B-165852, SEPTEMBER 3, 1969, 49 COMP. GEN. 152

B-165852, SEPTEMBER 3, 1969, 49 COMP. GEN. 152

BIDS -- MISTAKES -- CORRECTION -- NONRESPONSIVE BIDS IN RECOMMENDING THE TERMINATION OF A PURPORTED CONTRACT THAT HAD BEEN AWARDED TO A BIDDER PERMITTED TO CORRECT ITS BID PRICE BECAUSE IT HAD BEEN ERRONEOUSLY COMPUTED ON ESTIMATED REQUIREMENTS 24 TIMES THE GOVERNMENT'S TRUE ESTIMATE AND THE MISTAKE MAY HAVE AFFECTED THE AMOUNT BID, AND THAT THE CORRECTION WAS TANTAMOUNT TO THE SUBMISSION OF A SECOND BID, THE UNITED STATES GENERAL ACCOUNTING OFFICE (GAO) DID NOT EXCEED ITS REVIEW AUTHORITY. THE STANDARD OF REVIEW PURSUANT TO THE WUNDERLICH ACT (41 U.S.C. 321, 322) APPLIES TO CONTRACT DISPUTES AND NOT TO MISTAKES IN BID, AND THE FINALITY OF AN ADMINISTRATIVE DETERMINATION DOES NOT APPLY TO QUESTIONS OF LAW. FOR YEARS GAO DECIDED ALL QUESTIONS CONCERNING CORRECTIONS OF BID MISTAKES, AND EVEN WITH THE DELEGATION OF SUCH AUTHORITY, THE COMPTROLLER GENERAL IS NOT DEPRIVED OF THE RIGHT TO QUESTION ADMINISTRATIVE DETERMINATIONS, NOR THE BIDDER OF THE RIGHT TO REQUEST HIS DECISION. CONTRACTS -- AWARDS - ERRONEOUS -- NONRESPONSIVE BIDDER WHERE THE CORRECTION OF A BID WAS IMPROPER, THE FACT THAT THE CORRECTION WAS PERMITTED BY AN AUTHORIZED GOVERNMENT AGENT DOES NOT ESTOP THE GOVERNMENT FROM TERMINATING THE PURPORTED CONTRACT. ALTHOUGH WITHDRAWAL OF THE ERRONEOUS BID COULD HAVE BEEN PERMITTED, CORRECTION WAS PRECLUDED AS THE INTENDED BID COULD NOT BE SUBSTANTIALLY DETERMINED FROM THE INVITATION OR BID. THE BID PROTEST PROCEDURES USED HAVING CONFORMED TO SECTION 20.2, TITLE 4, CODE OF FEDERAL REGULATIONS, AND THE CONTRACTOR TIMELY INFORMED ITS INTERESTS COULD BE ADVERSELY AFFECTED AND GIVEN AN OPPORTUNITY TO PRESENT ITS VIEWS, TERMINATION OF THE PARTIALLY PERFORMED CONTRACT WAS NEITHER PREJUDICIAL TO THE CONTRACTOR NOR ADVERSE TO THE BEST INTERESTS OF THE GOVERNMENT, AND WAS REQUIRED IN ORDER TO PRESERVE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM.

TO THE AIROSOL COMPANY, INC., SEPTEMBER 3, 1969:

FURTHER REFERENCE IS MADE TO A LETTER DATED AUGUST 15, 1969, FROM YOUR ATTORNEY IN SUPPORT OF A REQUEST FOR RECONSIDERATION OF OUR DECISION OF JULY 24, 1969, 49 COMP. GEN. 48, WHEREIN WE ADVISED THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, TO TERMINATE A PURPORTED CONTRACT AWARDED TO AIROSOL UNDER INVITATION FOR BIDS NO. FPNGC-A-70283.

IN BRIEF, WE HELD IN OUR DECISION THAT THERE WAS A REASONABLE BASIS FOR CONCLUDING THAT AIROSOL'S ACTION, IN ERRONEOUSLY COMPUTING ITS BID PRICE ON ESTIMATED REQUIREMENTS 24 TIMES THE GOVERNMENT'S TRUE ESTIMATE, MAY HAVE AFFECTED THE AMOUNT OF THE BID THE COMPANY OTHERWISE WOULD HAVE MADE. WE FELT THAT THE GOVERNMENT'S ACTION IN PERMITTING CORRECTION OF THE BID AFTER OPENING, TO APPLY THE SAME INDICATED UNIT RATE TO THE GOVERNMENT'S TRUE ESTIMATED REQUIREMENTS WHICH WERE ONLY 1/24TH OF THE QUANTITY ON WHICH YOUR BID WAS BASED WAS TANTAMOUNT TO PERMITTING A SECOND BID. THIS, OF COURSE, CANNOT BE ALLOWED UNDER COMPETITIVE BIDDING PROCEDURES SINCE THE STATUTES REQUIRING ADVERTISEMENTS FOR BIDS AND THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDERS ARE DESIGNED TO ASSURE TO THE GOVERNMENT THE BENEFITS OF FULL AND FREE COMPETITION, AND THEREFORE ARE TO BE APPLIED SO AS TO AVOID ANY PARTIALITY OR FAVORITISM TO, OR ANY PREJUDICE AGAINST, ANY BIDDER. WE HAVE IN PURSUANCE OF THESE PRINCIPLES ESTABLISHED THE RULE THAT THE RIGHTS OF OTHER BIDDERS REQUIRE DENIAL OF A DOWNWARD CORRECTION OF ANY BID WHICH WOULD DISPLACE A LOWER BIDDER, EXCEPT WHERE THE CORRECT BID CAN BE ASCERTAINED SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. SEE THE CASES CITED IN OUR FIRST DECISION IN THIS MATTER.

YOUR ATTORNEY SUBMITS THAT YOU ARE ENTITLED TO RETAIN YOUR CONTRACT AND HAS REQUESTED THAT WE RESCIND OUR DECISION BECAUSE OF ANY OR ALL OF THE FOLLOWING:

(1) THE COMPTROLLER GENERAL HAS REVERSED THE ADMINISTRATIVE PROCURING OFFICE'S DETERMINATION IN A MANNER THAT IS BEYOND THE SCOPE OF HIS REVIEW AUTHORITY.

(2) IN THE CIRCUMSTANCES OF THIS CASE, THE PRINCIPLE OF ESTOPPEL SHOULD BE APPLIED AGAINST THE GOVERNMENT.

(3) THE AIROSOL CONTRACT SHOULD NOT BE DISTURBED SINCE THERE HAS BEEN PARTIAL PERFORMANCE THEREUNDER AND THE PARTIES CANNOT BE RESTORED TO THEIR STATUS QUO.

(4) THE TERMINATION OF AIROSOL'S CONTRACT IS COMPLETELY ADVERSE TO THE BEST INTERESTS OF THE GOVERNMENT.

THE POSITION TAKEN BY YOUR ATTORNEY, THAT WE HAVE EXCEEDED OUR AUTHORITY TO REVIEW AND REVERSE THE ADMINISTRATIVE ACTION IN THIS CASE, IS BASED UPON THE CONTENTION THAT WE ARE PRECLUDED FROM DECIDING DE NOVO WHETHER A MISTAKE SHOULD HAVE BEEN CORRECTED, UNLESS THE ADMINISTRATIVE DECISION DOES NOT MEASURE UP TO THE STANDARDS OF REVIEW ESTABLISHED BY THE WUNDERLICH ACT OF MAY 11, 1954, 68 STAT. 81 (41 U.S.C. 321, 322).

THE CITED ACT APPLIES ONLY TO ADMINISTRATIVE DECISIONS RENDERED PURSUANT TO A CONTRACTUAL PROVISION RELATING TO THE FINALITY OR CONCLUSIVENESS THEREOF. UNDER SECTION 2 OF THE ACT (41 U.S.C. 322) ADMINISTRATIVE DECISIONS ON QUESTIONS OF LAW MAY NOT BE MADE FINAL. SINCE MISTAKES IN BIDS ARE NOT DISPUTES ARISING UNDER A CONTRACT THERE IS NO BASIS FOR APPLYING "WUNDERLICH" STANDARDS TO THE INSTANT MATTER. HISTORICALLY, QUESTIONS CONCERNING CORRECTIONS OF MISTAKES IN BIDS WERE FOR A NUMBER OF YEARS ALL DECIDED IN THIS OFFICE, UNTIL AUTHORITY TO MAKE SUCH CORRECTIONS WAS EXPRESSLY GRANTED BY THIS OFFICE TO VARIOUS AGENCIES AND DEPARTMENTS OF THE GOVERNMENT. FOR EXAMPLE, SEE B-101323, MARCH 21, 1951, AND 38 COMP. GEN. 177 (1958). SUCH AUTHORITY WAS GRANTED SUBJECT TO THE EXPRESS CONDITION THAT THE PROCEDURE AUTHORIZED CANNOT OPERATE TO DEPRIVE A BIDDER OF HIS RIGHT TO HAVE THE MATTER DETERMINED BY THIS OFFICE. MOREOVER, FEDERAL PROCUREMENT REGULATIONS, SECTION 1-2.406-3(E) PROVIDES THAT NOTHING CONTAINED IN THE REGULATORY PROVISIONS WHICH PERMIT ADMINISTRATIVE CORRECTION OF MISTAKES, FPR 1 2.406-3, SHALL DEPRIVE THE COMPTROLLER GENERAL OF HIS RIGHT TO QUESTION THE CORRECTNESS OF ANY ADMINISTRATIVE DETERMINATION MADE THEREUNDER NOR DEPRIVE ANY BIDDER OF HIS RIGHT TO HAVE THE MATTER DETERMINED BY THE COMPTROLLER GENERAL SHOULD HE SO REQUEST. ACCORDINGLY, WE DO NOT AGREE WITH THE POSITION TAKEN THAT WE HAVE EXCEEDED OUR REVIEW AUTHORITY IN THIS MATTER.

SECONDLY, IT IS ARGUED THAT THE GOVERNMENT IS ESTOPPED FROM TERMINATING AIROSOL'S CONTRACT SINCE AN AUTHORIZED GOVERNMENT AGENT ACTED POSITIVELY IN PERMITTING CORRECTION OF AIROSOL'S BID AND AIROSOL RELIED TO ITS DETRIMENT UPON THE AMENDED CONTRACT BY SETTING ASIDE MANUFACTURING SPACE IN ITS PLANT AS WELL AS MAKING COMMITMENTS FOR VARIOUS ITEMS REQUIRED IN THE PERFORMANCE OF THIS CONTRACT.

WHILE GSA TOOK THE POSITION THAT AIROSOL'S MISTAKE WAS OBVIOUS AND ITS PRICE FOR ONE TWENTY-FOURTH OF THE ESTIMATED QUANTITY CONTEMPLATED IN ITS BID COULD BE ASCERTAINED SUBSTANTIALLY FROM THE BID BY SIMPLY DIVIDING BY 24, WE BELIEVE IT IS PLAIN THAT THE BID IN NO WAY INDICATES EITHER THAT AIROSOL INTENDED TO BID FOR THE GOVERNMENT'S TRUE ESTIMATED REQUIREMENTS, OR WHAT ITS BID THEREFOR WOULD HAVE BEEN IN VIEW OF THE REASONABLE PROBABILITY THAT AIROSOL'S BID WAS BASED IN SOME DEGREE UPON A QUANTITY DISCOUNT, THE AMOUNT OF WHICH OBVIOUSLY COULD NOT BE DETERMINED FROM THE BID ITSELF. ALTHOUGH WITHDRAWAL OF YOUR BID UNDER THESE CIRCUMSTANCES COULD HAVE BEEN PERMITTED, THE REGULATIONS PRECLUDE CORRECTION IF SUCH ACTION WOULD RESULT IN DISPLACEMENT OF ONE OR MORE LOW ACCEPTABLE BIDS UNLESS THE CORRECT BID WAS DETERMINABLE SUBSTANTIALLY FROM THE INVITATION AND BID ITSELF. SINCE IT IS OUR VIEW THAT THE CORRECTION IN QUESTION WAS IMPROPER, WE DO NOT BELIEVE THE GOVERNMENT EITHER CAN OR SHOULD BE ESTOPPED FROM TERMINATING THE PURPORTED CONTRACT WITH AIROSOL UPON RECOGNITION OF ITS IMPROPRIETY.

IN THIS REGARD WE NOTE THE OBJECTION RAISED BY YOUR ATTORNEY TO THE EFFECT THAT AIROSOL SHOULD HAVE BEEN NOTIFIED OF THE PROTEST WHEN FILED. HOWEVER, IT WAS NOT UNTIL SOMETIME AFTER RECEIPT OF THE ADMINISTRATIVE REPORT ON APRIL 17, 1969, THAT WE WERE ABLE TO CONSIDER THE MERITS OF THIS PROTEST. WHEN IT WAS DETERMINED THAT THE PROTEST MIGHT REQUIRE ACTION BY THIS OFFICE WHICH WOULD ADVERSELY AFFECT AIROSOL'S INTERESTS WE IMMEDIATELY ADVISED YOU THEREOF AND PROVIDED YOU WITH AN OPPORTUNITY TO PRESENT YOUR VIEWS, WHICH WERE IN FACT CONSIDERED PRIOR TO OUR DECISION. WE BELIEVE THEREFORE THAT SUCH ACTION DID NOT RESULT IN ANY PREJUDICE TO YOUR POSITION, AND WAS STRICTLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 20.2, TITLE 4, CODE OF FEDERAL REGULATIONS, WHICH GOVERN BID PROTEST PROCEDURES IN THIS OFFICE.

WITH RESPECT TO THE POINT RAISED THAT THE AIROSOL CONTRACT SHOULD NOT BE DISTRUBED BECAUSE THERE HAS BEEN PARTIAL PERFORMANCE THEREUNDER AND THE PARTIES INVOLVED CANNOT BE RESTORED TO THEIR STATUS QUO, WE CANNOT AGREE SINCE WE FIND NO LEGAL BASIS FOR AUTHORIZING ADDITIONAL PURCHASES OF THE SUBJECT ITEMS FROM AIROSOL UNDER AN UNAUTHORIZED CONTRACT. WE BELIEVE THE ACTION SUGGESTED WOULD SERIOUSLY JEOPARDIZE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM, AND, FURTHER, THAT THE STATUS QUO CAN BEST BE RESTORED BY AWARDING A CONTRACT FOR THE REMAINDER OF THE TERM TO THE BIDDER WHO WOULD HAVE RECEIVED THE AWARD BUT FOR THE UNAUTHORIZED CORRECTION MADE TO YOUR BID.

THE ARGUMENT IS ALSO MADE THAT TERMINATION OF AIROSOL'S CONTRACT IS COMPLETELY ADVERSE TO THE BEST INTERESTS OF THE GOVERNMENT SINCE THE ADMINISTRATION MIGHT FIND ITSELF WITHOUT A CONTRACT SOURCE SHOULD TRIO DECIDE AT THIS TIME NOT TO ACCEPT A CONTRACT. IN THIS REGARD IT IS OUR VIEW THAT THE POSITION TAKEN BY TRIO THROUGHOUT THIS PROTEST THAT THE AIROSOL CONTRACT WAS INVALID AND THAT AWARD SHOULD BE MADE TO TRIO, CONSTITUTES A MANIFESTATION OF TRIO'S INTENT TO EXTEND ITS OFFER DURING THE PENDENCY OF THE PROTEST AND WOULD PRECLUDE ANY EFFORT ON ITS PART TO REJECT AN AWARD.

FINALLY, WE HAVE NOTED YOUR ATTORNEY'S AGREEMENT WITH THE ANALYSIS IN OUR DECISION CONCERNING THE INVITATION'S LACK OF CLARITY IN STATING THE BIDDING UNITS FOR THESE ITEMS, AND THE FURTHER ARGUMENT THAT SINCE YOU DID NOT DRAFT THE LANGUAGE YOU SHOULD NOT BE HELD RESPONSIBLE FOR ANY LOSSES RESULTING THEREFORM. AS A GENERAL RULE, WE WOULD AGREE THAT A PARTY WHO DRAFTED AMBIGUOUS CONTRACT LANGUAGE COULD NOT HOLD THE OTHER CONTRACTING PARTY TO THE DRAFTER'S INTERPRETATION OF AMBIGUOUS LANGUAGE IF SUCH OTHER PARTY POSSESSED A CONTRARY, BUT REASONABLE, UNDERSTANDING OF THE AGREEMENT. HOWEVER, SUCH IS NOT THE POSTURE OF THIS CASE SINCE BOTH PARTIES WERE FULLY AWARE OF THE GOVERNMENT'S TRUE ESTIMATE AND BIDDING UNIT PRIOR TO AWARD OF THE PURPORTED CONTRACT. MOREOVER, THE LOSSES, IF ANY, OCCURRED NOT BECAUSE OF A CONTRACT ENTERED INTO WITHOUT A MUTUAL UNDERSTANDING OF ITS TERMS, BUT RATHER FROM THE UNAUTHORIZED ACCEPTANCE OF WHAT AMOUNTED TO A NEW BID AFTER OPENING BASED UPON THE BOVERNMENT'S TRUE ESTIMATED REQUIREMENTS.

FOR THE REASONS STATED ABOVE, WE MUST ADHERE TO OUR PREVIOUS DECISION.