B-136112, JUN. 2, 1958

B-136112: Jun 2, 1958

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO A LETTER OF MAY 12. BIDS WERE OPENED ON JUNE 27. THE AEC FAIR ESTIMATE FOR THE WORK TO BE PERFORMED UNDER THE CONTRACT WAS $42. THE SIX BIDS RECEIVED WERE AS FOLLOWS: TABLE 1. BIDS FOR WHICH WERE OPENED ON JUNE 26. HAD BEEN INADVERTENTLY SWITCHED AND THAT THE BID FOR THE INSTANT CONTRACT SHOULD HAVE BEEN HIGHER BY $1. 6 PERCENT ($111.88) OF THAT AMOUNT WAS CLAIMED FOR PROFIT ALLOWANCE. WORKSHEETS TENDING TO ESTABLISH THE NATURE AND AMOUNT OF THE ERROR WERE SUBMITTED BY LETTER OF JUNE 28. IN THE INTEREST OF TIME SAVING AWARD WAS MADE AS REQUESTED. A BID MAY BE CORRECTED AFTER OPENING AND PRIOR TO AWARD UPON A CONCLUSIVE SHOWING THAT A MISTAKE WAS MADE.

B-136112, JUN. 2, 1958

TO HONORABLE LEWIS L. STRAUSE, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO A LETTER OF MAY 12, 1958, WITH ENCLOSURES, FROM THE GENERAL MANAGER TRANSMITTING FOR OUR CONSIDERATION THE CLAIM OF THE HALE CONSTRUCTION COMPANY FOR ADDITIONAL PAYMENTS IN CONNECTION WITH THE WORK PERFORMED ON CONTRACT NO. AT/45-1/-1212.

THE AEC HANFORD OPERATIONS OFFICE ISSUED AN INVITATION FOR BIDS ON JUNE 11, 1957, FOR CONSTRUCTION OF CERTAIN ADDITIONS TO BUILDING NO. 202-S.IN ACCORDANCE WITH THE INVITATION, BIDS WERE OPENED ON JUNE 27, 1957. THE AEC FAIR ESTIMATE FOR THE WORK TO BE PERFORMED UNDER THE CONTRACT WAS $42,000. THE SIX BIDS RECEIVED WERE AS FOLLOWS:

TABLE

1. HALE CONSTRUCTION COMPANY $32,682.00

2. GEORGE A. GRANT, INC. 44,865.00

3. JENSEN-RASMUSSEN AND COMPANY 45,210.00

4. FRANK H. LOHSE 46,846.00

5. RAYMOND BRITTON 46,860.00

6. LEWIS HOPKINS COMPANY 51,200.00

IMMEDIATELY AFTER BID OPENING AND PRIOR TO AWARD, THE LOW BIDDER ALLEGED THAT THE BIDS SUBMITTED TO IT BY A SUBCONTRACTOR FOR THE PAINTING WORK ON THE PROJECT IN QUESTION AND ON ANOTHER AEC PROJECT, BIDS FOR WHICH WERE OPENED ON JUNE 26, HAD BEEN INADVERTENTLY SWITCHED AND THAT THE BID FOR THE INSTANT CONTRACT SHOULD HAVE BEEN HIGHER BY $1,848. ALSO, 6 PERCENT ($111.88) OF THAT AMOUNT WAS CLAIMED FOR PROFIT ALLOWANCE. WORKSHEETS TENDING TO ESTABLISH THE NATURE AND AMOUNT OF THE ERROR WERE SUBMITTED BY LETTER OF JUNE 28, 1957. THE BIDDER AT THE SAME TIME REQUESTED THAT THE CONTRACT BE AWARDED TO IT AS THE LOW BIDDER, AND THAT ITS CLAIM FOR CORRECTION OF THE PRICE BE SUBMITTED TO OUR OFFICE. IN THE INTEREST OF TIME SAVING AWARD WAS MADE AS REQUESTED.

A BID MAY BE CORRECTED AFTER OPENING AND PRIOR TO AWARD UPON A CONCLUSIVE SHOWING THAT A MISTAKE WAS MADE, OF WHAT IT CONSISTED, HOW IT OCCURRED AND THE AMOUNT INTENDED. 14 COMP. GEN. 78. IT APPEARS THAT ALL OF THE ELEMENTS NECESSARY FOR CORRECTION ARE PRESENT WITH REGARD TO THE AMOUNT OF $1,848 AND, THEREFORE, SINCE THE AWARD WAS MADE WITH THE UNDERSTANDING THAT THE RIGHT TO CLAIM THE ADDITIONAL AMOUNT WAS RESERVED, CORRECTION IN THAT AMOUNT MAY BE MADE. AS TO THE 6 PERCENT PROFIT ALLOWANCE, HOWEVER, THE INFORMATION SUBMITTED DOES NOT INDICATE THAT THE INTENT TO INCREASE THE PROFIT ALLOWANCE BY THE AMOUNT INDICATED WAS ESTABLISHED BY THE NECESSARY DEGREE OF PROOF AND IT MUST THEREFORE BE DISALLOWED.

AFTER AWARD HAD BEEN MADE, THE CONTRACTOR DISCOVERED THAT A HOIST ESTIMATE SUBMITTED BY A SUBCONTRACTOR WAS BASED UPON AN ERROR AS TO THE NATURE OF THE SPECIFICATIONS AND THAT THE HOIST ESTIMATE SHOULD HAVE BEEN INCREASED BY $3,125, FROM $475 TO $3,600. IT IS REPORTED THAT THE BID ITSELF DID NOT FURNISH SUFFICIENT INFORMATION TO SHOW THAT ERROR AND IT WAS NOT NOTED BY THE CONTRACTING OFFICER UNTIL THE WORKSHEETS WERE EXAMINED AFTER AWARD IN CONNECTION WITH THE ADDITIONAL AMOUNT CLAIMED FOR PAINTING. THE CONTRACTOR ALLEGES, HOWEVER, THAT THE CONTRACTING OFFICER IS CHARGED WITH CONSTRUCTIVE KNOWLEDGE OF THE ERROR BECAUSE OF THE DIFFERENCE BETWEEN THE LOW BID AND THE AEC ESTIMATE OF COST, AND BETWEEN THE LOW BID AND THE OTHER BIDS RECEIVED.

IT IS A WELL RECOGNIZED RULE THAT A BIDDER WHO ALLEGES AN ERROR IN HIS BID AFTER IT HAS BEEN ACCEPTED MUST BEAR THE CONSEQUENCES OF HIS ERROR UNLESS THE ERROR WAS MUTUAL OR SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN PRIOR TO ACCEPTANCE THAT THE ERROR EXISTED AND SOUGHT TO TAKE ADVANTAGE OF IT. 23 COMP. GEN. 596, 598 AND CASES THEREIN CITED. SEE, ALSO, 29 COMP. GEN. 40, AND 17 COMP. GEN. 560. UNDER ORDINARY CIRCUMSTANCES THE DISCREPANCY IN AMOUNT BETWEEN THE LOW BID AS CORRECTED BY THE ADDITION FOR THE ERROR IN THE PAINTING ESTIMATE, AND THE AEC ESTIMATE AND THE OTHER BIDS, MIGHT HAVE WARRANTED A CONCLUSION THAT THE CONTRACTING OFFICER WAS PUT ON CONSTRUCTIVE NOTICE OF THE ERROR WHICH SHOULD HAVE BEEN BROUGHT TO THE ATTENTION OF THE BIDDER PRIOR TO ACCEPTANCE. IN THIS INSTANCE, HOWEVER, THE BIDDER, AFTER BIDS HAD BEEN OPENED AND THE DISCREPANCY BETWEEN ITS BID AND OTHERS WAS KNOWN, HAD ALLEGED A SPECIFIC ERROR AND AFFIRMATIVELY REQUESTED AN AWARD SUBJECT TO ITS RIGHT TO CLAIM AN ADJUSTMENT FOR THE ERROR REFERRED TO. WE THINK THAT THIS WAS TANTAMOUNT TO AN EXPRESS AFFIRMANCE OF THE BID IN ALL OTHER RESPECTS, AND THAT THE CONTRACTING OFFICER WAS UNDER NO FURTHER OBLIGATION TO BRING TO THE ATTENTION OF THE BIDDER THE DISCREPANCY OF WHICH HE OBVIOUSLY WAS ALREADY AWARE. THERE BEING NO QUESTION OF LACK OF GOOD FAITH ON THE PART OF THE CONTRACTING OFFICER, WE MUST CONCLUDE THAT THE ERROR WAS UNILATERAL ONLY AND ACCEPTANCE CONSUMMATED A BINDING CONTRACT WHICH FIXED THE RIGHTS AND DUTIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313. THE RIGHTS THEREBY VESTED IN THE GOVERNMENT MAY NOT BE SURRENDERED IN THE ABSENCE OF SOME CONCOMITANT BENEFIT FLOWING TO THE UNITED STATES. UNITED STATES V. AMERICAN SALES CO., 27 F. 2D 389. ACCORDINGLY, THE CLAIM FOR $3,125 MUST BE DENIED.

THE CONTRACTOR ALSO CONTENDED AFTER AWARD OF THE CONTRACT THAT HE WAS NOT REQUIRED, UNDER THE TERMS OF THE SPECIFICATIONS, TO PENETRATE EXISTING WALLS FOR PEDESTRIAN DOORS AND THAT HE SHOULD BE PAID AN ADDITIONAL AMOUNT UNDER THE CONTRACT FOR PERFORMING SUCH WORK. THE CONTRACTOR'S CLAIM AS TO THE VALIDITY OF HIS INTERPRETATION IS BASED ON ITEM 2 DIVISION 1 OF THE SPECIFICATIONS WHICH STATES:

"PENETRATION OF EXISTING BUILDING WALL FOR OPENING INTO MATERIAL HOIST SHAFT AND INSTALLATION OF STRUCTURAL STEEL FRAME IN OPENING WILL BE BY OTHERS.' THAT PROVISION, HOWEVER, CLEARLY IS LIMITED TO ANY OPENING INTO THE MATERIAL HOIST SHAFT. ITEM 1 OF DIVISION 1 TO THE SPECIFICATIONS CLEARLY PROVIDES THAT THE CONTRACTOR SHOULD PENETRATE "EXISTING BUILDING WALLS FOR PEDESTRIAN DOORS.' IN ADDITION, PARAGRAPH SC-9 OF THE SPECIFICATIONS PROVIDES THAT THE CONTRACTOR SHALL CUT SUCH OPENINGS AND PROVIDE AND INSTALL DOOR AND FRAME. THE SPECIFICATIONS, THEREFORE, MUST BE REGARDED AS CLEAR AND UNAMBIGUOUS. IT FOLLOWS THAT SINCE THE MISINTERPRETATION WAS DUE SOLELY TO THE CONTRACTOR'S NEGLIGENCE, HE MUST BEAR THE CONSEQUENCES THEREOF AND NO ADDITIONAL PAYMENT MAY BE MADE. COMP. GEN. 509.

ASSUMING PROPER COMPLETION OF THE CONTRACT BY THE CONTRACTOR, THE CONTRACT MAY BE AMENDED TO PROVIDE FOR ADDITIONAL PAYMENT IN ACCORDANCE WITH THE FOREGOING. SUCH AMENDMENT SHOULD CONTAIN A REFERENCE TO THIS DECISION.