A-56725, JULY 27, 1934, 14 COMP. GEN. 78

A-56725: Jul 27, 1934

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE EVIDENCE OF MISTAKE MUST BE SUCH AS TO SHOW CONCLUSIVELY THAT A MISTAKE WAS MADE. REQUIRING THE IMMEDIATE PRESENTATION OF SUCH CONVINCING PROOF OF THE EXISTENCE AND CHARACTER THEREOF AS TO LEAVE NO ROOM FOR DOUBT THAT THERE WAS IN FACT A BONA-FIDE MISTAKE IN THE BID SOUGHT TO BE CORRECTED OR WITHDRAWN AND TO REMOVE ANY REASONABLE SUSPICION THAT THE CLAIM OF ERROR IS FOR THE PURPOSE OF OBTAINING SOME UNDUE ADVANTAGE OR OF AVOIDING THE CONSEQUENCE OF AN ILL- ADVISED BID. THE MERE UNSUPPORTED STATEMENT OF THE BIDDER AFTER THE OPENING OF THE BIDS THAT A MISTAKE HAD BEEN MADE ON A PARTICULAR ITEM IN TRANSFERRING IT FROM THE ESTIMATE SHEET TO THE BID IS NOT THE FURNISHING OF EVIDENCE SUCH AS TO ESTABLISH THAT A MISTAKE WAS MADE AND IN WHAT IT CONSISTS SO AS TO ALLOW THE BID TO BE DISREGARDED.

A-56725, JULY 27, 1934, 14 COMP. GEN. 78

CONTRACTS - MISTAKE IN BID - WITHDRAWAL - CORRECTION - BIDDER'S RESPONSIBILITY TO AUTHORIZE THE CORRECTION OR WITHDRAWAL OF A BID BEFORE ACCEPTANCE ON THE BASIS OF A MISTAKE ALLEGED AFTER THE OPENING OF THE BIDS, THE EVIDENCE OF MISTAKE MUST BE SUCH AS TO SHOW CONCLUSIVELY THAT A MISTAKE WAS MADE, IN WHAT IT CONSISTS, AND HOW IT OCCURRED, REQUIRING THE IMMEDIATE PRESENTATION OF SUCH CONVINCING PROOF OF THE EXISTENCE AND CHARACTER THEREOF AS TO LEAVE NO ROOM FOR DOUBT THAT THERE WAS IN FACT A BONA-FIDE MISTAKE IN THE BID SOUGHT TO BE CORRECTED OR WITHDRAWN AND TO REMOVE ANY REASONABLE SUSPICION THAT THE CLAIM OF ERROR IS FOR THE PURPOSE OF OBTAINING SOME UNDUE ADVANTAGE OR OF AVOIDING THE CONSEQUENCE OF AN ILL- ADVISED BID. THE MERE UNSUPPORTED STATEMENT OF THE BIDDER AFTER THE OPENING OF THE BIDS THAT A MISTAKE HAD BEEN MADE ON A PARTICULAR ITEM IN TRANSFERRING IT FROM THE ESTIMATE SHEET TO THE BID IS NOT THE FURNISHING OF EVIDENCE SUCH AS TO ESTABLISH THAT A MISTAKE WAS MADE AND IN WHAT IT CONSISTS SO AS TO ALLOW THE BID TO BE DISREGARDED. IT WOULD NOT APPEAR PROPER OR IN THE INTERESTS OF THE UNITED STATES TO MAKE AWARD OF A CONTRACT TO A BIDDER LACKING THE ESSENTIAL QUALIFICATIONS AND MEANS OF FAIRLY AND SUCCESSFULLY PERFORMING ITS OBLIGATIONS UNDER A CONTRACT FOR THE CONSTRUCTION OF A PUBLIC BUILDING OF ANY CONSIDERABLE MAGNITUDE. BIDDERS MAY BE REQUIRED TO SHOW CERTAIN QUALIFICATIONS AS A CONDITION PRECEDENT TO LETTING A CONTRACT WHERE THE WORK IS OF SUCH MAGNITUDE OR INVOLVING TECHNICAL REQUIREMENTS THAT THE INTERESTS OF THE UNITED STATES WOULD NOT ADEQUATELY BE PROTECTED BY GIVING OF A PERFORMANCE BOND. HOWEVER, THE LOW BID MAY NOT BE REJECTED ON THE GROUND THAT THE BIDDER IS NOT RESPONSIBLE WHEN IT IS SHOWN THAT THE BIDDER HAS SUCCESSFULLY COMPLETED WORK OF A SIMILAR CHARACTER AND MAGNITUDE TO THAT COVERED BY THE PROPOSED CONTRACT. THE FACT THAT CERTAIN SUBCONTRACTORS FROM WHICH THE CONTRACTOR PROPOSES TO PURCHASE MATERIALS OR TO SUBLET A PORTION OF THE CONSTRUCTION ARE REPORTED TO BE NOT RESPONSIBLE IS NOT SUFFICIENT TO AUTHORIZE THE LOW BID TO BE DISREGARDED OR FOR HOLDING THAT THE SAID BIDDER IS NOT A RESPONSIBLE BIDDER. IT WILL BE THE RESPONSIBILITY OF THE SAID BIDDER IN EVENT ITS BID IS ACCEPTED TO PERFORM THE WORK IN ACCORDANCE WITH THE TERMS OF THE CONTRACT--- WHICH INCLUDES RESPONSIBILITY FOR THE SUBCONTRACTORS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, JULY 27, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 19, 1934, IN PERTINENT PART AS FOLLOWS:

UNDER DATE OF JUNE 19, 1934, BIDS WERE OPENED FOR THE CONSTRUCTION OF THE ADMINISTRATION BUILDING AT CHICKAMAUGA AND CHATTANOOGA NATIONAL MILITARY PARK, TENNESSEE.

TWELVE BIDS IN ALL WERE RECEIVED, THE TWO LOW BIDDERS BEING:

RAY M. LEE -------------------------------------- $52,848

R. E. BARNES CONSTRUCTION COMPANY --------------- 56,500

SINCE THE OPENING OF THE BIDS THIS DEPARTMENT HAS RECEIVED COMMUNICATIONS DATED JUNE 19 AND JULY 2 FROM THE LOW BIDDER, RAY M. LEE, ALLEGING THAT A MISTAKE OF $5,000 HAS BEEN MADE IN HIS BID IN THE ITEM FOR THE STONE WORK, WHICH WAS SET DOWN ON HIS ESTIMATE SHEET AT $9,034 BUT CARRIED ON THE COST SHEET AS $4,034. ON JUNE 22 THE STANDARD IRON AND WIRE WORKS OF CHATTANOOGA, TENNESSEE, ALSO ALLEGED THAT AN IRREGULARITY EXISTED IN THE BID OFFERED BY RAY M. LEE.

THE DEPARTMENT IS NOW IN RECEIPT OF A REPORT DATED JULY 11, FROM THE SUPERINTENDENT OF THE CHICKAMAUGA AND CHATTANOOGA NATIONAL MILITARY PARK COVERING INVESTIGATIONS MADE OF THE THREE LOWEST BIDDERS FOR THIS CONSTRUCTION WORK. THE SUPERINTENDENT, AMONG OTHER THINGS, REPORTS THAT THIS JOB IS LARGER THAN ANY PREVIOUS JOB UNDERTAKEN BY RAY M. LEE AND, FURTHER, THAT LETTERS OF INQUIRY SENT OUT TO SUBCONTRACTORS PROPOSED TO BE USED BY THE LOW BIDDER AND LETTERS OF INQUIRY SENT TO PERSONS FOR WHOM HE HAD PREVIOUSLY DONE WORK HAVE NOT BEEN REPLIED TO AT THIS TIME. THE SUPERINTENDENT FURTHER STATES THAT THE R. E. BARNES CONSTRUCTION COMPANY, THE SECOND LOW BIDDER, APPEARS TO BE RELIABLE AND WELL QUALIFIED TO ACCEPT THE RESPONSIBILITY INVOLVED IN THIS WORK. THE SUPERINTENDENT RECOMMENDS THAT THE CONTRACT BE AWARDED TO THE R. E. BARNES CONSTRUCTION COMPANY.

ALL PAPERS IN THE CASE ARE TRANSMITTED HEREWITH FOR YOUR CONSIDERATION AND IT IS REQUESTED THAT THIS DEPARTMENT BE ADVISED AS TO WHETHER OR NOT, IN VIEW OF THE CIRCUMSTANCES, THE BID OF RAY M. LEE MAY BE REJECTED AND THE CONTRACT PROPERLY AWARDED TO THE R. E. BARNES CONSTRUCTION COMPANY.

WITH RESPECT TO THE QUESTION OF THE ALLEGED MISTAKE IN THE BID OF RAY M. LEE, TRADING AS THE RAY M. LEE CO., THE STANDARD GOVERNMENT INSTRUCTIONS TO BIDDERS, WHICH ALL BIDDERS WERE URGED TO READ BEFORE SUBMITTING THEIR BIDS, NOTIFIED ALL BIDDERS CONCERNED IN PARAGRAPH 14 THEREOF THAT NEGLIGENCE ON THE PART OF ANY BIDDER IN PREPARING HIS BID CONFERRED NO RIGHT FOR THE WITHDRAWAL AFTER IT HAD BEEN OPENED, AND ALL BIDDERS WERE REQUIRED TO FURNISH A BID BOND CONDITIONED ON NOT WITHDRAWING THEIR BID WITHIN A STATED PERIOD, AND THE EXECUTION OF A CONTRACT, WITH SURETY, IN EVENT THEIR PROPOSAL WAS ACCEPTED. THE SAID LOW BIDDER, RAY M. LEE CO., FURNISHED A BID BOND IN THE SUM OF $12,000 WITH THE AETNA CASUALTY AND SURETY CO. AS SURETY THEREON. ALSO BIDDERS WERE ADVISED IN PARAGRAPH 19 OF THE SAID INSTRUCTIONS THAT---

ERRORS IN BID.--- BIDDERS OR THEIR AUTHORIZED AGENTS ARE EXPECTED TO EXAMINE THE MAPS, DRAWINGS, SPECIFICATIONS, CIRCULARS, SCHEDULE, AND ALL OTHER INSTRUCTIONS PERTAINING TO THE WORK, WHICH WILL BE OPEN TO THEIR INSPECTION. FAILURE TO DO SO WILL BE AT THE BIDDER'S OWN RISK, AND HE CANNOT SECURE RELIEF ON THE PLEA OF ERROR IN THE BID. IN CASE OF ERROR IN THE EXTENSION OF PRICES THE UNIT PRICE WILL GOVERN.

THE BIDDER IN THIS CASE NOT HAVING REQUESTED WITHDRAWAL OF ITS BID PRIOR TO THE TIME FIXED FOR OPENING, THE QUESTION FOR CONSIDERATION IS WHETHER THERE HAS BEEN SHOWN SUCH A BONA FIDE MISTAKE IN THE BID AS WILL AUTHORIZE DISREGARD OR CORRECTION OF SUCH BID.

NUMEROUS DECISIONS OF THIS OFFICE HAVE BEEN TO THE EFFECT THAT IN ORDER TO AUTHORIZE EITHER THE DISREGARD OR CORRECTION OF A BID ON THE BASIS OF MISTAKE ALLEGED AFTER THE OPENING, THE EVIDENCE OF MISTAKE MUST BE SUCH AS TO SHOW CONCLUSIVELY THAT A MISTAKE WAS MADE, IN WHAT IT CONSISTS, AND HOW IT OCCURRED. IN OTHER WORDS, THERE SHOULD BE PRESENTED IMMEDIATELY SUCH CONVINCING PROOF OF THE EXISTENCE AND CHARACTER OF THE ERROR AS TO LEAVE NO REASONABLE ROOM FOR DOUBT THAT THERE WAS IN FACT A BONA FIDE MISTAKE IN THE BID AND TO REMOVE ANY REASONABLE BASIS FOR SUSPICION THAT THE CLAIM OF ERROR IS FOR THE PURPOSE OF OBTAINING SOME UNDUE ADVANTAGE OR OF AVOIDING THE CONSEQUENCE OF AN ILL-ADVISED BID. 9 COMP. GEN. 339.

IT WAS STATED BY MR. JUSTICE MCKENNA IN DELIVERING THE OPINION OF THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF MOFFETT, HODGKINS AND CO. V. ROCHESTER, 178 U.S. 373, 385, THAT:

THE PARTY ALLEGING THE MISTAKE MUST SHOW EXACTLY IN WHAT IT CONSISTS AND THE CORRECTION THAT SHOULD BE MADE. THE EVIDENCE MUST BE SUCH AS TO LEAVE NO REASONABLE DOUBT UPON THE MIND OF THE COURT AS TO EITHER OF THESE POINTS. THE MISTAKE MUST BE MUTUAL, AND COMMON TO BOTH PARTIES TO THE INSTRUMENT. * * *

THERE WAS NO MUTUAL MISTAKE IN THIS CASE. THERE IS NOTHING IN THE BID ITSELF OR IN THE AMOUNT OF THE BID WHEN COMPARED WITH THE AMOUNT OF THE NEXT LOWEST BID RECEIVED TO PUT THE CONTRACTING OFFICER ON NOTICE THAT THERE WAS A MISTAKE IN THE BID--- THE DIFFERENCE BEING $3,652--- AND THE ONLY EVIDENCE OF A MISTAKE IS THE UNSUPPORTED STATEMENT OF THE BIDDER THAT A MISTAKE OF $5,000 HAD BEEN MADE IN THE ITEM FOR STONE WORK WHICH WAS SET DOWN ON THE ESTIMATE SHEET AT $9,034 BUT CARRIED TO THE COST SHEET AS $4,034, AND AS SUCH INCLUDED IN THE AGGREGATE PRICE OF $52,848 STATED IN THE BID FOR THE CONSTRUCTION OF THE BUILDING. THE SAID BIDDER DID NOT FURNISH THE ORIGINAL ESTIMATE SHEET DULY ATTESTED, AND, AS ABOVE STATED, THERE IS NOTHING IN THE BID ITSELF TO INDICATE A MISTAKE. THERE THUS HAS NOT BEEN FURNISHED SUCH EVIDENCE OF MISTAKE AS TO BRING THE CASE WITHIN THE RULE STATED BY THE SUPREME COURT OF THE UNITED STATES IN THE MOFFETT, HODGKINS AND CO. CASE, SUPRA.

AS TO THE QUESTION RAISED BY THE SUPERINTENDENT OF THE CHICKAMAUGA AND CHATTANOOGA NATIONAL MILITARY PARK AS TO THE RESPONSIBILITY OF THE SAID RAY M. LEE CO., AND WHETHER THE SAID COMPANY IS A RESPONSIBLE BIDDER, IT IS UNDERSTOOD, OF COURSE, THAT IT WOULD NOT BE PROPER OR IN THE INTERESTS OF THE UNITED STATES TO MAKE AWARD OF A CONTRACT TO A BIDDER LACKING THE ESSENTIAL QUALIFICATIONS AND MEANS OF FAIRLY AND SUCCESSFULLY PERFORMING ITS OBLIGATIONS UNDER A CONTRACT FOR THE CONSTRUCTION OF A PUBLIC BUILDING OF ANY CONSIDERABLE MAGNITUDE. BIDDERS MAY BE REQUIRED TO SHOW CERTAIN QUALIFICATIONS AS A CONDITION PRECEDENT TO LETTING A CONTRACT WHERE THE WORK IS OF SUCH MAGNITUDE OR INVOLVING TECHNICAL REQUIREMENTS THAT THE INTERESTS OF THE UNITED STATES WOULD NOT ADEQUATELY BE PROTECTED BY GIVING OF A PERFORMANCE BOND. IN THIS CONNECTION ATTENTION IS INVITED TO DECISION OF THIS OFFICE, DATED NOVEMBER 15, 1928, 8 COMP. GEN. 252, 256.

BIDDERS WERE REQUIRED BY PARAGRAPH 6 OF THE ADVISED SPECIFICATIONS TO FURNISH A LIST OF WORK WHICH THEY HAD EXECUTED SIMILAR IN CHARACTER AND MAGNITUDE TO THAT COVERED BY THE CONTRACT AND IN COMPLIANCE THEREWITH THE SAID RAY M. LEE CO. FURNISHED A LIST AS FOLLOWS:

CHART

STRUCTURE CITY TOTAL COST

FULTON NATIONAL BANK --------------- ATLANTA, GA -------- $45,000

COUNTY FIRE STATION ---------------- ----- DO ----------- 35,000

HEATING PLANT FOR TANK SCHOOL ------ FORT BENNING, GA --- 22,000

CONGREGATIONAL CHURCH -------------- DALLAS, TEX -------- 35,000

HIGH SCHOOL ------------------------ OLNEY, TEX --------- 125,000

AS FURTHER EVIDENCE OF THE SAID BIDDER'S ABILITY AND RESPONSIBILITY ATTENTION IS INVITED TO A LETTER DATED JULY 9, 1934, FROM CLARENCE T. JONES, ARCHITECT, TO THE SUPERINTENDENT OF THE CHICKAMAUGA AND CHATTANOOGA NATIONAL MILITARY PARK, IN PERTINENT PART AS FOLLOWS:

THE FOLLOWING IS A MEMORANDUM OF OUR FINDINGS, TOGETHER WITH MY REACTIONS FROM OUR TRIP TO ATLANTA, ON WHICH WE INVESTIGATED THE RAY M. LEE COMPANY, LOW BIDDERS ON THE PROPOSED ADMINISTRATION BUILDING AT CHICKAMAUGA PARK.

I WAS VERY MUCH IMPRESSED WITH THE GOOD THINGS THAT EVERYONE WHO KNEW MR. LEE HAD TO SAY ABOUT HIM. IN HIS OFFICE YOU PERHAPS NOTICED HIS DIPLOMA IN ENGINEERING FROM OHIO STATE. AT THE FULTON NATIONAL BANK MR. DELOACH GAVE HIM A VERY FINE REPUTATION AND TOLD US THAT HE CARRIED A BALANCE OF FROM FOUR TO EIGHT THOUSAND DOLLARS. HOWEVER, HE DID SAY THAT HE DID NOT THINK MR. LEE COULD STAND A HEAVY LOSS.

MR. SMITH, OF PRINGLE AND SMITH, AN ARCHITECTURAL FIRM OF VERY HIGH STANDING, GAVE HIM A GOOD REPUTATION AND TOOK US OUT TO SHOW US THE FULTON NATIONAL BANK AT BUCKHEAD, WHICH WAS A VERY NICE JOB. MR. THOMPSON QUESTIONED MR. SMITH REGARDING THE SUBCONTRACTORS NAMED IN MR. LEE'S BID AND MADE A MEMO, WHICH ACCOMPANIES MR. LEE'S PAPERS. I WAS IMPRESSED WITH ONE QUESTION THAT MR. THOMPSON ASKED AND THAT WAS: "WOULD HE BE WILLING TO GIVE MR. LEE A CONTRACT ON A FINE RESIDENCE? AND MR. SMITH REPLIED "NO," HE WOULD NOT ASK HIM TO BID.

YOU WILL RECALL THAT IN TALKING WITH MR. LEE AT HIS OFFICE THAT HE STATED THAT HE HAD MADE A MISTAKE OF $5,000 IN TRANSFERRING HIS FIGURES FOR FINAL ADDITION AND THAT IF HE HAD NOT MADE THIS MISTAKE HIS BID WOULD HAVE BEEN $5,000 HIGHER. HE STATED, HOWEVER, THAT HE WOULD BE WILLING TO STAND BY HIS BID AND SEE IT THROUGH. HE FURTHER STATED THAT HE HAD FIGURED ON A HAND-TOOLED FINISH FOR TRIM AND LINTELS. THIS, AS YOU KNOW, IS NOT IN ACCORDANCE WITH THE SPECIFICATIONS, BUT MR. LEE STATED THAT HE UNDERSTOOD THAT IT WOULD BE ALLOWED.

MY GENERAL REACTION TO THE ABOVE IS THAT WHILE MR. LEE IS A GOOD BUILDER, ALL OF HIS WORK HAS BEEN SMALLER THAN THIS PRESENT CONTRACT AND THAT HE HAS HAD NO EXPERIENCE WITH FINE RESIDENCES AND THAT IT WOULD BE QUITE A MISTAKE TO AWARD TO HIM THIS CONTRACT, WHICH IS ESSENTIALLY THAT OF A FINE RESIDENCE AND ESPECIALLY SINCE HE ADMITS HE MADE THIS MISTAKE OF $5,000. THIS WOULD PLACE HIM IN A POSITION TO BE CONTINUALLY SKIMPING AND TO DO THINGS IN A CHEAP WAY SO AS TO COME WITHIN THE AMOUNT OF HIS CONTRACT.

THERE IS NOTHING IN THE REPORT OF JULY 11, 1934, FROM THE SUPERINTENDENT OF THE SAID PARK THAT SHOWS ANY LACK OF RESPONSIBILITY ON THE PART OF THE SAID RAY M. LEE CO., OR THAT THE SAID BIDDER IS NOT A RESPONSIBLE BIDDER, OR THAT THE COMPANY CANNOT AND WILL NOT SATISFACTORILY COMPLETE THE WORK IF AWARDED THE CONTRACT. THE FACT THAT CERTAIN SUBCONTRACTORS FROM WHICH THE CONTRACTOR PROPOSES TO PURCHASE MATERIALS OR TO SUBLET A PORTION OF THE CONSTRUCTION ARE REPORTED TO BE NOT RESPONSIBLE IS NOT SUFFICIENT TO AUTHORIZE THE LOW BID TO BE DISREGARDED OR FOR HOLDING THAT THE SAID BIDDER IS NOT A RESPONSIBLE BIDDER. IT WILL BE THE RESPONSIBILITY OF SAID COMPANY IN EVENT ITS BID IS ACCEPTED TO PERFORM THE WORK IN ACCORDANCE WITH THE TERMS OF THE CONTRACT--- WHICH INCLUDES RESPONSIBILITY FOR THE SUBCONTRACTORS.

ANSWERING YOUR QUESTION SPECIFICALLY, YOU ARE ADVISED THAT THERE IS NO BASIS FOR THE REJECTION OF THE BID OF THE RAY M. LEE CO. AS NOT BEING A RESPONSIBLE BIDDER OR FOR PERMITTING THE SAID RAY M. LEE CO. TO WITHDRAW OR CORRECT ITS BID OR FOR RELIEVING THE BIDDER FROM THE CONSEQUENCES OF FAILURE TO PERFORM IN ACCORDANCE THEREWITH.