B-143796, OCT. 3, 1960

B-143796, OCT. 3, 1960

TO MCMILLAN, CANNON, BROWNING, JENKINS AND ALSTON:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 19, 1960, REQUESTING, ON BEHALF OF NELSON BROTHERS CONSTRUCTION COMPANY, THE CANCELLATION OR ADJUSTMENT OF ITS BID FOR A NEW CONSTRUCTION LEASE OF POSTAL FACILITIES IN MAGNA, UTAH, BECAUSE OF AN ERROR ALLEGED TO HAVE BEEN MADE IN THE BID.

UNDER DATE OF APRIL 25, 1960, THE POST OFFICE DEPARTMENT SOLICITED BIDS FOR NEW CONSTRUCTION LEASE FACILITIES AT MAGNA, UTAH, FOR A BASE PERIOD OF 10 YEARS, PLUS 2 RENEWAL OPTIONS OF 5 YEARS EACH. THE INVITATION PROVIDED THAT BIDS WOULD BE RECEIVED IN THE OFFICE OF THE DEPARTMENT'S REGIONAL REAL ESTATE MANAGER AT DENVER, COLORADO, UNTIL 2:00 P.M., MAY 26, 1960, AT WHICH TIME THE BIDS WOULD BE PUBLICLY OPENED. THE INVITATION REQUIRED EACH BIDDER TO SUBMIT BEFORE THE BID OPENING, A BID BOND IN THE PENAL SUM OF $6,000 GUARANTEEING THAT THE BIDDER WOULD GIVE A 100 PERCENT PERFORMANCE BOND AND A LABOR AND MATERIAL BOND WITHIN 20 CALENDAR DAYS AFTER WRITTEN ACCEPTANCE OF ITS BID (AGREEMENT TO LEASE) FURNISHED WITHIN 60 CALENDAR DAYS AFTER DATE OF BID OPENING.

THE FIVE BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED ON MAY 26, 1960, AS SCHEDULED. NELSON BROTHERS CONSTRUCTION COMPANY SUBMITTED A BID OFFERING TO CONSTRUCT AND LEASE THE FACILITIES FOR AN ANNUAL RENTAL OF $6,795 FOR THE BASE 10-YEAR TERM AND FOR $6,895 FOR THE TWO 5-YEAR RENEWAL OPTIONS. THE FOUR OTHER BIDS RECEIVED PROVIDED FOR AN ANNUAL RENTAL OF $8,760, $9,600, $10,324, AND $10,560, FOR THE 10-YEAR BASIC LEASE. THE BID OF NELSON BROTHERS, BEING CONSIDERED REASONABLE AND BEING THE LOWEST OF THE BIDS RECEIVED, WAS ACCEPTED BY LETTER DATED MAY 31, 1960.

BY LETTER DATED JUNE 2, 1960, NELSON BROTHERS CONSTRUCTION COMPANY ADVISED THE REGIONAL REAL ESTATE MANAGER, DENVER, COLORADO, THAT A MISTAKE HAD BEEN MADE IN ITS BID AND THAT THE ANNUAL RENTAL SHOULD HAVE BEEN $7,795. IT WAS STATED THAT THE ERROR OCCURRED IN COMPUTING THE AMOUNT NECESSARY TO AMORTIZE A CONTEMPLATED $45,000 LOAN AT SIX PERCENT OVER A 10 -YEAR PERIOD, AND THAT THE ERROR WAS DISCOVERED IN PREPARING A SIMILAR BID COVERING FACILITIES IN BLANDING, UTAH. IN VIEW THEREOF, IT IS REQUESTED THAT NELSON BROTHERS CONSTRUCTION COMPANY BE PERMITTED TO RESCIND ITS BID OR THAT THE ANNUAL RENTAL BE INCREASED TO $7,795.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER AN ERROR WAS MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. IT IS REPORTED THAT WHILE THERE WAS A SUBSTANTIAL DIFFERENCE BETWEEN THE AMOUNT OF THE LOW AND THE NEXT LOW BID SUCH VARIANCE WAS NOT SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. IT IS STATED THAT SUBSTANTIAL DIFFERENCES ARE NOT UNCOMMON IN BIDS SUCH AS IS HERE INVOLVED, SINCE THE VARIOUS BIDDERS HAVE DIFFERENT TAX STRUCTURES AND GOALS, AND THE FACILITIES INVOLVED ARE DESIGNED FOR MULTI-PURPOSE USE AND ARE READILY CONVERTED TO MANY OTHER USES UPON VACATION BY THE POST OFFICE DEPARTMENT. IN SUCH CIRCUMSTANCES THERE IS NOTHING OF SUFFICIENT MAGNITUDE WHICH WOULD WARRANT CHARGING THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF ERROR IN THE BID. THUS, IT MUST BE CONSIDERED THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID UNDER THE CIRCUMSTANCES INVOLVED CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO.

MOREOVER, THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, 163. IF, AS ALLEGED, AN ERROR WAS MADE BY NELSON BROTHERS CONSTRUCTION COMPANY IN ITS BID IN COMPUTING THE RENTAL DESIRED, IT IS CLEAR THE ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT, AND WAS IN NO WAY INDUCED BY THE GOVERNMENT. SUCH ERROR AS MIGHT HAVE BEEN MADE IN THE BID WAS UNILATERAL- -- NOT MUTUAL--- AND, THEREFORE, AFFORDS NO BASIS FOR GRANTING RELIEF TO THE CONTRACTOR. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249 AND SALIGMAN ET AL V. UNITED STATES, 56 F.SUPP. 505.

FOR THE FOREGOING REASONS, WE FIND NO LEGAL BASIS FOR RELIEVING NELSON BROTHERS CONSTRUCTION COMPANY FROM THE TERMS OF ITS ACCEPTED BID. YOUR REQUEST FOR AN INCREASE IN THE RENTALS PAYABLE UNDER THE LEASE MUST ALSO BE DENIED FOR THE SAME REASONS. IN THIS CONNECTION WE ARE ADVISED THAT EVEN IF OUR CONCLUSION WERE OTHERWISE AS TO THE VALIDITY OF THE CONTRACT, THE POST OFFICE DEPARTMENT WOULD NOT AGREE TO MAKE A CONTRACT WITH NELSON BROTHERS AT THE INCREASED RENTAL CLAIMED.