BNUMBER:  B-274697
DATE:  December 24, 1996
TITLE:  PCL Constructors Canada, Inc.

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Matter of:PCL Constructors Canada, Inc.

File:     B-274697

Date:December 24, 1996

Geoffrey T. Keating, Esq., Thomas F. Burke, Esq., and Richard C. Wall, 
Esq., McKenna & Cuneo, for the protester.
Alex D. Tomaszczuk, Esq., and Matthew A. Anzaldi, Esq., Shaw, Pittman, 
Potts & Trowbridge, for Axor Engineering Construction Group, Inc., an 
intervenor.
Dennis J. Gallagher, Esq., Department of State, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency properly allowed correction of a mistake in the 
awardee's low bid where the awardee presented clear and convincing 
evidence of the existence of the mistake and of the intended bid 
price.

DECISION

PCL Constructors Canada, Inc. (PCL) protests award of a firm, 
fixed-price contract to Axor Engineering Construction Group, Inc. 
(Axor) by the Department of State pursuant to invitation for bids 
(IFB) No. S-FBOAD-96-B-0001, for construction of the new United States 
Embassy Chancery building in Ottawa, Ontario, Canada.  The protester 
contends that the agency improperly allowed Axor to correct a mistake 
in its bid before awarding the contract to it and that Axor's bid 
should have been rejected.  We deny the protest.

Issued on June 21, 1996, the IFB requested bids for the basic work 
(i.e., construction of a four-story chancery office building) and for 
an alternate item (i.e., construction of pedestrian steps adjacent to 
the chancery office building).  The IFB required bidders to submit a 
price for the basic project as well as a price for the alternate item; 
no individual line item prices were required.  The contract was to be 
awarded to the responsible bidder whose bid was the lowest-priced for 
the basic work only.   

Seven bids were received and opened on August 27.  Axor's bid of 
$50,700,000[1] was the apparent low bid; PCL's bid of $57,367,000 was 
the apparent second-low bid; the independent government estimate was 
$65,765,835.  Because Axor's bid was significantly lower than the 
next-low bid and the government estimate, the contracting officer 
asked Axor to verify its bid price.  Axor responded that it had made a 
mistake in its bid.  

Contracting officials met with Axor's representatives who explained 
what the mistake was and how it occurred.  Basically, Axor stated that 
it made a mistake when it attempted to substitute one subcontractor's 
quote for another's.  Contracting officials also examined Axor's bid 
worksheets (i.e., computer-generated spreadsheets), subcontractor 
quotations used by Axor in calculating its bid, a statement describing 
its employees' bid-related activities and the manner in which the bid 
error occurred, and a supporting affidavit from Axor's president 
explaining various notations on the bid worksheets, and obtained a 
legal opinion from a State Department attorney.  Ultimately, agency 
officials determined that Axor had, in fact, made a mistake and 
allowed the firm to correct its bid upward to $54,450,000 before 
awarding the contract to the firm on September 12.  Shortly 
thereafter, PCL filed this protest.

PCL protests that the agency unreasonably permitted Axor to correct 
the alleged mistake because there was no clear evidence that a mistake 
was made or what price Axor actually intended to bid if, in fact, a 
mistake was made. PCL asserts that it is difficult to determine the 
precise nature of any mistake that may have occurred because neither 
the original bid price nor the corrected price can be traced to any 
numbers contained in Axor's bid worksheets.  The protester also 
contends that Axor may not have intended to substitute one 
subcontractor's quote for the other's, as Axor alleges it intended, 
because the quotes are not for identical work.[2]

An agency may allow upward correction of a low bid before award where 
there is clear and convincing evidence establishing both the existence 
of the mistake and the intended bid.  Federal Acquisition Regulation 
(FAR)  sec.  14.407-3; Vrooman Constructors, Inc., B-218610, Oct. 2, 1985, 
85-2 CPD  para.  369.  Whether the evidence meets this standard is a 
question of fact, and our Office will not question an agency's 
decision based on this evidence unless it lacks a reasonable basis.  
Maple Constr. Co., Inc., B-270073, Feb. 6, 1996, 96-1 CPD  para.  43.  
Workpapers, including computer-generated spreadsheets, may constitute 
clear and convincing evidence if they are in good order and indicate 
the intended bid price, and there is no contravening evidence.  Id.  
An agency may also consider statements from the bidder explaining the 
entries on the workpapers, how the mistake occurred, and the actual 
intended price.  See, e.g., Pipeline Constr., Inc., 73 Comp. Gen. 228 
(1994),  94-2 CPD  para.  21.  Our review of the entire record confirms that 
the State Department properly permitted Axor to correct its bid.

The record reveals the following chronology.  In calculating its 
lump-sum bid for the entire project, Axor prepared a computer 
spreadsheet (Annex A) which, among other things:  (1) included 
identification of the various work items from the specifications; (2) 
named the subcontractor (where applicable) that would perform a 
particular work item; (3) stated the subcontractor's quoted price for 
the work item; and (4) stated any price adjustment that Axor intended 
to make on a particular work item.  Under the heading "miscellaneous 
metals," Annex A listed Charland Iron Works (Charland) as the 
subcontractor, Charland's quoted price of $12,750,000,[3] and a 
downward adjustment of $4 million to be made by Axor.  Axor explained 
that it entered the quote it received from Charland but, thinking that 
the quoted price was too high, entered a $4 million downward 
adjustment next to Charland's price in order to reduce the cost to 
$8.75 million which was Axor's best estimate of what this work item 
should cost.  

Less than 1 hour before bid opening, Axor received a quote[4] of just 
$9 million for miscellaneous metals from C. J. Rush/ Rovico (Rush).[5]  
As this quoted price was more in line with Axor's estimate of $8.75 
million for this work, Axor quickly prepared a revised computer 
spreadsheet (Annex B) on which it attempted to substitute Rush's quote 
for its own $8.75 estimate.  On Annex B, Axor entered Rush's $9 
million quote in place of Charland's $12.75 million quote but, in its 
haste, forgot to remove the $4 million downward adjustment, resulting 
in a net price for miscellaneous metals of just $5 million (Rush's $9 
million quote less the mistaken $4 million downward adjustment).  
Annex B was then used as the basis for Axor's bid.

The protester contends that it cannot be determined from Axor's 
worksheets whether a mistake occurred and, if a mistake was made, the 
precise nature of that mistake.  We do not agree.  The spreadsheets 
are in good order and, in fact, contain clear and convincing evidence, 
as discussed below, of the existence of the mistake and of the 
intended bid price.[6] 

Our review of record shows that Axor made a mistake when it attempted 
to substitute the Rush quote for its own estimate of the cost to have 
a subcontractor perform the miscellaneous metals work.  Axor explained 
that it used its own estimate of $8.75 million for the metal work.  
Examination of Annex A confirms that this is true.  The estimate was 
in the form of two related entries--in one column, Axor entered 
Charland's $12.75 million quote for miscellaneous metals; in another 
column, Axor deducted $4 million for the same work.  The net result of 
the two entries was Axor's $8.75 million estimate for this work item.  
The record also confirms that Axor received Rush's quote for metal 
work in the last hour before bid opening and then created Annex B, 
substituting Rush's $9 million quote--which was roughly equivalent to 
its own $8.75 million estimate--for Charland's quote, but leaving the 
$4 million downward adjustment.  Axor explained that it intended to 
delete the $4 million adjustment in order to price miscellaneous 
metals at $9 million instead of its previous estimate of $8.75 million 
but mistakenly did not, resulting in its erroneously pricing 
miscellaneous metals at just $5 million.  Axor's explanation of its 
mistake is believable and consistent with the pertinent entries on 
both spreadsheets, evidence in the record showing that Axor received 
Rush's quote via facsimile transmission less than one hour before bid 
opening, and the industry practice of finalizing subcontractor quotes 
at the last minute.  Moreover, the credibility of Axor's claim that it 
did not intend to use $5 million as the cost for miscellaneous metals 
is further supported by the fact that the record shows that Axor 
received six quotes for metal work ranging in price from $9 million to 
$15 million; the $5 million figure actually used by Axor in 
formulating its bid was considerably below the lowest of all of the 
quotes received.  Thus, it is unlikely that Axor intended its 
spreadsheet to reflect just $5 million for miscellaneous metals work.  
Based on this record, we believe that the agency reasonably determined 
that there was clear and convincing evidence of the mistake and the 
intended bid.
   
In sum, because Axor's workpapers and supporting statements provided 
clear and convincing evidence establishing both the existence of the 
mistake and the intended bid, the agency properly allowed Axor to 
correct its bid upward in the claimed amount.  As Axor's corrected bid 
was still the lowest-priced bid, the contracting officer properly 
awarded the contract to Axor.

The protest is denied.

Comptroller General
of the United States

1. All prices in this decision are in Canadian dollars.

2. The protester submitted a number of voluminous arguments in support 
of its protest; the State Department responded to each argument, 
justifying its actions.  We have reviewed the entire record, 
considered all of the arguments, and find no basis for sustaining the 
protest.  However, we will discuss only the most significant arguments 
in this decision.

3. Charland's quote was received by Axor via facsimile transmission on 
August 26, the day before bid opening.

4. The parties are in agreement that it is customary in the 
construction industry, in this part of Canada, not to finalize 
subcontractor quotes or final bid prices until the day of bid opening.

5. Rush's quote was received, via facsimile transmission, at 3:15 p.m. 
on August 27; bid opening was scheduled for 4 p.m. that same day.

6. Other than the mistake, the only noteworthy difference between the 
two spreadsheets is that Annex B contains some handwritten notes 
representing $1.4 million in additional downward adjustments made by 
Axor.  In an affidavit submitted to the State Department, Axor's 
president explained that the notes indicate specific work items on 
which Axor could cut some of its costs to lower its total price.  For 
example, one of the notes states: "Window 175K" which represents a 
cost reduction of $175,000 for windows.  As each of these cost 
reductions is for a particular work item and none of them has anything 
to do with miscellaneous metals, we do not see how these reductions 
had any effect on the mistake made in calculating the cost of 
miscellaneous metals or the propriety of the agency's allowing Axor to 
correct its bid.