B-117821, MAR 15, 1954

B-117821: Mar 15, 1954

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PRECIS-UNAVAILABLE THE CHAIRMAN ATOMIC ENERGY COMMISSION: I HAVE YOUR LETTER OF NOVEMBER 24. REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO ERRORS ALLEGED BY THE VALLEY CONSTRUCTION COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. IS BASED. BECAUSE OF THE URGENCY OF THE WORK THE VALLEY CONSTRUCTION COMPANY WAS REQUESTED TO SIGN A FORMAL CONTRACT AND THAT IT WAS AGREED THAT THE MATTER OF THE ERRORS IN THE BID OF THE COMPANY WOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR CONSIDERATION. 000 LINEAR FEET OF PIPE WHEREAS IT SHOULD HAVE INCLUDED THE COST OF INSTALLING 17. THAT THE ONLY GUIDE IT HAD AS TO THE QUANTITY OF PIPE TO BE INSTALLED WAS A NEWSPAPER ITEM IN WHICH IT WAS STATED THAT THREE MILES (15.

B-117821, MAR 15, 1954

PRECIS-UNAVAILABLE

THE CHAIRMAN ATOMIC ENERGY COMMISSION:

I HAVE YOUR LETTER OF NOVEMBER 24, 1953, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO ERRORS ALLEGED BY THE VALLEY CONSTRUCTION COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. AT(45-1)-693 DATED JUNE 30, 1953, IS BASED.

UNDER THE CONTRACT, THE VALLEY CONSTRUCTION COMPANY AGREED TO FURNISH ALL LABOR, CERTAIN MATERIALS AND PERFORM ALL WORK NECESSARY FOR THE CONSTRUCTION OF AN EXPORT WATER LINE AT HANFORD WORKS, RICHLAND, WASHINGTON, IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS AND DRAWINGS FOR THE LUMP SUM OF OF $53,531. YOU STATE THAT UPON BEING REQUESTED BY TELEPHONE TO VERIFY ITS BID, THE VALLEY CONSTRUCTION COMPANY ALLEGED THAT IT HAD MADE ERRORS IN ITS BID; HOWEVER, BECAUSE OF THE URGENCY OF THE WORK THE VALLEY CONSTRUCTION COMPANY WAS REQUESTED TO SIGN A FORMAL CONTRACT AND THAT IT WAS AGREED THAT THE MATTER OF THE ERRORS IN THE BID OF THE COMPANY WOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR CONSIDERATION.

THE COMPANY ALLEGES THAT IN COMPUTING ITS BID PRICE FOR THE PROJECT IT INCLUDED THE COST OF INSTALLING ONLY 16,000 LINEAR FEET OF PIPE WHEREAS IT SHOULD HAVE INCLUDED THE COST OF INSTALLING 17,000 LINEAR FEET; AND THAT THE ONLY GUIDE IT HAD AS TO THE QUANTITY OF PIPE TO BE INSTALLED WAS A NEWSPAPER ITEM IN WHICH IT WAS STATED THAT THREE MILES (15,840 LINEAR FEET) OF PIPE WERE TO BE INSTALLED. THEREFORE, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE PROJECT BE INCREASED BY $2,750 TO COVER THE COST OF INSTALLING THE ADDITIONAL 1,000 LINEAR FEET OF PIPE. THE ESTIMATE SHEET SUBMITTED BY THE COMPANY IN SUPPORT OF ITS ALLEGATION OF ERROR INDICATES THAT THE COMPANY USED THE FIGURE OF 16,000 AS THE NUMBER OF LINEAR FEET OF PIPE TO BE INSTALLED.

THE RECORD INDICATES THAT THE VALLEY CONSTRUCTION COMPANY RECEIVED A COPY OF NOTICE OF INVITATION TO BID DATED MAY 29, 1953, IN WHICH PROSPECTIVE BIDDERS WERE ADVISED THAT THE WORK CONSISTED OF THE CONSTRUCTION OF APPROXIMATELY 17,000 LINEAR FEET OF 30-INCH (INSIDE DIAMETER) CONCRETE PIPE LINE. THIS MISTAKE APPEARS TO BE AN ERROR IN JUDGMENT ON THE PART OF THE COMPANY AND DOES NOT CONSTITUTE A MISTAKE SUCH AS WOULD AUTHORIZE OR JUSTIFY THE REVISION OF THE CONTRACT PRICE OF THE PROJECT.

THE COMPANY FURTHER ALLEGES THAT IT WAS UNABLE TO DETERMINE FROM THE SPECIFICATIONS AND DRAWINGS IN ITS POSSESSION THAT THE ENCASEMENT CONCRETE WOULD REQUIRE THE USE OF FORMS AND THAT IT THEREFORE BASED ITS COST ON POURING THE CONCRETE AROUND THE PIPE AND AGAINST THE DITCH SIDES AS IT HAD DONE ON OTHER PROJECTS REQUIRING PIPE ENCASEMENT. IN ITS LETTER OF JUNE 30, 1953, THE COMPANY STATED THAT THE COST TO IT OF THE ENCASEMENT CONCRETE AS REQUIRED BY THE SPECIFICATIONS WOULD BE $95 PER CUBIC YARD AND NOT $25 PER CUBIC YARD AS SHOWN ON ITS ESTIMATE SHEET. THEREFORE, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE PROJECT BE INCREASED BY $7,700 TO COVER THE ADDITIONAL MATERIALS AND LABOR COST INCIDENT TO CONSTRUCTING THE FORMS FOR THE ENCASEMENT CONCRETE.

THE ABSTRACT OF BIDS SHOWS THAT THE NINE OTHER BIDS RANGED FROM $78,470 TO $175,000, AND THAT THE GOVERNMENT'S ESTIMATE FOR THE PROJECT WAS $142,640. THUS, THE BID OF THE COMPANY OF 53,531 FOR THE PROJECT IS SUBSTANTIALLY LOWER THAN THE NEXT LOWEST BID AND IS NOT NEARLY ONE HALF THE GOVERNMENT'S ESTIMATE. IT IS REPORTED THAT THE GOVERNMENT ESTIMATED THE COST OF THE ENCASEMENT CONCRETE REQUIRED BY THE SPECIFICATIONS AS $94 PER CUBIC YARD OR $10,340 FOR THE TOTAL QUANTITY APPROXIMATELY FOUR TIMES THE AMOUNT ORIGINALLY ESTIMATED BY THE COMPANY.

ALTHOUGH THERE APPEARS TO BE NO DOUBT THAT THE COMPANY FAILED TO INCLUDE THE COST OF THE FORMS IN ITS PRICE FOR THE ENCASEMENT CONCRETE, IT HAS NOT ESTABLISHED THAT THE INTENDED BID PRICE THEREON WAS $95 PER CUBIC YARD. ACCORDINGLY, SINCE IT WAS BELIEVED THAT THE BID OF THE COMPANY WAS ERRONEOUS AND SINCE SUCH BELIEF WAS CONFIRMED PRIOR TO AWARD - WHICH AWARD WAS SUBJECT TO CORRECTION BY THE GENERAL ACCOUNTING OFFICE - PAYMENT FOR THE ENCASEMENT CONCRETE WORK OMITTED BY THE COMPANY FROM ITS BID PRICE IS AUTHORIZED TO BE MADE IN THE AMOUNT OF $7,590, WHICH IS THE DIFFERENCE BETWEEN THE GOVERNMENT'S ESTIMATE AND THE COMPANY'S ORIGINAL ESTIMATE FOR THE WORK INVOLVED.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING THE PAYMENT HEREIN AUTHORIZED.

THE ABSTRACT OF BIDS AND A COPY OF THE COMPANY'S ORIGINAL ESTIMATE SHEET ARE BEING RETAINED IN THIS OFFICE. THE OTHER PAPERS ARE RETURNED HEREWITH.