The Danger of the “Plug Number” and a Simple Strategy to Avoid Death by Mistake

By Grace Mahan

Ideally, prospective contractors make bids for government contracts without error. However, whether because of a clerical oversight or off-the-mark subcontractor bids, mistakes do occur. Often, errors in bids for government contracts result in the forced removal of a bid, or worse, the retroactive reversal of an award. However, as highlighted by a recent GAO decision, this need not be the case.

In Herman Construction Group, Inc., the GAO sustained a bid protest against the Department of Veterans Affairs (VA) after finding that the agency improperly allowed the awardee of a contract, to correct a mistake in a bid after the awardee failed to prove the existence of the mistake by clear and convincing evidence.

In this case, Herman Construction protested a contract award to Talion, a bidder that was nonetheless selected after increasing its bid price due to an alleged error in its original quotation. Talion’s error resulted from the use of a subcontractor quote of $500,000 in its original bid. The $500,000 figure was a “plug number,” which Talion then failed to amend after receiving the actual subcontractor quotation for $1,498,770. To prove its mistake, Talion provided the VA with both the allegedly mistaken worksheet, showing a value of $500,000 that read “Talion Priced” under the subcontractor name column; and the corrected worksheet, showing a value of $1,498,770, and also reading “Talion Priced” under the subcontractor name column.

Although the VA accepted Talion’s corrected bid, the GAO decided that Talion failed to prove its mistake by clear and convincing evidence because its explanation did not connect the worksheet to the subcontractor’s quotation. By contrast, according to the GAO, several line items in the worksheet contained the phrase “Talion Priced,” the worksheet itself did not facially evidence any mistake, and the agency found that Talion’s original bid was not unreasonably low. Consequently, the worksheet did not indicate that the $500,000 value was a “plug number” to be removed upon receipt of a subcontractor quotation.

Simply viewed, this is a cautionary tale about the danger of using “plug numbers” in contract bids. However, the protest also presents a lesson in how bidders should use “plug numbers” (if necessary) and how they should record mistakes in order to meet the standard of clear and convincing evidence in the event that a “plug number” is used in error. According to the GAO in Herman, a mistaken quote in a bid must have a nexus to the correct quote that should have been used. Accordingly, any “plug number” used in a bid for a government contract should avoid a general accompanier like “Talion Priced” and instead include something along the lines of “plug number to be replaced by subcontractor bid once received.” That sort of language might well withstand a protest such as the one filed by Herman.

Our firm has extensive experience in the federal procurement process and in pursuing and defending bid protests. Please contact any of our lawyers if we may be able to assist you with these or other matters.

 

Posted in Government Contracts and tagged .