B-125672, NOVEMBER 10, 1955, 35 COMP. GEN. 279

B-125672: Nov 10, 1955

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CONTRACTS - AWARDS - CANCELLATION OR CORRECTION - EVIDENCE OF ERROR EVIDENCE OF ERROR SUBMITTED BY BIDDER AFTER OPENING OF BIDS WHICH ESTABLISHES THAT A BONA FIDE MISTAKE WAS MADE. DOES NOT ESTABLISH CONCLUSIVELY WHAT THE INTENDED BID SHOULD HAVE BEEN. A NOTICE OF AWARD WHICH WAS ISSUED BY THE CONTRACTING OFFICER AFTER RECEIPT OF EVIDENCE ESTABLISHING ERROR SHOULD BE CANCELED. 1955: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 2. RELATIVE TO AN ERROR ALLEGED BY THE CLEMENS CONSTRUCTION COMPANY TO HAVE BEEN MADE IN ITS BID DATED SEPTEMBER 6. WHICH WAS SUBMITTED IN RESPONSE TO INVITATION CIVENG-08-123-56-6. IT IS STATED IN THE SUMMARY OF THE FACTS OF THE MATTER. THAT BIDS RECEIVED UNDER THE INVITATION WERE OPENED ON SEPTEMBER 7.

B-125672, NOVEMBER 10, 1955, 35 COMP. GEN. 279

CONTRACTS - AWARDS - CANCELLATION OR CORRECTION - EVIDENCE OF ERROR EVIDENCE OF ERROR SUBMITTED BY BIDDER AFTER OPENING OF BIDS WHICH ESTABLISHES THAT A BONA FIDE MISTAKE WAS MADE, BUT DOES NOT ESTABLISH CONCLUSIVELY WHAT THE INTENDED BID SHOULD HAVE BEEN, PRECLUDES CORRECTION OF BID, AND A NOTICE OF AWARD WHICH WAS ISSUED BY THE CONTRACTING OFFICER AFTER RECEIPT OF EVIDENCE ESTABLISHING ERROR SHOULD BE CANCELED.

TO THE SECRETARY OF THE ARMY, NOVEMBER 10, 1955:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 2, 1955, WITH ENCLOSURES, FURNISHING THE REPORT REQUESTED IN OUR LETTER OF OCTOBER 10, 1955, RELATIVE TO AN ERROR ALLEGED BY THE CLEMENS CONSTRUCTION COMPANY TO HAVE BEEN MADE IN ITS BID DATED SEPTEMBER 6, 1955, WHICH WAS SUBMITTED IN RESPONSE TO INVITATION CIVENG-08-123-56-6, ISSUED AUGUST 3, 1955, BY THE DISTRICT ENGINEER, JACKSONVILLE, FLORIDA.

IT IS STATED IN THE SUMMARY OF THE FACTS OF THE MATTER, FORWARDED WITH YOUR LETTER, THAT BIDS RECEIVED UNDER THE INVITATION WERE OPENED ON SEPTEMBER 7, 1955, AND THAT THE LOWEST BID RECEIVED IN THE TOTAL ESTIMATED AMOUNT OF $904,300 WAS SUBMITTED BY THE CLEMENS CONSTRUCTION COMPANY. THE OTHER BIDS RANGED IN TOTAL ESTIMATED AMOUNTS FROM $1,138,086,36 TO $1,677,000 AND THE GOVERNMENT'S ESTIMATE, NOT INCLUDING PROFIT, WAS IN THE AMOUNT OF $1,607,440. IMMEDIATELY AFTER THE OPENING AND BEFORE AWARD A REPRESENTATIVE OF THE CLEMENS CONSTRUCTION COMPANY NOTIFIED THE CONTRACTING OFFICER THAT AN ERROR HAD BEEN MADE IN COMPUTING ITS BID IN THAT NO AMOUNT HAD BEEN INCLUDED FOR OVERHEAD AND PROFIT. IN RESPONSE TO A REQUEST FOR ANY DATA RELATIVE TO THE ERROR, THE BIDDER SUBMITTED WORKSHEETS WHICH SHOWED AN ESTIMATED COST OF EXCAVATING UNCLASSIFIED MATERIAL OF $819,621 BASED UPON A UNIT PRICE OF 39 CENTS PLUS PER CUBIC YARD. THIS UNIT PRICE INCLUDED A 2 CENTS PER CUBIC YARD FACTOR LABELED " MISCELLANEOUS.' TO THIS BASIC FIGURE THE BIDDER ADDED APPROXIMATELY 3 CENTS PER CUBIC YARD WHICH WAS REFERRED TO AS "CONTINGENCY" TO ARRIVE AT ITS BID PRICE OF 42 CENTS PER CUBIC YARD.

IN A LETTER DATED OCTOBER 7, 1955, SWORN TO AND SUBSCRIBED BEFORE A NOTARY PUBLIC, THE PRESIDENT OF THE CLEMENS CONSTRUCTION COMPANY ADVISED OUR OFFICE THAT IN COMPUTING BIDS ON FIVE PROJECTS DURING THE LAST FIVE YEARS IT WAS THE BIDDER'S PRACTICE TO PREPARE WORKSHEETS OF COST ESTIMATES ON THE BASIS OF ACTUAL COST OF EACH ITEM TO ARRIVE AT THE ACTUAL UNIT COST OF EXCAVATION AND TO ADD ITEMS SUCH AS "CONTINGENCY, OVERHEAD AND PROFIT" TO THE ACTUAL UNIT COST. IT WAS ALSO POINTED OUT THAT THE BID OF CLEMENS CONSTRUCTION COMPANY WAS 43 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE AND 33 PERCENT LOWER ON A CORRECTED BASIS AND ON SUCH BASIS MORE THAN $57,000 LOWER THAN THE NEXT LOWEST BID. IN ADDITION, IT WAS STATED THAT THE BID BOND SUBMITTED BY THE BIDDER WAS IN THE AMOUNT OF $240,000 WHICH IS 20 PERCENT OF $1,200,000. THIS, THE BIDDER CLAIMED, WAS INDICATIVE OF AN ERROR, DUE TO THE FACT THAT HAD AN ERROR NOT BEEN MADE ITS INTENDED PRICE OF $1,080,700 WOULD HAVE BEEN MORE CONSISTENT WITH THE AMOUNT OF THE BOND.

IN ADDITION TO THE FOREGOING, THE BIDDER'S ATTORNEY SUBMITTED WITH HIS LETTER OF OCTOBER 17, 1955, AMONG OTHER THINGS, A MEMORANDUM TO THE COMPTROLLER GENERAL OF THE UNITED STATES IN WHICH THE BIDDER REITERATES THE PRIOR CONTENTIONS WITH REGARD TO THE ALLEGED ERROR AND PRESENTS EVIDENCE WHICH SHOWS CLEARLY THAT IN PREPARING BIDS ON PRIOR PROJECTS THE BIDDER DID NOT INCLUDE OVERHEAD AND PROFIT IN THE AMOUNTS INCLUDED AS "CONTINGENCY" AND " MISCELLANEOUS.' IT IS URGED THAT THE SAME PROCEDURE WAS FOLLOWED IN THIS CASE.

THE RECORD SHOWS THAT THE CHIEF OF ENGINEERS DETERMINED ON THE BASIS OF THE EVIDENCE BEFORE HIM THAT, ALTHOUGH THE BID WAS LOW, THERE WAS NO CLEAR AND CONVINCING EVIDENCE OF AN ACTUAL MISTAKE AND THAT THE CONTRACTING OFFICER WAS INSTRUCTED TO CONSIDER THE BID IN THE FORM AND AMOUNT ORIGINALLY SUBMITTED. THE CONTRACTING OFFICER THEN ISSUED A NOTICE OF AWARD ON OCTOBER 4, 1955, AND FORWARDED TO THE BIDDER FOR EXECUTION THE CONTRACTUAL DOCUMENTS WHICH WE UNDERSTAND HAVE NOT BEEN RETURNED.

WHILE IT APPEARS THAT THE CHIEF OF ENGINEERS DETERMINED THAT THERE WAS NO CONVINCING EVIDENCE OF AN ACTUAL MISTAKE IN THE BID, THE RECORD SHOWS THAT THE CONTRACTING OFFICER REPORTED IN HIS FINDINGS AND RECOMMENDATION RELATIVE TO THE MATTER THAT A COMPARISON OF THE LOW BID WITH THE GOVERNMENT'S ESTIMATE AND THE OTHER BIDS RECEIVED AND AN ANALYSIS OF THE BIDDER'S WORKSHEETS INDICATED THAT ITS BID DID NOT INCLUDE AN AMOUNT FOR OVERHEAD, PROFIT AND BOND PREMIUM AND THAT THE BID IS INSUFFICIENT FOR PERFORMANCE OF THE WORK WITHOUT FINANCIAL LOSS TO THE BIDDER. THE CONTRACTING OFFICER REPORTED FURTHER THAT " THE EVIDENCE AVAILABLE INDICATES THAT AN ERROR WAS MADE DURING THE PREPARATION OF THE BID, BUT THE BIDDER HAS NOT PRESENTED CONCLUSIVE PROOF OF WHAT HIS INTENDED BID PRICE WOULD HAVE BEEN BUT FOR THE ERROR.'

AFTER CAREFUL CONSIDERATION OF THE ENTIRE RECORD, IT IS OUR VIEW THAT THE ALLEGATION OF ERROR PRIOR TO AWARD, SUPPORTED BY THE BIDDER'S WORKSHEETS AND THE DISPARITY BETWEEN ITS BID AND THE OTHER BIDS RECEIVED, FURNISHES REASONABLE PROOF THAT A BONA FIDE MISTAKE WAS MADE. THE EVIDENCE SUBMITTED, HOWEVER, SHOWS MERELY THAT THE BIDDER MADE AN ERROR IN NOT INCLUDING OVERHEAD AND PROFIT IN HIS BID AS IT HAD BEEN ACCUSTOMED TO DO ON PRIOR SIMILAR BIDS. IT DOES NOT ESTABLISH WITH ANY DEGREE OF CERTAINTY THE AMOUNT OF SUCH OVERHEAD AND PROFIT. IN FACT, IT APPEARS FROM THE WORKSHEETS SUBMITTED THAT THE FIGURES USED BY THE BIDDER FOR THESE ITEMS IN PRIOR BIDS HAVE VARIED FROM JOB TO JOB. THIS BEING THE CASE, THE EVIDENCE SUBMITTED MAY NOT BE ACCEPTED AS ESTABLISHING WHAT THE AMOUNT OF THE BID WOULD HAVE BEEN EXCEPT FOR THE ERROR SO AS TO PERMIT CORRECTION OF THE BID. BEFORE SUCH CORRECTION LEGALLY MAY BE AUTHORIZED, THE ERROR AND THE INTENDED BID MUST BE CONCLUSIVELY ESTABLISHED BY COMPETENT EVIDENCE. SEE 9 COMP. GEN. 339; 14 ID. 78 80; 16 ID. 565; 17 ID. 532.

ACCORDINGLY, SINCE THE NOTICE OF AWARD WAS GIVEN AFTER RECEIPT OF EVIDENCE BY THE CONTRACTING OFFICER ESTABLISHING THE EXISTENCE OF THE MISTAKE AND SINCE IT IS UNDERSTOOD THAT THERE HAS BEEN NO PERFORMANCE BY THE CONTRACTOR, THE NOTICE OF AWARD SHOULD BE CANCELED.