B-163655, MAR. 29, 1968

B-163655: Mar 29, 1968

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

SECRETARY: REFERENCE IS MADE TO A LETTER DATED MARCH 15. THE MISTAKES ALLEGED IN THIS CASE WERE CONSIDERED BY NAVSUP IN ACCORDANCE WITH THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION 2-406.3. THERE IS INCLUDED A COMPLETE STATEMENT OF FACTS BY THE CONTRACTING OFFICER. N00156-68-B-0222 WAS ISSUED ON 3 NOVEMBER 1967 AND BIDS WERE OPENED ON 3 JANUARY 1968. ITEM 1 WAS A QUANTITY OF SIXTY E28 ARRESTING ENGINE ASSEMBLIES. ITEM 2 WAS A QUANTITY OF THIRTY ON-SITE SPARES FOR ITEM 1. NINE BIDS WERE RECEIVED. THE BIDS OF THE FOUR LOWEST BIDDERS WERE AS FOLLOWS: UNIT PRICE UNIT PRICE UNIT PRICE BIDDER ITEM 1 ITEM 2 ITEM 3 DISCOUNT CARDWELL MFG. THE ERRORS WERE DESCRIBED AS FOLLOWS: -WHEN ALL COSTS AND DATA WERE REVIEWED.

B-163655, MAR. 29, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MARCH 15, 1968, WITH ENCLOSURES, REFERENCE SUP 0232B, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP), CONCERNING THE PROPRIETY OF PERMITTING CORRECTION OF A MISTAKE IN BID ALLEGED BY CARDWELL MANUFACTURING COMPANY, THE LOW BIDDER UNDER INVITATION FOR BIDS NO. N00156-68-B-0222, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA.

IN A LETTER TO THE COMMANDER, NAVSUP, DATED MARCH 4, 1968, WE ADVISED THAT IN VIEW OF THE CONGRESSIONAL INQUIRY ON BEHALF OF ENTWISTLE MANUFACTURING CORPORATION, THE SECOND LOW BIDDER UNDER THE INVITATION, THIS OFFICE WOULD UNDERTAKE TO RULE ON THE QUESTIONS AT ISSUE.

THE MISTAKES ALLEGED IN THIS CASE WERE CONSIDERED BY NAVSUP IN ACCORDANCE WITH THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION 2-406.3. IN THE REPORT FROM THE DEPUTY COMMANDER, PURCHASING, DATED MARCH 15, 1968, THERE IS INCLUDED A COMPLETE STATEMENT OF FACTS BY THE CONTRACTING OFFICER. IT STATES, IN RELEVANT PART, AS FOLLOWS: "1. INVITATION FOR BIDS NO. N00156-68-B-0222 WAS ISSUED ON 3 NOVEMBER 1967 AND BIDS WERE OPENED ON 3 JANUARY 1968. THE INVITATION CALLED FOR BIDS ON THREE ITEMS. ITEM 1 WAS A QUANTITY OF SIXTY E28 ARRESTING ENGINE ASSEMBLIES. ITEM 2 WAS A QUANTITY OF THIRTY ON-SITE SPARES FOR ITEM 1. ITEM 3 CALLED FOR DATA FOR ITEM 1. NINE BIDS WERE RECEIVED. THE BIDS OF THE FOUR LOWEST BIDDERS WERE AS FOLLOWS:

UNIT PRICE UNIT PRICE UNIT PRICE BIDDER ITEM 1 ITEM 2 ITEM 3 DISCOUNT CARDWELL MFG. CO. $ 6876.00 $570.00 NO CHARGE ENTWISTLE MFG. $ 9900.00 $586.05 NO CHARGE 5 PERCENT

CORP. 10 DAYS ALL AMERICAN $10,000.00 $613.00 NO CHARGE 1/4 PERCENT

ENGINEERING 10 DAYS E. W. BLISS CO. $10,851.00 $516.91 NO CHARGE 3 PERCENT

10 DAYS THE REMAINING UNIT PRICE BIDS ON ITEM 1 RANGED FROM $11,470.00 TO $30,200. "2. THE INVITATION INCLUDED THE THREE ITEMS AS LOT 1 AND SPECIFIED THAT AWARD WOULD BE MADE ON A LOT BASIS. "3. SUSPECTING A MISTAKE BECAUSE OF THE DISPARITY BETWEEN THE LOW BID OF CARDWELL MANUFACTURING COMPANY, INC. (CARDWELL) AND THE PRICES OF THE OTHER BIDDERS, THE CONTRACTING OFFICER REQUESTED VERIFICATION OF THE LOW BID. BY LETTER OF JANUARY 29, 1968 CARDWELL NOTIFIED THE CONTRACTING OFFICER THAT TWO ERRORS HAD BEEN MADE IN THE CARDWELL BID. ON PAGE 1 OF SAID LETTER, THE ERRORS WERE DESCRIBED AS FOLLOWS: -WHEN ALL COSTS AND DATA WERE REVIEWED, WE FOUND THE FOLLOWING ERRORS IN OUR PREPARATION OF THIS IFB:

-1. THE MATERIAL AS BID WAS CORRECT AT A VALUE OF $5495.27 PER UNIT. HOWEVER, WE OMITTED THE BATTERY CALLED FOR IN YOUR WIRING DIAGRAM. MR. GEORGE EULO (A REPRESENTATIVE OF CARDWELL) BROUGHT THIS TO OUR ATTENTION AFTER THE BID OPENING. HAD THE BATTERY BEEN INCLUDED IN THE MATERIAL LIST, THIS ERROR COULD NOT HAVE OCCURRED. THEREFORE, THE COST OF APPROXIMATELY $60.00 FOR BATTERY WILL HAVE TO BE INCLUDED IN THE MATERIAL COSTS.

-2. THE ESTIMATING SHEET LISTED 427 HOURS REQUIRED TO MANUFACTURE AND ASSEMBLE EACH UNIT. IN PREPARATION OF THE BID, 427 HOURS, THE MULTIPLIER WAS TRANSPOSED TO READ 247 HOURS, AND THE INCORRECT EXTENSION WAS ENTERED IN THE BID PRICE.-

* * * ** * * "5. BY LETTER OF FEBRUARY 14, 1968 CARDWELL SUBMITTED TO THE CONTRACTING OFFICER AN AFFIDAVIT STATING THAT THE STATEMENTS IN THE CARDWELL LETTER OF 29 JANUARY 1968 WERE TRUE AND THAT ATTACHMENT A TO SAID LETTER CONTAINS TRUE COPIES OF THE WORKSHEETS USED BY CARDWELL IN COMPUTING THE PRICES WHICH WERE BID UNDER THE IFB. "6. THE CONTRACTING OFFICER HAS CAREFULLY EXAMINED THE VARIOUS WORKSHEETS SUBMITTED BY CARDWELL AS ATTACHMENT A TO THE 29 JANUARY 1968 LETTER AND IS OF THE OPINION THAT CARDWELL INTENDED TO BID A UNIT PRICE OF $7882.20 UNDER ITEM 1 OF THE IFB RATHER THAN THE UNIT PRICE OF $6876.00 ACTUALLY BID FOR SAID ITEM 1. THE SEVEN DETAILED WORKSHEETS SHOWING THE LABOR HOURS FOR EACH COMPONENT, THE ADDING MACHINE TAPES SHOWING TOTAL LABOR HOURS FOR THE VARIOUS CLASSES OF LABOR SHOWN ON THE DETAILED SHEETS, AND THE TYPEWRITTEN ESTIMATING SHEET DATED 12-6-67 BEARING THE NAME OF -BILL BRUER- AS ESTIMATOR SHOW THAT A TOTAL OF 427 LABOR HOURS WAS DETERMINED BY THE BIDDER TO BE NECESSARY FOR MANUFACTURE OF EACH OF THE 60 UNITS UNDER ITEM 1. THE SAID ESTIMATING SHEET DATED 12-6-67 ALSO SHOWS $1915.39 FOR RAW MATERIALS, $3200.31 FOR PURCHASED MATERIALS, $227.45 FOR SUB CONTRACT, $100 FOR RAW MATERIALS, $102.00 FOR LUMBER AND $50.12 (SEE REVERSE OF SHEET) FOR TOOLING. THE WORKSHEET DATED 12/28/67 (WHICH SHOWS OPPOSITE THE WORDS -SUB TOTAL- THE FIGURE $6876.00, THE PRICE BID BY CARDWELL) SETS FORTH ALL OF THE FIGURES SHOWN ON THE ESTIMATING SHEET DATED 12-6-67 EXCEPT THE LABOR HOUR FIGURE OF 427 HOURS. IN LIEU OF SAID 427 HOURS, THE SHEET DATED 12/28/67 LISTS -247- LABOR HOURS. THE 247 FIGURE WAS USED IN ESTABLISHING THE LABOR COST OF $716.30 (247 X $2.90) AND THE MANUFACTURING BURDEN COST OF $664.43 (247 X $2.69) SHOWN ON SAID SHEET AS ELEMENTS IN THE TOTAL BID PRICE OF $6876.00 FOR ITEM 1 SHOWN ON SUCH SHEET. THE CONTRACTING OFFICER IS OF THE OPINION THAT THE FIGURE OF -247- LABOR HOURS USED IN THE BID PRICE COMPUTATION ON THE WORKSHEET DATED 12/28/67 RESULTED FROM AN UNINTENTIONAL TRANSPOSITION OF THE -427- LABOR HOURS SHOWN ON THE OTHER WORKSHEETS. THE CONTRACTING OFFICER IS FURTHER OF THE OPINION THAT THE EVIDENCE IS CLEAR AND CONVINCING THAT (1) THE BIDDER INTENDED TO BID A PRICE BASED ON 427 LABOR HOURS FOR ITEM 1 PLUS THE OTHER PRICING FIGURES INCLUDED ON THE WORKSHEET DATED 12/28/67 AND (2) THAT THE INTENDED UNIT BID PRICE FOR ITEM 1 WAS $7882.20 RATHER THAN THE PRICE OF $6876.00 ACTUALLY BID. "7. AS STATED IN PARAGRAPH 3 ABOVE, THE CARDWELL LETTER OF JANUARY 29, 1968 ADVISES THAT IN ADDITION TO THE ERROR RESULTING FROM THE TRANSPOSITION OF THE LABOR HOUR FIGURES THE BIDDER FAILED TO INCLUDE IN HIS UNIT BID PRICE THE COST OF A BATTERY CALLED FOR BY THE IFB SPECIFICATIONS FOR ITEM 1. CARDWELL'S LETTER STATES, IN EFFECT, THAT IT DID NOT REALIZE THAT A BATTERY WAS REQUIRED SINCE THE BATTERY WAS CALLED FOR IN A WIRING DIAGRAM RATHER THAN IN A MATERIAL LIST. CARDWELL'S LETTER ESTIMATES THAT THE BATTERY WILL COST APPROXIMATELY $60.00 FOR EACH OF THE 60 UNITS CALLED FOR BY ITEM 1, OR A TOTAL OF $3600.00. COGNIZANT TECHNICAL PERSONNEL AT NAEC HAVE CONFIRMED THAT THE BATTERY IN QUESTION HAS A COST OF APPROXIMATELY $60.00 EACH. CARDWELL'S LETTER DOES NOT SPECIFICALLY REQUEST THAT THE BID PRICE BE INCREASED TO COVER THE COST OF THE BATTERY AND SUCH LETTER IS INTERPRETED BY THE CONTRACTING OFFICER AS REQUESTING WITHDRAWAL OF THE BID ONLY IF THE REQUEST FOR CORRECTION OF BID PRICE TO ALLOW FOR AN INCREASE OF $1006.20 PER UNIT ARISING FROM THE ERROR DISCUSSED ABOVE RELATING TO DIRECT LABOR HOURS AND DIRECT MANUFACTURING BURDEN IS NOT ALLOWED. THE PRESIDENT OF CARDWELL HAS ORALLY CONFIRMED THAT THE CONTRACTING OFFICER HAS CORRECTLY INTERPRETED THE LETTER. "8. THE CONTRACTING OFFICER IS OF THE OPINION THAT THE BID PRICE SHOULD NOT BE INCREASED WITH RESPECT TO THE BATTERY WHICH WAS NOT IN FACT INCLUDED IN SUCH PRICE. THE BIDDER, AT THE TIME OF BIDDING DID NOT REALIZE THAT A BATTERY WAS REQUIRED AS A COMPONENT OF ITEM 1 AND ACCORDINGLY COULD NOT HAVE INTENDED TO INCLUDE $60.00 PER UNIT, OR ANY OTHER AMOUNT, FOR SUCH BATTERY IN THE BID PRICE. THE FAILURE OF THE BIDDER TO INCLUDE THE COST OF THE BATTERY SHOULD NOT, HOWEVER, REQUIRE THAT THE BID BE WITHDRAWN. THE INTENDED UNIT BID PRICE OF CARDWELL FOR ITEM 1, AFTER CORRECTING SUCH PRICE UPWARD BY $1006.20 TO COVER THE ERROR DUE TO THE TRANSPOSITION OF LABOR HOUR FIGURES AS DISCUSSED ABOVE, IS $7882.20, WHICH IS $1522.80 LESS THAN THE UNIT PRICE OF $9405 (AFTER APPLYING OFFERED DISCOUNT OF 5 PERCENT) BID BY ENTWISTLE MFG. CORP; THE NEXT HIGHER BIDDER. IN VIEW OF THE $1522.80 DIFFERENCE IN SUCH BID PRICES AND OF THE FACT THAT IT IS ESTABLISHED THAT THE COST OF THE BATTERY WHICH WAS NOT INCLUDED IN THE CARDWELL BID PRICE IS APPROXIMATELY $60.00, IT IS THE OPINION OF THE CONTRACTING OFFICER THAT THE AWARD OF CONTRACT TO CARDWELL AT A PRICE WHICH DOES NOT INCLUDE THE COST OF THE BATTERY WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS. IN THIS CONNECTION, ATTENTION IS CALLED TO COMPTROLLER GENERAL DECISION B 151424 (42 COMP. GEN. 723) AND TO DECISION B-155432 DATED 1 DECEMBER 1964. "9. IN VIEW OF THE FOREGOING, IT IS THE RECOMMENDATION OF THE CONTRACTING OFFICER THAT A DETERMINATION BE MADE PERMITTING THE UNIT BID PRICE OF CARDWELL ON ITEM 1 TO BE CORRECTED TO READ -$7882.20-, THAT THE EXTENDED PRICE FOR ITEM 1 BE CORRECTED TO READ - $472932.00- AND THAT THE AGGREGATE CONTRACT PRICE FOR ITEMS 1, 2 AND 3 BE CORRECTED TO READ -$490,032.00-.'

IN ACCORDANCE WITH THE ABOVE-CITED REGULATION THE DEPUTY COMMANDER, PURCHASING, RECOMMENDS THAT CARDWELL'S BID SHOULD BE CORRECTED TO $490,032 FOR THE SAME REASONS STATED BY THE CONTRACTING OFFICER.

IN CONNECTION WITH THE ERROR ARISING FROM TRANSPOSITION OF LABOR HOUR FIGURES WE HAVE REVIEWED AND ANALYZED THE VARIOUS WORKSHEETS SUBMITTED BY CARDWELL AND WE ARE OF THE OPINION THAT THE ADMINISTRATIVE DETERMINATION OF THE EXISTENCE OF A MISTAKE AND THE BID PRICE ACTUALLY INTENDED ARE FULLY SUPPORTED BY CLEAR AND CONVINCING EVIDENCE. ACCORDINGLY, THE RECOMMENDATION TO PERMIT CORRECTION OF THIS ASPECT OF THE ERRONEOUS BID IS APPROVED.

WE ALSO AGREE THAT THE ERROR DUE TO THE ALLEGED FAILURE BY CARDWELL TO INCLUDE THE COST OF BATTERIES REQUIRED BY THE INVITATION MAY NOT BE CORRECTED BECAUSE THE OMISSION IS NEITHER APPARENT FROM THE WORKSHEETS NOR OTHERWISE CONCLUSIVELY PROVEN, AND WE ARE NOT SATISFIED THAT WITHDRAWAL OF THE BID ON THAT GROUND SHOULD NECESSARILY HAVE BEEN PERMITTED. SINCE COGNIZANT NAVAL TECHNICAL PERSONNEL HAVE CONFIRMED THE ESTIMATED COST OF SUCH BATTERIES AND WE ARE ASSURED THAT CARDWELL'S BID WOULD HAVE BEEN THE LOWEST EVEN IF CORRECTED, WE MUST AGREE WITH THE AGENCY'S CONCLUSION THAT THERE WILL BE NO PREJUDICE TO OTHER BIDDERS IF THE LOW BID IS ACCEPTED WITHOUT CORRECTION IN THIS REGARD. 42 COMP. GEN. 723 AND B-155432, DECEMBER 1, 1964.

IT IS CONTENDED THAT ON A PREVIOUS OCCASION ENTWISTLE WAS CONFRONTED WITH A SIMILAR SITUATION AND ITS WORKSHEETS WERE CONSIDERED TO BE INSUFFICIENT TO PERMIT CORRECTION OF THE ERRORS ALLEGED AT THAT TIME. THE PREVIOUS SITUATION WAS THE SUBJECT OF OUR DECISION B-153651, DATED APRIL 2, 1964, WHEREIN WE STATED IN RELEVANT PART AS FOLLOWS:

"WE AGREE ALSO THAT THE RECORD WOULD NOT SUPPORT A DETERMINATION ALLOWING THE BIDDER TO CORRECT ITS BID TO ACCORD WITH THE REVISED AMOUNTS SHOWN ON EXHIBITS -D- AND -E-. WE HAVE HELD THE DEGREE OF PROOF REQUIRED TO JUSTIFY WITHDRAWAL OF A BID BEFORE AWARD TO BE IN NO WAY COMPARABLE TO THAT NECESSARY TO ALLOW CORRECTION OF AN ERRONEOUS BID. 36 COMP. GEN. 441. THE SCHEDULES PURPORT TO DOCUMENT A MYRIAD OF SMALL ERRORS AND OMISSIONS IN SUCH COMPONENTS OF TOTAL PRICE AS THE ALLOWANCES FOR VARIOUS ITEMS OF PURCHASED AND VARIABLE MATERIALS, REINSTALLATION KITS, TOOLING COSTS, LABOR AND BURDEN, AND EVEN IN THE MARK-UP FOR GENERAL AND ADMINISTRATIVE EXPENSES AND PROFIT. THE EXTENT TO WHICH THE BIDDER WOULD HAVE RELIED UPON THE AMOUNTS IT NOW SEEKS TO HAVE INCLUDED IN ITS BID PRICE BEFORE THE BID WAS SUBMITTED IS DIFFICULT TO CONCLUDE WITH ANY DEGREE OF CERTAINTY. CF. B-145954 DATED JULY 6, 1961. AS IS NOT THE CASE HERE, THE EVIDENCE OF THE BID ORIGINALLY INTENDED MUST ITSELF HAVE BEEN IN EXISTENCE PRIOR TO BID OPENING IN ORDER TO ENTITLE THE BIDDER TO CORRECTION. B-146424 DATED SEPTEMBER 18, 1961. FURTHERMORE THE RULE PERMITTING A BID TO BE CORRECTED UPON THE SUBMISSION OF EVIDENCE ESTABLISHING THAT THE BIDDER INTENDED TO BID AN AMOUNT OTHER THAN THE AMOUNT SET FORTH ON THE FACE OF ITS BID DOES NOT EXTEND TO PERMITTING A BIDDER TO RECALCULATE A NEGLIGENTLY FORMULATED BID TO INCLUDE FACTORS WHICH WERE NOT IN MIND WHEN THE BID WAS PREPARED AND SUBMITTED. 41 COMP. GEN. 289; 17 COMP. GEN. 575, 577.' IT IS OUR OPINION THAT THE TWO SITUATIONS ARE DISSIMILAR AND CLEARLY REQUIRE DIFFERENT RESOLUTIONS. THE TRUE LABOR HOUR FIGURES WHICH SHOULD HAVE BEEN USED IN THE PRESENT CASE FOR COMPUTING LABOR COSTS AND THE MANUFACTURING BURDEN COST CAN BE EXACTLY DETERMINED FROM CARDWELL'S WORKSHEETS. HOWEVER, THE PRIOR CASE REFERRED TO IS CLEARLY DISTINGUISHABLE SINCE THE BID ACTUALLY INTENDED IN THAT CASE WAS NOT CLEARLY AND CONCLUSIVELY DETERMINABLE FROM THE WORKSHEETS OR OTHER EVIDENCE IN EXISTENCE PRIOR TO BID OPENING DUE TO THE EXTENT OF THE ERRORS AND OMISSIONS ALLEGED.

ACCORDINGLY, YOU ARE ADVISED THAT CARDWELL'S BID SHOULD BE CORRECTED TO $490,032, AND THE BID CONSIDERED ON THAT BASIS. ALL OF THE PARTIES INTERESTED IN THIS MATTER HAVE BEEN ADVISED OF OUR DECISION.