[Protest of Navy Award for Anchor Dampers]

B-238973: Jul 20, 1990

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A firm protested a Navy contract award for anchor dampers, contending that the Navy: (1) improperly refused to conduct another round of discussions to allow it to correct its bid; (2) should have allowed it to submit a corrected bid; (3) failed to properly notify it of a possible bid error; and (4) failed to conduct a preaward survey. GAO held that the Navy: (1) was not required to reopen negotiations; (2) allowed the protester an opportunity to review its proposal; (3) notified the protester of its bid errors; and (4) reasonably refused to conduct the preaward survey. Accordingly, the protest was denied.

B-238973, Jul 20, 1990, 69 Comp.Gen. 634

PROCUREMENT - Competitive Negotiation - Best/final offers - Pricing errors - Correction - Propriety 1. Where, before award, but after receipt of best and final offers, an offeror claims a mistake in its proposal, agency may-- but is not required to-- reopen negotiations with offerors to allow the offeror claiming the mistake to revise its proposal, if the agency determines it is clearly in the government's best interest to do so. PROCUREMENT - Competitive Negotiation - Discussion reopening - Propriety 2. Where, during discussions, agency requested the protester to review its proposed pricing on a specific item and protester verified its original price, agency determination not to reopen negotiations to allow protester to correct a subsequently discovered error is reasonable since protester was previously provided an opportunity to review its proposal and further negotiations would result in unacceptable delay of performance. PROCUREMENT - Competitive Negotiation - Discussion - Adequacy - Criteria 3. Protest that agency failed to properly notify it of possible errors where agency specifically cited only one item and failed to cite a second item is denied where both items were identical, except for shipping costs, and an error in one would have identified an error in the other.

Attorneys

David Grimaldi Company:

David Grimaldi Company protests the award of a contract to any other offeror under request for proposals (RFP) No. N68335-89-R-0317 issued by the Naval Air Engineering Center (NAEC), Lakehurst, New Jersey, for the acquisition of anchor dampers and piston rod weldments, which are components of the arresting engine used to land aircraft on certain aircraft carriers. After the submission of best and final offers (BAFOs), but prior to award, Grimaldi discovered that it had made a mistake in its proposed price for the anchor dampers. Grimaldi contends that NAEC improperly refused to conduct another round of discussions to allow it to correct the mistake.

We deny the protest.

The RFP, issued on May 5, 1989, called for each offeror to price the requirement for both FOB origin and FOB destination. In abbreviated form, the solicitation's pricing schedule was structured as follows:

Item # DESCRIPTION Qty

Lot I - FOB Origin

0001 Anchor Dampers 8 Ea.

0002 Weldments, Piston Rod 12 Ea.

0003 Data in accordance with DD Form 1423 1 LO

Lot II - FOB Destination

0004 Anchor Dampers 8 Ea.

0005 Weldments, Piston Rod 12 Ea.

0006 Data in accordance with DD Form 14231 LO

Award was to be made to the offeror under Lot I or Lot II which offered the lowest overall cost to the government. Of the five offers received by the amended October 9 closing date, four were included in the competitive range. Discussions were conducted with the four companies. Because Grimaldi priced the anchor dampers approximately 45 percent lower per unit than the next low offeror, NAEC suspected a possible mistake. The agency notified Grimaldi of this suspicion in discussions held January 4, 1990 and in a letter dated January 10. Grimaldi responded that it had reviewed its proposal and that its prices would remain the same as it had originally quoted.

On February 7, personnel from NAEC begin a pre-award survey of Grimaldi's facility. While reviewing Grimaldi's bill of materials, the NAEC personnel discovered that although the solicitation specifications required the supply of two of the part identified as "anchor damper assemblies," Grimaldi's price was based on only one. The pre-award survey was never completed. NAEC's personnel advised the contracting officer of Grimaldi's mistake and indicated that the mistake would affect Grimaldi's price.

The following day Grimaldi contacted the contracting officer, claimed that its omission was caused by an ambiguity in the drawings included in the solicitation, and asked for an opportunity to correct its offer. The contracting officer consulted with NAEC's technical personnel and concluded that both the drawing and the bill of materials included in the solicitation clearly state the requirement for two damper assemblies. a letter dated February 22, the contracting officer informed Grimaldi that, although it was clear that Grimaldi had made a mistake, the intended price could not be determined from its offer and because correction would require repricing the offer, correction would not be permitted. Grimaldi was told it could withdraw its offer. Grimaldi responded by letter dated March 1, indicating that it would not withdraw its offer and objecting to the manner in which the procurement and pre-award survey had been conducted.

The contracting officer rejected Grimaldi's offer, which admittedly was based on a misunderstanding of the RFP's requirements, by letter dated March 14. The contracting officer informed Grimaldi that its error could only be corrected through negotiations and that the agency had determined that it was not in the best interests of the government to conduct a second round of discussions because the time required would unacceptably impact on the award and delivery of the supplies to the Fleet. Award was made on the same day to The Entwistle Company. Grimaldi protested to our Office by letter dated March 16.

Grimaldi contends that NAEC should have allowed it to submit a corrected offer and argues that "after discovery of the mistake it would have been a simple matter to reprice the item," which it could have done without prejudice to the other offerors since it had no knowledge of their prices. The protester also complains that during discussions it was not adequately informed of the suspected mistake in its offer because the agency referred only to a possible error in item 0001 and did not reference item 0004. The protester also asserts that it did not stop the pre-award survey: it says that it only intended to delay the survey to obtain information on how to proceed, with the intention of resuming it at a later time. Grimaldi alleges that it was NAEC personnel who decided that "there was no reason to continue this survey and requested it be stopped."

Concerning Grimaldi's mistake in its offer, the agency reports that it determined that correction of the error would require the reopening of discussions with Grimaldi and therefore with all offerors in the competitive range since Grimaldi's intended price could not be established from its offer. /1/ The agency says that reopening discussions was not in the best interests of the government because the items being procured have a long lead time which cannot be expedited because of their complexity. The agency says that additional delays would be detrimental to fleet operations and argues that additional slippage in the delivery schedule would certainly occur if it were to reopen negotiations, since the contracting officer must obtain higher level approval before conducting a second round of BAFOs and it would also have to complete the pre-award survey on Grimaldi if it were again the low offeror. In addition, since during discussions the agency had advised Grimaldi of a possible mistake in item 0001, the agency sees no reason to afford the protester the opportunity now to revise its offer when it had failed to do so previously. We agree.

When a mistake of other than a clerical nature is suspected or alleged before award in a negotiated procurement, the Federal Acquisition Regulation (FAR) contemplates that the mistake will be resolved through discussions, FAR Sec. 15.607(b) (FAC 84-16), by "calling it to the offeror's attention as specifically as possible without disclosing information concerning other offerors' proposals or the evaluation process. ..."FAR Sec. 15.610(c)(4) (FAC 84-16). That is precisely what NAEC attempted to do here during oral discussions and in its confirming January 10 letter in which it requested Grimaldi:

"to review your proposal for a possible error in pricing Item 0001 since there is a disparity between your price and the other offers received. your offer is correct for Item 0001 please confirm this in writing."

In its best and final offer, Grimaldi replied:

"As you had stated in your letter of January 10, 1990 to review our proposal, we have. Our prices will remain as originally quoted."

Grimaldi therefore did not discover its mistake as a result of the discussions which were conducted with it. It was only after the submission of BAFOs, in conjunction with the pre-award survey, that it was discovered that Grimaldi's price was based on half the quantity of a certain part-- the anchor damper assemblies-- that was required by the solicitation.

There is no way of ascertaining what Grimaldi's price would have been had it been based on supplying the correct quantity of anchor damper assemblies. In fact the protester itself does not undertake to state what its price would have been, or would be, based on a correct understanding of the solicitation requirements. The relief it seeks is an opportunity to submit a revised price proposal, i.e., to participate in another round of discussions. See FAR Sec. 15.610(c)(5) (FAC 84 16).

Agencies may, but are not required to, reopen negotiations where a mistake is claimed after the receipt of BAFOs and provide the offeror with an opportunity to discuss the matter. See Standard Manufacturing Co., 65 Comp.Gen. 451 (1986), 86-1 CPD Para. 304. Under FAR Sec. 15.611(c) (FAC 84-16), after the receipt of BAFOs, the contracting officer should not reopen discussions unless it is clearly in the government's best interest to do so. The question here is whether the agency abused this discretion. As noted above, the agency justifies its decision not to reopen discussions because of slippage in the delivery schedule and the detrimental effect additional delays would have on fleet operations. The protester states that it would only take it a "day or two" to recalculate its proposal. The agency has shown, however, that the actual time required for it to get approval for and conduct another round of discussions, and to select an awardee (including a possible pre-award survey) substantially exceeds that. Further, offerors have a responsibility to exercise due care and diligence in preparing their proposals. The agency, in oral and written discussions, prior to the submission of BAFOs, requested Grimaldi to thoroughly review its proposal for possible errors, specifically citing the price of item 0001, and we see no reason to require the agency to afford Grimaldi another opportunity. Therefore, we will not object to NAEC's refusal to reopen discussions.

We find no merit to Grimaldi's contention that the agency failed to properly notify it of possible error because the contracting officer referred to only line item 0001 and omitted line item 0004. The RFP clearly indicated that either item 0001 or 0004, but not both items, would be awarded after a transportation evaluation was performed. Both items were identical, except for shipping terms, and an error in one would have indicated an error in the other. If Grimaldi had carefully reviewed its offer for item 0001 it would have discovered its error. Since Grimaldi did not find an error in regard to item 0001, there is no reason to conclude that it would have discovered an error in regard to item 0004.

Finally, we need not resolve whether Grimaldi or the government stopped the pre-award survey. Even if the survey had been completed and had been otherwise favorable to the protester, the problem remained that the government was aware that Grimaldi's offered price was based on only half of the anchor damper assemblies required. This problem would have had to have been resolved through a second round of discussions, which because of schedule constraints the agency reasonably refused to conduct.

The protest is denied.

/1/ When discussions are reopened after best and final offers are received, the contracting officer is required to hold discussions with all the offerors in the competitive range and allow them to submit another round BAFOs. See Greenleaf Distribution Servs., Inc., B-221335, Apr. 30, 1986, 86-1 CPD Para. 422.