BNUMBER: B-270661
DATE: April 8, 1996
TITLE: Merrick Construction Company, Inc.
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Matter of:Merrick Construction Company, Inc.
File: B-270661
Date:April 8, 1996
Michael H. Payne, Esq., Starfield & Payne, for the protester.
S. Leo Arnold, Esq., Ashley, Ashley & Arnold, for Valley Construction
Company, Inc. an intervenor.
Lester Edelman, Esq., Department of the Army, for the agency.
Jacqueline Maeder, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency properly allowed correction of a mistake in bid by the low
bidder where the existence of the mistake and the intended bid price
were clear from the bidder's original bid preparation papers and the
corrected bid remains significantly below the next low bid.
DECISION
Merrick Construction Company, Inc. protests the award of a contract to
Valley Construction Company, Inc. under invitation for bids (IFB) No.
DACW38-95-B-0085, issued by the U.S. Army Corps of Engineers for flood
control equipment and services at various sites along the Mississippi
River, asserting that the Corps improperly permitted Valley to correct
a mistake in its low bid.
We deny the protest.
The IFB, issued on August 9, 1995, required the submission of prices
for 31 line items and a total price. Of the seven bids received at
bid opening on September 21, Valley's was low at $5,652,923; Merrick's
was second low at $6,872,500. The government estimate for the
contract work was $6,234,831.
By letter dated September 25, Valley advised the agency that it had
reviewed its bid after opening because it was substantially lower than
the government estimate and the other bids received, and had
discovered a mistake. Valley stated that its bid of $669,100 on line
item No. 22, "Drainage Pumps," reflected the omission of $520,000 and
requested permission to correct line item No. 22 to the intended
$1,189,100 amount and to make a corresponding adjustment in its total
bid price.
A bidder who seeks upward correction of its bid price prior to award
must submit clear and convincing evidence that a mistake was made, the
manner in which the mistake occurred, and the intended price. Federal
Acquisition Regulation (FAR) sec. 14.407-3(a); Red Samm Constr., Inc.,
B-250891; B-250891.2, Feb. 25, 1993, 93-1 CPD para. 178. Workpapers,
including records of computer generated software
spreadsheets/worksheets (hard copy printouts, computer disks, tapes or
other software media), 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. C Constr.
Co., Inc., B-253198.2, Sept. 30, 1993, 93-2 CPD para. 198. Whether
evidence of the intended bid amount meets the clear and convincing
evidence is a question of fact, and we will not question an agency's
decision in this regard unless it lacks a reasonable basis. 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.
Here, in support of its request, Valley provided the Army with bid
workpapers, consisting of its computer generated bid spreadsheet, its
handwritten computation for the pumps and reducers under item No. 22
and other documentation, including copies of subcontractor quotes.
With the workpapers, Valley submitted an explanation of how it made
the mistake and sworn affidavits from those involved in the mistake
and the preparation of the bid attesting to the authenticity of the
submissions. In response to requests from the Army, Valley
subsequently provided the agency with its complete bid file.
Valley explained that its error resulted from its combined use of a
computer spreadsheet and handwritten calculations. Specifically,
although the bid schedule required a lump-sum bid price for item No.
22, Valley, for ease of calculation, divided items for line item No.
22 into two groups, including in the first group certain required 48
inch "O" pumps (2 each), speed reducers (2 each) and associated
installation and, in the second group, a discharge pipe, couplings,
expansion joints, formed suction intakes and siphon breaker assembly.
On one handwritten worksheet, with the caption "22-Pumps & Pipes" in
the upper right-hand corner, Valley listed its breakdown of five
components and prices for the pumps and reducers as follows:
Pumps 560,000
Reducers 125,000
685,000
Tax 55,000
740,000
Install pipes &
pumps 225,000
Elec[trical] for
pumps & pipes 75,000
1,040,000
Beneath the calculation was the circled phrase "Use 520,000 ea."
According to Valley, the notation "520,000 ea." indicated the price
for one pump and one reducer. In entering this data into its
computer, Valley explained that it inadvertently entered the $520,000
unit price in the incorrect column of its spreadsheet, as a result of
which the unit price was not multiplied by 2 to calculate the intended
extended price for the required two pumps. Its spreadsheet shows at
line item No. 22 the following information:
Div. Description QuantityU/SUB SUB-K TOTAL ADD BID
22 Drainage Pumps
48" O Pumps installed with reducers 2
ea.$520,000$520
000$520,000
48" O discharge pipe-installed 710 lf[1]
$210$149100$149
100$149,000
48" O flexible coupling 8 ea.
48" O expansion joints 4 ea.
formed suction intakes 2 ea.
siphon breaker assembly 2 ea.
The first subitem reflects the five items on Valley's handwritten
sheet, as noted above. According to the protester, the $520,000
should have been entered in the "U/SUB" column to be multiplied by 2,
the quantity. The cost for two pumps would then have been calculated
and printed in the "SUBK" column, and then carried to the "TOTAL"
column. If mark-up[2] were allocated to the cost of an item, the
mark-up figure was entered in the "ADD" column, added to the figure in
the "TOTAL" column and the result printed in the "BID" column. Since
no mark-up was added to Valley's cost for item No. 22, nothing
appeared in the "ADD" column and the "BID" column repeated the "TOTAL"
column. Thus, the intended unit price of $520,000 was treated as the
extended price and added to the $149,100 for the remaining subitems of
item No. 22, resulting in a total for the item of $669,100.
Although the agency expressed initial reservations about what appeared
to be inconsistencies in Valley's bid, and was unsure the intended bid
was apparent from the bid documents,[3] it concluded, upon further
review of Valley's complete bid file and its written explanation and
sworn statements, that Valley had clearly and convincingly established
the existence of a mistake and the bid actually intended. The Army
therefore allowed an upward adjustment of $520,000 to line item No.
22, thereby making Valley's corrected bid total $6,172,923. This
corrected amount remains lower than the government estimate and
approximately 10 percent lower than Merrick's second-low bid.
Merrick questions the evidentiary value of Valley's worksheets and of
the copy of its computer spreadsheet, arguing that Valley does not
name the software used or explain its operation. The protester also
argues that there is nothing in the record to support Valley's
assertion that the "SUBK" column was the multiple of the "Quantity"
and "U/SUB" columns and asserts that Valley's handwritten notation
beneath its calculations for line item No. 22 cannot be interpreted as
reading "Use 520,000 ea," as Valley asserts. According to Merrick,
the alleged letters "ea" are indecipherable, and therefore it is
impossible to tell whether Valley intended to use the $1,040,000
listed on the handwritten sheet for the two pumps and reducers or the
$520,000 as the total for the two pumps and reducers.
While Valley did not name the software it used or explain its
operation, such information is not necessarily required to establish
that the bidder seeking bid correction has provided clear and
convincing evidence. See Fishermen's Boat Shop, Inc., B-252560, July
9, 1993, 93-2 CPD para. 11. Here, the intended computer operation is
readily ascertainable by examining the entries on the spreadsheet and,
contrary to Merrick's assertion, these different entries substantiate
Valley's explanation of its spreadsheet calculations. Specifically,
where a quantity is given for a line item and a price is entered in
the "U/SUB" column, that price is consistently multiplied by the given
quantity and the resulting sum is printed in the "SUBK" column. The
figure in the "SUBK"column is carried to the "TOTAL" column and, as
Valley explained, carried to the "BID" column unless a figure appears
in the "ADD" column. If a figure is entered in the "ADD" column, it
is added to the figure in the "TOTAL" column and the result is printed
in the "BID" column. It is clear, therefore, that the quantity item
is a multiplier which multiplies the number in the "U/SUB" column.
It is also clear from the documents submitted that Valley's
subcontractor, INT A-C, quoted $685,000 for the pumps and reducers,
and that Valley used this equipment quote in its calculations. To
this, Valley added associated installation costs, including electrical
costs and tax which, when added to the cost of the equipment, equal
$1,040,000. While Merrick suggests that, because Valley's handwritten
calculations contain five subitems and its computer spreadsheet
contains only two, it is impossible to view the handwritten sheet as
supporting the computer spreadsheet, this position is simply
misplaced. Valley explained that it had divided the work included in
line item No. 22 into two groups. Because it further divided its
handwritten calculations for one group into five subitems is of no
consequence as the handwritten calculations are specifically captioned
as line item No. 22 calculations and clearly constitute the associated
costs of installing the pumps.
As to the difficulty in deciphering Valley's handwritten letters "ea"
the simple answer is that the letters, "ea" are sloppily written but
reasonably discernible, and the entry is entirely plausible in
context. Moreover, as noted above, Valley submitted affidavits in
which Valley's vice president swore that he performed the written
calculations and wrote the circled phrase "Use 520,000 ea." on the
handwritten worksheets. There is nothing in the record to suggest
that this statement is inaccurate. Based on this explanation and the
worksheet entries, it is clear that the $1,040,000 entry reflects the
intended entry for two pumps.[4]
Finally, the protest alleges that Valley's unadjusted total bid of
$5,686,923 is not supported by the documents since neither Valley's
computer spreadsheet nor its bid schedule totals to this figure.
Valley's total bid before upward adjustment was incorrectly calculated
and handwritten on its spreadsheet and its schedule as $5,686,923.
This total was not computer generated on its spreadsheet because
Valley made a last-minute modification on item No. 26, decreasing this
item by $175,000. Valley then incorrectly subtracted the $175,000
from the computer-generated total of $5,827,923, resulting in Valley's
incorrect total of $5,686,923. The mathematical error was corrected
by the agency as permitted by FAR sec. 14.407-2. The correct total for
the unadjusted bid on both the spreadsheet and the schedule is, as the
agency states, $5,652,923. In sum, the agency had a reasonable basis
to conclude that Valley had provided clear and convincing evidence of
the existence of a mistake and of its actually intended bid price.
The protest is denied.
Comptroller General
of the United States
1."Lf" refers to linear feet.
2. Valley calculated its total mark-up for this project as
approximately $750,000. This $750,000 appeared as the last item on
its computer spreadsheet. In submitting its bid, Valley randomly
allocated the $750,000 mark-up to different items on the bid schedule.
3. Specifically, the agency originally believed Valley's bid was
unbalanced and had included mark-up in four items, Nos. 1, 4, 29 and
30, greater than the cost of the items. The agency also noted that the
apparently overstated mark-up on these four items "coincidentally"
equaled the $520,000 upward adjustment sought by Valley.
Additionally, Valley provided inconsistent subcontractor price
quotations, one quote from ITT A-C Pumps and one from Patterson Pumps,
in support of its pricing. The issue of the unbalanced bid items is
addressed below. As to the inconsistent quotes, Valley provided
written documentation stating that it did not use the Patterson quote
because it received this quote the day of bid opening and although
this quote was lower for the pumps, it was unclear if the pump price
included the reducers. Also, both quotes included quotes for the
diesel engines required under the RFP, and ITT A-C's quote for the
engines was lower. Because ITT A-C's total quote was lower, Valley
used that quote in preparing its bid price. Indeed, the ITT A-C quote
for pumps and reducers equals $685,000, the exact price listed on
Valley's handwritten calculations. The agency verified ITT A-C's
price quotation.
4. In its initial protest, Merrick suggested that Valley's bid was
mathematically unbalanced, thereby providing for a prohibited advance
payment. In fact, the record does not reflect that Valley's bid even
contains any enhanced prices; indeed as to item No. 1, the largest of
four items referenced by the protester, Merrick's price of $650,000
was more than double Valley's price of $300,000. To the extent that
Merrick is asserting that Valley's bid should have been rejected as
unbalanced, the allegation simply lacks any plausible basis.