B-129736, NOVEMBER 29, 1956, 36 COMP. GEN. 441

B-129736: Nov 29, 1956

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THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S ALLEGATION OF ERROR WAS NOT MADE IN GOOD FAITH. A GREATER DEGREE OF PROOF IS NECESSARY TO ALLOW CORRECTION OF AN ERRONEOUS BID THAN IS REQUIRED TO JUSTIFY WITHDRAWAL OF A BID BEFORE AWARD. 1956: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 6. DA-36- 058-CIVENG-57-18 WAS AWARDED. PROVISION WAS MADE FOR QUOTING A JOB PRICE FOR THE WORK AT BOTH SITES. 625 AND THE GOVERNMENT'S COST ESTIMATE FOR THE WORK AT BOTH SITES WAS $107. WAS FURNISHED BY AN EMPLOYEE OF HIS OFFICE. IT DISCOVERED THAT IT HAD MADE AN ERROR IN ITS BID IN THAT ITS TOTAL FIELD OVERHEAD ITEM WAS INADVERTENTLY OMITTED RESULTING IN AN ERROR OF $14.

B-129736, NOVEMBER 29, 1956, 36 COMP. GEN. 441

BIDS - MISTAKES - WITHDRAWAL OR CORRECTIONS - BURDEN OF PROOF IN ORDER TO FIND A BIDDER BY NOTICE OF AWARD AFTER RECEIPT OF EVIDENCE WHICH REASONABLY ESTABLISHES THE BIDDER'S OMISSION OF A MATERIAL ITEM OF COST FROM THE BID PRICE, THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S ALLEGATION OF ERROR WAS NOT MADE IN GOOD FAITH. A GREATER DEGREE OF PROOF IS NECESSARY TO ALLOW CORRECTION OF AN ERRONEOUS BID THAN IS REQUIRED TO JUSTIFY WITHDRAWAL OF A BID BEFORE AWARD.

TO THE SECRETARY OF THE ARMY, NOVEMBER 29, 1956:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 6, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY ( LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE RYSGAARD CONTRACTING COMPANY, ST. PAUL, MINNESOTA, ALLEGES IT MADE ITS BID ON WHICH CONTRACT NO. DA-36- 058-CIVENG-57-18 WAS AWARDED.

THE OFFICE OF THE DISTRICT ENGINEER, PITTSBURGH DISTRICT, CORPS OF ENGINEERS, BY INVITATION NO. CIVENG-36-058-57-11, REQUESTED BIDS --- TO BE OPENED AUGUST 15, 1956--- FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR CLEANING AND PAINTING THE EXTERIOR SURFACES OF 13 VERTICAL LIFT GATES AND ONE TAINTER TYPE GATE AT EMSWORTH LOCKS AND DAM, OHIO RIVER, ITEM 1, AND FOR CLEANING AND PAINTING BOTH THE INTERIOR AND EXTERIOR SURFACES OF 10 VERTICAL LIFT GATES AND THE EMERGENCY BULKHEADS AT MONTGOMERY ISLAND LOCKS AND DAM, OHIO RIVER, ITEM 2. UNDER ITEM 3, PROVISION WAS MADE FOR QUOTING A JOB PRICE FOR THE WORK AT BOTH SITES. IN RESPONSE THE RYSGAARD CONTRACTING COMPANY SUBMITTED A BID DATED AUGUST 15, 1956, OFFERING TO PERFORM THE WORK COVERED BY ITEM 1 AT THE JOB PRICE OF $36,027.60; TO PERFORM THE WORK COVERED BY ITEM 2 AT A JOB PRICE OF $50,778.60; AND TO PERFORM THE WORK COVERED BY ITEM 3 AT A JOB PRICE OF $86,806.20. THE FIVE OTHER BIDDERS ON ITEM 3 QUOTED JOB PRICES RANGING FROM $127,339 TO $245,625 AND THE GOVERNMENT'S COST ESTIMATE FOR THE WORK AT BOTH SITES WAS $107,670, WHICH AMOUNT DOES NOT INCLUDE THE ITEM OF PROFIT.

IN HIS UNDATED FINDINGS OF FACT THE CONTRACTING OFFICER STATES THAT ON AUGUST 15, 1956, A REPRESENTATIVE OF THE RYSGAARD CONTRACTING COMPANY TELEPHONED REQUESTING THE AMOUNTS OF THE LOW BID THE THE GOVERNMENT'S ESTIMATE WHICH, HE STATED, WAS FURNISHED BY AN EMPLOYEE OF HIS OFFICE; THAT BY TELEGRAM DATED AUGUST 16, 1956, THE COMPANY ADVISED THAT, IN RECOMPUTING ITS FIGURES, IT DISCOVERED THAT IT HAD MADE AN ERROR IN ITS BID IN THAT ITS TOTAL FIELD OVERHEAD ITEM WAS INADVERTENTLY OMITTED RESULTING IN AN ERROR OF $14,865; AND THAT THE COMPANY REQUESTED THAT ITS BID BE CORRECTED ACCORDINGLY OR THAT IT BE PERMITTED TO WITHDRAW ITS BID ON THE PROJECT.

BY LETTER DATED AUGUST 17, 1956, THE COMPANY WAS REQUESTED TO FURNISH A WRITTEN STATEMENT EXPLAINING ITS ERROR AND EVIDENCE IN SUPPORT THEREOF. BY LETTER DATED AUGUST 22, 1956, THE COMPANY SUBMITTED AN AFFIDAVIT IN WHICH IT EXPLAINED HOW THE ERROR OCCURRED, AND PHOTOSTATIC COPIES OF THE WORKSHEETS USED IN COMPUTING ITS BID PRICES, AND A REVISED UNIT PRICE SCHEDULE. IT IS REPORTED THAT ON AUGUST 29, 1956, A CONFERENCE WAS HELD WITH MR. RYSGAARD AT WHICH CONFERENCE HE SUBMITTED AN ORIGINAL WORKSHEET AND A SUPPLEMENTAL AFFIDAVIT DATED AUGUST 29, 1956, WHICH READS, IN PART, AS FOLLOWS:

MAKING MY BID, I COMPUTED MY BASIC UNIT COSTS BY TAKING THE WAGE RATE FOR AN HOUR TOGETHER WITH THE ACTUAL ANTICIPATED COVERED IN SAID HOUR, PLUS THE COST OF MATERIAL AND NORMAL PROFIT THEREFORE, THEREBY ARRIVING AT A BASIC UNIT COST COVERING LABOR, MATERIAL, AND PROFIT, AS SHOWN ON WORK SHEETS 1, A, B AND C. THESE UNIT COSTS WERE THEN EXTENDED ON THE BASIS OF THE TOTAL AREAS FOR THE VARIOUS UNITS OF THE TOTAL JOB, AS SHOWN ON WORK SHEETS 2 AND 3. I THEN DEVELOPED INDIVIDUAL COSTS FOR THE VARIOUS COMPONENT PARTS OF THE JOB, SUCH AS MATERIAL QUANTITIES, AS SHOWN ON THE TOP HALF OF WORK SHEET 4, DAY LABOR, AS SHOWN ON WORK SHEET 5, AND A GENERAL FIELD OVERHEAD SCHEDULE, AS SHOWN IN ITS ENTIRE FORM PLUS PROPORTIONATE ALLOCATIONS TO THE VARIOUS BID ITEMS ON WORK SHEET 6, INCLUDING AMONG OTHER THINGS, EQUIPMENT REQUIREMENTS, AS DETAILED ON THE LOWER HALF OF WORK SHEET 4. THIS SECOND COMPUTATION OF MATERIAL QUANTITIES AND DAY LABOR IS MERELY A CROSS CHECK TO VERIFY THE BASIC UNIT COSTS. HOWEVER THE COSTS COMPUTED IN THE GENERAL FIELD OVERHEAD SCHEDULE ARE A NEW COMPUTATION OF COSTS WHICH MUST BE PRO-RATED BACK OVER THE BASIC UNIT COSTS TO INCREASE THE BID PRICES ON THE VARIOUS COMPONENT PARTS OF THE TOTAL JOB.

4. THE COMPUTATION WHICH WAS MADE ON SHEET 6 SHOWS THE TOTAL FIELD OVERHEAD COST TOGETHER WITH AN ALLOCATION OF THE PORTION OF FIELD OVERHEAD COSTS WHICH I INTENDED TO ADD TO THE EMSWORTH JOB IN THE AMOUNT OF $9,125.00 AND THE MONTGOMERY JOB IN THE AMOUNT OF $10,125.00 IF MY BID ON EITHER OF THOSE JOBS WERE ACCEPTED WITHOUT MY BEING AWARDED THE ENTIRE CONTRACT.

5. IT WILL BE NOTED THAT THE TOTALS AS ALLOCATED FOR THE EMSWORTH JOB AND THE MONTGOMERY JOB WHEN ADDED TOGETHER TOTAL MORE THAN THE TOTAL FIELD OVERHEAD SCHEDULE, THE REASON FOR THIS BEING THAT CERTAIN ITEMS ARE REPEATED IN LIKE AMOUNT FOR EACH JOB AND THEREBY WILL SHOW ONLY ONCE IN THE TOTAL FIELD OVERHEAD WHICH IS APPLICABLE TO THE COMBINED TOTAL BID. THUS, THE COMPUTATION ON WORK SHEET 6 SHOWS THAT MY INTENDED BID ON THE TOTAL CONTRACT WAS $101,671.20 CONSISTING OF $86,806.20 BASIC UNIT COSTS AND $14,865.00 FIELD OVERHEAD COSTS; THAT MY INTENDED BID ON THE EMSWORTH JOB WAS $45,152.60 CONSISTING OF $36,027.60 BASIC UNIT COSTS AND $9,125.00 FIELD OVERHEAD COSTS AND THAT MY INTENDED BID ON THE MONTGOMERY JOB WAS $60,903.60 CONSISTING OF $50,778.60 BASIC UNIT COSTS AND $10,125.00 FIELD OVERHEAD COSTS.

THE RECORD SHOWS THAT THE DISTRICT ENGINEER (CONTRACTING OFFICER) SUBMITTED THE MATTER OF THE ALLEGED ERROR BY THE RYSGAARD CONTRACTING COMPANY TO THE OFFICE OF THE CHIEF OF ENGINEER FOR CONSIDERATION, WITH HIS SPECIFIC FINDING THAT THE EVIDENCE PRESENTED CLEARLY AND CONVINCINGLY ESTABLISHED THE EXISTENCE OF A MISTAKE, BUT WAS INSTRUCTED THAT THE BID OF THE COMPANY SHOULD BE CONSIDERED FOR AWARD IN THE FORM SUBMITTED. ACCORDINGLY, ON OCTOBER 1, 1956, THE BID WAS ACCEPTED AND THE RYSGAARD CONTRACTING COMPANY NOTIFIED OF THE AWARD OF A CONTRACT FOR THE WORK COVERED BY ITEM 3 (WORK AT BOTH SITES) AT ITS ORIGINAL BID PRICE OF $86,806.20. IN THE LETTER ADVISING OF THE AWARD THE COMPANY WAS INFORMED THAT THE CHIEF OF ENGINEERS HAD DETERMINED THAT CLEAR AND CONVINCING EVIDENCE OF THE ERROR HAD NOT BEEN SUBMITTED BY THE COMPANY.

BY LETTER DATED OCTOBER 15, 1956, THE RYSGAARD CONTRACTING COMPANY PROTESTED THE ACTION OF THE CORPS OF ENGINEERS IN AWARDING A CONTRACT TO IT ON THE BASIS OF ITS ORIGINAL BID PRICE FOR ITEM 3. IN ITS LETTER THE COMPANY CONTENDED THAT, WHILE THE EVIDENCE SUBMITTED BY IT MIGHT NOT BE SUFFICIENT TO ESTABLISH ITS ALLEGED BID PRICE, IT WAS SUFFICIENT TO ESTABLISH THAT AN ERROR WAS MADE IN ITS BID, AS ALLEGED.

IN HIS FINDINGS OF FACT, THE CONTRACTING OFFICER STATED THAT FROM SAMPLES OF THE COMPANY'S WORKSHEETS FOR BIDS ON OTHER JOBS, IT APPEARS THAT THE COMPANY USUALLY DID SEPARATELY COMPUTE OVERHEAD AND ADJUST ITS UNIT COSTS ACCORDINGLY; AND THAT AN EXAMINATION OF THE COMPANY'S ORIGINAL WORKSHEETS FOR THE SUBJECT PROJECT REVEALS THAT THE AMOUNT OF $14,865 SHOWN ON SHEET SIX, REPRESENTING FIELD OVERHEAD AND COSTS AND INCLUDING FIELD OFFICE, EQUIPMENT RENTAL AND MAINTENANCE, TELEPHONE, TRAVEL, FREIGHT, SETTING UP AT JOB, AND SUBSISTENCE, WERE OMITTED FROM THE BID AS ALLEGED BY THE COMPANY. IT WAS ALSO STATED THAT AN APPARENT ERROR IN COMPUTATION AMOUNTING TO $8,236.80 IN FAVOR OF THE COMPANY WAS DISCOVERED ON THE COMPANY'S WORKSHEETS.

WHILE IT IS TRUE THAT THE RESPONSIBILITY FOR THE PREPARATION OF A BID IS UPON THE BIDDER, WHO ORDINARILY MUST BEAR THE CONSEQUENCES OF AN ERROR IN THE BID UPON WHICH A CONTRACT IS BASED, THAT RULE DOES NOT ENTITLE THE GOVERNMENT TO TAKE ADVANTAGE OF A BIDDER'S ERROR WHEN, AS IN THE PRESENT CASE, IT HAS BEEN ALLEGED AND SATISFACTORILY ESTABLISHED PRIOR TO AWARD. THE GENERAL RULE IS THAT THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE NASON COAL COMPANY V. UNITED STATES, 64 C.1CLS. 526; RESTATEMENT OF THE LAW OF CONTRACTS, SECTION 503; AND WILLISTON ON CONTRACTS, SECTION 1578. ALSO SEE MOFFETT, HODGKINS, AND CLARKE COMPANY V. ROCHESTER, 178 U.S. 373; KEMP V. UNITED STATES, 38 F.1SUPP. 568; ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.1CLS. 466; AND 17 COMP. GEN. 575, 576. UNDERTAKING TO BIND A BIDDER BY ACCEPTANCE OF A BID AFTER NOTICE OF A CLAIM OF ERROR BY THE BIDDER, THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S CLAIM WAS NOT MADE IN GOOD FAITH. THE DEGREE OF PROOF REQUIRED TO JUSTIFY WITHDRAWAL OF A BID BEFORE AWARD IS IN NO WAY COMPARABLE TO THAT NECESSARY TO ALLOW CORRECTION OF AN ERRONEOUS BID.

SINCE THE NOTICE OF AWARD WAS GIVEN AFTER RECEIPT OF EVIDENCE BY THE CONTRACTING OFFICER REASONABLY ESTABLISHING THE BIDDER'S OMISSION FROM HIS BID PRICE OF A MATERIAL ITEM OF COST, AND SINCE IT IS UNDERSTOOD THAT THE CONTRACTOR HAS NOT EXECUTED THE CONTRACT OR FURNISHED A PERFORMANCE OR PAYMENT BOND, THE NOTICE OF AWARD SHOULD BE CANCELED.

THE CONTRACTING OFFICER'S UNDATED FINDINGS OF FACT; THE AFFIDAVITS OF MR. RYSGAARD; THE CONTRACTOR'S ORIGINAL AND REVISED WORKSHEETS; AND THE ABSTRACT OF BIDS ARE BEING RETAINED. THE OTHER PAPERS ARE RETURNED.