B-179084, OCT 17, 1973, 53 COMP GEN 232

B-179084, OCT 17, 1973, 53 COMP GEN 232

BIDS - MISTAKES - EVIDENCE OF ERROR - "CLEAR AND CONVINCING EVIDENCE" OF ERROR WHILE GAO HAS A RIGHT OF REVIEW, THE AUTHORITY TO CORRECT MISTAKES ALLEGED AFTER BID OPENING BUT PRIOR TO AWARD VESTS IN THE PROCURING AGENCY, AND AS THE WEIGHT TO BE GIVEN EVIDENCE SUBMITTED IN SUPPORT OF AN ERROR IS A QUESTION OF FACT, THE DETERMINATION BY THE DESIGNATED EVALUATOR OF EVIDENCE, TO WHOM THE MATTER WAS REFERRED PURSUANT TO ASPR 2- 406.3(B)(1) AND E(3), TO CORRECT THE ERROR SINCE THE WORK SHEETS OF THE LOW BIDDER ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE THAT THE ALLEGED ERROR OCCURRED, SHOWED HOW IT OCCURRED, AND THAT THE PRICE BID WAS ONLY APPROXIMATELY 35 PERCENT OF THE PRICE INTENDED, WILL NOT BE DISTURBED BY GAO, FOR WORK SHEETS ALONE CAN CONSTITUTE CLEAR AND CONVINVING EVIDENCE OF ERROR, AND THE FACT THAT THE PROCURING ACTIVITY DETERMINED THE EVIDENCE WAS NOT CLEAR AND CONVINCING IN NO WAY BOUND THE EVALUATOR OR REFLECTED ON THE INDEPENDENT CONSIDERATION OF THE EVIDENCE. FURTHERMORE, THE ASPR 2- 406 PROCEDURE FOR EVALUATING BID MISTAKES APPLIES WHETHER THE PROCUREMENT IS ROUTINE OR COMPLICATED.

TO FRASER-VOLPE CORPORATION, OCTOBER 17, 1973:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 3, 1973, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO TSN COMPANY, INC. (TSN) UNDER INVITATION FOR BIDS (IFB) NO. DAAA 21-73-B 0131, ISSUED BY THE DEPARTMENT OF THE ARMY, PICATINNY ARSENAL, DOVER, NEW JERSEY.

THE IFB, AS AMENDED, WHICH CALLED FOR AN ELECTRO-OPTICAL SCANNING SYSTEM TO VERIFY THAT THE PROPER LEGEND HAS BEEN CLEARLY IMPRINTED ON THE 105MM M67 PROPELLANT CHARGE BAGS, ESTABLISHED JANUARY 8, 1973, AS THE BID OPENING DATE. ON THAT DATE, NINE BIDS WERE RECEIVED AND RECORDED AS FOLLOWS:

TSN $ 8,758.00

FRASER-VOLPE CORPORATION 33,654.00

ZIA ASSOCIATES, INC 34,989.00

FOOD TECHNOLOGY CORPORATION 47,740.00

YORK INFORMATION SYSTEM 48,375.50

WELLESLEY INSTRUMENTS CORPORATION 48,600.00

LASER SCIENCES 68,900.00

VISICON, INC 69,300.00

WOOD-IVEY SYSTEM CORPORATION 73,600.00

SINCE TSN'S PRICE WAS SUBSTANTIALLY BELOW THE OTHER BID PRICES, THE PROCURING ACTIVITY, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-406.1, REQUESTED THAT TSN VERIFY ITS BID PRICE. BY A TELEGRAM DATED JANUARY 11, 1973, TSN ALLEGED THAT IT HAD MADE AN ERROR IN ITS BID PRICE AND REQUESTED THAT ITS BID BE CORRECTED TO $30,856.00. BY A LETTER DATED JANUARY 17, 1973, TSN STATED THAT THE MISTAKE OCCURRED WHEN ITS SECRETARY ERRONEOUSLY TRANSFERRED TO THE BID FORM ONLY THE TOTAL PRICE SHOWN ON ONE OF THE FOUR WORK SHEETS USED IN COMPUTING ITS BID PRICE. TSN'S WORK SHEETS WERE SUBMITTED TO SUPPORT ITS ALLEGATION TOGETHER WITH ONE SUBCONTRACTOR QUOTE AND SEVERAL POTENTIAL SUPPLIERS' CATALOGS AND PRICE LISTS.

OUR OFFICE CONSISTENTLY HAS HELD THAT TO PERMIT CORRECTION OF AN ERROR IN BID PRIOR TO AWARD, A BIDDER MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAS BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED, AND THE INTENDED BID PRICE. 49 COMP. GEN. 480, 482 (1970); 51 ID. 503, 505 (1972). THESE SAME BASIC REQUIREMENTS FOR THE CORRECTION OF A BID ARE FOUND IN ASPR 2-406.3(A)(2) WHICH PROVIDES:

*** IF THE EVIDENCE IS CLEAR AND CONVINCING BOTH AS TO EXISTENCE OF THE MISTAKE AND AS TO THE BID ACTUALLY INTENDED, AND IF THE BID, BOTH AS UNCORRECTED AND AS CORRECTED, IS THE LOWEST RECEIVED, A DETERMINATION MAY BE MADE TO CORRECT THE BID AND NOT PERMIT ITS WITHDRAWAL.

IN THE PRESENT CASE, AFTER CONSIDERATION OF THE EVIDENCE SUBMITTED IN SUPPORT OF THE ALLEGED ERROR, THE PROCURING ACTIVITY FOUND:

4. THE EVIDENCE HAS BEEN REVIEWED BY THIS ARSENAL AND IT IS NOT CONSIDERED CLEAR AND CONVINCING AS TO THE BID ACTUALLY INTENDED. ***

THE PROCURING ACTIVITY BY LETTER DATED AUGUST 1, 1973, RECEIVED IN OUR OFFICE ON AUGUST 8, 1973, ADVISED THAT IT MADE THIS DETERMINATION BECAUSE THE CATALOG ITEMS AND PRICE LISTS SUBMITTED BY TSN COULD NOT BE CORRELATED WITH THE DETAILED COSTS SHOWN ON ITS WORK SHEETS, SINCE TSN HAD NOT RECEIVED FIRM QUOTATIONS FOR THESE ITEMS. ONLY THE SUBCONTRACTOR QUOTE IN THE AMOUNT OF $650.00 COULD BE CORRELATED WITH THE WORK SHEETS.

THIS MATTER WAS FORWARDED BY THE PROCURING ACTIVITY TO THE GENERAL COUNSEL OF THE UNITED STATES ARMY MATERIEL COMMAND (AMC) AS REQUIRED BY ASPR 2-406.3(B)(1) AND (E)(3). AFTER A CONSIDERATION OF THE SUBMITTED EVIDENCE IN SUPPORT OF BID CORRECTION, AMC UNDER DATE OF MAY 3, 1973, MADE THE FOLLOWING DETERMINATION:

3. BY LETTER OF 17 JAN 73 TSN ALLEGED THAT IT HAD MADE A MISTAKE IN ITS BID PRICE, THAT ITS INTENDED PRICE WAS $30,856.00, EXPLAINED HOW THE MISTAKE OCCURRED, SUBMITTED ITS WORKSHEETS IN PROOF OF ITS INTENDED PRICE AND REQUESTED CORRECTION OF ITS BID PRICE.

4. THE WORKSHEETS CONSIST OF 4 SEPARATE PAGES. THE FIRST 3 SHOW THE COST OF MATERIAL AND LABOR FOR 3 SEPARATE COMPONENTS WHICH COMPRISE THE SCANNER SYSTEM. THE FOURTH PAGE SHOWS A TOTAL OF THE COST OF THE THREE COMPONENTS, AS SHOWN FROM THE FIRST 3 PAGES, TO WHICH IS ADDED MISCELLANEOUS EXPENSE, FREIGHT, TRAVEL, C & A AND PROFIT FOR A TOTAL OF $30,856.00.

5. IN ITS NARRATIVE STATEMENT, TSN EXPLAINS THAT IN FILLING OUT THE BID SET, THE PRICE WAS MISTAKENLY SUBMITTED AS SHOWN ON THE FIRST PAGE OF THE WORKSHEETS AS IT WAS OVERLOOKED THAT THE ESTIMATE CONSISTED OF 4 PAGES, THE LAST OF WHICH CONTAINED THE INTENDED PRICE. IN REVIEW OF THIS FILE, I FIND THAT ADDITION OF THE VARIOUS FIGURES COMPRISING THE COST OF THE COMPONENTS TO BE CORRECT AND THE ADDITION OF THE COSTS OF SUCH COMPONENTS PLUS THE COST OF MISCELLANEOUS EXPENSES, TRAVEL, FREIGHT, G & A AND PROFIT TO BE $30,856.00 AS SHOWN ON THE FOURTH PAGE. THIS INFORMATION THEN DISCLOSES CLEAR AND CONVINCING EVIDENCE OF AN ERROR IN BID AND THE INTENDED BID PRICE.

6.THEREFORE, I HEREBY DETERMINE THAT IN THE BEST INTEREST OF THE GOVERNMENT THE CONTRACTING OFFICER SHOULD BE AND HEREBY IS AUTHORIZED TO PERMIT TSN COMPANY, INC. TO CORRECT ITS UNIT BID PRICE AND THE TOTAL AMOUNT OF ITS BID TO $30,856.00 FOR ITEM 0001 UNDER IFB DAAA21-73-B 0131.

YOU CONTEND THAT THE REVISION OF TSN'S BID BY 253 PERCENT AND 10 PERCENT BELOW THE NEXT LOWEST BID IS IN STRONG OPPOSITION TO ASPR'S INTENT. YOU FURTHER CONTEND THAT THE WORK SHEETS SUBMITTED BY TSN TO SUPPORT CORRECTION CANNOT CONSTITUTE CLEAR AND CONVINCING EVIDENCE AS TO THE BID PRICE ACTUALLY INTENDED, SINCE ASPR 2-406.3(E)(1) REQUIRES THAT ALL PERTINENT EVIDENCE BE SUBMITTED SO THAT WORK SHEETS ALONE CANNOT CONSTITUTE A SUFFICIENT BASIS FOR A DECISION TO CORRECT THE BID. YOU STATE THAT THE VERY FACT THAT THE PROCURING ACTIVITY AND AMC COULD DIFFER AS TO THEIR INTERPRETATION OF THE DATA SUBMITTED BY TSN DEMONSTRATES THAT THE EVIDENCE IS NOT CLEAR AND CONVINCING.

YOU ALSO CONTEND THAT TSN WAS SUBJECT TO THE SAME BUSINESS PRESSURES AS THE OTHER BIDDERS AND IN ADDITION, TSN'S PRESIDENT SIGNED ITS BID ON DECEMBER 11, 1972, SO TSN HAD 28 DAYS TO REVIEW ITS BID TO INSURE CORRECTNESS. YOU STATE THAT THE OTHER BIDDERS, WHO PROPERLY REVIEWED THEIR BIDS, SHOULD NOT BE PENALIZED BY TSN'S NEGLIGENCE. YOU FURTHER ALLEGE THAT ASPR 2-406, AS WRITTEN, BETTER COVERS "ROUTINE PROCUREMENTS" WHERE A MISTAKE CAN BE EASILY TRACED, AND NOT PROCUREMENTS SUCH AS THE IFB QUESTIONED HERE FOR THE PROCUREMENT OF A CUSTOMIZED SCANNER SYSTEM, WHERE IT IS ALMOST IMPOSSIBLE TO PRESENT CLEAR AND CONVINCING EVIDENCE. YOU CONCLUDE THAT TO ACCEPT TSN'S ORIGINAL BID ON SUCH EVIDENCE IS AN INVITATION TO FRAUD IN FUTURE PROCUREMENTS OF THIS NATURE, SINCE IT IS EASY TO FABRICATE WORK SHEETS FOR ANY VALUE DESIRED AFTER LEARNING AT BID OPENING THE AMOUNT OF THE OTHER BIDS SUBMITTED.

WITH REGARD TO YOUR CONTENTION AS TO TSN'S FAILURE TO SUBMIT DATA OTHER THAN ITS WORK SHEETS, TSN IN ITS LETTER OF AUGUST 16, 1973, RECEIVED IN OUR OFFICE ON SEPTEMBER 4, 1973, STATED:

THE ELECTRO-OPTICAL SCANNING SYSTEM IN CONTRACT DAAA21-73-B-0131 REQUIRED CUSTOM DESIGN AND DEVELOPMENT TO MEET THE SPECIFICATIONS. CONSEQUENTLY, IN BIDDING, IT WAS NECESSARY TO GUESS-ESTIMATE NOT ONLY MAN-HOURS BUT ALSO THE COST OF THE VARIOUS COMPONENTS TO BE INCLUDED IN THE SYSTEM. GATHERED THE TECHNICAL MATERIALS AND PRICES OF PHOTOMETERS, MARKING DEVICES AND THE LIKE TO HELP US ARRIVE AT PROBABLE COSTS. WE WERE UNABLE TO GET SPECIFIC PRICES FOR THE VARIOUS COMPONENTS UNLESS WE DEFINED OUR REQUIREMENTS. THE REQUIREMENTS CAN ONLY BE DEFINED AFTER THE DESIGNING AND THE DEVELOPMENT ARE COMPLETED. OBVIOUSLY, IT IS IMPRACTICAL TO DO THE ACTUAL DESIGN AND DEVELOPMENT WORK ON QUOTATIONS.

UNDER SUCH CIRCUMSTANCES, OUR OFFICE HAS FOUND WORK SHEETS IN THEMSELVES TO BE CLEAR AND CONVINCING EVIDENCE, IF THEY ARE IN GOOD ORDER AND INDICATE THE INTENDED BID PRICE AS LONG AS THERE IS NOT CONTRAVENING EVIDENCE. SEE B-173031, SEPTEMBER 17, 1971; B-176900, NOVEMBER 29, 1972.

MOREOVER, SINCE ASPR 2-406.3(E)(3) REQUIRED THAT THIS MATTER BE SUBMITTED TO AMC FOR ITS DETERMINATION, THE FINDING BY THE PROCURING ACTIVITY THAT THE EVIDENCE SUBMITTED TO SUPPORT BID CORRECTION WAS NOT CLEAR AND CONVINCING IN NO WAY BINDS AMC NOR SHOULD IT BE REFLECTIVE ON AMC'S INDEPENDENT CONSIDERATION OF THE EVIDENCE.

EVEN THOUGH THE GENERAL ACCOUNTING OFFICE (GAO) HAS RETAINED THE RIGHT OF REVIEW, THE AUTHORITY TO CORRECT MISTAKES ALLEGED AFTER BID OPENING BUT PRIOR TO AWARD IS VESTED IN THE PROCURING AGENCY AND THE WEIGHT TO BE GIVEN THE EVIDENCE IN SUPPORT OF AN ALLEGED MISTAKE IS A QUESTION OF FACT TO BE CONSIDERED BY THE ADMINISTRATIVELY DESIGNATED EVALUATOR OF EVIDENCE, WHOSE DECISION WILL NOT BE DISTURBED BY OUR OFFICE UNLESS THERE IS NO REASONABLE BASIS FOR THE DECISION. 41 COMP. GEN. 160, 163 (1961); 51 ID. 1, 3 (1971). UNDER THE PRESENT IFB, THIS AUTHORITY WAS DELEGATED TO AMC WITHOUT AUTHORITY TO REDELEGATE. ASPR 2 406.3(B)(1). MOREOVER, ASPR MAKES NO DISTINCTION, AS YOU ALLEGE IT SHOULD, BETWEEN "ROUTINE PROCUREMENTS" AND MORE COMPLICATED PROCUREMENTS WITH REGARD TO THE APPLICABILITY OF ASPR 2-406.

THIS PROCEDURE FOR THE CORRECTION OF A BID AFTER BID OPENING IS CONSONANT WITH THE STATUTES REQUIRING ADVERTISING FOR BIDS AND THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE, RESPONSIVE BIDDERS, SINCE THESE STATUTES ARE FOR THE BENEFIT OF THE UNITED STATES IN SECURING BOTH FREE COMPETITION AND THE LOWEST COMPETITIVE PRICES IN ITS PROCUREMENT ACTIVITIES. SEE B-148117, MARCH 22, 1962. THEREFORE, WHERE THESE PROCEDURES ARE STRICTLY FOLLOWED SO THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS NOT PREJUDICED, THE UNITED STATES SHOULD HAVE THE COST BENEFIT OF THE BID AS CORRECTED, PROVIDED THAT IT IS STILL LOWER THAN ANY OTHER BID SUBMITTED. THIS PROCEDURE DOES NOT PREJUDICE THE OTHER BIDDERS, SINCE CORRECTION WILL ONLY BE MADE UPON A CONVINCING SHOWING OF WHAT THE BID WOULD HAVE BEEN AT BID OPENING BUT FOR THE MISTAKE. IN ANY CASE, THIS PROCEDURE IS NOT FOR THE BENEFIT OF THE OTHER BIDDERS, BUT RATHER IT IS FOR THE BENEFIT OF THE UNITED STATES SO IT CAN RECEIVE THE PROCURED GOODS OR SERVICES AT THE LOWEST POSSIBLE PRICE.

THE PRINCIPLES SUPPORTING THIS PROCEDURE HAVE BEEN FOLLOWED BY GAO SINCE ITS CREATION BY THE BUDGET AND ACCOUNTING ACT OF 1921, 42 STAT. 20, 23, 31 U.S.C. 1. SEE, FOR EXAMPLE, 2 COMP. GEN. 503 (1923). PRIOR TO 1921, THE COMPTROLLER OF THE TREASURY ESTABLISHED THIS SAME GENERAL RULE. SEE 20 COMP. DEC. 728 (1914). THIS PROCEDURE HAS ALSO BEEN SANCTIONED BY THE COURT OF CLAIMS. EDMUND J. RAPPOLI, INC. V. UNITED STATES, 98 CT. CL. 499 (1943); CHRIS BERG, INC. V. UNITED STATES, 192 CT. CL. 176 (1970).

THE POTENTIAL FUTURE FRAUD WHICH YOU FORESEE FLOWING FROM A DECISION ALLOWING CORRECTION IN THIS CASE IS PROTECTED AGAINST BY THE HIGH STANDARD OF PROOF NECESSARY BEFORE CORRECTION IS AUTHORIZED AND THE INDEPENDENT REVIEW OF THE SUBMITTED EVIDENCE BY AN APPROPRIATE HIGHER AUTHORITY SUCH AS AMC. MOREOVER, NOTHING PREVENTS THE SUBMISSION OF SUCH CASES, AS HAS BEEN DONE HERE, TO GAO FOR OUR DECISION. SEE ASPR 2 406.3(F).

FROM THE DATA FURNISHED IN SUPPORT OF THE ALLEGED ERROR, WE CANNOT CONCLUDE THAT THERE WAS NO REASONABLE BASIS FOR THE DETERMINATION REACHED. ACCORDINGLY, YOUR PROTEST IS DENIED.