B-176357, AUG 29, 1972

B-176357, AUG 29, 1972

BID PROTEST - MISTAKE IN BID - ESTABLISHMENT OF INTENDED BID DENIAL OF PROTEST ON BEHALF OF SAVOY CONSTRUCTION COMPANY, INC., AGAINST THE ACTIONS OF THE U.S. ARMY CORPS OF ENGINEERS IN DENYING SAVOY'S REQUEST TO CORRECT AN ALLEGED MISTAKE IN BID UNDER A CONSTRUCTION IFB, AND THE AWARD OF THE CONTRACT TO BLAKE CONSTRUCTION COMPANY, INC. SINCE SAVOY DOES NOT USE A SET PROCEDURE IN ARRIVING AT THE FIGURES FOR PROFIT AND OVERHEAD, WHICH WOULD LEND ITSELF TO ANALYSIS AND REVIEW, IT MUST BE CONCLUDED THAT THE AMOUNTS ASSERTED ARE IN THE NATURE OF ARBITRARY FIGURES NOT INDICATED OR SUBSTANTIATED BY THE WORKSHEETS OR RECORDS. IS THE VIEW OF THE COMP. GEN. THAT IT WAS INCUMBENT UPON SAVOY TO HAVE SUBMITTED SOMETHING MORE THAN ITS MERE STATEMENTS TO INDICATE THE AMOUNTS TO BE USED FOR THE ADDITIONAL PROFIT AND OVERHEAD. ACCORDINGLY, THE BID ACTUALLY INTENDED MAY NOT BE REGARDED AS HAVING BEEN ESTABLISHED BY CLEAR AND CONVINCING PROOF, AND THE PROTEST MUST BE DENIED.

TO FRIED, FRANK, HARRIS, SHRIVER & KAMPELMAN:

REFERENCE IS MADE TO YOUR LETTERS RECEIVED JUNE 30 AND AUGUST 8, 1972, WITH ENCLOSURES, PROTESTING ON BEHALF OF SAVOY CONSTRUCTION COMPANY, INC. (SAVOY), AGAINST THE ACTIONS OF THE U.S. ARMY CORPS OF ENGINEERS (CORPS) IN DENYING SAVOY'S REQUEST TO CORRECT AN ALLEGED MISTAKE-IN-BID UNDER INVITATION FOR BIDS DACA31-72-B-0091, ISSUED MAY 18, 1972, BY THE BALTIMORE DISTRICT, CORPS OF ENGINEERS, AND IN THE AWARDING OF THE CONTRACT TO BLAKE CONSTRUCTION COMPANY, INC.

THE INVITATION SOLICITED BIDS FOR THE CONSTRUCTION OF THE HARRY DIAMOND LABORATORIES, PHASE II, IN ADELPHI, MARYLAND (U.S. NAVAL ORDNANCE LABORATORIES GROUNDS). THE BID SCHEDULE CONSISTED OF SIX ITEMS AND ONE ADDITIVE ITEM. AWARD WAS TO BE MADE ON THE BASIS OF THE LOW AGGREGATE AMOUNT FOR ITEM 1 PLUS THOSE OTHER ITEMS PROVIDING THE MOST FEATURES OF WORK WITHIN THE AVAILABLE FUNDS. (FUNDS WERE AVAILABLE FOR THE SIX ITEMS.) THREE BIDS WERE RECEIVED AND OPENED ON THE SCHEDULE OPENING DATE, JUNE 23, 1972. THE TWO LOWEST BIDS AND THE GOVERNMENT'S ESTIMATE ON THE SIX ITEMS WERE AS FOLLOWS:

SAVOY BLAKE

GOVERNMENT CONSTRUCTION CONSTRUCTION

ESTIMATE CO., INC. CO., INC.

ITEM 1 $5,530,555 $4,648,000 $6,339,000

ITEM 2 738,181 700,000 570,000

ITEM 3A 8,000 10,000 10,250

3B 190,575 577,500 57,750

ITEM 4 538,571 430,000 300,000

ITEM 5 32,022 29,500 4,000

ITEM 6 874,823 803,000 758,000

TOTAL BID PRICE: $7,912,727 $7,198,000 $8,039,000

THE CORPS ADJUSTED SAVOY'S SUBMITTED BID PRICE BECAUSE OF AN OBVIOUS ERROR IN EXTENDING THE FIGURES OF ITEM 3B AND CONSIDERED SAVOY'S TOTAL BID PRICE TO BE $6,741,775. THE CORPS, HOWEVER, WAS LATER ADVISED THAT THE $7,198,000 PRICE WAS IN FACT THE BID PRICE INTENDED REGARDLESS OF THE EXTENSION ERROR IN THE BID.

SAVOY ON JUNE 24, 1972, ADVISED THE CORPS THAT AN OBVIOUS ERROR HAD BEEN DISCOVERED IN ITS BID AND REQUESTED AN OPPORTUNITY TO EXPLAIN AND TO SUBMIT PROOF OF THE ERROR IN ORDER TO REFORM UPWARD ITS BID OF $7,198,000. DURING THE COURSE OF SEVERAL MEETINGS WITH THE CORPS, SAVOY STATED THAT BECAUSE OF SEVERAL UNANTICIPATED EVENTS SAVOY HAD BEEN FORCED TO CONVERT ITS WORKSHEET FOR ITEM 1 INTO A COMPOSITE WORKSHEET FOR THE TOTAL JOB, INSTEAD OF USING A WORKSHEET FOR EACH ITEM (EXCEPT FOR ITEM 3) AND A SUMMARY SHEET AS ORIGINALLY INTENDED.

IN CONVERTING ITS ORIGINAL WORKSHEET FOR ITEM 1 INTO THE COMPOSITE WORKSHEET, SAVOY ALLEGES THAT SINCE THE COMPOSITE WORKSHEET LACKED SIMILAR CAPTIONS OF THE OTHER WORKSHEETS, SAVOY'S ESTIMATORS OMITTED THE FOLLOWING ITEMS FROM THE COMPOSITE WORKSHEET IN THE TRANSPOSITION OF THE SUBCONTRACTORS' QUOTES:

FOUNDATION PILING (ITEM 3B) $131,275

PAVING (ITEM 6) 171,580

FENCING (ITEM 6) 3,680

LANDSCAPING (ITEM 6) 135,530

SITE CONCRETE (ITEM 6) 46,000

TOTAL: $488,065

SAVOY ALLEGES THAT ITS BASE BID PRICE SHOULD HAVE BEEN COMPUTED BY TOTALLING THE COMPOSITE COST PRICE ($6,906,427) AND $488,065. TO THIS TOTAL, SAVOY CONTENDS THAT $10,000 IN LAST MINUTE ADJUSTMENTS, $20,000 FOR ADDITIONAL COST OF GENERAL CONDITIONS (OVERHEAD), $270,000 FOR PROFIT ($250,000 PLUS $20,000 FOR THE ADDITIONAL COST INCREASE OF $488,065), AND $45,000 FOR BOND COSTS SHOULD HAVE BEEN ADDED TO REACH A TOTAL ROUNDED OFF BID OF $7,739,000. IN SUPPORT OF THIS CLAIM OF REFORMATION OF THE MISTAKE, SAVOY HAS SUBMITTED ITS WORKSHEETS AND SUBCONTRACTORS' QUOTES FOR THE BID ITEMS.

THE CORPS, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) 2- 406.3(A)(3) DETERMINED THAT SAVOY HAD SUBMITTED CLEAR AND CONVINCING EVIDENCE THAT A MISTAKE HAD IN FACT BEEN MADE, BUT THAT SAVOY HAD NOT SUBMITTED CLEAR AND CONVINCING PROOF OF THE BID PRICE ACTUALLY INTENDED. ACCORDINGLY, THE CORPS DID NOT ALLOW SAVOY TO CORRECT ITS BID.

YOU CONTEND THAT SAVOY HAS ADEQUATELY PROVED, BY SUBMITTING "CLEAR AND CONVINCING" EVIDENCE, THE BID PRICE IT INTENDED TO SUBMIT AND THAT THE CORPS APPLIED AN IMPROPER STANDARD OF EVIDENCE TO ESTABLISH THE PRICE "BEYOND A SHADOW OF DOUBT" IN DENYING SAVOY'S REQUEST TO CORRECT ITS BID. REGARDING THE ARMY'S STATEMENT THAT OBJECTIVE EVIDENCE OF THE INTENDED BID PRICE HAD NOT BEEN PRESENTED, YOU NOTE THAT OUR OFFICE HAS RULED THAT A MISTAKE-IN-BID CAN BE CORRECTED EVEN IF THE MAGNITUDE OF THE MISTAKE HAS NOT BEEN SHOWN, SO LONG AS THE RANGE OF UNCERTAINTY IS RELATIVELY SMALL. ACCORDINGLY, YOU REQUEST THAT SAVOY BE PERMITTED TO CORRECT ITS MISTAKE-IN -BID, AND THAT THE CORPS BE REQUIRED TO CANCEL THE CONTRACT AND MAKE THE AWARD TO SAVOY AS THE RESPONSIBLE BIDDER SUBMITTING THE LOW RESPONSIVE BID.

OUR OFFICE HAS FREQUENTLY HELD THAT TO PERMIT CORRECTION OF AN ERROR IN BID PRIOR TO AWARD (WHERE CORRECTION WOULD NOT DISPLACE A LOWER BID), A BIDDER MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAS BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED AND THE INTENDED BID PRICE. 49 COMP. GEN. 480 (1970); B-172578, JULY 22, 1971. THE SAME BASIC REQUIREMENTS FOR THE CORRECTION OF A BID ARE FOUND IN PARAGRAPH 2- 406.3(A)(3) OF ASPR 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 ***."

SAVOY CONTENDS THAT WITH THE ADDITION OF $488,065 FOR WORK OMITTED IN ITS BID PRICE, IT WOULD NECESSARILY HAVE TO INCREASE BOTH OVERHEAD AND PROFIT BY $20,000 EACH. YOU SAY THAT SAVOY DOES NOT DERIVE ITS FIGURES FOR PROFIT OR OVERHEAD BY APPLYING PERCENTAGE FIGURES, BUT THAT IT SELECTS FIGURES FOR PROFIT AND OVERHEAD AFTER CONSIDERING ALL OF THE OTHER VARIABLE FACTORS. SINCE SAVOY DOES NOT USE A SET PROCEDURE IN ARRIVING AT THESE FIGURES, WHICH LENDS ITSELF TO AN ANALYSIS OR REVIEW BY OUR OFFICE, WE MUST CONCLUDE FROM THE RECORD THAT THE AMOUNTS ASSERTED ARE IN THE NATURE OF ARBITRARY FIGURES NOT INDICATED OR SUBSTANTIATED BY SAVOY'S AVAILABLE WORKSHEETS OR RECORDS.

WHILE EXPLANATORY STATEMENTS BY A BIDDER ARE CONSIDERED IN CONJUNCTION WITH WORKSHEETS AND OTHER EVIDENCE IN DETERMINING WHETHER HIS ALLEGED INTENDED BID PRICE HAS BEEN ADEQUATELY ESTABLISHED, WHERE SIGNIFICANT AMOUNTS ARE INVOLVED, AS HERE, WE DO NOT BELIEVE SAVOY'S STATEMENTS, STANDING ALONE, MAY BE REASONABLY REGARDED AS CONSTITUTING THE REQUIRED CLEAR AND CONVINCING EVIDENCE SO AS TO ESTABLISH THE INTENDED ADDITIONAL PROFIT AND OVERHEAD FIGURES WITHIN ANY ACCEPTABLE RANGE OR DEGREE OF CERTAINTY. ACCORDINGLY, IT IS OUR VIEW THAT IT WAS INCUMBENT UPON SAVOY TO HAVE SUBMITTED SOMETHING MORE THAN ITS MERE STATEMENTS TO INDICATE THE AMOUNTS SAVOY CONTENDS IT WOULD HAVE USED FOR THE ADDITIONAL PROFIT AND OVERHEAD IN ORDER TO HAVE SUCH FIGURES ACCEPTED IN THE ESTABLISHMENT OF THE INTENDED BID PRICE.

SINCE IT IS OUR POSITION THAT THE AMOUNTS OF THE INTENDED PROFIT AND OVERHEAD PORTION OF THE MISTAKE IN SAVOY'S BID CANNOT BE REASONABLY ASCERTAINED FROM THE EVIDENCE SUBMITTED, THE BID ACTUALLY INTENDED MAY NOT BE REGARDED AS HAVING BEEN ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE, AND CONSIDERATION OF THE OTHER ELEMENTS OF THE ALLEGED MISTAKE IS THEREFORE NOT REQUIRED.

ACCORDINGLY, YOUR PROTEST IS DENIED. SAVOY'S SUBCONTRACTOR QUOTATIONS ARE RETURNED.