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lECUICN 4 THU COMPTrI'OLLER CENERALDECISION (.;) OF THT UNITED NTATri6

TWAU MING TO pi. D.C. 2C_54 a

FILE: 3-391786 DATE: July 18, 1978

M ATTER OF: Farrell Construction Company

DIGEST:

1. When contracting officer cannot determine, frompattern of pricing in bid as submitted, what pricebidder intended for omitted item, price LiUy not besupplied after opening.

2. Fact that bidder may not have received one page ofamendment, and therefore omitted price for mandatoryitem, does not warrant accrsptane of bid withomitted price.

3. Mistake in bid rules may be applied only when bidis responsive and otherwise for acceptance, notto correct price omission.

4. Procur'ng agency, under ASPR, has discretion todetermine amount and kind of equipment which maybe included in and paid-for as mobilization andpreparation cost. Arguments that Government mayhave to divert funds, pay interest on amounts due,or terminate before completion of contract arebased on events which may or may not occur, and dcnot affect legality of proposed award.

5. Cost of special equipment acquired to performma'jor const -ction contract may be paid as incurredunder mobilization and preparatory work clausewithout violating statute prohibiting advancepayments. Moreover, Government's interests appearto be protected in case of termination for conven-ience.

Farrell Construction Company (Farrell) protestsaward to any othe rcontractor under invitation forbids (IFB) No. DACW62-78-H-0050, issued by theNashville, Tennessee, District of the Corps of Engineers(the Corps). The solicitation, issued on March 8,1978, with an amended opening date of April 20, 1978,was for construction of the Divide Cut, Section 2, ofthe Tennessee-Tombigbee Waterway.

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Farrell, low bidder at $29,082,950, failed tosubmit a Minority "!isiness Enterprise SubcontractingProgram Plan with its Did, as cslied fot by the IFB.In addition, Farrell omitted a price for bid itemNo. 2E.3, covering construction of a pipe drainagestructure at location S-25E. The Corpy determined thatthe first was a minor informality which Farroll couldcure by submitting its plan after bid opening, butthat failure to price all items, as specifically re-quired by the IFS, made the bid nonresponsive.

Farrell contests the latter determination, arguingthat from its pattern o:f pricing, the Corps shouldhave been able to determine and supply the intendedprice for the missing item. In addition, Farrell hasprotested possible award to Harbert ConstrdctionCorporation (Harbert) and MIB Contracting Company(M&B), second arid third-low bidders at $29,199,994and $29,963,466, respectively, on grounds that theirbids are unreasonably unbalanced and award to eitherwould be c6ntrary to the best interests of the Govern-ment. Award has been delayed pending our decisionon the protest.

The Corns report states that, as originally issued,the unit price schedule of the IFS listed 50 separateitems on four pages, S-1 through 5-4. Seven amendments,subsequently were issued. The first and only onerelevant to this protest, dated March 24, 1978, listedrevised pages which the Corps wished bidders to sub-stitute for those in the original invitation. Twonew items were added to page S-1, so that there wasno room for what had been the last item on that page,item 2E.3; it therefore was transferred to the top ofpage S-2. Page S-2 was included in the revised pagessent to bidders1 however, it was not marked with anamendment number, as were those which contained sub-stantive changes.

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Farrell's failure to price item 2E.3 stems fromthe fact that it did not use revised page S-2 in submit-ting its bid. Farrell has furnished our Uffice withaffidavits stating that, following its usual procedure,it requested three sets of che invitation, one ofwhich was disassembled and placed in a loose leafbinder. As amendments were received, Farrell states,the old pages were removed from the binder and therevised pages substituted. Accordli'c to Farrell,neither the set of Amendment 0001 which it placed in thebinder nor the other two sets of this amendment, whichit received but did not disturb, contained revisedpage S-2.

Farrell states that it prepared estimatesfor bid item 2E.3, the pipe drainage structure atlocation S-25E, and for items 2E.4 and aE.s, pipedrainage structures at locations S-30W and 5-31W.However, because its working,(take off) sbeets werearranged by structure.. not item number, Farrell usedonly structure numieru in transferring items from itsworking sheets to the price schedule. Thus, Farrellstates, it was not aware during the process of fillingout the schedule that item 2R.3 was missing.

The Corps, in determining that this inadvertentomission made Farrell's bid nonresponsive, applied thegeneral rule set forth in 52 Comp. Gen. 604 (1973),which states that a bid is regarded as nonresponsiveon its face for failure to include a price on everyitem as required by the IFS. Farrell, on the otherhand, asserts that an exception to the rule, alsoset forth in that case, should apply. The exceptionstates:

"Even though a bidder fails to submit a pricefor an item in a bid, that omission can becorrected if the bid, as submitted, indicatesnot only the probability of error but also theexact nature of the error and the amount intended.B-151332, June 27, 1963. The rationale for this

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exception is that where the consistency of thepricing pattern in the bidding documents estab-14qhes both the existence of the error and thebid actually intended, to hold that the bid isnonresponsive would be to coavtrt what appearsto be an rbvious cle.ical error of omission toa matter of nonresponsivenerw. B-157429,August 19, 1965.0

Farrell has argued that use of th_ original pageS-2 and omission of item 2E.3 clearly demonstrates theexistence of an erxor, and that the amount of itsintended bid for item 2E.3, $28,000, is established byits pricing pattern for items 2E.4 and 7Z.5, for whichit bid $28,000 each. Farrell argues that the pipedrainage œtructures represented by these Lhree itemsvary only in minimal ways, such as size or length ofculvert pipe, and that materials allocated to each arepractically identical. In an attempt to confirm itspricing pattern, Farrell has submitted its work sheetsfor the three pipe drainage structures. Firrell arguesthat the other bids also show a pattern of pricing,since all but one include identical prices for items2e.3 and 2E.4. Moreover, the Governmcnt estimatesfor items 2E.3 and 2E.5 are the same, Farrell pointsout.

Farrell alternatively argues that the omissionshould be handled as a mistake in bid, which could becorrected under Armed Services Procurement Regulation(ASPR) 2-406.3(2) upon a showing of clear and convincingevidence as to the mistake and Farrell's intended price.As still another alternative, Farrell suggests that theomission has onlya trivial effect on price, quality, orquantity, since $28,000 is only 0.096 percent of the totalbid price, and therefore mnay be waived under ASPR 2-405.If this alternative is accepted by our Office, Farrellstates, it will undertake the contract on the basis thatits bid price includes item 2E.3.

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T1e Corps doer not accent Farrell's pattern ofpricing argument, stating to apply the exception,bids must be on identical. items. Each pipe drainagestructure here, the Corps states, requires structuralexcavation, back filling, dewatering, placement ofbedding material, pipe culvert, and concrete, andreinforcement at a specific location. Although thestructure at location S-25E is similar to those atlocations S-30W and S-31W, the Corps argues, thesolicitation clearly intended that each be separatelypriced.

In addition, the Corps has examined Farrell's worksheets for bid items 2E.6 and 2E.8, also pipe drainagestructures, and found that while Farrell rhowed identi-cal requirements for the construction work (except fora variatibn in the quantity of sand),. rarrell bid$28,000 for one and $63,000 for the other. "What factorsentered into Farrell's judgment to make such a pricedifferential cannot be determined with any certaintyfrom the bid documents," the Corps states.

Harbert and MaB,2 in comments to our Office, generallysupport the Corps' conclusion that Farrell has notshown a pattern of pricing which would clearly indicateits intended price for item 2E.3. Harbert suggeststhat Farrell may have inadvertently omitted anotherprice in the bid schedule, argues that Farrell had aduty to use reasonable care in assembling its bid, andhas submitted its own work sheets and supplier quotationsas evidence of the differences between the three pipedrainage structures in question.

Although a great deal of extraneous evidence hasbeen introduced into the record, our cases require thatboth the error and Farrell's intended price be estab-lished from the bid itself if the very limited patternof pricing exception is to be applied.

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Both 52 Comp. Gen. 644, apura and Con-ChenEnterrises, B-187795, October-l, 1977, 77T-TCPD284, for example, have applied the "bid patternsexception and allowed correction of pricingomissions in option quantities. Neither casedealt with a situation where the entire optionquantity or quantities were omitted. In Can-ChenEnterprises, supra the bidder omitted the priceor the st of two option years while in 52Comp. Gen. 604, supra the bidder omitted a pricefor the third of four option quantities. In bothcases the intent to bid on option quantities wasclear from the face of the bid as prices wereinserted for the last option year and the finaloption quantity, respectively. Also in each in-stance the amount of the omitted price was madeabsolutely plain by the prices bid on the otherportions of the option quantities.

In the instant case, no options are involved,and no reasonably clear bidding pattern for theregular quantitAes can be established. In large-scaledrawings furnished to bidders, the pipe drainagestructures represented by the latter, items wereshown together; however, a separate-profile wasprovided for the pipe drainage structure at locationS-25E, which Farrell omitted. The drawings indicatethat elevations and pipe and headwall dimensions ofthe three structures, while similar, are not identical.The contracting officer could not determine, fromFarrell's bid as submitted, whether Farrell regardedthese variations as significant. (Farrell laterstated that it added $4,000 to its estimated directcosts for each item to cover overhead, bond, andprofit, then rounded off its bid prices on all threeitems to $28,000 each.)

Accordingly, we do not Lelieve that Farrell'sbid contains sufficient evidence of a biddingpattern to invoke the very limited exception to therule requiring bids on all necessary items. SeeAinslie Corporation, B-190878, May 4, 1978, 78-1CPD 340; B-178;;9, July 23, 1973.

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As for Farrell's failure to receive revised page8-2, in a similar case in which a bidder attemptedafter opening to supply a price for a mandatory itemon which it had not bid, due to failure to receive anamendment on time, we stated that while the Governmentshould make every effort to see that bidders receivedtimely copies of IFB's and amendmants, the fact thatthere was a failure to do so in a particular case didnot warrant the acceptance of a bid after the time fixedfor opening. We stated that acceptance of a bid whichis not responsive to the solicitation as amended wouldprejudice the rights of the Government and other bidders,who were entirely responsive, and the contracting officerwould nct be legally authorized to accept such a bid.40 Comp. Gen. 126 (1960).

In the instant case, although Parrell may not havereceived .revised page S-2, it seems to us that Farrellshould have been aware of the Omission. Farrellacknowledged receipt of amendment 0001, and by acareful checking of the list of revised pages therein,should have been able to determine that one was mis-sing.

Farrell's alternative argument, that the mistakein bid procedures should be used hare, also is coveredin 52 Comp. Gen. 604, sugra. We stated that to allowa bidder to correct a price omission after allegingmistake would generally grant an option to explain,after opening, whether it intended to perform or notperform the work for whii'lh the price was omitted.To extend this option would in effect be granting thebidder an opportunity to submit a new bid. Therefore,an allegation of mistake may be considered only wherea bid is responsive and otherwise for acceptance. Seealso Bayshore Systems Corporation, 56 Comp. den. 83TD1762, 76-2 CPD 395.

Nor may the omission be waived as a minor fnfor-mality under ASPR 2-405. Drawings and specificationsfor the pipe drainage structure at location S-25E werein such finite detail that the item Bihould, we believe,

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be regarded as material, even though it representsonly a small friction of the contract price. SeeG-enerajl Engineering and Machine Works, Inc., 5-190379,3antuary 5, 1978, 78-1 CPD 9. Farrell's subsequent offernot to chargqe for the omitted item does not make thebid responsive. Garamond Pridemark Press, B-182664,February 21, 1975, 75-1 CPD 106. In view of thefc Oeqo ing, we eo not need to reach the issue ofFarcril1's failure to submit a minority subcontracting,. in .

Sixnce Parre,1's bid is nonresponsive, we mustccn-s;der F'arreli's protest ofnaward to either the second;L- third-low biddezs on grounds that their bids are un-bdaliiced. Farrell alleges that Harbert and MSB haveb id u6rxeasor.ably high prices for two categories of work,(1) mobilization and preparation and (2) clearing andg ubrbino. (It appears that Farrell regards Harbert'sbid fou mobilization and M&B's bid for clearing andgrubbing as unbalanced). The prices in question areas follows:

Bid Iteum Govt. Estimate Farrell Harbert Al & £Bgabh & Prep $1,060,000 $ 650,000 6,000,000 -,0oo0oC E G 288,000 2,376,400 2,086,945 4,200,000

!ctal $1,348.000 $3,026.400 $8,086.945 $6,200.Ofn

Harbert contests the timeliness of this basis ofprotest; however, the Corps states that the matter wasraisrei with it in a timely fashion. T'ne Corps reportto our office, which recommended denial of Farrell'spYrotest, therefore may be considered adverse agencyaction, and Farrell's protest is timely under 4 C.F.R.C.2 (21977). In any event, the Corps has asked that we

rule on the matter.

Farrell argues that award to Harbert or MaB wouldnot be in the best interest of the Government, sincethzese costs will be paid at the "front end" of the

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contract. The effect, Farrell argues, is that eitherbidder will be financing its performance with Governmentmoney, rather than with its own. Farrell contends thatthe bids should be rejected because the Governmentmight have to divert funds from other sources tomaintain liquidity of the project and might incuradditional costs if, due to exhaustion of funds, interesthas to be paid on amounts due. Moreover, Farrell arguies,because 20 percent of Harber''s price is for mobilization,if the contract should be terminated before completion,the Government will have purchased a huge fleet ofequipment for the contractor.

The Corps responds that there is no unbalancingbecause, if excavation costs are added to those citedby Farrell, there is virtually no difference betweenthe prices of the three lowest bidders. Farrell takesissue with this, arguing that excavation costs will bepaid over the entire term of the contract. The Corpsalso indicates that no funding problemr are anticipated.

Harbert argues that the solicitation permits thecost of equipment, less its estimated salvage value atthe end of the contract, to be included in mobili-zation and preparation and to be paid as documented.Harbert states that it confirmed this interpretationwith the Nashville District office of the Corps bothbefore anid after submitting its bid. Harbert explainsthat because the project must be completed in threesuccessive, six-month construction seasor.3, it planstr,'work on a 6-day, double 10-hour shift basis. Sincer.-ajor equipment therefore will have between 6,000 and8,000 hours of service, Harbert states, it decided tomobilize with new equipment. Harbert estimated thedifference between the purchase price for this equip-ment and its value at the end of the contract wouldbe $6,352,000; preparation costs were estimated at anadditional $623,000; Harbert states that it thereforebid $6 million for mobilization and preparation. Harbertargues that Farrell actually is protesting that themobilization and preparation payment clause is anundesirable contract provision.

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In analyzir'g unbalanced bide, our OfMice generallyhas considered ihether each bid iten carries its shareof the cost of She work and the contractor's profit.ut whether the bid is based on nominal prices for sanework and enhanced prices 'or other work. We then attemptto Determine whether award to a bidder submitting sucha bid will result in the lowest ultimate cost to theGovernment. See Chrysler Corporation, B-182754,Februatry 18, 1975, 75-1 CPD 100.

In the case of Haribert's bid, we believe the issueis not whether it is unbalanced, but whether the costof equipment to be used in performing the contractproperly may be includeC in end paid for 3s mobilizationand preparation.

Section lB of the solicitation covers Mobilizationand Preparatory Work; it contains the standard clauseset forth in ASPR 7-603.37. This clause, ASPR states,is to be us;id "in major construction contracts requiringmajor or special items of plant and equipment *** whichare considered to be in excess of the type, kind, andquantity presumed to be normal equipment of a contractorqualified to undertake the work." The head of the procuringactivity must approve its insertion in contracts containinga separate bid item for mobilization and preparatory work.The clause, as Harbert and the Corps have indicated,permits payment of the contractor's actual expenses forplant, equipment and material if the contractingofficer finds them suitable and rnecessary for efficientprosecution of the contract. Payments may not exceedthe cost to the contractor, less estimated salvagevalue upon completion of the contract, as determined bythe contracting officer.

The decision as to the amount and kind of equipmentnecessary for successful construction of the DivideCut on the Tenne3see-Tombigbee Waterway is, we believe,one of the type which ASPR has committed to the unique

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discretion of the procuring agency. Harbert has irneffect asserted that the equipment which it intendsto purchase for this contract tL in e'ceas of that whichit normally possesses. The Corps has not at any tildedisputed this.

Farrell, in its letter of ,7une 15, 1978, concede.that the mobilization estimate and plan of Harhert

ffllr within the boundaries of the mobilization paymentclause." Arguments that the Government may have todivert funds, pay interest on amounts due, or terminatebefore completion of the contract are based on eventswhich may o0: may not occur, and we do not find thatthe poss'bility of these events affects the legalityof the proposed award.

M&B also argues that Harbert's bid is unbalanced,while its own is not. MiB contends that payment underthe mobilization and preparatory work c~duse of thecontract violates the prohibition against advance pay-ments of 31 U.S.C. 529, citing General TalephoneCompany of California, 57, Comp. Ge .. 89 (177 ), 77-2CP' 376. Farrell has argued that if, following paynentof mobilization costs which include the purchase ofspecial equipment, the contract weze terminated forthe convenience of the Government, the Gojvernment A___would have bought the contractor a huge fleet of equip-ment.

We disagree. In the General Telephrtae case, abid on a contract to provide telephone services fora Veterans Administration hospital was rejected becauseit required the agency to pay, at the time of iiLstalla-tion, a basic charge for special equipment which wasbeing lease& for the 10-year term of the contract. Thecontractor's capital outlay for that equipment, we held,could not be recovered before the services were rendered.

Under the facts in that case, however, the basiccharge was payable whether or not service continued forthe duration of the lease. The Government acquired nolegal or equitable interest in the equipment to beinstalled, could not demand that it be relocated toanother location if service were terminated at theinstalled location, and had no interest in its residualvalue. we found that under these circumstances, a

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substantial portion of the basic charge would not havebeen "actually earned" at the time the charge was made,and that only a portion of the entire capital cost ofthe leased equipment represented the current fiscalyear's needs.

By contrast, under the mobilization and preparatorywork clause of the protested solicitation, the Government'sinterest is protected. ASPR 7-603.37 requires documenta-tion of actual costs as incurred, appraisal of the equip-ment at the site of the contract, a showing that it hasbeen acquired free of encumbrances, and an agreementthat it will not be removed from the construction sitebefore completion and acceptance of the entire work.The contracting officer must find that the equipment issuitable and necessary for efficient prosecution of thecontract, and specific limits are placed on the amountswhich may be paid as mobilization and preparation costs.kioreover, in this case salvage value will be subtractedfrom the purchase price of the contractor's equipment.

In the event of termination, the termination clausefor construction contracts, set forth in ASPR 7-602.29(b)(vi) and included in the contract in Standard Form 23,states that the contractor shall transfer title and deliverto the Government supplies and other material acquired inconnection with performance of the work which has beenterminated. It appears to us that title to the specialequipment acquired by the contractor under the mobilizationclause would come within the reach of this provision.See also ASPR 7-602.29(b)(ix), which states that the con-tractor shall "take such action as may be necessary oras the contracting officer may direct for the protectionand preservation of the property related to this contractwhich is in the possession of the contractor and inwhich the Government has or may acquire an interest."

Finally, we are dealing with a major constructioncontract of the type in which special financing arrange-ments such as progress payments have always been Fermitted.The Government, as shown by the mobilization and prepara-tory work clause, recognizes that a qualified contractormay have to acquire special equipment to perform this typeof contract and, by regulation, permits costs of such equip-ment to be paid as incurred.

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For the foregoing reasons, we find that paymentsunder this clause are not advance payments. They arenot made in advance of or in excess of eligible costsincurred on the contract. Rather, we believe, they arein the nature of progress payments for construction con-tracts. See B-152600, June 11, 1976.

The other advance payment decisions of our Office citedby M&B concern payment of attorney's fees and other ex-penses in administrative proceedings, 56 Comp. Gen. 111(1976); station housing allowances for military personnel,56 Comp. Gen. 190 (1976); and the federal share of studentsalaries under a college work-study program, 56 Comp. Gen.567 (1977). We do not find them relevant to this case.

We therefore find that the cost of equipment to beused in performing the contract properly was included inHarbert's bid as a mobilization cost, and may be paid inthe fiscal year incurred without violating statutorylimitations. Since Farrell's bid is nonresponsive, awardmay be made to Harbert as the low, responsive, responsiblebidder, and we need not reach the question of whether M&B'sbid is unbalanced.

Accordingly, the protest is denied.

Deputy ComptrollerSGeneralof the United States