B-125670, OCT. 24, 1955

B-125670: Oct 24, 1955

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TO THE HONORABLE SECRETARY OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 3. DA-25-066-ENG-3670 IS BASED. THE WORK WAS DIVIDED INTO TWO PARTS. PROSPECTIVE BIDDERS WERE REQUESTED TO QUOTE A LUMP-SUM PRICE FOR EACH PART. THE TWO OTHER RESPONSIVE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $19. THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $17. THE BID OF THE COMPANY WAS ACCEPTED ON JUNE 30. IT WAS STATED THAT ON JULY 22. THE PRESIDENT OF THE COMPANY WAS ADVISED THAT. THERE WAS NO ALTERNATIVE BUT TO INSTRUCT HIM TO PROCEED WITH THE WORK AND TO SUBMIT A CLAIM FOR ADDITIONAL COMPENSATION. IT IS REPORTED THAT THE GOVERNMENT ESTIMATE CONTAINED APPROXIMATELY TWICE THE QUANTITIES OF RAILS.

B-125670, OCT. 24, 1955

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 3, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR THE FLORA CONSTRUCTION COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-25-066-ENG-3670 IS BASED.

BY INVITATION NO. ENG-25-066-55-112, AS AMENDED, THE OFFICE OF THE DISTRICT ENGINEER, OMAHA DISTRICT, CORPS OF ENGINEERS, REQUESTED BIDS FOR FURNISHING LABOR, MATERIALS AND PERFORMING ALL WORK FOR THE CONSTRUCTION OF OBSTRUCTION LIGHTING, E-W RUNWAY, CHEYENNE MUNICIPAL AIRPORT, CHEYENNE, WYOMING, IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS AND DRAWINGS. THE WORK WAS DIVIDED INTO TWO PARTS, NAMELY (1) OBSTRUCTION LIGHTING SYSTEM AND (2) GUARD RAIL AND SIGNS), AND PROSPECTIVE BIDDERS WERE REQUESTED TO QUOTE A LUMP-SUM PRICE FOR EACH PART. IN RESPONSE, THE FLORA CONSTRUCTION COMPANY SUBMITTED A BID DATED JUNE 27, 1955, OFFERING TO FURNISH THE OBSTRUCTION LIGHTING SYSTEM FOR THE LUMP SUM OF $10,695, AND TO FURNISH THE GUARD RAIL AND SIGNS FOR THE LUMP SUM OF $3,600, MAKING A TOTAL PRICE OF $14,295 FOR THE PROJECT. THE TWO OTHER RESPONSIVE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $19,535.94 AND $20,433, AND THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $17,730. THE BID OF THE COMPANY WAS ACCEPTED ON JUNE 30, 1955.

IN A REPORT DATED AUGUST 4, 1955, FROM THE CONTRACTING OFFICER, IT WAS STATED THAT ON JULY 22, 1955, THE FLORA CONSTRUCTION COMPANY VERBALLY ALLEGED THAT IT HAD MADE AN ERROR IN ITS BID; AND THAT AT A CONFERENCE HELD ON JULY 25, 1955, THE PRESIDENT OF THE COMPANY WAS ADVISED THAT, SINCE AN AWARD HAD BEEN MADE, THERE WAS NO ALTERNATIVE BUT TO INSTRUCT HIM TO PROCEED WITH THE WORK AND TO SUBMIT A CLAIM FOR ADDITIONAL COMPENSATION. IN A LETTER DATED JULY 28, 1955, THE COMPANY STATED THAT THE ERROR OCCURRED WHEN IT OVERLOOKED A NOTE ON A CONTRACT DRAWING TO THE EFFECT THAT IT HAD BEEN REDUCED TO ONE-HALF OF THE ORIGINAL SCALE, AND THAT AS A RESULT OF SUCH OVERSIGHT IT UNDERESTIMATED THE QUANTITIES COVERING THE GUARD RAIL, POSTS, CABLE, AND TRENCHING BY 50 PERCENT. THE COMPANY REQUESTED THAT THE TOTAL CONTRACT PRICE FOR THE PROJECT BE INCREASED FROM $14,295 TO $19,831--- AN INCREASE OF $5,536--- TO COVER THE OMITTED ITEMS. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS ORIGINAL WORKSHEETS AND COPIES OF QUOTATIONS RECEIVED FROM VARIOUS SUPPLIERS AND COPIES OF PURCHASE ORDERS PLACED WITH SUCH SUPPLIERS. IT IS REPORTED THAT THE GOVERNMENT ESTIMATE CONTAINED APPROXIMATELY TWICE THE QUANTITIES OF RAILS, POSTS, CABLE, AND TRENCHING AS THE ESTIMATE PREPARED BY THE FLORA CONSTRUCTION COMPANY ON WHICH ITS BID WAS BASED.

IN HIS REPORT RECOMMENDING THAT THE CONTRACT PRICE OF THE PROJECT BE INCREASED TO THE AMOUNT OF THE NEXT-LOWEST RESPONSIVE BID, THE CONTRACTING OFFICER STATED THAT HE NOTED THE DISPROPORTION OF THE BID OF THE FLORA CONSTRUCTION COMPANY, INDICATING THE POSSIBILITY OF ERROR, BUT THAT, BECAUSE A LOWER NONRESPONSIVE BID WAS RECEIVED, THE COMPANY WAS NOT REQUESTED TO VERIFY ITS BID. IT IS STATED FURTHER, HOWEVER, THAT IN VIEW OF THE DIFFERENCE BETWEEN THE COMPANY'S BID OF $3,600 FOR THE GUARD RAIL AND SIGNS AND THE TWO OTHER RESPONSIVE BIDS IN THE AMOUNT OF $7,779.15 AND $8.057, AND THE GOVERNMENT ESTIMATE IN THE AMOUNT OF $6,000 FOR THOSE ITEMS, THE COMPANY SHOULD HAVE BEEN REQUESTED TO VERIFY ITS BID PRIOR TO THE AWARD.

THE ABSTRACT OF BIDS SHOWS THAT THE COMPANY'S BID OF $3,600 FOR THE GUARD RAIL AND SIGNS IS LESS THAN ONE-HALF OF THE TWO OTHER RESPONSIVE BIDS AND SLIGHTLY MORE THAN ONE-HALF OF THE GOVERNMENT ESTIMATE. IN VIEW OF THE DIFFERENCE BETWEEN THE BID OF THE COMPANY AND THE OTHER RESPONSIVE BIDS AND THE GOVERNMENT ESTIMATE, THE PROBABILITY OF ERROR WAS APPARENT AND, IN THE CIRCUMSTANCES, THE BID OF THE FLORA CONSTRUCTION COMPANY SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS NO ROOM FOR DOUBT THAT THE FLORA CONSTRUCTION COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. IF, HOWEVER, THE BID BE CORRECTED TO THE INTENDED BID PRICE OF $19,831, IT WILL NOT BE THE LOWEST RESPONSIVE BID ON THE PROJECT. IT IS REPORTED THAT THE COMPANY HAS INDICATED THAT IT WOULD PROCEED WITH THE WORK PENDING CONSIDERATION OF ITS CLAIM FOR ADDITIONAL COMPENSATION. ACCORDINGLY, CONTRACT NO. DA-25-066-ENG 3670 MAY BE AMENDED TO INCREASE THE PRICE FOR THE PROJECT TO THE AMOUNT OF THE NEXT-LOWEST CORRECT BID, AND PAYMENT IS AUTHORIZED TO BE MADE ON THAT BASIS.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO BE ATTACHED TO THE CONTRACT.

THE CONTRACTING OFFICER'S STATEMENT OF AUGUST 4, 1955, AND THE CONTRACTOR'S WORKSHEETS ARE BEING RETAINED. THE OTHER PAPERS ARE RETURNED.