B&M Cillessen Construction Co., Inc., B-287449.2, June 5, 2001

B-287449.2 Jun 05, 2001 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights A firm protested a Department of the Interior contract award for building construction, contending that Interior improperly allowed the awardee to make an upward correction of its low bid. GAO held that Interior's decision to allow the awardee to upwardly correct its low bid was not objectionable, since Interior reasonably concluded that the awardee presented clear and convincing evidence of the claimed mistake and the intended bid price. Accordingly, the protest was denied. View Decision Matter of: B&M Cillessen Construction Co., Inc. File: B-287449.2 Date: June 5, 2001 DIGEST Attorneys DECISION B&M Cillessen Construction Co., Inc. protests the award of a contract to HB Construction of Albuquerque, Inc., under invitation for bids (IFB) No. RMK66010001, issued by the Bureau of Indian Affairs, United States Department of the Interior, for building construction at the Huerfano Dormitory-School, Huerfano Community, New Mexico. B&M contends that the agency improperly allowed HB to make an upward correction of its low bid. We deny the protest. The IFB was issued on January 15, 2001, and, as amended, contained a bid schedule with three line items--a base bid item (construction of a new dormitory and a new kindergarten classroom) and two additive bid items (renovation of two different buildings). For each item, bidders were required to submit a lump sum price; to arrive at the firm's total bid price, bidders were required to add the three prices together. As relevant here, the IFB contained the clause at Federal Acquisition Regulation (FAR) Sec. 52.229-3, captioned "Federal, State, and Local Taxes," which provides that "[t]he contract price includes all applicable Federal, State, and local taxes and duties." FAR Sec. 52.229-3(b). In this case, the applicable taxes include a 5.75-percent New Mexico Gross Receipts Tax (NMGRT) and a 3-percent Navajo Business Activities Tax (BAT). /1/ Five firms, including B&M and HB, submitted bids by the 2 p.m. bid opening time on February 27. HB submitted the apparent low bid of $4,579,000, and B&M submitted the apparent second low bid of $4,855,000. As relevant here, the breakdown of HB's total bid was as follows: base bid -- $4,409,000; additive 1 -- $89,000; and additive 2 -- $81,000. On February 27, after bids were opened, HB's president notified the agency's administrative contracting officer that he mistakenly omitted from the firm's bid an amount for the NMGRT; he requested an opportunity to add an amount to its bid representing the 5.75-percent NMGRT. The contracting officer informed him that she was sending the firm a letter requesting bid verification and that he should submit a response. In responding, HB's president confirmed the firm's total bid of $4,579,000 with respect to the construction items, but stated that the firm did not include in the bid an amount for the NMGRT. To support his mistake claim, HB's president submitted two computer-generated bid worksheets. The first worksheet, dated "27 Feb 01" at "01:13 PM," showed that HB included in its price for the base bid item an amount for "gross receipts tax," calculated by multiplying 5.75 percent by the firm's original base bid subtotal; this worksheet did not show a 3-percent tax. The second worksheet, dated "27 Feb 01" at "01:48 PM," showed that HB changed the "gross receipts tax" percentage from 5.75 percent to 3 percent, and recalculated the amount shown on the worksheet for this tax by multiplying 3 percent by the firm's revised base bid subtotal. In an affidavit dated March 5, HB's president provided the following explanation of the claimed mistake: By law the gross receipts tax percentage for this project is 5.75% or $263,293 on HB's bid of $4,579,000. The total amount of HB's bid including NMGRT should have been $4,842,293. Our bid should have included a line item of 3.0% Tribal Tax + 5.75% NMGRT for a total of 8.75% GRT. At approximately 1:13 PM on bid day I was told to add 3% to Gross Receipt Tax when in fact, I changed the Gross Receipt Tax to 3%. Agency Report (AR), Tab 6A, Affidavit of HB's President (Mar. 5, 2001). After doing its own calculations, the agency concluded that, as submitted at bid opening, HB's bid did not include an amount for the 5.75-percent NMGRT; HB's bid only included an amount for the 3-percent Navajo BAT. The agency further concluded that HB clearly intended to include in its bid an amount for the 5.75-percent NMGRT, although it was not clear why the percentage was changed from 5.75 percent to 3 percent (in the second worksheet) in lieu of adding 3 percent to the NMGRT, as explained in the above-referenced affidavit, since HB would have remained the low bidder. AR, Tab 9, Contracting Officer's Memorandum (Mar. 22, 2001).