B-127535, APR. 19, 1956

B-127535: Apr 19, 1956

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BUREAU OF RECLAMATION: REFERENCE IS MADE TO YOUR LETTER OF APRIL 6. THE WORK TO BE PERFORMED WAS DIVIDED INTO EIGHT ITEMS FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT. WALKER WAS ACCOMPANIED BY A BID BOND IN THE AMOUNT OF $3. 550 AND THE GOVERNMENT ENGINEER'S ESTIMATE OF COST FOR THE WORK WAS $43. YOU STATE THAT WHEN THE BIDS WERE OPENED IT WAS NOTED THAT THE BID SUBMITTED BY MR. WALKER WAS ONLY 36.4 PERCENT OF THE ENGINEER'S ESTIMATE AND WAS 27.7 PERCENT BELOW THE NEXT BID. WALKER'S LOW BID WAS REFERRED TO THE ASSISTANT COMMISSIONER AND CHIEF ENGINEER OF THE BUREAU FOR ADVICE AS TO WHETHER THE LOW BID WAS ACCEPTABLE IN VIEW OF THE DISPARITY BETWEEN IT AND THE ENGINEER'S ESTIMATE.

B-127535, APR. 19, 1956

TO MR. L. V. DOWNS, CONTRACTING OFFICER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 6, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR MR. GEORGE C. WALKER, D/B/A GEORGE C. WALKER CONSTRUCTION, ALLEGES HE MADE IN HIS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS ON SPECIFICATION NO. 117C-369.

BY THE INVITATION REFERRED TO THE BUREAU OF RECLAMATION REQUESTED BIDS--- TO BE OPENED ON MARCH 29, 1956,--- FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE CONSTRUCTION OF A COMPACTED FILL FOR STATION 89 PLUS 00 TO STATION 93 PLUS 00, AND FOR THE CONSTRUCTION OF A CULVERT, FOR THE WAHLUKE SIPHON AND WAHLUKE BRANCH CANAL, COLUMBIA BASIN PROJECT, WASHINGTON. THE WORK TO BE PERFORMED WAS DIVIDED INTO EIGHT ITEMS FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT. IN RESPONSE, MR. GEORGE C. WALKER SUBMITTED A BID DATED MARCH 29, 1956, OFFERING TO PERFORM THE WORK FOR VARIOUS UNIT PRICES SET FORTH OPPOSITE EACH ITEM, WHICH PRODUCED A TOTAL BID OF $15,900. THE BID OF MR. WALKER WAS ACCOMPANIED BY A BID BOND IN THE AMOUNT OF $3,200. THE TEN OTHER BIDS ON THE PROJECT RANGED FROM $21,980 TO $60,550 AND THE GOVERNMENT ENGINEER'S ESTIMATE OF COST FOR THE WORK WAS $43,600.

IN A MEMORANDUM DATED APRIL 6, 1956, YOU STATE THAT WHEN THE BIDS WERE OPENED IT WAS NOTED THAT THE BID SUBMITTED BY MR. WALKER WAS ONLY 36.4 PERCENT OF THE ENGINEER'S ESTIMATE AND WAS 27.7 PERCENT BELOW THE NEXT BID; THAT ON MARCH 30, 1956, MR. WALKER'S LOW BID WAS REFERRED TO THE ASSISTANT COMMISSIONER AND CHIEF ENGINEER OF THE BUREAU FOR ADVICE AS TO WHETHER THE LOW BID WAS ACCEPTABLE IN VIEW OF THE DISPARITY BETWEEN IT AND THE ENGINEER'S ESTIMATE; THAT ON THE SAME DAY YOU WERE ADVISED BY THE CHIEF ENGINEER THAT HE HAD NO OBJECTION TO THE LOW BID IF THE LOW BIDDER WOULD CONFIRM HIS PRICES ON ITEMS 1 AND 6. ON THE SAME DATE YOU SENT COPIES OF THE CONTRACT, WITH PERFORMANCE AND PAYMENT BOND FORMS TO MR. WALKER IN ANTICIPATION OF AWARD OF THE CONTRACT, ADVISING HIM, HOWEVER, IN THE LETTER OF TRANSMITTAL, THAT THE LETTER SHOULD NOT BE CONSIDERED AS A NOTICE OF AWARD. YOU STATE FURTHER THAT ON MARCH 31,1956, MR. WALKER WAS REQUESTED BY TELEPHONE TO CONFIRM HIS BID PRICES ON ITEMS 1 AND 6, AND THAT ON APRIL 2 MR. WALKER ADVISED BY TELEPHONE THAT HE WAS HAVING DIFFICULTY NEGOTIATING THE PERFORMANCE AND PAYMENT BONDS FOR THE ANTICIPATED CONTRACT AND THAT, WHILE HE WAS NOT AWARE OF ANY DISCREPANCY IN HIS BID, HE WANTED TO GIVE THE MATTER SOME MORE REVIEW.

BY LETTER DATED APRIL 2, 1956, THE UNITED STATES FIDELITY AND GUARANTY COMPANY, SURETY FOR MR. WALKER, ADVISED THE CONTRACTING OFFICER THAT IT HAD SUGGESTED TO MR. WALKER THAT HE ATTEMPT TO HAVE HIS BID ON THE PROJECT WITHDRAWN ON THE BASIS OF A MATERIAL MISTAKE IN HIS BID; THAT IT HAD CONTACTED OTHER CONTRACTORS WHO HAD BID ON THE PROJECT AND HAD DISCOVERED FROM THEM THAT CERTAIN PORTIONS OF THE WORK COULD NOT BE PERFORMED IN THE MANNER CONTEMPLATED BY MR. WALKER, AND THAT IT WAS THEIR OPINION THAT MR. WALKER COULD NOT POSSIBLY PERFORM THE CONTRACT WORK AT HIS BID PRICE OF $15,900. ALSO, THE COMPANY STATED THAT IT HAD INDICATED TO MR. WALKER THAT IT WAS NOT WILLING TO EXECUTE THE PERFORMANCE AND PAYMENT BONDS ON HIS BEHALF.

BY LETTER DATED APRIL 4, 1956, MR. WALKER ADVISED THAT HE HAD MADE AN ERROR IN HIS BID AND REQUESTED THAT HE BE PERMITTED TO WITHDRAW HIS BID ON THE PROJECT. IN HIS LETTER MR. WALKER STATED THAT HE DID NOT RETAIN HIS ORIGINAL ESTIMATE SHEETS, BUT THAT HE HAD PREPARED A REVISED ESTIMATE WHICH, HE STATED, DID NOT ALLOW FOR UNFORESEEN CONTINGENCIES. THE REVISED ESTIMATE SHEET SHOWED DIFFERENT UNIT PRICES FOR THE VARIOUS ITEMS OF WORK, RESULTING IN A TOTAL OF $21,110. IT IS REPORTED THAT THE REVISED ESTIMATE SHEET HAS BEEN ANALYZED AND THAT THE ESTIMATED PRICE IS CONSIDERED TO BE REASONABLE AND IS BELOW THE PRICE ESTIMATED BY THE ANALYST. IT IS NOTED FROM A COMPARISON OF THE PRICES SHOWN IN MR. WALKER'S BID AND THAT SHOWN ON THE REVISED ESTIMATE SHEET THAT MR. WALKER INCREASED HIS UNIT PRICE FOR ITEM 1 (COMPACTED FILL) FROM $0.32 TO $0.52 PER CUBIC YARD AND HIS UNIT PRICE FOR ITEM 3 (STRIPPING BORROW PITS) FROM $0.10 TO $0.17 PER CUBIC YARD.

WHILE THE EXACT NATURE OF THE ERROR CLAIMED IS NOT CLEARLY ESTABLISHED, WE DO NOT BELIEVE THAT ACCEPTANCE OF MR. WALKER'S BID IN THE EXISTING CIRCUMSTANCES WOULD EFFECTUATE A BINDING CONTRACT. FURTHERMORE, IN YOUR LETTER YOU STATE THAT FROM YOUR DISCUSSIONS WITH MR. WALKER AND HIS SURETY, YOU DOUBT THAT HE WOULD HAVE THE FINANCIAL RESOURCES TO CARRY ON THE JOB PROPERLY UNDER THE CONDITIONS THAT WOULD EXIST AFTER HE HAD SECURED PAYMENT AND PERFORMANCE BONDS OR PUT UP CASH EQUIVALENTS, EVEN THOUGH AWARD WERE TO BE MADE IN THE AMOUNT OF $21,110--- THE AMOUNT SHOWN ON HIS REVISED ESTIMATE SHEET. IT THEREFORE APPEARS THAT HE DOES NOT QUALIFY FOR THE AWARD AS A RESPONSIBLE BIDDER. ACCORDINGLY, THE BID OF MR. WALKER SHOULD BE DISREGARDED, WITHOUT LIABILITY TO HIM OR HIS SURETY.

IN YOUR LETTER YOU STATE THAT THE SUBJECT INVITATION PROVIDES THAT THE BID BOND BE IN AN AMOUNT OF NOT LESS THAN 10 PERCENT OF THE AMOUNT OF THE BID AND THAT THE BID BOND SUBMITTED BY MR. WALKER WAS IN THE AMOUNT OF $3,200--- $1,610 IN EXCESS OF THE MINIMUM AMOUNT PRESCRIBED BY THE INVITATION. YOU REQUEST, FOR YOUR FUTURE GUIDANCE AND FOR THE INFORMATION OF MR. WALKER AND HIS SURETY, ADVICE AS TO WHETHER THE AMOUNT OF A FORFEITURE UNDER A BID BOND IS IN THE FULL AMOUNT OF THE BOND OR, AS IN THIS CASE, 10 PERCENT OF THE AMOUNT OF THE BID WHICH IS THE MINIMUM SPECIFIED IN THE INVITATION.

WHILE THE QUESTION PRESENTED IS HYPOTHETICAL AND THEREFORE CANNOT BE ANSWERED BY A SPECIFIC DECISION, YOUR ATTENTION IS INVITED TO THE DECISION OF OUR OFFICE DATED JULY 18, 1938, 18 COMP. GEN. 54, WHICH HELD--- QUOTING FROM SYLLABUS--- AS FOLLOWS:

"WHERE BID GUARANTEES IN THE FORM OF CERTIFIED OR CASHIER'S CHECKS MIGHT BE POSTED AT THE OPTION OF THE BIDDER IN LIEU OF AND TO SERVE THE SAME PURPOSE AS A BID BOND, REQUIRED BY THE SPECIFICATIONS, WHICH COULD BE DISCHARGED UPON THE BIDDER'S FAILURE TO ENTER INTO A WRITTEN CONTRACT IN ACCORDANCE WITH THE BID AS ACCEPTED AND THE NONFURNISHING OF THE REQUIRED PERFORMANCE BOND ONLY BY PAYING THE GOVERNMENT THE DIFFERENCE BETWEEN THE AMOUNT OF THE ACCEPTED BID AND THE COST TO THE GOVERNMENT OF HAVING THE WORK DONE, THE BID DEPOSIT IN AMOUNT LESS THAN THE COST TO THE GOVERNMENT OF HAVING THE WORK DONE BY ANOTHER MAY NOT BE RETURNED TO THE BIDDER WHO HAS FAILED TO MEET THE REQUIRED CONDITIONS, NOR IS THE POSTING OF THE BID DEPOSIT TO BE CONSTRUED AS AN AGREEMENT TO PAY LIQUIDATED DAMAGES IN THE FLAT AMOUNT OF THE BOND, AND THE DEFAULTING BIDDER-CONTRACTOR IS LIABLE FOR SUCH AMOUNT IN EXCESS OF THE BID SECURITY AS REPRESENTS THE DIFFERENCE BETWEEN THE AMOUNT OF HIS BID, PLUS THE BID SECURITY, AND THE COST TO THE GOVERNMENT OF PROCURING THE WORK ELSEWHERE JUST AS HE WOULD BE ENTITLED TO A REFUND OF THE UNNEEDED PORTION OF THE BID DEPOSIT HAD THE DAMAGES RESULTING FROM HIS DEFAULT BEEN LESS THAN THE AMOUNT OF THE BID SECURITY.'

THAT HOLDING APPEARS TO BE IN FULL ACCORD WITH THE EXPRESS CONDITION OF THE FORM OF BID BOND USED IN THIS CASE, WHICH IS THAT THE PRINCIPAL SHALL PAY THE GOVERNMENT "THE DIFFERENCE BETWEEN THE AMOUNT SPECIFIED IN SAID BID AND THE AMOUNT FOR WHICH THE GOVERNMENT MAY PROCURE THE REQUIRED WORK, SUPPLIES, AND SERVICES, IF THE LATTER AMOUNT BE IN EXCESS OF THE FORMER.'