A-37899, AUGUST 10, 1931, 11 COMP. GEN. 65

A-37899: Aug 10, 1931

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CONTRACTS - MISTAKES - WITHDRAWAL OF BIDS THE QUESTION AS TO WHETHER A BIDDER MAY BE RELEASED FROM ITS BID IS FOR DETERMINATION NOT BY THE CONTRACTING OFFICER OR THE ADMINISTRATIVE ESTABLISHMENT CONCERNED. WHEN A MISTAKE IS ALLEGED BY A BIDDER. SHOWING PARTICULARLY WHETHER THE ALLEGED MISTAKE WAS BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER BEFORE OR AFTER THE AWARD WAS MADE. 1931: I HAVE YOUR LETTER OF JULY 30. AS FOLLOWS: THERE IS SUBMITTED THE ATTACHED FILE COMPRISING BIDS OF THE LINDH GUSTAFSON-KLOPFER COMPANY. FOR DECISION AS TO WHETHER THIS ADMINISTRATION IS AUTHORIZED TO DISREGARD THE BIDS OF THE LINDH-GUSTAFSON-KLOPFER COMPANY AND THE WALBRIDGE-ALDINGER COMPANY COVERING THE INSTALLATION OF THE REFRIGERATING PLANT REFERRED TO ABOVE AND ACCEPT THAT OF THE PENNSYLVANIA ENGINEERING COMPANY IN THE AMOUNT OF $13.

A-37899, AUGUST 10, 1931, 11 COMP. GEN. 65

CONTRACTS - MISTAKES - WITHDRAWAL OF BIDS THE QUESTION AS TO WHETHER A BIDDER MAY BE RELEASED FROM ITS BID IS FOR DETERMINATION NOT BY THE CONTRACTING OFFICER OR THE ADMINISTRATIVE ESTABLISHMENT CONCERNED, BUT BY THE GENERAL ACCOUNTING OFFICE. WHEN A MISTAKE IS ALLEGED BY A BIDDER, THE CONTRACTING OFFICER OR ADMINISTRATIVE OFFICER CONCERNED SHOULD IMMEDIATELY NOTIFY THE BIDDER TO SUBMIT AN EXPLANATION AND SUCH EVIDENCE AS MAY BE ADDUCED TENDING TO SHOW JUST HOW THE ERROR OCCURRED AND IN WHAT IT CONSISTED. AFTER RECEIVING THE BIDDER'S RESPONSE TO SUCH NOTIFICATION, THE MATTER SHOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR DETERMINATION ACCOMPANIED BY A COPY OF THE REQUEST FOR BIDS, ABSTRACT OF BIDS RECEIVED, THE ORIGINAL BID OF THE BIDDER ALLEGING A MISTAKE, A COPY OF ALL CORRESPONDENCE WITH REFERENCE TO THE ALLEGED MISTAKE, AND A STATEMENT OF THE FACTS IN CONNECTION THEREWITH, SHOWING PARTICULARLY WHETHER THE ALLEGED MISTAKE WAS BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER BEFORE OR AFTER THE AWARD WAS MADE, AND A RECOMMENDATION IN THE MATTER.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AUGUST 10, 1931:

I HAVE YOUR LETTER OF JULY 30, 1931, AS FOLLOWS:

THERE IS SUBMITTED THE ATTACHED FILE COMPRISING BIDS OF THE LINDH GUSTAFSON-KLOPFER COMPANY, THE WALBRIDGE-ALDINGER COMPANY, AND THE PENNSYLVANIA ENGINEERING COMPANY, TOGETHER WITH AN ABSTRACT SHOWING THE AMOUNT OF THE BIDS SUBMITTED BY OTHER CONTRACTORS, COVERING CERTAIN WORK TO BE PERFORMED AT THE U.S. VETERANS' HOSPITAL, CAMP CUSTER, MICHIGAN, WHICH INCLUDES THE INSTALLATION OF A REFRIGERATING PLANT AT SAID HOSPITAL, FOR DECISION AS TO WHETHER THIS ADMINISTRATION IS AUTHORIZED TO DISREGARD THE BIDS OF THE LINDH-GUSTAFSON-KLOPFER COMPANY AND THE WALBRIDGE-ALDINGER COMPANY COVERING THE INSTALLATION OF THE REFRIGERATING PLANT REFERRED TO ABOVE AND ACCEPT THAT OF THE PENNSYLVANIA ENGINEERING COMPANY IN THE AMOUNT OF $13,300.00, WHICH IS THE NEXT LOWEST BID COVERING THE INSTALLATION OF SAID EQUIPMENT, FOR THE REASON THAT THE BIDDERS ALLEGING ERROR HAVE STATED THAT THE PRICES QUOTED BY THEM WERE THE RESULT OF ERRONEOUS CALCULATIONS.

THE BIDS COVERING THE WORK DESCRIBED ABOVE WERE OPENED ON JULY 7, 1931, AND THE BID OF THE LINDH-GUSTAFSON-KLOPFER COMPANY COVERING THE INSTALLATION OF THE REFRIGERATING EQUIPMENT, WHICH IS DESCRIBED AS ITEM 3 ON STANDARD FORM NO. 21, WAS DISCLOSED TO BE $1,600.00, WHILE THAT OF THE WALBRIDGE-ALDINGER COMPANY COVERING THE SAME ITEM WAS $7,500.00. THE AMOUNT QUOTED BY THE PENNSYLVANIA ENGINEERING COMPANY, THE NEXT LOWEST BIDDER ON THIS ITEM, WAS $13,300.00. THE WIDE VARIATION OF THE QUOTATIONS ON THE ITEM OF REFRIGERATING EQUIPMENT WAS SUCH AS TO IMMEDIATELY PUT THE CONTRACTING OFFICER ON NOTICE AS TO THE PROBABILITY OF ERROR ON THE PART OF BOTH THE LINDH-GUSTAFSON-KLOPFER COMPANY AND THE WALBRIDGE-ALDINGER COMPANY, INASMUCH AS IT WAS CONSIDERED THAT A REASONABLE ESTIMATE OF THE COST OF THE WORK DESCRIBED IN THIS ITEM WOULD BE APPROXIMATELY $13,000.00. THE LINDH-GUSTAFSON KLOPFER COMPANY, BY LETTER DATED JULY 9, 1931, WHICH WAS RECEIVED IN THIS ADMINISTRATION ON JULY 11, 1931, ADVISED THAT AN ERROR HAD BEEN MADE IN ITEM 3 OF THEIR BID AS A RESULT OF MISINTERPRETATION OF LAST MINUTE TELEPHONE QUOTATIONS AND THAT ITEM 3 ON THE BID FORM EXECUTED BY THEM SHOULD BE LEFT BLANK. ON JULY 14, 1931, A COMMUNICATION WAS ADDRESSED TO THE WALBRIDGE-ALDINGER COMPANY ASKING THAT THEIR BID ON ITEM 3 BE VERIFIED, AND SAID COMPANY REPLIED BY LETTER DATED JULY 16, 1931, ADVISING THAT THE QUOTATION MADE BY THEM WAS INCORRECT AND REQUESTING THAT THEY BE EXCUSED FROM FURTHER CONSIDERATION IN CONNECTION WITH THIS ITEM.

IT WILL BE NOTED THAT ALL BIDS RECEIVED COVERING ITEM 3, WITH THE EXCEPTION OF THOSE OF THE LINDH-GUSTAFSON-KLOPFER COMPANY AND THE WALBRIDGE-ALDINGER COMPANY, RANGE FROM $13,300.00 TO $14,500.00, WHICH WOULD TEND TO CONFIRM THE CONTENTIONS OF SAID CONTRACTORS TO THE EFFECT THAT THE BIDS SUBMITTED BY THEM WERE THE RESULT OF ERRONEOUS CALCULATIONS, ALTHOUGH IN NEITHER INSTANCE DOES THE CONTRACTOR FURNISH A DEFINITE STATEMENT SHOWING THE CALCULATIONS ON WHICH THE ERRONEOUS BID WAS BASED IN SUBSTANTIATION OF HIS CONTENTION.

IT WILL BE APPRECIATED IF, IN ADDITION TO YOUR DECISION AS TO WHETHER THE BIDS OF THE CONTRACTORS ALLEGING ERROR MAY BE DISREGARDED AND THE AWARD MADE TO THE NEXT LOWEST BIDDER, YOU WILL ADVISE FOR THE GUIDANCE OF THE ADMINISTRATION IN HANDLING SIMILAR CASES IN THE FUTURE WHETHER A MERE ALLEGATION OF ERROR NOT SUPPORTED BY A DETAILED STATEMENT OF THE CALCULATIONS ON WHICH THE ERRONEOUS BID WAS BASED SHOULD BE CONSIDERED SUFFICIENT, OR WHETHER THE BIDDER SHOULD BE REQUIRED TO FURNISH A DETAILED STATEMENT OF THE CALCULATIONS ON WHICH IT IS ALLEGED THAT HIS ERRONEOUS BID WAS BASED.

FROM THE FACTS AS REPORTED IT APPEARS THAT AFTER THE BIDS WERE OPENED BUT BEFORE AWARD, THE LOW BIDDER AS TO ITEM 3, LINDH-GUSTAFSON KLOPFER CO., BY LETTER DATED JULY 9, 1931, ADVISED THE CONTRACTING OFFICER THAT IT HAD MADE A MISTAKE IN THE SUBMISSION OF ITS BID AND REQUESTED THAT ITS BID ON ITEM 3 SHOULD BE DISREGARDED.

IT APPEARS ALSO THAT THE CONTRACTING OFFICER HAD REASON TO BELIEVE, AND DID BELIEVE, THAT THE SECOND LOW BIDDER HAD MADE A MISTAKE IN THE SUBMISSION OF ITS BID, THE SAID BID BEING SO MUCH LOWER THAN THE OTHER BIDS RECEIVED, AND UPON BEING ASKED BY THE CONTRACTING OFFICER TO VERIFY ITS BID, SAID BIDDER IN LETTER OF JULY 16, 1931, ADVISED AS FOLLOWS:

WE ARE IN RECEIPT OF YOUR LETTER, DATED JULY 14TH, REGARDING OUR PROPOSAL, IN THE AMOUNT OF $7,500.00, FOR THE REFRIGERATING AND ICE MAKING PLANT REQUIRED FOR THE ADDITIONS TO THE U.S. VETERANS' HOSPITAL AT CAMP CUSTER AS SPECIFIED UNDER ITEM NO. 3.

AT THE TIME OF SUBMITTING THE PROPOSAL FOR THE THREE ITEMS, WE HAD ONLY ONE BID AVAILABLE FOR ITEM NO. 3, AND, THEREFORE, HAD NO PRICES OF COMPARISON IN THIS TRADE. THE QUOTATION, WITH CERTAIN EXCEPTIONS TO THE SPECIFICATIONS, WAS OBTAINED OVER THE/PHONE, BUT THROUGH AN ERROR THE FIGURE WAS NOT FOUND TO BE INCOMPLETE UNTIL WE RECEIVED THE CONFIRMATION. THE TIME, HOWEVER, WAS TOO LATE TO REVISE THE PROPOSAL.

UPON COMPARISON WITH THE OTHER FIGURES RECEIVED FOR THIS WORK, YOU CAN READILY SEE THAT THE BID MUST HAVE BEEN INCORRECT. IN VIEW OF THE COURTESY EXTENDED TO THE OTHER PARTY, WHO LIKEWISE MADE AN ERROR, WE SHALL ASK TO BE EXCUSED FROM FURTHER CONSIDERATION.

IT IS TO BE NOTED THAT THE LOWEST BID WAS ONLY $1,600 AND THAT THE NEXT LOWEST BID WAS $7,500, WHEREAS THE LOWEST BID NOT CLAIMED TO BE ERRONEOUS IS $13,300 AND THERE ARE FIVE OTHER BIDS WITHIN A RANGE OF $1,200 ABOVE $13,300. THESE DIFFERENCES IN PRICE, ASIDE FROM ANY OTHER FACTS OR CIRCUMSTANCES, WERE SUFFICIENT TO RAISE A PRESUMPTION OF ERROR.

WHILE NEITHER OF THESE TWO BIDDERS WOULD BE ENTITLED, UPON THE SHOWING MADE, TO HAVE ITS BID REFORMED, OR TO BE PAID ANY AMOUNT IN ADDITION TO ITS BID PRICE IF ITS BID HAD BEEN ACCEPTED IN GOOD FAITH WITHOUT NOTICE OF ERROR, SINCE THE MATTER WAS BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER BEFORE AN AWARD WAS MADE, YOU ARE ADVISED THAT THE BIDS OF THE LINDH-GUSTAFSON-KLOPFER CO. AND WALBRIDGE-ALDINGER CO. MAY BE DISREGARDED IN MAKING THE AWARD. 10 COMP. GEN. 182. COMPARE 10 COMP. GEN. 271.

AS TO THE QUESTION PRESENTED IN THE CONCLUDING PARAGRAPH OF YOUR LETTER, SUPRA, AS TO THE EVIDENCE NECESSARY TO ESTABLISH A MISTAKE, IT MAY BE STATED THAT THE QUESTION AS TO WHETHER A BIDDER MAY BE RELIEVED FROM ITS BID IS FOR DETERMINATION NOT BY THE CONTRACTING OFFICER NOR THE ADMINISTRATIVE ESTABLISHMENT CONCERNED, BUT BY THIS OFFICE. SEE DECISION OF SEPTEMBER 4, 1930, TO YOU, 10 COMP. GEN. 108.

WHEN A MISTAKE IS ALLEGED BY A BIDDER, THE CONTRACTING OFFICER OR ADMINISTRATIVE OFFICE CONCERNED SHOULD IMMEDIATELY NOTIFY THE BIDDER TO SUBMIT AN EXPLANATION AND SUCH EVIDENCE AS MAY BE ADDUCED TENDING TO SHOW JUST HOW THE ERROR OCCURRED AND IN WHAT IT CONSISTED. AFTER RECEIVING THE BIDDER'S RESPONSE TO SUCH NOTIFICATION, THE MATTER SHOULD BE SUBMITTED TO THIS OFFICE FOR DETERMINATION, ACCOMPANIED BY A COPY OF THE REQUEST FOR BIDS, AN ABSTRACT OF THE BIDS RECEIVED, THE ORIGINAL BID OF THE BIDDER ALLEGING A MISTAKE, A COPY OF ALL CORRESPONDENCE WITH REFERENCE TO THE ALLEGED MISTAKE, AND A STATEMENT OF THE FACTS IN CONNECTION THEREWITH, SHOWING PARTICULARLY WHETHER THE ALLEGED MISTAKE WAS BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER BEFORE OR AFTER THE AWARD WAS MADE, AND A RECOMMENDATION IN THE MATTER.