B-127054, MAY 31, 1956

B-127054, MAY 31, 1956

TO HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 17, 1956, WITH ENCLOSURES, REQUESTING DECISION AS TO WHETHER EARL H. VICTORSON AND SAMUEL C. KOVAN MAY BE RELIEVED FROM THE OBLIGATION OF FURNISHING ELECTRIC CURRENT FOR THE OFFICE SPACE IN THE COMPTON BUILDING, 161 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS, AS PROVIDED FOR UNDER UNEXECUTED LEASE NO. GS-01B-1716.

IT APPEARS THAT PURSUANT TO INVITATION 1PR-529, THE ABOVE PARTIES SUBMITTED A BID DATED MARCH 15, 1955, WHEREIN THEY OFFERED TO FURNISH 5,600 SQUARE FEET OF OFFICE SPACE AT A RENTAL OF $1.90 PER SQUARE FOOT FOR OCCUPANCY JULY 1, 1955. THE SPACE OFFERED IS STATED TO BE PRACTICALLY THE IDENTICAL SPACE OCCUPIED BY THE GOVERNMENT UNDER A PRIOR LEASE GS-01B-2 AND AT THE SAME RENTAL RATE, NAMELY, $1.90 PER SQUARE FOOT. THE ORIGINAL LEASE EXPIRED ON JUNE 30, 1955. THE ABOVE INVITATION STIPULATED THAT ELECTRICITY FOR LIGHTING AND OPERATION OF OFFICE MACHINES WOULD BE REQUIRED. THE SPECIFICATIONS ATTACHED TO THE INVITATION REQUIRED BIDDERS TO ANSWER "YES" OR "NO" AS TO WHETHER CERTAIN SPECIAL SERVICES WOULD BE FURNISHED AS PART OF THE RENTAL CONSIDERATION.

THE FORMER CONTRACTING OFFICER IN "FINDINGS" DATED DECEMBER 19, 1955, REPORTS THAT IN AN EXAMINATION OF ALL BIDS PRIOR TO AWARD IT WAS NOTED THAT UNDER THE BID SUBMITTED BY MESSRS. VICTORSON AND KOVAN--- THE LOWEST OF THE SIX BIDS RECEIVED--- THE BIDDERS OFFERED TO FURNISH ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION, WHEREAS SUCH SERVICE WAS NOT FURNISHED BY THEM AS PART OF THE RENTAL CONSIDERATION UNDER THE ORIGINAL LEASE. AWARD WAS MADE TO THE LOW BIDDERS ON JULY 5, 1955, AT WHICH TIME LEASE FORMS WERE SUBMITTED TO THEM FOR EXECUTION, BUT IT APPEARS THAT THEY REFUSED TO SIGN THEM. SHORTLY AFTERWARD THE ATTORNEY FOR THE BIDDERS COMPLAINED ABOUT THE INCLUSION OF ELECTRICITY IN THE SERVICES TO BE FURNISHED BY THE LESSORS AS PART OF THE RENTAL CONSIDERATION, AND ALLEGED THAT IN THIS RESPECT THE BID OF MARCH 15, 1955, WAS IN ERROR. THE ATTORNEY REQUESTED RELIEF AND MODIFICATION OF THE LEASE IN THAT REGARD. SUCH REQUEST WAS RENEWED IN THE ATTORNEY'S LETTER OF JULY 26, 1955, TO THE CONTRACTING OFFICER WHEREIN IT IS ASSERTED THAT THERE WAS NO INTENTION TO INCLUDE ELECTRICITY AS PART OF THE RENTAL CONSIDERATION AND THAT THE BIDDERS INTENTIONS IN THIS RESPECT WERE MADE CLEAR IN PREVIOUS DISCUSSIONS WITH REPRESENTATIVES OF THE SOCIAL SECURITY OFFICE, THE OCCUPYING AGENCY, AND THE REGIONAL OFFICE OF THE ADMINISTRATION. THE ATTORNEY STATES THAT HIS CLIENTS WERE UNDER THE IMPRESSION THAT THE QUESTIONS IN THE SPECIFICATIONS ATTACHED TO THE INVITATION FOR BIDS REGARDING THE FURNISHING OF ELECTRIC CURRENT AND THE NECESSARY LIGHT FIXTURES, ETC., WERE SIMPLY ROUTINE QUESTIONS FOR THE PURPOSE OF ASCERTAINING WHETHER SUCH SERVICES WOULD BE AVAILABLE, BUT NOT FOR THE PURPOSE OF INCLUDING ELECTRIC CURRENT IN THE STATED RENTAL. ALSO, HE STATES THAT ALL TENANTS OF THE COMPTON BUILDING PAY SEPARATELY FOR ELECTRIC CURRENT, AND THAT AT THE OPENING OF THE BIDS NO REFERENCE WAS MADE TO THE FACT THAT THE BID SUBMITTED BY HIS CLIENTS INCLUDED ELECTRICITY AS PART OF THE RENTAL CONSIDERATION, WHEREAS IT WAS ANNOUNCED THAT ONE OF THE OTHER BIDS DID. HE REFERS TO SUBSTANTIAL EXPENDITURES MADE AND TO BE MADE BY THE LESSORS AT AN APPROXIMATE COST OF $2,125, WHICH COST HE STATES IS GREATLY IN EXCESS OF WHAT MIGHT REASONABLY BE CONSIDERED "ALTERATIONS AND REPAIRS REQUIRED FOR INITIAL OCCUPANCY.'

FOLLOWING RECEIPT OF YOUR LETTER THE ATTORNEY FOR MESSRS. VICTORSON AND KOVAN CONTACTED THIS OFFICE AND REQUESTED AN OPPORTUNITY TO SUBMIT ADDITIONAL INFORMATION. BY LETTER OF MAY 15, 1956, YOUR GENERAL COUNSEL FORWARDED COPY OF THE ATTORNEY'S LETTER OF MARCH 9, 1956, TO HIM, AND AN AFFIDAVIT EXECUTED ON MARCH 5, 1956, BY THE MANAGER OF THE COMPTON BUILDING WHO WAS PRESENT AT THE OPENING OF THE BIDS, TOGETHER WITH A COPY OF INTEROFFICE MEMORANDUM DATED APRIL 16, 1956, BY THE PRESENT CONTRACTING OFFICER COMMENTING ON THE STATEMENTS MADE BY THE ATTORNEY AND THE BUILDING MANAGER. IN THE ABOVE AFFIDAVIT THE AFFIANT STATES THAT THE BID SUBMITTED BY THE TERMINAL BUILDING (APPARENTLY HAS REFERENCE TO OLIVER BUILDING) WAS THE ONLY BID ANNOUNCED AS INCLUDING ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION. HE REFERS PARTICULARLY TO THE STATEMENT DATED MARCH 15, 1955, ATTACHED TO THE BID OF THE SAME DATE SUBMITTED BY THE OWNERS OF THE COMPTON BUILDING, SHOWING THE YEARLY COST FOR THE ENTIRE BUILDING OF THE SERVICES TO BE FURNISHED AS PART OF THE RENTAL CONSIDERATION. HE STATES THAT THE AMOUNTS SHOWN IN SUCH STATEMENT, INCLUDING AN ITEM OF $11,421.42 FOR ELECTRIC CURRENT, REPLACEMENT OF BULBS, MAINTENANCE, ETC., REPRESENTS THE AMOUNT PAID BY THE COMPTON BUILDING AND WHICH IS IN TURN REIMBURSED BY EACH TENANT, IN ADDITION TO RENT, IN ACCORDANCE WITH METER RATES, AND THAT THE COMPTON BUILDING DOES NOT INCLUDE ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION PAID BY ANY OF ITS TENANTS. HE ASSERTS THAT IN A CONVERSATION WITH THE CONTRACTING OFFICER SHORTLY AFTER THE OPENING OF THE BIDS THE CONTRACTING OFFICER STATED THAT THE LESSORS COULD SAFELY GO FORWARD WITH ALTERATIONS REQUESTED BY THE SOCIAL SECURITY BOARD AS IT WAS NO LONGER THE PRACTICE TO SEND FORMAL BID ACCEPTANCES, THAT THE LEASE WOULD COME ALONG AT A LATER DATE, AND THAT IT WOULD BE ON THE SAME TERMS AS THE OLD LEASE. THIS LATTER STATEMENT IS ESSENTIALLY THE SAME AS THE STATEMENT CONTAINED IN LETTER OF SEPTEMBER 23, 1955, FROM THE DISTRICT MANAGER OF THE SOCIAL SECURITY OFFICE, TO THE EFFECT THAT IT WAS HIS RECOLLECTION THAT IT WAS THE LESSORS' INTENTION TO OFFER THE SPACE ON THE SAME TERMS AS EXISTED UNDER THE PRIOR LEASE, EXCEPT FOR ADDITIONAL ALTERATIONS.

IN HIS LETTER OF MARCH 9, 1956, THE ATTORNEY ASSERTS THAT THE ABOVE ALTERATIONS WERE MADE AFTER THE STATEMENTS BY GOVERNMENT REPRESENTATIVES THAT THE NEW LEASE WOULD BE THE SAME AS THE OLD LEASE. HE STATES THAT ELECTRIC CURRENT CONSUMED BY THE GOVERNMENT COSTS APPROXIMATELY $1,800 PER ANNUM. HE POINTS OUT THAT ALL OTHER BIDS INCLUDING THE NEXT LOW BID OF $2 PER SQUARE FOOT SUBMITTED BY THE ESSEX BUILDING, 600 WASHINGTON STREET, AND REFERRED TO AS NOT ACCEPTABLE BY THE GOVERNMENT, WERE ALL SUBSTANTIALLY HIGHER THAN THE COMPTON BUILDING BID. ALSO, HE ASSERTS THAT THE TERMINAL BUILDING (OLIVER) BID WHICH OFFERED ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION OF $2.50 PER SQUARE FOOT IS 30 PERCENT IN EXCESS OF THE COMPTON BUILDING BID.

IN COMMENTING ON THE ADDITIONAL INFORMATION SUBMITTED, THE PRESENT CONTRACTING OFFICER IN INTEROFFICE MEMORANDUM OF APRIL 16, 1956, STATES THAT IT WAS MERELY INCIDENTAL THAT IT WAS ANNOUNCED DURING THE OPENING OF THE BIDS THAT ONE OF THE BIDS INCLUDED ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION. HE ADMITS THAT A CONVERSATION BETWEEN THE BUILDING MANAGER AND MR. BUCKLEY, THE FORMER CONTRACTING OFFICER, TOOK PLACE IMMEDIATELY FOLLOWING THE OPENING OF THE BIDS, BUT STATES THAT MR. BUCKLEY MERELY STATED THAT THE PROVISIONS OF THE NEW LEASE WOULD CONFORM IN MOST RESPECTS WITH THE EXISTING LEASE. HE ADDS THAT IDENTICAL CONFORMITY WOULD HAVE BEEN IMPOSSIBLE AS BOTH THE INVITATION AND THE COMPTON BID VARIED CONSIDERABLY FROM THE TERMS OF THE ORIGINAL LEASE. HE ADMITS THAT THE ALTERATIONS MADE BY THE LESSORS EXCEEDED THEIR OBLIGATION UNDER THE ACCEPTED BID AND INSISTS THAT THERE WAS NO REASON FOR MR. BUCKLEY TO QUESTION THE BID WITH RESPECT TO THE FURNISHING OF ELECTRIC CURRENT AS PART OF THE RENTAL CONSIDERATION. IN CONCLUSION, HE STATES IN EFFECT THAT THE CONTENTION OF THE LESSOR'S ATTORNEY AS TO THE ABOVE ITEM OF $11,421.42, IS THE FIRST TIME HE WAS AWARE THAT IT WAS NOT PROPERLY INCLUDED AS AN EXPENSE FOR DETERMINING THE NET RENT FOR THE PURPOSES OF SECTION 322 OF THE ECONOMY ACT, AS AMENDED, 40 U.S.C. 278/A). INDICATES, HOWEVER, THAT ELIMINATION OF THE ITEM FROM SERVICES FURNISHED BY THE LESSOR WOULD NOT HAVE PREVENTED THE AWARD TO THE LESSORS BECAUSE OF THE 15 PERCENTUM LIMITATION.

THE PERTINENT DETAILS FROM THE ABSTRACT OF BIDS ARE AS FOLLOWS:

TABLE

COST PER

ANNUM AND

BUILDING AREA SQ. FT. SERVICES FURNISHED COMPTON BLDG. 5,600 $10,640 ALL REGULAR WITH ELECTRICITY

AND WITH INITIAL ALTERATIONS. KIMBALL BLDG. 5,600 $15,960 ALL REGULAR, WITHOUT

ELECTRICITY; ALTERATIONS

NEGOTIATED. NORTH STATION 5,900 $13,865ALL REGULAR, WITHOUT ELECTRICITY;

ALTERATIONS NEGOTIATED. OLIVER BLDG. 5,544 $13,860 ALL REGULAR, WITH ELECTRICITY;

ALTERATIONS PERFORMED AT COST. WASH. ESSEX 5,600 $11,200 ALL REGULAR WITHOUT ELECTRICITY;

BLDG. NO ELEC. FIXTURES TO RENDER

30 FEET CANDLES MINIMUM.

ALTERATIONS. UNITY BLDG. 5,500 $14,000 ALL REGULAR, WITHOUT ELECTRICITY.

INITIAL ALTERATIONS INCLUDED.

THE STATEMENT IN THE LETTER OF MARCH 9, 1956, FROM THE LESSORS' ATTORNEY TO THE EFFECT THAT IT IS HIS UNDERSTANDING THAT THE SPACE OFFERED BY THE WASHINGTON ESSEX BUILDING AT 600 WASHINGTON STREET WAS NOT ACCEPTABLE TO THE GOVERNMENT HAS NOT BEEN CONTRADICTED.

IT IS TRUE, OF COURSE, THAT THE FORMULATION AND SUBMISSION OF A BID IS THE SOLE RESPONSIBILITY OF THE BIDDER; THAT A BONA FIDE ACCEPTANCE OF A COMPLETE AND UNAMBIGUOUS LOW BID CONSUMMATES A BINDING CONTRACT; AND THAT IF, THEREAFTER, IT DEVELOPS THAT THE BIDDER THROUGH INADVERTENCE, NEGLIGENCE, OR OTHERWISE, HAS OMITTED FROM OR INCLUDED IN HIS BID SOME PROVISION TO HIS PREJUDICE, THE BURDEN MUST BE BORNE BY HIM. 19 COMP. GEN. 1021. AS SUGGESTED IN YOUR LETTER, IT IS EQUALLY TRUE THAT THE BID AND ACCEPTANCE CONSTITUTE A CONTRACT, THE SUBSEQUENT EXECUTION OF A FORMAL WRITTEN CONTRACT BEING MERELY THE REDUCTION TO FORM OF THE ANTECEDENT UNDERTAKINGS AND INTENTIONS OF THE PARTIES.

THE FOREGOING ARE ESTABLISHED RULES CONTROLLING THE CONSUMMATION AND OPERATION OF GOVERNMENT CONTRACTS, INCLUDING CONTRACTS FOR THE LEASING OF PROPERTY. HOWEVER, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, PARTICULARLY THE VARIANCE BETWEEN THE RENTAL RATE IN THE COMPTON BID, INCLUDING THE SERVICES AND ALTERATIONS OFFERED, AND THE RENTAL RATES OFFERED IN THE OTHER ACCEPTABLE BIDS, TOGETHER WITH THE FACT THAT THE COMPTON BID OFFERED ESSENTIALLY THE SAME QUARTERS AND AT THE SAME RENTAL AS UNDER THE ORIGINAL LEASE, IT SEEMS CLEAR THAT THESE FACTORS WERE SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF ERROR, AND UPON INQUIRY OF THE LESSORS' INTENT, BEFORE ACCEPTING THEIR BID. HAD SUCH AN INQUIRY BEEN MADE THERE IS NO REASON TO DOUBT THAT THE QUESTION COULD HAVE BEEN SETTLED THEN AND THERE.

ACCORDINGLY, SINCE THE LEASE HAS NOT BEEN SIGNED THERE WOULD APPEAR TO BE NO LEGAL OBJECTION TO AMENDING THE PROPOSED LEASE TO ELIMINATE ELECTRIC CURRENT FROM THE SERVICES TO BE FURNISHED BY THE LESSOR AS PART OF THE RENTAL CONSIDERATION AND TO REQUIRE THE LESSORS TO SUPPLY ELECTRIC CURRENT AS IN THE MANNER PROVIDED UNDER THE ORIGINAL LEASE, NOT TO EXCEED THE PREVAILING RATES FOR SIMILAR SERVICES.