Wednesday, January 17, 2018

VA Improperly Allowed Bidder to Revise Its Bid

What would you do if you found that you had made a significant mistake in a bid submitted to the Government? A mistake so material that it could jeopardize your financial position.Would you ask to be allowed to revise your bid? Would you request that it be disregarded? There is a provision in the FAR (Federal Acquisition Regulations) that allow bidders to correct mistakes. However, the criteria for allowing that is very restrictive.

In April of last year, the Department of Veterans Affairs (VA) issued a solicitation for renovation and expansion of the emergency department at its Palo Alto health care campus. Bids were due by June 8th. Four bids were submitted. Talion's was the lowest bid at $6.6 million and Herman's, the second lowest bid at $7.8 million. The day after the bid opining, June 9th, Talion informed the VA that it had made a mistake in its bid and requested that it be permitted to either correct its bid or withdraw it. Talon explained that it had underestimated its work for drywall services by $1 million. Ultimately, the VA allowed Talion to resubmit its bid up to $7.7 million, slightly lower than Herman's second lowest bid.

Herman protested the VA's action on the basis that it improperly permitted Talion to correct the "alleged" mistake in its bid.

A bidder may be permitted to upwardly correct its bid price prior to award where there is clear and convincing evidence that both a mistake was made and the intended bid price (see FAR 14.407-3(a). In situations where a bidder seeks upward correction but will remain the lowest-priced, 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 requirement for clear and convincing evidence reflects the need to protect the integrity of the sealed bid procurement process, where, except for narrowly defined circumstances, award should be made on the basis of the bids as submitted.

In this regard, Herman maintained that Talion's bid did not provide clear and convincing evidence of a mistake or the intended bid. The GAO (Government Accountability) agreed. GAO ruled that the VA unreasonable determined that Talion could upwardly correct its bid because the evidence submitted does not show that a mistake was made or that Talion intended to include the "missing" subcontractor quotation as part of its bid price. The published decision includes on the nature of the omission and why it did not constitute clear and convincing evidence. You can read the full decision here.

Because the GAO found that the VA improperly permitted Talion to correct its mistake, it recommended that the contract awarded to Talion be terminated for the convenience of the Government and that it award a contract to Talion at the original bid price or consider whether it would be appropriate to allow Talion to withdraw its original bid. GAO also ordered the VA to reimburse Herman the costs associated with filing and pursuing its protest, including attorney's fees.

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