B-138405, APRIL 8, 1959, 38 COMP. GEN. 678

B-138405: Apr 8, 1959

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CONTRACTS - MISTAKES - PRICE ADJUSTMENT - EXECUTION OF CONTRACT A CONTRACTOR WHO WAS INFLUENCED TO EXECUTE A CONSTRUCTION CONTRACT AFTER MAKING A GENERAL ALLEGATION OF ERROR AT THE BID OPENING ON ADVICE FROM THE CONTRACTING OFFICER THAT WITHDRAWAL OF THE BID WOULD RESULT IN FORFEITURE OF THE BID BOND AND WHO PERFORMED THE CONTRACT AFTER ASSURANCE THAT A CLAIM FOR AN ADDITIONAL AMOUNT WOULD RECEIVE CONSIDERATION ON SUBSTANTIATION OF THE ERROR MAY NOT BE DENIED CONSIDERATION OF THE CLAIM BY REASON OF THE CONTRACT EXECUTION AND PERFORMANCE. 1959: REFERENCE IS MADE TO A LETTER DATED JANUARY 8. THE CONTRACTOR WAS REQUIRED TO COMMENCE WORK UNDER THE CONTRACT WITHIN 10 CALENDAR DAYS FROM DATE OF RECEIPT OF NOTICE TO PROCEED AND TO COMPLETE THE SAME WITHIN 90 CALENDAR DAYS AFTER DATE OF RECEIPT OF SUCH NOTICE.

B-138405, APRIL 8, 1959, 38 COMP. GEN. 678

CONTRACTS - MISTAKES - PRICE ADJUSTMENT - EXECUTION OF CONTRACT A CONTRACTOR WHO WAS INFLUENCED TO EXECUTE A CONSTRUCTION CONTRACT AFTER MAKING A GENERAL ALLEGATION OF ERROR AT THE BID OPENING ON ADVICE FROM THE CONTRACTING OFFICER THAT WITHDRAWAL OF THE BID WOULD RESULT IN FORFEITURE OF THE BID BOND AND WHO PERFORMED THE CONTRACT AFTER ASSURANCE THAT A CLAIM FOR AN ADDITIONAL AMOUNT WOULD RECEIVE CONSIDERATION ON SUBSTANTIATION OF THE ERROR MAY NOT BE DENIED CONSIDERATION OF THE CLAIM BY REASON OF THE CONTRACT EXECUTION AND PERFORMANCE; THEREFORE THE ADDITIONAL AMOUNT WHICH HAS BEEN DETERMINED TO REPRESENT ACCEPTABLE COSTS UNDER THE CONTRACT MAY BE PAID.

TO THE SECRETARY OF THE ARMY, APRIL 8, 1959:

REFERENCE IS MADE TO A LETTER DATED JANUARY 8, 1959, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS), REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED TO CAMPBELL 1MARRS DEVELOPMENT COMPANY BECAUSE OF AN ALLEGED MISTAKE IN ITS BID, THE ACCEPTANCE OF WHICH FORMED THE BASIS FOR CONTRACT NO. DA-41-093 AIV 1089, DATED APRIL 29, 1955.

BY INVITATION NO. AIV-41-093-55-243, THE PURCHASING AND CONTRACTING OFFICE, FORT HOOD, TEXAS, REQUESTED BIDS, TO BE OPENED APRIL 26, 1955, FOR FURNISHING ALL PLANT, LABOR AND MATERIALS AND PERFORMING ALL WORK IN STRICT ACCORDANCE WITH THE PLANS AND SPECIFICATIONS FOR INSTALLATION OF 16 -FOOT DOORS AND NECESSARY WORK INCIDENTAL THERETO IN CERTAIN MOTOR SHOP BUILDINGS SITUATED AT FORT HOOD. THE CONTRACTOR WAS REQUIRED TO COMMENCE WORK UNDER THE CONTRACT WITHIN 10 CALENDAR DAYS FROM DATE OF RECEIPT OF NOTICE TO PROCEED AND TO COMPLETE THE SAME WITHIN 90 CALENDAR DAYS AFTER DATE OF RECEIPT OF SUCH NOTICE.

THE RECORD SHOWS THAT FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, AMONG WHICH WAS THAT SUBMITTED BY CAMPBELL-1MARRS DEVELOPMENT COMPANY, IN THE AMOUNT OF $21,140. THE OTHER BIDS WERE IN THE AMOUNTS OF $33,600, $36,639.48, $39,860, AND $42,666, RESPECTIVELY. IT APPEARS THAT J. H. BOYD, WHO IS REFERRED TO AS THE MANAGER AND ESTIMATOR FOR CAMPBELL- 1MARRS DEVELOPMENT COMPANY, WAS PRESENT AT THE OPENING OF BIDS AND THAT WHEN THE AMOUNTS OF THE BIDS WERE DISCLOSED HE INFORMED MAJOR CHARLES W. HUDSON, WHO LATER EXECUTED THE CONTRACT ON BEHALF OF THE GOVERNMENT, THAT HE HAD BID THE JOB WITHOUT SECURING A FIRM PRICE ON MATERIAL, HAVING ESTIMATED THE COST OF MATERIAL ON HIS OWN PERSONAL KNOWLEDGE, AND THAT HE HAD FORGOTTEN TO ADD CERTAIN LABOR COSTS. SOME DISCUSSION TOOK PLACE BETWEEM MAJOR HUDSON AND MR. BOYD RELATIVE TO WHETHER CAMPBELL-1MARRS WOULD BE ABLE TO WITHDRAW ITS BID BECAUSE OF THE ALLEGED ERROR WITHOUT INCURRING LIABILITY UNDER ITS BID BOND, AND IT APPEARS FROM MAJOR HUDSON'S LETTER OF JUNE 19, 1956, TO CAMPBELL-1MARRS LUMBER COMPANY, INC. (APPARENTLY THE SAME CONCERN AS CAMPBELL-1MARRS DEVELOPMENT COMPANY), THAT MAJOR HUDSON ADVISED MR. BOYD THAT SINCE THERE WAS NO EVIDENCE OF AN OBVIOUS ERROR, THE BID BOND (IN THE AMOUNT OF $6,000) NECESSARILY WOULD HAVE TO BE FORFEITED IN THE CASE OF WITHDRAWAL. ACCORDING TO CAMPBELL- 1MARRS' LETTER OF APRIL 25, 1956, TO THE PURCHASING AND CONTRACTING OFFICER, WHICH SETS FORTH THE CLAIM UNDER CONSIDERATION, MR. BOYD TOLD MAJOR HUDSON THAT HIS COMPANY PROBABLY WOULD BE SMART TO FORFEIT THE BID BOND. THE LETTER STATES THAT MAJOR HUDSON REPLIED THAT HE WOULD NOT LIKE TO SEE THE COMPANY DO THAT, AND THAT HE EXPLAINED TO MR. BOYD THAT THE COMPANY WOULD HAVE AN OPPORTUNITY TO ASK FOR AN ADJUSTMENT ON THE CONTRACT PRICE AFTER COMPLETING THE JOB, IF IT LOST CONSIDERABLE MONEY, SINCE IT COULD ASK FOR A RENEGOTIATION OF THE CONTRACT JUST AS THE GOVERNMENT COULD IF IT FELT THAT THE COMPANY HAD MADE TOO MUCH PROFIT. IN COMMENTING ON CAMPBELL-1MARRS' CONTENTIONS IN THE PREMISES IN A STATEMENT DATED MAY 25, 1956, PREPARED FOR THE CONTRACTING OFFICER THEN ADMINISTERING THE CONTRACT, MAJOR HUDSON STATES, AMONG OTHER THINGS, THAT MR. BOYD "DID ASK ME ABOUT A CLAIM AND I TOLD HIM THAT HE COULD FILE A CLAIM ANY TIME THAT HE SO DESIRED AND IT WOULD BE CONSIDERED BY APPROPRIATE AUTHORITY.' HOWEVER, HE FURTHER STATES:

AS WELL AS I REMEMBER THIS CONTRACT DID NOT INCLUDE A CONTRACT RENEGOTIATION CLAUSE AND THE STATEMENT ALLEGED BY MR. BOYD'S REFERENCE RENEGOTIATION IS IN ERROR.

IN THE REFERRED-TO LETTER OF JUNE 19, 1956, TO CAMPBELL-1MARRS, MAJOR HUDSON STATES:

I CANNOT STATE THE SPECIFIC CLAUSE UNDER WHICH YOU MIGHT SUBMIT A CLAIM SINCE I DO NOT HAVE ACCESS TO CURRENT REGULATIONS HERE IN KOREA. HOWEVER, AS I STATED BEFORE, THE US GOVERNMENT HAD NO INTENTION OF ARBITRARILY FORCING YOU TO TAKE A LOSS IF YOU COULD DEFINITELY HAVE PROVEN BEYOND A DOUBT THAT THE ERROR WAS THROUGH NO FAULT OF YOUR OWN.

THE CONTRACT WAS AWARDED TO CAMPBELL-1MARRS DEVELOPMENT COMPANY ON APRIL 29, 1955, WHEN CONTRACT AND PERFORMANCE AND PAYMENT BOND FORMS WERE SENT TO THE COMPANY FOR EXECUTION. THESE WERE SUBSEQUENTLY EXECUTED. IN THE STATEMENT OF MAY 25, 1956, MAJOR HUDSON STATES THAT MR. BOYD WAS ASKED, PRIOR TO AWARDING THE CONTRACT, WHETHER HE DESIRED TO WITHDRAW THE BID, BUT REPLIED THAT "HE WOULD LIKE TO GO AHEAD WITH THE JOB AS HE HAD BID IT AND WOULD TRY TO ECONOMIZE AND NOT LOSE ANY MONEY.' NOTICE TO PROCEED WITH THE WORK WAS ISSUED UNDER DATE OF MAY 14, 1955, AND SHOWS THAT IT WAS RECEIVED ON MAY 18, 1955, THEREBY FIXING AUGUST 16, 1955, AS THE DATE FOR THE COMPLETION OF THE CONTRACT.

IT APPEARS THAT THE SUPPLIER FROM WHOM THE CONTRACTOR HAD ORDERED THE ITEMS OF HARDWARE SPECIFIED TO BE USED IN THE PERFORMANCE OF THE CONTRACT HAD NOTIFIED THE CONTRACTOR BY LETTER OF MAY 4, 1955, THAT CERTAIN OF THE ITEMS WERE INCAPABLE OF BEING USED IN CONJUNCTION WITH CERTAIN OTHER SPECIFIED ITEMS, AND THAT WHEN THIS WAS BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER ( MAJOR HUDSON), IT RESULTED IN THE ISSUANCE--- UNDER THE PROVISION OF THE CONTRACT RELATING TO " CHANGES"--- OF CHANGE ORDER NO. 1, DATED APRIL 29, 1955 (BACK DATED), DIRECTING THE NECESSARY CHANGES IN THE SPECIFICATIONS AT A REDUCTION IN CONTRACT PRICE AMOUNTING TO $199.78. THE RECORD SHOWS THAT THE CONTRACTOR HAD BY LETTER OF JUNE 20, 1955, PROPOSED TO ACCEPT THE CHANGE DIRECTED BY THIS CHANGE ORDER AT NO CHANGE IN CONTRACT PRICE, BUT HAD REQUESTED A 90-DAY EXTENSION IN CONTRACT TIME, AND THAT THE CONTRACTING OFFICER ( MAJOR HUDSON) ADVISED THE CONTRACTOR BY LETTER OF JUNE 29, 1955, THAT HIS OFFICE REFUSED THE CONTRACTOR'S PROPOSAL AND DIRECTED THAT THE JOB BE COMPLETED AS CHANGED, WITH THE UNDERSTANDING THAT "YOUR PROPOSAL WILL BE ACCEPTED FOR CONSIDERATION UNDER THE DISPUTES CLAUSE AFTER THE JOB IS COMPLETED.' ACKNOWLEDGING THIS LETTER BY LETTER OF JULY 13, 1955, THE CONTRACTOR ADVISED THE CONTRACTING OFFICER THAT, IN ORDER NOT TO DELAY THE WORK FURTHER, IT WAS ACCEPTING THE CHANGE ORDER, WITH THE REDUCTION IN CONTRACT PRICE PROVIDED FOR THEREIN, BUT THAT THE CONTRACTOR DID NOT AGREE THAT IT WAS JUST AND RIGHT, AND THAT THE CONTRACTOR RESERVED THE RIGHT TO CLAIM AN ADJUSTMENT THERETO,"AS WELL AS ALL OTHER PROVISIONS OF CONTRACT AS SET FORTH IN GENERAL PROVISIONS CLAUSE PARAGRAPH 6, TITLED " DISPUTES.'" THE CONTRACTOR ALSO REPEATED ITS REQUEST FOR A TIME EXTENSION UNDER THE CONTRACT. THE CONTRACTING OFFICER ( MAJOR HUDSON) ANSWERED THIS LETTER BY LETTER OF JULY 15, 1955, STATING THAT IT WAS HIS DECISION THAT THE GOVERNMENT WAS ENTITLED TO THE REDUCTION OF $199.78 IN CONTRACT PRICE WHICH HAD BEEN IN QUESTION; THAT THE CONTRACTOR COULD APPEAL, IF IT DID NOT AGREE; AND THAT HIS OFFICE WOULD CONSIDER A TIME EXTENSION AT A LATER DATE, WHEN AN ACCURATE COMPLETION DATE COULD BE DETERMINED, SINCE SOME DELAY DUE TO CHANGE IN SPECIFICATIONS WAS ACKNOWLEDGED.

THE FILE CONTAINS A MEMORANDUM DATED SEPTEMBER 22, 1955, FROM C. H. CUSHMAN, OF THE PURCHASING AND CONTRACTING OFFICE, FORT HOOD, TO MAJOR WILLIAMS ( THOMAS W.), WHO WAS THEN THE CONTRACTING OFFICER, WHICH SETS FORTH THAT THE CHANGE AUTHORIZED BY CHANGE ORDER NO. 1 WAS NECESSITATED BY AN ERROR MADE BY THE GOVERNMENT IN THE CONTRACT SPECIFICATIONS; THAT THE POST ENGINEER, UPON DISCOVERY OF THE ERROR, HAD REQUESTED THE CONTRACTOR TO INSTALL A SAMPLE OF THE HARDWARE OR EQUIPMENT ORDERED AS REPLACEMENTS FOR HIS INSPECTION PRIOR TO PROCEEDING WITH THE CONTRACT, IN ORDER TO AVOID A REPETITION OF THE ERROR; AND THAT THIS WAS COMPLIED WITH BY THE CONTRACTOR AND ON JULY 26, 1955, THE SAMPLE HAD BEEN APPROVED VERBALLY BY THE POST ENGINEER. HOWEVER, IT WAS FURTHER STATED IN THE MEMORANDUM THAT WRITTEN APPROVAL FOR THE HANGERS, ONE OF THE MAIN ITEMS, HAD NOT BEEN GIVEN UNTIL AUGUST 30, 1955, AND THE MEMORANDUM CONCLUDED:

IT IS EASILY DETECTED BY READING ALL CORRESPONDENCE IN THE FILE THAT MANY MISTAKES ARE EVIDENT IN THIS CONTRACT FROM THE BEGINNING TO THIS DATE AND THEY ARE NOT ALL WITH THE CONTRACTOR, SO IT IS RECOMMENDED THAT THE CHANGE ORDER REQUEST BE RECONSIDERED BY THE CONTRACTING OFFICER.

BY LETTER OF SEPTEMBER 27, 1955, NELLIE R. JOHNSTON, CIVILIAN CONTRACTING OFFICER, TRANSMITTED THE ABOVE MEMORANDUM TO MAJOR CHARLES W. HUDSON, WHO HAD BY THEN BEEN TRANSFERRED FROM FORT HOOD, REQUESTING HIS COMMENTS ON THE REQUEST FOR EXTENSION OF TIME AND "AN EXPECTED CLAIM, WHICH MAY FOLLOW.' MAJOR HUDSON RETURNED THE LETTER AND MEMORANDUM, WITH THE FOLLOWING NOTATION ON THE LETTER:

ANY OTHER ACTION THAN AN EXTENSION WOULD BE BAD FAITH ON PART OF GOVERNMENT. THE PROJECT HAS BEEN UNNECESSARILY DETAINED BY GOVERNMENT. SINCE THE BEGINNING DUE TO INADEQUATE AND UNSOUND SPECIFICATIONS.

THE FILE CONTAINS A MEMORANDUM FOR THE RECORD, DATED OCTOBER 24, 1955, SIGNED BY MAJOR J. MARCINKOWSKI, AS CHIEF PURCHASING AND CONTRACTING OFFICER, WHICH STATES:

DUE TO INADEQUATE SPECIFICATIONS AND DELAY IN APPROVAL OF MATERIAL TO BE USED ON SUBJECT CONTRACT, IT IS CONSIDERED THAT THE CONTRACTOR HAS BEEN DELAYED BY THE GOVERNMENT AND AN EXTENSION OF TIME IS GRANTED FOR A PERIOD OF NINETY (90) CALENDAR DAYS, TO END 16 NOVEMBER 1955.

ON THE BASIS OF THE ABOVE DETERMINATION, CHANGE ORDER NO. 2, DATED OCTOBER 24, 1955, WAS ISSUED BY JOHN F. EMBRY, CIVILIAN CONTRACTING OFFICER, EXTENDING THE TIME UNDER THE CONTRACT TO NOVEMBER 16, 1955. ALSO, BY CHANGE ORDER NO. 3, THE TIME FOR COMPLETION OF THE CONTRACT WAS EXTENDED TO FEBRUARY 14, 1956, FOR CAUSES WHICH WERE STATED TO BE BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, NAMELY, DELAY IN RECEIPT OF MATERIAL AND DELAYS DUE TO THE GOVERNMENT.

BY LETTER OF FEBRUARY 25, 1956, THE CONTRACTOR ADVISED THE CONTRACTING OFFICER THAT THE CONTRACT HAD BEEN COMPLETED AND A PAYMENT ESTIMATE HAD BEEN SUBMITTED TO THE POST ENGINEER FOR VERIFICATION AND PROCESSING IN ORDER THAT IT MIGHT RECEIVE COMPLETE PAYMENT "AS SHOWN ON CONTRACT," BUT WITH THE UNDERSTANDING THAT THE SUBMISSION OF SUCH ESTIMATE WAS NOT TO BE TAKEN AS A WAIVER OF A CLAIM WHICH THE CONTRACTOR INTENDED TO FILE FOR AN AMOUNT OVER AND ABOVE THE CONTRACT PRICE. RELATIVE THERETO, THE CONTRACTOR STATED:

SHORTLY AFTER THE AWARD WAS MADE ON THIS CONTRACT, WE FOUND CERTAIN DISCREPANCIES IN THE SPECIFICATIONS AND ERRORS IN OUR ESTIMATE AT WHICH TIME WE CALLED SAME TO YOUR ATTENTION.

MAJOR CHARLES HUDSON, WHOM AT THAT TIME WAS CONTRACTING OFFICER ADVISED US TO COMPLETE THE CONTRACT AND THEN AUDIT THE ACCOUNT OF THIS CONTRACT AND TO FILE CLAIM FOR ANY DEFICIENCY FOUND IN SAME.

THE CONTEMPLATED CLAIM WAS SUBMITTED BY THE CONTRACTOR'S LETTER OF APRIL 25, 1956, REFERRED TO ABOVE, WHEREIN IT ALLEGES THAT IT EXPENDED $15,767.29 FOR THE PURCHASE OF MATERIALS, $9,364.70 FOR DIRECT LABOR COSTS, AND $561.88 FOR PAYROLL TAXES AND INSURANCE, COMPUTED ON A PERCENTAGE BASIS, IN PERFORMING THE CONTRACT, TO WHICH THE CONTRACTOR HAS ADDED THE AMOUNT OF $3,357.75 TO COVER OVERHEAD AND PROFIT, AND ARRIVED AT THE SUM OF $29,951.62, WHICH IT CONTENDS, IN EFFECT, REPRESENTS THE REASONABLE COST OF PERFORMANCE. THE CONTRACTOR'S CLAIM IS FOR THE DIFFERENCE BETWEEN THIS AMOUNT AND THE CONTRACT PRICE AS ADJUSTED BY CHANGE ORDER NO. 1, OR THE NET AMOUNT OF $8,111.40. IN ATTEMPTING TO ACCOUNT FOR THE DIFFERENCE BETWEEN THE ACTUAL COSTS OF PERFORMING THE CONTRACT AND THE AMOUNT OF CAMPBELL-1MARRS' BID, THE CONTRACTOR STATES:

OUR ERRORS IN ESTIMATING WERE BOTH TYPOGRAPHICAL AND HUMAN. THE TYPOGRAPHICAL ERROR WAS IN ESTIMATING THE HARDWARE AND METAL FOR THE DOORS. IT WAS ESTIMATED AT $180.00 PER UNIT AND WAS EXTENDED AT $80.00 PER UNIT, WHICH CAUSED A DIFFERENCE OF $4,200.00 IN OUR BID. THE OTHER ERRORS MADE BY US WERE IN ESTIMATING LABOR. WE FAILED TO INCLUDE LABOR FOR REMOVING THE OLD DOORS AND THE OLD COLUMNS AND FOOTINGS, WHICH ACTUALLY COST US OVER $4,000.00.

AS FOR THE SPECIFICATIONS, IT WAS FOUND THAT CERTAIN ASPECTS OF THEM WERE NOT WORKABLE, AND THAT THE TYPE OF HANGER SPECIFIED WOULD NOT WORK WITH THE TYPE OF BRACKET SPECIFIED. ALSO A GOOD PART OF THE HARDWARE WAS OBSOLETE AND HAD TO BE SPECIALLY MANUFACTURED.

IMMEDIATELY AFTER BEING AWARDED THE CONTRACT, WE PURCHASED AND PAID FOR APPROXIMATELY $9,000.00 WORTH OF LUMBER, MASONITE, BOLTS AND METAL, WHICH LAY IN OUR YARD FOR MONTHS, AWAITING FIRST, APPROVAL ON THE HARDWARE AND LATER THE MANUFACTURE AND DELIVERY OF THE HARDWARE. WE MADE MOST OF THE DOORS IN THE YEAR AND HAD THEM READY FOR SEVERAL MONTHS BEFORE THE HARDWARE WAS AVAILABLE. CONSEQUENTLY WE HAD SOME $15,000.OO OF OUR FUNDS TIED UP IN MATERIALS AND LABOR FOR QUITE SOME TIME.

THE RECORD CONTAINS A " REPORT ON TOTAL COST AUDIT," DATED JUNE 25, 1956, MADE BY THE ARMY AUDIT AGENCY OF THE COSTS INCURRED BY CAMPBELL 1MARRS DEVELOPMENT COMPANY UNDER THE CONTRACT INVOLVED, WHICH DISCLOSES THAT THE AGENCY ACCEPTED ALL BUT $444.24 OF THE COSTS CLAIMED BY THE CONTRACTOR, THE SAID AMOUNT REPRESENTING EXPENSES FOUND BY THE AGENCY TO BE APPLICABLE TO THE CONTRACTOR'S COMMERCIAL WORK. THE REPORT STATES: THE REASON FOR COSTS EXCEEDING THE ORIGINAL BID PRICE WAS NOT READILY ASCERTAINABLE; HOWEVER, IT APPEARED THAT AN UNDERESTIMATE OF THE LABOR REQUIRED TO REMOVE THE OLD DOORS AND INSTALL THE NEW DOORS, AND NO APPARENT ESTIMATE OF OVERHEAD, WERE THE PRIME FACTORS.

AS CONCLUDED BY CAPTAIN ROBERT A. WYANSKI, THE CONTRACTING OFFICER SUBMITTING THE ADMINISTRATIVE REPORT IN THIS MATTER, THE EVIDENCE SUBMITTED BY THE CONTRACTOR IN SUPPORT OF THE SPECIFIC ERRORS ALLEGED IN ITS LETTER OF APRIL 25, 1956, TO HAVE BEEN MADE IS UNSATISFACTORY. NEVERTHELESS, THE CONTRACTOR SUBMITTED AN AFFIDAVIT SUBSCRIBED AND SWORN TO BY J. H. BOYD UNDER DATE OF OCTOBER 19, 1957, WHEREIN THE CONTRACTOR'S REPRESENTATIVE AVERS THAT THE ERRORS IN QUESTION WERE MADE AS ALLEGED, AND THE GOVERNMENT IS NOT IN A POSITION TO REFUTE THE CONTRACTOR'S ALLEGATIONS. MOREOVER, IN HIS REFERRED-TO STATEMENT OF MAY 25, 1956, MAJOR HUDSON STATES:

I DETERMINED THAT AN ERROR THAT WAS MADE IN THIS CONTRACTOR'S BID, THE RESPONSIBILITY FOR THE PREPARATION OF WHICH WAS UPON HIM, WAS DUE SOLELY TO HIS OWN NEGLIGENCE AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THE ERROR WAS UNILATERAL, NOT MUTUAL, AND THEREFORE I FELT IT DID NOT ENTITLE THE BIDDER TO RELIEF.

WHILE IT IS TRUE THAT THE RESPONSIBILITY FOR THE PREPARATION OF A BID IS UPON THE BIDDER, WHO ORDINARILY MUST BEAR THE CONSEQUENCES OF AN ERROR IN THE BID UPON WHICH A CONTRACT IS BASED, THE GENERAL RULE IS THAT THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE OUR DECISION B-129736, DATED NOVEMBER 29, 1956, 36 COMP. GEN. 441, TO YOU.

THAT THE CONTRACTOR MADE SERIOUS, IF NOT CLEARLY DEFINED, ERRORS IN ITS BID SEEMS TO BE REASONABLY WELL ESTABLISHED BY THE RECORD. THE CONTRACTING OFFICER WHO AWARDED THE CONTRACT ADMITS THAT HE DETERMINED THAT AN ERROR HAD BEEN MADE AND THE REPORT OF THE AUDIT CONDUCTED BY THE ARMY AUDIT AGENCY IS CONFIRMATORY OF ERROR. MOREOVER, IN VIEW OF THE WIDE DISPARITY BETWEEN THE AMOUNT OF CAMPBELL-1MARRS' BID AND THE NEXT LOWEST BID, AND THE CONTRACTOR'S GENERAL ALLEGATION OF ERROR AT THE OPENING OF BIDS, THERE WOULD BE CONSIDERABLE DOUBT AS TO WHETHER THE ACCEPTANCE OF THE BID ALONE WOULD HAVE CONSUMMATED A BINDING CONTRACT OBLIGATING THE CONTRACTOR TO PERFORM THE WORK FOR THE AMOUNT OF ITS BID. IT IS NEVERTHELESS TRUE THAT THE ACCEPTANCE, AND THE PROFFER OF THE FORMAL CONTRACT, WERE IN ANY EVENT TANTAMOUNT TO AN OFFER BY THE GOVERNMENT WHICH THE BIDDER BY ACCEPTANCE COULD CONVERT INTO A BINDING CONTRACT, UNAFFECTED BY ANY PRIOR ERRORS OR CLAIMS OR ERROR IN HIS BID. SEE MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 CT.1CLS. 699; BOARD OF TRUSTEES, ETC. V. O. D. WILSON CO., 133 F.2D 399. WE ARE SATISFIED FROM THE RECORD, HOWEVER, THAT THE CONTRACTOR WAS INFLUENCED IN HIS DECISION TO ACCEPT THE CONTRACT BY THE ADVICE GIVEN BY MAJOR HUDSON THAT WITHDRAWAL OF THE BID WOULD RESULT IN THE FORFEITURE OF THE BID BOND, AND THE FAILURE OF MAJOR HUDSON TO ADVISE HIM PROPERLY AS TO HIS RIGHT TO SUBMIT PROOF OF HIS CLAIM OF ERROR. IN THESE CIRCUMSTANCES, WE HAVE HELD THAT CONSIDERATION OF SUCH CLAIM SHOULD NOT BE DENIED BY REASON OF THE EXECUTION AND PERFORMANCE OF THE CONTRACT. SEE 38 COMP. GEN. 504.

IT IS ALSO CLEAR THAT THE CONTRACTOR WENT FORWARD WITH THE EXECUTION AND PERFORMANCE OF THE CONTRACT ONLY UPON BEING ASSURED BY THE CONTRACTING OFFICER THAT ITS CLAIM FOR AN AMOUNT IN ADDITION TO THE CONTRACT PRICE WOULD RECEIVE CONSIDERATION, DEPENDING UPON ITS SUBSTANTIATION OF ERROR. SEE EDMUND J. RAPPOLI COMPANY, INC. V. UNITED STATES, 98 C.1CLS. 499; ANNO. 52 ALR 2D 797. FURTHERMORE, THERE IS THE CIRCUMSTANCE THAT COMPLETION OF THE WORK UNDER THE CONTRACT WAS UNDULY DELAYED AS A RESULT OF THE GOVERNMENT'S INCLUDING INCORRECT SPECIFICATIONS IN THE CONTRACT AND ITS DELAY IN APPROVING CONTRACT MATERIALS, WHICH APPEARS TO HAVE RESULTED IN AN INDETERMINATE AMOUNT OF INCREASED EXPENSE TO THE CONTRACTOR.

IN THE ABOVE CIRCUMSTANCES, PAYMENT TO THE CONTRACTOR OF THE AMOUNT OF $7,667.16, REPRESENTING THE DIFFERENCE BETWEEN THE CONTRACT PRICE AS ADJUSTED ($20,940.22) AND THE AMOUNT OF $28,607.38, DETERMINED BY THE ARMY AUDIT AGENCY TO REPRESENT ACCEPTABLE COSTS INCURRED UNDER THE CONTRACT, IN FULL SETTLEMENT OF ITS CLAIM, APPEARS PROPER AND IS AUTHORIZED, IF OTHERWISE CORRECT. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE PAYMENT VOUCHER.