Matter of: Herman Construction Group, Inc.

Agency: Department of Veteran Affairs

Disposition: Protest Sustained

Keywords: Mistake; Bid and Proposal Costs; Price Calculation Error

Decided: January 5, 2018

Released: January 12, 2018

General Counsel P.C. Highlight:   Agencies may only permit bid modification based on error or mistake when the evidence establishes clear and convincing evidence both that a mistake was made and the intended bid price was different than that submitted.

Summary of Facts

In April of 2017, the Department of Veterans Affairs (VA) issued an invitation for bids (IFB) for the renovation of and expansion of the emergency department at the VA Palo Alto Health Care System campus in Palo A lot, California.  Bidders provided a base bid item price along with four alternate bid item prices, based on various design features.

Five companies submitted bids, including Talion Construction, LLC (Talion) and Herman Construction Group (Herman).  Talion submitted the lowest bid, at $6,635,332.  Herman’s bid was second lowest, with a price of $7,820,508.  Bidding closed on June 8, 2017.  On June 9, 2017, Talion requested permission from the VA to either withdraw their bid or correct a mistake within the bid.  The error included the calculation for both the base bid and the four alternate bids for drywall services.  Talion’s error stemmed from a “plug” number of $500,000 for drywall.  Talion explained the bid should have reflected a price of $1,498,770 for drywall services.  Correcting this error would result in Talion’s bid price changing to $7,771,658.

In support of their request for change, Talion forwarded a copy of a subcontractor quotation and accompanying fax sheet dated June 7.  Talion explained this information was omitted from the bid due to the timing of the receipt of the information.

Basis for Protest

Herman filed a protest with the GAO, alleging Talion should not have been permitted to correct their mistake in the bid, as there is not clear and convincing evidence of mistake or the intended bid price.

Under the law, where there is clear and convincing evidence both that a mistake was made and the intended bid price was different, a bidder may upwardly correct its bid price.  Where, as here, the bidder remains the lowest bidder despite the upward correction, “a request for correction must be supported by statements and shall include all pertinent evidence, including original worksheets and other data used to prepare the bid, subcontractors’ quotations, if any, published price lists, and any other evidence that establishes the existence of the error and the intended bid price.”

The GAO found the submission of the contractor’s bid and the corrected worksheet do not show that a mistake was made or that Talion intended to include the subcontractor quotation as part of the price of the bid.  Talion did not provide evidence connecting the submitted and corrected worksheets to the subcontractor’s quotation.  The work sheet does not establish evidence of mistake.  There is nothing irregular in a $500,000 value for the cost of drywall that would independently leave one with the impression a mistake had been made.  Similarly, the bid price itself is not clear and convincing evidence of mistake.  Instead, the bid price was in the government’s expected price range between $5 and $10 million.

Instead, the only “evidence” of mistake is the explanation provided by Talion that the $500,000 figure represented a plug number, and that a subsequent bid from a subcontractor was to be subbed in upon receipt.  The GAO found the statements self serving and uncorroborated.  Additionally, the statements do not offer clear and convincing proof of a mistake.  Finally, there is nothing in the record establishing Talion was committed to the subcontractor bid provided.  Instead, the bid indicates Talion itself would be providing the drywall services.  The GAO found insufficient evidence exists to support the claim they intended to use the subcontractor at issue.

GAO Decision

The agency’s action allowing Talion to correct the mistake in their bid was improper.  The agency has the option of awarding the contract to Talion at the original bid price or, in the alternative, they may consider Talion’s request to withdraw their bid as originally requested.

Protest Sustained