B-177955, MAR 22, 1973

B-177955: Mar 22, 1973

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IF THE FACTORS WHICH RAND INCLUDED FOR THE REST OF ITS BID FOR MARKUP AND BOND ARE ADDED TO THE ALLEGEDLY OMITTED COST ITEM. THE FACTS CONCERNING THE ALLEGED ERROR ARE NOT SUFFICIENTLY CLEAR TO WARRANT CORRECTION OF THE BID SINCE THERE IS A REASONABLE BASIS FOR ARGUMENT THAT PUBLIC CONFIDENCE IN THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BE ADVERSELY AFFECTED THEREBY. SUPPLY SERVICE VETERANS ADMINISTRATION CENTRAL OFFICE: REFERENCE IS MADE TO LETTER 134C. FIVE BIDS WERE RECEIVED AND OPENED ON OCTOBER 31. THE ABSTRACT SHOWS THE AMOUNTS OF THE BIDS WERE AS FOLLOWS: RAND $221. 400 THE GOVERNMENT ESTIMATE FOR THE PROJECT WAS $351. IT IS REPORTED THAT WITHIN ONE HOUR AFTER BID OPENING.

B-177955, MAR 22, 1973

BID CORRECTION - ALLEGED MISTAKE IN LOW BID - PREJUDICE TO BIDDERS DECISION DENYING CORRECTION TO THE LOW BID OF A. RAND CORPORATION, AND DIRECTING ITS WITHDRAWAL FROM AWARD CONSIDERATION UNDER AN IFB ISSUED BY THE DEPARTMENT OF MEDICINE AND SURGERY, VETERANS ADMINISTRATION, FOR CONSTRUCTION OF A CORONARY CARE UNIT AT LONG BEACH, CALIF. IF THE FACTORS WHICH RAND INCLUDED FOR THE REST OF ITS BID FOR MARKUP AND BOND ARE ADDED TO THE ALLEGEDLY OMITTED COST ITEM, IT WOULD NO LONGER BE THE LOW BIDDER, AND CORRECTION OF ITS BID WOULD BE PREJUDICIAL TO THE OTHER BIDDERS. SEE 42 COMP. GEN. 723, 725 (1963). IN ANY CASE, THE FACTS CONCERNING THE ALLEGED ERROR ARE NOT SUFFICIENTLY CLEAR TO WARRANT CORRECTION OF THE BID SINCE THERE IS A REASONABLE BASIS FOR ARGUMENT THAT PUBLIC CONFIDENCE IN THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BE ADVERSELY AFFECTED THEREBY. SEE 48 COMP. GEN. 748, 751 (1969).

TO DIRECTOR, SUPPLY SERVICE VETERANS ADMINISTRATION CENTRAL OFFICE:

REFERENCE IS MADE TO LETTER 134C, DATED JANUARY 31, 1973, WITH ENCLOSURES, FROM THE DIRECTOR OF SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN IN REGARD TO THE BID OF THE A. RAND CORPORATION (RAND), SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 600-155-73.

THE INVITATION, ISSUED BY THE CONTRACTING OFFICER, VA WADSWORTH HOSPITAL CENTER, LOS ANGELES, CALIFORNIA, SOLICITED BIDS FOR CONSTRUCTION OF AN 11- BED CORONARY CARE UNIT ON THE 11TH FLOOR OF THE VETERANS ADMINISTRATION HOSPITAL, LONG BEACH, CALIFORNIA.

FIVE BIDS WERE RECEIVED AND OPENED ON OCTOBER 31, 1972. THE ABSTRACT SHOWS THE AMOUNTS OF THE BIDS WERE AS FOLLOWS:

RAND $221,840

BIG 4 CONSTRUCTION CO. 238,900

JOHNSON-SCURLOCK CO. 256,600

GEO-STRUCTORS 257,000

MITCHELL CONSTRUCTION CO. 332,400

THE GOVERNMENT ESTIMATE FOR THE PROJECT WAS $351,300.

IT IS REPORTED THAT WITHIN ONE HOUR AFTER BID OPENING, THE LOW BIDDER, RAND, CONTACTED THE VETERANS ADMINISTRATION, LOS ANGELES OFFICE AND REQUESTED AN IMMEDIATE APPOINTMENT WITH THE CONTRACTING OFFICER. THIS MEETING WAS HELD ON THE SAME DAY, AT WHICH TIME RAND ALLEGED A $16,000 ERROR IN ITS BID PRICE. IT IS FURTHER REPORTED THAT RAND ALLEGED, AND ITS WORKSHEETS INDICATED, THAT THE AIR CONDITIONING AND CONTROLS PORTION OF ITS BID PRICE WAS OMITTED FROM THE MECHANICAL PORTION OF ITS BID PRICE WHEN IT WAS TRANSFERRED TO ITS BID SPREAD SHEET. RAND WAS ADVISED TO SUBMIT ITS CLAIM OF ALLEGED MISTAKE IN WRITING, WHICH IT DID BY LETTER DATED NOVEMBER 2, 1972.

IT WAS THE CONTRACTING OFFICER'S OPINION THAT IN VIEW OF THE EVIDENCE SUBMITTED, AUTHORIZATION SHOULD BE GIVEN ALLOWING RAND TO INCREASE ITS BID PRICE BY $16,000, WHICH WOULD STILL LEAVE IT THE LOWEST BIDDER, OR TO ALLOW THE BIDDER TO WITHDRAW ITS BID.

THE DOCUMENTATION WAS THEN SUBMITTED TO THE DIRECTOR, SUPPLY SERVICE, VA CENTRAL OFFICE, WASHINGTON, D.C. UPON REQUEST, RAND ALSO SUBMITTED COPIES OF MEMOS CONFIRMING TELEPHONE QUOTATIONS FROM THE SUBCONTRACTOR FOR AIR CONDITIONING AND CONTROLS IN THE AMOUNT OF $16,000. SUBSEQUENTLY, THE ENTIRE FILE WAS SUBMITTED TO OUR OFFICE AS A DOUBTFUL CASE IN ACCORDANCE WITH FPR 1-2.406-3(C), FOR AN ADVANCE DECISION.

IN REGARD TO AN ALLEGED ERROR IN BID, OUR OFFICE HAS HELD THAT TO PERMIT CORRECTION PRIOR TO AWARD, 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. SEE 49 COMP. GEN. 480, 482 (1970); B-173031, SEPTEMBER 17, 1971. THE SAME BASIC REQUIREMENTS FOR THE CORRECTION OF A BID ARE FOUND IN 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 ***.

IT APPEARS FROM RAND'S WORKSHEETS THAT IN COMPUTING ITS BID PRICE, THE BIDDER INCLUDED A FACTOR OF .06 FOR "MARKUP" (M/U) AND A FACTOR OF .006 FOR "BOND." ADDITIONALLY, IT APPEARS THAT THE AMOUNTS COMPUTED FOR MARKUP AND BOND, AFTER APPLICATION OF THE ABOVE FACTORS, WERE SUBSEQUENTLY ROUNDED OFF. HAD RAND INCLUDED THE $16,000 OMITTED COST ITEM IN ITS BID COMPUTATIONS PRESUMABLY THE AMOUNTS FOR MARKUP AND BOND WOULD HAVE BEEN COMPUTED IN THE SAME MANNER (INCLUDING ROUNDING OFF) AND WOULD HAVE INCREASED ACCORDINGLY. THUS, IT APPEARS THAT RAND, BY SEEKING TO INCREASE ITS BID PRICE BY THE AMOUNT OF $16,000 IS NOT REQUESTING AN ADDITIONAL SUM FOR MARKUP AND BOND.

ALTHOUGH WE ARE UNABLE TO DETERMINE THE EXACT AMOUNT OF RAND'S INTENDED BID, THIS IN ITSELF WOULD NOT PRECLUDE CORRECTION OF THE BID. SEE 42 COMP. GEN. 723 (1963).

WE HAVE PERMITTED BIDS TO BE CORRECTED SO AS TO REFLECT THE OMISSION OF DIRECT COSTS, WITHOUT ANY CORRESPONDING INCREASE FOR OMITTED PROFIT AND OVERHEAD WHERE THE BIDDER REQUESTS PERMISSION IN SUCH FORM; HOWEVER, WE HAVE DONE SO ONLY IN THOSE CIRCUMSTANCES WHERE THE RELATIVE STANDING OF BIDDERS WOULD NOT BE AFFECTED BY THE MISTAKE. SEE 49 COMP. GEN. 480, SUPRA; B-149798, SEPTEMBER 7, 1962.

IN THE INSTANT CASE, THE DIFFERENCE BETWEEN THE BID OF RAND AND THE BID OF THE NEXT LOWEST BIDDER IS ONLY $17,060. IF THE FACTOR FOR MARKUP (.06) IS ADDED TO THE OMITTED $16,000 FIGURE AND THEN THE FACTOR FOR BOND (.006) IS ADDED TO THE RESULT AS WAS DONE IN RAND'S ORIGINAL COMPUTATIONS, IT APPEARS THAT RAND WOULD NO LONGER BE THE LOW BIDDER. TO ALLOW CORRECTION IN THIS CIRCUMSTANCE WOULD BE PREJUDICIAL TO THE OTHER BIDDERS. SEE 42 COMP. GEN. 723, 725 (1963).

IN A SIMILAR CASE, AT 37 COMP. GEN. 851 (1958), WHEREIN THE LOW BIDDER REQUESTED CORRECTION OF ITS BID DUE TO AN ERROR IN ADDITION, BUT DID NOT REQUEST CORRECTION OF OTHER ERRORS, WHICH IF CORRECTED WOULD HAVE DISPLACED IT IN THE STANDING OF BIDDERS, WE STATED THAT "*** A BIDDER MAY NOT BE PERMITTED TO REMAIN LOW BIDDER BY FOREGOING PART OF ITS CLAIM OF ERROR." WE BELIEVE THAT THIS PRINCIPLE IS APPLICABLE TO THE INSTANT CASE, AND ACCORDINGLY, RAND MAY NOT FOREGO ANY CLAIM FOR MARKUP OR BOND ON THE OMITTED $16,000 COST ITEM SINCE SUCH ACTION COULD ALLOW IT TO REMAIN LOW BIDDER.

EVEN IF THE STANDING OF BIDDERS WERE NOT AFFECTED, IT IS CLEAR THAT THE BID OF RAND AND THAT OF THE NEXT LOWEST BIDDER WOULD BE EXTREMELY CLOSE. WE DO NOT BELIEVE THAT THE FACTS ARE SUFFICIENTLY CLEAR TO WARRANT CORRECTION OF THE BID. IT HAS BEEN OUR VIEW THAT REGARDLESS OF THE GOOD FAITH OF THE PARTY OR PARTIES INVOLVED, CORRECTION SHOULD BE DENIED IN ANY CASE IN WHICH THERE EXISTS ANY REASONABLE BASIS FOR ARGUMENT THAT PUBLIC CONFIDENCE IN THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BE ADVERSELY AFFECTED THEREBY. SEE 48 COMP. GEN. 748, 751 (1969). IT IS OUR BELIEF THAT THE PRESENT CASE FALLS IN THAT CATEGORY.

ACCORDINGLY, THE LOW BID SHOULD NOT BE CORRECTED, BUT SHOULD BE WITHDRAWN FROM AWARD CONSIDERATION.