B-139980, JUL. 7, 1959

B-139980: Jul 7, 1959

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JUNE 19. OUR DECISION IS REQUESTED AS TO WHETHER THE RELIEF REQUESTED MAY BE GRANTED. FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. A CONTRACT WAS AWARDED TO THE COMPANY ON JUNE 23. THE CONTRACTING OFFICER REPORTS THAT THE AWARD WAS MADE AT 10:15 A.M. THE RECORD SHOWS THAT THE BID OF THE CUMMINGS BOAT COMPANY AS TO ITEM 2.01 WAS IN THE AMOUNT OF $370. WHEREAS THE BIDS OF THE FOUR OTHER BIDDERS FOR THIS ITEM WERE IN THE AMOUNTS OF $1. THE WORK APPEARS TO HAVE BEEN COMPLETED ON AUGUST 8. THE CLAIM WAS SUPPORTED BY A LETTER DATED JUNE 10. THE CONTRACTING OFFICER TAKES THE POSITION THAT HE WAS NOT ON CONSTRUCTIVE NOTICE OF ERROR IN THE BID PRIOR TO THE AWARD OF THE CONTRACT.

B-139980, JUL. 7, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JUNE 19, 1959, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATING TO A CLAIM SUBMITTED BY THE CUMMINGS BOAT COMPANY, TACOMA, WASHINGTON, FOR ADDITIONAL COMPENSATION UNDER CONTRACT NO. DA-04-197-TC-3283, IT BEING ALLEGED BY THE CLAIMANT THAT IT MADE A MISTAKE IN ITS BID OF JUNE 23, 1958, COVERING THE DRYDOCKING, TOWING, CLEANING, PAINTING, AND REPAIR OF THE U.S. ARMY VESSEL DESIGN NO. 259 (VESSEL NUMBER "T-89"). IN VIEW OF THE FACTS SET FORTH IN THE FILE, OUR DECISION IS REQUESTED AS TO WHETHER THE RELIEF REQUESTED MAY BE GRANTED.

THE RECORD SHOWS THAT BY INVITATION NO. TC-04-542-58-92, DATED JUNE 12, 1958, THE U.S. ARMY TRANSPORTATION TERMINAL COMMAND, PACIFIC, FORT MASON, CALIFORNIA, INVITED BIDS FOR THE PERFORMANCE OF THE WORK REFERRED TO IN THE PRECEDING PARAGRAPH, THE BIDS TO BE OPENED AT 10 A.M. ON JUNE 23, 1958. FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE LOWEST BEING THAT SUBMITTED BY THE CUMMINGS BOAT COMPANY AT THE BID PRICE OF $2,512. A CONTRACT WAS AWARDED TO THE COMPANY ON JUNE 23, 1958, AT ITS BID PRICE. THE FOUR OTHER BIDS RECEIVED RANGED IN PRICE FROM $4,101 TO $6,415.

THE CONTRACTING OFFICER REPORTS THAT THE AWARD WAS MADE AT 10:15 A.M. ON JUNE 23, 1958, AND THAT AT 3:30 P.M. ON THE SAME DAY A REPRESENTATIVE OF THE CONTRACTOR CALLED STATING THAT AN ERROR HAD BEEN MADE IN THAT THERE HAD BEEN OMITTED FROM THE BID PRICE THE COST OF PARTS REQUIRED BY ITEM 2.01--- "MAIN ENGINE REPAIR"--- OF THE SPECIFICATIONS. THE RECORD SHOWS THAT THE BID OF THE CUMMINGS BOAT COMPANY AS TO ITEM 2.01 WAS IN THE AMOUNT OF $370, WHEREAS THE BIDS OF THE FOUR OTHER BIDDERS FOR THIS ITEM WERE IN THE AMOUNTS OF $1,249, $1,800, $1,847, AND $2,380. THE WORK APPEARS TO HAVE BEEN COMPLETED ON AUGUST 8, 1958. UNDER DATE OF OCTOBER 31, 1958, THE CONTRACTOR REQUESTED PAYMENT OF THE ADDITIONAL SUM OF $917.40, CLAIMED TO REPRESENT THE ADDITIONAL COST INVOLVED IN THE REPAIR OF THE MAIN ENGINE REDUCTION GEAR. THAT AMOUNT CONSISTS OF THE SUM OF $834, AS OF THE COST OF THE PARTS REQUIRED, PLUS TEN PERCENT ($83.40) FOR PROFIT. THE CLAIM WAS SUPPORTED BY A LETTER DATED JUNE 10, 1958, FROM HATCH AND KIRK, INC., TO THE CONTRACTOR, QUOTING A PRICE OF $834, FOR THE MARINE ENGINE PARTS CALLED FOR BY THE SPECIFICATIONS TO THE "T-89.'

THE CONTRACTING OFFICER TAKES THE POSITION THAT HE WAS NOT ON CONSTRUCTIVE NOTICE OF ERROR IN THE BID PRIOR TO THE AWARD OF THE CONTRACT. IT WAS, HOWEVER, HIS OPINION, BASED UPON REVIEW OF THE JOB ORDER FILE AND A COMPARISON WITH THE BID BREAKDOWN OF ALL OTHER BIDS RECEIVED, THAT THE PRICE FOR THE REPAIR PARTS FOR ITEM 2.01 WAS OMITTED BY THE CONTRACTOR FROM THE PRICE BID FOR THIS ITEM, AND HE RECOMMENDED THAT THE CONTRACTOR'S CLAIM IN THE AMOUNT OF $917.40 BE FAVORABLY CONSIDERED--- THAT AMOUNT REPRESENTING A FAIR ESTIMATE OF THE COST TO THE CONTRACTOR OF THE REPAIR PARTS FOR THE ENGINE.

IT WAS THE RECOMMENDATION OF THE CHIEF OF TRANSPORTATION, AS HEAD OF A PROCURING ACTIVITY, THAT THE CLAIM OF THE CUMMINGS BOAT COMPANY BE ALLOWED TO THE EXTENT OF $834. IN CONNECTION WITH SUCH RECOMMENDATION, THE CHIEF OF TRANSPORTATION EXPRESSED THE VIEW THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE ERROR PRIOR TO AWARD, THIS VIEW BEING BASED UPON THE DIFFERENCE BETWEEN THE DOLLAR AMOUNT OF THE LOW BID AND THE FOUR OTHER BIDS AS TO ITEM 2.01; ALSO, THAT THE SAME IS TRUE RESPECTING THE DIFFERENCE BETWEEN THE TOTAL PRICE OF THE LOW BIDDER AND THE FOUR OTHER BIDDERS.

ON THE BASIS OF THE RECORD IN THIS CASE, THERE APPEARS TO BE NO DOUBT THAT AN ERROR WAS MADE IN THE BID AS ALLEGED. FURTHERMORE, THE PROBABILITY OF ERROR IS SO CLEARLY INDICATED BY THE DIFFERENCE IN THE BID PRICES THAT IT APPEARS THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR AND, THEREFORE, SHOULD HAVE REQUESTED VERIFICATION PRIOR TO AWARD. UNDER THIS CIRCUMSTANCE, WE CONCLUDE THERE IS A PROPER LEGAL BASIS FOR AMENDING THE CONTRACT HEREIN SO AS TO AUTHORIZE PAYMENT OF THE ADDITIONAL SUM OF $834, AND ACTION BY YOUR DEPARTMENT MAY BE TAKEN ACCORDINGLY. A COPY OF THIS DECISION SHOULD BE ATTACHED TO THE AMENDMENT.