B-128769, JAN. 18, 1957

B-128769, JAN. 18, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 18, 1956 (C 310D/JJC:PJK NBY -1813), WITH ENCLOSURES, FROM THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, RELATING TO AN ERROR ALLEGED BY THE E. H. MORRILL COMPANY TO HAVE BEEN MADE IN ITS BID ON CONTRACT NO. NBY-1813, COVERING REPAIRS TO A RESERVOIR AND REPLACEMENT OF A CHLORINATOR AT THE NAVAL AIR STATION, OAKLAND, CALIFORNIA.

THE FOREGOING LETTER WAS IN REPLY TO OUR LETTER OF OCTOBER 31, 1956, TRANSMITTING TO YOU A COPY OF THE CONTRACTOR'S LETTER OF OCTOBER 3, 1956, IN WHICH THE ACCURACY OF THE GOVERNMENT'S ESTIMATE WAS QUESTIONED. IT WAS POINTED OUT IN THE LETTER OF OCTOBER 31 THAT THE CONTRACTOR'S BID ON ITEM 2 WAS $13,734; THAT THE ONLY OTHER BID ON THAT ITEM WAS IN THE AMOUNT OF $20,660, AND THAT THE SUBSTANTIAL DISPARITY BETWEEN THE LATTER BID AND THE GOVERNMENT'S ESTIMATE OF $13,250 AS TO ITEM 2 SUGGESTED THE POSSIBILITY OF ERROR IN THE ESTIMATE. THE CHIEF OF THE BUREAU OF YARDS AND DOCKS STATES THAT THE OFFICER IN CHARGE OF CONSTRUCTION ADVISES THAT THE ESTIMATE WAS ORIGINALLY CONSIDERED REASONABLE AND ON REVIEW IS STILL CONSIDERED FAIR AND REASONABLE WITH RESPECT TO THE WORK INVOLVED FOR ACCOMPLISHMENT DURING THE SUMMER MONTHS OF 1956.

THE RECORD SHOWS THAT THE BASIC WORK INVOLVED WAS COVERED BY ITEM 1 OF THE BID FORM AS TO WHICH THE GOVERNMENT ESTIMATE WAS $15,340 AND AS TO WHICH THE CONTRACTOR SUBMITTED A BID OF $18,734. ITEM 2 COVERED THE SAME WORK AS THAT COVERED BY ITEM 1 BUT SUBJECT TO THE OMISSION OF FILTER MATERIAL AND PAINTING. AS TO ITEM 2 THE GOVERNMENT'S ESTIMATE WAS IN THE AMOUNT OF $13,250 AND THE CONTRACTOR'S BID PRICE WAS $13,734. THE GOVERNMENT'S ESTIMATE AS TO ITEM 2 APPEARS TO HAVE BEEN ARRIVED AT BY SUBTRACTING FROM THE BASIC ESTIMATE FOR ITEM 1--- $13,947--- THE SUM OF $1,900, LEAVING A BALANCE OF $12,047 TO WHICH WAS ADDED 10 PERCENT FOR CONTINGENCIES AMOUNTING TO $1,203, OR A TOTAL OF $13,250.

IT WILL BE SEEN FROM THE FOREGOING THAT, WHILE THE DIFFERENCE BETWEEN THE GOVERNMENT'S ESTIMATE AS TO ITEMS 1 AND 2 WAS APPROXIMATELY $2,000, THE DIFFERENCE IN THE CONTRACTOR'S BID AS TO THESE ITEMS WAS $5,000. ALSO, IT IS NOTED THAT THE DIFFERENCE IN THE AMOUNT BID ON ITEMS 1 AND 2 BY THE ONLY OTHER BIDDER IN THIS CASE WAS $2,037. IN THE CIRCUMSTANCES, IT APPEARS THAT THE CONTRACTOR'S REDUCTION OF ITS BID BY $5,000 BY REASON OF THE OMISSION OF WORK HAVING AN ESTIMATED COST OF APPROXIMATELY $2,000, REASONABLY MIGHT HAVE BEEN QUESTIONED BY THE CONTRACTING OFFICER AS INDICATING A MISTAKE IN BID, THEREBY AFFORDING THE CONTRACTOR AN OPPORTUNITY TO VERIFY ITS BID. SINCE THIS WAS NOT DONE, IT IS OUR VIEW THAT THE CONTRACT SHOULD BE CANCELLED WITHOUT LIABILITY ON THE PART OF THE CONTRACTOR, AS SUGGESTED IN THE CONCLUDING PARAGRAPH OF A PRIOR LETTER DATED SEPTEMBER 10, 1956, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), IN REGARD TO THIS MATTER.