B-167091, JUL. 30, 1969

B-167091: Jul 30, 1969

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HOW IT WAS MADE AND INTENDED PRICE WERE ESTABLISHED AND LOW BID AS CORRECTED REMAINED LOW. CORRECTION UNDER ASPR 2-406 WAS PROPER. INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 29 AND LETTER OF JUNE 10. THE PREVIOUSLY MENTIONED INVITATION WAS ISSUED JANUARY 23. THE SOLICITATION WAS MADE ON AN "ALL OR NONE" BASIS. EIGHT BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED MARCH 7. THE LOWEST BID RECEIVED WAS THAT OF MAR FAB COMPANY. YOUR BID WAS SECOND LOWEST RECEIVED IN THE AMOUNT OF $302. THE CONTRACTING OFFICER NOTED THAT THE PRICES QUOTED BY MAR FAB WERE SUBSTANTIALLY LOWER THAN THOSE OFFERED BY ANY OTHER BIDDERS AND THEREFORE HE SUSPECTED AN ERROR IN BID. MAR FAB ACKNOWLEDGED THAT ITS BID PRICES WERE IN ERROR AND REQUESTED A CONFERENCE TO AFFORD A REPRESENTATIVE OF THE COMPANY AN OPPORTUNITY TO PRESENT THE ORIGINAL WORKSHEETS AND BACKUP MATERIALS USED IN THE PREPARATION OF ITS BID AND TO EXPLAIN HOW THE ERROR WAS COMMITTED AND WHAT THE COMPANY HAD INTENDED TO BID.

B-167091, JUL. 30, 1969

BID PROTEST - MISTAKE IN BID DECISION TO AMERICAN AIR FILTER CO., INC., SECOND LOW BIDDER, DENYING PROTEST AGAINST AWARD BY DEFENSE PERSONNEL SUPPORT CENTER, DEFENSE SUPPLY AGENCY, TO AWARD TO MAR FAB CO., LOW BIDDER, FOR SURGICAL CABINETS ON BASIS OF CORRECTED BID. SINCE ERROR, HOW IT WAS MADE AND INTENDED PRICE WERE ESTABLISHED AND LOW BID AS CORRECTED REMAINED LOW, CORRECTION UNDER ASPR 2-406 WAS PROPER.

TO AMERICAN AIR FILTER CO., INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 29 AND LETTER OF JUNE 10, 1969, PROTESTING AWARD UNDER INVITATION FOR BIDS NO. DSA120-69-B-2315, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), DEFENSE SUPPLY AGENCY (DSA), PHILADELPHIA, PENNSYLVANIA, TO ANYONE OTHER THAN YOUR COMPANY.

THE PREVIOUSLY MENTIONED INVITATION WAS ISSUED JANUARY 23, 1969, FOR 781 EACH OF SIX DIFFERENT ITEMS OF SURGICAL INSTRUMENT AND DRESSING CABINETS FOR DELIVERY TO ATLANTA ARMY DEPOT, GEORGIA. THE SOLICITATION WAS MADE ON AN "ALL OR NONE" BASIS, WITH PRICES TO BE QUOTED F.O.B. ORIGIN AND/OR F.O.B. DESTINATION, WITH AND WITHOUT A REQUIREMENT FOR FIRST ARTICLE TESTING. EIGHT BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED MARCH 7, 1969. THE LOWEST BID RECEIVED WAS THAT OF MAR FAB COMPANY, INC., IN THE GROSS AMOUNT OF $186,224.27; YOUR BID WAS SECOND LOWEST RECEIVED IN THE AMOUNT OF $302,564.

THE CONTRACTING OFFICER NOTED THAT THE PRICES QUOTED BY MAR FAB WERE SUBSTANTIALLY LOWER THAN THOSE OFFERED BY ANY OTHER BIDDERS AND THEREFORE HE SUSPECTED AN ERROR IN BID. IN AN EFFORT TO FIND OUT WHETHER, IN FACT, AN ERROR EXISTED, THE CONTRACTING OFFICER SENT A TELEGRAM ON MARCH 7, 1969, TO MAR FAB ASKING IT TO REVIEW AND VERIFY ITS BID. ON MARCH 10, 1969, MAR FAB ACKNOWLEDGED THAT ITS BID PRICES WERE IN ERROR AND REQUESTED A CONFERENCE TO AFFORD A REPRESENTATIVE OF THE COMPANY AN OPPORTUNITY TO PRESENT THE ORIGINAL WORKSHEETS AND BACKUP MATERIALS USED IN THE PREPARATION OF ITS BID AND TO EXPLAIN HOW THE ERROR WAS COMMITTED AND WHAT THE COMPANY HAD INTENDED TO BID. THE REQUESTED CONFERENCE WAS HELD ON MARCH 13, 1969. SUBSEQUENTLY, ON APRIL 25, 1969, THE CONTRACTING OFFICER, PURSUANT TO PARAGRAPH 2-406.3 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), SUBMITTED MAR FAB'S REQUEST FOR CORRECTION OF ITS BID WITH THE ORIGINAL WORKSHEETS AND OTHER PERTINENT DOCUMENTATION TO THE OFFICE OF COUNSEL, DSA. AN ANALYSIS OF THE DOCUMENTATION SUBMITTED RESULTED IN THE DETERMINATION BY THAT OFFICE THAT THE MISTAKE ALLEGED BY MAR FAB HAD, IN FACT, OCCURRED. ALSO, IT WAS CONCLUDED FROM THE EVIDENCE FURNISHED BY MAR FAB THAT THE BID ACTUALLY INTENDED HAD BEEN CLEARLY AND CONVINCINGLY ESTABLISHED AND THAT THE ERRONEOUS INITIAL PRICES SUBMITTED BY MAR FAB WERE CORRECTABLE UNDER THE AUTHORITY OF ASPR 2-406.3 (A) (2). ON MAY 19, 1969, THE COUNSEL, DSA, DETERMINED THAT MAR FAB'S LOW BID, IF CORRECTED TO REFLECT ITS INTENDED UNIT PRICES, WOULD REMAIN LOW; THAT THE ALLEGED MISTAKE, HOW IT OCCURRED AND THE BID PRICES INTENDED WERE PROMPTLY SUPPORTED BY CLEAR AND CONVINCING EVIDENCE; AND THAT, PURSUANT TO ASPR 2- 406.3, THE BID OF MAR FAB COULD BE CORRECTED TO THE UNIT PRICES INTENDED. FOLLOWING RECEIPT OF THIS DETERMINATION AND PRIOR TO RECEIPT OF YOUR PROTEST, THE CONTRACTING OFFICER ISSUED A NOTICE OF AWARD TO MAR FAB ON MAY 29, 1969, ON THE BASIS OF THE CORRECTED PRICES, OR IN THE TOTAL AMOUNT OF $235,573.24. IN YOUR LETTER OF PROTEST YOU STATE: "* * * THE PRICE ORIGINALLY QUOTED BY MARFAB WAS OBVIOUSLY SO LOW THAT MARFAB MUST HAVE HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE DEFICIENCY, AND MODIFICATION OF THE BID SHOULD NOT HAVE BEEN PERMITTED.'FURTHERMORE, AMERICAN AIR FILTER SUBMITS THAT BOTH THE INITIAL AND AMENDED BIDS ARE SO LOW THAT IT COULD RESULT IN A DISADVANTAGEOUS SITUATION TO THE GOVERNMENT WHEREIN THE OFFERED PRICE IS LESS THAN THE ACTUAL COST, NECESSITATING AN INCREASE IN THE CONTRACT PRICE DURING THE PERIOD OF PERFORMANCE, THROUGH CHANGE ORDER OR OTHER MEANS.'* * * IT IS SUBMITTED THAT THE TIME MARFAB AMENDED ITS BID IT KNEW OF INFORMATION CONTAINED IN THE BID SUBMITTED BY AMERICAN AIR FILTER SO THAT MARFAB COULD SELECTIVELY AMEND PORTIONS OF ITS CALCULATIONS TO INCREASE ITS BID PRICE TO APPROACH, BUT NOT EXCEED, THE BID BY AMERICAN AIR LTER.'

YOUR FIRST ASSERTION THAT MAR FAB'S PRICE WAS SO LOW THAT IT MUST HAVE HAD KNOWLEDGE OF THE MISTAKE IS NOT SUBSTANTIATED BY THE RECORD BEFORE US; RATHER, THE CONTRACTING OFFICER, THE OFFICE OF COUNSEL, DPSC, AND THE COUNSEL, DSA, WERE SATISFIED FROM THE EVIDENCE SUBMITTED THAT THE ERROR WAS BONA FIDE AND UNINTENTIONAL. UPON REVIEW OF THE RECORD, WE FIND NO REASON TO DISAGREE WITH THE ADMINISTRATIVE CONCLUSIONS REACHED TO EXTEND THE RELIEF PROVIDED BY ASPR 2-406.3.

THE NEXT REASON STATED FOR YOUR PROTEST WAS THAT MAR FAB'S BID WAS SO LOW THAT IT MIGHT HAVE TO BE INCREASED BY A CHANGE ORDER. THE CONTRACTING OFFICER'S REPORT TO OUR OFFICE STATES IN PERTINENT PART: "* * * THE PROTESTED PROCUREMENT IS THE FIRST COMPETITIVE PROCUREMENT OF PRODUCTION QUANTITIES OF THE SOLICITED SUPPLIES; ACCORDINGLY, THE CONTRACTING OFFICER HAS NO INDEPENDENT BASIS FOR DETERMINING WHETHER MAR FAB'S REVISED PRICES REPRESENT THAT COMPANY'S ACTUAL COSTS OR LESS, AS SUGGESTED BY AMERICAN. HOWEVER, AMERICAN'S SPECULATION IN THIS REGARD IS REFUTED BY MAR FAB'S REPRESENTATION THAT ITS REVISED PRICES DO, IN FACT, INCLUDE FACTORS OVER AND ABOVE ACTUAL COSTS, SO THAT THE CONCERN FOR THE GOVERNMENT'S INTERESTS SHOWN BY AMERICAN BECAUSE OF MAR FAB'S -LOSS CONTRACT- APPEARS UNWARRANTED. REGARDLESS OF MAR FAB'S PRICE SITUATION, HOWEVER, THE CONTRACTING OFFICER IS WITHOUT AUTHORITY TO MODIFY ITS CONTRACT BY CHANGE ORDER OR OTHER MEANS SOLELY FOR THE PURPOSE OF IMPROVING MAR FAB'S PRICE POSITION, AND DOES NOT CONTEMPLATE THE POSSIBILITY OF PERMITTING A REDETERMINATION OF THE CONTRACT PRICE IN CONNECTION WITH ANY CHANGE ORDER OR OTHER MODIFICATION ISSUED FOR A LEGITIMATE CONTRACT PURPOSE.'

FINALLY, YOU PROTEST THAT MAR FAB AT THE TIME IT CORRECTED ITS BID WAS AWARE OF THE PRICES QUOTED BY OTHER BIDDERS AND COULD, THEREFORE, SELECTIVELY AMEND ITS BID SO AS NOT TO EXCEED THE OTHER BIDS. IN THIS REGARD, THE CONTRACTING OFFICER'S REPORT STATES: "* * * MAR FAB DID NOT, IN FACT, REQUEST PERMISSION TO CORRECT ITS PRICES ON A SELECTIVE BASIS. ITS MISTAKE CONSISTED IN THE FAILURE TO APPLY SPECIFIC PERCENTAGE FACTORS FOR GENERAL AND ADMINISTRATIVE EXPENSES AND PROFIT (15 PERCENT AND 10 PERCENT, RESPECTIVELY) TO ITS BID PRICES, AND CORRECTION OF THE MISTAKE WAS ACCOMPLISHED BY APPLYING THESE PERCENTAGE FACTORS UNIFORMLY TO ALL SUCH PRICES. * * *"

OF COURSE, AFTER BIDS ARE OPENED A BIDDER CLAIMING THAT AN ERROR EXISTED IN HIS BID WOULD HAVE KNOWLEDGE OF OTHER BIDDERS' PRICES. HOWEVER, ASPR ALLOWS BIDS TO BE CORRECTED ONLY UNDER CERTAIN CIRCUMSTANCES. ASPR 2-406 STATES IN PART:

"2-406 MISTAKES IN BIDS.

"2-406.1 GENERAL. AFTER THE OPENING OF BIDS, CONTRACTING OFFICERS SHALL EXAMINE ALL BIDS FOR MISTAKES. IN CASES OF APPARENT MISTAKES, AND IN CASES WHERE THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT A MISTAKE MAY HAVE BEEN MADE, HE SHALL REQUEST FROM THE BIDDER A VERIFICATION OF THE BID, CALLING ATTENTION TO THE SUSPECTED MISTAKE. IF THE BIDDER ALLEGES A MISTAKE, THE MATTER SHALL BE PROCESSED IN THE MANNER SET FORTH BELOW. SUCH ACTIONS SHALL BE TAKEN PRIOR TO AWARD.

"2-406.3 OTHER MISTAKES.

"/A) THE DEPARTMENTS ARE AUTHORIZED TO MAKE THE FOLLOWING ADMINISTRATIVE DETERMINATIONS IN CONNECTION WITH MISTAKES IN BIDS, OTHER THAN APPARENT CLERICAL MISTAKES, ALLEGED AFTER OPENING OF BIDS AND PRIOR TO AWARD.

"/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; * * *"

THEREFORE, SINCE THE ERROR IN MAR FAB'S BID AND ITS INTENDED BID PRICES HAVE BEEN ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE, YOUR PROTEST AGAINST THE CORRECTION OF THE BID IS DENIED. SEE 41 COMP. GEN. 160.