B-133797, SEP. 26, 1957

B-133797: Sep 26, 1957

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TO SECRETARY OF AGRICULTURE: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 13. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. THE WORK TO BE PERFORMED WAS DIVIDED INTO 17 ITEMS FOR BIDDING AND PAYMENT PURPOSES. AS A PART OF THE BID SCHEDULE THERE WERE SET FORTH THE NUMBER OF TREES AND STUMPS OF VARIOUS SIZES AND THE ESTIMATED COST OF REMOVING THEM AND OTHER RELATED WORK. THE TOTAL ESTIMATE FOR THIS ITEM WAS $1. PARAGRAPH 100.4 AND 100.5 OF THE TECHNICAL SPECIFICATION PROVIDES AS FOLLOWS: "100.4 ESTIMATE OF WORK AND PAYMENT SCHEDULE "AN ESTIMATE OF THE AMOUNT OF WORK AND OF THE COST THEREOF IS CONTAINED IN THE "CLEARING AND GRUBBING. - WORK ESTIMATE AND PAYMENT SCHEDULE" WHICH IS ATTACHED TO THE BID SCHEDULE. "100.5 PAYMENT "PAYMENT WILL BE MADE AT THE CONTRACT PRICE FOR "CLEARING AND GRUBBING" TO BE DETERMINED AS FOLLOWS: "THE BASIS OF PAYMENT FOR BOTH PARTIAL AND FINAL PAYMENTS WILL BE THE ACTUAL AMOUNT OF WORK PERFORMED OF THE DIFFERENT TYPES INDICATED IN THE "WORK ESTIMATE AND PAYMENT SCHEDULE" MULTIPLIED BY THE RESPECTIVE RATES SHOWN IN THE "WORK ESTIMATE AND PAYMENT SCHEDULE" AND THE SUM OF THESE PRODUCTS MULTIPLIED BY THE BID RATIO AS BID BY THE CONTRACTOR IN THE BID SCHEDULE.

B-133797, SEP. 26, 1957

TO SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 13, 1957, REQUESTING A DECISION RELATIVE TO AN ERROR ALLEGED BY HENDERSON HITE CONSTRUCTION COMPANY, BRADSTOWN, KENTUCKY, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. SCS-36-KY-57, ISSUED BY THE SOIL CONSERVATION SERVICE, LEXINGTON, KENTUCKY.

THE INVITATION REQUESTED BIDS FOR THE CONSTRUCTION OF AN EARTHFILLED FLOODWATER RETARDING STRUCTURE IN THE PLUM CREEK PILOT WATERSHED APPROXIMATELY ONE MILE SOUTHWEST OF NEED MORE, SHELBY COUNTY, KENTUCKY. THE WORK TO BE PERFORMED WAS DIVIDED INTO 17 ITEMS FOR BIDDING AND PAYMENT PURPOSES. ITEM 1 COVERS CLEARING AND GRUBBING. AS A PART OF THE BID SCHEDULE THERE WERE SET FORTH THE NUMBER OF TREES AND STUMPS OF VARIOUS SIZES AND THE ESTIMATED COST OF REMOVING THEM AND OTHER RELATED WORK. THE TOTAL ESTIMATE FOR THIS ITEM WAS $1,418.05. PARAGRAPH 100.4 AND 100.5 OF THE TECHNICAL SPECIFICATION PROVIDES AS FOLLOWS:

"100.4 ESTIMATE OF WORK AND PAYMENT SCHEDULE

"AN ESTIMATE OF THE AMOUNT OF WORK AND OF THE COST THEREOF IS CONTAINED IN THE "CLEARING AND GRUBBING--- WORK ESTIMATE AND PAYMENT SCHEDULE" WHICH IS ATTACHED TO THE BID SCHEDULE.

"100.5 PAYMENT

"PAYMENT WILL BE MADE AT THE CONTRACT PRICE FOR "CLEARING AND GRUBBING" TO BE DETERMINED AS FOLLOWS:

"THE BASIS OF PAYMENT FOR BOTH PARTIAL AND FINAL PAYMENTS WILL BE THE ACTUAL AMOUNT OF WORK PERFORMED OF THE DIFFERENT TYPES INDICATED IN THE "WORK ESTIMATE AND PAYMENT SCHEDULE" MULTIPLIED BY THE RESPECTIVE RATES SHOWN IN THE "WORK ESTIMATE AND PAYMENT SCHEDULE" AND THE SUM OF THESE PRODUCTS MULTIPLIED BY THE BID RATIO AS BID BY THE CONTRACTOR IN THE BID SCHEDULE. FOR THE PURPOSE OF MAKING PARTIAL PAYMENTS, THE WORK AREA WILL BE DIVIDED INTO SECTIONS AND PAYMENTS WILL BE DETERMINED FOR EACH SECTION AFTER THE WORK TO BE DONE IN EACH SECTION HAS BEEN COMPLETED.

"THE BID RATIO SHALL BE DETERMINED BY THE CONTRACTOR BID; THIS BID RATIO IS THE VALUE BY WHICH THE GOVERNMENT'S TOTAL ESTIMATED COST IS MULTIPLIED TO DETERMINE THE TOTAL AMOUNT BID. IN CASE OF ERRORS OF EXTENSION, THE BID RATIO SHALL GOVERN THE COMPUTATION.

"FOR EXAMPLE, ASSUME THAT THE TOTAL ESTIMATED COST SHOWN IN THE BID SCHEDULE IS TWO THOUSAND DOLLARS ($2,000.00) AND THAT THE CONTRACTOR ESTIMATES THAT HE CAN DO THE REQUIRED WORK FOR 90 PERCENT OF THE TOTAL COST ESTIMATED BY THE GOVERNMENT. THEN THE BID RATIO IS 0.90 (NINETY ONE- HUNDREDTHS) AND THE "TOTAL AMOUNT" BID WOULD BE OBTAINED BY MULTIPLYING THE "TOTAL ESTIMATED COST" BY THE "BID RATIO" AS FOLLOWS:

$2000 TIMES 0.90 EQUALS $1800.00 (TOTAL AMOUNT BID)

"THE COST OF EARTHFILL MADE NECESSARY AS THE RESULT OF GRUBBING OPERATIONS WILL NOT BE PAID FOR DIRECTLY BUT SHALL BE INCLUDED IN THE CONTRACT PRICE FOR "CLEARING AND GRUBBING.'"

IN RESPONSE TO THE INVITATION HENDERSON HITE CONSTRUCTION COMPANY, INC., SUBMITTED A BID OFFERING TO PERFORM THE WORK FOR THE PRICES SET FORTH FOR THE VARIOUS ITEMS. ALTHOUGH THE BID DID NOT SHOW AN AGGREGATE TOTAL FOR ALL ITEMS, THE AGGREGATE TOTAL WAS $15,402.96, IF THE BID ON ITEM 1 WAS CONSIDERED AS $1,000. THE FOUR OTHER BIDS RECEIVED WERE IN THE TOTAL AMOUNTS OF $20,842.11, $21,822.01, $29,018.27, AND $29,028.27.

THE BID OF HENDERSON HITE CONSTRUCTION COMPANY, INC., ON ITEM 1 WAS AS FOLLOWS:

CHART

"ITEM UNIT

NO. WORK OR MATERIAL QUANTITY UNIT PRICE AMOUNT

1. CLEARING AND GRUBBING (REFER TO TECHNICAL SPECIFICATIONS FOR

EXPLANATION OF BIDDING PROCEDURE.)

$1,418.05 TIMES $1,000.00 EQUALS XXX$1,000.00

TOTAL ESTIMATED COST BID RATIO

IT IS REPORTED THAT UPON THE OPENING OF THE BIDS ON JUNE 11, 1957, IT WAS NOTED THAT THE BIDDER HAD NOT QUOTED PROPERLY ON ITEM 1; THAT ON THE SAME DAY THE CONTRACTING OFFICER CONTACTED THE BIDDER BY TELEPHONE TO ASCERTAIN HIS INTENTION; THAT THE BIDDER ADVISED THAT IT WAS HIS INTENTION TO QUOTE THE GOVERNMENT'S ESTIMATED COST OF $1,418.05; AND THAT THE BID RATIO SHOULD HAVE BEEN 1.0. THIS WAS SUBSEQUENTLY CONFIRMED IN WRITING AND IN EXPLANATION OF THE ERROR THE BIDDER ADVISED THAT WHILE HE NOW UNDERSTANDS THE PROCEDURE THAT SHOULD HAVE BEEN FOLLOWED IN MAKING HIS INTENTION CLEAR, IN THE PAST ALL HIS ESTIMATING AND BIDDING EXPERIENCE ON WORK OF THIS NATURE HAD BEEN ON A PER ACRE BASIS AND THAT HE WAS UNFAMILIAR WITH THE ESTIMATE AND RATIO BASIS AS SET OUT IN THE INVITATION INVOLVED. THE BIDDER REQUESTS THAT HIS BID BE CORRECTED TO SHOW A RATIO OF 1.0 FOR ITEM 1 WHICH WOULD MAKE THE TOTAL FOR THE ITEM $1,418.05 AND THE AGGREGATE TOTAL BID $15,821.01.

THE BID RATIO QUOTED BY THE OTHER BIDDERS ON ITEM 1 WAS 1.0, 1.0, 1.0, 1.5 AND 2.0. SINCE IT WAS EVIDENT THAT THE BID OF HENDERSON HITE CONSTRUCTION COMPANY, INC., IF CORRECTED, WOULD STILL BE SUBSTANTIALLY LOWER THAN THE NEXT LOW BID, AND SINCE IT WAS ADVISABLE TO MAKE THE AWARD PROMPTLY, THE BID WAS ACCEPTED ON JUNE 28, 1957, AS SUBMITTED, SUBJECT TO THE CORRECTION OF THE AMOUNT SHOWN FOR ITEM 1, IF AUTHORIZED.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD THERE APPEARS LITTLE, IF ANY, DOUBT THAT AN ERROR WAS MADE ON ITEM 1 AS ALLEGED. ACCORDINGLY, SINCE THE BID WAS OBVIOUSLY IMPROPER ON ITS FACE AND THE BIDDER PROMPTLY ADVISED AS TO HIS INTENDED BID FOR ITEM 1, CONTRACT NO. 12-10-1150-106, MAY BE AMENDED TO PROVIDE FOR A BID RATIO OF 1.0 FOR ITEM 1, AS RECOMMENDED BY THE CONTRACTING OFFICER.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO THE CONTRACT.

THE COPY OF THE BID AND ATTACHMENTS ARE RETURNED. THE OTHER PAPERS ARE BEING RETAINED HERE.