B-130081, JAN. 16, 1957

B-130081, JAN. 16, 1957

TO HONORABLE LEWIS L. STRAUSS, CHAIRMAN, ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO THE DEPUTY GENERAL MANAGER'S LETTER OF DECEMBER 12, 1956, REQUESTING OUR OPINION AS TO THE MERITS OF THE CLAIM OF THE BEN SCHAEFER BUILDING COMPANY, A SUBCONTRACTOR UNDER CPFF CONTRACT NO. AT/40- 1/-1965 BETWEEN MAXON CONSTRUCTION COMPANY AND THE COMMISSION.

THE CLAIM INVOLVES AN ERROR WHICH SCHAEFER ALLEGES IT MADE IN A BID SUBMITTED TO AND ACCEPTED BY MAXON. THE ALLEGED ERROR CONSISTED OF A FAILURE TO INCLUDE CERTAIN WORK IN THE SCHAEFER BID. THE EVIDENCE INDICATES THAT THE ERROR PROBABLY WOULD NOT HAVE OCCURRED BUT FOR SCHAEFER'S CARELESSNESS IN HANDLING CERTAIN ADDENDA TO THE BID INVITATION. THE WORK OMITTED WAS CERTAIN UNDERGROUND PIPING ADDED TO THE INVITATION BY BULLETIN NO. 2, PART OF WHICH HAD TO BE INSTALLED BY PLUMBING SUBCONTRACTOR AND PART BY A PIPING AND HEATING SUBCONTRACTOR. SCHAEFER DID NOT PROPOSE TO DO THESE TYPES OF WORK ITSELF AND INADVERTENTLY FORWARDED ITS ONLY COPY OF BULLETIN NO. 2 TO A PROSPECTIVE SUBCONTRACTOR WITHOUT REALIZING WHAT IT WAS OR THAT IT MADE ADDITIONS TO THE WORK. SCHAEFER DID NOT RECEIVE A QUOTATION FROM THE COMPANY TO WHICH IT HAD FORWARDED BULLETIN NO. 2 BUT DID RECEIVE, THE DAY BEFORE BID OPENING, FROM A PLUMBING SUBCONTRACTOR WHO HAD SEEN BULLETIN NO. 2 ELSEWHERE A TELEPHONE QUOTATION WHICH INCLUDED $8,205 FOR UNDERGROUND PIPING. SCHAEFER STATES IT ASKED THIS SUBCONTRACTOR WHETHER THE $8,205 COVERED ALL PIPING ADDED BY BULLETIN NO. 2 AND WAS TOLD IT DID. HOWEVER, IT IS NOW ALLEGED THAT THE $8,205 COVERED ONLY THE PIPING UNDER THE JURISDICTION OF THE PLUMBING TRADE AND DID NOT INCLUDE SOME $6,925 WORTH OF PIPING UNDER THE JURISDICTION OF THE PIPEFITTING TRADE.

SCHAEFER THEN ENDORSED ON THE BOTTOM OF ITS BID OF $118,836 THE FOLLOWING:

"IF UNDERGROUND PIPING OUTSIDE OF BUILDING IS OMITTED DEDUCT $8,205.00.'

THIS BID WAS DELIVERED TO MAXON. SHORTLY BEFORE BID OPENING SCHAEFER TELEPHONED MAXON AND STATED IT HAD NOT RECEIVED BULLETINS NOS. 1 AND 2. MAXON TOLD SCHAEFER WHAT WAS IN THE BULLETINS AND SCHAEFER THEN OPENED ITS BID AND ADDED THE FOLLOWING NOTATION:

"BID DOES NOT INCLUDE BUL. NO. 1 AND ONLY UNDERGROUND PIPING IN BULLETIN NO. 2.'

THE DAY AFTER BID OPENING SCHAEFER ALLEGEDLY LEARNED FOR THE FIRST TIME THAT THE PLUMBING SUBCONTRACTOR'S QUOTATION OF $8,205 DID NOT INCLUDE ALL THE UNDERGROUND PIPING AND SCHAEFER ADVISED MAXON OF THE MISTAKE IN ITS BID.

THE DAY AFTER BID OPENING MAXON WROTE SCHAEFER ASKING WHETHER ITS BID OF $118,836 WAS A FIRM BID FOR ALL THE WORK, INCLUDING THAT COVERED BY BULLETINS NOS. 1 THROUGH 4. SEVERAL DAYS LATER MAXON AND SCHAEFER REPRESENTATIVES HAD A CONFERENCE AT WHICH SCHAEFER WAS ADVISED THAT IT MUST PERFORM THE WORK FOR $118,836, WITH THE RIGHT TO SUBMIT A CLAIM FOR ADDITIONAL COMPENSATION OF $6,925, OR BE HELD LIABLE FOR THE DIFFERENCE BETWEEN ITS BID AND THAT OF THE NEXT LOWEST BIDDER. THEREAFTER, SCHAEFER WROTE MAXON STATING THAT THE $118,836 BID WAS A "FIRM, COMPLETE BID," BUT THAT IT CONTAINED AN ERROR, AND THAT IT WAS CLAIMING AN ADDITIONAL $6,925 BECAUSE OF THE PIPING WORK OMITTED. ABOUT TWO WEEKS LATER MAXON ACCEPTED SCHAEFER'S BID FOR $118,836 BY A LETTER WHICH STATED THAT THE CLAIM FOR THE ADDITIONAL $6,925 HAD BEEN FORWARDED TO THE ATOMIC ENERGY COMMISSION FOR REVIEW AND DECISION.

IN OUR OPINION SCHAEFER'S CLAIM IS MERITORIOUS. WHILE IT MAY BE THAT A CONTRARY RESULT WOULD BE REACHED IF THE CLAIM HAD BEEN MADE FOR THE FIRST TIME AFTER ITS BID HAD BEEN ACCEPTED, AS TO WHICH WE EXPRESS NO OPINION, THE EVIDENCE PRESENTED SHOWS CLEARLY THAT SCHAEFER'S BID WAS ACCEPTED BY MAXON WITH FULL KNOWLEDGE OF THE ERROR CLAIMED, AND THAT THE ACCEPTANCE WAS SUBJECT TO CORRECTION IF AUTHORIZED. SCHAEFER HAD AGREED TO ACCEPTANCE OF ITS BID SUBJECT TO RESERVATION AS TO ITS CLAIM FOR OMITTED WORK. THERE WAS THUS NO UNQUALIFIED ACCEPTANCE OF AN UNQUALIFIED BID. UNDER THESE CIRCUMSTANCES, WE THINK THE ONLY QUESTION TO BE RESOLVED IS WHETHER SCHAEFER ACTUALLY HAD FAILED TO CONSIDER SOME OF THE UNDERGROUND PIPING WORK IN ITS BID. IN THIS CONNECTION, IT MAY BE NOTED THAT SCHAEFER'S BID CLEARLY SHOWED IT HAD ALLOWED ONLY $8,205 FOR ALL UNDERGROUND PIPING COVERED BY BULLETIN NO. 2, AND IT APPEARS PROBABLE THAT THIS FACT ALONE MIGHT INDICATE OMISSION OF PART OF THE PIPING.

ACCORDINGLY, IF IT BE ADMINISTRATIVELY DETERMINED THAT SCHAEFER'S BID OF $118,836 FAILED TO TAKE INTO CONSIDERATION ALL THE UNDERGROUND PIPING CALLED FOR BY BULLETIN NO. 2, WE BELIEVE IT IS ENTITLED TO ADDITIONAL COMPENSATION TO THE EXTENT OF THE FAIR VALUE OF THE OMITTED WORK, NOT IN EXCESS OF $6,925.