B-179406, FEB 14, 1974, 53 COMP GEN 597

B-179406: Feb 14, 1974

Additional Materials:

Contact:

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

 

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

ALTHOUGH THE BIDDER MADE NO CLAIM OF ERROR FOR OTHER ITEMS THE AGENCY CONTENDS WERE OMITTED IN THE BID PREPARATION THAT DOES NOT PRECLUDE CONSIDERATION OF THE BID AS CORRECTED SINCE THE CORRECTED BID APPROXIMATES THE GOVERNMENT'S ESTIMATE FOR THE JOB AND EVIDENCE INDICATES THE BID WOULD BE LOW EVEN IF THE OMITTED ITEMS WERE TO BE ADDED TO THE BID. BIDS - MISTAKES - EVIDENCE OF ERROR - DETERMINATION PROCEDURE THE APPARENT COMPUTATION OF CERTAIN INDIVIDUAL ITEMS ON WORKSHEETS FURNISHED IN SUPPORT OF AN ERROR IN BID AFTER THE TOTAL PRICE WAS DETERMINED RATHER THAN BEFORE IS A LOGICAL IF NOT AN OPTIMUM PROCEDURE AND DOES NOT REASONABLY PUT THE AUTHENTICITY OF THE WORKSHEETS INTO QUESTION. INVITATION FOR BIDS (IFB) NO. 2PBO-MB-894 WAS ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA) FOR JANITORIAL SERVICES AT THE U.S.

B-179406, FEB 14, 1974, 53 COMP GEN 597

BIDS - MISTAKES - CORRECTIONS - STILL LOWEST BID THE WORKSHEETS SUBMITTED TO SUBSTANTIATE THE ALLEGATION OF ERROR IN THE LOW LUMP-SUM BID TO PERFORM JANITORIAL SERVICES HAVING ESTABLISHED THE ERROR OCCURRED IN THE BID PREPARATION BY SUBTRACTING RATHER THAN ADDING THE PROFIT ITEM, THE BID MAY BE CORRECTED. FURTHERMORE, ALTHOUGH THE BIDDER MADE NO CLAIM OF ERROR FOR OTHER ITEMS THE AGENCY CONTENDS WERE OMITTED IN THE BID PREPARATION THAT DOES NOT PRECLUDE CONSIDERATION OF THE BID AS CORRECTED SINCE THE CORRECTED BID APPROXIMATES THE GOVERNMENT'S ESTIMATE FOR THE JOB AND EVIDENCE INDICATES THE BID WOULD BE LOW EVEN IF THE OMITTED ITEMS WERE TO BE ADDED TO THE BID. BIDS - MISTAKES - EVIDENCE OF ERROR - DETERMINATION PROCEDURE THE APPARENT COMPUTATION OF CERTAIN INDIVIDUAL ITEMS ON WORKSHEETS FURNISHED IN SUPPORT OF AN ERROR IN BID AFTER THE TOTAL PRICE WAS DETERMINED RATHER THAN BEFORE IS A LOGICAL IF NOT AN OPTIMUM PROCEDURE AND DOES NOT REASONABLY PUT THE AUTHENTICITY OF THE WORKSHEETS INTO QUESTION.

IN THE MATTER OF ONEIDA CHEMICAL COMPANY, INC.; O'BRIAN CLEANING COMPANY, INC., FEBRUARY 14, 1974:

ON MAY 30, 1973, INVITATION FOR BIDS (IFB) NO. 2PBO-MB-894 WAS ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA) FOR JANITORIAL SERVICES AT THE U.S. CUSTOMS AND IMMIGRATION STATION IN CHAMPLAIN, NEW YORK. AT BID OPENING ON JUNE 20, 1973, TWO BIDS WERE RECEIVED, ONE FROM THE ONEIDA CHEMICAL COMPANY, INC. (ONEIDA), IN THE AMOUNT OF $107,602.96 AND ONE FROM THE O'BRIAN CLEANING COMPANY, INC. (O'BRIAN), IN THE AMOUNT OF $146,000. THE GOVERNMENT'S ESTIMATE OF THE COST OF PERFORMING THE CONTRACT WAS $158,000.

ON JUNE 21, 1973, A REPRESENTATIVE OF ONEIDA CONTACTED GSA'S NEW YORK REGIONAL OFFICE AND ADVISED OF AN ALLEGED MISTAKE IN BID. THE REPRESENTATIVE WAS ADVISED TO SUBMIT THE ORIGINAL WORKSHEETS AND ANY OTHER PERTINENT INFORMATION AND DOCUMENTATION IN SUPPORT OF THE CLAIMED MISTAKE. AT A MEETING IN GSA'S NEW YORK REGIONAL OFFICE ON JUNE 27, 1973, THE ONEIDA REPRESENTATIVE SUBMITTED THE COMPANY'S WORKSHEETS. ON JULY 3, 1973, THAT SAME OFFICE RECEIVED A LETTER DATED JUNE 27, 1973, FROM ONEIDA EXPLAINING HOW THE ALLEGED MISTAKE OCCURRED.

ON JULY 11, 1973, A BOARD OF AWARD MEETING WAS HELD TO CONSIDER ONEIDA'S ALLEGED MISTAKE IN BID. THE BOARD OF AWARD FOUND THAT THE EVIDENCE SUBMITTED DID NOT SUPPORT THE EXISTENCE OF THE ALLEGED MISTAKE NOR THE BID INTENDED. IT WAS ALSO FOUND THAT ONEIDA'S WORKSHEETS REVEALED OTHER SUPPOSED ERRORS OF OMISSION OR UNDERESTIMATION THAT THE BOARD DETERMINED WOULD SERIOUSLY IMPAIR THE PROTESTANT'S ABILITY TO PERFORM THE CONTRACT AS BID. A WRITTEN FINDINGS AND DETERMINATION THAT ONEIDA'S BID PRICE WAS SO FAR OUT OF LINE WITH THE AMOUNT OF THE OTHER BID RECEIVED AND THE AMOUNT ESTIMATED BY THE GOVERNMENT THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO ONEIDA OR TO THE OTHER BIDDER AND, THEREFORE, SHOULD BE REJECTED, WAS SIGNED ON JULY 13, 1973, AND APPROVED BY THE ASSISTANT GENERAL COUNSEL, GSA, ON JULY 24, 1973.

A CERTIFIED LETTER WAS SENT TO ONEIDA ADVISING THAT ITS BID HAD BEEN REJECTED. ON AUGUST 2, 1973, THE BOARD OF AWARD RECONVENED AND RECOMMENDED THAT THE CONTRACT BE AWARDED TO O'BRIAN. BY LETTER DATED AUGUST 6, 1973, O'BRIAN WAS AWARDED CONTRACT NO. GS-02B-17404, AT ITS BID PRICE OF $146,000. ON AUGUST 6, A TELEGRAM FROM ONEIDA PROTESTING ANY AWARD OF THE CONTRACT OTHER THAN TO ITSELF WAS RECEIVED IN GSA'S NEW YORK REGIONAL OFFICE AFTER THE LETTER OF AWARD TO O'BRIAN HAD BEEN MAILED. PERFORMANCE OF THE CONTRACT HAS BEEN SUSPENDED BY GSA PENDING RESOLUTION OF THE PROTEST. O'BRIAN HAS BEEN NOTIFIED NOT TO INCUR COSTS NOR SECURE INSURANCE OR PERFORMANCE BONDS UNTIL FURTHER NOTICE.

IT IS ONEIDA'S CONTENTION THAT SINCE ITS MISTAKEN BID OF $107,602.96 AND ITS ALLEGED INTENDED BID OF $118,903.60 WERE BOTH LOWER THAN THAT OF O'BRIAN'S BID, THE CONTRACTING OFFICER'S ONLY CHOICE WAS TO DETERMINE WHICH OF THESE AMOUNTS SHOULD HAVE BEEN THE CONTRACT PRICE AND TO MAKE AN AWARD ACCORDINGLY. GSA HAS TAKEN THE POSITION THAT ITS ACTIONS WERE PROPER AS (1) FROM THE WORKSHEETS SUBMITTED, ONEIDA'S INTENDED BID PRICE COULD NOT HAVE BEEN ASCERTAINED WITH ANY DEGREE OF CERTAINTY, NOR WAS THE AUTHENTICITY OF THE WORKSHEETS CLEARLY PROVEN AND (2) ONEIDA'S BID WAS UNREALISTICALLY LOW.

WE HAVE REVIEWED THE WORKSHEETS THAT THE DIRECTOR, BUILDINGS MANAGEMENT DIVISION, HAD BEFORE HIM IN CONNECTION WITH THE ALLEGED ERROR AND WE DO NOT AGREE THAT THERE IS A LACK OF CONVINCING EVIDENCE OF THE INTENDED BID PRICE UNDER THE IFB. ONEIDA'S WORKSHEET SHOWS A TOTAL PRICE OF $113,253.28. THE NEXT LISTED ENTRY IS:

& PLUS PROFIT (ADD 5% OF VOL) 5650.32

HOWEVER, INSTEAD OF ADDING THIS AMOUNT, THE PROTESTANT SUBTRACTED IT TO ARRIVE AT THE $107,602.96 FIGURE. THUS, SINCE THE AMOUNT TO BE INCLUDED AS A PERCENTAGE OF PROFIT AS FIGURED ON THE TOTAL VOLUME WAS CLEARLY INDICATED, IT WAS A MATTER OF SIMPLE ARITHMETIC TO CORRECT THE FINAL TOTAL AND DETERMINE THE INTENDED TOTAL BID PRICE WHICH WOULD HAVE STILL BEEN LESS THAN THE NEXT LOW BID.

AS CONCERNS THE ALLEGED OMISSIONS FROM THE WORKSHEETS, WE OBSERVE THAT THE IFB ONLY REQUIRED THE SUBMISSION OF A LUMP SUM PRICE FOR ALL THE SERVICES TO BE PERFORMED AND DID NOT PROVIDE FOR PRICES ON AN ITEM BY-ITEM BASIS. FURTHERMORE, GSA HAS REVISED THE ORIGINAL ESTIMATE OF $158,000 FOR THE JOB DOWN TO $113,059.97 PLUS PROFIT AND HAS FURNISHED INFORMATION WHICH INDICATES THAT IF THE COST OF ITEMS NOT SPECIFICALLY INCLUDED IN THE WORKSHEET WERE ADDED TO THE BID IT WOULD REMAIN THE LOW BID. IN THAT CONNECTION, OUR OFFICE HAS PERMITTED A BIDDER TO FOREGO A CLAIM OF ERROR WHERE THE EVIDENCE HAS CLEARLY INDICATED THAT THE BID WOULD HAVE BEEN THE LOWEST ABSENT ERROR. SEE B-173031, SEPTEMBER 17, 1971, AND DECISIONS CITED THEREIN.

ADDITIONALLY, GSA HAS DRAWN INTO QUESTION THE AUTHENTICITY OF ONEIDA'S WORKSHEETS, CONTENDING THAT CERTAIN INDIVIDUAL ITEMS WHICH ARE SHOWN TO MAKE UP A TOTAL PRICE FIGURE APPEAR TO HAVE BEEN COMPUTED AFTER THE TOTAL PRICE WAS DETERMINED RATHER THAN BEFORE. ONEIDA HAS SUBMITTED A DETAILED EXPLANATION AS TO HOW IT COMPUTED ITS BID. IT IS OUR OPINION, AS A RESULT OF THIS EXPLANATION, THAT THERE IS NO REASONABLE BASIS TO QUESTION THE AUTHENTICITY OF THE WORKSHEETS OR TO DOUBT THAT THE WORKSHEETS FURNISHED WERE NOT THE ACTUAL WORKSHEETS USED IN THE COMPUTATION OF ONEIDA'S BID. ONEIDA ADDED UP ALL THE KNOWN COSTS AND THEN DIVIDED THE TOTAL BY THE PERCENTAGE OF THE TOTAL BID THAT AMOUNT REPRESENTED. IN OTHER WORDS, THE TOTAL KNOWN COST IS FIRST COMPUTED. INDIRECT COSTS, SUCH AS OVERHEAD, PROFIT AND OUTSIDE CHARGES, ARE THEN DETERMINED AS A PERCENTAGE OF THE TOTAL AMOUNT TO BE BID. THIS PERCENTAGE IS THEN SUBTRACTED FROM 100 PERCENT AND THE RESULTING PERCENTAGE IS DIVIDED INTO THE FIGURE REPRESENTING THE KNOWN COSTS. THE RESULT IS THE TOTAL COST FIGURE FOR THE BID. APPLYING THIS FORMULA TO ONEIDA'S WORKSHEETS, WE FIND NO REASON TO DOUBT THEIR AUTHENTICITY. THE ONLY AREA OF POSSIBLE DOUBT IN ONEIDA'S WORKSHEETS IS IN THE MISTAKEN COMPUTATION POINTED OUT BY ONEIDA. IT MIGHT BE ARGUED THAT WHILE ONEIDA'S WORKSHEETS STATED "& PLUS PROFIT (ADD 5% OF VOL) 5650.32," THE MATHEMATICAL FUNCTION PERFORMED (SUBTRACTION) WAS CORRECT AND THE WORDS "PLUS" AND "ADD" WERE INCORRECT. HOWEVER, IT IS OUR OPINION THAT SINCE THE $5650.32 AMOUNT REPRESENTED A PROFIT FIGURE, AND IN VIEW OF THE AMOUNT BID BY O'BRIAN AND THE $158,000 ORIGINAL ESTIMATE BY GSA, ONEIDA INTENDED TO ADJUST ITS BID IN AN UPWARD DIRECTION.

IT HAS BEEN CONTENDED THAT AN AWARD TO ONEIDA AT A PRICE LESS THAN $125,000 WOULD RESULT IN A LOSS CONTRACT. HOWEVER, IN VIEW OF THE REVISION OF THE ORIGINAL $158,000 GOVERNMENT ESTIMATE TO $113,059.97, PLUS PROFIT, CORRECTION OF THE ONEIDA BID TO $118,903.60 WOULD NOT APPEAR TO RESULT IN A LOSS CONTRACT. IT ANY EVENT, OUR OFFICE HAS HELD THAT AN AWARD MAY NOT BE WITHHELD MERELY BECAUSE THE LOW BID IS A BELOW COST BID. B-178928, JULY 17, 1973.

IN THE CIRCUMSTANCES. WE RECOMMEND THAT THE ONEIDA BID BE CORRECTED TO $118,903.60 AND AWARD BE MADE TO ONEIDA AT THE CORRECTED BID PRICE IF IT IS DETERMINED TO BE A RESPONSIBLE BIDDER.

IF THE AWARD IS MADE TO ONEIDA, THE CONTRACT WITH O'BRIAN SHOULD BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT.

AS THIS DECISION CONTAINS A RECOMMENDATION FOR CORRECTIVE ACTION TO BE TAKEN, IT IS BEING TRANSMITTED BY LETTERS OF TODAY TO THE CONGRESSIONAL COMMITTEES NAMED IN SECTION 232 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, PUBLIC LAW 91-510, 31 U.S.C. 1172.