B-124295, JAN. 3, 1956

B-124295, JAN. 3, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 20, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER ANY EXCESS COST IS CHARGEABLE TO THE CENTRAL ENGINEERING COMPANY, CAMBRIDGE, MASSACHUSETTS, BY REASON OF ITS DEFAULT IN THE PERFORMANCE OF CONTRACT NO. DA 19-016-ENG-3788.

BY INVITATION NO. ENG-19-016-55-97, AS AMENDED, THE OFFICE OF THE DIVISION ENGINEER, NEW ENGLAND DIVISION, CORPS OF ENGINEERS, BOSTON, MASSACHUSETTS, REQUESTED BIDS--- TO BE OPENED APRIL 14, 1955--- FOR FURNISHING LABOR, MATERIALS, AND FOR PERFORMING ALL WORK NECESSARY FOR THE CONSTRUCTION OF CERTAIN ROADS AND UTILITIES AT THE DOW AIR FORCE BASE, BANGOR, MAINE. THE CENTRAL ENGINEERING COMPANY SUBMITTED A BID DATED APRIL 14, 1955, OFFERING TO PERFORM THE WORK FOR THE VARIOUS UNIT AND JOB PRICES SET FORTH OPPOSITE EACH ITEM, THE TOTAL OF WHICH IS $253,096. THE BID OF THE COMPANY WAS ACCOMPANIED BY A BID BOND IN THE AMOUNT OF $55,000. THE TWO OTHER RESPONSIVE AGGREGATE BIDS ON ITEMS 1 TO 82, INCLUSIVE, WERE IN THE AMOUNTS OF $350,685.60, AND $355,418.75, AND THE GOVERNMENT ESTIMATE WAS $313,925.

IN HIS UNDATED REPORT THE CONTRACTING OFFICER STATES THAT BY LETTER DATED APRIL 14, 1955, THE CENTRAL ENGINEERING COMPANY WAS REQUESTED TO VERIFY ITS BID AND THAT BY LETTER DATED APRIL 18, 1955, THE COMPANY ADVISED THAT THE PRICES QUOTED IN ITS BID WERE CORRECT. BY LETTER DATED APRIL 26, 1955, THE COMPANY REQUESTED PERMISSION TO WITHDRAW ITS BID ON THE PROJECT FOR THE REASON THAT IT HAD DISCOVERED THAT ITS SUBCONTRACTOR HAD FAILED TO INCLUDE THE COST OF EXCAVATION IN THE UNIT PRICES QUOTED IN ITS ESTIMATE. IN RESPONSE TO A REQUEST FOR EVIDENCE IN SUPPORT OF THE ALLEGED ERROR, THE COMPANY STATED THAT IT COULD NOT FURNISH SUCH EVIDENCE SINCE THE ORIGINAL WORK SHEETS OF THE SUBCONTRACTOR WHO HAD MAKE THE ALLEGED ERROR WERE NOT AVAILABLE. IT IS FURTHER REPORTED THAT AT A CONFERENCE HELD ON APRIL 29, 1955, MR. CACCIOLA, D/B/A THE CENTRAL ENGINEERING COMPANY, STATED THAT HE WOULD BE WILLING TO PROCEED WITH THE WORK PROVIDED THAT HE COULD ARRANGE FOR PERFORMANCE AND PAYMENT BONDS; AND THAT ALTHOUGH IT APPEARED DOUBTFUL THAT MR. CACCIOLA COULD OBTAIN THE NECESSARY BONDS, IN ORDER TO PROTECT THE INTERESTS OF THE GOVERNMENT, THE CONTRACT WAS AWARDED TO THE CENTRAL ENGINEERING COMPANY ON THE BASIS OF ITS ORIGINAL BID PRICE. SUBSEQUENTLY, BY LETTER DATED MAY 12, 1955, COPIES OF THE CONTRACT AND PERFORMANCE AND PAYMENT BONDS WERE FORWARDED TO THE CENTRAL ENGINEERING COMPANY FOR EXECUTION AND IN THE LETTER THE COMPANY WAS ADVISED THAT, IN ACCORDANCE WITH THE TERMS OF ITS BID BOND, EXECUTED COPIES OF THE CONTRACT AND BONDS MUST BE RETURNED TO THE CONTRACTING OFFICE WITHIN 10 DAYS. THEREAFTER, BY LETTER DATED MAY 27, 1955, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT IN VIEW OF ITS FAILURE TO RETURN EXECUTED COPIES OF THE CONTRACT AND BONDS WITHIN THE TIME PRESCRIBED IN ITS BID BOND, HE HAD NO ALTERNATIVE BUT TO AWARD A CONTRACT FOR THE WORK TO THE NEXT LOWEST BIDDER AND THAT THE COMPANY AND ITS SURETY WOULD BE HELD LIABLE FOR ANY EXCESS COSTS INCURRED BY THE GOVERNMENT. IN A LETTER DATED MAY 27, 1955, IN WHICH IT PROTESTED THE AWARD OF THE CONTRACT TO IT, THE CENTRAL ENGINEERING COMPANY STATED THAT IT WAS REFUSING TO EXECUTE THE CONTRACT AND TO FURNISH PERFORMANCE AND PAYMENT BONDS BECAUSE OF THE SERIOUS ERRORS IN ITS BID. THE COMPANY STATED FURTHER THAT BECAUSE OF THE GREAT DIFFERENCE OF $97,589.60 BETWEEN ITS BID AND THE NEXT LOWEST BID ON THE PROJECT, THE CONTRACTING OFFICER SHOULD HAVE PERMITTED IT TO WITHDRAW ITS BID PRIOR TO THE AWARD OF THE CONTRACT.

IN AN AFFIDAVIT DATED JULY 11, 1955, MR. CACCIOLA, D/B/A THE CENTRAL ENGINEERING COMPANY, STATED THAT THE PRINCIPAL OCCUPATION OF THE COMPANY IS THE INSTALLATION OF STEAM PIPING AND HEATING WORK OF ALL KINDS; THAT WHEN HE DISCOVERED THAT THE WORK COVERED BY ITEMS 1 TO 63, INCLUSIVE, OF THE INVITATION COVERED ROAD WORK AND UTILITIES, HE REQUESTED LOUIS RECINE CONSTRUCTION, INC., A SUBCONTRACTOR, TO SUBMIT A BID ON ITEMS 1 TO 63, INCLUSIVE, THE TOTAL OF WHICH IS $108,198.50; THAT WHEN HE WAS REQUESTED TO VERIFY HIS BID HE VERIFIED ONLY THE PRICES FOR THE WORK HE CONTEMPLATED DOING HIMSELF, NAMELY, THE WORK COVERED BY ITEMS 64 TO 82, INCLUSIVE, AND THAT NO VERIFICATION WAS MADE OF ITEMS 1 TO 63, INCLUSIVE, SINCE HE FELT THAT THE SUBCONTRACTOR WHO WAS TO PERFORM THE WORK COVERED BY THOSE ITEMS WAS A COMPETENT AND RESPONSIBLE CONTRACTOR. MR. CACCIOLA STATED FURTHER THAT ON APRIL 25, 1955, WHEN HE REQUESTED HIS SUBCONTRACTOR TO ENTER INTO A CONTRACT FOR THE WORK COVERED BY ITEMS 1 TO 63, INCLUSIVE, THE SUBCONTRACTOR REFUSED TO DO SO FOR THE REASON THAT HE HAD FAILED TO INCLUDE THE COST OF ALL THE EXCAVATION FOR ITEMS 4 TO 19, INCLUSIVE, ITEM 21, AND ITEMS 24 TO 41, INCLUSIVE; AND THAT ON APRIL 27, 1955, HIS SUBCONTRACTOR ADVISED HIM THAT IN ADDITION TO THE OTHER ERRORS, HE DISCOVERED THAT HE SHOULD HAVE QUOTED A UNIT PRICE OF $450 INSTEAD OF $45 FOR ITEM 20, THE ERROR ON THAT ITEM RESULTING FROM A MISPLACED DECIMAL POINT. WITH THE AFFIDAVIT, MR. CACCIOLA SUBMITTED AN ESTIMATE RECEIVED FROM HIS SUBCONTRACTOR WHICH SHOWS THE COST OF THE OMITTED EXCAVATION WORK REQUIRED UNDER ITEMS 4 TO 19, INCLUSIVE, ITEM 21, AND ITEMS 24 TO 41, INCLUSIVE, AS BEING $29,042, WHICH AMOUNT WHEN ADDED TO THE AMOUNT OF THE ERROR ($4,455) ALLEGED TO HAVE BEEN MADE ON ITEM 20, TOTALS $33,497.

THUS, IT APPEARS THAT PRIOR TO AWARD, THE CENTRAL ENGINEERING COMPANY WAS REQUESTED TO VERIFY ITS BID ON ITEMS 1 TO 82, INCLUSIVE; THAT THE COMPANY ACTUALLY VERIFIED THE PRICES ONLY ON THE WORK IT CONTEMPLATED PERFORMING, NAMELY, THE WORK COVERED BY ITEMS 64 TO 82, INCLUSIVE; THAT THE COMPANY REQUESTED PERMISSION TO WITHDRAW ITS BID ON THE PROJECT FOR THE REASON THAT AN ERROR HAD BEEN MADE IN ITS SUBCONTRACTOR'S BID; THAT THE COMPANY WAS NOT PERMITTED TO WITHDRAW ITS BID FOR THE REASON THAT IT WAS UNABLE TO PRODUCE THE WORK SHEETS OF ITS SUBCONTRACTOR; AND THAT THE CONTRACTING OFFICER WAS AWARE THAT THE COMPANY'S SURETY HAD REFUSED TO ENTER INTO AN AGREEMENT AS TO THE EXECUTION OF PERFORMANCE AND PAYMENT BONDS. IT ALSO APPEARS THAT THE COMPANY'S ORAL AGREEMENT TO PROCEED WITH THE CONTRACT WORK WAS CONDITIONED UPON IT OBTAINING PERFORMANCE AND PAYMENT BONDS. THE COMPANY STATES THAT IT WAS UNABLE TO OBTAIN PERFORMANCE AND PAYMENT BONDS FROM EITHER THE SURETY COMPANY WHICH ISSUED ITS BID BOND OR FROM ANY OTHER SURETY COMPANY, AND IN SUBSTANTIATION OF SUCH STATEMENT, THE COMPANY SUBMITTED AFFIDAVITS FROM OFFICIALS OF TWO SURETY COMPANIES.

ALTHOUGH THE COMPANY FURNISHED NO EVIDENCE IN SUPPORT OF ITS ALLEGATION OF ERROR, THE GREAT DISPARITY BETWEEN ITS BID AND THE OTHER BIDS, TOGETHER WITH THE CIRCUMSTANCE THAT ITS BID WAS SUBSTANTIALLY BELOW THE AMOUNT OF THE GOVERNMENT ESTIMATE, WHEREAS THE OTHER TWO BIDS WERE SUBSTANTIALLY ABOVE SUCH ESTIMATE, SUFFICIENTLY WARRANTS THE CONCLUSION, PRIMA FACIE, THAT SUCH A BONA FIDE MISTAKE WAS MADE BY THE COMPANY AS TO AUTHORIZE THE WITHDRAWAL OF ITS BID WITHOUT FORFEITURE OF THE BID SECURITY. ACCORDINGLY, AND SINCE THE CENTRAL ENGINEERING COMPANY DID IN FACT REQUEST PERMISSION TO WITHDRAW ITS BID PRIOR TO AWARD, IT MAY BE RELEASED FROM OBLIGATION UNDER THE CONTRACT. THEREFORE, THE COMPANY IS NOT LIABLE FOR ANY EXCESS COSTS INCURRED BY THE GOVERNMENT BY REASON OF ITS DEFAULT IN THE PERFORMANCE OF CONTRACT NO. DA 19-016-ENG-3788. SEE ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.CLS. 466, 476; AND 17 COMP. GEN. 416, 418.

A DUPLICATE SET OF THE PAPERS IN THE CASE IS BEING RETAINED. THE OTHER PAPERS ARE RETURNED.