B-164910, OCT. 25, 1968

B-164910: Oct 25, 1968

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TO TELEDYNE SYSTEMS COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 9. ELEVEN BIDS WERE RECEIVED AND OPENED ON APRIL 5. THE LOWEST BID ON THE KITS WAS SUBMITTED BY YOUR FIRM. THE SECOND AND THIRD LOWEST BIDS WERE APPROXIMATELY $12. BECAUSE YOUR BID WAS SUBSTANTIALLY LOWER THAN THE OTHER BIDS RECEIVED ON THE KITS. YOUR FIRM WAS REQUESTED BY TELEPHONE TO VERIFY YOUR BID PRICES. CONFIRMED THAT YOU WERE BIDDING IN ACCORDANCE WITH THE REQUIREMENTS OF THE SPECIFICATIONS. YOU STATED THAT THE UNIT PRICE FOR ITEM 3 WAS ERRONEOUSLY COMPUTED ON THE BASIS OF THE MATERIAL COST FOR ONLY "PIECE 2 (RECEPTACLE CUP) OF COMPONENT 1 AND THAT SUCH PRICE DID NOT INCLUDE THE COST OF PIECE 1 (THERMOSTATIC SWITCH).'.

B-164910, OCT. 25, 1968

TO TELEDYNE SYSTEMS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 9, 1968, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT TO A COMPANY OTHER THAN YOUR FIRM UNDER DEPARTMENT OF THE NAVY SOLICITATION NO. N00189-68- B0189, ISSUED BY THE NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA.

THE CITED INVITATION, ISSUED ON MARCH 6, 1968, AND SUBSEQUENTLY MODIFIED, REQUESTED BIDS FOR FURNISHING 3,698 FIELD CHANGE KITS FOR RADIO SETS. ELEVEN BIDS WERE RECEIVED AND OPENED ON APRIL 5, 1968. THE LOWEST BID ON THE KITS WAS SUBMITTED BY YOUR FIRM. THE SECOND AND THIRD LOWEST BIDS WERE APPROXIMATELY $12,000 AND $26,000, RESPECTIVELY, HIGHER THAN THE BID OF YOUR FIRM. BECAUSE YOUR BID WAS SUBSTANTIALLY LOWER THAN THE OTHER BIDS RECEIVED ON THE KITS, YOUR FIRM WAS REQUESTED BY TELEPHONE TO VERIFY YOUR BID PRICES. BY LETTER DATED APRIL 11, 1968, YOU CONFIRMED YOUR BID PRICES. IN RESPONSE TO A TELEPHONIC REQUEST YOUR FIRM BY LETTER DATED MAY 3, 1968, CONFIRMED THAT YOU WERE BIDDING IN ACCORDANCE WITH THE REQUIREMENTS OF THE SPECIFICATIONS. HOWEVER, IN YOUR LETTER YOU ALLEGED THAT A MISTAKE HAD BEEN MADE IN YOUR BID AND YOU REQUESTED THAT THE UNIT PRICE FOR ITEM 3, 80 EACH OF COMPONENT 1, BE INCREASED FROM $5.17 TO $15.21. YOU STATED THAT THE UNIT PRICE FOR ITEM 3 WAS ERRONEOUSLY COMPUTED ON THE BASIS OF THE MATERIAL COST FOR ONLY "PIECE 2 (RECEPTACLE CUP) OF COMPONENT 1 AND THAT SUCH PRICE DID NOT INCLUDE THE COST OF PIECE 1 (THERMOSTATIC SWITCH).' IN SUPPORT OF YOUR ALLEGATION OF ERROR, YOUR FIRM SUBMITTED YOUR ORIGINAL WORKSHEETS UPON WHICH YOUR BID PRICE WAS COMPUTED.

AFTER CONSIDERATION OF THE DOCUMENTARY EVIDENCE SUBMITTED IN SUPPORT OF THE ALLEGED ERROR, THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, UNDER DATE OF JUNE 11, 1968, MADE THE FOLLOWING DETERMINATION (QUOTED IN PERTINENT PART) REGARDING YOUR FIRM'S REQUEST FOR CORRECTION: "2. TELEDYNE INDUSTRIES, INC. ALLEGED BY ITS LETTERS OF 3 MAY AND 27 MAY 1968 THAT THE BID FOR ITEM 3 SHOULD HAVE BEEN $15.21 EACH OR JUST LESS THAN ITS BID OF $16.22 EACH FOR THE COMPLETE KIT; THAT IN PREPARING THE BID THE COST OF A SWITCH WAS NOT INCLUDED BUT IS REQUIRED WITH COMPONENT NO. 1, WHICH ALSO REQUIRES A RECEPTACLE CUP, THE COST OF WHICH WAS INCLUDED. A QUOTATION MEMORANDUM WAS SUBMITTED SHOWING STEPLADDER COSTS RELATED TO THE SWITCH, INCLUDING $13.65 APPLICABLE TO A QUANTITY OF 80 SWITCHES AND $4.89 TO A QUANTITY OF 3,780 SWITCHES. A LETTER QUOTATION REGARDING CUPS WAS ALSO FURNISHED WHICH SHOWED $3.10 APPLICABLE TO 100 UNITS AND $1.80 TO 3,800 UNITS. "3. TELEDYNE FURNISHED A TWO-PAGE WORKSHEET WHICH INCLUDED VARIOUSLY COMPUTED PRICES FOR THE COMPLETE KIT, ONE COMPUTATION TOTALING $17.00 AND ONE TOTALING $12.13, WITH A NOTATION FOLLOWING THE LATTER FIGURE -USE $16.22 EA.-. THE FIRST FIGURE INCLUDED TOTAL MATERIAL COSTS FOR ALL KIT COMPONENTS OF $8.00. THE SECOND FIGURE INCLUDED MATERIAL COSTS OF $7.45 FOR ALL KIT COMPONENTS, WHICH AMOUNT INCLUDED $1.80 FOR A CUP AND $4.89 FOR A SWITCH FOR COMPONENT NO. 1. THE COMPUTATION FOR ITEM 3 SHOWS TOTAL MATERIAL COST OF $3.10 (CUP) PLUS VARIOUS UNEXPLAINED PERCENTAGE AMOUNTS, ADDED TO A TOTAL OF $4.17, WITH NOTATION -USE 5.17 EA-. "4. THE BID PRICES SUBMITTED FOR ITEMS 1, 2, AND 3 ARE NOT THE ESTIMATED COSTS, AND ARE NOT SHOWN ON THE WORKSHEET EXCEPT BY NOTATION. IN THAT REGARD, THE BIDDER EXPLAINED THAT THE PROFIT LEVEL FOR EACH ITEM WAS THE RESULT OF MANAGERIAL DECISION. FURTHER, THE ESTIMATED COST FOR A CUP FOR COMPONENT 1 WAS INCLUDED IN THE COMPUTATIONS FOR ITEM 3 AT $3.10 AND IN THE COMPUTATIONS FOR THE COMPLETE KIT AT $1.80, IN ACCORDANCE WITH THE VARYING QUANTITY/PRICE QUOTATIONS FROM A SUPPLIER. HAD THE SAME PATTERN BEEN FOLLOWED AND THE ERROR NOT OCCURRED, APPARENTLY, AN AMOUNT OF $13.65 WOULD HAVE BEEN INCLUDED IN ITEM 3 FOR A SWITCH AND NOT THE AMOUNT OF $4.89 USED IN THE KIT COMPUTATIONS. THE BID INTENDED FOR ITEM 3 IS NOT ASCERTAINABLE. THE FOREGOING EVIDENCE DOES NOT SHOW THE INTENDED BID NOR WHAT THE BID WOULD HAVE BEEN BUT FOR THE ERRORS. "5. THE CONTRACTING OFFICER STATED THAT THE INTENDED BID FOR ITEM 3 WAS NOT COMPLETELY CLEAR FROM THE WORKPAPERS.

DETERMINATION "BASED ON THE FOREGOING, IT IS HEREBY DETERMINED THAT TELEDYNE INDUSTRIES, INC. MADE AN ERROR IN ITS BID, HOWEVER, THE EVIDENCE IS NOT CLEAR AND CONVINCING AS TO THE INTENDED BID. ACCORDINGLY, THE BID SHALL BE DISREGARDED.'

THE ABOVE-QUOTED DETERMINATION WAS MADE PURSUANT TO THE PROVISIONS OF PARAGRAPH 2-406.3 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). SAID PARAGRAPH PROVIDES IN SUBPARAGRAPHS (A) (1), (A) (2) AND (A) (3) THAT IN THE CASE OF OTHER THAN APPARENT CLERICAL MISTAKES ALLEGED AFTER OPENING OF BIDS AND PRIOR TO AWARD, THE DEPARTMENTS MAY MAKE THE FOLLOWING ADMINISTRATIVE DETERMINATIONS:

"/1) WHERE THE BIDDER REQUESTS PERMISSION TO WITHDRAW A BID AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES THE EXISTENCE OF A MISTAKE, A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID MAY BE MADE.

"/2) HOWEVER, IF THE EVIDENCE IS CLEAR AND CONVINCING BOTH AS TO EXISTENCE OF THE MISTAKE AND AS TO THE BID ACTUALLY INTENDED, AND IF THE BID, BOTH AS UNCORRECTED AND AS CORRECTED, IS THE LOWEST RECEIVED, A DETERMINATION MAY BE MADE TO CORRECT THE BID AND NOT PERMIT ITS WITHDRAWAL.

"/3) WHERE THE BIDDER REQUESTS PERMISSION TO CORRECT A MISTAKE IN HIS BID AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES BOTH THE EXISTENCE OF A MISTAKE AND THE BID ACTUALLY INTENDED, A DETERMINATION PERMITTING THE BIDDER TO CORRECT THE MISTAKE MAY BE MADE; PROVIDED THAT, IN THE EVENT SUCH CORRECTION WOULD RESULT IN DISPLACING ONE OR MORE LOWER BIDS, THE DETERMINATION SHALL NOT BE MADE UNLESS THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. IF THE EVIDENCE IS CLEAR AND CONVINCING ONLY AS TO THE MISTAKE, BUT NOT AS TO THE INTENDED BID, A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID MAY BE MADE.'

THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, PURSUANT TO AUTHORITY DELEGATED TO HIM UNDER ASPR 2-406.3 (B) (2) HAS CONCLUDED THAT THE INFORMATION SUBMITTED IN SUPPORT OF YOUR FIRM'S REQUEST FOR BID CORRECTION CONSTITUTED CLEAR AND CONVINCING EVIDENCE OF A MISTAKE IN BID BUT NOT OF THE BID ACTUALLY INTENDED. WITHDRAWAL OF THE BID, BUT NOT CORRECTION, WAS AUTHORIZED. ON JUNE 30, 1968, A CONTRACT FOR FURNISHING THE FIELD CHANGE KITS WAS AWARDED TO ARTISAN ELECTRONICS.

YOU CONTEND THAT SINCE CORRECTION OF YOUR BID PRICE WAS NOT AUTHORIZED BY THE NAVAL SUPPLY SYSTEMS COMMAND, A CONTRACT SHOULD HAVE BEEN AWARDED TO YOUR FIRM ON THE BASIS OF YOUR ORIGINAL BID PRICES AS REQUESTED IN YOUR LETTER OF MAY 27, 1968. IN YOUR LETTER YOU STATED: "IN THE MEANTIME, TO AVOID FURTHER DELAY IN YOUR RECEIPT OF MATERIAL WE RESPECTFULLY SUGGEST THAT THE AWARD BE BASED ON THE UNCORRECTED ITEM 3 PRICE AND THAT CONTRACTUAL ADJUSTMENT BE MADE AT A LATER DATE, AFTER YOUR REVIEW HAS BEEN COMPLETED.'

IT IS REPORTED THAT NEITHER THE CONTRACTING OFFICER NOR THE NAVAL SUPPLY SYSTEMS COMMAND INTERPRETED THIS STATEMENT AS A REQUEST THAT IF CORRECTION IS NOT AUTHORIZED, THAT AWARD BE MADE ON THE BASIS OF YOUR ORIGINAL BID. RATHER, YOUR STATEMENT WAS INTERPRETED AS REQUESTING AN UNAUTHORIZED ACTION OF OBTAINING AN AWARD FIRST AND THEN A REVIEW OF THE BID MISTAKE AND CORRECTION THEREOF AT A LATER DATE. WE ARE OF THE OPINION THAT THE LATTER INTERPRETATION OF YOUR STATEMENT WAS CORRECT.

IN YOUR LETTER OF JULY 26, 1968, TO THE NAVAL SUPPLY CENTER, YOU STATED:

"AS EXPLAINED TO US BY YOUR REPRESENTATIVES ON 19 AND 23 JULY, VIA TELEPHONE, THE REASONING BEHIND YOUR REJECTION OF OUR BID WAS AS FOLLOWS:

"IT WAS CLEAR TO YOU FROM THE DOCUMENTS WE SUBMITTED THAT A MISTAKE HAD BEEN MADE IN OUR PRICE FOR ITEM 3, BUT THE INTENDED PRICE FOR ITEM 3 WAS NOT CLEAR; THEREFORE, UNDER ASPR 2-406.3 (A) (3) YOU HAD NO CHOICE BUT TO ALLOW US TO WITHDRAW OUR BID. TO DO OTHERWISE (I.E., ALLOW US TO ACCEPT A CONTRACT WITH THE ORIGINAL PRICE), WOULD HAVE BEEN -UNFAIR-; EVEN HAD WE WISHED TO ACCEPT IT. IT SHOULD BE NOTED HERE THAT WE HAVE NOT YET BEEN REQUESTED TO WITHDRAW OUR BID.'

YOU CONTEND THAT ASPR 2-406.3 (A) (3) NEITHER EXPRESSLY NOR BY IMPLICATION REQUIRES THAT A MISTAKEN BID BE REJECTED BY A CONTRACTING OFFICER. YOU STATE THAT SUCH REGULATION PROVIDES THAT WHERE THE CONTRACTING OFFICER IS CONVINCED AS TO A MISTAKE, BUT NOT AS TO THE INTENDED BID "A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID MAY BE MADE.' YOU ALLEGE THAT UNDER THE FOREGOING ASPR PROVISION THE CONTRACTING OFFICER HAD THE ELECTION OF TAKING SOME ALTERNATE ACTION, SUCH AS ALLOWING YOUR FIRM THE OPPORTUNITY TO WAIVE YOUR RIGHT TO WITHDRAWAL AND ACCEPT A CONTRACT BASED ON YOUR ORIGINAL ERRONEOUS PRICE. YOU STATE THAT SUCH ACTION WOULD BE PERMISSIBLE, FOR IF THE EVIDENCE IS CLEAR AND CONVINCING THAT YOUR FIRM WAS THE LOWEST BIDDER, ABSENT THE ERROR IN YOUR BID, EVEN THOUGH THE AMOUNT OF YOUR CORRECT OR INTENDED BID COULD NOT BE CLEARLY PROVEN, OTHER BIDDERS WOULD NOT BE PREJUDICED BY AN AWARD TO YOUR FIRM AT YOUR ORIGINAL BID PRICE. IN SUPPORT OF SUCH CONTENTION, YOU CITE THAT PART OF OUR DECISION REPORTED IN 42 COMP. GEN. 723, 725, WHICH READS AS FOLLOWS:

"IF THE EVIDENCE WERE CLEAR AND CONVINCING THAT RAMIREZ WOULD HAVE BEEN THE LOWEST BIDDER ABSENT ERROR IN ITS BID, EVEN THOUGH THE AMOUNT OF ITS CORRECT OR -INTENDED- BID COULD NOT CLEARLY BE PROVEN, IT WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS IF RAMIREZ RECEIVED THE AWARD. THE ACTUAL FACTS OF THE CASE ARE THAT PROOF IS LACKING AS TO WHAT RAMIREZ- BID WOULD HAVE BEEN BUT FOR THE ERROR, AND IT IS VERY DOUBTFUL WHETHER A NON- ERRONEOUS BID BY RAMIREZ WOULD HAVE BEEN THE LOWEST BID. WE FEEL THAT THE CASE FALLS WITHIN THE RATIONALE OF SECTION 2-406.3 (E) (2) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH PROVIDES AS FOLLOWS:

"-WHERE THE BIDDER FAILS OR REFUSES TO FURNISH EVIDENCE IN SUPPORT OF A SUSPECTED OR ALLEGED MISTAKE, THE CONTRACTING OFFICER SHALL CONSIDER THE BID AS SUBMITTED UNLESS THE AMOUNT OF THE BID IS SO FAR OUT OF LINE WITH THE AMOUNTS OF OTHER BIDS RECEIVED OR WITH THE AMOUNT ESTIMATED BY THE AGENCY OR DETERMINED BY THE CONTRACTING OFFICER TO BE REASONABLE, OR THERE ARE OTHER INDICATIONS OF ERROR SO CLEAR, AS REASONABLY TO JUSTIFY THE CONCLUSION THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO THE BIDDER OR TO OTHER BONA FIDE BIDDERS. * * *-"

IT IS TRUE THAT IN CERTAIN CASES WHERE A BIDDER HAS ESTABLISHED THAT AN ERROR HAD BEEN MADE IN ITS BID BUT NOT ITS INTENDED BID PRICE, OUR OFFICE HAS AUTHORIZED ACCEPTANCE OF ITS ORIGINAL BID ON THE BASIS THAT IT WAS THE LOWEST BID AND, THEREFORE, NOT PREJUDICIAL TO OTHER BIDDERS. IT SHOULD BE NOTED THAT IN THOSE CASES, THE BIDDER HAD ADVISED THE CONTRACTING OFFICER THAT IF HE COULD NOT PERMIT CORRECTION OF THE BID THAT THE BID BE CONSIDERED FOR AWARD AS ORIGINALLY SUBMITTED. IN YOUR CASE, HOWEVER, YOU DID NOT REQUEST THAT THE CONTRACTING OFFICER EITHER CORRECT YOUR BID OR MAKE AN AWARD TO YOUR FIRM ON THE BASIS OF YOUR ORIGINAL BID PRICE. INSTEAD YOU REQUESTED THAT AN AWARD BE MADE TO YOUR FIRM ON THE BASIS OF YOUR ORIGINAL BID PRICE, AND THAT AFTER AWARD THE CONTRACT PRICE BE ADJUSTED TO REFLECT A CORRECTION OF THE BID.

YOU STATE THAT THE AMOUNT OF THE ERROR IN YOUR BID WAS $803.20 AND THAT IT SHOULD HAVE BEEN OBVIOUS TO THE CONTRACTING OFFICER THAT YOUR FIRM HAD NO INTENTION OF JEOPARDIZING THE AWARD OF A $60,000 CONTRACT BECAUSE OF THE ERROR IN YOUR BID. WHILE IT IS TRUE THAT A BIDDER MIGHT BE WILLING TO ABSORB A LOSS RESULTING FROM AN ERROR IN ITS BID IN ORDER TO RECEIVE AN AWARD, THE CONTRACTING OFFICER WAS NOT APPRISED OF YOUR WILLINGNESS TO ACCEPT AN AWARD AT YOUR BID PRICE NOTWITHSTANDING YOUR ALLEGATION OF ERROR.

IN YOUR LETTER OF JULY 26, 1968, TO THE PROCUREMENT AGENCY, YOU REFERRED TO YOUR TELEGRAM OF JUNE 4, 1968, BY WHICH YOUR FIRM EXTENDED THE PERIOD FOR ACCEPTANCE OF YOUR BID FROM JUNE 5 TO JULY 15, 1968. YOU STATE THAT IT SHOULD BE NOTED THAT NO MENTION WAS MADE IN SUCH TELEGRAM OF YOUR ALLEGATION OF MISTAKE IN YOUR BID AS SET FORTH IN YOUR PREVIOUS CORRESPONDENCE. YOU STATE THAT IT HAS BEEN HELD THAT SUCH ACTION BY THE BIDDER CONSTITUTED A NEW OFFER ON THE ORIGINAL BID TERMS AND WAS IN EFFECT A CONFIRMATION OF THE BIDDER'S WILLINGNESS TO PERFORM ON THAT BASIS. YOU CITE AS AUTHORITY FOR THAT PROPOSITION 34 COMP. GEN. 20. IN THAT DECISION, THE BIDDER, IN COMPLIANCE WITH THE GOVERNMENT'S REQUEST, SENT A TELEGRAM EXTENDING ITS PERIOD FOR ACCEPTANCE AFTER SUCH ACCEPTANCE PERIOD HAD EXPIRED. WE HELD AT PAGE 21OF THAT DECISION: "* * * WHEN, THEREFORE, THE ADMINISTRATIVE OFFICE, BY TELEGRAM OF NOVEMBER 2, 1949, REQUESTED AN - EXTENSION- OF YOUR BID, YOUR ORIGINAL OFFER HAD ALREADY EXPIRED AND NO ACT OF THE GOVERNMENT COULD THEN HAVE CREATED A CONTRACT OR IMPOSED ANY OBLIGATION UPON YOU. YOUR LETTER OF NOVEMBER 25, IN RESPONSE TO THAT TELEGRAM, WAS THEREFORE A NEW OFFER, AND, SINCE IT CONTAINED NO QUALIFICATION OR MODIFICATION OF THE PRICE ORIGINALLY QUOTED, IT COULD NOT REASONABLY HAVE BEEN CONSTRUED AS EMBODYING THE ALLEGATION OF ERROR PREVIOUSLY MADE, BUT RATHER AS A CONFIRMATION OF YOUR WILLINGNESS TO CONTRACT AT THE PRICES QUOTED.' HOWEVER, YOUR TELEGRAM DID NOT CONSTITUTE A "NEW OFFER" WHICH THE GOVERNMENT ELICITED BY REQUESTING AN EXTENSION OF YOUR BID ACCEPTANCE PERIOD. RATHER, THE TELEGRAM WAS A UNILATERAL OFFER ON YOUR PART WHICH THE GOVERNMENT DID NOT ACCEPT. FROM THE FOREGOING, IT MUST BE CONCLUDED THAT THE ADMINISTRATIVE ACTION TAKEN IN REGARD TO YOUR BID WERE PROPER. ACCORDINGLY, YOUR PROTEST IS DENIED.