B-128456, DEC. 3, 1956

B-128456, DEC. 3, 1956

TO GLAZER STEEL CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 13, 1956, WITH ENCLOSURES, REQUESTING RECONSIDERATION OF DECISION DATED JULY 30, 1956, B-128456, WHEREIN THE SECRETARY OF THE ARMY WAS INFORMED THAT THERE WAS NO LEGAL BASIS FOR MODIFYING THE PRICE SPECIFIED IN YOUR CONTRACT NO. DA-47-013-ENG -440, DATED MAY 22, 1954. THE FACTS AND CIRCUMSTANCES IN THE CASE ARE SET FORTH IN FULL IN THE DECISION, RECEIPT OF A COPY OF WHICH YOU ACKNOWLEDGED IN YOUR LETTER, AND THEREFORE WILL NOT BE RESTATED HERE.

IN VIEW OF THE CONTENTIONS MADE BY YOU IN YOUR LETTER, A FURTHER REPORT RELATIVE THERETO WAS REQUESTED FROM THE DEPARTMENT OF THE ARMY. IN A SUPPLEMENTAL REPORT DATED OCTOBER 26, 1956, THE DISTRICT ENGINEER (CONTRACTING OFFICER) REPORTS AS FOLLOWS:

"3. RELATIVE TO GLAZER STEEL CORPORATION'S (HEREINAFTER CALLED GLAZER) STATEMENT IN PARAGRAPH 3 OF ITS LETTER DATED 13 OCTOBER 1956 TO THE COMPTROLLER GENERAL ON THE DIFFERENCE BETWEEN ITS BID AND THE NEXT BID AND ALSO TO ITS STATEMENT THAT,"* * * ANYONE WHO IS FAMILIAR WITH STRUCTURAL STEEL FABRICATING WOULD RECOGNIZE IMMEDIATELY THAT A SERIOUS ERROR HAD BEEN MADE, * * *" IT IS APPARENT FROM ITS OWN STATEMENTS IN THE MISTAKE IN BID RECORD THAT GLAZER, WHO IS A STEEL FABRICATOR, DID NOT RECOGNIZE ITS OWN ERROR UNTIL SOMETIME AFTER IT STARTED FABRICATION OF THE STEEL UNDER THE CONTRACT AND THEN IT REVISED THE AMOUNT OF TONNAGE BID ON FROM 776 TO 683.86 (INCLOSURE NO. 12, CLAIM RECORD). HOWEVER GLAZER DID NOT KNOW HOW OR WHERE THE MISTAKE OCCURRED UNTIL ADVISED BY A HIRED REGISTERED ENGINEER IN LETTER DATED 30 DECEMBER 1955 OF THE PROBABLE CAUSE OF ITS ERROR IN ESTIMATING THE TONS OF STRUCTURAL STEEL REQUIRED (INCLOSURE NO. 15, CLAIM RECORD).

"4. GLAZER IN PARAGRAPH 4 OF SAID 13 OCTOBER 1956 LETTER STATES:

"* * * SHORTLY AFTER THE BID WAS AWARDED TO US OUR ENGINEERING DEPARTMENT VERBALLY ADVISED REPRESENTATIVES OF THE CONTRACTING OFFICER THAT WE HAD NEGOTIATED THIS TONNAGE AT 683.86. * * *"

INQUIRY OF GOVERNMENT PERSONNEL FORMERLY WITH THE MILWAUKEE DISTRICT FAMILIAR WITH SUBJECT CONTRACT AND THE RECORDS IN THIS OFFICE DO NOT DISCLOSE ANY SUCH VERBAL INFORMATION BEING RECEIVED. GLAZER'S ABOVE- MENTIONED STATEMENT IS INCONSISTENT WITH ITS WRITTEN STATEMENT ON PAGE 2 OF ITS LETTER DATED 13 JUNE 1955, VIZ "* * * (AT THE TIME WE FIRST NOTIFIED YOU OF OUR DIFFICULTIES) * * *" (ENCLOSURE NO. 12, CLAIM RECORD). GLAZER IN THIS STATEMENT WAS REFERRING TO ITS LETTER DATED 22 JANUARY 1955, (INCLOSURE NO. 10, CLAIM RECORD).

"5. GLAZER'S SELF-SERVING STATEMENT ON PAGE 2 OF SAID LETTER DATED 13 OCTOBER 1956 RELATIVE TO THE CONTRACTING OFFICER TAKING ADVANTAGE OF GLAZER IS SELF-EVIDENT AND IS NOW RAISED FOR THE FIRST TIME AND PRESUMABLY AFTER READING THE COMPTROLLER GENERAL'S DECISION DENYING SUBJECT CLAIM. IN THE SAME PARAGRAPH GLAZER STATES:

"A 10 PERCENT DIFFERENCE IN BIDS IS AN ENORMOUS SUM IN SUCH BASIC INDUSTRY.'

A DIFFERENCE OF 10 PERCENT IN BIDS IS NOT UNUSUAL; IN FACT, EXPERIENCE IN EXAMINING BIDS AFTER OFFICIAL OPENING INDICATES THE PERCENTAGE IN THE RANGE OF BIDS IS USUALLY GREATER THAN 10 PERCENT. THIS IS ILLUSTRATED IN SUBJECT PROCUREMENT WHERE THE ABSTRACT OF BIDS (INCLOSURE NO. 3, CLAIM RECORD) SHOWS THE RANGE IN DIFFERENT BIDS AS COMPARED TO GLAZER'S BID FROM APPROXIMATELY MINUS 9 PERCENT TO PLUS 158 PERCENT. THE RANGE IN PERCENTAGE OF THE FOUR NEXT HIGHER BIDS ABOVE GLAZER'S BID AND COMPARED THERETO SHOW APPROXIMATELY THE FOLLOWING:

BIDDER NO. 2. BID PLUS 9 PERCENT

BIDDER NO. 7. BID PLUS 15 PERCENT

BIDDER NO. 1. BID PLUS 29 PERCENT

BIDDER NO. 4. BID PLUS 47 PERCENT

BIDDER NO. 3 WAS APPROXIMATELY 158 PERCENT HIGHER THAN OTHER BIDDERS. BIDDER NO. 5. WAS APPROXIMATELY MINUS 9 PERCENT UNDER GLAZER'S BID. THIS BIDDER WAS PERMITTED TO WITHDRAW HIS BID AS NOT BEING FINANCIALLY RESPONSIBLE TO CARRY OUT THE CONTRACT.

"6. ABSTRACT OF BIDS, INVITATION NO. CIVENG-11-032-52-35 IS INCLOSED AS ANOTHER ILLUSTRATION THAT THE RANGE IN BIDS RECEIVED IS GREATER THAN 10 PERCENT. THIS WAS A SUPPLY PROCUREMENT FOR FURNISHING, FABRICATING AND DELIVERING STRUCTURAL STEEL. THIS ABSTRACT OF BIDS SETS FORTH DIFFERENCES BETWEEN THE BIDS RECEIVED RANGING FROM $238,650.00 FOR THE LOWEST BIDDER TO $857,500.00 FOR THE HIGHEST BIDDER. THE FOUR BIDDERS LISTED ON THIS ABSTRACT WERE AT THE TIME OF BIDDING EXPERIENCED AND RESPONSIBLE STRUCTURAL STEEL FABRICATORS.

"7. THE LAST SHIPMENT OF STRUCTURAL STEEL UNDER SUBJECT CONTRACT WAS RECEIVED ON OR ABOUT 1 SEPTEMBER 1954. THE CONTRACTING OFFICER DID NOT KNOW GLAZER WAS GOING TO ALLEGE A MISTAKE IN BID UNTIL RECEIPT OF GLAZER'S LETTER DATED 22 JANUARY 1955 (INCLOSURE NO. 10, CLAIM RECORD).

"8. CLAIMANT AT ALL TIMES FROM THE FILING OF ITS CLAIM AND THE PROCESSING THEREOF THROUGH THE COMPTROLLER GENERAL CONTENDED THAT IT WAS A UNILATERAL ERROR IN BID SOLELY DUE TO ITS ESTIMATING DEPARTMENT AND SUCH ERROR COULD NOT HAVE BEEN DISCOVERED UNTIL AFTER AWARD OF THE CONTRACT. GLAZER'S STATEMENT IN SAID LETTER OF 13 OCTOBER 1956 TO THE EFFECT THAT THE CONTRACTING OFFICER SHOULD HAVE DISCOVERED SAID ERROR IN BID AND PROTECTED GLAZER FROM ITS OWN MISTAKE AND NOT TAKE ADVANTAGE OF SUCH ERROR IS ENTIRELY INCONSISTENT WITH ITS STATEMENT MADE PRIOR TO THE COMPTROLLER GENERAL'S DECISION ON SUBJECT CLAIM.

"10. THE CONTRACTING OFFICER PRIOR TO THE AWARD OF SUBJECT CONTRACT HAD NO KNOWLEDGE OR SUSPICION THAT A MISTAKE IN BID WOULD BE ALLEGED. FACT, AN EXAMINATION OF THE RECORD DISCLOSES THAT THE GOVERNMENT ESTIMATE WAS LOWER THAN ALL BIDS RECEIVED. GLAZER'S BID WAS APPROXIMATELY 13 PERCENT OVER THE GOVERNMENT ESTIMATE. THE ABSTRACT OF BIDS SHOWS THE USUAL AND NORMAL DIFFERENCES IN BIDDING FOR LIKE CHARACTER WORK. THERE WAS NOTHING IN THE BIDDING DOCUMENTS THAT WOULD PLACE THE CONTRACTING OFFICER ON NOTICE OF POSSIBLE ERROR IN BID.'

THERE WAS NOTHING ON THE FACE OF YOUR BID TO INDICATE THAT THE PRICE QUOTED THEREIN WAS NOT AS INTENDED. AS STATED IN THE DECISION OF JULY 30, 1956, SIX OTHER BIDS WERE RECEIVED, THE LOWEST OF WHICH WAS $202,091 (REJECTED ON THE GROUND THAT THE BIDDER WAS NOT RESPONSIBLE), AND THE OTHER FIVE RANGED FROM $242,187 TO $564,577. BECAUSE OF THE WIDE RANGE IN THE BIDS--- DIFFERENCES OF MORE THAN TEN PERCENT BETWEEN SUCCESSIVE BIDS BEING NOTED IN SEVERAL CASES--- WE CANNOT ACCEPT YOUR CONTENTION THAT THE CONTRACTING OFFICER WAS ON NOTICE OF THE PROBABILITY OF ERROR IN YOUR BID. SINCE YOU ARE A REGULAR STRUCTURAL STEEL FABRICATOR YOU WERE IN A BETTER POSITION TO NOTICE AN ERROR IN YOUR BID THAN THE CONTRACTING OFFICER. THE CONTRACT WAS NOT MERELY FOR THE PURCHASE OF A QUANTITY OF STEEL, BUT FOR THE FABRICATION AND DELIVERY OF STEEL PIPE SUPPORTS AS CALLED FOR BY DETAILED SPECIFICATIONS AND DRAWINGS, AND IT WAS NOT NECESSARILY TO BE ASSUMED THAT THE PRICES WOULD BE FIXED ONLY WITH REFERENCE TO STEEL COSTS. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID WAS UPON YOU. IN THE CASE OF FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163, THE COURT OF CLAIMS OF THE UNITED STATES SAID:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

THE MERE FACT THAT THE PECUNIARY RESULT WHICH A CONTRACT HAS PRODUCED HAS NOT COME UP TO THE EXPECTATIONS OF ONE OR BOTH OF THE PARTIES IS NOT SUFFICIENT TO VARY THE TERMS OF A WRITTEN CONTRACT. SEE SIMPSON V. UNITED STATES, 172 U.S. 372, 379. ALTHOUGH INDIVIDUALS MAY RECOGNIZE MORAL OR EQUITABLE OBLIGATIONS AND SURRENDER THEIR LEGAL RIGHTS, OFFICIALS REPRESENTING THE GOVERNMENT DO NOT HAVE THAT FREEDOM OF ACTION, BUT MUST ACT STRICTLY IN ACCORDANCE WITH THE LAW. CLAIMS AGAINST THE GOVERNMENT ARE REQUIRED TO BE ADJUSTED AND SETTLED IN ACCORDANCE WITH THE FACTS IN THE CASE AND THE LAW APPLICABLE THERETO.

YOUR LETTER HAS BEEN GIVEN CAREFUL CONSIDERATION BUT THERE APPEARS TO BE NOTHING THEREIN TO WARRANT A DIFFERENT CONCLUSION FROM THAT PREVIOUSLY REACHED IN THE MATTER.