B-144054, OCT. 17, 1960

B-144054: Oct 17, 1960

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 20. BIDS WERE OPENED ON MAY 26. THE LOW BID WAS SUBMITTED BY CAPUTO CONSTRUCTION. THE REMAINING SIX BIDS RECEIVED WERE IN THE AMOUNT OF $54. THE ESTIMATE PREPARED BY THE CONTRACT ARCHITECT FOR THE PROJECT WAS $49. CAPUTO MENTIONED HIS FIRM'S BID AND SAID HE WAS RECHECKING THE FIGURES AND SUB-BIDDERS' PRICES BUT AT THE PRESENT TIME BELIEVED THE BID WAS ADEQUATE. THE REQUESTED LIST OF PROJECTS WAS RECEIVED BY THE CONTRACTING OFFICE ON MAY 28. NO CHARGE WAS INDICATED IN THE BID. GS-01B- 3245 WAS AWARDED TO CAPUTO CONSTRUCTION. 000 LOWER THAN IT SHOULD HAVE BEEN. ENCLOSED WITH THE LETTER ARE WORKSHEETS WHICH THE CONTRACTOR CERTIFIED AS CONTAINING THE ESTIMATE ORIGINALLY PREPARED BY IT FOR THE PROJECT AND UPON WHICH ITS BID PRICE WAS BASED.

B-144054, OCT. 17, 1960

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 20, 1960, WITH ENCLOSURES, REQUESTING A DECISION CONCERNING AN ERROR IN BID ALLEGED BY CAPUTO CONSTRUCTION, INC., AFTER AWARD OF CONTRACT NO. GS-01B-3245 ON JUNE 7, 1960.

ON MAY 5, 1960, GENERAL SERVICES ADMINISTRATION, REGION 1, ISSUED INVITATION NO. BOS-60-113, PROJECT NO. 56, FOR BASEMENT WORKROOM, CONVEYOR, CHUTE, ETC., AT THE UNITED STATES POST OFFICE, LYNN, MASSACHUSETTS. BIDS WERE OPENED ON MAY 26, 1960, AND, OF THE SEVEN BIDS RECEIVED, THE LOW BID WAS SUBMITTED BY CAPUTO CONSTRUCTION, INC., IN THE TOTAL AMOUNT OF $44,470. THE REMAINING SIX BIDS RECEIVED WERE IN THE AMOUNT OF $54,751, $59,200, $59,950, $60,102, $65,985, AND $76,558. THE ESTIMATE PREPARED BY THE CONTRACT ARCHITECT FOR THE PROJECT WAS $49,935.

THE CONTRACTING OFFICER REPORTS THAT ON MAY 27, 1960, HE TELEPHONED MR. RALPH A. CAPUTO, THE PRESIDENT OF CAPUTO CONSTRUCTION, INC., TO REQUEST THAT HE FURNISH A LIST OF PROJECTS COMPLETED BY HIS FIRM DURING THE PAST YEAR AND, DURING THAT CONVERSATION, MR. CAPUTO MENTIONED HIS FIRM'S BID AND SAID HE WAS RECHECKING THE FIGURES AND SUB-BIDDERS' PRICES BUT AT THE PRESENT TIME BELIEVED THE BID WAS ADEQUATE. THE REQUESTED LIST OF PROJECTS WAS RECEIVED BY THE CONTRACTING OFFICE ON MAY 28, 1960, BUT NO CHARGE WAS INDICATED IN THE BID. ON JUNE 7, 1960, CONTRACT NO. GS-01B- 3245 WAS AWARDED TO CAPUTO CONSTRUCTION, INC., IN THE AMOUNT OF $44,470.

BY LETTER DATED JUNE 13, 1960, CAPUTO CONSTRUCTION, INC., REQUESTED TO BE RELEASED FROM ITS BID, ALLEGING AN ERROR IN ADDITION, WHICH MADE ITS BID APPROXIMATELY $10,000 LOWER THAN IT SHOULD HAVE BEEN. ENCLOSED WITH THE LETTER ARE WORKSHEETS WHICH THE CONTRACTOR CERTIFIED AS CONTAINING THE ESTIMATE ORIGINALLY PREPARED BY IT FOR THE PROJECT AND UPON WHICH ITS BID PRICE WAS BASED. THE WORKSHEETS CONTAIN PENCILED FIGURES LISTED IN TWO COLUMNS, RESPECTIVELY HEADED "TOTAL ESTIMATED MATERIAL COSTS" AND "TOTAL ESTIMATED LABOR COST," WITH A TOTAL FIGURE OF $32,087 APPEARING UNDER THE MATERIAL COST COLUMN. THE TOTALS OF BOTH COLUMNS ARE INCLUDED IN A COMPUTATION APPEARING ON THE WORKSHEET, ALONG WITH SEVERAL OTHER AMOUNTS INDICATED AS FACTORS OF COSTS, FOR A TOTAL BID OF $44,470. TOTAL OF THE ESTIMATED MATERIAL COST IS INDICATED ON THE WORKSHEETS AS $32,087, THE FIGURES ACTUALLY TOTAL $42,087, WITH THE APPARENT RESULT THAT THE ESTIMATED MATERIAL COST FIGURE USED BY THE CONTRACTOR IN ARRIVING AT ITS BID PRICE WAS UNDERESTIMATED BY $10,000. IN ADDITION TO THE WORKSHEETS, THE CONTRACTOR SUBMITTED AFFIDAVITS FROM SUB-BIDDERS ATTESTING TO SEVERAL INDIVIDUAL MAJOR ITEMS OF COST APPEARING ON THE WORKSHEET UNDER THE ESTIMATED MATERIAL COST OF $21,000 FOR "ELECTRICAL" WORK. THE CONTRACTOR HAS NOT EXECUTED THE CONTRACT BUT HAS INDICATED A WILLINGNESS TO DO SO IF AN ADJUSTMENT IS MADE IN ITS BID FOR THE ALLEGED ERROR IN ADDITION.

THE CONTRACTING OFFICER REPORTS THAT HE HAS NOT BEEN ABLE TO ASCERTAIN WHEN THE CONTRACTOR DISCOVERED THE ALLEGED ERROR, BUT THAT THE CONTRACTOR DID REPORT THAT IT HAD MADE AN UNSUCCESSFUL ATTEMPT TO REDUCE ITS SUB- BIDDERS' PRICES SO AS TO ABSORB THE ERROR.

A COMPARISON OF THE CONTRACTOR'S ESTIMATE WITH THE CONTRACT ARCHITECT'S ESTIMATE SHOWS A SIMILARITY OF COSTS IN INDIVIDUAL MAJOR ITEMS APPEARING ON THE CONTRACTOR'S WORKSHEETS, SUCH AS ELECTRICAL WORK, PLUMBING AND HEATING, AND ASPHALT PLANK FLOORING.

BASED ON THE FOREGOING, THE CONTRACTING OFFICER RECOMMENDS THAT THE CONTRACT BE REFORMED TO INCREASE THE AMOUNT OF THE CONTRACT TO $54,470, OR $10,000 OVER THE BID PRICE.

WE BELIEVE THAT THE EVIDENCE SUBMITTED BY THE CONTRACTOR REASONABLY ESTABLISHES THAT IT MADE AN ERROR OF ADDITION IN COMPUTING ITS BID PRICE. HOWEVER, THE CONTRACTOR DID NOT ALLEGE ITS ERROR UNTIL AFTER THE AWARD WAS MADE. IN SUCH CASES, A VALID AND BINDING CONTRACT IS CONSUMMATED DESPITE THE ERROR UNLESS IT CAN BE SHOWN THAT THE CONTRACTING OFFICER ACCEPTED THE BID WITH NOTICE, ACTUAL OR OTHERWISE, OF THE ERROR. 26 COMP. GEN. 415 AND CASES CITED THEREIN.

UNDER THE FACTS DISCLOSED IT APPEARS THAT THE LOW BIDDER HIMSELF SUSPECTED THE POSSIBILITY OF AN ERROR IN HIS BID, AND, IN EFFECT, SO ADVISED THE CONTRACTING OFFICER THE DAY AFTER BID OPENING. IN SUCH CIRCUMSTANCES, EVEN THOUGH THE LOW BIDDER STATED HE WOULD ADVISE THE CONTRACTING OFFICER IF HIS BID WAS IN ERROR AND FAILED TO DO SO DURING THE ENSUING ELEVEN DAYS BEFORE AWARD, WE BELIEVE AWARD SHOULD NOT HAVE BEEN MADE WITHOUT VERIFICATION OF THE BID.

FOR THE ABOVE REASONS, WE ARE OF THE OPINION THAT THE AWARD MADE TO CAPUTO CONSTRUCTION, INC., ON JUNE 7, 1960, DID NOT RESULT IN A VALID AND BINDING CONTRACT. WE ARE ALSO OF THE OPINION THAT THE CONTRACT MAY NOT BE REFORMED TO INCREASE THE AMOUNT OF THE CONTRACT TO $54,470. THE SECOND LOW BID REPORTED RECEIVED IS IN THE TOTAL AMOUNT OF $54,751. WE HAVE NO WAY OF KNOWING TO WHAT EXTENT THE INCLUSION OF AN ADDITIONAL $10,000 IN THE TOTAL ESTIMATED MATERIAL COST (THE AMOUNT OF THE ERROR IN ADDITION MADE BY THE LOW BIDDER IN COMPUTING ITS ESTIMATED MATERIAL COST) MIGHT HAVE AFFECTED OTHER FACTORS OF COST CONSIDERED BY THE CONTRACTOR (OVERHEAD COSTS FOR EXAMPLE) IN ITS BID PRICE COMPUTATIONS. TO ALLOW THE CONTRACTOR TO PERFORM THE CONTRACT AT A PRICE WHICH IS NOT CLEARLY ESTABLISHED AS ITS INTENDED BID PRICE, AS IN THIS CASE, WOULD WORK TO THE DETRIMENT OF OTHER BIDDERS WHO MIGHT HAVE BEEN LOW BUT FOR THE CONTRACTOR'S MISTAKE.

ACCORDINGLY, THE AWARD MADE TO CAPUTO CONSTRUCTION, INC., ON JUNE 7, 1960, MAY BE CANCELED.

THE ENCLOSURES FORWARDED WITH THE LETTER OF SEPTEMBER 20, 1960, ARE RETURNED AS REQUESTED.