B-170378, DEC. 4, 1970

B-170378, DEC. 4, 1970

BID PROTEST - NEGOTIATIONS - MISTAKE IN BID DENIAL OF PROTEST BY SCHLESS CONSTRUCTION COMPANY, INC., AGAINST THE CORRECTION OF AN ERRONEOUS BID AND THE AWARD OF A CONTRACT FOR CONSTRUCTION OF RAILROAD FACILITIES, EQUIPMENT STORAGE YARD, ETC., ISSUED BY DEPT. OF THE ARMY, CORPS OF ENGINEERS, TO J.P. CULLEN AND SON, CORPORATION. WHERE A BID WAS CORRECTED FROM $1,127,419.81 TO $1,193,508.25 (KEEPING IT LOW), PROTESTANT'S CLAIM THAT EVIDENCE OF A MISTAKE IN A UNIT PRICE BID IS NOT POSSIBLE AND THAT BIDDER MIGHT DELIBERATELY LIST SOME UNIT PRICES LOW AND CLAIM THE MISTAKE AT A LATER DATE WILL BE DENIED SINCE THERE IS CLEAR EVIDENCE OF THE ERROR (ORIGINAL WORKSHEETS) AND THE CORRECTION DID NOT RESULT IN THE DISPLACEMENT OF ANOTHER BID. WHERE CORRECTION PREVENTS THE LOSS OF AN ADVANTAGEOUS BID, EXERCISE OF JUDGEMENT SUBJECT TO THE REVIEW AUTHORITY OF THE GAO, WILL BE ALLOWED.

TO SCHLESS CONSTRUCTION COMPANY, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED JULY 14 AND 31, 1970, PROTESTING THE AWARD MADE TO J. P. CULLEN & SON CORPORATION, UNDER INVITATION FOR BIDS NO. DACA 23-70-B-0037, ISSUED BY THE DEPARTMENT OF THE ARMY, CHICAGO DISTRICT, CORPS OF ENGINEERS.

THE INVITATION ISSUED ON MAY 4, 1970, AS AMENDED, CALLS FOR FURNISHING ALL PLANT, LABOR, EQUIPMENT AND MATERIALS AND PERFORMING ALL WORK FOR PHASE I, ACID PLANTS AT THE JOLIET ARMY AMMUNITION PLANT. THE WORK REQUIRED THEREUNDER INCLUDED SITE PREPARATION CONSISTING OF RELOCATION AND CONSTRUCTION OF RAILROAD FACILITIES, EQUIPMENT STORAGE YARD, DRAINAGE DITCHES, CULVERTS AND STORM SEWERS, OVERHEAD STEAM LINE, ELECTRIC LINE AND GENERAL OVERLOT GRADING. THE BID PRICE SCHEDULE CONSISTED OF THE BASE SCHEDULE AND ONE ADDITIVE ITEM. FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON JUNE 18, 1970. AS SHOWN IN THE ABSTRACT OF BIDS, THE GOVERNMENT'S ESTIMATE FOR THE ENTIRE PHASE I WAS $1,744,255 AND J. P. CULLEN AND SON CORPORATION (CULLEN) SUBMITTED THE LOW BID OF $1,127,419.81. YOUR BID WAS SECOND LOW IN THE AMOUNT OF $1,214,225.50.

IT IS REPORTED BY THE ADMINISTRATIVE OFFICE THAT ON JUNE 22, 1970, THE CHICAGO DISTRICT OFFICE REQUESTED CULLEN TO REVIEW ITS BID PRICES AND SUBMIT WRITTEN VERIFICATION THEREOF. ON JUNE 23, 1970, CULLEN ALLEGED THAT A MISTAKE WAS MADE IN ITS BID PRICE ON ITEM 2(B), 12 EACH, TURNOUTS, IN FAILING TO TRANSFER THE CORRECT AMOUNT OF A SUBCONTRACTOR'S QUOTATION FOR THE ITEM TO CULLEN'S SUMMARY SHEET. THE ESTIMATOR INSERTED THE AMOUNT OF $55.63 INSTEAD OF $5,563 FOR EACH "TURNOUT", AND THE TOTAL FIGURE OF $668 FOR THE TWELVE "TURNOUTS" WAS INSERTED IN CULLEN'S BID INSTEAD OF THE INTENDED $66,756 (CORRECTED TO UNIT PRICE PER ITEM). THE RECORD, ACCOMPANIED BY ORIGINAL WORKSHEETS, SUBSTANTIATES THE BIDDER'S ALLEGATION THAT AN ERROR OCCURED IN TRANSFERRING ITS COST FIGURES FROM THE WORKSHEETS TO THE BID.

THE GENERAL COUNSEL OF THE OFFICE OF THE CHIEF OF ENGINEERS, PURSUANT TO AUTHORITY DELEGATED TO HIM UNDER THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-406.3(B)(1) HAS CONCLUDED THAT THE INFORMATION SUBMITTED IN SUPPORT OF THE CULLEN REQUEST FOR BID CORRECTION CONSTITUTED CLEAR AND CONVINCING EVIDENCE BOTH OF A MISTAKE AND THE INTENDED BID. HE THEREFORE GRANTED AUTHORITY TO CULLEN TO CORRECT ITS BID FROM $1,127,419.81 TO $1,193,508.25. IN VIEW OF THE CLEAR EVIDENCE PRESENTED BY CULLEN AND THE FACT THAT EVEN AS CORRECTED THE BID BY CULLEN REMAINED LOW, THIS OFFICE FINDS THE ACTION WAS PROPER UNDER THE DELEGATED AUTHORITY REFLECTED IN ASPR 2-406.3(A)(3).

IT IS YOUR CONTENTION THAT IN THE CASE OF A UNIT PRICE BID, CLEAR AND CONVINCING EVIDENCE OF MISTAKE IS NOT POSSIBLE. YOUR BASIS FOR THIS IS THAT A UNIT PRICE BID MAY BE DELIBERATELY UNBALANCED FOR A NUMBER OF REASONS. YOU CITE EXAMPLES SUCH AS; WHERE A BIDDER HAS KNOWLEDGE THAT THE ITEM WILL BE MATERIALLY CHANGED; WHERE THE ITEM WILL BE PERFORMED EITHER AT THE START OR AT THE END OF THE JOB; AND, WHERE A BIDDER MIGHT DELIBERATELY LIST SOME UNIT PRICES LOW AND CLAIM A MISTAKE AT A LATTER DATE AS LONG AS THE CHANGE IN UNITS WOULD RESULT IN THE LOW BIDDER STILL STAYING LOW.

WE HAVE CAREFULLY CONSIDERED YOUR VIEWS THAT WHERE THERE IS AN ACKNOWLEDGED MISTAKE IN BID, THAT BID SHOULD BE DISCARDED AND NOT AWARDED AT A HIGHER VALUE, ON THE BASIS THAT SUCH PRACTICE IS DETRIMENTAL TO THE COMPETITIVE BIDDING SYSTEM. WHILE THE POSSIBILITY OF ABUSE IS BY NATURE PRESENT WHERE THE EXERCISE OF JUDGMENT IS REQUIRED, IN THE CORRECTION OF THESE TYPES OF MISTAKES WE BELIEVE THE BENEFITS TO THE GOVERNMENT AND SAFEGUARDS IN THE REGULATION OUTWEIGH THE THREAT OF ABUSE. IN THIS VEIN WE STATED IN B-164886, DECEMBER 6, 1968, AS FOLLOWS:

"CORRECTION, RATHER THAN WITHDRAWAL, OF AN ERRONEOUS BID IS A LONG ESTABLISHED PRACTICE IN PROPER CASES SANCTIONED BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AS A JUSTIFIABLE MEANS OF PREVENTING THE LOSS TO THE GOVERNMENT OF A POTENTIALLY ADVANTAGEOUS BID. SINCE CORRECTION IS NEVER PERMITTED WHERE ITS EFFECT WOULD BE TO DISPLACE ANOTHER BID (UNLESS THE CORRECT AMOUNT IS CLEARLY ASCERTAINABLE FROM THE FACT OF THE BID), THE PROPRIETY OF PERMITTING CORRECT IS ESSENTIALLY A MATTER BETWEEN THE BIDDER AND THE GOVERNMENT (SEE 42 COMP. GEN. 723, 725) AND THE INTERESTS OF OTHER BIDDERS, WHO WOULD NOT BE IN LINE FOR AWARD UNLESS THE BID IN QUESTION WERE REJECTED, ARE NOT CONSIDERED TO BE SUCH AS TO ENTITLE THEM TO PARTICIPATE AS ADVERSARY PARTIES IN THIS PURELY ADMINISTRATIVE DETERMINATION, ALTHOUGH THEY ARE PERMITTED TO APPLY FOR AND OBTAIN REVIEW BY OUR OFFICE OF THE ADMINISTRATIVE ACTION.

"OUR OFFICE RECOGNIZED THE SERIOUSNESS OF THESE MATTERS WHEN GRANTING AUTHORITY, SUBJECT TO OUR REVIEW, TO THE CHIEF OF ENGINEERS, AND OTHER HEADS OF PROCURING AGENCIES, TO DECIDE CERTAIN TYPES OF CASES INVOLVING ERRORS IN BIDS ALLEGED PRIOR TO AWARD. SEE ASPR 2-406.3(B)(1).

"WE SHARE YOUR CONCERN THAT UNSCRUPULOUS BIDDERS NOT BE ALLOWED TO USE THE MISTAKE IN BID PROCEDURE TO OBTAIN AN UNDUE ADVANTAGE OVER THE GOVERNMENT OR THE OTHER BIDDERS. ON THE OTHER HAND, BASED ON THE FOREGOING LEGAL ANALYSIS, WE DO NOT BELIEVE THE COURTS WOULD PERMIT THE ENFORCEMENT OF A CONTRACT ON THE BASIS OF A BID KNOWN BY THE CONTRACTING OFFICER PRIOR TO AWARD TO HAVE BEEN SUBMITTED IN ERROR; AND BID CORRECTION, WE BELIEVE, IS APPROPRIATE UNDER THE RULES TO PROTECT THE INTERESTS OF THE GOVERNMENT. ACCORDINGLY, IN OUR VIEW, THE MOST FEASIBLE SOLUTION IS TO RETAIN THE PRESENT RULES AND TO USE OUR REVIEW AUTHORITY TO INSURE THAT THOSE RULES ARE STRICTLY AND PROPERLY APPLIED."

ACCORDINGLY, YOUR PROTEST IS DENIED.