Matter of: 4-S Construction, Inc. File: B-248090 Date: June 16, 1992

Matter of: 4-S Construction, Inc. File: B-248090 Date: June 16, 1992

PROCUREMENT Sealed Bidding Low bids Error correction Price adjustments Propriety Protest that agency improperly failed to permit low bidder to correct its bid is sustained where the bidder has provided clear and convincing evidence that as corrected its bid would remain low and the amount of the intended bid falls within a narrow range of uncertainty.

Attorneys

DECISION 4-S Construction, Inc. protests the Coast Guard's decision denying 4-S's pre-award request to correct a mistake in its low bid, submitted in response to invitation for bids (IFB) No. DTCG40-92-B-3EFK01, for the upgrade of mechanical shops at the U.S. Coast Guard Yard, Baltimore.

We sustain the protest.

BACKGROUND

The IFB requested fixed-price, lump-sum bids for a base contract and five additive work items for work to be performed in accordance with detailed specifications and drawings that were part of the solicitation. At the January 8, 1992 bid opening, the Coast Guard received 13 bids ranging in price for the base bid plus all 5 additive items from 4-S's low bid of $2,534,200 to $3,992,720. The second low aggregate bid was $2,627,000.

For additive item 1 (two toilet/locker rooms and a janitor's closet room), the item in issue in this protest, the bids ranged from 4-S's low bid of $25,600 to $165,000. The second lowest bid for additive item 1 was $105,000. Based on the difference in prices for additive item 1 between the low bid of 4-S and the other bids received, the contracting officer suspected that there was a mistake in 4-S's bid. As a result, by letter of January 9, 4-S was requested to review and confirm its bid. 4-S initially confirmed its bid. During a subsequent telephone call, however, 4-S asserted that its bid for additive item 1 was mistaken, and on January 31, 4-S sent the Coast Guard a letter requesting that it be permitted to modify its bid for additive item 1.

4-S stated that in pricing its bid for additive item 1, it had failed to include two subcontractor quotations, one for mechanical work (including plumbing, heating, ventilation, and air conditioning) in the amount of $61,200, and one for $14,010 for tile work. 4-S submitted copies of the quotations which it allegedly intended to use for these items and requested that it be permitted to increase its bid for additive item 1 by $75,210 to $100,810.

The Coast Guard initially denied 4-S's claim because 4-S did not provide clear and convincing evidence of its intended bid. The firm provided the agency with only raw subcontractor quotations for the allegedly omitted work rather than its complete workpapers. The agency found that without all the workpapers 4-S used to prepare the bid, it was unable to determine if the quotes submitted by 4-S were the quotes that 4-S actually used to prepare its bid. In addition, the Coast Guard was concerned that without these workpapers, it could not determine the percentage markup for overhead and profit that 4-S would have included in its bid. The agency noted that with overhead and profit added to the bid, 4-S could have been displaced as the low bidder.

Subsequently, and while the protest was pending, 4-S sent a revised request for correction to the Coast Guard with additional information, including additional subcontractor quotations and the workpapers that were used to prepare its bid. 4-S explained that the mistake resulted because it received the two omitted quotations by facsimile transmission during the height of last minute, pre-bid activity. In its haste to include the amounts indicated in the quotations for the base bid, it simply forgot to include the amount for mechanical work and tile work for additive item 1 in its total cost for that item. 4-S also asserted that for the base bid and the other four additive items, the firm added 10 percent for profit and overhead and would have included the same percentage in its bid for additive item 1. 4-S thus revised its request for correction and now requested that the bid for additive item 1 be increased by $85,291 to $110,891 ($61,200 for the mechanical work, plus $14,010 for the tile work, plus $10,081 for profit and overhead [10 percent of $100,810, its new unburdened total for additive item 1]) and that its total bid be increased by $85,291 from $2,534,200 to $2,619,491.

The Coast Guard reviewed the additional information provided by 4-S and concluded that 4-S still had not provided clear and convincing evidence of its intended bid. Independent of the protester's claimed mistakes in the areas of mechanical work, tile work, and overhead and profit, the Coast Guard questioned the bid because 4-S used two electrical subcontractors, one for the base item and one for its additive items. In addition, the Coast Guard was concerned because, according to the agency, additive item 1 required the removal of roof asbestos and the subcontractor 4-S intended to use for asbestos removal work for its base bid did not separately price asbestos removal for additive item 1, while other asbestos subcontractors did so. Finally, the Coast Guard was concerned because 4-S's worksheets did not include any amount for bonds that were required by the solicitation.

The Coast Guard also determined that it was not clear that as corrected 4 -S's bid would remain low. In this regard, the Coast Guard added to 4-S's total bid the lowest quotation that 4-S received for asbestos removal for additive item 1, plus the difference between the amount that the electrical subcontractor 4-S was using for its base bid proposed for the additive items, and the low quote that 4-S used for the electrical portion of its additive items. With these amounts added to the 4-S bid, the bid was no longer low. Consequently, the Coast Guard concluded that 4-S should not be permitted to correct its bid.

DISCUSSION

Generally, to obtain upward correction of a low bid, the bidder asserting a mistake must submit clear and convincing evidence that a mistake was made and the intended bid price. Federal Acquisition Regulation Sec. 14.406-3(a). Workpapers may constitute clear and convincing evidence of the intended bid if they are in good order and indicate the intended bid price and there is no contravening evidence. Consolidated Duct Sys., Inc., B-241402; B-241402.3, Feb. 6, 1991, 91-1 CPD Para. 125.

Given that 4-S's bid for additive item 1 was substantially below that of the other bidders, it is clear that 4-S's bid for this item was mistaken. However, while 4-S has demonstrated the amount omitted for mechanical work, 4-S has not provided clear and convincing evidence of its total intended bid for additive item 1. Nevertheless, since there is clear and convincing evidence that the bid as corrected would fall within a narrow range of uncertainty and would remain low, 4-S may correct its bid to the bottom end of the range of uncertainty.

Evidence of the Total Intended Bid

In support of its claim for correction, 4-S submitted its worksheets and the subcontractor quotes it received while preparing its bid. The worksheets consist of a sheet on which 4-S entered its material, labor, and subcontract costs for all items by work division. In addition, there is a worksheet for each line item in the solicitation, that is, the base bid and the five additive items. 4-S's worksheets for the base bid and the four additive items other than additive item 1 show that 4-S added 10 percent of its total price for labor and material to each item to account for profit and overhead. 4-S's worksheets for additive item 1 also show that 4-S included a line item for each intended element of work, including a gypsum wall board ceiling; interior non-common wall partitions; single tier lockers; toilet partitions; toilet accessories; electrical work; and mechanical work. 4-S inserted a price next to each element with the exception of mechanical work. The total of these elements is the total that 4-S included in its bid for additive item 1. 4-S also provided its subcontractor quotes for mechanical work, and asserted that it would have used the same subcontractor for additive item 1 as it used for its base bid. This subcontractor bid $61,200 for additive item 1.

Our review of the quotations 4-S received for mechanical work shows that the quotation 4-S allegedly intended to use for the mechanical work for additive item 1 is the lowest quotation for additive item 1 that 4-S received. In addition, 4-S's workpapers show a consistent pattern of using the lowest subcontractor quotation it received. Accordingly, we find there is clear and convincing evidence that 4-S intended to bid $61,200 as the mechanical portion of additive item 1. See BAL/BOA Servs., Inc., B-233157, Feb. 9, 1989, 89-1 CPD Para. 138.

4-S's worksheets for additive item 1, however, do not make any reference to or provide a line on which to include figures for the other cost elements it claims to have omitted (overhead and profit, and tile work). Thus, even assuming that, as asserted, 4-S would have used the same subcontractor for the tile work that it used for its base bid, and the same percentage for overhead and profit that it used for the other items, 4-S has provided only evidence of the cost of the work. This does not establish that 4-S intended to include this amount in its bid for additive item 1. See Bush Painting, Inc., B-239904, Aug. 30, 1990, 90-2 CPD Para. 188. Accordingly, we cannot conclude that 4-S intended to include a cost for these items in its bid. Consequently, we find that 4-S has not provided clear and convincing evidence of its total intended bid.

Correction to the Low End of the Range of Uncertainty

Correction may be allowed in limited circumstances even though the intended bid cannot be determined exactly, provided there is clear and convincing evidence that the amount of the intended bid would fall within a narrow range of uncertainty and remain low after correction. Vrooman Constructors, Inc., B-226965.2, June 17, 1987, 87-1 CPD Para. 606. In such cases, correction is limited to increasing the contract price upward only to the low end of the range of uncertainty. Id. We find that such correction is proper here.

As discussed above, 4-S has clearly and convincingly demonstrated that the cost of the mechanical work was omitted from its intended bid. Accordingly, the low end of the range of uncertainty of 4-S's intended bid would be $2,595,400 (4-S's uncorrected bid of $2,534,200, plus $61,200, the amount of the omitted mechanical work). The top of the range of uncertainty of 4-S's intended bid is $2,619,491 (4-S's uncorrected bid of $2,534,200, plus $61,200, the amount of the omitted mechanical work, plus $14,010, the amount of the allegedly omitted tile work, plus $10,081, the amount of the allegedly omitted overhead and profit). Thus, both the low end and the high end of the range of uncertainty fall below the second low bid ($2,627,000). Further, the range of uncertainty between 4-S's high and low corrected bids, less than 1 percent, is narrow.

The Coast Guard argues that it is unclear whether 4-S's bid would remain low based on questions the Coast Guard raises about other cost elements of 4-S's bid unrelated to the claimed mistakes in the areas of mechanical work, tile work, and overhead and profit. Specifically, the Coast Guard states that, as noted above, 4-S used a different electrical subcontractor for its base bid and its additive bid items; it was unclear that the subcontractor 4-S chose for its asbestos work included asbestos removal for additive item 1; and 4-S's workpapers did not show that the firm made any provision for bonding costs.

The Coast Guard's conclusions in this regard are not reasonable. First, whether or not it is unusual to use more than one electrical subcontractor, the fact is that 4-S's worksheets clearly show that the bid was prepared using the quotation of one electrical subcontractor for the base bid and a different electrical subcontractor for the additive items. Given this fact, it was unreasonable for the Coast Guard to assume that this was not the intended bid and to add into 4-S's bid additional costs for electrical work. Further, while the subcontractor 4-S chose for its asbestos work did not separately price asbestos removal for additive item 1, it did specifically note in its quotation that it would remove asbestos in accordance with the applicable drawing and specifications, which the agency states show that asbestos removal was required for additive item 1. Accordingly, it was not reasonable for the Coast Guard to conclude that the subcontractor would not perform the asbestos removal work required by the specifications or to add the cost of additional asbestos work to 4-S's bid. Finally, 4-S states that it included its bonding costs in its profit and overhead. Since bonding costs could reasonably be considered part of overhead, and there is no requirement that bonding costs be separately stated, we find no reason to question 4-S's assertion.

Accordingly, since 4-S's intended bid clearly would be low as corrected and falls within a narrow range of uncertainty, the Coast Guard should permit 4-S to correct the bid to $2,595,400, the low end of the range of uncertainty. Id. We also find that 4-S is entitled to its costs of filing and pursuing the protest, including reasonable attorneys' fees.

The protest is sustained.

The Honorable Samuel K. Skinner The Secretary of Transportation

Dear Mr. Secretary:

Enclosed is a copy of our decision of today sustaining the protest of 4-S Construction, Inc. against the Coast Guard's decision denying its request to correct a mistake in its low bid under invitation for bids No. DTCG40- 92-B-3EFK01, for the upgrade of mechanical shops at the U.S. Coast Guard Yard, Baltimore.

We sustained the protest since, as corrected, 4-S's intended bid clearly would be low and falls within a narrow range of uncertainty. The Coast Guard should permit 4-S to correct the bid to $2,595,400, the low end of the range of uncertainty. In addition, we find that 4-S is entitled to its costs of filing and pursuing the protest, including reasonable attorneys' fees.

Since the enclosed decision contains a recommendation for corrective action, we direct your attention to 31 U.S.C. Sec. 3554(e)(1) (1988), which requires the head of the procuring activity responsible for the solicitation to report to our Office if the agency has not fully implemented our recommendations within 60 days of receipt of our decision. Please advise us, in any case, of the action taken on the recommendation.