BNUMBER: B-266344
DATE: February 16, 1996
TITLE: Grunley Construction Co., Inc.
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Matter of:Grunley Construction Co., Inc.
File: B-266344
Date: February 16, 1996
Herman M. Braude, Esq., Braude & Margulies, P.C., for the protester.
Terrence J. Tychan, Department of Health and Human Services, for the
agency.
Jeanne W. Isrin, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency improperly permitted correction of alleged mistake in bid where
bidder claimed mistake in line item price rather than in total price,
but (1) it is not clear from face of bid which of the two was
intended; (2) either price reasonably could have been intended; and
(3) bid is low under only one of the two reasonable interpretations.
DECISION
Grunley Construction Co., Inc. protests the award of a contract to
Modern Electric of Maryland, Ltd. under invitation for bids (IFB) No.
263-95-B-CP-0239, issued by the Department of Health and Human
Services, National Institutes of Health (NIH), for construction
services to install emergency generators and an uninterruptible power
source (UPS) in Building 12 on the NIH campus in Bethesda, Maryland.
Grunley contends that NIH improperly allowed Modern to correct a
mistake in its bid.
We sustain the protest.
The bid schedule contained three line items: base bid item 0001, item
0002 for option 1, and item 0003 for two deductive services. The IFB
provided that the low bidder would be "the responsible bidder offering
the lowest aggregate price for (1) the base bid plus (2) option #1
minus (3) the deductive bid items. . . ."
Twelve bids were received by the August 24, 1995 bid opening. Modern
was identified as the apparent low bidder, with a total aggregate bid
of $3,426,380; Grunley submitted the second low bid, $3,504,000.
Modern's bid schedule was as follows:
Line Item Modern's bid
Base Item 0001 $3,903,495
Item 0002 Option 1 $12,243
Subtotal 1 (items 0001 + 0002)
$3,683,480
Item 0003
Deduct 1
$188,019
Deduct 2 $69,081
Subtotal 2 (Deduct 1 + Deduct 2)
$257,100
Total Aggregate Amount (Subtotal 1 - Subtotal 2)
$3,426,380
After bid opening, contracting officials noted that Modern's bid
schedule was not arithmetically correct: the correct sum of its base
item price, $3,903,495, and its option 1 price, $12,243, was
$3,915,738, rather than $3,683,480, the price listed for subtotal 1 on
the schedule. The submitted total aggregate amount figure,
$3,426,380, was correct based on the stated $3,683,480 price for
subtotal 1 (i.e., $3,683,480 - $257,100 = $3,426,380). However,
subtracting the deduct items from the arithmetically correct subtotal
1 price ($3,915,758 - $257,100), results in a total aggregate amount
of $3,658,638, which is higher than Grunley's bid.
In claiming a mistake in the base item price, Modern explained that
its stated subtotal 1 price was correct, and that its low total
aggregate amount, calculated using this number, therefore also was
correct. According to Modern, its intended base item price was
$3,671,237; the $3,903,495 base item price shown on the bid schedule
was too high, and resulted from an employee's misunderstanding of a
last minute telephonic change in the bid. The employee allegedly was
told that 5 percent profit and 1 percent bonding costs already were
included in the price, but he erroneously added those amounts to the
intended $3,671,237 figure, resulting in the $3,903,495 price shown
for the base item. After reviewing all the information, contracting
officials allowed correction and made award to Modern. On September
29, award was made to Modern.
Grunley argues that allowing correction was improper in this case
because the intended bid cannot be ascertained from the bid itself--it
cannot be determined from the face of the bid whether the error lies
in the base bid price or in the subtotal 1 price due to incorrect
addition. Since either interpretation is reasonable, and Modern's bid
would not be low under the second interpretation, the agency could not
properly permit correction. We agree.
The Federal Acquisition Regulation (FAR) allows for correction of
mistakes in bids under specified circumstances. See FAR sec. 14.406.
Where correction would result in displacing one or more lower bids, it
may not be allowed unless the existence of the mistake and the bid
actually intended are ascertainable substantially from the invitation
and the bid itself. FAR sec. 14.406-3(a); Virginia Beach Air
Conditioning Corp., 69 Comp. Gen. 178 (1990), 90-1 CPD para. 78.
Correction is permitted where a bid discrepancy admits to only one
reasonable interpretation that is ascertainable from the face of the
bid in light of the government estimate, the range of other bids, or
the contracting officer's logic and experience. Roy McGinnis & Co.,
Inc., B-239710, Sept. 24, 1990, 90-2 CPD para. 251. On the other hand,
where a bid is reasonably susceptible of being interpreted as offering
either one of two prices shown on its face, only one of which is low,
the bid must be rejected since the request for correction is
considered as resulting in displacing a lower bid. Virginia Beach Air
Conditioning Corp., supra; Keister Constr., Inc., B-227027, Aug. 5,
1987, 87-2 CPD para. 129.
There are two possible explanations for the discrepancy on the face of
Modern's bid: (1) subtotal 1 and the total aggregate amount shown are
correct, and the base item price is erroneous, as Modern claims, or
(2) the base item price is correct, an error was made in adding it to
the option 1 price so that the subtotal 1 figure and therefore, the
total aggregate amount, are incorrect. We see nothing on the face of
the bid which either supports or renders unreasonable either of these
interpretations. In this regard, both possible total aggregate
amounts ($3,426,380 and $3,658,638) are generally within the range of
the other bids received, so this comparison provides no basis for
concluding that one or the other likely was not intended.
The agency maintains that the only reasonable interpretation of
Modern's bid was that the error lay in the base bid price and that the
intended total aggregate amount was $3,426,380, as stated on Modern's
bid schedule. In the agency's view, since all the other line items
are arithmetically correct and internally consistent, the base item
was the only place where a mistake could have been made. According to
the agency, if the mistake were anywhere but in the base item, one
would reasonably expect to find mistaken subtotals elsewhere on the
schedule and that working backward from the aggregate listed in the
bid, in a logical progression, shows that this is not the case.
This argument is flawed in that it is based on the unsupported
assumption that the total aggregate amount is correct. As discussed,
there simply is no evidence on the face of the bid that this was the
case. Based on the bid itself, it is just as logical to start with
the assumption that the stated base item price is correct, and that an
error (e.g., faulty addition or transcription) was made in stating the
sum of the base item and option 1 prices, resulting in an understated
subtotal 1 price.
The agency contends that this interpretation is "strained and
unnatural," in that it requires one to assume that "entirely
gratuitous and inexplicable" errors have also occurred in the two
subtotal figures. While we agree with the agency that it is not
apparent how a transcription, addition or other error might have been
made in reaching the subtotal 1 price, neither is it at all apparent
from the bid (that is, without looking at Modern's explanation) how
any error in the base item bid could have been made. The agency's
inclination to believe Modern's claim of a base item price mistake
results solely from consideration of the firm's explanation. Without
that explanation, there would be absolutely no clue as to which item
was mistaken, or as to how the mistake was made; had Modern offered
instead an explanation as to why the subtotal 1 price was mistaken,
that explanation could appear just as reasonable.
The danger in these circumstances, obviously, is that only the bidder
claiming the mistake has access to the information--except for the bid
itself--necessary to support the mistake claim. Allowing a bidder to
explain its intent after bid opening thus could afford the bidder the
option of characterizing its claimed mistake in a manner that would
result in the displacement of the bid that otherwise would have been
low. While the mistake-in-bid rules are intended to permit relief to
bidders who make genuine mistakes in their bids, the paramount concern
of the rules is the protection of the competitive bidding system.
Eagle Elec., B-228500, Feb. 5, 1988, 88-1 CPD para. 116. The preservation
of fairness in the system precludes allowing a bidder to make such an
election after the results of the bidding are known. Hudgins Constr.
Co., Inc., B-213307, Nov. 15, 1983, 83-2 CPD para. 570.
We conclude that Modern should not have been permitted to correct its
bid, and that award should have been made to Grunley. Although the
protest was filed within 10 calendar days after award, the agency
proceeded with performance notwithstanding the protest based on its
determination, pursuant to FAR sec. 33.104(c)(2)(ii), that urgent and
compelling circumstances which significantly affect the government's
interests would not permit awaiting our decision. The agency informs
us that 35 percent of the work has been performed and that 50 percent
of contract funds have been expended. Under these circumstances,
termination of Modern's contract and award to Grunley would not be
practicable. However, Grunley is entitled to reimbursement of the
costs of filing and pursuing this protest, including reasonable
attorneys' fees, and its bid preparation costs. 4 C.F.R. sec.
21.6(d)(1), (2) (1995). Grunley should file its claim, detailing and
certifying the time expended and cost incurred, directly with NIH
within 60 days after receipt of this decision. 4 C.F.R. sec. 21.6(f)(1).
The protest is sustained.
Comptroller General
of the United States