B-133879, OCT. 7, 1957

B-133879, OCT. 7, 1957

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER OF SEPTEMBER 24, 1957, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY REQUESTING OUR ADVICE AS TO THE CONSIDERATION OF BIDS SUBMITTED FOR CONSTRUCTION OF BOAT HARBORS AT SKAGWAY AND HAINES, ALASKA, DESIGNATED AS PROJECTS AAA.50-A-261 AND AAA.50 -A-290 RESPECTIVELY.

THE INVITATIONS WERE ISSUED ON AUGUST 7, 1957. THE SKAGWAY INVITATION CONTAINED THE FOLLOWING PROVISION: "IN CASE CONTRACT FOR PROJECT NO. AAA.50-A-290, HAINES BOAT HARBOR, IS AWARDED TO THE UNDERSIGNED THE BASE BID WILL BE REDUCED BY THE SUM OF $-------- DOLLARS ($------).' THE HAINES INVITATION CONTAINED A SUBSTANTIALLY SIMILAR PROVISION TO BE APPLIED IF AWARD OF THE SKAGWAY PROJECT SHOULD BE MADE TO THE SAME BIDDER.

BIDS FOR BOTH PROJECTS WERE OPENED ON SEPTEMBER 11, 1957. THE TWO LOW BIDS RECEIVED WERE AS FOLLOWS:

CHART

BIDDER HAINES SKAGWAY

BASE BID REDUCTION FOR BASE BID REDUCTION FOR

AWARD OF AWARD OF

SKAGWAY HAINES ROCK AND DIRT $137,748 $24,000 $92,049 $26,000 CONSTRUCTION CO. KIEL AND PETERMAN $123,000 6,000 110,000 ------- TOTAL WITH BOTH DEDUCTIONS ROCK AND DIRT $179,797 CONSTRUCTION CO. KIEL AND PETERMAN $227,000

AT THE OPENING AND UPON REQUEST OF THE REPRESENTATIVE OF KIEL AND PETERMAN, THE CONTRACTING OFFICER STATED THAT THE DEDUCTIONS OFFERED BY BOTH INVITATIONS WOULD BE APPLIED IN THE EVENT AWARD OF BOTH CONTRACT WAS MADE TO THE SAME BIDDER, SO THAT IF A BIDDER INDICATED A CREDIT IN EACH BID, BOTH CREDITS WOULD BE TAKEN. NO ROCK AND DIRT REPRESENTATIVES WERE PRESENT AT THE OPENING AND, SINCE THEIR BID WAS SUBSTANTIALLY LESS THAN THE ENGINEER'S ESTIMATE, CONFIRMATION OF THE ROCK AND DIRT BID WAS REQUESTED. IN REPLY, BY LETTER OF SEPTEMBER 13, 1957, ROCK AND DIRT INDICATED THAT UNDER THEIR INTERPRETATION OF THE DEDUCTIVE PROVISION OF EACH INVITATION A DEDUCTION COULD BE TAKEN ONLY IN THE AMOUNT INDICATED IN THE SECOND BID PURSUANT TO WHICH AWARD WAS MADE AND THAT NO DEDUCTION COULD BE TAKEN ON THE FIRST AWARD SINCE, AT THE TIME SUCH CONTRACT WAS ENTERED INTO, IT COULD NOT BE SAID THAT AWARD OF BOTH CONTRACTS HAD BEEN MADE TO THE SAME BIDDER. THUS, ROCK AND DIRT STATED, IF THE SKAGWAY CONTRACT WERE AWARDED FIRST, IT COULD BE AWARDED ONLY AT THE BASE PRICE WITHOUT CONSIDERATION OF THE DEDUCTION. IF AWARD WERE THEN MADE ON THE HAINES PROJECT TO THE SAME BIDDER, THE DEDUCTION INDICATED IN THE HAINES BID COULD BE TAKEN.

THIS INTERPRETATION APPEARS TO PRESUPPOSE A CONDITION IN THE INVITATION THAT THE CONTRACTS WILL BE AWARDED AT DIFFERENT TIMES AND THAT NO DEDUCTION MAY BE TAKEN ON THE FIRST AWARD IF AFTERWARD THE SECOND PROJECT IS AWARDED TO THE SAME BIDDER. TO SUPPORT SUCH A MEANING IT WOULD BE NECESSARY TO READ ADDITIONAL WORDS INTO THE REDUCTION PROVISION, TO MAKE IT "IN CASE CONTRACT FOR PROJECT NO.----- IS AWARDED TO THE UNDERSIGNED AT THE BASE PRICE BID THEREON THE BASE BID WILL BE REDUCED * * *.' WE FIND NOTHING IN THE LANGUAGE OF THE DEDUCTIVE PROVISIONS AS WRITTEN TO REQUIRE SUCH A READING. FURTHERMORE, SINCE A DIFFERENT DEDUCTION WAS OFFERED BY ROCK AND DIRT IN EACH CASE AND SINCE THE CONTRACTING OFFICER MIGHT AWARD EITHER CONTRACT FIRST, THE CHOICE BETWEEN THE DEDUCTION OF $26,000 IN THE ROCK AND DIRT BID APPLICABLE TO SKAGWAY OR THE DEDUCTION OF $24,000 APPLICABLE TO THE HAINES PROJECT WOULD BE LEFT TO THE DISCRETION OF THE CONTRACTING OFFICER. IT IS NOT REASONABLE TO ASSUME THAT A BIDDER WOULD BE WILLING TO PERMIT THE CONTRACTING OFFICER SUFFICIENT LATITUDE TO DETERMINE WHETHER HIS BID SHOULD BE LOWER OR HIGHER BY SUCH A SUBSTANTIAL SUM AS $2,000. ACCORDINGLY, WE MUST CONCLUDE THAT THE ROCK AND DIRT INTERPRETATION OF THE DEDUCTIVE PROVISIONS IS SUPPORTED NEITHER BY THE LANGUAGE OF THE PROVISIONS NOR BY LOGIC.

WHILE THE ROCK AND DIRT LETTER OF SEPTEMBER 13, DID NOT EXPLICITLY ALLEGE THAT ITS BIDS WERE SUBMITTED IN ERROR, IT IS CLEAR THAT THE BIDS WERE FORMULATED UPON THE BASIS OF AN ERRONEOUS INTERPRETATION OF THE INVITATIONS. THE CONTRACTING OFFICER HAD BEEN PLACED ON NOTICE OF POSSIBILITY OF ERROR BECAUSE OF THE DISPROPORTIONALLY LOW BIDS SUBMITTED BY ROCK AND DIRT AND THE DISPROPORTIONALLY LARGE DEDUCTIONS WHICH WOULD BE MADE THEREFROM UNDER A PROPER INTERPRETATION OF THE DEDUCTIVE PROVISIONS AND RECEIVED ACTUAL NOTICE OF ERROR THROUGH THE SEPTEMBER 13 LETTER. WHILE, AS INDICATED, WE THINK THE LANGUAGE USED WAS REASONABLY CLEAR, WE DO NOT BELIEVE THAT ACCEPTANCE OF THE BIDS AS SUBMITTED, WITH KNOWLEDGE THAT THE BIDDER INTENDED A DIFFERENT MEANING, WOULD BIND THE BIDDER TO PERFORM ACCORDING TO THE CONTRACTING OFFICER'S INTERPRETATION. ON THE OTHER HAND, WE WOULD NOT CONSIDER IT PROPER TO ACCEPT THE BID ON THE BASIS OF THE BIDDER'S INTERPRETATIONS WHICH WAS DIFFERENT FROM THAT INTENDED AND UNDERSTOOD BY OTHER BIDDERS, EVEN IF THE INTENDED AMOUNT WERE CLEAR. IT IS, IT IS IMPOSSIBLE TO TELL FROM THE BIDS WHETHER THE ROCK AND DIRT FIRM INTENDED ITS AGGREGATE BID FOR THE COMBINED PROJECTS TO BE $24,000 OR $26,000 LESS THAN THE TOTAL OF ITS BASE BIDS, AND TO PERMIT IT TO CORRECT OR CLARIFY ITS BIDS NOW WOULD BE CONTRARY TO THE ESTABLISHED RULES OF COMPETITIVE BIDDING. SEE 35 COMP. GEN. 279. IT FOLLOWS THAT THE ROCK AND DIRT BIDS MAY NEITHER BE CONSIDERED FOR AWARD AS SUBMITTED, NOR CORRECTED IN ACCORDANCE WITH THE INTERPRETATION PRESENTED BY THE BIDDER. AWARD MAY THEREFORE BE MADE ON THE BASIS OF THE NEXT LOW RESPONSIVE BID SUBMITTED BY A RESPONSIBLE BIDDER.