B-150366, FEB. 5, 1964

B-150366, FEB. 5, 1964

TO MR. MICHAEL CHERNICK:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF OCTOBER 21 AND NOVEMBER 25, 1963, REQUESTING RECONSIDERATION OF DECISION OF APRIL 16, 1963, TO YOU AND MRS. CHERNICK, WHEREIN IT WAS CONCLUDED THAT THERE IS NO LEGAL BASIS FOR REFORMATION OF PARAGRAPH 5 OF THE AGREEMENT TO LEASE A POSTAL FACILITY AT SIOUX CITY, IOWA, ENTERED INTO ON JUNE 15, 1961, BETWEEN YOU AND MRS. CHERNICK AND THE POST OFFICE DEPARTMENT.

THE FACTS AND CIRCUMSTANCES LEADING UP TO THE EXECUTION OF THE AGREEMENT TO LEASE ARE FULLY SET FORTH IN THE CITED DECISION AND WILL NOT BE REPEATED HERE.

YOUR REQUEST IS BASED ON "MANY INEQUITIES" AND YOU STATE, IN EFFECT, THAT THE DEPARTMENT HAD NO RIGHT TO TAKE ADVANTAGE OF YOU WITH RESPECT TO TAXES, SPACE, AND IMPROVEMENTS, ALL OF WHICH RESULTED IN UNJUST ENRICHMENT TO THE GOVERNMENT BECAUSE OF A TYPOGRAPHICAL ERROR IN THE PERCENTAGE FACTORS IN PARAGRAPH 5 OF THE AGREEMENT TO LEASE WHICH FURNISHED THE BASIS FOR EFFECTING AMORTIZATION OF THE SITE ACQUISITION COSTS.

SPECIFICALLY, YOU STATE THAT YOU DID NOT EXPECT TO BE ACCEPTED AS LOW BIDDER AND THAT BEFORE AWARD YOU WERE CALLED TO WASHINGTON AND WERE INFORMED BY MR. KENNETH RABIDOUX, ACTING DIRECTOR, REALTY DIVISION, THAT YOU WOULD BE REQUIRED TO REDUCE THE RENTAL FOR THE SEVERAL RENEWAL PERIODS; AND THAT YOU COMPLIED WITH SUCH REQUIREMENT AS EVIDENCED BY THE "SCHEDULE" ATTACHED TO YOUR LETTER. YOU CONTEND, IN EFFECT, THAT ON THIS OCCASION IT WAS INCUMBENT UPON THE ACTING DIRECTOR OF REAL ESTATE, WHO IT IS INDICATED WAS ACTING IN THE CAPACITY OF REPRESENTATIVE OF THE CONTRACTING OFFICER, TO FURTHER EXAMINE YOUR BID FOR POSSIBLE ERRORS AND YOU STATE THAT YOU WERE NOT AFFORDED AN OPPORTUNITY TO EXAMINE YOUR BID. YOU STATE FURTHER THAT THE "TYPOGRAPHICAL RROR" IN THE PERCENTAGE FACTOR IN PARAGRAPH 5 OF THE AGREEMENT TO LEASE WHICH YOU CONCEDE "WORKED BOTH WAYS" WAS NOT DISCOVERED UNTIL A QUESTION AROSE AS TO HOW MUCH THE DEPARTMENT WAS OFFERING YOU ON THE ADDITIONAL APPROXIMATELY $50,000 REQUIRED TO BE INVESTED BY YOU INCIDENT TO THE DEFICIENCY JUDGMENT ON PARCEL NO. 3.

YOU SAY THAT YOU HAVE CONTACTED MR. RABIDOUX WHO IS NO LONGER WITH THE DEPARTMENT; THAT HE INFORMED YOU THAT AS DIRECTOR OF REAL ESTATE HE SHOULD HAVE DISCOVERED THE ERROR AND MADE THE NECESSARY CORRECTIONS AT THE PRE- AWARD MEETING; THAT THE DEPARTMENT IS STILL OBLIGATED TO MAKE THE PROPER ADJUSTMENT AND THAT OTHERWISE THE SITUATION WILL RESULT IN UNJUST ENRICHMENT TO THE GOVERNMENT.

IN ADDITION TO THE FOREGOING, YOU ALLEGE THAT THE DEPARTMENT HAS FAILED TO CLEAR REAL ESTATE TAXES ON THE SITE IN THE AMOUNT OF $7,352.78, WHICH AMOUNT IS STILL TIED UP IN ESCROW AND YOU DEMAND PAYMENT THEREOF. FURTHER, YOU STATE THAT THE CITY IS ATTEMPTING TO ASSESS YOU FOR THE COST OF CERTAIN SIDEWALK IMPROVEMENTS WHICH COST YOU STATE IS NOT ANY PART OF YOUR OBLIGATION.

THE INVOLVED LEASE PROJECT WAS ADVERTISED PURSUANT TO THE PROVISIONS OF 39 U.S.C. 2103 AND THE COMPETITIVE BIDDING REQUIREMENTS OF 41 U.S.C. 5 AS REQUIRED BY 39 U.S.C. 2112. SINCE YOUR BID, AS AMENDED BY YOUR LETTER OF JUNE 15, 1961, WAS THE LOWEST RESPONSIVE BID IT WAS ACCEPTED ON JUNE 15, 1961. IT IS IMMATERIAL THAT YOU NEVER EXPECTED YOUR BID TO BE ACCEPTED. THE FACT REMAINS THAT IT WAS ACCEPTED THEREBY OBLIGATING YOU TO PERFORM IN ACCORDANCE THEREWITH AND FURNISHING THE BASIS FOR THE PERCENTAGE INCREASE IN RENTAL, IN THE EVENT THE SITE ACQUISITION COST EXCEEDED $183,249. THE DEPARTMENT HAS CONCEDED THAT BEFORE AWARD OF THE CONTRACT IT NEGOTIATED WITH YOU FOR THE PURPOSE OF OBTAINING MORE REALISTIC RENTAL RATES FOR THE SEVERAL RENEWAL PERIODS. THE DEPARTMENT, MOREOVER, HAS REPORTED THAT DURING SUCH NEGOTIATIONS YOU VOLUNTARILY AGREED TO REDUCE THE RENTAL RATES FOR ALL OF THE RENEWAL PERIODS; AND THAT AS YOU WERE AWARE, YOU WERE UNDER NO COMPULSION TO MAKE SUCH REDUCTIONS; AND THAT THERE IS NOTHING IN THE RECORD INDICATING THAT YOUR OFFER TO REDUCE THE RENEWAL OPTION RATES WAS OTHER THAN VOLUNTARY ON YOUR PART. AS TO YOUR STATEMENT THAT AT THE PRE- AWARD CONFERENCE YOU WERE NOT PERMITTED TO EXAMINE YOUR BID (AGREEMENT TO LEASE) THE DEPARTMENT HAS REPORTED THAT WHILE IT IS NOT AWARE WHETHER THIS IS TRUE OR NOT THE FACT REMAINS THAT THERE WAS AVAILABLE TO YOU YOUR OWN COPY OF THE BID AS CONTAINED IN THE AGREEMENT TO LEASE, AS AMENDED BY YOUR LETTER OF JUNE 15, 1961.

AS TO THE ALLEGED TYPOGRAPHICAL ERROR IN PARAGRAPH 5 OF YOUR BID AS AMENDED, THAT PARAGRAPH PROVIDED THAT IF THE SITE COST EXCEEDED $183,249 THE ANNUAL RENTAL DURING THE BASIC TERM (20 YEARS) "SHALL BE INCREASED BY 8/10'S OF 1 PERCENT ).8) PERCENT OF THE ADDITIONAL COST OF THE SITE ACQUISITION" AND THAT "IF THE SAID SITE COST IS LESS THAN THE SAID TOTAL AMOUNT, THEN THE ANNUAL RENTAL DURING THE BASIC 20-YEAR TERM SHALL BE REDUCED BY 7/10THS OF 1 PERCENT ).7) PERCENT OF THE DECREASED COST.' FOLLOWING THE AWARD TO YOU ON JUNE 15, 1961, A DEFICIENCY JUDGMENT WAS ENTERED IN THE CONDEMNATION PROCEEDING AS TO PARCEL NO. 2 FOR $4,000 PLUS $47.50 INTEREST. THE DEPARTMENT'S LETTER OF JULY 23, 1962, ADVISED YOU OF THAT JUDGMENT, AS WELL AS THE POSSIBILITY OF A FURTHER DEFICIENCY OF $45,899.12 (SUBSEQUENTLY REVISED TO $45,969.86) BASED UPON A COURT AWARD OF $147,500 ENTERED IN MARCH 1962 WITH RESPECT TO PARCEL NO. 3, AND THAT THE DEPARTMENT WISHED TO APPEAL SAID JUDGMENT. YOU REIMBURSED THE DEPARTMENT THE INCREASED SITE COSTS WITH RESPECT TO PARCEL NO. 2 TOGETHER WITH THE AMOUNT OF $183,249 AS SET OUT IN THE ADVERTISEMENT AND THE AGREEMENT TO LEASE. IN THE MEANTIME, HOWEVER, BY TELEGRAM DATED JULY 24, 1962, YOU ALLEGED, IN EFFECT, THAT PARAGRAPH 5 OF THE AGREEMENT TO LEASE RELATING TO SITE ACQUISITION COST CONTAINED A TYPOGRAPHICAL ERROR AND THAT THE INCREASED COST OF $4,047.50 FOR PARCEL NO. 2 SHOULD BE AMORTIZED AT 8 PERCENT ANNUALLY, OR $323.80, INSTEAD OF 8/10THS OF ONE PERCENT AS STIPULATED IN YOUR BID. FOLLOWING RECEIPT BY THE DEPARTMENT OF NOTICE THAT A MOTION FOR A NEW TRIAL AS TO PARCEL NO. 3 HAD BEEN MADE AND DENIED, AND THAT THE DEPARTMENT OF JUSTICE DID NOT INTEND TO APPEAL YOU WERE ADVISED ACCORDINGLY BY LETTER DATED AUGUST 28, 1962, AND YOU WERE REQUESTED TO REMIT $42,500 FOR THE DEFICIENCY PLUS $3,469.86 INTEREST THEREON.

AS POINTED OUT IN THE DECISION OF APRIL 16, 1963, WE FIND NOTHING TO SUPPORT YOUR ALLEGATION OF ERROR IN THE PERTINENT PERCENTAGE FACTOR IN PARAGRAPH 5 OF YOUR BID SINCE THE WORDING OF THE BID IN THIS RESPECT IS TOO SPECIFIC AND PRECISE TO PERMIT OF A TYPOGRAPHICAL ERROR, IT BEING SPECIFICALLY PROVIDED THAT IN THE EVENT THE SITE ACQUISITION COST EXCEEDED $183,249, THE ANNUAL RENTAL WOULD THEN BE INCREASED "BY 8/10'S OF 1 PERCENT ).8) PERCENT OF THE ADDITIONAL COST OF THE SITE ACQUISITION.' FURTHER POINTED OUT THE ").8) PERCENT" OBVIOUSLY WAS INTENDED TO AFFIRM THE CORRECTNESS OF THE "8/10'S OF 1 PERCENT" AND IF AN ERROR RESULTED FROM ASSUMING THAT THE SITE ACQUISITION COSTS WOULD NOT EXCEED $183,249 BY ANY SUBSTANTIAL AMOUNT, IT WAS SOLELY AN ERROR IN JUDGMENT, IN NO WAY INDUCED BY THE GOVERNMENT FOR WHICH NO RELIEF MAY BE GRANTED.

AS TO THE REPORTED STATEMENT BY THE FORMER CONTRACTING OFFICER'S REPRESENTATIVE TO THE EFFECT THAT HE SHOULD HAVE DISCOVERED THE "ERROR" THE DEPARTMENT HAS REPORTED THAT ITS CASE FILE BEARS NO WRITING ATTRIBUTABLE TO MR. RABIDOUX OR ANY OTHER PARTY WHICH WOULD IMPLY IN ANY MANNER THAT THE DEPARTMENT CONSIDERED THE PERCENTAGE FACTORS IN PARAGRAPH 5 OF YOUR BID AS INDICATING A TYPOGRAPHICAL ERROR OR THAT THE GOVERNMENT WAS DELIBERATELY TAKING ADVANTAGE OF YOU. CERTAINLY, NEITHER THE CONTRACTING OFFICER NOR HIS REPRESENTATIVE HAD ANY WAY AT THE TIME OF THE ADVERTISEMENT FOR BIDS OF KNOWING WHAT THE FINAL ACQUISITION COST WOULD BE OR WHETHER THERE WOULD BE ANY DEFICIENCY JUDGMENT.

WITH RESPECT TO THE REPORTED STATEMENT OF MR. RABIDOUX TO THE EFFECT THAT THE LEASE OUGHT TO BE REFORMED AS REQUESTED BY YOU IN ORDER TO PRECLUDE UNJUST ENRICHMENT ON THE PART OF THE GOVERNMENT, THE DEPARTMENT HAS REPORTED THAT SUCH STATEMENT IS NOT OTHERWISE SUBSTANTIATED BY HIS OFFICIAL CONDUCT IN THE CASE. IN THE CIRCUMSTANCES, WE FIND NOTHING IN YOUR LETTER OF OCTOBER 21, 1963, WHICH FURNISHES ANY LEGAL BASIS FOR MODIFICATION OF PARAGRAPH 5 OF THE AGREEMENT TO LEASE. THEREFORE, THE DECISION OF APRIL 16, 1963, IS AFFIRMED.

AS TO YOUR ALLEGATION CONCERNING THE DEPARTMENT'S FAILURE TO CLEAR THE TAXES TOTALING $7,352.78, THE DEPARTMENT HAS SUBMITTED A REPORT FROM THE DEPARTMENT OF JUSTICE TO THE EFFECT THAT IOWA TAXES FOR THE YEARS 1960, 1961, AND 1962 WERE NOT INVOLVED IN THE TAKING; THAT THE DECLARATION OF TAKING WAS FILED ON NOVEMBER 28, 1960; THAT UNDER THE LAW OF IOWA, THE 1960 TAXES WOULD NOT BECOME A LIEN UNTIL DECEMBER 31 OF THAT YEAR; THAT SINCE TITLE TO THE PROPERTY HAD VESTED IN THE UNITED STATES AT THE TIME THE 1960 TAXES BECAME A LIEN ON THE PROPERTY THE STATE OF IOWA WAS NOT ENTITLED TO RECOVER THE 1960 OR THE 1961 TAXES. YOU WERE SO ADVISED BY THE DEPARTMENTS' LETTER OF OCTOBER 30, 1963. AS TO THE TAXES FOR THE YEARS SUBSEQUENT TO 1961 THE DEPARTMENT HAS REPORTED THAT ON FEBRUARY 14, 1962, A QUIT CLAIM DEED TO THE PROPERTY WAS DELIVERED TO YOU AND THEREFORE ANY TAXES BECOMING DUE AND PAYABLE THEREAFTER ARE CLEARLY YOUR RESPONSIBILITY.

AS TO THE COST OF THE SIDEWALK IMPROVEMENTS FOR WHICH YOU STATE THE CITY IS ATTEMPTING TO HOLD YOU RESPONSIBLE AND FOR WHICH YOU HAVE DENIED LIABILITY, YOUR ATTENTION IS INVITED TO PARAGRAPH 7, PART I OF THE INSTRUCTIONS TO BIDDERS WHEREIN ALL BIDDERS WERE EXPRESSLY ADVISED THAT ALL IMPROVEMENTS TO THE LAND SHALL CONFORM TO ALL APPLICABLE LOCAL LAWS, ORDINANCES, AND REGULATIONS. IN PARAGRAPH 3, PART II BIDDERS WERE ADVISED OF THE TYPE OF PAVING REQUIRED AND THAT THE CURBS ALONG ABUTTING STREETS SHOULD BE OF CONCRETE OR OTHER ACCEPTABLE MATERIAL WITHIN LOCAL CODES OR ORDINANCES AS REQUIRED. PARAGRAPH 4, PART I PROVIDED THAT WHERE LOCAL, COUNTY OR STATE LAWS, REGULATIONS OR ORDINANCES REQUIRE THE SERVICES OF A REGISTERED ARCHITECT OR ENGINEER TO PREPARE PLANS AND SPECIFICATIONS, THE BIDDER SHOULD COMPLY WITH THESE REQUIREMENTS. THE DEPARTMENT HAS REPORTED THAT YOU RETAINED THE FIRM OF FRED BRAUNING AND ASSOCIATES FOR THIS PROJECT AND THAT THIS ARCHITECTURAL FIRM PREPARED THE FINAL PLANS AND SPECIFICATIONS WHICH WERE APPROVED BY THE DEPARTMENT. PARAGRAPH 21, DIVISION 7 OF THE GENERAL CONDITIONS WHICH WERE MADE A PART OF THE SPECIFICATIONS AND WHICH WERE PREPARED BY YOUR ARCHITECT, ADVISED YOU THAT YOU WOULD BE REQUIRED TO MAKE REPAIRS TO ALL SIDEWALKS, CURBS AND STREETS AND TO PROVIDE CURB CUTS AND DRIVE AS INDICATED ON THE DRAWINGS AND THAT THE CURB CUTS, WALK INSTALLATION AND REPLACEMENT OF STREETS, ALLEYS, ETC., SHOULD BE IN COMPLIANCE WITH ALL LOCAL REGULATIONS.

UNDER ITEM NO. 1, SHEET NO. 1 OF THE DRAWINGS PREPARED BY YOUR ARCHITECTURAL FIRM AND DESIGNATED FOR YOUR IT IS EXPRESSLY STATED THAT "CONTRACTOR IS RESPONSIBLE FOR REMOVING SIDEWALKS, CURBS AND STREET PAVING NECESSARY FOR NEW CONSTRUCTION AND SHALL REPLACE SAME AS REQUIRED TO MEET ALL CODES AND LOCAL REQUIREMENTS.'

IN THE CIRCUMSTANCES, AND SINCE THE DEPARTMENT HAS REPORTED THAT THE SIDEWALK WORK IN THIS CASE WAS REQUIRED BY THE CITY AND SINCE THERE IS NOTHING IN THE CONTRACT OBLIGATING THE GOVERNMENT TO REIMBURSE YOU THEREFOR, THERE IS NO LEGAL OR EQUITABLE BASIS FOR THE GOVERNMENT TO ASSUME THE COST THEREOF.