BNUMBER:  B-265937
DATE:  January 17, 1996
TITLE:  CRK-JVC/Shockley Joint Venture

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Matter of:CRK-JVC/Shockley Joint Venture

File:     B-265937

Date:     January 17, 1996

John Lukjanowicz, Esq., Oles Morrison & Rinker, for the protester.
Christopher M. Bellomy, Esq., Department of the Navy, for the agency.
Christine Davis, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

An agency reasonably found that the protester had not presented clear 
and convincing evidence that it mistakenly failed to add certain tax 
and insurance prices to its total base bid price where the protester's 
mistake claim was initially based on bid worksheets that did not form 
the basis for the bid, and the submitted documentation and 
explanations in support of the mistake claim contain unexplained 
discrepancies and uncertainties as to the intended bid.

DECISION

CRK-JVC/Shockley Joint Venture (CRK) protests the decision of the 
Department of the Navy, Naval Facilities Engineering Command, to deny 
its request to correct a mistake in its low bid under invitation for 
bids (IFB) No. N62742-95-B-1305.

We deny the protest.

The IFB sought the design and construction of a Navy Exchange 
Distribution Center at the Naval Station, Pearl Harbor, Hawaii.  The 
IFB requested prices for a base bid item covering the basic project 
and for an additive item--the construction of a mezzanine.

The protester submitted the lowest of seven bids on the June 27, 1995, 
bid opening date.  The lowest three bids and the government estimate 
were as follows:

                Base Bid        Additive Item   Total Bid

CRK             $10,948,000     $730,000        $11,678,000

Bodell Construction$12,205,000  $605,000        $12,810,000S&M 
Sakamoto, Inc.  $12,492,000     $540,000        $13,032,000

Government Estimate$12,500,000  $725,000        $13,225,000
On June 28, the Navy asked CRK to confirm its bid, given that the 
other bids and the government estimate were significantly higher.  On 
June 30, CRK confirmed its bid.  On July 6, CRK retracted its 
confirmation and informed the Navy that its bid contained a mistake.  
CRK claimed its base bid was understated by $492,175, consisting of 
$39,441 for liability insurance and $452,734 for Hawaii Use Tax.  CRK 
stated that it meant to include these amounts in its base bid, but a 
computer programming error had the effect of excluding these amounts.  
The requested correction would make CRK's bid $12,170,175, or 5 
percent lower, than the next low bid.

On July 12, CRK submitted the bid worksheets and other back-up data 
used to prepare its bid, including a series of computer 
spreadsheets.[1]  CRK submitted 11 base bid spreadsheets and 10 
additive spreadsheets generated for this project.  Each base bid 
spreadsheet consistently excluded the prices for the liability 
insurance and Hawaii Use Tax items from the total base bid amount.  In 
an affidavit, the responsible CRK employee explained how the exclusion 
of these prices stemmed from a computer programming oversight.[2]
 
CRK generated all spreadsheets before bid opening, except for one base 
bid spreadsheet that bore a computerized "4:14 PM" notation.[3]  The 
amount claimed by CRK ($39,441 for liability insurance and $452,734 
for Hawaii Use Tax) appeared under these line items in the 4:14 p.m. 
spreadsheet.  Another spreadsheet, which bore a "3:26 PM" notation, 
reflected $39,773 for liability insurance and $458,411 for Hawaii Use 
Tax.  

CRK's actual base bid of $10,948,000 did not appear on any of the 
submitted spreadsheets.  The "Total Bid" amount is $10,983,493 on the 
4:14 p.m. spreadsheet ($35,493 more than the actual bid) and 
$11,120,906 on the 3:26 p.m. spreadsheet ($172,906 more than the 
actual bid).  CRK's lead team member explained in an affidavit that 
the actual bid submitted was based on the 3:26 p.m. spreadsheet.  The 
3:26 p.m. spreadsheet contains a handwritten notation, "cut 
(177,906)," which the team member stated he calculated and inscribed 
on the spreadsheet.[4]  The team member stated that he then 
arbitrarily shaved $5,000 from the handwritten "cut" amount and 
directed a $172,906 reduction to the 3:26 p.m. total base bid amount, 
which yields the submitted base bid of $10,948,000.

The base bid spreadsheet program contained individual line items for 
taxes, insurance, overhead, bonds, and profit, including liability 
insurance and Hawaii Use Tax.  In contrast, the additive spreadsheet 
program did not itemize these indirect costs, but contained a markup 
line item to account for them.  A markup of 10.43 percent appears on 
CRK's 3:44 p.m. additive spreadsheet.[5]  This same 10.43-percent 
markup figure also appears on CRK's 3:26 p.m. and 4:14 p.m. base bid 
spreadsheets in an inactive cell (i.e.,an item not actually used to 
calculate the total base bid).  The 10.43-percent base bid markup is 
the ratio between the total indirect project costs (taxes, insurance, 
overhead, bonds, and profit) and the total direct project costs; 
however, the Hawaii Use Tax and liability insurance items are not 
included in the 10.43-percent base bid markup.[6]

On August 7, the Navy's contract specialist asked the protester to 
clarify perceived ambiguities in the evidence, in particular, the 
apparent pricing discrepancies between the 3:26 p.m. and 4:14 p.m. 
spreadsheets, and between the base bid and additive spreadsheets.  The 
contract specialist asked which base bid spreadsheet formed the basis 
for CRK's bid and its mistake claim, and why the Hawaii Use Tax and 
liability insurance prices differed between the 3:26 p.m. and 4:14 
p.m. spreadsheets.  The contract specialist also asked the protester, 
"[w]hy is there no Hawaii Use Tax and Liability Insurance for [the 
additive bid item]?"  

On August 8, CRK replied that the 3:26 p.m. spreadsheet was the basis 
for its bid, and that the 4:14 p.m. spreadsheet, on which the mistake 
claim was based, was created after bid opening to highlight some 
revised subcontractor quotes, including one quote received after bid 
opening.  The protester explained that the Hawaii Use Tax and 
liability insurance prices fluctuated between the spreadsheets because 
they were percentages of other variable prices, such as labor or 
subcontract costs.  CRK also stated that, although the base bid 
mistakenly omitted the Hawaii Use Tax and liability insurance prices, 
the additive bid properly encompassed these costs through the 
application of a 10.43-percent markup.  

On August 10, the contracting officer denied CRK's request for bid 
correction, citing various inconsistencies in the evidence.  For 
example, the contracting officer was concerned that CRK purportedly 
based its bid on the 3:26 p.m. spreadsheet, but sought correction for 
prices appearing on the 4:14 p.m. spreadsheet, which were not 
traceable to the actual base bid submitted.  Moreover, the contracting 
officer  questioned, in view of CRK's explanation that the Hawaii Use 
Tax and liability insurance costs were included in the 10.43-percent 
additive markup, but were not in the base bid markup, whether CRK 
intended to omit the Hawaii Use Tax and liability insurance from its 
markup for both the base and additive bid.  Although the contracting 
officer denied CRK's request for correction, he offered CRK the 
opportunity to withdraw its bid, given that it was much lower than the 
government estimate.

On August 11, CRK asked the contracting officer to reconsider his 
decision.  CRK said that it mistakenly requested an upward adjustment 
for amounts appearing on the 4:14 p.m. spreadsheet, instead of the 
amounts appearing on the 3:26 p.m. spreadsheet.  CRK also said that 
the contracting officer improperly compared the base bid and additive 
bid in resolving the mistake claim, "[s]ince we have not requested any 
bid correction on the [additive bid], and since the [additive bid] has 
no relevancy to the well documented error made on [the base bid]."  

The contracting officer declined to reconsider his decision, stating 
that CRK's letter "reinforces our conclusion that the evidence you 
provided did not establish clearly and convincingly the mistake and 
the actual intended bid."  On August 16, CRK stated that it would 
accept the contract at its mistaken bid price, but would protest the 
agency's denial of its request for correction.  This protest followed.

CRK alleges that the Navy unreasonably denied its request for bid 
correction.  CRK claims that the Navy should have allowed an upward 
adjustment of its bid in the amount of $498,184.  This amount 
corresponds with the Hawaii Use Tax and liability insurance items on 
CRK's 3:26 p.m. base bid spreadsheet.

In order to protect the competitive bid system from abuse, the Federal 
Acquisition Regulation (FAR) imposes a high standard of proof--clear 
and convincing evidence--upon bidders seeking upward correction of 
their bids after bid opening but before award.  The bidder must submit 
clear and convincing evidence that a mistake was made, the manner in 
which the mistake occurred, and the intended price.  FAR  sec.  
14.406-3(a).  The exact amount of the intended bid need not be 
established, provided that there is clear and convincing evidence that 
the amount of the intended bid would fall within a narrow range of 
uncertainty and would remain low after correction.  Great Lakes Dredge 
& Dock Co., B-248007.2, Sept. 3, 1992, 92-2 CPD  para.  151.  Workpapers, 
including records of computer-generated software 
spreadsheets/worksheets, may constitute part of that clear and 
convincing evidence, if they are in good order and indicate the 
intended bid price, and there is no contravening evidence.  RJS 
Constructors, B-257457, Oct. 7, 1994, 94-2 CPD  para.  130; Northwest 
Builders, 67 Comp. Gen. 278 (1988), 88-1 CPD  para.  200; Bush Painting, 
Inc., B-239904, Aug. 30, 1990, 90-2 CPD  para.  188.

An agency may not permit the correction of a mistake asserted after 
bid opening, but before award, if the bidder's evidence fails to meet 
the high standard of proof established by FAR  sec.  14.406-3(a), 
notwithstanding the good faith of the parties.    Three O Constr., 
S.E., B-255749, Mar. 28, 1994, 94-1 CPD  para.  216.  Furthermore, because 
the contracting agency is vested with authority to correct mistakes, 
and because the weight to be given evidence in support of an asserted 
mistake is a question of fact, we will not disturb an agency's 
decision concerning bid correction unless there was no reasonable 
basis for the decision.  Id.; Lash Corp., 68 Comp. Gen. 232 (1989), 
89-1 CPD  para.  120; Tri-State Consultants, B-250700, Dec. 22, 1992, 92-2 
CPD  para.  433.

The question facing the agency in this case was whether the protester 
had clearly and convincingly established that its base bid mistakenly 
omitted the costs for the Hawaii Use Tax and liability insurance and, 
if so, what the intended bid price would have been.  The record 
reflects that the agency weighed the protester's evidence and 
discovered various ambiguities and contradictions that, in the Navy's 
view, precluded bid correction.  Based on our review of the record, we 
cannot say that the agency lacked a reasonable basis in concluding 
that the protester's evidence was less than clear and convincing.  

First, the protester based its mistake claim on two different base bid 
spreadsheets, neither of which reflected CRK's actual base bid of 
$10,948,000.  Although the protester submitted an affidavit to explain 
how certain manual adjustments to the 3:26 p.m. spreadsheet yielded 
the actual base bid, the protester maintained until its mistake 
request was denied that its bid was understated by amounts appearing 
on the 4:14 p.m. spreadsheet.  These varying explanations reasonably 
caused the agency to question the relevance of the 4:14 p.m. 
spreadsheet to the protester's mistake claim and bid, and to compare 
the protester's spreadsheets for a consistent pattern of pricing.  The 
agency's examination indicated certain weaknesses in the protester's 
evidence and brought other inconsistencies to light.  For example, the 
agency considered the fact that the protester did not reduce the 3:26 
p.m. bid according to the manual notation, "cut (177,906)"; that the 
4:14 p.m. spreadsheet included a revised subcontractor quote 
(assertedly received after bid opening) not encompassed by the "cut 
(177,906)"; and that the 4:14 p.m. spreadsheet only partially 
documented the price reductions allegedly comprising the "cut 
(177,906)."

The protester argues that even though it based its bid correction 
request on amounts appearing in the 4:14 p.m. spreadsheet, the agency 
should have known that the 4:14 p.m. spreadsheet was irrelevant and 
should have confined its review to the 3:26 p.m. spreadsheet.  The 
protester notes that it clarified for the Navy on August 8 that the 
4:14 p.m. spreadsheet was created after bid opening to highlight some 
revised subcontractor quotes and that the 3:26 p.m. spreadsheet was 
the basis for its bid.  What is troubling, however, is that CRK had 
been alerted to the discrepancy in its bid correction request, yet 
inexplicably did not revise its request to reflect the 3:26 p.m. 
amounts until the agency, citing (among other things) confusion over 
the competing spreadsheets, denied the correction request.  By that 
time (approximately a month and a half after bid opening), it was 
understandable that the agency lacked confidence in the reliability of 
the spreadsheets to support the mistake claim.  In our view, the 
protester is solely responsible for the agency's misgivings about how 
CRK calculated its bid price and which documents were relevant to 
those calculations.  See Three O Constr., S.E., supra.

We also find that the agency reasonably questioned whether the 
omission of the Hawaii Use Tax and liability insurance amounts from 
CRK's base bid was inadvertent or intentional, in view of CRK's 
inconsistent explanation of its base bid and additive bid pricing.  
Although CRK applied the same markup of 10.43 percent to both its base 
and additive bid, the base bid markup, as calculated from the 
individual indirect cost line items, excluded the amounts for the 
Hawaii Use Tax and liability insurance.  Had those amounts been 
included in the markup figure, as the protester asserts they should 
have been but for the programming error, CRK's base bid markup would 
have been 15.4 percent.  Yet the protester continues to confirm that 
the 10.43-percent additive markup covers the Hawaii Use Tax and 
liability insurance costs.[7]  Moreover, the protester has not 
explained why the 10.43 percent markup covered the costs for the 
Hawaii Use Tax and liability insurance for the additive bid, but not 
the base bid.  

CRK argues that the agency should not have considered this perceived 
inconsistency because CRK did not allege an error with respect to the 
additive markup.  Although it is possible that the protester's markup 
strategy for the additive item may have had little or no relation to 
its markup strategy for the base bid item, the record contains no 
explanation to this effect.  See generally Franco, B-214124, May 1, 
1984, 84-1 CPD  para.  488.  As the record stands, the protester has vouched 
for the 10.43-percent markup and because this figure demonstrably 
excludes the Hawaii Use Tax and liability insurance prices in the base 
bid, the agency could reasonably conclude that the exclusion of these 
prices from the base bid may have been intentional.  See Gunco, Inc., 
B-238910, July 17, 1990, 90-2 CPD  para.  46.

CRK argues that, if it had intended to exclude the Hawaii Use Tax and 
liability insurance amounts from the base bid, it would not have 
bothered to itemize them on the base bid spreadsheet.  Although we 
agree that the discrepancy between the inclusion of the amounts for 
Hawaii Use Tax and liability insurance constitutes evidence of a 
mistake, we cannot say that the Navy lacked a reasonable basis for 
finding that the clear and convincing evidence required for bid 
correction was not present, given the significant and substantially 
unexplained discrepancies and uncertainties in CRK's supporting 
documentation and explanations.  See Great Lakes Dredge & Dock Co., 
supra; Three O Constr., S.E., supra.

The protest is denied.

Comptroller General
of the United States

1. CRK also submitted affidavits by members of its bidding team, who 
attested to the authenticity and completeness of the bid documents and 
explained how the bidding error occurred. 

2. According to the affidavit, the problem began when the employee 
created the base-bid spreadsheet for this project by modifying a 
template spreadsheet.  The employee added to the template spreadsheet 
a Hawaii Use Tax line item and reprogrammed a "dummy" liability 
insurance line item.  The employee explained that, when he modified 
the template spreadsheet, he neglected to enter the necessary codes to 
cause the Hawaii Use Tax and liability insurance amounts to be added 
into the total base bid amount.

3. The time and date notations on CRK's spreadsheets were based on 
Pacific Daylight Time.  Bid opening was 1 p.m. Hawaii Standard Time, 
which corresponds with 4 p.m. Pacific Daylight Time.

4. According to the affidavit, the "cut" resulted from the following 
bid changes: (1) lower subcontractor quotes for the base bid amounting 
to an overall $135,315 reduction; (2) adjustments to the additive 
bid--which had already been submitted to CRK's Honolulu representative 
based on a 3:12 p.m. additive spreadsheet--amounting to an overall 
$25,000 reduction; (3) the application of a 10.4-percent markup to the 
foregoing items, amounting to a $16,672 reduction; and (4) and an 
additional $918 reduction so that the base bid would be a round 
figure.

5. The protester did not allege an error with respect to the additive 
bid.

6. A markup of 10.46 percent appears on CRK's 3.12 p.m. additive 
spreadsheet, the asserted basis for CRK's additive bid.  The 10.46 
figure corresponds with the ratio calculated from prices appearing on 
an earlier base bid spreadsheet (3:14 p.m.).

7. CRK advised the Navy on August 8, "[o]ur evaluation of [the 
additive] bid item prior to the bid time and the markup amount applied 
satisfied us that all the itemized costs, including Hawaiian Use Tax 
and liability insurance were adequately covered."  CRK has maintained 
this position throughout the course of this protest.