A-99405, DECEMBER 16, 1938, 18 COMP. GEN. 549

A-99405: Dec 16, 1938

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" AND A CHANGE ORDER IS ISSUED REDUCING THE WORK TO BE DONE BECAUSE OF THE NECESSITY FOR HAVING A PORTION OF THE WORK PERFORMED IN A MANNER DIFFERENT THAN THAT ORIGINALLY CONTEMPLATED AND REDUCING THE CONTRACT PRICE ON THE BASIS OF THE UNIT PRICE OF THE PARTICULAR WORK AS SET FORTH IN THE CONTRACT FOR THIS PURPOSE. IN CONNECTION WITH WHICH PRICE THE CONTRACTOR HAS ALLEGED ERROR AND OF WHICH PROBABLE ERROR THE CONTRACTING OFFICER WAS ON NOTICE PRIOR TO AWARD BUT TOOK NO STEPS TO CLARIFY ON THE ASSUMPTION THAT NO EXTRA WORK INVOLVING THE APPLICATION OF THE SAID UNIT PRICE WOULD BE ORDERED. IT IS EVIDENT THAT THE CONTRACTING OFFICER DID NOT ACCEPT THE BID AND EXECUTE THE CONTRACT ON THE ASSUMPTION THAT THE CONTRACTOR INTENDED THE UNIT PRICE AS BID.

A-99405, DECEMBER 16, 1938, 18 COMP. GEN. 549

CONTRACTS - CHANGE ORDERS INVOLVING REDUCTION IN WORK AND CONTRACT PRICE - CONTRACTOR'S ALLEGATION OF MISTAKE IN BID PRICE USED AS BASIS FOR CONTRACT PRICE ADJUSTMENT WHERE THE CONTRACT PROVIDES THAT FOR CHANGES IN THE WORK CAUSING AN INCREASE OR DECREASE IN THE AMOUNT DUE "AN EQUITABLE ADJUSTMENT SHALL BE MADE," AND A CHANGE ORDER IS ISSUED REDUCING THE WORK TO BE DONE BECAUSE OF THE NECESSITY FOR HAVING A PORTION OF THE WORK PERFORMED IN A MANNER DIFFERENT THAN THAT ORIGINALLY CONTEMPLATED AND REDUCING THE CONTRACT PRICE ON THE BASIS OF THE UNIT PRICE OF THE PARTICULAR WORK AS SET FORTH IN THE CONTRACT FOR THIS PURPOSE, IN CONNECTION WITH WHICH PRICE THE CONTRACTOR HAS ALLEGED ERROR AND OF WHICH PROBABLE ERROR THE CONTRACTING OFFICER WAS ON NOTICE PRIOR TO AWARD BUT TOOK NO STEPS TO CLARIFY ON THE ASSUMPTION THAT NO EXTRA WORK INVOLVING THE APPLICATION OF THE SAID UNIT PRICE WOULD BE ORDERED, AND IT IS EVIDENT THAT THE CONTRACTING OFFICER DID NOT ACCEPT THE BID AND EXECUTE THE CONTRACT ON THE ASSUMPTION THAT THE CONTRACTOR INTENDED THE UNIT PRICE AS BID, THE ERRONEOUS UNIT PRICE, THE USE OF WHICH WOULD EFFECT AN UNCONSCIONABLE REDUCTION IN CONTRACT PRICE, MAY BE DISREGARDED IN DETERMINING THE AMOUNT TO BE DEDUCTED UNDER THE CHANGE ORDER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, DECEMBER 16, 1938:

LETTER (QM 672 C-CO) DATED NOVEMBER 14, 1938, FROM THE QUARTERMASTER GENERAL, IS AS FOLLOWS:

REFERENCE IS MADE TO THE INCLOSED CORRESPONDENCE FROM S. J. GROVES AND SONS CO., RELATIVE TO AN ALLEGED MISTAKE IN ITS BID FOR THE CONSTRUCTION AND COMPLETION OF INTERCEPTOR SEWER SYSTEM AT FORT SNELLING, MINN. THE ALLEGED MISTAKE IS THE BASIS OF A PROTEST FILED BY THIS CONTRACTOR TO THE INSTRUCTIONS ISSUED BY THIS DEPARTMENT TO THE CONSTRUCTING QUARTERMASTER AT FORT SNELLING, MINN., AUTHORIZING DEDUCTIONS FROM THE CONTRACT BY CHANGE ORDER COMPUTED ON THE BASIS OF ITS BID AT UNIT PRICES.

THE FACTS OF THIS CASE MAY BE STATED BRIEFLY AS FOLLOWS:

(A) PURSUANT TO INVITATION FOR BIDS NO. QM 6142-39-9 DATED APRIL 19, 1938, FOR CONSTRUCTION AND COMPLETION OF AN INTERCEPTOR SEWER SYSTEM AT FORT SNELLING, MINN., THE PROTESTANT SUBMITTED THE LOWEST BID UNDER ITEM 3 OF SAID INVITATION. ALL BIDS RECEIVED IN RESPONSE TO THIS INVITATION WERE OPENED AND ABSTRACTED BY THE CONTRACTING OFFICER AT 10:30 A.M. MAY 19, 1938.

(B) THE CONTRACTING OFFICER RECOMMENDED THAT AWARD OF CONTRACT BE MADE TO ORFEI, LAMETTI AND LAMETTI, ST. PAUL, MINN., LOW BIDDER IN THE AMOUNT OF $168,348.00 FOR ITEM 2 COVERING THE TUNNEL SECTION OF THE INTERCEPTOR SEWER AND TO S. J. GROVES AND SONS COMPANY, MINNEAPOLIS, MINNESOTA, IN THE AMOUNT OF $63,752.88 FOR ITEM 3 COVERING THE OPEN-CUT SECTION OF THE INTERCEPTOR SEWER. THE TOTAL AWARD WAS $232,100.88 OR $177.12 LESS THAN THE LOW BID OF ORFEI, LAMETTI AND LAMETTI UNDER ITEM 1 FOR THE ENTIRE JOB. THEREFORE, AWARD OF SEPARATE CONTRACTS TO ORFEI,LAMETTI AND LAMETTI AND S. J. GROVES AND SONS COMPANY UNDER ITEMS 2 AND 3 RESPECTIVELY WAS AUTHORIZED BY 1ST INDORSEMENT DATED MAY 26, 1938, A COPY OF WHICH IS INCLOSED.

(C) THE UNIT PRICE BIDS SUBMITTED BY EACH CONTRACTOR FOR ADDITION OR DEDUCTIONS TO THESE CONTRACTS WERE ACCEPTED. AUTHORIZATION OF THIS AWARD WAS ALSO MADE BY 1ST INDORSEMENT DATED MAY 26, 1938.

(D) YOUR ATTENTION IS INVITED TO PAR. 2 OF THE INDORSEMENT OF MAY 26, 1938, AND THE COMMENTS THEREON BY THE CONSTRUCTING QUARTERMASTER WHICH ARE QUOTED AS FOLLOWS:

"3. YOUR 1ST INDORSEMENT DATED MAY 28, 1938, GIVING AUTHORITY TO AWARD SEWER CONTRACTS CALLS ATTENTION TO THE FACT THAT UNIT PRICES, ITEMS 4 (C) TO 4 (F) INC., OF "ORFEI, LAMETTI AND LAMETTI" ARE SEEMINGLY OUT OF LINE. IT IS PRESUMED THAT "S. J. GROVES AND SONS COMPANY" SHOULD HAVE BEEN MENTIONED INSTEAD. THERE IS NOTHING OF RECORD IN THIS OFFICE TO SHOW WHERE THIS FACT (THE ERROR IN UNIT PRICES) WAS CALLED TO THE ATTENTION OF EITHER CONTRACTOR PRIOR TO JULY 1ST, 1938.'

(E) DURING THE PROGRESS OF THE PORTION OF THE WORK BEING PERFORMED UNDER THE CONTRACT OF S. J. GROVES AND SONS CO., IT WAS DETERMINED THAT OPEN-CUT EXCAVATION FROM BUILDING K-1 TO A POINT IMMEDIATELY SOUTH OF BUILDING D-8 WOULD JEOPARDIZE EXISTING STRUCTURES IN THAT IMMEDIATE VICINITY AND THAT IT WAS NECESSARY TO SUBSTITUTE TUNNEL EXCAVATION FOR OPEN-CUT EXCAVATION TO AVOID THE POSSIBILITY OF PERMANENT INJURY TO BUILDINGS K-1 AND K-2 THAT WOULD PROBABLY RESULT IF OPEN-CUT EXCAVATION WERE CONTINUED.

(F) INASMUCH AS THE PROPOSED CHANGE FELL WITHIN THE GENERAL SCOPE OF THE CONTRACT, CHANGE ORDER "A," IN ACCORDANCE WITH THIS DECISION, WAS ISSUED REDUCING THE CONTRACT OF S. J. GROVES AND SONS CO., IN THE AMOUNT OF $10,987.65. THE FIGURES OF THIS CHANGE ORDER WERE COMPUTED ON THE BASIS OF UNIT PRICES UNDER ITEM 4 OF THE CONTRACTOR'S BID. CHANGE ORDER "A," DATED OCT. 18, 1938, IS ATTACHED TO CONTRACT. AS NOTED ABOVE, TWO DIFFERENT CONTRACTORS RECEIVED AWARDS FOR THE INSTALLATION OF SEVERABLE UNITS OF INTERCEPTOR SEWER SYSTEM. THE UNIT PRICES SUBMITTED BY ORFEI, LAMETTI AND LAMETTI FOR ADDITIONAL TYPE "A" TUNNEL WORK COMPLETE IS $18.00 PER LINEAL FOOT, WHEREAS THE UNIT PRICE OF S. J. GROVES AND SONS, CO., FOR TYPE "A" TUNNEL WORK COMPLETE IS $39.93 PER LINEAL FOOT. CONSEQUENTLY ACCEPTANCE OF THE UNIT PRICE OF THE S. J. GROVES AND SONS, CO., FOR ACCOMPLISHING THE ADDITIONAL TUNNEL EXCAVATION REQUIRED AT $39.93 PER LINEAL FOOT COMPLETE AS AGAINST THE UNIT PRICE BID OF ORFEI, LAMETTI AND LAMETTI TO DO THE SAME WORK AT $18.00 PER LINEAL FOOT WOULD BE INCOMPATIBLE WITH THE PUBLIC INTEREST. THEREFORE ANOTHER CHANGE ORDER HAS BEEN AUTHORIZED INCREASING THE AMOUNT OF TYPE "A" TUNNEL WORK TO BE PERFORMED BY ORFEI, LAMETTI AND LAMETTI AT THE UNIT PRICES CONTAINED IN THEIR ORIGINAL BID. COPY OF THEIR ACCEPTANCE OF THIS PROPOSAL DATED SEPTEMBER 15, 1938, IS INCLOSED.

(G) WHEN THE S. J. GROVES AND SONS CO. WAS APPRISED OF THE PROPOSED ACTION OF THE CONTRACTING OFFICER REDUCING ITS CONTRACT BY CHANGE ORDER, THE TELEGRAM OF PROTEST, WHICH IS REPRODUCED IN THE 1ST PARAGRAPH OF ITS LETTER OF OCTOBER 8, 1938, WAS FILED IMMEDIATELY. THIS TELEGRAM WAS THE FIRST INDICATION THAT THE S. J. GROVES AND SONS CO. INTENDED TO PROTEST THE AWARD OF THIS CONTRACT ON THE BASIS OF A MISTAKE IN ITS BID.

(H) THE S. J. GROVES AND SONS COMPANY CONTEND THAT THE ABOVE-NOTED CHANGE IN ITS CONTRACT SHOULD BE ACCOMPLISHED ON AN EQUITABLE BASIS IN ACCORDANCE WITH ARTICLE 3 OF THE CONTRACT. HOWEVER, GRANTING THE FAIRNESS AND JUSTNESS OF THIS CONTENTION THE FACT REMAINS THAT THE FINAL RESULT ACCOMPLISHED BY AN EQUITABLE ADJUSTMENT MUST BE BASED UPON UNIT PRICES.

(I) THE INFERENCE IS INESCAPABLE IF THE RECORD OF THIS CASE IS READ CAREFULLY, THAT S. J. GROVES AND SONS COMPANY HAD KNOWLEDGE (SEE LETTER OF OCTOBER 13, 1938, TO CAPTAIN D. MCK. ASHTON) OF THE ALLEGED MISTAKE IN UNIT PRICES UNDER ITEM 4, PRIOR TO THE AWARD. YET, NOTWITHSTANDING THIS IMPUTED KNOWLEDGE, NO PROTEST WAS MADE. IN FACT, NO POSITIVE ACTION OF ANY NATURE WAS TAKEN UNTIL THE DATE OF ITS TELEGRAM AS MENTIONED ABOVE IN SUB.-PAR. (G) EXCEPT THE LETTER WHICH WAS SUPPOSED TO HAVE BEEN WRITTEN TO THE CONSTRUCTING QUARTERMASTER ON JULY 15, 1938, ALTHOUGH THE CONTRACTOR ADMITTED A MISTAKE HAD BEEN MADE WHEN CONFRONTED WITH THE FACTS ABOUT JULY 1. IT WAS THE DUTY OF THE CONTRACTOR TO BRING THE ALLEGED ERROR TO THE ATTENTION OF THE CONTRACTING OFFICER IMMEDIATELY, DESPITE THE FACT NO CHANGES WERE CONTEMPLATED IN THE CONTRACT AS WAS POINTED OUT IN 1ST INDORSEMENT OF MAY 26, 1938. HAVING FAILED TO ACT PROMPTLY OR EVEN WITHIN A REASONABLE TIME IT WOULD SEEM THAT ANY ADJUSTMENT IN THE CONTRACT AT THIS TIME IS BARRED BY LACHES.

WHILE IT IS ENTIRELY POSSIBLE THAT THE UNIT PRICE BID OF S. J. GROVES AND SONS CO. OF $7.19 PER LINEAL FOOT FOR EIGHT- (8-) INCH SEWER PIPE IS A MISTAKE, IT IS ALSO A FACT THAT MANIPULATION OF UNIT PRICES BASED ON THE BIDDER'S GUESS AS TO WHETHER ADDITIONS OR DEDUCTIONS ARE MOST PROBABLE IS NOT WITHOUT PRECEDENT. ON THE OTHER HAND THIS DEPARTMENT IS FULLY AWARE OF THE FACT THAT SOME OF THE UNIT PRICES UNDER ITEM 4 ARE ENTIRELY OUT OF LINE, PARTICULARLY SUB-ITEM (C) EIGHT-INCH CLAY SEWER PIPE ONLY. WHETHER THE DISPARITY IN THE BID OF THE PROTESTANT IN COMPARISON WITH THOSE OF OTHER BIDDERS ON THE FOREGOING SUB-ITEM IS DELIBERATE OR CAUSED THROUGH INADVERTENCE IS UNDETERMINED. HOWEVER, IT SEEMS THAT AN EQUITABLE ADJUSTMENT OF PROTESTANT'S CONTRACT IN ACCORDANCE WITH THE FIGURES AS SET OUT BELOW, WHICH WERE TAKEN FROM THE LOW UNIT PRICE BID OF THE COMBINED SEWER WORK, WOULD BE:

CHART 1,085 LIN. FEET 8 INCH CLAY SEWER PIPE AT $0.80 ------------ - $868.00 82 LIN. FEET STANDARD BRICK MANHOLE AT $12.00 ------------- -- 984.00 362 CU.YDS. OPEN-CUT ROCK EXCAVATION AT $5.00 ------------ --- 1,810.00 785 CU.YDS. OPEN-CUT EARTH EXCAVATION AT $0.50 ---------- ---- 392.50

4,054.50

NOTE THAT THE FIRST ENTRY IS THE ONLY AMOUNT THAT WOULD BE AFFECTED BY AN EQUITABLE ADJUSTMENT NOT BASED UPON THE CONTRACTOR'S ALLEGED MISTAKE.

BY WAY OF EXPLAINING WHAT MIGHT SEEM TO BE ARGUING TWO SIDES OF THIS QUESTION IT IS POINTED OUT THAT THE INTENTION HERE IS RATHER TO PRESENT TWO READILY POSSIBLE ANSWERS: (1) THE CONTRACTOR HAS PRESENTED AN INDEFINITE CLAIM WHICH HE HAS FAILED TO SUSTAIN; (2) THE CONTRACTING OFFICER REALIZED A PROBABLE ERROR AND FAILED TO CALL THE CONTRACTOR'S ATTENTION THERETO BEFORE AWARDING THE CONTRACT FOR THE APPARENT REASON THAT AS THE WORK TO BE DONE WAS VERY DEFINITELY BELIEVED TO BE THAT SHOWN ON THE PLANS, NO CHANGES INVOLVING THE USE OF UNIT PRICES WOULD OCCUR. NOTWITHSTANDING IT DID BECOME NECESSARY TO CHANGE A PART OF THE WORK UNDER CONTRACT WITH GROVES TO THE TYPE OF WORK CONTRACTED FOR WITH ORFEI, LAMETTI AND LAMETTI, ENFORCING A REDUCTION OF GROVES' WORK. THERE WAS NOTHING ELSE TO DO BUT TO EFFECT THE CHANGE, AND THAT IMMEDIATELY, UNDER THE TERMS OF THE CONTRACT WITH GROVES, AND CORRECT THE MISTAKE LATER IF ONE EXISTED. AFTER A CAREFUL REVIEW OF ALL THE FACTS AND POSSIBILITIES IT IS THE OPINION OF THE CONTRACTING OFFICER THAT GROVES' BID PER LINEAL FOOT OF 8 INCHES TERRA COTTA SEWER PIPE ONLY AT $7.19 WAS INTENDED TO COVER ONE LINEAL FOOT 8 INCHES TERRA COTTA SEWER COMPLETE IN PLACE, INCLUDING EXCAVATION AND BACKFILL, AND THAT, THEREFORE, AN ADJUSTMENT OF THE CHANGE ORDER "A" TO GROVES IS IN ORDER; THE ADJUSTMENT SET FORTH IN PARAGRAPH ABOVE IS CONSIDERED BY THE CONTRACTING OFFICER AS BEING EQUITABLE.

IN ACCORDANCE WITH THE REQUEST CONTAINED IN THE FINAL PARAGRAPH OF THE CONTRACTOR'S LETTER OF OCTOBER 13, 1938, THE MATTERS IN CONTROVERSY IN CONNECTION WITH THIS CONTRACT ARE SUBMITTED TO YOU FOR PROPER INTERPRETATION.

THE PROTESTANT'S ORIGINAL CORRESPONDENCE IS INCLOSED. ALL OTHER PAPERS REFERRED TO HEREIN ARE ATTACHED TO AND MADE A PART OF CONTRACTS NOS. W- 6142 QM-11 AND W-6142 QM-12 WHICH ARE ON FILE IN THE GENERAL ACCOUNTING OFFICE.

THE CONTRACTOR'S LETTER OF OCTOBER 13, 1938, IS AS FOLLOWS:

WE ARE ENCLOSING COPIES OF COMMUNICATIONS ADDRESSED TO THE QUARTERMASTER GENERAL, U.S. ARMY, WASHINGTON, D.C., WHEREIN YOU WILL NOTE THAT WE HAVE PROTESTED HIS INSTRUCTIONS TO YOU REGARDING CHANGE IN OUR CONTRACT FOR SECTION TWO OF THE INTERCEPTOR SEWER SYSTEM. WE ADDRESSED THESE COMMUNICATIONS TO WASHINGTON AFTER BEING INFORMED BY YOUR OFFICE THAT SUCH A CHANGE HAD BEEN AUTHORIZED.

AS YOU KNOW, AT THE TIME OUR CONTRACT WAS AWARDED US THERE WAS AMPLE EVIDENCE THAT WE HAD MADE A MISTAKE IN SUBMITTING UNIT PRICES. ALSO THIS MISTAKE IN OUR BID WAS NOT CALLED TO OUR ATTENTION AT ANY TIME PRIOR TO THE AWARD OR AFTERWARD BY THE CONSTRUCTING QUARTERMASTER, LIEUTENANT SCIPPLE, ALTHOUGH IT IS EVIDENT THAT HE HAD KNOWLEDGE OF THE MISTAKE IN OUR BID PRIOR TO MAKING THE AWARD. WE CALL YOUR ATTENTION TO YOUR (OQMG) LETTER OF MAY 26TH ADDRESSED TO LIEUTENANT SCIPPLE WHICH READS AS FOLLOWS:

"ATTENTION IS INVITED TO THE FACT THAT UNIT PRICES 4-/C) TO 4-/F), INCLUSIVE, SUBMITTED BY ORFEI, LAMETTI AND LAMETTI, ARE OUT OF LINE WITH UNIT PRICES SUBMITTED BY OTHER BIDDERS. HOWEVER, THE WORK, AS SHOWN ON THE PLANS, IS VERY DEFINITE AND IT SHOULD THEREFORE NOT BE NECESSARY TO COMPLETE ANY ADDITIONAL WORK INVOLVING THE HIGH UNIT PRICES. YOUR OFFICE SHOULD NOT ISSUE INSTRUCTION FOR AN ADDITIONAL WORK UNDER THESE UNIT PRICES UNLESS IT IS ABSOLUTELY NECESSARY TO DO SO.'

THINGS REMAINED STATUS-QUO REGARDING THIS ERROR UNTIL YOU TOOK OVER LIEUTENANT SCIPPLE'S DUTIES AROUND JULY 1ST. YOU IMMEDIATELY CALLED OUR ATTENTION TO THE FACT OF THIS MISTAKE WHICH WE IMMEDIATELY ADMITTED, AFTER CHECKING THE BID, AND ATTEMPTED A CORRECTION WITH OUR LETTER OF JULY 15TH TO YOU.

IT OCCURS TO US THAT THE CONTRACTING OFFICER TOOK ADVANTAGE OF US IN THE MATTER OF DEDUCTIONS USING OUR UNIT PRICES AS A BASIS FOR SAID DEDUCTIONS ALTHOUGH HE WOULD UNDER NO CIRCUMSTANCES PERMIT AN INCREASE IN OUR CONTRACT. WE FEEL THEREFORE, THAT WE ARE BEING UNJUSTIFIEDLY DEALT WITH BY THE CONTRACTING OFFICER IN TAKING AWAY A PORTION OF OUR OPEN-CUT WORK AND SUBSTITUTING IN PLACE THEREOF,"TYPE A TUNNEL.'

AS STATED IN OUR CORRESPONDENCE TO WASHINGTON, COPIES ENCLOSED, WE FEEL THIS CHANGE IN OUR CONTRACT SHOULD BE COVERED BY CHANGE ORDER AS PROVIDED FOR IN ARTICLE 3 OF THE CONTRACT. WE CAN FIND NO AUTHORITY WHEREBY CONTRACTING OFFICER IS PERMITTED TO PROCEED AS OTHERWISE PROVIDED FOR IN ARTICLE 3 AND MUST INSIST THAT WE STILL BE CONSIDERED AS A PARTY TO THE ORIGINAL CONTRACT EXPECTING AN EQUITABLE ADJUSTMENT IN THE MATTER. BECAUSE WE FEEL THAT IT IS NOT THE INTENTION OF THE GOVERNMENT TO ARBITRARILY STRIKE OUT A PORTION OF OUR CONTRACT FOR THE BENEFIT OF ANOTHER CONTRACTOR WE ASK THAT THIS MATTER BE SUBMITTED TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR PROPER INTERPRETATION OF THE MATTERS IN DISPUTE UNDER OUR CONTRACT.

AS SHOWN BY THE SPECIFICATIONS, CONTRACT NO. W-6142 QM-12, DATED MAY 28, 1938, WITH S. J. GROVES AND SONS COMPANY, REQUIRED THE CONSTRUCTION OF SOME 10,000 LINEAR FEET OF SEWERS AND APPURTENANCES, INCLUDING 3,460 FEET OF 18-INCH SEWER, 3,948 FEET OF 15-INCH SEWER, AND 1,089 FEET OF 10-INCH SEWER, AND 1,315 FEET OF 8-INCH MISCELLANEOUS CONNECTING SEWERS, TOGETHER WITH MANHOLES, DIVERSION CHAMBERS, AND INCIDENTAL WORK, ALL FOR THE CONSIDERATION OF $63,572.88, THE LOW BID PRICE FOR SUCH WORK. CHANGE ORDER "A" DATED OCTOBER 18, 1938, THAT IS, SUBSEQUENT TO THE CONTRACTOR'S LETTER OF OCTOBER 13, 1938, QUOTED, SUPRA, PROVIDES FOR THE ELIMINATION FROM THE CONTRACT WORK OF 1,085 FEET OF 8-INCH SEWER, APPARENTLY BEING THE GREATER PART OF THE ITEM OF 1,315 FEET OF 8-INCH MISCELLANEOUS CONNECTING SEWERS, WITH A REDUCTION IN THE CONTRACT PRICE OF $10,987.65. THUS IT APPEARS THAT WHILE THE CONTRACT WORK WAS REDUCED SOMETHING LESS THAN 10 PERCENT, THE CHANGE ORDER STATES A REDUCTION IN THE CONTRACT PRICE OF ALMOST 20 PERCENT. THE CONTRACTOR APPARENTLY DOES NOT DISPUTE THE RIGHT OF THE GOVERNMENT TO MAKE THE CHANGE IN THE WORK, BUT CONTENDS THAT SUCH CHANGE MUST BE MADE PURSUANT TO ARTICLE 3 OF THE CONTRACT PROVIDING FOR AN EQUITABLE PRICE ADJUSTMENT.

THE REDUCTION IN THE CONTRACT PRICE STATED IN CHANGE ORDER "A" IS BASED ON UNIT PRICES STIPULATED IN THE CONTRACT, TAKEN FROM THE CONTRACTOR'S BID, TO BE APPLIED "IN MAKING DEDUCTIONS FROM OR ADDITIONS TO THE CONTRACT AMOUNT, PROVIDED ANY DEVIATION FROM THE DRAWINGS AND SPECIFICATIONS DECREASES OR INCREASES THE WORK INDICATED OR REQUIRED.' THE GREATEST PART OF SUCH STATED PRICE REDUCTION RESULTS FROM THE INCLUSION OF THE ITEM "1,085 FEET OF 8-INCH SEWER PIPE AT $7.19 $7,801.15.' THIS IS BASED ON THE STATED CONTRACT UNIT PRICE, ITEM 40, FOR "EIGHT (8) INCH CLAY SEWER PIPE ONLY" OF $7.19 PER LINEAR FOOT.

THAT THIS ITEM OF $7.19 A FOOT FOR 8-INCH SEWER PIPE "ONLY" WAS OBVIOUSLY IN ERROR IS SHOWN BY THE ABSTRACT OF BIDS ATTACHED TO THE CONTRACT SHOWING THAT THE EIGHT OTHER BIDDERS STATED PRICES FROM 22 CENTS TO 80 CENTS A FOOT FOR SUCH PIPE. THE INVITATION FOR BIDS STATED THAT THE UNIT PRICE SHOULD INCLUDE "THE FURNISHING OF ALL LABOR AND MATERIAL, COMPLETE IN PLACE, UNLESS OTHERWISE NOTED.' APPARENTLY THE CONTRACTOR BID ON THE PIPE ITEMS IN PLACE, OVERLOOKING, OR NOT UNDERSTANDING, THE PURPORT OF THE WORD "ONLY" FOLLOWING THE WORD PIPE. BUT EVEN ON THIS BASIS THE UNIT PRICE OF $7.19 A FEET FOR 8-INCH PIPE STATED IN THE BID WAS OBVIOUSLY IN ERROR, BY COMPARISON WITH THE CONTRACTOR'S IMMEDIATELY FOLLOWING BIDS OF ONLY $4.50 A FOOT FOR 10 INCH PIPE, $6.11 A FOOT FOR 15-INCH PIPE, AND $7.30 A FOOT FOR 18-INCH PIPE. THAT THE CONTRACTING OFFICER WAS ON NOTICE OF THESE DISCREPANCIES PRIOR TO THE AWARD, BUT TOOK NO STEPS TO CLARIFY THEM, ON THE ASSUMPTION THAT NO EXTRA WORK INVOLVING THE APPLICATION OF SUCH UNIT PRICES WOULD BE ORDERED, IS SHOWN BY THE CITED INDORSEMENT OF MAY 26, 1938, DIRECTING THE AWARD, AND THE COMMENT THEREON QUOTED IN THE PRESENT SUBMISSION.

ORDINARILY, OF COURSE, A BIDDER OR CONTRACTOR MUST BEAR THE CONSEQUENCES OF HIS MISTAKES. IN THIS CASE, HOWEVER, IT SEEMS CLEAR THAT THE CONTRACTOR DID NOT INTEND THE STATED PRICE OF $7.19 A FOOT FOR 8-INCH CLAY SEWER PIPE TO COVER THE COST OF PIPE ALONE, AND THAT THE CONTRACTING OFFICER DID NOT ACCEPT THE BID AND EXECUTE THE CONTRACT ON THE ASSUMPTION THAT THE CONTRACTOR SO INTENDED, THE EVIDENT ERROR IN PRICES HAVING PREVIOUSLY BEEN BROUGHT TO HIS ATTENTION. UNDER THESE CONDITIONS IT CANNOT BE HELD THAT THERE WAS A MEETING OF THE MINDS OF THE CONTRACTING PARTIES AS TO THIS ITEM, WHICH WAS TO BE APPLIED ONLY IN THE CONTINGENCY OF A CHANGE IN THE WORK.

ARTICLE 3 OF THE CONTRACT PROVIDES THAT FOR CHANGES IN THE WORK CAUSING AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THE CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE,"AN EQUITABLE ADJUSTMENT SHALL BE MADE AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY.' THE LETTER OF SUBMISSION, QUOTED ABOVE, STATES IN SUBPARAGRAPH (H) THAT GRANTING THE ADJUSTMENT HERE IS REQUIRED TO BE MADE ON AN EQUITABLE BASIS IN ACCORDANCE WITH SAID ARTICLE 3,"THE FACT REMAINS THAT THE FINAL RESULT ACCOMPLISHED BY AN EQUITABLE ADJUSTMENT MUST BE BASED ON UNIT PRICES.' BUT AN "EQUITABLE" ADJUSTMENT FOR CHANGES IN THE WORK SOLELY WITHIN THE DISCRETION OF THE GOVERNMENT WOULD NOT COMPREHEND THE APPLICATION OF UNIT PRICES KNOWN TO BE GROSSLY ERRONEOUS WHEN INCORPORATED IN THE CONTRACT, AND NOT QUESTIONED AT THAT TIME ON THE ASSUMPTION THAT NO CHANGES WOULD BE MADE. IF THAT WERE PERMISSIBLE THE GOVERNMENT MIGHT ELIMINATE A HALF OF THE WORK AND OBTAIN THE OTHER HALF FOR LITTLE OR NOTHING, BY TAKING ADVANTAGE OF THE CONTRACTOR'S EVIDENT ERROR IN UNIT PRICES. SUCH ACTION WOULD BE CLEARLY UNCONSCIONABLE AND THE VERY ANTITHESIS OF THE FAIR DEALING CONTEMPLATED BY THE PROVISION IN ARTICLE 3 FOR AN "EQUITABLE" ADJUSTMENT OF THE CONTRACT PRICE.

ON THE RECORD PRESENTED, I HAVE TO ADVISE THAT THE CONTRACTING OFFICER, OR THE HEAD OF THE DEPARTMENT, ON APPEAL, IS AUTHORIZED TO DISREGARD THE ERRONEOUS PRICE STIPULATED FOR 8-INCH CLAY SEWER PIPE IN DETERMINING THE AMOUNT TO BE DEDUCTED FROM THE CONTRACT PRICE AS AN EQUITABLE ADJUSTMENT FOR THE DECREASE IN THE WORK PURSUANT TO THE TERMS OF ARTICLE 3 OF THE CONTRACT, AND THAT CHANGE ORDER "A" IS FOR REVISION ACCORDINGLY.

THE WHOLE DIFFICULTY COULD HAVE BEEN AVOIDED BY CALLING ON THE CONTRACTOR TO CLARIFY ITS UNIT BID PRICES--- PATENTLY ERRONEOUS--- PRIOR TO THE AWARD.