B-136044, JUN. 23, 1958

B-136044: Jun 23, 1958

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TO SECRETARY OF AGRICULTURE: REFERENCE IS MADE TO A LETTER DATED JUNE 3. THE BID WAS ACCOMPANIED BY A BID GUARANTEE IN THE FORM OF A CERTIFIED CHECK FOR $3. BUSH STATED THAT HE REALIZED THE AMOUNT OF WORK INVOLVED AND THAT HE WAS CONVINCED THAT THE WORK COULD BE PERFORMED FOR THE QUOTED AMOUNT OF $72. THE BID OF THE BUSH CONSTRUCTION COMPANY FOR THE PROJECT WAS ACCEPTED AND. PERFORMANCE AND PAYMENT BONDS WERE FORWARDED TO THE COMPANY FOR EXECUTION AND RETURN. IT APPEARS THAT SUBSEQUENTLY THE BUSH CONSTRUCTION COMPANY WAS UNABLE TO OBTAIN THE REQUIRED PAYMENT AND PERFORMANCE BONDS IN SUPPORT OF THE CONTRACT- - ALTHOUGH IT APPARENTLY HAD NO DIFFICULTY IN OBTAINING SUCH BONDS FOR A SIMILAR CONTRACT AWARDED ABOUT SIX MONTHS LATER.

B-136044, JUN. 23, 1958

TO SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO A LETTER DATED JUNE 3, 1958, WITH ENCLOSURES, FROM THE DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, FOREST SERVICE, FURNISHING THE REPORT REQUESTED BY OUR OFFICE WITH RESPECT TO THE PROPRIETY OF THE CANCELLATION OF A BID SUBMITTED BY THE BUSH CONSTRUCTION COMPANY, LADYSMITH, WISCONSIN, TO THE FOREST SERVICE FOR CERTAIN CONSTRUCTION WORK IN CONNECTION WITH THE BEAVER RIVER ROAD F.R. NO. 397-A PROJECT.

IN RESPONSE TO INVITATION NO. 38, ISSUED BY THE FOREST SERVICE, REGION 9, MILWAUKEE, WISCONSIN, THE BUSH CONSTRUCTION COMPANY SUBMITTED A BID OFFERING TO FURNISH ALL LABOR, EQUIPMENT, AND MATERIALS AND PERFORM ALL WORK FOR THE CONSTRUCTION OF THE BEAVER RIVER FOREST ROAD NO. 397-A PROJECT LOCATED IN THE SUPERIOR NATIONAL FOREST, LAKE COUNTY, MINNESOTA, IN ACCORDANCE WITH PLANS AND SPECIFICATIONS FOR A TOTAL PRICE OF $72,917.15. THE BID WAS ACCOMPANIED BY A BID GUARANTEE IN THE FORM OF A CERTIFIED CHECK FOR $3,650. IN VIEW OF THE VERY LOW AMOUNT OF THE BID OF THE BUSH CONSTRUCTION COMPANY, AN OFFICIAL OF THE FOREST SERVICE CALLED THE COMPANY ON DECEMBER 30, 1957, AT WHICH TIME MR. BUSH STATED THAT HE REALIZED THE AMOUNT OF WORK INVOLVED AND THAT HE WAS CONVINCED THAT THE WORK COULD BE PERFORMED FOR THE QUOTED AMOUNT OF $72,917.15. THEREFORE, BY LETTER DATED DECEMBER 31, 1957, THE BID OF THE BUSH CONSTRUCTION COMPANY FOR THE PROJECT WAS ACCEPTED AND, BY LETTER DATED JANUARY 2, 1958, THE FORMAL CONTRACT, PERFORMANCE AND PAYMENT BONDS WERE FORWARDED TO THE COMPANY FOR EXECUTION AND RETURN. IT APPEARS THAT SUBSEQUENTLY THE BUSH CONSTRUCTION COMPANY WAS UNABLE TO OBTAIN THE REQUIRED PAYMENT AND PERFORMANCE BONDS IN SUPPORT OF THE CONTRACT- - ALTHOUGH IT APPARENTLY HAD NO DIFFICULTY IN OBTAINING SUCH BONDS FOR A SIMILAR CONTRACT AWARDED ABOUT SIX MONTHS LATER--- AND AFTER DUE NOTICE OF THE PROBABLE RESULT IF THE BONDS WERE NOT FURNISHED, THE COMPANY WAS ULTIMATELY DECLARED IN DEFAULT ON APRIL 14, 1958. UPON READVERTISEMENT, AN AWARD WAS MADE TO THE ST. PAUL DREDGING COMPANY FOR THE PROJECT IN THE AMOUNT OF $118,691.57.

THE LETTER DATED MAY 2, 1958, FROM THE HONORABLE ALVIN E. O-KONSKI, MEMBER OF CONGRESS, AND A LETTER DATED MAY 20, 1958, FROM THE BUSH CONSTRUCTION COMPANY, APPEAR TO SEEK RELIEF FOR THE COMPANY BY HAVING THE TRANSACTION CANCELED AND THE BID GUARANTEE CHECK RETURNED. IN SUPPORT OF SUCH REQUEST FOR RELIEF THE CONTENTION IS ADVANCED THAT AT THE TIME THE BID WAS COMPUTED, AND CONTINUOUSLY UNTIL AFTER AWARD WAS MADE, THE SITE OF THE WORK WAS COVERED WITH SNOW AND, THEREFORE, THE BUSH CONSTRUCTION COMPANY WAS UNABLE TO DETERMINE THE TYPE OF SOIL, TOPOGRAPHY, C., THAT IT WOULD ENCOUNTER, AND THAT BY REASON OF SUCH CONDITION THE COMPUTATION OF THE COMPANY'S BID WAS ON AN ERRONEOUS BASIS.

THE BID OF $72,917.15 OF THE BUSH CONSTRUCTION COMPANY FOR THIS PROJECT WAS, AS REPORTED, NOT ONLY $73,196.75 BELOW THE GOVERNMENT ENGINEER'S ESTIMATE FOR THE WORK BUT WAS ALSO $34,616.90 LOWER THAN THE NEXT LOWEST BID AND $67,628.50 BELOW THE AVERAGE OF THE FIVE OTHER BIDS RECEIVED. HENCE, WHILE THE CONTRACTING AUTHORITIES OF THE FOREST SERVICE APPEAR TO HAVE COMPLETELY FULFILLED ANY OBLIGATION WHICH THEY MIGHT HAVE HAD WITH RESPECT TO THE VERIFICATION OF THE BID PRIOR TO ITS ACCEPTANCE, IT MAY WELL BE THAT THERE EXISTED SUCH A SUBSTANTIAL VARIATION BETWEEN THE LOW BID OF THE BUSH CONSTRUCTION COMPANY AND BOTH THE ENGINEER'S ESTIMATE AND ALL OTHER BIDS RECEIVED THAT THERE COULD STILL HAVE BEEN A REASONABLE DOUBT AS TO THE CORRECTNESS OF THE BID. NEVERTHELESS, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN HOLDING THAT ACCEPTANCE OF THE BID WAS NOT EFFECTIVE TO CREATE A BINDING CONTRACT.

HOWEVER, THE MATERIAL FACTS ARE SO NEARLY IDENTICAL TO THOSE PRESENTED IN THE CASE OF WINTERS V. UNITED STATES, 114 C.CLS. 394, 84 F.SUPP. 756 (CERTIORARI DENIED 338 U.S. 903), THAT WE CAN HAVE NO DOUBT THAT THE COURT OF CLAIMS WOULD ALLOW THE CONTRACTOR TO RECOVER ANY EXCESS COSTS WHICH MIGHT BE COLLECTED FROM THE BUSH CONSTRUCTION COMPANY. WE THEREFORE CONCLUDE THAT THE FORFEITURE OF THE BID DEPOSIT MAY BE CONSIDERED AS FULLY DISCHARGING THE CONTRACTOR'S LIABILITY IN THE MATTER.