A-93616, APRIL 5, 1938, 17 COMP. GEN. 815

A-93616: Apr 5, 1938

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THERE WAS NOTHING ON THE FACE OF THE BID. THE ACCEPTANCE WAS IN GOOD FAITH. AS FOLLOWS: BIDS WERE OPENED IN THE BUREAU OF YARDS AND DOCKS ON FEBRUARY 2. AT SAID OPENING THE LOWEST BID RECEIVED WAS THAT OF MR. THE BUREAU OF YARDS AND DOCKS REACHED THE CONCLUSION THAT SAID BIDDER DID NOT HAVE THE REQUISITE ORGANIZATION OR EXPERIENCE TO ADEQUATELY HANDLE THE CLASS OF CONSTRUCTION INVOLVED. THE PROJECT WAS A HIGHLY SPECIALIZED TYPE OF WORK NOT TO BE UNDERTAKEN BY AN INEXPERIENCED ORGANIZATION AND ANY FAILURE THEREOF WOULD ENDANGER NOT ONLY THE CASTING PIT BUT ALSO THE ADJOINING FOUNDRY BUILDING WITH ITS OVENS. THE COMPLETION OF THE PIT IS OF THE UTMOST URGENCY AS IT IS TO BE USED FOR THE CASTING OF GUN SLIDES ON NEW SHIPS.

A-93616, APRIL 5, 1938, 17 COMP. GEN. 815

CONTRACTS - MISTAKES - BIDS - FORFEITURE OF BID BOND AND LIABILITY FOR DAMAGES BECAUSE OF DEFAULT WHERE A BIDDER FIRST ALLEGED ERROR IN ITS BID AFTER THE BID HAD BEEN ACCEPTED, AND THERE WAS NOTHING ON THE FACE OF THE BID, OR IN A COMPARISON WITH THE OTHER BIDS, TO SUGGEST ERROR, THE ACCEPTANCE WAS IN GOOD FAITH, AND AS THE BIDDER HAS REFUSED TO PERFORM THE LEGALLY BINDING CONTRACT WHICH RESULTED, THE BID BOND SUBMITTED SHOULD BE REGARDED AS FORFEITED AND PROPER STEPS SHOULD BE TAKEN TO COLLECT THE AMOUNT OF THE GOVERNMENT'S DAMAGES RESULTING FROM THE DEFAULT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE NAVY, APRIL 5, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF MARCH 21, 1938, AS FOLLOWS:

BIDS WERE OPENED IN THE BUREAU OF YARDS AND DOCKS ON FEBRUARY 2, 1938, FOR A CASTING PIT IN THE NAVY YARD, WASHINGTON, D.C., UNDER SPECIFICATION NO. 8656. AT SAID OPENING THE LOWEST BID RECEIVED WAS THAT OF MR. W.M.E. POWERS IN THE SUM OF $31,189.00.

IN DISCUSSING THE DETAILS OF THE WORK WITH MR. POWERS AFTER THE OPENING, THE BUREAU OF YARDS AND DOCKS REACHED THE CONCLUSION THAT SAID BIDDER DID NOT HAVE THE REQUISITE ORGANIZATION OR EXPERIENCE TO ADEQUATELY HANDLE THE CLASS OF CONSTRUCTION INVOLVED. THE PROJECT WAS A HIGHLY SPECIALIZED TYPE OF WORK NOT TO BE UNDERTAKEN BY AN INEXPERIENCED ORGANIZATION AND ANY FAILURE THEREOF WOULD ENDANGER NOT ONLY THE CASTING PIT BUT ALSO THE ADJOINING FOUNDRY BUILDING WITH ITS OVENS, FURNACES AND EQUIPMENT. FURTHERMORE, THE COMPLETION OF THE PIT IS OF THE UTMOST URGENCY AS IT IS TO BE USED FOR THE CASTING OF GUN SLIDES ON NEW SHIPS, BEING THE ONLY FACILITY PROVIDED IN THE NAVAL SERVICE FOR THAT PURPOSE AND A DELAY IN ITS COMPLETION WOULD HAVE A SERIOUS EFFECT ON THE BUILDING PROGRAM.

ON ACCOUNT OF THE IMPORTANCE OF THE WORK, AND THE DETERMINATION REACHED THAT THE LOW BIDDER DID NOT HAVE SUFFICIENT EXPERIENCE OR TECHNICAL ORGANIZATION TO PROPERLY HANDLE THE WORK CONTEMPLATED BY THE SPECIFICATION, THE NAVY DEPARTMENT IN THE EXERCISE OF THE RIGHT RESERVED TO THE GOVERNMENT BY PARAGRAPH 6-03 OF THE SPECIFICATION TO REJECT ANY BID RESPECTING WHICH THE FACTS AS TO BUSINESS AND TECHNICAL ORGANIZATION, FINANCIAL RESOURCES, PLANT OR EXPERIENCE COMPARED WITH THE PROJECT BID UPON, JUSTIFY SUCH REJECTION, AUTHORIZED THE BUREAU OF YARDS AND DOCKS TO MAKE AWARD TO THE SECOND LOW BIDDER, S.S. JONES, INC., MANASQUAN, NEW JERSEY, IN THE SUM OF $33,778.

AFTER AWARD WAS MADE TO S.S. JONES, INC., THIS CONCERN IN LETTER OF FEBRUARY 25, 1938, FROM ITS PRESIDENT, MR. S. S. JONES, TO THE BUREAU OF YARDS AND DOCKS, ALLEGED ERROR IN THE SUM OF APPROXIMATELY $7,000 IN ITS BID. THE ORIGINAL OF SAID LETTER IS ENCLOSED TOGETHER WITH ATTACHED COPIES OF THE ORIGINAL FIGURES ALLEGED TO HAVE BEEN SUED IN PREPARING THE BID. THERE IS ALSO ATTACHED A SHEET SHOWING THE ORIGINAL FIGURES AND THE REVISION OF SAID FIGURES TO COVER THE ITEMS IN WHICH THE PURPORTED ERROR OCCURRED.

PARAGRAPH 2-01 OF SPECIFICATION NO. 8656, WHICH IS ATTACHED WITH ADDENDUM NO. 1, FORMING PART THEREOF, INDICATES THE EXTENT OF THE SHEET PILE COFFERDAM NECESSARY FOR THE WORK. ON THE LOCATION PLAN HEREWITH (YARDS AND DOCKS DRAWING NO. 126490), THE RED LINE INDICATES THE EXTENT OF THE COFFERDAM WHICH MR. JONES, ACCORDING TO HIS LETTER AND TO ORAL STATEMENTS, CONTEMPLATED IN FIGURING THE WORK. THE YELLOW LINE ON THE SAME PLAN INDICATES THE LEAST SIZE OF COFFERDAM NECESSARY.

IN VIEW OF THE FACT THAT MR. JONES STATED THAT HE WAS NOT WILLING TO CONTINUE WITH THE CONTRACT, AWARD HAS BEEN MADE TO THE NEXT BIDDER, THE MCLEAN CONTRACTING COMPANY AT $39,267, AND CONTRACT WITH SAID COMPANY DULY EXECUTED.

IN HIS LETTER OF FEBRUARY 25, 1938, MR. JONES REQUESTS THAT HE BE RELEASED FROM THE OBLIGATION OF HIS BID. THE BUREAU OF YARDS AND DOCKS, THE CONTRACTING BUREAU, IS OF THE OPINION THAT MR. JONES DID NOT MAKE AN ERROR AS CLAIMED, AND RECOMMENDS THAT HIS REQUEST BE GRANTED.

FOR USE IN CONSIDERING THE REQUEST FOR RELIEF IN THIS CASE THERE ARE ENCLOSED IN ADDITION TO THE PAPERS ABOVE DESCRIBED, PHOTOSTATIC COPIES OF THE SCHEDULE OF BIDS RECEIVED FOR THE WORK, OF THE BID OF S.S. JONES, INC., AND OF THE ACCOMPANYING BID BOND IN THE PENAL SUM OF $2,500 WITH THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND AS SURETY.

PLEASE INFORM THE NAVY DEPARTMENT AS TO THE ACTION TAKEN.

THE RECORD IN THIS CASE DISCLOSES THAT THE ERROR WAS NOT ALLEGED UNTIL AFTER THE BID HAD BEEN ACCEPTED. THERE WAS NOTHING ON THE FACT OF THE BID ITSELF TO SUGGEST ERROR, AND CONSIDERING THE WIDE RANGE OF THE PRICES SUBMITTED--- THE BID NEXT HIGHER THAN THE JONES BID BEING $39,267 AND 15 OTHERS RANGING FROM $42,021.65 TO $71,943--- IT CANNOT BE PRESUMED THE ACCEPTANCE OF THE BID OF THE S.S. JONES, INC., WAS NOT IN GOOD FAITH OR THAT IT WOULD BE UNCONSCIONABLE TO HOLD THE BIDDER TO ITS BID. EVEN NOW THE FACT OF ERROR AND THE AMOUNT THEREOF HAVE NOT BEEN CLEARLY ESTABLISHED, ALTHOUGH IT IS PROBABLY TRUE THAT THE BIDDER DID NOT EXERCISE PROPER CARE IN COMPUTING THE COST BEFORE SUBMITTING ITS BID. ACCORDINGLY, IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES IT MUST BE HELD THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH AND, THEREFORE, GAVE RISE TO A LEGALLY BINDING CONTRACT, AND IN VIEW OF THE REFUSAL OF THE SAID BIDDER TO PERFORM, THE BID BOND SUBMITTED IN THE SUM OF $2,500 SHOULD BE REGARDED AS FORFEITED AND PROPER STEPS SHOULD BE TAKEN TO MAKE COLLECTION OF THE AMOUNT OF THE GOVERNMENT'S DAMAGES RESULTING FROM THE DEFAULT. SEE SCOTT V. UNITED STATES, 44 CT.CLS. 524; 15 COMP. GEN. 1049, AND CASES THEREIN CITED.