B-130346, JAN. 28, 1957

B-130346, JAN. 28, 1957

TO HONORABLE L. N. MCCLELLAN, ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 11, 1957, RELATIVE TO CERTAIN ALLEGED ERRORS MADE BY MISCO-WEST COAST, A JOINT VENTURE COMPRISING MISCO, INC., AND WEST COAST ELECTRIC COMPANY, NC., BOTH OF SEATTLE, WASHINGTON, IN A BID WHICH WAS SUBMITTED IN RESPONSE TO AN INVITATION ON SPECIFICATIONS NO. DC-4783, FOR THE CONSTRUCTION OF THE HELENA VALLEY PUMPING PLANT, HELENA VALLEY UNIT, MONTANA, HELENA-GREAT FALLS DIVISION, MISSOURI RIVER BASIN PROJECT.

YOU REQUEST A DECISION AS TO (1) WHETHER WE WOULD BE REQUIRED TO OBJECT TO AN AWARD BY YOU AS CONTRACTING OFFICER OF A CONTRACT TO MISCO-WEST COAST ON THE BASIS OF ITS TOTAL BID PRICE AS CORRECTED TO AGREE WITH ITS ALLEGATIONS OF ERROR; (2) WHETHER, IF SO REQUIRED TO OBJECT, THE BID SHOULD BE DISREGARDED OR CONSIDERED FOR AWARD ON ITS ORIGINAL BASIS; AND (3) WHETHER, IF IT SHOULD BE DECIDED THAT AN AWARD WOULD BE PROPER ON EITHER SUCH CORRECTED OR THE ORIGINAL BASIS, THE AWARD COULD BE MADE WITHOUT RECEIPT OF REPRESENTATIONS FROM THE BIDDER, AS REQUIRED UNDER THE TERMS OF THE INVITATION, WITH RESPECT TO ANY ARRANGEMENT MADE BY THE BIDDER FOR PAYMENT TO ANY COMPANY OR PERSON (OTHER THAN A FULL-TIME BONA FIDE EMPLOYEE WORKING FOR THE COMPANY) A FEE, COMMISSION, PERCENTAGE OR BROKERAGE FEE, CONTINGENT UPON OR RESULTING FROM THE AWARD OF THE CONTRACT.

THE TOTAL BID OF MISCO-WEST COAST AS SET FORTH IN ITS COMPLETED BID FORM IS IN THE AMOUNT OF $859,524.15. BY TELEGRAM RECEIVED ON THE OPENING DATE, THE BIDDER REDUCED ITS PRICE ON ITEM NO. 25 OF THE BIDDING SCHEDULE FROM $0.44 TO $0.26 PER POUND FOR FURNISHING AND INSTALLING TRASH-RACKS, AND STATED THAT "THIS REDUCES TOTAL FOR SCHEDULE BY AMOUNT OF $28,170.' AS THUS ADJUSTED, THE TOTAL BID WAS $831,354.15. HOWEVER, THE BID WAS EVALUATED AT $830,285.40 BECAUSE OF A DISCREPANCY OF $1,068.75 BETWEEN THE UNIT PRICE OF $0.095 AND THE TOTAL PRICE OF $1,187.50 FOR ITEM 51. THE ABSTRACT OF BIDS SHOWS THAT SEVEN OTHER BIDS WERE RECEIVED IN AMOUNTS RANGING FROM $1,154,622 TO $1,630,729 AND THAT THE GOVERNMENT ENGINEER'S ESTIMATE WAS $894,086 FOR COMPLETING THE WORK IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS.

IT IS REPORTED THAT ON DECEMBER 7, 1956, MISCO-WEST COAST ADVISED YOUR OFFICE THAT IT HAD MADE SUBSTANTIAL ERRORS IN THE PREPARATION OF THE BID AND REQUESTED A HEARING ON THE SUBJECT. ON DECEMBER 10, 1956, A REPRESENTATIVE FROM EACH OF THE CONCERNED JOINT VENTURERS AND FROM THE SURETY ON THEIR BID BOND CALLED AT YOUR OFFICE TO DISCUSS THE MATTER AND INDICATED THAT THEY DESIRED EITHER THAT THEIR BID BE CORRECTED OR THAT THEY BE RELIEVED OF ANY BID OBLIGATION. ON DECEMBER 13, YOU RECEIVED A TELEGRAM FROM THE LAW FIRM OF LYCETTE, DIAMOND AND SYLVESTER STATING THAT MISCO-WEST COAST'S BID HAD BEEN FOUND TO BE GROSSLY IN ERROR AND THAT THE BIDDER REQUESTED RELIEF FROM ACCEPTANCE. ON DECEMBER 26, 1956, THERE WAS RECEIVED A LETTER DATED DECEMBER 20, 1956, FROM THE BIDDER, TOGETHER WITH AFFIDAVITS, WORKING PAPERS AND A COPY OF "ADDRESS BY JOSEF DIAMOND" ON THE SUBJECT OF "MISTAKES IN BIDDING.'

THE ALLEGED ERRORS IN BID AGGREGATE THE SUM OF $43,978.75, INCLUDING THE ABOVE AMOUNT OF $1,068.75 WHICH WAS DEDUCTED IN EVALUATING THE BID ON THE BASIS THAT THE TOTAL AMOUNT STATED FOR ITEM 51 DOES NOT AGREE WITH THE STATED UNIT PRICE. THAT ERROR OBVIOUSLY OCCURRED AS A RESULT OF A MISPLACED DECIMAL POINT IN THE UNIT PRICE. ERRORS WERE ALSO ALLEGED WITH RESPECT TO THE PRICES OF $120,870, $540 AND $40,690 ($68,860 MINUS $28,170) QUOTED ON ITEMS 1, 12 AND 25, AND IT WAS CONTENDED THAT SUCH PRICES SHOULD BE INCREASED BY THE AMOUNTS OF $34,100, $4,860 AND $3,950, RESPECTIVELY.

ON ITEM 1, THE WORKSHEETS INDICATE A PROBABLE OMISSION OF APPROXIMATELY $31,000 TO COVER LABOR COSTS FOR PUMP OPERATION DURING A ONE-YEAR PERIOD, AND THE BIDDER ADDED 10 PERCENT TO THAT FIGURE FOR PROFIT IN CLAIMING AN INCREASE OF $34,100. ON ITEM 12, THE WORKSHEETS SHOW A TOTAL COST OF $4,090 AND ADDITIONS OF $900 AND $410 FOR OVERHEAD AND PROFIT, A "ROUGH- TOTAL BID" OF $5,400, A ,BID UNIT PRICE" OF $54 AND A "BID TOTAL" OF $540. HOWEVER, AS COMPARED WITH THE ALLEGEDLY INTENDED UNIT PRICE OF $540, THE OTHER BIDS SHOWED UNIT PRICES RANGING FROM $80 TO $300 ON THIS ITEM AND THE GOVERNMENT ENGINEER'S ESTIMATE WAS ONLY $100 PER UNIT.

ON ITEM 25, THE WORKSHEETS SHOW THAT A CHANGE WAS MADE IN THE UNIT PRICE TO $0.285 AFTER THE DATE OF OPENING OF THE BID, BASED UPON OTHER CHANGES SHOWING A TOTAL COST OF $33,745, $7,420 FOR OVERHEAD, $3,370 FOR PROFIT AND A ROUGH TOTAL BID PRICE OF $44,535. IN THE BID TOTAL COLUMN THE AMOUNT FOR ITEM 25 WAS CHANGED TO $44,602.50 WHICH IS $3,912.50 IN EXCESS OF THE AMENDED BID PRICE OF $40,690. HOWEVER, THE CLAIM OF ERROR IN THE AMOUNT OF $3,950 IS BASED UPON AN ALLEGED PREVIOUS ALLOCATION OF $11,370 FOR OVERHEAD ON THIS ITEM, REPRESENTING 22 PERCENT OF $51,674, ESTIMATED COST. THE BIDDER CONTENDS THAT THIS OVERHEAD WAS PART OF A FIXED ESTIMATED TOTAL, HENCE NOT SUBJECT TO REDUCTION, AND THAT, THROUGH ERROR, THIS AMOUNT WAS REDUCED TO $7,420 BY APPLYING THE 22 PERCENT TO THE NEW ESTIMATED COST.

NO SPECIFIC INFORMATION HAS BEEN FURNISHED AS TO WHY THE BIDDER DID NOT CLAIM THE ADDITIONAL SUM OF $3,912.50 ON ITEM 25. THE WORKSHEETS SHOW FURTHER CHANGES AS HAVING BEEN MADE IN THE TOTALS FOR ITEMS 26, 27 AND 29, AS TO WHICH IT IS IMPLIED IN AN AFFIDAVIT FURNISHED BY THE BIDDER THAT SUCH CHANGES REPRESENTED A PART OF THE REDUCTION OF $28,170 IN THE ORIGINAL PRICE STATED FOR ITEM 25. THIS MIGHT ACCOUNT FOR THE FAILURE TO CLAIM THE ADDITIONAL SUM OF $3,912.50 ON ITEM 25.

YOU STATE THAT YOUR REVIEW OF THE MATTER HAS DISCLOSED NOTHING CAUSING YOU TO DOUBT THE ALLEGATIONS OF ERROR OR THAT THE BIDDER ACTUALLY INTENDED TO QUOTE PRICES FOR ITEMS 1, 12, 25 AND 51, INCREASED IN THE RESPECTIVE AMOUNTS OF $34,100, $4,860, $3,950 AND $1,068.75. IN CONNECTION WITH ITEM 25, IT HAS BEEN ASSUMED THAT THE BIDDER INTENDED TO QUOTE A UNIT PRICE ON THE CONCERNED 156,500 POUNDS WHICH WOULD COMPENSATE FOR THE ADDITIONAL $3,950, OR APPROXIMATELY SO, BUT THE RECORD FURNISHED FAILS TO SHOW THAT THE HIGHER RATE HAD BEEN DETERMINED PRIOR TO SUBMISSION OF THE BID, OR HOW THE RATE USED WAS IN ERROR. IT IS ALSO REPORTED THAT THE LUMP-SUM PRICES OF THE LOW BID, WITH THE INCREASES FOR THE FOUR ITEMS NOW CLAIMED BY THE BIDDER, APPEAR TO BE REASONABLE IN OVERALL COMPARISON WITH YOUR ENGINEER'S ESTIMATE AND THE PRICES OF THE OTHER BIDS RECEIVED, AND THAT THE TOTAL BID PRICE SO INCREASED WOULD STILL BE LESS THAN THE ENGINEER'S ESTIMATE AND SUBSTANTIALLY LESS THAN ALL OTHER BIDS RECEIVED. RELATIVE TO THE BIDDER'S FAILURE TO STATE WHETHER OR NOT AN AGENT HAD BEEN EMPLOYED TO SECURE THE CONTRACT, YOU INDICATE THAT NO RESPONSE TO A LETTER AND TELEGRAM CONCERNING THIS MATTER HAS BEEN RECEIVED FROM THE BIDDER.

PARTICULARLY IN REGARD TO ITS BID PRICE FOR ITEM 1 OF THE BIDDING SCHEDULE, WE ARE OF THE OPINION THAT THE BIDDER HAS FURNISHED SUFFICIENT EVIDENCE TO SHOW THAT A MISTAKE WAS MADE BY OMITTING A SUBSTANTIAL AMOUNT TO COVER THE COST OF NECESSARY PUMPING OPERATIONS. THIS WOULD SEEM TO WARRANT THE CONCLUSION THAT THE AWARD CANNOT BE MADE TO THE LOW BIDDER ON THE BASIS OF ITS ORIGINAL BID AS AMENDED BY THE TELEGRAM RECEIVED PRIOR TO OPENING. ON THE OTHER HAND, WE FEEL THAT THE BIDDER HAS NOT ESTABLISHED WITH THE REQUIRED DEGREE OF CERTAINTY WHAT ITS INTENDED BID PRICES WERE WITH RESPECT TO ITEMS 1, 12 AND 25 SO AS TO PERMIT A CHANGE IN ITS BID PRICES. SEE 17 COMP. GEN. 575; 34 ID. 633.

ACCORDINGLY, YOU ARE ADVISED THAT THE BID OF MISCO-WEST COAST SHOULD BE DISREGARDED IN THE MAKING OF ANY AWARD UNDER THE INVITATION ON SPECIFICATIONS NO. DC-4783.