A-78046, JULY 31, 1936, 16 COMP. GEN. 98

A-78046: Jul 31, 1936

Additional Materials:

Contact:

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

 

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

CONTRACTS - MISTAKES IN BIDS - PROCEDURE AND DISPOSITION OF CERTIFIED CHECK SUBMITTED WITH BID WHERE A BIDDER REFUSES TO ENTER INTO A CONTRACT BECAUSE OF AN ALLEGED MISTAKE IN BID AND IT IS DETERMINED FROM THE CIRCUMSTANCES INVOLVED. THE CERTIFIED CHECK FURNISHED WITH THE BID IS FOR COVERING INTO THE TREASURY AS A MISCELLANEOUS RECEIPT. BIDS WERE REQUESTED MAY 8. SIX BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. - TWO DAYS AFTER THE BIDS WERE OPENED. ON THE SAME DATE HEADQUARTERS INFORMED THE BIDDER THERE WAS NO ADMINISTRATIVE AUTHORITY TO ALLOW WITHDRAWAL OF A BID AFTER OPENING AND THAT ITS BID WAS ACCEPTED. THAT IT WAS ATTEMPTING TO GET A BOND AND IF SUCCESSFUL WOULD EXECUTE THE CONTRACT.

A-78046, JULY 31, 1936, 16 COMP. GEN. 98

CONTRACTS - MISTAKES IN BIDS - PROCEDURE AND DISPOSITION OF CERTIFIED CHECK SUBMITTED WITH BID WHERE A BIDDER REFUSES TO ENTER INTO A CONTRACT BECAUSE OF AN ALLEGED MISTAKE IN BID AND IT IS DETERMINED FROM THE CIRCUMSTANCES INVOLVED, AND THE BIDDER'S OWN ADMISSION OF NEGLIGENCE IN THE PREPARATION OF ITS PROPOSAL, THAT RELIEF MAY NOT BE GRANTED FROM THE OBLIGATION ASSUMED IN THE SUBMISSION OF THE BID, THE CERTIFIED CHECK FURNISHED WITH THE BID IS FOR COVERING INTO THE TREASURY AS A MISCELLANEOUS RECEIPT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, JULY 31, 1936:

THERE HAS BEEN RECEIVED FROM THE COMMANDANT, UNITED STATES COAST GUARD, A LETTER DATED JULY 10, 1936, FILE CE-201 0035, FORWARDING FOR DISPOSITION A CERTIFIED CHECK IN THE AMOUNT OF $500 SUBMITTED WITH THE LOW BID OF THE PASQUALE CONTRACTING CO., JAMAICA PLAIN, MASS., FOR CONSTRUCTION WORK AT THE NORTH SCITUATE COAST GUARD STATION, SCITUATE, MASS., THE BIDDER HAVING REFUSED TO EXECUTE A CONTRACT ON THE GROUND OF MISTAKE IN THE PRICE QUOTED.

BIDS WERE REQUESTED MAY 8, 1936, FOR OPENING JUNE 2, 1936, FOR FURNISHING ALL LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED IN THE CONSTRUCTION OF A DWELLING, GARAGE, AND ACCESSORIES AT THE NORTH SCITUATE COAST GUARD STATION. SIX BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, AS FOLLOWS: PASQUALE CONTRACTING CO., INC. ----------- ------- ------- $34,990 OLSON AND APPLEBY ----------------------------- ---------- 36,980 KOSLOW AND RITCHIE -------------------------------- ------ 39,313 J. MALAGUTI AND SONS, INC. ---------------------------- -- 44,715 WALTER H. BARKER ----------------------------------------- 46,245 MAURICE M. DEVINE, INC. ---------------------------------- 48,936

BY TELEGRAM OF JUNE 4, 1936--- TWO DAYS AFTER THE BIDS WERE OPENED-- TO HEADQUARTERS, UNITED STATES COAST GUARD, THE LOW BIDDER ASSERTED THAT A SERIOUS ERROR HAD BEEN MADE IN COMPUTING ITS BID AND REQUESTED PERMISSION TO WITHDRAW THE BID. ON THE SAME DATE HEADQUARTERS INFORMED THE BIDDER THERE WAS NO ADMINISTRATIVE AUTHORITY TO ALLOW WITHDRAWAL OF A BID AFTER OPENING AND THAT ITS BID WAS ACCEPTED, AND REQUESTED THE BIDDER TO ADVISE WHETHER IT WOULD EXECUTE A CONTRACT AND BOND OR WOULD DEFAULT.

THE BIDDER ADVISED ON JUNE 6, 1936, THAT IT WAS ATTEMPTING TO GET A BOND AND IF SUCCESSFUL WOULD EXECUTE THE CONTRACT, BUT ON JUNE 17, 1936, THE SAID BIDDER TELEGRAPHED THAT IT HAD MADE A CAREFUL REESTIMATE OF THE COST OF THE PROJECT AND DETERMINED THAT THE MINIMUM COST THEREOF WAS $38,000; THAT IF AN ERROR HAD NOT BEEN MADE IN ITS PROPOSAL IT WOULD HAVE QUOTED A PRICE OF $39,990; THAT IT COULD NOT STAND THE LOSS WHICH WOULD BE INCURRED BY ENTERING INTO THE CONTRACT AND WAS UNABLE TO OBTAIN A BOND. THE BIDDER REQUESTED THAT CONSIDERATION BE GIVEN THE FACT IT HAD MADE AN ERROR, AND REQUESTED RETURN OF ITS CERTIFIED CHECK. ACCORDINGLY, ON JUNE 17, 1936, THE LOW BIDDER WAS DECLARED IN DEFAULT, AND THE CONTRACT WAS SUBSEQUENTLY AWARDED TO THE NEXT LOW BIDDER IN THE AMOUNT OF $36,980.

AS YOU WERE ADVISED IN MY LETTER OF JUNE 23, 1936, A-76315, THE PROCEDURE SET FORTH IN DECISION OF FEBRUARY 2, 1929, 8 COMP. GEN. 397, SHOULD BE FOLLOWED IN ALL CASES OF ALLEGED MISTAKE IN BIDS; THAT IS, THE CONTRACTING OFFICER SHOULD, BEFORE MAKING AN AWARD, TRANSMIT TO THIS OFFICE THE BID IN WHICH THE ERROR IS ALLEGED, AN ABSTRACT OF ALL BIDS RECEIVED, A COPY OF THE SPECIFICATIONS AND ALL CORRESPONDENCE RELATIVE TO THE ALLEGED ERROR, WITH ADMINISTRATIVE REPORT, FOR DETERMINATION WHETHER THE BID MAY BE CORRECTED OR THE BIDDER RELIEVED OF ITS OBLIGATION UNDER THE BID.

SINCE AWARD HAS ALREADY BEEN MADE IN THIS CASE, THERE IS FOR CONSIDERATION WHETHER THE CERTIFIED CHECK IN THE AMOUNT OF $500 SUBMITTED BY THE LOW BIDDER WITH ITS BID--- APPARENTLY AS A GUARANTY THAT IT WOULD EXECUTE A CONTRACT AND PERFORMANCE BOND IF TENDERED THE AWARD--- MAY BE RETURNED AS REQUESTED, AND WHETHER THE LOW BIDDER IS CHARGEABLE WITH ANY ADDITIONAL AMOUNT BY REASON OF THE LOSS TO THE GOVERNMENT RESULTING FROM ITS FAILURE TO PERFORM IN ACCORDANCE WITH ITS ACCEPTED BID.

BY PARAGRAPHS 14 AND 19 OF THE STANDARD GOVERNMENT INSTRUCTIONS TO BIDDERS, WHICH ALL BIDDERS WERE DIRECTED TO READ BEFORE PREPARATION OF THIER BIDS, BIDDERS WERE ADVISED THAT NEGLIGENCE ON THE PART OF ANY BIDDER IN PREPARING HIS BID CONFERRED NO RIGHT TO WITHDRAWAL AFTER THE OPENING THEREOF, AND THAT FAILURE TO EXAMINE THE MAPS, DRAWINGS, SPECIFICATIONS, ETC., WOULD BE AT THE BIDDER'S OWN RISK AND HE COULD NOT SECURE RELIEF ON THE PLEA OF ERROR IN THE BID. WHILE THIS OFFICE HAS AUTHORIZED RELIEF OF BIDDERS IN CERTAIN CASES ON THE BASIS OF MISTAKE ASSERTED AFTER THE OPENING, IT HAS BEEN HELD THAT TO JUSTIFY SUCH ACTION THE EVIDENCE OF MISTAKE MUST BE SUCH AS TO SHOW CONCLUSIVELY THAT A MISTAKE HAS BEEN MADE, IN WHAT IT CONSISTS, AND HOW IT OCCURRED. 9 COMP. GEN. 339; 14 ID. 78.

IN THE CASE OF CRILLY V. BOARD OF EDUCATION, 54 ILL.APP. 371, THE PLAINTIFF, WHO HAD SUBMITTED A BID FOR THE ERECTION OF A BUILDING, ALLEGED THAT BY A CLERICAL ERROR HIS BID WAS $3,000 LESS THAN INTENDED AND REQUESTED RELIEF IN EQUITY IN THE FORM OF CORRECTION OF HIS BID AND RETURN OF THE DEPOSIT MADE IN CONNECTION THEREWITH. THE COURTS REFUSED TO GRANT RELIEF, ON THE GROUND THAT IF A MISTAKE HAD BEEN MADE IT MIGHT EASILY HAVE BEEN AVOIDED BY THE EXERCISE OF ORDINARY CARE. IN BROWN V. LEVY, 29 TEX.CIV.APP. 389, 69 S.W. 255, RETURN OF A BID DEPOSIT ON A PLEA OF ERROR IN ADDING THE ITEMS INVOLVED WAS LIKEWISE REFUSED, THE COURT HOLDING THAT VALIDITY OF THE CONTRACT WHICH AROSE ON ACCEPTANCE OF THE BIDDER'S OFFER WAS NOT AFFECTED BY THE FACT THAT THE BIDDER HAD MADE A MISCALCULATION IN HIS PRELIMINARY ESTIMATES. SEE, ALSO, DECISION OF JUNE 3, 1936, A-75520, 15 COMP. GEN. 1049.

NO EVIDENCE HAS BEEN PRESENTED IN THIS CASE TO SUPPORT THE STATEMENTS OF THE PASQUALE CONTRACTING CO. TO THE EFFECT THAT IT MADE A MISTAKE IN ITS BID. ANY MISTAKE THAT MAY HAVE BEEN MADE WAS ADMITTEDLY THE RESULT OF THE BIDDER'S OWN NEGLIGENCE IN THE PREPARATION OF ITS PROPOSAL. THERE WAS NOTHING IN THE BID ITSELF OR AS COMPARED WITH THE OTHER BIDS RECEIVED, WHICH MIGHT HAVE PUT THE CONTRACTING OFFICER ON NOTICE THAT A MISTAKE HAD BEEN MADE OR CAUSED HIM TO REQUEST VERIFICATION OF THE BID. WITH RESPECT TO THE LOW BIDDER'S STATEMENT THAT THE WORK COULD NOT BE DONE FOR LESS THAN $38,000, IT APPEARS THE NEXT LOW BIDDER HAS ACCEPTED AWARD AT ITS BID PRICE OF $36,980.

THERE BEING NO BASIS FOR RELIEVING THE PASQUALE CONTRACTING CO., INC., FROM THE OBLIGATION ASSUMED IN SUBMISSION OF ITS BID, WHICH WAS ACCEPTED IN GOOD FAITH, THE CERTIFIED CHECK FURNISHED AS SECURITY MAY NOT BE RETURNED TO THE BIDDER BUT SHOULD BE DEPOSITED AND COVERED INTO THE TREASURY AS A MISCELLANEOUS RECEIPT. THERE SHOULD BE FORWARDED TO THIS OFFICE COPIES OF THE ORIGINAL INVITATION AND SPECIFICATIONS AND ANY OTHER PAPERS SHOWING THE EXACT CONDITIONS UNDER WHICH THE BID AND CERTIFIED CHECK WERE SUBMITTED IN ORDER THAT IT MAY BE DETERMINED WHETHER THERE IS ANY REASON WHY THE LOW BIDDER SHOULD NOT BE HELD LIABLE FOR THE DIFFERENCE BETWEEN ITS BID AND THE NEXT LOWEST BID AND CALLED UPON TO REMIT THE BALANCE OF $1,490 REMAINING AFTER COLLECTION OF THE AMOUNT OF THE CERTIFIED CHECK.