Sealed bidding

Army Lawyer, Jan, 2007 by Jennifer C. Santiago

Agencies Should Not Rely on Protestor to Determine Validity of Mistakes

In Odyssey International, Inc., (1) the Government Accountability Office (GAO) examined a protest from the low bidder in an invitation for bids (IFB) case from the Department of Labor (DOL) for construction of a three-story dormitory. (2) The low bidder, Odyssey, bid $6,246,616, while the next lowest bid was from Allied Contractors and Eng'rs (Allied) for $7,319,800. (3) There were six other bids, and the government estimate was $7,352,357. (4)

About a month after bid opening, the agency asked the lowest three bidders to verify their bids, at which time Odyssey reported "'a dramatic posting error' in its bid tabulation sheet." (5) Apparently, Odyssey had "mistakenly recorded a $1,275,000 quote for structural steel from a subcontractor as $275,000 in its electronic spreadsheet." (6) To prove the mistake, Odyssey "furnished the subcontractor's proposal of $1,275,000, as well as printed copies of the original bid tabulation spreadsheet and the corrected spreadsheet." (7) The DOL then requested additional evidence in order to "establish[] the existence of the error, and the manner in which it occurred, and the bid actually intended." (8)

About a week later, Odyssey provided additional information, "including a compact disc (CD) containing the electronic version of the previously printed spreadsheets." (9) In addition to the $1,000,000 mistake, Odyssey also adjusted its bid to reflect the increase in profit based on the increased price. (10) The final bid submitted was $7,317,216, only $2,584 less than the next lowest bidder, Allied. (11) At that point, Allied submitted an agency protest concerning the "propriety of permitting Odyssey to correct its bid." (12) At some point after receiving the protest, the DOL accepted Odyssey's bid, "finding clear and convincing evidence of the mistake and the intended bid," resulting in a denial of Allied's protest. (13) Allied then filed a protest with the GAO based on a review of Odyssey's submitted spreadsheet. (14) As a result of Allied's position, the DOL "reversed its prior position and advised that it would now not accept Odyssey's corrected bid because of 'a number of other serious errors, related to [the] initial mistake in bid claimed by Odyssey.'" (15)

Ultimately, the GAO found that there was clear and convincing evidence of the mistake that Odyssey provided based on "hidden" information contained on the CD. Odyssey hid two rows of a spreadsheet for confidentiality purposes (profit markup) that was later viewed and interpreted by Allied, and later determined by DOL as being insufficient to establish clear and convincing evidence of the mistake. (16) I determined that the information contained in the spreadsheet did not allow DOL to "determine[e] Odyssey's intended bid price." (17)

The GAO held that the DOL "did not act reasonably in determining that Odyssey's spreadsheets were not in good order and did not provide clear and convincing evidence of Odyssey's intended bid." (18) The GAO further recommended to "permit Odyssey to correct its mistake in bid, and award the contract to that firm, if otherwise appropriate." (19)

Failing to Acknowledge Amendment Is Not Always Non-Responsive

In its successful protest, Fort Mojave/Hummel argued that DOL's rejection of its bid based on the failure to acknowledge an amendment was improper. (20) The IFB required the successful bidder to "construct nine new buildings totaling approximately 190,997 gross square feet, including ... [dormitories, an administrative medical/dental building, an education building, a cafeteria, and a warehouse]." (21) The amendment at issue "answered 28 bidder questions and clarified the period of performance." (22) Fort Mojave/Hummel failed to acknowledge the amendment, and as a result, the agency rejected the bid as non-responsive. (23)

The GAO provides a detailed review of precedent on failing to acknowledge material amendments to IFBs, to include defining what "material" amendments include. (24) The basis for the agency rejecting the protestor's bid was that there were two items set forth in the amendment that were in fact material: "one item pertains to the insulation of certain pipes and the other item pertains to the placement of certain pipes in five of the rooms in the vocational education building." (25) The protestor argued that, contextually, neither of the two provisions should be interpreted as material. The GAO agreed, and held that the amendment items were "no more than [ ] minor modification[s] of what was already required by the IFB, not as the agency suggests, the imposition of a material, new and separate legal obligation." (26)

The GAO further recommended that the protestor be reimbursed the reasonable costs of filing and pursuing the protest, including reasonable attorneys' fees." (27)

(1) Comp. Gen. B-296855.2, 2005 U.S. Comp. Gen. LEXIS 249 (Nov. 16, 2005).

(2) Id. at 1.

(3) Id.

(4) Id. at 2.

(5) Id.

(6) Id.

(7) Id.

(8) Id.

(9) Id.