B-162740, JAN. 17, 1968

B-162740, JAN. 17, 1968

BIDS - MISTAKES - TELEGRAPH ERRORS DECISION TO SECY. OF AGRICULTURE CONCERNING PROTEST OF NEAL BUILDERS, INC. AGAINST AWARD TO RUSSELL CONSTRUCTION CO. BY FOREST SERVICE FOR CONSTRUCTION OF BRIDGE RAILING. ACTION OF A CONTRACTING OFFICER IN REDUCING A BID THEREBY REPLACING A LOW BID ON THE BASIS THAT A TELEGRAPHIC MODIFICATION WAS THE RESULT OF A PHONE MISUNDERSTANDING IS UNAUTHORIZED SINCE SUCH ERROR IS NOT CLERICAL-TYPE ERROR FOR CORRECTION UNDER FPR 1-2.406-2, TITLE 5, PAR. 273. ALSO SINCE NEITHER THE EXISTENCE OF THE ERROR NOR THE INTENDED BID PRICE WAS CONCLUSIVELY ESTABLISHED FROM FACE OF BID OR FROM EVIDENCE FURNISHED THE CORRECTION WAS NOT PROPER. HOWEVER, SINCE PROTESTING LOW BIDDER DID NOT IMMEDIATELY SEEK TO HAVE PERFORMANCE HELD UP AND IS NOT NOW REQUESTING CANCELLATION, CANCELLATION BECAUSE OF PERFORMANCE WOULD NOT BE IN INTEREST OF GOVT. HOWEVER THE CONTRACTING AGENCY SHOULD ISSUE INSTRUCTIONS TO AVOID RECURRENCE OF ERRONEOUS ACTION.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 15, 1967, FROM YOUR DIRECTOR OF THE OFFICE OF PLANT AND OPERATIONS, RELATIVE TO THE PROTEST BY NEAL BUILDERS, INC., AGAINST THE AWARD TO RUSSELL CONSTRUCTION COMPANY OF FOREST SERVICE CONTRACT NO. 26-1754, KELLY FORK BRIDGE NO. 254-0.0.

IN HIS REPORT FURNISHED TO THIS OFFICE THE CONTRACTING OFFICER STATES THAT RUSSELL ORIGINALLY ENTERED A BID OF $124,229.51, WHICH INCLUDED A UNIT PRICE OF $12 ON ITEM 219, 346 LINEAL FEET OF BRIDGE RAILING, AND BY A TIMELY TELEGRAPHIC MODIFICATION RECEIVED BEFORE OPENING ADDED $23.78 TO ITEM 219 WHICH BROUGHT ITS TOTAL BID TO $132,457.39. AFTER BID OPENING RUSSELL ADVISED THE CONTRACTING OFFICER THAT THE TELEGRAPHIC MODIFICATION AS RECEIVED BY THE GOVERNMENT WAS ERRONEOUS, INASMUCH AS RUSSELL INTENDED TO REPLACE ITS ORIGINAL UNIT PRICE BID FOR ITEM 219 WITH THE AMOUNT OF $23.78 RATHER THAN TO ADD THAT AMOUNT TO ITS ORIGINAL BID. SUBSEQUENTLY, WESTERN UNION FORWARDED TO THE CONTRACTING OFFICER A CORRECTED MESSAGE WHICH IT CERTIFIED TO BE CORRECT. IT FURTHER APPEARS THAT THE WESTERN UNION OPERATOR RECEIVED THE MESSAGE FROM RUSSELL BY TELEPHONE AND THAT THE WORDING OF THE TELEGRAM AS ORIGINALLY DELIVERED TO THE GOVERNMENT WAS THE RESULT OF A "PHONE MISUNDERSTANDING.' IN VIEW OF THE ABOVE AND SINCE RUSSELL'S BID OF $35.78 FOR ITEM 219 WAS APPROXIMATELY 75 PERCENT HIGHER THAN THE ENGINEER'S ESTIMATE AND THE OTHER BIDS FOR THE ITEM, THE CONTRACTING OFFICER CORRECTED THE BID TO $23.78, THEREBY REDUCING RUSSELL'S TOTAL BID TO $128,305.39 AND DISPLACING NEAL'S APPARENT LOW BID OF $130,222.75. AWARD WAS REQUIRED BY THE INVITATION TO BE MADE IN THE AGGREGATE AND WAS MADE ACCORDINGLY TO RUSSELL ON SEPTEMBER 29, 1967, AT THE LOWER PRICE.

IT IS NEAL'S CONTENTION THAT AN ERROR DID NOT OCCUR IN THE TRANSMISSION OF THE TELEGRAM IN THIS CASE, BUT RATHER THERE WAS A DELIBERATE CHANGE IN THE CONTENT OF RUSSELL'S TELEGRAM AMOUNTING TO AN INTENT TO DEFRAUD THE GOVERNMENT AND, CONSEQUENTLY, IT WAS IMPROPER FOR THE CONTRACTING OFFICER TO PERMIT THE DOWNWARD CORRECTION OF RUSSELL'S BID.

CONCERNING THE ALLEGATION THAT RUSSELL DELIBERATELY ATTEMPTED TO DEFRAUD THE GOVERNMENT, THE ONLY EVIDENCE SUBMITTED IN SUPPORT THEREOF IS THAT AFTER OPENING RUSSELL AND WESTERN UNION HAVE ALLEGED THAT A PHONE MISUNDERSTANDING RESULTED IN AN ERRONEOUS BID. UPON REVIEW OF THE ENTIRE RECORD OF THIS CASE, WE DO NOT FIND ANY BASIS FOR SUSTAINING AN ALLEGATION OF FRAUD. HOWEVER, FOR THE REASONS STATED BELOW IT IS OUR OPINION THAT THE AWARD TO RUSSELL WAS IMPROPERLY MADE.

UNDER THE FEDERAL PROCUREMENT REGULATIONS (FPR) GOVERNMENT CONTRACTING OFFICERS ARE AUTHORIZED TO CORRECT CLERICAL MISTAKES APPARENT ON THE FACE OF THE BID, AFTER FIRST OBTAINING FROM THE BIDDER VERIFICATION OF THE BID ACTUALLY INTENDED. SEE FPR 1-2.406-2. TITLE 5, PARAGRAPH 273 OF THE DEPARTMENT OF AGRICULTURE ADMINISTRATIVE REGULATIONS REQUIRES THAT ALL DETERMINATIONS RELATIVE TO MISTAKES WHICH ARE NOT AUTHORIZED FOR HANDLING BY THE CONTRACTING OFFICERS ARE TO BE REFERRED THROUGH AGENCY CHANNELS TO THE OFFICE OF GENERAL COUNSEL FOR A LEGAL DETERMINATION OR OTHER APPROPRIATE ACTION. FPR 1 2.406-3 PROVIDES THAT A BID MAY BE CORRECTED WHERE CLEAR AND CONVINCING EVIDENCE ESTABLISHES BOTH THE EXISTENCE OF A MISTAKE AND THE BID ACTUALLY INTENDED; HOWEVER, IF SUCH CORRECTION WOULD RESULT IN DISPLACING ONE OR MORE LOWER ACCEPTABLE BIDS, CORRECTION MAY NOT BE MADE UNLESS THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND BID ITSELF.

THE PROHIBITION AGAINST A DOWNWARD CORRECTION WHICH WOULD DISPLACE A LOWER BID FOLLOWED A DECISION TO THAT EFFECT BY OUR OFFICE, 37 COMP. GEN. 210. WHILE IN A LATER DECISION, 41 COMP. GEN. 165, WE MADE AN EXCEPTION TO THE RULE AGAINST DISPLACEMENT OF LOWER BIDDERS IN A SITUATION WHERE AN ERROR WAS MADE BY THE TELEGRAPH COMPANY IN TRANSMITTING A BID TO THE CONTRACTING AGENCY, ON THE GROUND THAT THE MISTAKE WAS NOT ATTRIBUTABLE TO THE BIDDER BUT TO AN INDEPENDENT AGENCY OVER WHICH THE BIDDER HAD NO EFFECTIVE CONTROL, WE DO NOT CONSIDER THAT EXCEPTION APPLICABLE IN THE PRESENT CASE. IN THE CASE CITED THE EVIDENCE TO SUPPORT THE CORRECTION WAS IN THE RECORDS OF THE TELEGRAPH COMPANY AND IT WAS NOT NECESSARY TO CONSIDER OR RELY UPON ANY STATEMENTS, RECORDS, OR INFORMATION FURNISHED BY THE BIDDER. IN THE PRESENT CASE, AS WE UNDERSTAND THE RECORD, THE TELEGRAPH COMPANY HAD NO RECORD TO SHOW THAT THE MESSAGE DELIVERED ORIGINALLY WAS NOT THE MESSAGE TELEPHONED IN BY THE BIDDER, AND THE PURPORTED "CORRECTED" MESSAGE WAS SENT SOLELY ON THE BASIS OF THE BIDDER'S OWN STATEMENT, AND WE DO NOT BELIEVE THAT THE TELEGRAPH COMPANY'S "CERTIFICATION" OF THE CORRECTION IN THESE CIRCUMSTANCES CAN BE ACCEPTED AS A BASIS FOR CORRECTION. SEE B-159059, MAY 1, 1963, WHERE A CORRECTION OF AN ALLEGED MISTAKE INVOLVING A SIMILAR TELEPHONE MISUNDERSTANDING WAS DENIED.

THE RECORD OF THIS CASE INDICATES THAT THE CONTRACTING ACTIVITY PERMITTED CORRECTION OF RUSSELL'S BID WITHOUT REFERRING THE MATTER FOR A LEGAL DETERMINATION. IN OUR OPINION SUCH ACTION WAS UNAUTHORIZED SINCE AN ERROR DUE TO A "PHONE MISUNDERSTANDING" IS CLEARLY NOT A CLERICAL-TYPE ERROR SUCH AS CONTEMPLATED BY THE REGULATION. FOR THE REASONS STATED ABOVE WE ARE ALSO OF THE OPINION THAT THE CORRECTION COULD NOT PROPERLY HAVE BEEN PERMITTED BY ANY AUTHORITY, SINCE NEITHER THE EXISTENCE OF THE ERROR NOR THE INTENDED BID -- TO REPLACE RUSSELL'S PRICE ON ITEM 219 WITH $23.78 RATHER THAN TO ADD SUCH AMOUNT TO THE BID -- WAS CONCLUSIVELY AND SUBSTANTIALLY ESTABLISHED FROM THE FACE OF THE BID, OF WHICH THE ORIGINALLY DELIVERED TELEGRAM WAS A PART, OR FROM ANY EVIDENCE NOT FURNISHED BY THE BIDDER.

INASMUCH AS NEAL BUILDERS, INC., DID NOT IMMEDIATELY SEEK TO HAVE PERFORMANCE UNDER THE CONTRACT HELD UP AND ARE NOT NOW REQUESTING CANCELLATION, AND IT IS PRESUMED THAT THE WORK HAS BEEN PROCEEDED WITH BY THE RUSSELL COMPANY, IT APPEARS THAT CANCELLATION OF THE CONTRACT WOULD NOT BE IN THE INTEREST OF THE GOVERNMENT. IT IS REQUESTED, HOWEVER, THAT APPROPRIATE INSTRUCTIONS BE ISSUED TO CONTRACTING PERSONNEL OF YOUR DEPARTMENT TO AVOID RECURRENCE OF SUCH ERRONEOUS ACTION.

THE ENCLOSURES RECEIVED WITH THE DIRECTOR'S REPORT OF DECEMBER 15 ARE RETURNED AS REQUESTED.