A-90411, NOVEMBER 20, 1937, 17 COMP. GEN. 416

A-90411: Nov 20, 1937

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TOGETHER WITH THE CIRCUMSTANCE THAT ITS BID WAS SUBSTANTIALLY BELOW THE PRIOR ESTIMATE OF COST WHEREAS THE OTHER BIDS WERE SUBSTANTIALLY ABOVE SUCH ESTIMATE. WARRANT THE CONCLUSION THAT A BONA FIDE MISTAKE WAS MADE. THERE SHOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR CONSIDERATION THE SWORN STATEMENT OF THE LOW BIDDER SHOWING IN DETAIL WHAT MISTAKE WAS MADE AND HOW IT OCCURRED. RELIED UPON TO ESTABLISH THE EXACT AMOUNT WHICH WAS INTENDED TO BE BID. 15 COMP. OR IS UNABLE SATISFACTORILY TO ESTABLISH THE AMOUNT IT INTENDED TO BID SO AS TO AUTHORIZE A CORRECTION. WHERE THE DIFFERENCE BETWEEN THE LOW BID AND THE SECOND LOW BID IS RELATIVELY SMALL. 1937: I HAVE YOUR LETTER OF NOVEMBER 9.

A-90411, NOVEMBER 20, 1937, 17 COMP. GEN. 416

CONTRACTS - MISTAKES - BIDS - AWARD PROCEDURE AND EVIDENCE REQUIRED TO ESTABLISH AMOUNT OF ERROR WHERE A BIDDER, PRIOR TO AWARD, ALLEGED A MISTAKE IN ITS LOW BID TO DO CERTAIN CONSTRUCTION WORK, AND THE DISPARITY BETWEEN ITS BID AND THE OTHER BIDS, TOGETHER WITH THE CIRCUMSTANCE THAT ITS BID WAS SUBSTANTIALLY BELOW THE PRIOR ESTIMATE OF COST WHEREAS THE OTHER BIDS WERE SUBSTANTIALLY ABOVE SUCH ESTIMATE, WARRANT THE CONCLUSION THAT A BONA FIDE MISTAKE WAS MADE, THE BID MAY BE ALLOWED TO BE WITHDRAWN WITHOUT FORFEITURE OF THE BID SECURITY, BUT THE ALLEGATION OF MISTAKE MAY NOT BE ACCEPTED AS ESTABLISHING THE AMOUNT OF THE MISTAKE AND, IF INSTEAD OF WITHDRAWAL OF THE ERRONEOUS BID, THE BIDDER SEEKS A CORRECTION THEREOF, THERE SHOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR CONSIDERATION THE SWORN STATEMENT OF THE LOW BIDDER SHOWING IN DETAIL WHAT MISTAKE WAS MADE AND HOW IT OCCURRED, TOGETHER WITH THE SWORN ORIGINAL WORK AND ESTIMATE SHEETS, ETC., RELIED UPON TO ESTABLISH THE EXACT AMOUNT WHICH WAS INTENDED TO BE BID. 15 COMP. GEN. 1049, DISTINGUISHED. WHERE, AFTER A PROPER DETERMINATION OF A BONA FIDE MISTAKE IN A LOW BID, THE LOW BIDDER WITHDRAWS THE ERRONEOUS BID, OR IS UNABLE SATISFACTORILY TO ESTABLISH THE AMOUNT IT INTENDED TO BID SO AS TO AUTHORIZE A CORRECTION, ALL THE BIDS MAY BE REJECTED AND THE CONTRACT READVERTISED, OR, WHERE THE DIFFERENCE BETWEEN THE LOW BID AND THE SECOND LOW BID IS RELATIVELY SMALL, THE GENERAL ACCOUNTING OFFICE WOULD NOT BE REQUIRED TO OBJECT TO ACCEPTANCE OF THE SECOND LOW BID, IF IT BE ADMINISTRATIVELY CONSIDERED THAT SUCH ACTION WOULD BE AS ADVANTAGEOUS TO THE UNITED STATES AS READVERTISING THE CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, NOVEMBER 20, 1937:

I HAVE YOUR LETTER OF NOVEMBER 9, 1937, AS FOLLOWS:

THE ACCOMPANYING REPORT OF THE DISTRICT ENGINEER, BALTIMORE, MARYLAND, WITH RESPECT TO BIDS RECEIVED FOR THE CONSTRUCTION OF ONE 50 FOOT INSPECTION BOAT, ABSTRACT OF THE PROPOSALS RECEIVED, TOGETHER WITH THE BIDS AND PERTINENT PAPERS, ARE FORWARDED FOR DECISION BY YOUR OFFICE IN REGARD TO THE ALLEGED ERROR MADE BY THE HIGGINS INDUSTRIES, INC., NEW ORLEANS, LOUISIANA.

IT IS THE CONTENTION OF THIS BIDDER THAT IN THE CONSOLIDATION OF THE ESTIMATED COST THE ITEM OF OVERHEAD AND INSURANCE AMOUNTING TO $9,875.27 WAS NOT ADDED IN THE BID PRICE OF $29,900. AN EXAMINATION OF THE OTHER BIDS RECEIVED INDICATES TO THIS DEPARTMENT THAT AN ERROR WAS MADE, SINCE THE BID OF THE HIGGINS INDUSTRIES, INC., IS OUT OF LINE WITH THE OTHER BIDS RECEIVED, FOUR OF WHICH RANGE IN PRICE FROM $42,228TO $49,500. THE BID OF THE HIGGINS INDUSTRIES, INC., AS SUBMITTED, $29,900, WILL BE INCREASED TO $39,775.27 IF THE CLAIM OFERROR IS ALLOWED. THIS AMOUNT WILL BE LESS THAN THE SECOND LOW BID SUBMITTED BY THE SPEDDEN SHIPBUILDING CO., INC., BALTIMORE, MARYLAND, IN THE AMOUNT OF $42,228. THE ADDITION OF $600 FOR ADJUSTMENT IN TIME OF COMPLETION WILL NOT AFFECT THE RELATIVE STANDING OF THE TWO BIDS. IT IS RECOMMENDED THAT THIS DEPARTMENT BE AUTHORIZED TO CORRECT THE PROPOSAL OF THE HIGGINS INDUSTRIES, INC., IN ACCORDANCE WITH THE CLAIM OF THAT BIDDER.

THE RETURN OF THE ACCOMPANYING PAPERS IS REQUESTED WHEN THEY HAVE SERVED YOUR REQUIREMENTS.

THE DISTRICT ENGINEER'S REPORT STATES, INTER ALIA, THAT THE PRIOR ESTIMATE OF THE ENGINEER OFFICE OF THE COST OF THE BOAT WAS $35,000.

THE ABSTRACT OF BIDS SHOWS THE FOLLOWING BIDS WERE RECEIVED:

CHART

AFTER EVALUATION

NAME AMOUNT FOR PERFORMANCE

TIME

HIGGINS INDUSTRIES, INC. --------------- $29,900 $30,500

OLD DOMINION MARINE RY. CORP ----------- 49,500 49,800

SPEDDEN SHIPBUILDING CO ---------------- 44,940 44,940

SAME (ALTERNATE) -------------------- 42,228 42,228

SAME (ALTERNATE) -------------------- 42,708 42,708

AMERICAN CAR AND FOUNDRY CO ------------ 57,160 59,110

SAME (ALTERNATE) -------------------- 54,193 56,143

A LETTER DATED OCTOBER 12, 1937, FROM HIGGINS INDUSTRIES, INC., THE LOW BIDDER, ALLEGING ERROR IN ITS BID AND DESCRIBING THE CIRCUMSTANCES UNDER WHICH IT OCCURRED, IS AS FOLLOWS:

AT 4:20 P.M., OCTOBER 11TH, WE RECEIVED YOUR WIRE READING:

"RE BID WILL ENGINE FIFTY FOOT INSPECTION BOAT HAVE LANOVA CYLINDER HEAD.'

WE PROMPTLY REPLIED, ADVISING THAT THE BUDA DIESEL ENGINE, MODEL 1742, WOULD BE FURNISHED IN THE TYPE OF LANOVA CYLINDER HEAD.

YOUR TELEGRAM GIVING EVIDENCE THAT OUR BID WAS UNDER CONSIDERATION, THE UNDERSIGNED, PRESIDENT OF THIS COMPANY, MADE A REVIEW AND AN ANALYSIS OF THE BID, AS SUBMITTED, AND ON THE ESTIMATES AS COMPILED.

ON A RECHECK OF THE WORK SHEETS AND THEIR CONSOLIDATION, IT WAS DISCOVERED THAT AN ERROR HAD BEEN MADE, AND IN THE CONSOLIDATION OF THE COST, THE ESTIMATE AND COMPUTATION OF OVERHEAD AND INSURANCE IN THE AMOUNT OF $9,875.27 HAD NOT BEEN ADDED AND INCLUDED WITHIN THE PRICE BID.

WE CONFIRM A LONG DISTANCE CALL, HELD TODAY AT 12:15, THE UNDERSIGNED SPEAKING TO MR. DOYLE, SENIOR ENGINEER, ADVISING HIM OF OUR DISCOVERY OF THIS OVERSIGHT AND MISTAKE.

WE NOW WISH TO FORMALLY BRING TO YOUR ATTENTION THE FACT OF THIS ERROR: OUR BID SHOULD HAVE BEEN IN THE AMOUNT OF $39,792.82. THE ACTUAL COMPUTATION OF COST AND SELLING PRICE SHOWN BY OUR WORK SHEETS, EXCLUSIVE OF OVERHEAD AND INSURANCE, WAS IN FACT, $29,917.55, BUT THE DEPARTMENT CONCERNED WHEN MAKING UP THE BID ELIMINATED THE $17.55, IN ORDER TO MAKE THE BID IN A ROUND FIGURE, I.E., $29,900.00. IN ORDER THAT THIS ADVICE BE EXACT, WE ARE ADVISING YOU OF THIS TO REVEAL WHY OUR BID SHOULD HAVE BEEN, WITH THE ADDITIONS OF THE COST OF OVERHEAD AND INSURANCE, THE AMOUNT OF $39,792.82.

INASMUCH AS OUR BID WAS IN THE EVEN FIGURE OF $29,900.00, AND THE AMOUNT OF OVERHEAD AND INSURANCE BEING $9,875.27, THIS AMOUNT OVERLOOKED WOULD HAVE LEFT THE BID AS SUBMITTED, WITH OVERHEAD AND INSURANCE ADDED, $39,775.27.

WE SOLICIT THAT YOU CONSIDER THIS LETTER AS CALLING OUR ERROR AND OVERSIGHT TO YOUR ATTENTION, AND THE AMOUNT OVERLOOKED, I.E., $9,875.27.

WE HERE WISH TO STATE THAT IT IS HUMILIATING TO HAVE TO CONFESS THIS ERROR AND CALL IT TO YOUR ATTENTION. THIS FIRM IS RESPONSIBLE, MORALLY AND FINANCIALLY, AND IT IS OUR INTENT ON RECEIPT OF THE CONTRACT, WHEN AWARDED, TO HAVE BID PROPERLY ACCOMPANIED BY BID BOND, AND WILL IN DUE COURSE FOLLOW WITH PERFORMANCE BOND, AND WE WILL PERFORM TO CONTRACT, IN ACCORDANCE WITH THE FULL SPIRIT AND INTENT.

IN FURTHER EXTENUATION OF OUR ENGINEERING DEPARTMENT IN COMMITTING THIS ERROR, IT MAY BE IN ORDER TO RECITE:

WE WERE FIRST MADE AWARE OF THE INVITATION TO BID BY AN ADVERTISEMENT IN THE GOVERNMENT ADVERTISER. WE FIND THAT WE WROTE YOUR DISTRICT UNDER DATE OF SEPTEMBER 24TH, REQUESTING COPIES OF SPECIFICATIONS AND THE OPPORTUNITY OF QUOTING YOUR DISTRICT THEREON. WE ARE PRESUMING THAT WE RECEIVED THE SPECIFICATIONS ON OR ABOUT SEPTEMBER 28TH OR 29TH.

DURING THIS TIME WE HAVE BEEN MOVING INTO OFFICES IN NEW AND LARGER QUARTERS, AND DURING THE COURSE OF THE MOVING, ON OCTOBER 2ND, NEW ORLEANS WAS SUBJECTED TO UNPRECEDENTED RAINFALL EXCEEDING 14 INCHES, INUNDATING THE CITY IN PLACES, AND CAUSING GREAT DISRUPTION IN THE NEW BUILDING, PARTICULARLY IN THE ENGINEERING AND DRAFTING DEPARTMENTS. THE ENGINEERING STAFF WAS AT THAT TIME TAXED, AND UNQUESTIONABLY, THE TURMOIL AND THE MENTAL CONDITIONS OF OUR EMPLOYEES, AND THE SHORT TIME AVAILABLE TO PREPARE THE FORMALITIES OF THE BID, CONTRIBUTED TO THE ERROR.

ALL OF THE WORK SHEETS ARE EXTENSIVE, ACCURATE, COMPLETE, AND ARE AVAILABLE FOR INSPECTION. THE CONSOLIDATION SHEETS ARE COMPLETE AND AVAILABLE FOR SUBSTANTIATION OF THE CIRCUMSTANCES SURROUNDING THE ERROR. FINAL CONSOLIDATION TAB SHOWS THE CALCULATIONS FOR OVERHEAD AND INSURANCE, BUT DOES NOT INCLUDE THE AMOUNTS COMPUTED.

AS BUSINESS WAS DISRUPTED IN THE CITY FOR DAYS AFTER THE RAINFALL, AND AS DELIVERY OF MAIL AND CORRESPONDENCE WAS DIFFICULT, IT IS QUITE UNDERSTANDABLE HOW THE ERROR, UNDER THE PRESSURE, OCCURRED.

BID BONDS WERE SECURED FOR THE LIMIT OF ALLOWABLE TIME, AND IN ORDER THAT BIDS GO FORWARD TO BE RECEIVED BY YOUR OFFICE BEFORE THE OPENING HOUR, SAME HAD TO BE SENT BY AIR MAIL.

IT IS REGRETTED THAT BEFORE SENDING THE BID, THE OPPORTUNITY HAD NOT BEEN TAKEN TO RECHECK SAME. WE CONFESS THIS ERROR AND OVERSIGHT,AND WE TRUST THAT WITHIN THE LIMITATIONS IMPOSED THAT CONSIDERATION WILL BE GIVEN TO THIS OBVIOUS ERROR.

REGARDLESS OF OUR CALLING THIS TO YOUR ATTENTION, AND TO ESTABLISH AND MAINTAIN OUR RESPONSIBILITY, WE ARE WILLING AND DESIROUS OF GOING THROUGH WITH THE CONTRACT IN A PROPER AND CORRECT MANNER.

IT IS UNDERSTOOD THAT NO AWARD OF CONTRACT HAS BEEN MADE ON THE BIDS AND THAT NO CONTRACT HAS BEEN ENTERED INTO WITH THE LOW BIDDER, BUT THAT THE MATTER IS STILL OPEN BEFORE THE DISTRICT ENGINEER FOR CONSIDERATION. COMPARE 15 COMP. GEN. 1049.

THE DISPARITY BETWEEN THE LOW BID AND THE OTHER BIDS, TOGETHER WITH THE CIRCUMSTANCE THAT THE LOW BID WAS SUBSTANTIALLY BELOW THE PRIOR ESTIMATE OF THE COST OF THE BOAT, WHEREAS THE NEXT LOW BID AND ALL OTHERS WERE SUBSTANTIALLY ABOVE SUCH ESTIMATE, SUFFICIENTLY WARRANTS THE CONCLUSION, PRIMA FACIE, THAT SUCH A BONA FIDE MISTAKE WAS MADE BY THE LOW BIDDER AS TO AUTHORIZE THE WITHDRAWAL OF THE LOW BID WITHOUT FORFEITURE OF THE BID SECURITY.

THE ALLEGATION OF THE LOW BIDDER MAY NOT BE ACCEPTED, HOWEVER, AS ESTABLISHING THE AMOUNT OF THE MISTAKE, AND IF, INSTEAD OF WITHDRAWAL OF THE ERRONEOUS BID, THE LOW BIDDER SEEKS A CORRECTION THEREOF TO INCLUDE THE AMOUNT ERRONEOUSLY OMITTED, THERE SHOULD BE SUBMITTED TO THIS OFFICE FOR CONSIDERATION THE SWORN STATEMENT OF THE LOW BIDDER SHOWING IN DETAIL WHAT MISTAKE WAS MADE AND HOW IT OCCURRED, TOGETHER WITH THE SWORN ORIGINAL WORK AND ESTIMATE SHEETS, ETC., RELIED UPON TO ESTABLISH THE EXACT AMOUNT WHICH WAS INTENDED TO BE BID. SEE 8 COMP. GEN. 397; 16 ID. 193.

IF THE LOW BIDDER WITHDRAWS ITS MISTAKEN BID, OR IS UNABLE SATISFACTORILY TO ESTABLISH THE AMOUNT IT INTENDED TO BID SO AS TO AUTHORIZE A CORRECTION, ALL THE BIDS MAY BE REJECTED AND THE CONTRACT READVERTISED, OR, IN VIEW OF THE RELATIVELY SMALL DIFFERENCE BETWEEN THE AMOUNT WHICH THE LOW BIDDER ALLEGES IT INTENDED TO BID AND THE ACTUAL AMOUNT OF THE SECOND LOW BID--- SOMETHING LESS THAN $2,000, OR LESS THAN 5 PERCENTUM, AFTER EVALUATION FOR PERFORMANCE TIME--- THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO ACCEPTANCE OF THE SECOND LOW BID, IF IT BE ADMINISTRATIVELY CONSIDERED THAT SUCH ACTION WOULD BE AS ADVANTAGEOUS TO THE UNITED STATES AS READVERTISING THE CONTRACT.

THE FACTS OF THIS CASE CLEARLY DISTINGUISH IT FROM THE CASE INVOLVED IN DECISION OF JUNE 3, 1936, 15 COMP. GEN. 1049. IN THAT CASE NOT ONLY WAS THE DISPARITY IN THE BIDS INSUFFICIENT TO WARRANT THE CONCLUSION THAT A BONA FIDE MISTAKE HAD BEEN MADE IN THE BID, BUT THE BID HAD BEEN ACCEPTED IN GOOD FAITH AND A FORMAL CONTRACT EXECUTED, AND WHAT WAS SOUGHT WAS NOT THE WITHDRAWAL OR CORRECTION OF AN OPEN BID, BUT A REFORMATION OR RESCISSION OF THE CONTRACT.

THE PAPERS TRANSMITTED WITH YOUR LETTER WILL BE RETAINED HERE PENDING INFORMATION AS TO WHETHER THE LOW BIDDER ELECTS TO WITHDRAW ITS MISTAKEN BID OR TO ATTEMPT TO ESTABLISH BY ACCEPTABLE EVIDENCE THE EXACT AMOUNT IT INTENDED TO BID.