B-136252, JUN. 30, 1958

B-136252, JUN. 30, 1958

TO SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED JUNE 13, 1958, FROM THE ASSISTANT SECRETARY (LOGISTICS), CONCERNING THE PROTEST BY PHILSAN COMPANY TO AN AWARD UNDER INVITATION FOR BIDS NO. CIV-ENG-30-075-58-38 TO ANYONE OTHER THAN ITSELF AT ITS ALLEGED INTENDED BID PRICE.

THE INVITATION ISSUED BY U.S. ARMY ENGINEER DISTRICT, NEW YORK, NEW YORK, REQUESTED BIDS TO BE OPENED AT 2 P.M. ON MAY 1, 1958, FOR THE CONSTRUCTION OF UNIT NO. 4--- WEST ENDICOTT, NEW YORK, OF THE ENDICOTT, JOHNSON CITY AND VESTAL, NEW YORK, FLOOD CONTROL PROJECT. THE WORK TO BE PERFORMED WAS SET FORTH UNDER VARIOUS ITEMS AND BIDDERS WERE REQUIRED TO QUOTE UNIT PRICES ON A MAJORITY OF THE ITEMS AND LUMP SUM AMOUNTS FOR THE REMAINDER. AMONG THE ITEMS REQUIRING A LUMP-SUM QUOTATION WERE ITEM NO. 1, DIVERSION OF STREAM AND PROTECTION OF TRAFFIC; ITEM NO. 2, CLEARING OF SITE, AND ITEM NO. 27, CLEARING AND SNAGGING. AWARD WAS TO BE MADE TO THE RESPONSIBLE BIDDER QUOTING THE LOWEST AGGREGATE AMOUNT ON THE BASIS OF THE LUMP-SUM ITEMS AND THE ESTIMATED QUANTITIES FOR THE UNIT PRICE ITEMS.

THE NINE BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE PUBLICLY OPENED AT THE APPOINTED TIME, 2 P.M. MAY 1, 1958. AT 3:55 P.M. OF THE SAME DATE A TELEGRAM WAS RECEIVED FROM THE APPARENT LOW BIDDER, PHILSAN COMPANY, STATING THAT AN ERROR HAD BEEN MADE ON ITEM NO. 27 OF ITS BID. BY LETTER DATED MAY 2, 1958, SWORN TO BEFORE A NOTARY PUBLIC, PHILSAN COMPANY CONFIRMED ITS ALLEGATION OF ERROR AND IN SUPPORT THEREOF ATTACHED CERTIFIED COPIES OF THE PERTINENT PORTION OF ITS ORIGINAL WORKSHEETS. THE COMPANY STATED THAT IN COPYING FROM ONE SHEET TO ANOTHER SHEET THE LUMP SUM FOR ITEM NO. 27 WAS COPIED AS $10,000 RATHER THAN $100,000. THE COMPANY REQUESTED PERMISSION TO MODIFY ITS BID TO COMPENSATE FOR THE ERROR OR TO WITHDRAW THE BID. BY LETTER DATED MAY 22, 1958, THE BIDDER FILED A PROTEST WITH THE DISTRICT ENGINEER TO AWARD TO ANY BIDDER OTHER THAN ITSELF AT ITS ALLEGED INTENDED BID PRICE. THE BIDDER ALLEGES THAT IN COMPUTING THE BID SOME OF THE COSTS OF ITEM NO. 2 WERE COMBINED WITH ITEM NO. 27 AS THE WORK INVOLVED UNDER THE TWO ITEMS OVERLAPPED.

THE MATTER OF THE ALLEGED ERROR WAS CONSIDERED BY THE DISTRICT ENGINEER, DIVISION ENGINEER, AND THE CHIEF OF ENGINEERS, AND ALL RECOMMENDED THAT THE PHILSAN COMPANY BE ALLOWED TO WITHDRAW ITS BID BUT THAT CORRECTION OF THE BID SHOULD NOT BE ALLOWED.

IN A LETTER TO THIS OFFICE DATED JUNE 2, 1958, DANZANSKY AND DICKEY, ATTORNEYS FOR THE PHILSAN COMPANY, STATED IN PART AS FOLLOWS:

"IN ORDER TO SUPPORT THE EXERCISE OF HIS AUTHORITY TO ALLOW THE COMPANY TO WITHDRAW ITS BID, THE CHIEF OF ENGINEERS WAS OBLIGED UNDER ASPR 2-405.2 (A) (1) TO FIND "CLEAR AND CONVINCING EVIDENCE" ESTABLISHING THE EXISTENCE OF A MISTAKE. IT IS SUBMITTED THAT IN THE INSTANT CASE THE SAME EVIDENCE WHICH ESTABLISHED THE FACT OF A MISTAKE IN BID ALSO ESTABLISHED CLEARLY THE AMOUNT INTENDED TO BE BID, AS REQUIRED UNDER ASPR 2-405.2 (A) (2) AND THAT, ACCORDINGLY, THE CHIEF OF ENGINEERS SHOULD HAVE MADE A DETERMINATION PERMITTING THE BIDDER TO CORRECT THE MISTAKE. FOR, IT IS CLEAR THAT THE ERROR MADE BY PHILSAN WAS IN THE DROPPING OF A DIGIT IN ITEM 27, RESULTING IN THE USE OF $10,000 AS ONE ITEM OF COST INSTEAD OF THE INTENDED $100,000. THE CORRECTED BID IS EXACTLY THE DIFFERENCE BETWEEN THESE TWO FIGURES SO AS TO RECTIFY THE $90,000 ERROR. ALL THE PROOF IS TO THIS AFFECT AND, ONCE A DETERMINATION HAS BEEN MADE THAT THERE IS CLEAR AND CONVINCING EVIDENCE THAT A MISTAKE IN BID WAS MADE, THE AMOUNT INTENDED TO BE BID BECOMES SIMPLY A PROCESS OF ADDING $90,000 TO THE ORIGINAL MISTAKEN BID, AND THUS THE AMOUNT INTENDED TO BE BID BECOMES LIKEWISE CLEAR.'

THE ATTORNEYS REFER TO SEVERAL DECISIONS OF THIS OFFICE WHEREIN CORRECTION OF ERRORS IN BIDS HAS BEEN AUTHORIZED AND THEY SUGGEST THAT THE ERROR IN THE BID OF PHILSAN COMPANY SHOULD ALSO BE CORRECTED.

IT HAS BEEN CONSISTENTLY HELD BY THIS OFFICE THAT, WHILE "CLEAR AND CONVINCING EVIDENCE" OF A MISTAKE MUST BE SUBMITTED TO AUTHORIZE THE WITHDRAWAL OF A BID AFTER THE OPENING, THE EVIDENCE NECESSARY TO AUTHORIZE CORRECTION OF A BID MUST BE STRONGER AND MUST BE SUCH AS TO LEAVE NO DOUBT AS TO THE MISTAKE OR THE INTENDED BID PRICE, AND ALL CIRCUMSTANCES MUST BE CONSIDERED. THAT THIS HAS BEEN THE RULE IS DEMONSTRATED BY THE LARGE NUMBER OF CASES WHEREIN BIDDERS HAVE BEEN ALLOWED TO WITHDRAW THEIR BIDS AND THE RELATIVELY FEW CASES WHEREIN CORRECTION OF A BID HAS BEEN AUTHORIZED.

IN THE INSTANT CASE THE AGGREGATE AMOUNT OF THE NINE BIDS RECEIVED, THE AMOUNTS QUOTED FOR ITEMS NOS. 2 AND 27, TOGETHER WITH THE GOVERNMENT'S ESTIMATE OF THE COST, ARE AS FOLLOWS:

TABLE

TOTAL OF

BASE BID ITEMS 2 BIDDER (CONCRETE PIPE) ITEM 2 ITEM 27 AND 27PHILSAN COMPANY $746,179.50 $20,000 $10,000 $30,000 PHILSAN COMPANY (ALLEGED

INTENDED BID) 836,179.50 20,000 100,000 120,000 BIDDER NO. 2 884,121.15 31,605 20,000 51,605 BIDDER NO. 3 918,318.75 54,000 40,000 94,000 BIDDER NO. 4 924,000.00 25,000 12,000 37,000 BIDDER NO. 5

939,295.40 35,000 12,500 47,500 BIDDER NO. 6 974,967.50 37,500 30,000 67,500 BIDDER NO. 7 999,991.10 30,000 30,000 60,000 BIDDER NO. 8

1,189,503.70 43,000 20,000 63,000 BIDDER NO. 9 1,253,287.40 40,000 65,000 105,000 GOVERNMENT ESTIMATE 1,092,720.05 28,000 28,500 56,500

IT IS REPORTED, AND IS SHOWN BY THE ABOVE TABULATION, THAT THE AMOUNT OF THE ALLEGED INTENDED BID FOR ITEM NO. 27, EVEN WHEN CONSIDERED WITH ITEM NO. 2, IS EXCESSIVE WHEN COMPARED WITH THE GOVERNMENT'S ESTIMATE AND THE OTHER BIDS RECEIVED. IT MAY BE THAT COSTS WHICH MORE PROPERLY ARE APPLICABLE TO OTHER ITEMS WERE INCLUDED IN ITEM NO. 27 OR THAT THE BIDDER INTENDED TO SUBMIT AN UNBALANCED BID ON THAT ITEM--- SINCE IT WOULD BE COMPLETED EARLY IN THE CONTRACT PERIOD--- IN ORDER TO HELP FINANCE THE PROJECT.

ON THE RECORD PRESENTED, HOWEVER, WE AGREE WITH THE RECOMMENDATIONS OF THE DISTRICT AND DIVISION ENGINEERS AND THE DETERMINATION OF THE CHIEF OF ENGINEERS THAT THE EVIDENCE SUBMITTED IN THIS CASE IS NOT SUCH AS WOULD WARRANT THE CORRECTION OF THE BID. AS TO THE PROTESTING BIDDER'S ARGUMENT THAT THE SAME EVIDENCE WHICH ESTABLISHED THE ERROR ALSO ESTABLISHED THE INTENDED BID, IT MAY BE SAID THAT THE ALLEGATION OF ERROR IS SUBSTANTIALLY CORROBORATED BY THE OBVIOUS FACT THAT THE BID AS SUBMITTED WAS SO FAR OUT OF LINE WITH OTHER BIDS AS TO MAKE IT DOUBTFUL WHETHER IT COULD PROPERLY HAVE BEEN ACCEPTED WITHOUT VERIFICATION.

YOU ARE ADVISED THEREFORE THAT THE BID OF PHILSAN COMPANY MAY NOT BE CORRECTED BUT MAY BE DISREGARDED IN MAKING THE AWARD.

THE COPY OF THE INVITATION FOR BIDS IS RETURNED. THE OTHER PAPERS ARE BEING RETAINED HERE.