B-173031, SEP 17, 1971

B-173031: Sep 17, 1971

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UNDER AN IFB ISSUED BY THE NATIONAL PARKS SERVICE WAS ERRONEOUS. FINDS THAT THERE WAS EVIDENCE PRODUCED SUFFICIENT TO MEET THESE TESTS. AWARD SHOULD HAVE BEEN MADE TO ARUNDEL ON THE BASIS OF ITS ORIGINAL LOW BID. GAO WILL NOT RECOMMEND THAT THE AWARDED CONTRACT BE DISTURBED AT THIS TIME. SECRETARY: REFERENCE IS MADE TO A LETTER DATED JUNE 8. THE WORK TO BE PERFORMED WAS DIVIDED INTO 20 ITEMS. SIX BIDS WERE RECEIVED AND OPENED ON MARCH 25. 486 WAS SUBMITTED BY ARUNDEL ASPHALT PRODUCTS. 817 AND THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $194. THAT AWARD WILL BE MADE TO ONE BIDDER ON THE BASIS OF THE LOW BID FOR ALL BID ITEMS ACCEPTED. THE LOW BID WAS SUBMITTED. THE GOVERNMENT ESTIMATE IS $194.

B-173031, SEP 17, 1971

BID PROTEST - MISTAKE IN BID - ADMINISTRATIVE DETERMINATION - CORRECTIVE MEASURES DECISION THAT THE DETERMINATION MADE BY THE DIRECTOR, OFFICE OF SURVEY AND REVIEW, REGARDING THE PROTEST OF ARUNDEL ASPHALT PRODUCTS, INC. AGAINST THE ADMINISTRATIVE DECISION NOT TO ALLOW CORRECTION OF AN ALLEGED ERROR IN ITS LOW BID, UNDER AN IFB ISSUED BY THE NATIONAL PARKS SERVICE WAS ERRONEOUS. THE DIRECTOR FOUND THAT WHILE THE ERROR COULD BE PROVEN, THE INTENDED BID COULD NOT BE DETERMINED FROM THE WORKSHEET AND THEREFORE THE BID SHOULD BE REJECTED. IN ORDER TO PERMIT CORRECTION OF AN ERROR IN BID PRIOR TO AWARD, A BIDDER MUST SUBMIT "CLEAR AND CONVINCING EVIDENCE" THAT AN ERROR HAD BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURED, AND THE INTENDED BID PRICE. FROM AN EXAMINATION OF THE DOCUMENTS, THE COMP. GEN. FINDS THAT THERE WAS EVIDENCE PRODUCED SUFFICIENT TO MEET THESE TESTS. WHILE, AS A MINIMUM, AWARD SHOULD HAVE BEEN MADE TO ARUNDEL ON THE BASIS OF ITS ORIGINAL LOW BID, GAO WILL NOT RECOMMEND THAT THE AWARDED CONTRACT BE DISTURBED AT THIS TIME.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED JUNE 8, 1971, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, FURNISHING A REPORT ON THE PROTEST OF ARUNDEL ASPHALT PRODUCTS, INC., AGAINST THE ADMINISTRATIVE DECISION NOT TO CORRECT ITS LOW BID SUBMITTED UNDER INVITATION FOR BIDS (IFB) NO. 10, ISSUED BY THE NATIONAL PARK SERVICE, WASHINGTON, D. C.

THE INVITATION, ISSUED ON FEBRUARY 11, 1971, SOLICITED BIDS FOR THE CONSTRUCTION OF THE CHILDREN'S FARM ENTRANCE ROAD, OXON COVE PARK, PRINCE GEORGES COUNTY, MARYLAND. THE WORK TO BE PERFORMED WAS DIVIDED INTO 20 ITEMS.

SIX BIDS WERE RECEIVED AND OPENED ON MARCH 25, 1971. THE LOWEST AGGREGATE TOTAL BID IN THE AMOUNT OF $137,486 WAS SUBMITTED BY ARUNDEL ASPHALT PRODUCTS, INC. THE FIVE OTHER AGGREGATE TOTAL BIDS RANGED FROM $143,666 TO $212,817 AND THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $194,765.

BY LETTER DATED MARCH 26, 1971, ARUNDEL ADVISED THE CONTRACTING OFFICER THAT A CLERICAL ERROR HAD BEEN MADE IN ITS BID ON ITEM 7 IN THAT IT HAD INTENDED TO QUOTE A UNIT PRICE OF $2.40 INSTEAD OF $0.24 PER SQUARE YARD FOR THE 2,700 SQUARE YARDS OF SOIL-AGGREGATE BASE COURSE, GRADING B, 12 INCHES THICK. THE CORPORATION REQUESTED THAT THE UNIT PRICE FOR ITEM 7 BE CORRECTED TO READ $2.40 PER SQUARE YARD, OR IN THE ALTERNATIVE, THE CONTRACT BE AWARDED TO ARUNDEL ON THE BASIS OF ITS ORIGINAL BID PRICE FOR ITEM 7. IN SUPPORT OF ITS ALLEGATION OF ERROR, ARUNDEL SUBMITTED ITS ORIGINAL WORKSHEET WHICH SHOWS A UNIT PRICE OF $2.40 AND AN EXTENDED TOTAL PRICE OF $648 FOR 2,700 SQUARE YARDS OF 12 INCH SOIL AGGREGATE BASE (IFB ITEM 7). USING A UNIT PRICE OF $2.40 FOR A QUANTITY OF 2,700 SQUARE YARDS, THE CORRECT EXTENDED TOTAL WOULD BE $6,480.

AFTER CONSIDERATION OF THE DOCUMENTARY EVIDENCE SUBMITTED IN SUPPORT OF THE ALLEGED ERROR, THE DIRECTOR, OFFICE OF SURVEY AND REVIEW, DEPARTMENT OF THE INTERIOR, UNDER DATE OF APRIL 29, 1971, MADE THE FOLLOWING DETERMINATION REGARDING ARUNDEL'S REQUEST FOR CORRECTION OF ITS BID:

"DETERMINATION RESPECTING A MISTAKE IN BID BEFORE AWARD

ARUNDEL ASPHALT PRODUCTS, INC.,

LANHAM, PRINCE GEORGES COUNTY, MARYLAND -

NATIONAL PARK SERVICE INVITATION FOR BIDS 10 -

CONSTRUCTION OF CHILDREN'S FARM ENTRANCE ROAD,

OXON COVE PARK, PRINCE GEORGES COUNTY, MARYLAND

"PURSUANT TO THE AUTHORITY VESTED IN THE DIRECTOR, OFFICE OF SURVEY AND REVIEW, I HEREBY FIND AND DETERMINE:

"ON FEBRUARY 11, 1971, THE NATIONAL PARK SERVICE SOLICITED BIDS FOR FURNISHING ALL LABOR, PLANT, EQUIPMENT, MATERIAL, AND SUPPLIES AND PERFORMING ALL OPERATIONS IN CONNECTION WITH THE CONSTRUCTION OF CHILDREN'S FARM ENTRANCE ROAD, OXON HILL, PRINCE GEORGES COUNTY, MARYLAND.

"THE BID SCHEDULE PROVIDES, INTER ALIA, THAT AWARD WILL BE MADE TO ONE BIDDER ON THE BASIS OF THE LOW BID FOR ALL BID ITEMS ACCEPTED, WITH NO AWARD FOR INDIVIDUAL ITEMS. THE BID SCHEDULE FURTHER CONTAINS PLACES FOR LUMP SUM OR UNIT PRICES AND EXTENDED AMOUNTS FOR TWENTY INDIVIDUAL ITEMS.

"OF THE SIX BIDS RECEIVED, THE LOW BID WAS SUBMITTED, FOR A TOTAL OF $137,486, BY ARUNDEL ASPHALT PRODUCTS, INC., HEREIN THE BIDDER. OTHER BIDS VARY FROM A SECOND LOW OF $143,666 TO A HIGH OF $212,817. THE GOVERNMENT ESTIMATE IS $194,765.

"BIDS WERE OPENED ON MARCH 25, 1971, AND ON MARCH 26, 1971, THE BIDDER CLAIMED AN ERROR IN ITS BID FOR ITEM NO. 7 WHICH CALLS FOR A PRICE FOR 2,700 SQUARE YARDS OF SOIL-AGGREGATE BASE COURSE, GRADING B, 12 INCHES THICK. THE BIDDER QUOTES A UNIT PRICE OF $.24 AND AN EXTENDED AMOUNT OF $648. OTHER BIDS RANGE FROM UNIT PRICES OF $2.50 TO $3.00, WITH THE GOVERNMENT ESTIMATE OF $3.00, AND WITH CORRESPONDING TOTAL PRICES FOR THE ITEM $6,750 - $8,100. THE BIDDER ASSERTS AN INTENDED BID OF $2.40 INSTEAD OF THE $.24 SHOWN ON THE BID. THE EXTENDED OR TOTAL AMOUNT BID FOR SAID ITEM NO. 7 INDICATES NO ERROR IN THE MULTIPLICATION OF THE QUANTITY WITH THE UNIT PRICE AS QUOTED.

"THUS THE BIDDER SEEKS A CHANGE IN THE ITEM NO. 7 PRICE TO 'THE INTENDED $2.40 IN OUR BID', WHICH CHANGE WOULD, IF PERMITTED PERMIT THE BIDDER TO REMAIN THE LOW BIDDER AT A TOTAL BID OF $143,318.

"THE WORKSHEETS SUBMITTED TO SUPPORT THE CLAIM OF MISTAKE CONTAIN NO INFORMATION RELATIVE TO OVERHEAD AND PROFIT AND INDICATE THAT THE BID AS FILED MAY HAVE BEEN UNBALANCED. IT IS THEREFORE NOT POSSIBLE TO DETERMINE SPECIFICALLY WHAT THE BID, PROPERLY COMPUTED, WOULD HAVE BEEN.

"ACCORDINGLY, IT IS HEREBY DETERMINED THAT ALTHOUGH A MISTAKE IN BID IS RECOGNIZED AND ESTABLISHED, THERE IS NO SATISFACTORY OR CONVINCING EVIDENCE SHOWN TO SUPPORT THE CLAIM OF THE INTENDED BID. THE BIDDER IS THEREFORE PERMITTED TO WITHDRAW ITS BID ON SAID IFB 10, AND THE CONTRACTING OFFICER IS DIRECTED TO DISREGARD THE BID OF ARUNDEL ASPHALT PRODUCTS, INC."

IT IS NOTED THAT ALTHOUGH ARUNDEL REQUESTED THAT THE CONTRACT BE AWARDED TO IT ON THE BASIS OF ITS ORIGINAL BID IF CORRECTION OF ITS MISTAKE WAS NOT PERMITTED, THE DETERMINATION DID NOT MAKE A FINDING IN THAT REGARD.

OUR OFFICE HAS HELD THAT, TO PERMIT CORRECTION OF AN ERROR IN BID PRIOR TO AWARD, A BIDDER MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAD BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED, AND THE INTENDED BID PRICE. SEE 49 COMP. GEN. 480, 482 (1970). THE SAME BASIC REQUIREMENTS FOR THE CORRECTION OF A BID ARE FOUND IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1-2.406-3(A)(2) WHICH PROVIDES:

"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; *** "

THE DIRECTOR, OFFICE OF SURVEY AND REVIEW, PURSUANT TO THE AUTHORITY DELEGATED TO HIM UNDER FPR 1-2.406-3(B), CONCLUDED THAT THE INFORMATION SUBMITTED IN SUPPORT OF ARUNDEL'S REQUEST FOR BID CORRECTION CONSTITUTES CLEAR AND CONVINCING EVIDENCE OF A MISTAKE IN BID BUT NOT OF THE BID ACTUALLY INTENDED. THE DIRECTOR STATES IN HIS DETERMINATION THAT THE WORKSHEETS SUBMITTED TO SUPPORT THE CLAIM OF MISTAKE CONTAIN NO INFORMATION RELATIVE TO OVERHEAD AND PROFIT; THAT THE WORKSHEETS INDICATE THAT THE BID AS FILED MAY HAVE BEEN UNBALANCED; AND THAT IT IS THEREFORE NOT POSSIBLE TO DETERMINE SPECIFICALLY WHAT THE BID, PROPERLY COMPUTED, WOULD HAVE BEEN.

WE HAVE REVIEWED THE WORKSHEETS THAT THE DIRECTOR, SURVEY AND REVIEW, HAD BEFORE HIM IN CONNECTION WITH THE ALLEGED ERROR AND WE DO NOT AGREE THAT THERE IS NO CONVINCING EVIDENCE OF THE INTENDED BID PRICE FOR ITEM 7. THE BIDDER'S SUMMARY WORKSHEET SHOWS A UNIT PRICE OF $2.40 FOR THE 12 INCH SOIL-AGGREGATE BASE COURSE COVERED BY ITEM 7 OF THE BIDDING SCHEDULE. HOWEVER, THE UNIT PRICE HAD BEEN EXTENDED INCORRECTLY TO $648 RATHER THAN CORRECTLY TO $6,480. FURTHER, THE BACKUP WORKSHEET ON THE SOIL-AGGREGATE BASE COURSE STATES "12" 2.40" AND A COMPUTATION ABOVE IT BASED ON COST AND PROFIT IS TOTALLED AT $3.60. NUMERICAL NOTATIONS IN FRONT OF THE 12 INCH BASE COURSE PRICE AND THE PRICES FOR 4 INCH AND 8 INCH BASE COURSE, LISTED AS SEPARATE ITEMS IN THE INVITATION, INDICATE THESE PRICES ARE DERIVATIVES OF THE $3.60 TOTAL. ALSO, THE BACKUP WORKSHEET STATES:

"8" $1.60

4" .80 HANDWORK (3' WIDE) BID: 1.20"

THUS, THE $2.40 PRICE IS A PART OF THE PATTERN OF $.80 FOR EACH FOUR INCHES OF SOIL AGGREGATE. MOREOVER, THE SUMMARY WORKSHEET SHOWS THAT THE BID WAS COMPUTED FOR EACH ITEM BY EXTENDING THE UNIT PRICE FOR THE DESIGNATED QUANTITY TO ARRIVE AT EXTENDED PRICES FOR EACH ITEM WHICH WERE THEN ADDED TO ARRIVE AT A TOTAL BID PRICE. THE SUMMARY SHEET DOES NOT SHOW ANY APPLICATION OF PROFIT OR OVERHEAD TO THE EXTENDED AMOUNTS BEFORE ARRIVING AT A TOTAL BID PRICE. THEREFORE, THE PROFIT AND OVERHEAD MUST BE INCLUDED IN THE BIDDER'S UNIT PRICES. THIS SEEMS TO BE BORNE OUT BY THE FACT THAT IN ARRIVING AT THE $3.60 FIGURE PREVIOUSLY REFERRED TO THE BIDDER ADDED A 10 PERCENT FACTOR FOR PROFIT. IT IS TRUE THAT NO OVERHEAD FACTOR IS STATED, BUT IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT THE BIDDER INTENDED THE PROFIT FACTOR TO COVER THAT CONTINGENCY SINCE NO SEPARATE FACTOR WAS STATED FOR OVERHEAD.

HAVING THE WORKSHEETS BEFORE HIM, THE DIRECTOR, SURVEY AND REVIEW, DETERMINED THAT ARUNDEL HAD MADE AN ERROR IN BID ON ITEM 7. THIS HAD TO BE BASED UPON THE FACT THAT ARUNDEL HAD SHOWN $.24 FOR ITEM 7 WHEN THE WORKSHEETS SHOWED THAT A DIFFERENT PRICE WAS INTENDED. IT SEEMS TO US THAT THE SAME FIGURE ($2.40) IN THE WORKSHEETS THAT SHOWS THAT THE BIDDER MADE AN ERROR IN THE BID SHOWS WHAT THE INTENDED BID WAS. THEREFORE, IT WAS INCONSISTENT TO FIND THAT THE WORKSHEETS WHICH ESTABLISHED THAT AN ERROR IN BID HAD BEEN MADE DID NOT CONVINCINGLY ESTABLISH THE INTENDED BID IN THE CIRCUMSTANCES.

THE DIRECTOR, SURVEY AND REVIEW, STATED IN THE DETERMINATION THAT THE BID AS FILED MAY HAVE BEEN UNBALANCED AND IT WAS THEREFORE NOT POSSIBLE TO DETERMINE THE INTENDED BID. HOWEVER, THE WORKSHEETS REVEAL THAT THE INTENDED UNIT PRICE FOR ITEM 7 WAS $2.40 AND THAT THE ERROR OCCURRED IN EXTENDING THAT PRICE FOR THE TOTAL ESTIMATED QUANTITY INVOLVED. THE WORKSHEETS SHOW THAT THE TOTAL BID PRICE FOR THE WORK WAS ARRIVED AT BY ADDING THE EXTENDED PRICES FOR ALL THE ITEMS. THUS, SINCE THE PRICE ON ITEM 7 WAS INTENDED TO BE $2.40 PER SQUARE YARD, IT WAS A MATTER OF SIMPLE ARITHMETIC TO CORRECT THE EXTENDED PRICE AND DETERMINE THE INTENDED TOTAL BID PRICE WHICH WOULD HAVE BEEN LESS THAN THE NEXT LOW BID.

THERE IS NEXT FOR CONSIDERATION THE QUESTION WHETHER ONCE HAVING REFUSED ARUNDEL PERMISSION TO CORRECT ITS BID, IT WAS PROPER TO REFUSE THE REQUEST THAT AWARD BE MADE ON THE BASIS OF THE ORIGINAL BID.

IN THE LETTER OF JUNE 8, 1971, THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION STATES THAT IN VIEW OF OUR DECISION B-151424, JUNE 21, 1963, REPORTED IN 42 COMP. GEN. 723, IT WOULD HAVE BEEN IMPROPER TO HAVE AWARDED A CONTRACT TO ARUNDEL ON THE BASIS OF ITS ORIGINAL BID.

IN 42 COMP. GEN. 723, WE HELD (QUOTING THE SYLLABUS):

"ACCEPTANCE OF AN ERRONEOUS BID AFTER THE LOW BIDDER HAS BEEN DENIED PERMISSION TO HAVE HIS BID CORRECTED TO INCLUDE INADVERTENTLY OMITTED TRANSPORTATION COSTS BECAUSE THE EVIDENCE DID NOT ESTABLISH THE INTENDED BID PRICE OR THAT THE BID AS CORRECTED WOULD REMAIN THE LOW BID WOULD BE PREJUDICIAL TO OTHER BIDDERS AND, THEREFORE, THE BIDDER MAY NOT UPON HIS REQUEST RECEIVE AN AWARD ON THE BASIS OF THE ORIGINAL BID."

HOWEVER, ON PAGE 725 OF THE DECISION, WE STATED THAT, ALTHOUGH CORRECTION OF A LOW BID COULD NOT BE PERMITTED BECAUSE THE AMOUNT OF THE INTENDED BID WAS NOT ESTABLISHED WITH CERTAINTY REQUIRED BY THE RULES APPLICABLE TO CORRECTION OF MISTAKES IN BIDS, THE ACCEPTANCE OF SUCH A LOW BID WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS IF THE EVIDENCE CLEARLY INDICATED THAT THE BID WOULD HAVE BEEN THE LOWEST ABSENT ERROR. ALSO SEE B-168673, APRIL 7, 1970; B-165405, OCTOBER 24, 1968; AND B-155432, DECEMBER 1, 1964. SINCE THE EVIDENCE OF RECORD CLEARLY INDICATES THAT THE ARUNDEL BID WOULD HAVE REMAINED THE LOWEST IF CORRECTED, IT SHOULD NOT HAVE BEEN NECESSARY TO CONSIDER ARUNDEL'S REQUEST TO HAVE ITS ORIGINAL BID CONSIDERED. HOWEVER, SINCE THE EVIDENCE IS SUFFICIENT TO ESTABLISH THE INTENDED BID, THERE SHOULD NOT HAVE BEEN ANY DOUBT THAT ARUNDEL WOULD HAVE BEEN LOW BIDDER IF NO ERROR OCCURRED. THEREFORE, WE ARE OF THE OPINION THAT, AS A MINIMUM, AFTER HAVING REFUSED CORRECTION OF THE BID, AN AWARD SHOULD HAVE BEEN MADE TO ARUNDEL ON THE BASIS OF ITS ORIGINAL BID AS REQUESTED.

ALTHOUGH OUR OFFICE DOES NOT RECOMMEND THAT THE AWARDED CONTRACT BE DISTURBED AT THIS TIME, WE ARE BRINGING THE MATTER TO YOUR ATTENTION TO PRECLUDE A RECURRENCE OF THE SITUATION IN FUTURE CASES.