CHAPTER 8
Protest Grounds Based on Sealed Bidding Procedures
1. BID GUARANTEES 
Overview of This Protest Ground: Bid guarantees are a forms of security that are used in sealed bidding procedures (usually for construction) to make sure that (1) the bidder does not withdraw its bid during the specified period for acceptance and (2) the bidder will execute a written contract and furnish the required bonds if selected for award. See FAR § 28.001. The bid guarantee can also be used to offset excess reprocurement costs if the bidder violates those promises. Essentially, it can make a surety liable to the government for the bidder’s actions prior to contract award.
Protests in this area arise most often in sealed bidding procedures (FAR Part 14) when there is a discrepancy with the bid bond that leads the contracting officer to question whether the surety will be liable in the event that the bidder does not execute the contractual documents following award. Sometimes this type of protest is triggered by a letter included with the bid that casts doubt on the enforceability of the bid bond. Other times joint ventures will appear to have a bid bond in only one of the joint venture partners’ names, leading a contracting officer to reject the bid as nonresponsive. Finally, several cases arose because the bidder submitted a photocopy rather than the original signed bid bond.
COFC’s Key Language
The omission of the penal sum calls into question whether the surety would be obligated [to the Government]. Accordingly, the government finds itself exposed to a significant risk when the penal sum is omitted in an otherwise properly completed bid bond. The Government has a clear right to avoid entering into contracts containing ambiguous terms as well as an obvious interest in such avoidance…. In sum, the agency and GAO reasonably concluded that the same protection simply is not afforded by a bond lacking a penal sum as would be provided by a fully completed bond. This is, doubtless, an unfortunate result for a party which is seemingly well-intentioned, such as plaintiff, but it is because there are unscrupulous contractors that the government must ensure that it is protected.
Interstate Rock Products, Inc. v. United States, 50 Fed. Cl. 349 (2001).
GAO’s Key Language
A bid guarantee is a form of security that ensures that a bidder will not withdraw its bid within the period specified for acceptance and, if required, will execute a written contract and furnish required performance and payment bonds. Federal Acquisition Regulation (FAR) sect. 28.001. The bid guarantee secures the surety’s liability to the government, thereby providing funds to cover the excess costs of awarding to the next eligible bidder in the event that the bidder awarded the contract fails to fulfill these obligations…. When required by a solicitation, a bid guarantee is a material part of the bid and must be furnished with it…. Noncompliance with a solicitation requirement for a bid guarantee generally renders the bid nonresponsive and requires the rejection of the bid. FAR sect. 28.101-4(a).
Shaka Inc., B-405552, Nov. 14, 2011.
The determinative question in judging the sufficiency of a bid guarantee such as a bid bond is whether it could be enforced if the bidder subsequently fails to execute required contract documents and to provide performance and payment bonds…. The bid bond must clearly establish the liability of the surety; when the liability is not clear, the bond is defective…. In general, copies of bid guarantee documents do not satisfy the requirement for a bid guarantee since there is no way, other than referring to the original documents, for the agency to be certain that there had been no alterations to which the surety had not consented and could use as a basis to disclaim liability.
Islands Mechanical Contractor, Inc., B-404275, Jan. 24, 2011.
The sufficiency of a bid guarantee depends on whether the surety is clearly bound by its terms; when the liability of the surety is not clear, the bond is defective…. Under the law of suretyship, no one incurs a liability to pay the debts or perform the duties of another unless that person has expressly agreed to do so…. Thus, generally, a bid bond which names a principal different from the bidder is deficient, and the bid must be rejected unless it can be established that the different names identify the same entity.
On the other hand, where the entity that submitted the bid and that is identified as the bid bond principal are exactly the same, any discrepancy between the bidder’s and bid bond principal’s names is merely a matter of form that does not require rejection of the bid…. The proper question to be considered is whether the nominal bidder and bid bond principal are the same entity, such that it is certain that the surety will be obligated under the bond to the government in the event that that bidder withdraws its bid within the period specified for acceptance or fails to execute a written contract or furnish required performance and payment bonds.
Hostetter, Keach & Cassada Construction, LLC, B-403329, Oct. 15, 2010.
FAR Crosswalk: FAR § 14.402(a); FAR Subpart 28.1, Bonds and Other Financial Protections; and FAR clauses 52.228-1 and 52.214-5(d).
Other Relevant Cases: See page 311 in the Index of Representative Cases.
Commentary: A frequent subject of protests, the legal sufficiency of bid bonds is a mechanical and rigid inquiry. A bid bond that is deemed to be noncompliant with the strict requirements set out in the FAR will properly result in the rejection of a bid as nonresponsive. FAR § 28.101-4 presents a defined list of situations in which noncompliance with the solicitation’s requirement for a bid guarantee “shall” be waived unless the contracting officer explains in writing why such a waiver would be detrimental to the government’s interests. Beyond the nine enumerated reasons, a bidder submitting a noncompliant bid guarantee does so at its own risk.
Bidders must be particularly aware of the strict rules regarding the submission of photocopies of the bid bond or of the signatures on the bid bond. The GAO will uphold an agency’s rejection of such photocopied items. The reasoning behind this strict rule is that a photocopied version of a bid bond may not represent the current status of that agreement; the government will not be certain that it is protected by the bid bond without examining the original signed version. The underlying governmental interest is to ensure that the surety doesn’t later disclaim its liability by pointing to an original signed version of the bond that contains different terms from the photocopied version.
This is an area where bidders have to be extremely careful not to inject any ambiguity. If they do, they may face rejection of their bid on what might seem to be a hyper-technical ground.
Several cases in this area involve joint ventures that fail to make it clear that the entity submitting the bid appears on the bid bond. That is, the name of the joint venture must be on the bid bond as opposed to simply the name of one of the joint venture partners. If the bid bond is submitted in the name of only one of the entities forming the joint venture, the bid will likely be rejected as nonresponsive.
2. EVALUATION OF OPTIONS IN INVITATIONS FOR BIDS
Overview of This Protest Ground: This protest ground arises in sealed bidding (typically for construction) where the protester’s bid is lower for either the base or the base with options. Consequently, the protester argues that the government should have evaluated the competing prices in accordance with whatever route would lead to the protester offering the lowest cost. For example, in Contractors Northwest, the prices between the awardee and the protester were as follows:
| Protester | Awardee | |
| Base | $2,077,375 | $2,139,790 |
| Options | $1,562,626 | $1,263,550 |
| Total | $3,640,001 | $3,403,340 |
If the government had evaluated only the base bid, the protester would have been the low bidder. Conversely, if the government had evaluated the base bid plus the options, the awardee would have been the low bidder. Since the typical FAR clause allows the government to use its discretion in determining whether or not funding will be available to exercise the option, this is generally an unsuccessful protest ground.
GAO’s Key Language
Here, as noted above, the IFB identified FAR clause 52.217-3, “Evaluation Exclusive of Options,” as applying to this solicitation. Given this express incorporation, bidders were on notice that option prices would not be evaluated. To the extent that the protester believed that option prices should be evaluated or that the solicitation was in some way ambiguous with respect to the evaluation of option prices, such allegations concern alleged apparent solicitation improprieties that the protester was required to raise prior to bid opening. 4 C.F.R. § 21.2(a)(1) (2009).
Staker & Parsons Companies, B-402404.2, March 1, 2010.
Where, as here, the solicitation includes a provision requiring the evaluation of options, such options must be evaluated “[e]xcept when it is determined in accordance with FAR [§] 17.206(b) not to be in the Government’s best interests” to exercise the options. FAR § 52.217-5. FAR § 17.206(b) provides that it may not be in the government’s best interests to evaluate options “when there is a reasonable certainty that funds will be unavailable to permit exercise of the option.”
…
[The protester] asserts, without support, that additional funding is “unlikely” and that, absent more definitive proof by the agency that funding is available, the contracting officer should not have evaluated option pricing. However, [the protester] misconstrues the burden of proof applicable to this issue. The test is not whether a contracting officer can state with certainty that funds will be available to exercise options. Rather, FAR § 17.206(b) provides that options should be evaluated unless there is “reasonable certainty” that funds will not be available. The record does not show that there was “reasonable certainty” that funding is not available. Thus, we cannot find unreasonable the agency’s determination to evaluate option pricing in this case.
Marshall Company, Ltd., B-311196, April 23, 2008.
Although the contracting officer cannot state with certainty that funds will be available to exercise options, this is not the test. FAR § 17.206(b) does not require the agency to be clairvoyant in forecasting the availability of option quantity funding. Absent a showing that there is reasonable certainty that funds will not be available, an agency should evaluate option prices, where the solicitation provides for their evaluation. The record here shows that the agency is continuing to seek funds to permit the exercise of the options and that the contracting officer does not know with reasonable certainty that funds will be unavailable to permit the exercise of the options. Accordingly, we find that the agency reasonably evaluated option prices, as was provided for by the IFB.
Building Construction Enterprises, Inc., B-294784, Dec. 20, 2004.
Citing FAR § 52.217-4, included in the IFB, [the protester] first argues that the agency could not evaluate optional items because they were not awarded with the contract. This argument has no merit, given that the IFB expressly provides in a special clause that optional items may be exercised within 180 days of contract award and includes FAR § 52.217-5 informing bidders that evaluation would include both base and optional items and that the options need not be exercised at the time of award. [The protester] next argues that optional items cannot be considered under FAR § 52.217-5 because the contracting officer did not make a written determination prior to the issuance of the IFB that there is a reasonable likelihood that the options will be exercised, as required by FAR § 17.202(a). See also FAR § 17.208(c). Although it is true that a written determination is required prior to the issuance of the IFB, we do not find the lack of a contemporaneous writing to be fatal to the application of this clause in the evaluation.
Contractors Northwest, Inc., B-293050, Dec. 19, 2003.
With regard to the price factor, the RFP stated that “[t]he evaluated price will be inclusive of the base year and all option years….
…
…we agree with the protester that the source selection decision reflects a consideration of the proposals’ base period pricing only. That is, the source selection decision does not provide any discussion of the proposals’ option year pricing, including any recognition that the price advantages of [the protester’s] proposal appears to increase over each of the proposed option periods. Furthermore, the agency has not provided any documentation or statement from, for example, the source selection authority evidencing the consideration of the proposals’ option year pricing contemporaneous with the source selection. Given this, and based on our review of the record, we cannot find the agency’s source selection to be consistent with the terms of the solicitation.
Medical Development International, Inc., B-402198.2, March 29, 2010.
FAR Crosswalk: FAR §§ 17.202(a), 17.206(b), 17.208(a), (b), and (c); and FAR clauses 52.217-3, 52.217-4, and 52.217-5.
Other Relevant Cases: See page 312 in the Index of Representative Cases.
Commentary: This is a fairly straightforward protest ground. FAR Subpart 17.2, Options, sets out three different scenarios affecting sealed bidding. The contracting officer is required to select one of these three options and their corresponding clauses.
The first alternative envisions a scenario where the government will not evaluate the option pricing. This is set out in FAR 17.208(a) with its corresponding FAR clause 52.217-3. The second alternative envisions the government awarding the options at the same time that the award is made. This is explained at FAR 17.208(b), with its corresponding FAR clause at 52.217-4. The final alternative envisions a scenario where the government believes that the option will be exercised, but not at the time of the award. This is set out at FAR 17.208(c), with its corresponding FAR clause at 52.217-5. The FAR requires the contracting officer to make a written determination before selecting this third option. See FAR 17.202(a). However, even if the contracting officer fails to make this written determination, the GAO will still deny a protest as long as the contracting officer can affirm that he or she would have been able to make that written determination.
This is an area where the GAO tends to defer to the government. Regardless, contracting officers should ensure that they make the written determination if they select the third route represented by FAR clause 52.217-5.
3. CANCELLATION OF AN INVITATION FOR BIDS 
Overview of This Protest Ground: Protests in this area are typically filed by the low bidder under sealed-bidding procedures that learns that the government has decided to cancel the IFB rather than make an award. Although these cancellations are similar to the cancellation of a solicitation in a negotiated procurement, they can be far more harmful. In a sealed-bidding procedure, the prices of the competing offerors are publicly disclosed. Thus, a bidder suffers a greater competitive injury when its prices have been revealed and the government then decides to cancel the IFB.
The FAR expressly curtails the government’s discretion by requiring that an IFB be canceled after bid opening only if there is a “compelling reason to reject all bids and cancel the invitation.” A close reading of FAR § 14.404-1, Cancellations of invitations after opening, becomes critical for a contracting officer in this unfortunate situation.
COFC’s Key Language
The law is that although cancellation of a solicitation is disfavored after bids have been opened, cancellation of an IFB is permitted in compelling circumstances. FAR 14.404-1(a) (1) provides that “[p]reservation of the integrity of the competitive bid system dictates that, after bids have been opened, award must be made to that responsible bidder who submitted the lowest responsive bid, unless there is a compelling reason to reject all bids and cancel the invitation.” 48 C.F.R. § 14.404-1(a)(1) (2004). A compelling reason includes instances where “the agency head determines in writing that [a]ll otherwise acceptable bids received are at unreasonable prices.” 48 C.F.R. § 14.404 1(c)(6) (2004).
“The authority vested in the contracting officer to decide whether to cancel an IFB and readvertise is extremely broad. A determination concerning the unreasonableness of the prices bid is a matter of administrative discretion which should not be questioned unless the determination is shown to be unreasonable or that there is a showing of fraud or bad faith.” Overstreet Elec. Co., Inc. v. United States, 47 Fed. Cl. 728, 732 (2000) (quoting Caddell Constr. Co. v. United States, 7 Cl. Ct. 236, 241 (1985)).
First Enter. v. United States, 61 Fed. Cl. 109 (2004).
The Claims Court explained why FAR § 14.404-1 restricts administrative authority to cancel an IFB after bid opening:
The rejection of all bids after they have been opened tends to discourage competition because it results in making all bids public without award, which is contrary to the interest of the low bidder, and because rejection of all bids means that the bidders have expended manpower and money in the preparation of their bids without the possibility of acceptance. Vanguard Security Inc. v. United States, 20 Cl. Ct. 90, 102 (1990) (citing P. Francini & Co., Inc. v. United States, 2 Cl. Ct. 7, 9 (1983)).
In this respect, the court has recognized that after bid opening, bids “have been exposed to their competitors and will constitute ‘sitting ducks’ to serve as targets for competitors in the next round of bidding. Certainly, such a situation tends to undermine the integrity of the bidding process [that FAR § 14.404-1] is designed to foster and protect.” California Marine Cleaning, Inc. v. United States, 42 Fed. Cl. 281, 292 (1998) (quoting P. Francini, 2 Cl. Ct. at 10). For this reason, the Court of Claims recognized more than fifty years ago, and this court recognizes today, that “[t]o have a set of bids discarded after they are opened and each bidder has learned his competitor’s price is a serious matter, and it should not be permitted except for cogent reasons.” Massman Constr. Co. v. United States, 102 Ct. Cl. 699, 719, 60 F. Supp. 635, 643 (1945); California Marine, 42 Fed. Cl. at 292.
Great Lakes Dredge & Dock Co. v. United States, 60 Fed. Cl. 350 (2004).
GAO’s Key Language
When an agency issues an IFB and opens bids, award must be made to the bidder who submitted the lowest responsive bid, unless there if a compelling reason to reject all bids and cancel the invitation. Federal Acquisition Regulation § 14.404-1(a)(1). The standard for canceling an IFB after bids have been opened is different from the standard for canceling a request for proposals (RFP) after award; an agency need only demonstrate a reasonable basis to cancel an RFP after award. This different standard applies because of the potential adverse impact on the competitive bidding system of cancellation after bid prices have been exposed at a public bid opening. A compelling reason to cancel a solicitation after bid opening exists where material solicitation terms are ambiguous or in conflict.
Great Lakes Dredge & Dock Company, LLC, B-407502.2, Feb. 13, 2013.
Because of the potential adverse impact on the competitive bidding system of cancellation after bid prices have been exposed, a contracting officer must have a compelling reason to cancel an IFB after bid opening. FAR § 14.404-1(a)(1). The contracting officer has the discretion to determine whether the necessary circumstances exist for canceling a solicitation, and we will review the decision to ensure that it was reasonable. As a general rule, the need to change inadequate or ambiguous specifications and to revise them, after the opening of bids, to express properly the agency’s minimum needs constitutes such a compelling reason. See FAR § 14.404-1(c)(1), (2). In addition, FAR § 14.404-1(c) (4) provides that a compelling basis to cancel exists if the IFB does not provide for consideration of all factors of cost to the government.
United Contracting, LLC, B-407417, Jan. 2, 2013.
A contracting agency must have a compelling reason to cancel an IFB after bid opening due to the potential adverse impact on the competitive bidding system of resoliciting after bid prices have been exposed. Federal Acquisition Regulation (FAR) § 14.404-1(a) (1). An IFB may be canceled and all bids rejected after opening where, consistent with the compelling reason standard, cancellation is clearly in the public’s interest. FAR § 14.404-1(c)(10). An agency’s desire to obtain enhanced competition by materially modifying specifications to make them less restrictive constitutes a valid reason for canceling an IFB under this FAR standard.
Cummins Power Systems, LLC, B-402079.2, Jan. 7, 2010.
Cancellation of a solicitation after bids have been opened and prices have been exposed is only permitted where a compelling reason exists to cancel. Federal Acquisition Regulation (FAR) § 14.404-1(a)(1). A contracting agency properly may cancel a solicitation when sufficient funds are not available, regardless of any disputes concerning the validity of the government estimate or the reasonableness of the low responsive bid price.
Sea Box, Inc., B-400198, Aug. 25, 2008.
With regard to the cancellation of the IFB, a contracting agency must have a compelling reason to cancel an IFB after bid opening because of the potential adverse impact on the competitive bidding system of resolicitation after bid prices have been exposed. Federal Acquisition Regulation (FAR) § 14.404-1(a)(1); Where a solicitation contains inadequate or ambiguous specifications, or otherwise does not contain specifications that reflect the agency’s actual needs, the agency has sufficient reason to cancel. FAR § 14.404-1(c)(1). Contracting officials have broad discretion to determine whether a compelling reason to cancel exists, and our review is limited to considering the reasonableness of their decision.
Corcel Corporation, B-311332, B-311332.2, June 13, 2008.
FAR Crosswalk: FAR § 14.404-1.
Other Relevant Cases: See page 312 in the Index of Representative Cases.
Commentary: This is generally an unsuccessful protest ground because the government typically has a compelling reason for canceling an IFB. This is not always the case, however. For example, in Great Lakes Dredge & Dock Co. v. United States, 60 Fed. Cl. 350, 359 (2004), the COFC made an in-depth examination into the U.S. Army Corps of Engineers’ stated reasons for canceling an IFB after the bids were opened. The COFC went through each of the agency’s stated reasons (e.g., unduly restrictive specifications, inadequate specifications, unreasonably high prices) and determined that none of them had any merit. Accordingly, the COFC permanently enjoined the agency from awarding the contract to any firm other than the firm that submitted the low bid for the dredging project.
Such injunctions can effectively force the government to accept a low bid (even on high-dollar procurements). Accordingly, it is critical that the government not only contemporaneously document its reasons for cancellation but also ensure that those reasons are “compelling,” as required by the FAR.
4. MISTAKES IN BIDS 
Overview of This Protest Ground: Protests in this area are filed by low offerors who allege a mistake but are not permitted by the government to correct their bid price upwards. Alternatively, these protests are filed by other competitors arguing that the government should not have allowed the awardee to correct its bid upwards. The governing regulation, FAR § 14.407-3, tries to strike a balance between the competing policy interests of fairness, expediency, and the integrity of the procurement process. This FAR section allows for the upward correction of honest and verifiable mistakes while disallowing those that are not verifiable and are potentially injurious to the integrity of the procurement process.
A contracting officer faced with this situation must methodically work through the FAR section while simultaneously employing sound judgment to guard against the potential for a contractor to game the system by submitting an unrealistically low bid and then trying to use the “mistake” procedures to recoup otherwise foregone profits.
GAO’s Key Language
A bidder may be permitted to upwardly correct its bid price prior to award where there is clear and convincing evidence that a mistake was made, the manner in which the mistake occurred, and the intended price. See Federal Acquisition Regulation (FAR) § 14.407-3(a). Because the authority to correct mistakes alleged after bid opening but prior to award is vested in the procuring agency, and because the weight to be given the evidence in support of an asserted mistake is a question of fact, we will not disturb an agency’s determination concerning bid correction unless it is unreasonable.
Prudent Technologies, Inc., B-401736.3, Dec. 9, 2009.
An agency may permit correction of a bid where clear and convincing evidence establishes both the existence of a mistake and the bid actually intended, so long as the correction would not result in displacing one or more lower bids. FAR § 14.407-3(a). A request to correct a bid 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, the manner in which it occurred, and the bid actually intended. FAR § 14.407-3(g)(2). In judging the sufficiency of the evidence, we consider factors such as the closeness of the corrected bid and the next low bid as well as the range of uncertainty in the intended bid. In general, the closer an asserted intended bid is to the next low bid, the more difficult it is to establish that it was the bid actually intended. Correction of a bid may be permitted to reflect the omission of direct costs without any increase for profit where the bidder requests correction in such form and the bid would remain low whether or not the low bid is amended to reflect profit. Whether the evidence meets the clear and convincing standard is a question of fact and we will not question an agency’s decision based on this evidence unless it lacks a reasonable basis.
IAP-Leopardo Construction, Inc., B-401923, Dec. 2, 2009.
The Federal Acquisition Regulation (FAR) recognizes two principal situations in which bid errors may be corrected before award. First, a clerical mistake that is apparent on the face of a bid may be corrected by the contracting officer prior to award, if the contracting officer is able to ascertain the intended bid without the benefit of advice from the bidder. Such a correction is allowable if the discrepancy admits to only one reasonable interpretation ascertainable from the face of the bid, or from reference to the government estimate, the range of other bids, or the contracting officer’s logic and experience. FAR § 14.407-2.
Second, an agency also may allow a bidder to correct a mistake in its bid after bid opening. However, in order to protect the integrity of the procurement process, a bidder’s request for upward correction of a bid after bid opening but before award may be granted only where the request is supported by clear and convincing evidence of both the existence of a mistake and the bid actually intended, and only where the correction would not result in displacing one or more lower bids. Where neither situation is present, the bid may not be corrected.
Cashman Dredging and Marine Contracting Co., B-401547, Aug. 31, 2009.
Under FAR § 14.407-2, the contracting officer may correct apparent clerical mistakes in bids, so long as the contracting officer obtains from the bidder a verification of the bid intended. We have recognized that a bidder’s failure to follow IFB instructions precisely with respect to how to enter bid prices for deductive bid items is an obvious clerical mistake that can be corrected where the intended bid is evident from the face of the bid.
SDV Construction Group, LLC, B-400703, Jan. 7, 2009.
A clerical error that is apparent on the face of a bid may be corrected by the contracting officer prior to award, if the contracting officer is able to ascertain the intended bid without the benefit of advice from the bidder. Such a correction is allowable if the discrepancy admits to only one reasonable interpretation ascertainable from the face of the bid, or from reference to the government estimate, the range of other bids, or the contracting officer’s logic and experience.
Bighorn Lumber Company, Inc., B-299906, Sept. 25, 2007.
In order to protect the integrity of the procurement process, a bidder’s request for upward correction of a bid after bid opening but before award may be granted only where the request is supported by clear and convincing evidence of both the existence of a mistake and the bid actually intended, and only where the correction would not result in displacing one or more lower bids. FAR § 14.407-3(a). The burden is on the bidder to support such a request with statements, sworn if possible, and all pertinent evidence, such as the original worksheets and other data used in preparing the bid, that establishes the existence of the error, the manner in which it occurred, and the bid actually intended. FAR § 14.407-3(g) (2). For upward correction of a low bid, worksheets, including records of computer-generated software spreadsheets, may constitute clear and convincing evidence if they are in good order and indicate the intended price, and there is no contravening evidence. Our Office will not question an agency’s determination regarding the sufficiency of the evidence unless it lacks a reasonable basis.
IAP World Services, Inc., B-297084, Nov. 1, 2005.
A bidder who seeks upward correction of its bid price prior to award must submit clear and convincing evidence that a mistake was made, the manner in which the mistake occurred, and the intended price. Federal Acquisition Regulation (FAR) § 14.407-3(a). Workpapers, including records of computer generated software spreadsheets/workpapers (hardcopy printouts, computer disks, tapes or other software media), may constitute clear and convincing evidence if they are in good order, and indicate the intended bid price, and there is no contravening evidence. Whether the evidence is sufficient to meet this standard is a question of fact that an agency must decide. Our Office only questions this decision where it lacks a reasonable basis. Correction of the bid is not precluded merely because the corrected bid price is close to the next lowest bid price; while such a case requires a higher degree of scrutiny to ascertain the amount of the intended bid, the bid still can be corrected if the intended price is clearly established and the bid remains low.
Odyssey International, Inc., B-296855.2, Nov. 16, 2005.
An agency may permit correction of a bid where clear and convincing evidence establishes both the existence of a mistake and the bid actually intended. Federal Acquisition Regulation § 14.407-3(a). For upward correction of a low bid, workpapers, including records of computer generated software spreadsheets, may constitute clear and convincing evidence if they are in good order and indicate the intended bid price, and there is no contravening evidence. In addition, where the mistake has a calculable effect on the bid price and that effect can be determined by a formula evident from the bidder’s workpapers, the overall intended bid may be ascertained by taking into account the effects of the error on other bid calculations based on the mistaken entry. Moreover, correction may be allowed, even where the intended bid price cannot be determined exactly, provided there is clear and convincing evidence that the amount of the intended bid would fall within a narrow range of uncertainty and would remain low after correction. Our Office treats the question of whether the evidence of the intended bid meets the clear and convincing standard as a question of fact, and we will not question an agency’s decision in this regard unless it lacks a reasonable basis.
Roy Anderson Corporation, B-292555, B-292555.2, Oct. 10, 2003.
FAR Crosswalk: FAR § 14.407.
Other Relevant Cases: See page 312 in the Index of Representative Cases.
Commentary: A contracting officer must carefully follow the precise dictates of FAR § 14.407-1 while simultaneously employing common sense and good judgment. An instructive example is provided in IAP Leopardo. In that case, the contracting officer provided the low bidder with an opportunity to provide “clear and convincing” proof of the mistake and its intended bid. In response, the low bidder provided bid worksheets and its subcontractor quotes, demonstrating an error in a subcontractor quote based on a decimal point: The subcontractor’s quote was $529,460 as opposed to the erroneous $52,946. Although this information would likely have met the “clear and convincing standard,” the agency went a step further and required a sworn statement from the company’s estimator attesting to the facts surrounding the mistake. Although the sworn statement was not technically necessary, it proved to be a good business practice, which the GAO noted favorably in its decision.
5. RESPONSIVENESS TO AN IFB 
Overview of This Protest Ground: Protests based on this ground are generally filed by (often low) bidders that have been disqualified from an IFB because the government determined that their bids were not responsive. Protests are also filed by disappointed bidders arguing that the government should have rejected the “winning” bid as nonresponsive. The underlying fact patterns in this area are varied, but the more common include (1) the bidder’s failure to price a portion of the work that was evaluated and awarded, (2) the bidder’s imposing its own conditions that alter the work described in the IFB, (3) the bidder’s submitting multiple prices (or “tiered pricing”), which leads to confusion regarding the price bid by a “winning” bidder, (4) the bidder’s failure to acknowledge an amendment to the IFB and apparently basing its bid on the original IFB, (5) a bid that involves a period of performance that differs from that specified in the IFB, and (6) a discrepancy with the signature(s) on the bid that raises a question regarding the authority of the signatory to bind the bidder.
COFC’s Key Language
FAR 14.301(a) requires a bid to “comply in all material respects with the [solicitation].” 48 C.F.R. § 14.301(a) (emphasis added). In this case, the Solicitation required the use of “Square D, I-Line or equal factory assembled 480 volt panelboards.” [The protester], however, did not submit a proposal using Square D, I-Line panelboards. After several rounds of discussions with [the protester],[the agency] determined that the [protester’s] panelboards did not “meet the requirements specified in the [Solicitation].” 48 C.F.R. § 14.404-2(b).
After consulting with [the Government’s technical consultant], [the agency] provided [the protester] with a detailed explanation as to why its proposed materials did not meet the agency’s requirements. In fact, rather than evidencing irrational, arbitrary, or capricious reasoning, the Administrative Record shows that [the agency] made a good faith effort to work with [the protester] to ascertain whether its bid could be considered responsive before making the determination that the bid was nonresponsive.
Dow Electric, Inc. v. United States, 98 Fed. Cl. 688 (2011).
GAO’s Key Language
A bid that fails to include a price for every item required by the IFB generally must be rejected as nonresponsive. This includes a bidder’s failure to provide a responsive bid for optional contract line items, which thus renders the entire bid nonresponsive. This rule reflects the legal principle that a bidder who has failed to submit a price for an item generally cannot be said to be obligated to furnish that item. Therefore, where a page in a bidder’s schedule does not clearly indicate that the prices apply to an option that the IFB requires to be priced, the bid is ambiguous and thus, nonresponsive.
C&D Construction, Inc., B-408930.2, Feb. 14, 2014.
To be responsive, a bid must constitute an unequivocal offer to perform the exact thing called for in the solicitation, such that acceptance of the bid will bind the contractor in accordance with the material terms and conditions of the solicitation.
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A defect or variation is immaterial if the effect on price, quantity, quality, or delivery is negligible when contrasted with the total cost or scope of the services being acquired. Thus, a contracting agency may waive the failure to bid on an item as a minor informality if the item for which the price is omitted is divisible from the solicitation’s overall requirements, de minimis as to total cost, and would not affect the competitive standing of the bidders.
Massillon Construction and Supply Inc., B-407931, March 28, 2013.
Where a solicitation includes a base bid and alternatives, bids must be evaluated on the basis of work actually awarded. As a result, we have held that the failure of a bidder to provide a price for all alternates constitutes no basis, sufficient in itself, to require rejection of the bid. Failure of a bidder to offer a price for all alternates will constitute a basis for rejection only if evaluation and award includes the items not bid, and this is true even where the IFB states that failure to bid on every item will cause rejection of the bid as nonresponsive.
The Povolny Group, B-407570, Jan. 9, 2013.
To be responsive, and considered for award, a bid must contain an unequivocal offer to perform, without exception, the exact thing called for in the solicitation so that, upon acceptance, the contractor will be bound to perform in accordance with all of the solicitation’s material terms and conditions. If, in its bid, a bidder imposes conditions or modifies a material solicitation requirement, limits its liability to the government, or limits the rights of the government under a resulting contract, then the bid must be rejected as nonresponsive. A bidder’s intention to be bound by the solicitation requirements must be determined from the bid itself at the time of bid opening.
Here, the contracting officer could not overlook the document 4Granite included in its bid. Any extraneous documents submitted with a bid must be considered a part of the bid for purposes of determining the bid’s responsiveness.
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It is well settled that where a bidder introduces ambiguity in its bid regarding material terms, such as the case here, the bid must be rejected as nonresponsive….Since only material available at bid opening may be considered in making a responsiveness determination, [the protester’s] statements concerning its intent cannot be considered in determining the responsiveness of its bid. Bidders bear the primary responsibility for properly preparing bid documents in such a fashion that the contracting agency can accept the bid with full confidence that an enforceable contract, conforming to all the requirements of the IFB, will result.
4Granite, Inc., B-406459, April 2, 2012.
To be responsive, a bid must show on its face at the time of bid opening that it is an unqualified offer to comply with all material requirements of the solicitation, and that the bidder intends to be bound by the government’s terms as set forth in the solicitation. A bidder’s intention must be determined at the time of bid opening from all the bid documents, which include any extraneous documents submitted with the bid, since such materials are part of the bid for purposes of determining responsiveness.
Veterans Contracting Group, Inc., B-405940, Jan. 12, 2012.
To be considered for award, a bid must comply in all material respects with the IFB and should be filled out, executed, and submitted in accordance with the instructions on the invitation. Federal Acquisition Regulation (FAR) § 14.301(a), (d). A bidder can bind itself to the contents of some amendments merely by acknowledging receipt of the amendments; however, when a bidder, despite acknowledging an amendment, otherwise creates doubt as to its commitment to perform pursuant to the amendment, its bid must be rejected. If a bidder uses its own bid form or a letter to submit a bid, the bid may be considered if (1) the bidder accepts all the terms and conditions of the invitation and (2) award on the bid would result in a binding contract with terms and conditions that do not vary from the terms and conditions of the invitation. FAR § 14.301(d).
ATR Logistic Company, LLC, B-402606, Jun. 15, 2010.
With respect to certificates and representations, we examine the certificate or representation to determine whether it concerns the bidder’s responsiveness (that is, its commitment to provide the required services) or its responsibility. Generally, we have found that the failure of a bidder to include completed standard representations and certifications with its bid does not render the bid nonresponsive because it does not affect the bidder’s material obligations.
Veterans Construction of South Carolina, LLC, B-401723.2, Jan. 21, 2010.
Definitive responsibility criteria are specific and objective standards designed to measure a prospective contractor’s ability to perform the contract. Such criteria, which must be met as a precondition to award, limit the class of contractors to those meeting specified qualitative and quantitative qualifications necessary for adequate performance, e.g., unusual expertise or specialized facilities….
Where a protester alleges that a definitive responsibility criterion has not been satisfied, we will review the record to ascertain whether evidence of compliance has been submitted from which the contracting officer reasonably could conclude that the criterion has been met; generally, a contracting agency has broad discretion in determining whether bidders meet definitive responsibility criteria. Although the relative quality of the evidence is a matter within the contracting officer’s judgment, the contracting officer may only find compliance with the definitive responsibility criterion based on adequate, objective evidence.
As a general rule, the experience of a technically qualified subcontractor or third party—such as an affiliate or consultant—may be used to satisfy definitive responsibility criteria relating to experience for a prospective prime contractor. In considering whether the experience of a third party subcontractor or affiliate may be relied upon by a prime bidder to meet an experience criterion, we examine the record for evidence of a commitment by the third party to the bidder’s successful performance of the work.
Charter Environmental, Inc., B-297219, Dec. 5, 2005.
Generally, where a bidder does not submit its price on a revised bid schedule listing an increased requirement, but instead submits its bid on the original schedule, the mere acknowledgment of the amendment containing the revised bid schedule is not sufficient to bind a bidder to provide the increased quantity because it is not clear that the bidder has committed itself to provide the additional quantity for the price set forth in the bid.
McKinley Construction & Excavating., B-295547, March 3, 2005.
To be responsive and considered for award, a bid must contain an unequivocal offer to perform, without exception, the exact thing called for in the solicitation, so that, upon acceptance, the contractor will be bound to perform in accordance with all of the IFB’s material terms and conditions. If in its bid (including its bid cover letter), a bidder conditions or modifies a material solicitation requirement (such as a performance period), limits its liability to the government, or limits the rights of the government under a resulting contract, then the bid must be rejected as nonresponsive. Further, a bid that is nonresponsive on its face may not be made into a responsive bid through post-bid-opening clarifications, and mistake-in-bid procedures may not be used to render the bid responsive.
Oregon Electric Construction, Inc. dba Integrated Systems Group, B-294279, Sept. 27, 2004.
FAR Crosswalk: FAR § 14.404 (generally) and FAR §§ 14.301(a) and (d), 14.404-2(a) and (d), and 14.405.
Other Relevant Cases: See page 313 in the Index of Representative Cases.
Commentary: Protests in this area are filed by both disappointed offerors asserting that the apparent awardee is unresponsive and bidders challenging the government’s determination that their bid was nonresponsive. The typical argument of the latter group is that the government should have waived the issue as a “minor informality” in accordance with FAR § 14.405. Unless this argument clearly falls within one of the enumerated examples of minor informalities set out in that FAR section, the decision will turn on whether the bid, on its face, was an unequivocal offer to perform the exact thing called for in the solicitation. If not, and the ambiguity involves a “material term,” the government may (and in many cases must) reject the bid as nonresponsive.
An important exception to this rule, however, is the GAO’s explanation that a bidder’s failure to bid on an “alternate item” that was not selected for award does not, in itself, render the bid nonresponsive. This is contrasted with a bidder’s failure to include an “optional contract line item,” which will result in rejection. This distinction is made clear in two relatively recent cases: C&D Construction, Inc., B-408930.2, Feb. 14, 2014, and Hamilton Pacific Chamberlain, LLC, B-409208.2, April 3, 2014. Those cases clarify that where a solicitation includes a base bid and “alternatives,” bids must be evaluated on the basis of the work actually awarded. The GAO has clarified that this is true even if the solicitation states that failure to bid on every item will cause rejection of the bid as nonresponsive. Stated differently, a bidder’s failure to bid on an “alternate” item that was not selected for award does not render the bid nonresponsive. This is distinguished from a bidder’s failure to to price “optional contract line items” as required by the IFB. In that case, the bid must be rejected as nonresponsive.
A review of the sustained protests on this ground over the past decade (although relatively few in number) shows that the government tends to err in this area in two general ways: either being too strict or being too permissive with regard to responsiveness issues that arise in sealed bidding. Specifically, the government tends to make the following mistakes: (1) not being able to explain what aspect of the bid supports the government’s determination that the bid was nonresponsive; (2) relying on unsupported post-bid opening explanations of otherwise material discrepancies in determining that the low bid was responsive (for example, allowing a bidder to explain its failure to price a portion of the work when its omission is not clear on the face of the bid); (3) disparate treatment, such as rejecting one bid as nonresponsive while accepting another bid that included the same discrepancy; and (4) waiving (or ignoring) a bidder’s modification to a material term of the contract, for example, allowing the lowest bidder to alter the delivery schedule set out in the solicitation.