B-166654, MAY 23, 1969

B-166654: May 23, 1969

Additional Materials:

Contact:

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

 

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

PRESIDENT: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 10. BIDS WERE SOLICITED F.O.B. THE LISTED DESTINATIONS WERE LOCATIONS IN WEST HARTFORD. NINE BIDS WERE RECEIVED AS FOLLOWS: UNIT PRICES F.O.B. EXAMPLES OF SUCH APPARENT MISTAKES ARE: * * * OBVIOUS REVERSAL OF THE PRICE F.O.B. WAS CONSIDERED TO BE A REVERSAL OF DESTINATION AND ORIGIN PRICES. YOU WERE CONTACTED BY TELEPHONE AND TOLD THAT AN OBVIOUS CLERICAL MISTAKE HAD BEEN DISCOVERED IN YOUR BID IN THAT THE ORIGIN AND DESTINATION PRICES WERE REVERSED. YOU ARE REPORTED TO HAVE REPLIED THAT YOU WOULD CORRECT THE ERROR BY AN IMMEDIATE WIRE AND TO HAVE INQUIRED AS TO THE OTHER BIDS RECEIVED. WHICH INFORMATION WAS FURNISHED AT THAT TIME. IT IS REPORTED FURTHER THAT YOU CALLED BACK ABOUT 35 MINUTES LATER AND STATED THAT AN ERROR IN BID HAD NOT BEEN MADE AND THAT THE PRICES SHOULD BE CONSIDERED AS BID.

B-166654, MAY 23, 1969

TO MR. BENJAMIN C. BOWER, PRESIDENT:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 10, 1969, PROTESTING THE AWARD TO ANOTHER BIDDER OF A CONTRACT FOR 686,922 GUN SLINGS UNDER ROCK ISLAND ARSENAL INVITATION FOR BIDS DAAF01-69-B-0474.

BIDS WERE SOLICITED F.O.B. ORIGIN AND F.O.B. DESTINATION. THE INVITATION PROVIDED THAT BIDS ON BOTH BASES OR ON EITHER ONE OF THE TWO WOULD BE RESPONSIVE. IT STATED THAT AWARD WOULD BE MADE ON THE BASIS PROVIDING THE LOWEST OVERALL COST TO THE GOVERNMENT. IN THAT REGARD, IT PROVIDED THAT TRANSPORTATION COSTS TO THE GOVERNMENT FROM POINT OF ORIGIN TO LISTED DESTINATIONS WOULD BE TAKEN INTO ACCOUNT IN EVALUATING F.O.B. ORIGIN BIDS. THE LISTED DESTINATIONS WERE LOCATIONS IN WEST HARTFORD, CONNECTICUT; WORCHESTER, MASSACHUSETTS; AND YPSILANTI, MICHIGAN.

NINE BIDS WERE RECEIVED AS FOLLOWS:

UNIT PRICES

F.O.B. F.O.B.

DESTINATION ORIGIN LAKE STATE MFG. CORP. ANOKA, MINNESOTA

$0.5499 $0.5699 M. SLOANE MFG. CO. NEW PRAGUE, MINNESOTA 0.5649 0.5449 LITE INDUSTRIES, INC. PATERSON, NEW JERSEY 0.59 0.58 E.C.T. CORP. FAYETTEVILLE, N.C. 0.60 0.59 KINGS POINT MFG. CO. INC. FAYETTEVILLE, N.C. 0.606 0.599 PIONEER CANVAS PRODUCTS, INC. PHILADELPHIA, PENNSYLVANIA 0.649 0.629 FIEL MFG. CO. INC. NEW YORK, NEW YORK

0.79 0.765 MODEL MFG. INC. WICHITA, KANSAS 1.00 1.00 NOBLE MFG. CO. INC. HAYDENVILLE, MASS. 2.27 --

PARAGRAPH 2-406.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), IN PERTINENT PART, PROVIDES:

"APPARENT CLERICAL MISTAKES. ANY CLERICAL MISTAKE APPARENT ON THE FACE OF A BID MAY BE CORRECTED BY THE CONTRACTING OFFICER PRIOR TO AWARD, IF THE CONTRACTING OFFICER HAS FIRST OBTAINED FROM THE BIDDER WRITTEN OR TELEGRAPHIC VERIFICATION OF THE BID ACTUALLY INTENDED. EXAMPLES OF SUCH APPARENT MISTAKES ARE: * * * OBVIOUS REVERSAL OF THE PRICE F.O.B. DESTINATION AND THE PRICE F.O.B. FACTORY * * *.'

THE BID OF LAKE STATE, HIGHER F.O.B. ORIGIN THAN F.O.B. DESTINATION, WAS CONSIDERED TO BE A REVERSAL OF DESTINATION AND ORIGIN PRICES. THEREFORE, IN VIEW OF THE ABOVE-CITED ASPR, YOU WERE CONTACTED BY TELEPHONE AND TOLD THAT AN OBVIOUS CLERICAL MISTAKE HAD BEEN DISCOVERED IN YOUR BID IN THAT THE ORIGIN AND DESTINATION PRICES WERE REVERSED. YOU ARE REPORTED TO HAVE REPLIED THAT YOU WOULD CORRECT THE ERROR BY AN IMMEDIATE WIRE AND TO HAVE INQUIRED AS TO THE OTHER BIDS RECEIVED, WHICH INFORMATION WAS FURNISHED AT THAT TIME. IT IS REPORTED FURTHER THAT YOU CALLED BACK ABOUT 35 MINUTES LATER AND STATED THAT AN ERROR IN BID HAD NOT BEEN MADE AND THAT THE PRICES SHOULD BE CONSIDERED AS BID, SINCE YOU PREFERRED TO SHIP F.O.B. DESTINATION BECAUSE YOU PLANNED TO USE YOUR OWN TRUCK TO MAKE DELIVERIES TO THE EAST COAST AND TO PICK UP RAW MATERIALS ON THE RETURN TRIP. YOU WERE ASKED TO EXPLAIN HOW YOU COULD SHIP F.O.B. DESTINATION CHEAPER THAN F.O.B. ORIGIN. YOU REPLIED THAT YOU WOULD EXPLAIN IT BY AN IMMEDIATE WIRE. THE WIRE STATED: ,CONFIRMING OUR TELEPHONE CONVERSATION OF THIS DATE CLOSE COST ANALYSIS HAS PROVEN TO THIS CORP THAT THE PRICES BID ARE REALISTIC. THIS HAS BEEN ASCERTAINED FROM EXCESSIVE FREIGHT RATES FOR RAW MATERIALS RECEIVED FROM NEW ENGLAND. OUR STUDY HAS PROVEN THAT THE PICKING UP OF RAW MATERIAL AND DELIVERY OF COMPLETED ITEMS SHOWS US A PRICE DIFFERENTIAL OF $1.00 PER CASE AS ADVERSE TO ?80 DIFFERENTIAL IN OUR QUOTED PRICES. THEREFORE OUR PRICE REMAINS FIRM AS BID" THE BID WAS REFERRED TO THE CONTRACTING OFFICE'S TRANSPORTATION SECTION WHICH ADVISED THAT, IN THE OPINION OF THAT OFFICE, THERE IS NO SITUATION WHERE SHIPMENTS CAN BE MADE AT A LOWER COST F.O.B. DESTINATION THAN F.O.B. ORIGIN.

THE GENERAL COUNSEL, ARMY MATERIEL COMMAND, REVIEWED THE MATTER AND CONCLUDED AS FOLLOWS:

"ON THE BASIS OF THE INFORMATION FURNISHED BY LAKE STATE MANUFACTURING CORP.; ON THE BASIS OF THE FINDING OF THE TRANSPORTATION ANALYST THAT IT IS IMPOSSIBLE TO FURNISH AN ITEM AT A LOWER COST F.O.B. DESTINATION THAN F.O.B. ORIGIN; UPON ANALYSIS OF THE BIDS AND COST OF SHIPPING AS COMPUTED BY MINNESOTA COMPANIES' BIDDING ON THE ITEM IS ?02 AND WITH THE KNOWLEDGE THAT THE DESTINATIONS OF SHIPMENT ARE TO THREE DIFFERENT SHIPPING POINTS; IT IS REASONABLE TO CONCLUDE THAT LAKE STATE MANUFACTURING CORP. REVERSED ITS PRICES FOR F.O.B. DESTINATION AND F.O.B. ORIGIN. THESE INDICATIONS OF ERROR ARE SO CLEAR AS TO REASONABLY JUSTIFY THE CONTRACTING OFFICER TO REACH THE CONCLUSION THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO THE OTHER BONA FIDE BIDDERS AND THE BIDS OF LAKE STATE MANUFACTURING CORP. SHOULD, THEREFORE, BE REJECTED. AWARD OF THE CONTRACT SHOULD THEN BE MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.'

THE CONTRACT FOR THE GUN SLINGS WAS AWARDED TO M. SLOANE MANUFACTURING COMPANY OF NEW PRAGUE, MINNESOTA, ON APRIL 9, 1969. BY TELEGRAM OF APRIL 10, 1969, TO OUR OFFICE, YOU PROTESTED THE AWARD. IN THE TELEGRAM YOU STATED THAT LAKE STATE COULD DELIVER THE ARTICLES AT A LOWER RATE THAN THE GOVERNMENT AND THAT YOUR BID WAS PREPARED ON THAT BASIS.

THIS CASE IS SIMILAR TO THE ONE CONSIDERED IN DECISION B-147397 OF OCTOBER 24, 1961. IN THAT CASE BIDDERS WERE REQUIRED TO BID UPON LEASING FACILITIES TO THE GOVERNMENT ON TWO DIFFERENT BASES. ON ONE BASIS THE LESSOR WOULD MAINTAIN THE PREMISES AND ON THE OTHER THE GOVERNMENT WOULD MAINTAIN THEM. A BID RECEIVED FROM ONE BIDDER, OVERLOOK PROPERTIES, INC., WAS HIGHER ON THE GOVERNMENT MAINTENANCE BASIS THAN IT WAS ON THE LESSOR MAINTENANCE BASIS. THE BID WAS THE LOWEST RECEIVED ON THE BASIS OF LESSOR MAINTENANCE BUT NOT ON GOVERNMENT MAINTENANCE. SHORTLY AFTER THE OPENING OF BIDS THE BIDDER ALLEGED AN ERROR IN BID ON THE BASIS THAT BIDS FOR LESSOR MAINTENANCE AND GOVERNMENT MAINTENANCE HAD BEEN TRANSPOSED. THEN, SUBSEQUENTLY, THE BIDDER ADVISED THAT THE BID FOR LESSOR MAINTENANCE WAS CORRECT AND THAT THERE WAS AN ERROR IN THE BID FOR GOVERNMENT MAINTENANCE. OUR OFFICE CONCLUDED THAT BOTH THE LESSOR MAINTENANCE AND GOVERNMENT MAINTENANCE BIDS SUBMITTED BY OVERLOOK SHOULD BE DISREGARDED. IN SUPPORT OF THAT CONCLUSION IT WAS STATED:

"SINCE THE BID OF OVERLOOK PROPERTIES, INC., SHOWED HIGHER ANNUAL RENTALS FOR GOVERNMENT MAINTENANCE THAN IT SHOWED FOR LESSOR MAINTENANCE, THE BID IS OBVIOUSLY ERRONEOUS ON ITS FACE WITH RESPECT TO ONE OR THE OTHER, OR BOTH. HAD THE REPRESENTATIVES NOT ALLEGED ERROR SHORTLY AFTER THE BID OPENING, THE OBVIOUS INCONSISTENCY WOULD HAVE BEEN OF SUFFICIENT IMPORT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF A POSSIBLE ERROR AND WOULD HAVE REQUIRED HIM TO CALL IT TO THE BIDDER'S ATTENTION AND TO REQUEST CONFIRMATION OF THE BID BEFORE IT COULD HAVE BEEN ACCEPTED IN GOOD FAITH. EXAMINATION OF THE ABSTRACT OF BIDS, SHOWING THE AMOUNTS QUOTED BY ALL BIDDERS FOR THE BASIC TERM AND THE FIVE EXTENSIONS FOR BOTH GOVERNMENT AND LESSOR MAINTENANCE, REASONABLY ESTABLISH, AS ALLEGED BY THE TWO REPRESENTATIVES OF OVERLOOK PROPERTIES, INC., ON SEPTEMBER 29, THAT THE PRICES ON THE TWO SCHEDULES WERE IN FACT REVERSED. HOWEVER, AFTER BEING AWARE OF THE SITUATION FOR FOUR DAYS, OVERLOOK PROPERTIES, INC., ALLEGES THAT THE AMOUNT SHOWN IN THE BID FOR LESSOR MAINTENANCE IS CORRECT AND THAT ONLY THE QUOTATION FOR GOVERNMENT MAINTENANCE IS ERRONEOUS, AND REQUESTS THAT THE BID BE CONSIDERED AS SUBMITTED. ON THIS BASIS THE BID WOULD BE LOW ON LESSOR MAINTENANCE, WHEREAS, IF THE PRICES FOR THE TWO SCHEDULES WERE REVERSED, NEITHER WOULD BE LOW. THE BIDDER HAS PLACED HIMSELF IN A POSITION, WHETHER INTENTIONALLY OR NOT, WHERE AFTER THE OPENING OF THE BIDS HE HAD THE OPTION OF REQUESTING THAT THE BID PRICES ON THE TWO SCHEDULES BE REVERSED WHICH THE GOVERNMENT, UNDER THE CIRCUMSTANCES, COULD HARDLY HAVE LOGICALLY DENIED, OR CLAIMING THAT THE PRICES SHOWN ON EITHER ONE OF THE TWO SCHEDULES WAS CORRECT AND THE OTHER WAS ERRONEOUS. A BIDDER MAY NOT BE PERMITTED TO STAND ON ITS APPARENTLY ERRONEOUS BID AND MAKE A CONTRACT TO WHICH IT WOULD NOT HAVE BEEN ENTITLED BUT FOR THE ERROR. THE PRESERVATION OF FAIRNESS IN THE COMPETITIVE BID SYSTEM PRECLUDES GIVING A BIDDER THE RIGHT TO MAKE SUCH AN ELECTION AFTER THE RESULTS OF THE BIDDING ARE SHOWN. 35 COMP. GEN. 33; 37 ID. 579; AND 39 ID. 185.'

WE BELIEVE THAT THE FOREGOING HAS EQUAL APPLICATION TO THE IMMEDIATE SITUATION. BY DESIGN OR BY INADVERTENCE, LAKE STATE HAS PLACED ITSELF IN A POSITION WHERE IT COULD SECOND GUESS OTHER BIDDERS AFTER BIDS WERE OPENED. IF IT ACTUALLY INTENDED THE LOWER DESTINATION PRICE BID, IT COULD HAVE PRECLUDED ANY MISUNDERSTANDING IN THE MATTER BY SIMPLY BIDDING ON THE DESTINATION BASIS ALONE AS THE INVITATION PERMITTED. WHERE A BIDDER INTENDS A LOWER DESTINATION PRICE THAN AN ORIGIN PRICE, AND THE INVITATION PERMITS BIDDING ON A SINGLE BASIS, THERE DOES NOT APPEAR TO BE ANY PURPOSE IN BIDDING ORIGIN ALSO SINCE THE ORIGIN BID WOULD BE EFFECTIVELY ELIMINATED BY THE BIDDER'S LOWER DESTINATION BID.

IN VIEW OF THE FOREGOING, OUR OFFICE CONCURS IN THE ADMINISTRATIVE DISPOSITION OF THE LAKE STATE BID. THE PROTEST IS ACCORDINGLY DENIED.