B-141918, FEB. 17, 1960

B-141918, FEB. 17, 1960

TO MR. B. P. BELLPORT, ACTING ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 3, 1960, WITH ENCLOSURES, REQUESTING OUR DECISION AS TO WHETHER THERE SHOULD BE CONSIDERED FOR AWARD A BID SUBMITTED BY THE UNION ELECTRIC CORPORATION FOR THE CONSTRUCTION OF THE STAGE 04 ADDITIONS TO JAMESTOWN SUBSTATION AND THE SHUNT REACTOR INSTALLATION FOR FARGO SUBSTATION OF THE TRANSMISSION DIVISION, NORTH DAKOTA, MISSOURI RIVER BASIN PROJECT, UNDER SPECIFICATIONS NO. DC-5259, INCLUDING ITS SUPPLEMENTAL NOTICE NO. 1.

THE SPECIFICATION IN THIS CASE DIVIDED THE WORK INTO SEVERAL ITEMS, REQUIRING FOR SOME THE QUOTATION OF UNIT PRICES BASED ON ESTIMATED QUANTITIES, AND FOR OTHERS THE QUOTATION OF LUMP SUM PRICES. BASICALLY, THE SPECIFICATIONS DIVIDED THE ENTIRE WORK INTO SCHEDULE NO. 1, COMPRISING ITEMS 1 TO 60 INCLUSIVE, AND INTO SCHEDULE NO. 2, COMPRISING ITEMS 61 TO 78, INCLUSIVE, AND PROVIDED FOR CONSIDERATION OF BIDS ON EITHER OR BOTH OF THE COMPLETE SCHEDULES, OR FOR COMBINATIONS THEREOF.

YOU REPORT THAT THE SEVEN BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED AT 10:00 .M., CST, ON DECEMBER 29, 1959, AT THE OFFICE OF THE BUREAU OF RECLAMATION IN FARGO, NORTH DAKOTA. THE BIDS RECEIVED QUOTED TOTAL PRICES FOR THE WORK UNDER SCHEDULE NO. 1 RANGING FROM A LOW BID OF $85,703.50, SUBMITTED BY THE UNION ELECTRIC CORPORATION OF ARIZONA (PHOENIX), TO A HIGH BID OF $105,370.40. THE SECOND LOW BID THEREFOR WAS SUBMITTED BY ELECTRICAL BUILDERS, INC., OF VALLEY CITY, NORTH DAKOTA, IN THE AMOUNT OF $89,077.50. THE ENGINEER'S ESTIMATE FOR THE WORK COVERED BY SCHEDULE NO. 1 WAS $104,566.

FOR THE WORK UNDER SCHEDULE NO. 2 THE BID QUOTATIONS RANGED FROM A LOW BID OF $5,234.75, SUBMITTED BY ELECTRICAL BUILDERS, INC., TO A HIGH BID OF $8,077.25. THE SECOND LOW BID THEREFOR WAS SUBMITTED BY WILLIAM COLLINS AND SONS, INC., FARGO, NORTH DAKOTA, IN THE AMOUNT OF $5,424.75. THE BID SUBMITTED BY THE UNION ELECTRIC CORPORATION WAS IN THE AMOUNT OF $5,697. THE ENGINEER'S ESTIMATE FOR THE WORK COVERED BY SCHEDULE NO. 2 WAS THE SUM OF $5,889. YOU STATE THAT STIPULATIONS BY THE ABOVE-MENTIONED THREE LOWEST BIDDERS PRECLUDE AN AWARD OF SCHEDULE NO. 1 TO ANY OF THEM WITHOUT THE INCLUSION OF SCHEDULE NO. 2, AND THAT THIS RESULTS IN UNION ELECTRIC'S BEING THE APPARENT LOW BIDDER FOR THE ENTIRE JOB AT THE PRICE OF $91,400.50, AND ELECTRICAL BUILDERS, INC., THE SECOND LOW BIDDER AT THE PRICE OF $94,312.25.

YOU REPORT FURTHER THAT AT 11:00 A.M., ON DECEMBER 29, 1959, THE BID OPENING OFFICE RECEIVED A TELEGRAM FROM UNION ELECTRIC ADDING $100 TO ITS UNIT PRICE FOR ITEM 48 OF SCHEDULE NO. 1, WHICH PROVIDED FOR FURNISHING AND INSTALLING AN ESTIMATED QUANTITY OF 57 196-KV PEDESTAL TYPE INSULATOR ASSEMBLIES G. THE TELEGRAM INDICATED A DISPATCH TIME FROM DENVER OF 8:52 A.M. (MST) ON DECEMBER 29, AND THE RECEIPT TIME AT THE FARGO TELEGRAPH OFFICE OF 10:10 A.M. (CST) ON THAT DAY--- AN INTERVAL OF 18 MINUTES. THEREAFTER, ON JANUARY 7, 1960, THE BID OPENING OFFICE RECEIVED A LETTER DATED JANUARY 2, 1960, FROM UNION ELECTRIC, CONFIRMING THE DISPATCH TIME OF ITS TELEGRAM, AND ALLEGING THAT THE TELEGRAM WAS INVALID AND SHOULD NOT BE CONSIDERED SINCE IT COULD NOT HAVE BEEN RECEIVED BY THE BID OPENING OFFICE UNDER NORMAL CONDITIONS BY THE BID OPENING TIME, CITING IN SUPPORT THEREOF SUBPARAGRAPH 7 (B) OF THE INSTRUCTIONS TO BIDDERS.

YOU THEN STATE THAT IN VIEW OF UNION ELECTRIC'S TELEGRAPHIC ATTEMPT TO INCREASE THE UNIT PRICE ON ITEM 48, THE SUBSTANTIALLY HIGHER QUOTATIONS OF OTHER BIDDERS AND THE AMOUNT OF THE ENGINEER'S ESTIMATE FOR THAT ITEM, AND YOUR INFORMATION INDICATING THAT THE COST OF MERELY FURNISHING THE ASSEMBLIES WOULD BE GREATER THAN UNION ELECTRIC'S QUOTED UNIT PRICE OF $180, YOU SUSPECTED THAT UNION ELECTRIC HAD ACTUALLY ERRED IN QUOTING THAT PRICE AND HAD INTENDED TO QUOTE A HIGHER ONE. YOU INDICATE THAT SUBSEQUENT TO THE BID OPENING TIME UNION ELECTRIC MAY HAVE LEARNED THAT THE ATTEMPTED INCREASE OF $5,700 FOR THE ENTIRE ITEM QUANTITY WOULD RESULT IN ITS BID NOT BEING THE LOW ONE RECEIVED AND THAT, CONSEQUENTLY, THAT CONCERN MAY THEN HAVE DECIDED TO FOREGO CLAIMING AN ERROR IN SUCH CONNECTION IN AN EFFORT TO RETAIN THE LOW POSITION OF ITS BID QUOTATION AT THE BID OPENING TIME.

ON THE BASIS OF THE RECORD BEFORE YOU, YOU TELEGRAPHED UNION ELECTRIC ON JANUARY 14, 1960, REQUESTING IT TO REVIEW ITS COMPUTATIONS WITH RESPECT TO ITS UNIT BID PRICE ON ITEM 48 AND TO ADVISE YOU BY SWORN STATEMENT WHETHER OR NOT IT HAD ERRED IN ITS ORIGINAL QUOTATION AND IF SO, TO STATE THE NATURE, EXTENT, AND MANNER OF COMMISSION OF THE ERROR. UNION ELECTRIC REPLIED BY LETTER OF JANUARY 18, 1960, TRANSMITTING AN AFFIDAVIT TO THE EFFECT THAT IN QUOTING ON ITEM 48 IT HAD MADE A $100 PER UNIT PRICE ERROR. UNDER DATE OF JANUARY 25, 1960, YOU AGAIN TELEGRAPHED UNION ELECTRIC REQUESTING THAT IT SUBMIT VERIFIED ORIGINALS OF THE WORK AND COMPUTATION DOCUMENTS USED IN PREPARING ITS BID AND TENDING TO SUPPORT THE ALLEGATION OF ERROR. UNION ELECTRIC REPLIED UNDER DATE OF JANUARY 29, 1960, ENCLOSING AN INDICATED ORIGINAL SUMMARY SHEET OF PRICES FOR A PORTION OF THE SCHEDULED ITEMS, INCLUDING ITEM 48, WHICH, YOU STATE, INDICATES TO A SUBSTANTIAL EXTENT THE FACT AND AMOUNT OF THE ERROR. THAT LETTER UNION ELECTRIC REITERATED ITS REQUEST FOR AN AWARD ON THE BASIS OF ITS ORIGINAL BID PRICE QUOTATIONS.

YOU EXPRESS DOUBT THAT, AS A CONTRACTING OFFICER, YOU WOULD BE WARRANTED IN AWARDING A CONTRACT IN THIS CASE TO THE UNION ELECTRIC CORPORATION OF ARIZONA ON THE BASIS OF ITS ORIGINALLY QUOTED PRICES DESPITE THE BIDDER'S REQUEST FOR SUCH AWARD.

UNION ELECTRIC HAS BY AFFIDAVIT STATED THAT IT MADE AN ERROR OF $5,700 IN ITS ORIGINAL BID. IN OTHER WORDS, ITS INTENDED BID PRICE ADMITTEDLY WAS $91,403.50 ($85,703.50 INCREASED BY $5,700) AS TO SCHEDULE NO. 1, WHICH TOGETHER WITH ITS PRICE OF $5,697 FOR SCHEDULE NO. 2 RESULTS IN A TOTAL BID PRICE OF $97,100.50. THE TOTAL BID PRICE OF ELECTRICAL BUILDERS, INC., WAS THE SUM OF $94,312.25 FOR BOTH SCHEDULES. THUS, IF UNION ELECTRIC HAD BID AS IT INTENDED, IT WOULD NOT HAVE BEEN THE LOW BIDDER. WE HAVE HELD THAT A BIDDER MAY NOT BE PERMITTED TO REMAIN LOW BIDDER BY FOREGOING A CLAIM OF ERROR. 37 COMP. GEN. 851. TO PERMIT THIS PROCEDURE WOULD BE IN DEROGATION OF THE RIGHTS OF ELECTRICAL BUILDERS, INC., WHICH SUBMITTED A FIRM AND CORRECT BID IN THE AMOUNT OF $94,312.25. AS WE STATED IN 34 COMP. GEN. 82, 84, "CONDITIONS OR RESERVATIONS WHICH GIVE A BIDDER A CHANCE TO SECOND-GUESS HIS COMPETITORS AFTER BID-OPENING MUST BE REGARDED AS FATAL TO THE BID.'

ACCORDINGLY, THE BID OF UNION ELECTRIC MAY NOT BE ACCEPTED AT THE ERRONEOUS ORIGINAL PRICE.