B-144678, JAN. 9, 1961

B-144678, JAN. 9, 1961

TO WILLIAM M. HAUSSMANN, CONTRACTING OFFICER, NATIONAL CAPITOL PARKS:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 21, 1960, REQUESTING A DECISION AS TO THE ACTION WHICH SHOULD BE TAKEN CONCERNING AN ERROR ALLEGED PRIOR TO AWARD BY CLARKE, INCORPORATED, TO HAVE BEEN MADE IN ITS BID, SUBMITTED IN RESPONSE TO INVITATION FOR BIDS, IDENTIFIED AS CONTRACT NO. 14-10-0028-2098.

THE INVITATION WAS ISSUED ON OCTOBER 31, 1960, FOR THE CONSTRUCTION OF A GARAGE EXTENSION TO AN EXISTING BUILDING AND THE CONSTRUCTION OF A FIRE HOUSE IN PRINCE WILLIAM FOREST PARK, TRIANGLE, VIRGINIA. THE INVITATION CALLS FOR A LUMP SUM BID PRICE ON THE WORK AS DESCRIBED IN THE DETAILED SPECIFICATIONS ACCOMPANYING THE INVITATION. IN ADDITION, THE INVITATION REQUIRES THE SUBMISSION OF SUPPLEMENTARY BIDS ON CERTAIN ITEMS OF WORK WHICH ARE ADDITIONS TO OR DEDUCTIONS FROM THE SPECIFIED WORK, DESCRIBED THEREIN AS "ALTERNATIVE BID "A" (UNIT PRICE FOR INCREASED DEPTH OF WALLS)," AND "ALTERNATIVE BID "B" (ELIMINATION OF STORAGE ROOM).' THE GOVERNMENT RESERVES THE RIGHT TO ACCEPT THE ALTERNATIVE BIDS AS ITS INTERESTS MAY DIRECT. BIDS WERE OPENED ON NOVEMBER 17, 1960, AND THE ABSTRACT OF BIDS REVEALS THE FOLLOWING:

TABLE

ALTERNATIVE BID "A"

UNIT PRICE PER ALTERNATIVE

LINEAR FOOT BID "B"

MAIN LUMP BRICK CONCRETE

CONTRACTOR SUM BID COURSE MASONRY DEDUCT CLARKE, INC. $16,900.00 $1.50 $1.00 $1,500.00 HENDRICK CONST. CO. 23,600.00 0.90 1.50 1,800.00 WILLIAM H. HILL 26,767.00 0.50 0.50 1,967.00 JOHN L. BREEDEN, INC. 23,280.00 0.18 0.60 2,932.00

BY LETTER DATED NOVEMBER 25, 1960, CLARKE, INCORPORATED, NOTIFIED YOUR OFFICE THAT ITS BID WAS IN ERROR. MR. CLARKE, WHO PREPARED THE BID AS PRESIDENT OF THE FIRM, ALLEGED THAT IN ARRIVING AT THE TOTAL BID HE MISPLACED ONE SHEET OF A TOTAL OF SIX ESTIMATE SHEETS AND THAT THE AMOUNT ON THAT SHEET, $3,066, WAS ERRONEOUSLY EXCLUDED FROM THE TOTAL BID SUBMITTED. THE BIDDER HAS PRESENTED SIX YELLOW SHEETS OF PAPER ON WHICH ARE WRITTEN IN PENCIL WORDS AND FIGURES WHICH THE BIDDER STATES ARE THE ORIGINAL ESTIMATE FIGURES. ENCLOSED ALSO ARE TWO PIECES OF CALCULATING MACHINE TAPE FIGURES WHICH DO NOT INCLUDE THE FIGURES ON ONE OF THE YELLOW COMPUTATION SHEETS. THE FIGURES FOUND ON THE "EXCLUDED" SHEET (TOTALING $2,534), PLUS 10 PERCENT FOR OVERHEAD AND THEN 10 PERCENT FOR PROFIT, TOTAL $3,066. THE BIDDER STATES THAT IF IT IS PERMITTED TO CORRECT ITS BID TO THE AMOUNT OF $19,966 ($16,900 PLUS $3,066), IT WOULD FEEL OBLIGATED TO PERFORM UNDER THE TERMS OF THE CONTRACT AND SPECIFICATIONS.

YOU REQUEST OUR DECISION AS FOLLOWS:

"THE DISPARITY BETWEEN THE LOW BID AND THE OTHER BIDS, TOGETHER WITH THE COMPUTATION SHEETS, APPEARS TO WARRANT THE CONCLUSION THAT SUCH A BONAFIDE MISTAKE WAS MADE BY THE LOW BIDDER.

"IF CLARKE INCORPORATED HAS SATISFACTORILY ESTABLISHED THAT A MISTAKE WAS MADE IN PREPARING THE BID, YOUR ANSWER TO THE FOLLOWING QUESTIONS IS REQUESTED.

"1. MAY THIS BID BE REFORMED TO INCLUDE THE AMOUNT OF THE ALLEGED MISTAKE AND AWARD MADE AND A CONTRACT ENTERED INTO WITH CLARKE INCORPORATED IN THE AMOUNT OF $19,966?

"2. SHOULD THIS BID BE REJECTED AND THE NEXT LOWEST BID BE CONSIDERED THE LOW BID?

"IF THE ANSWER TO (1) IS IN THE NEGATIVE AND (2) IN THE POSITIVE, WOULD YOU BE REQUIRED TO OBJECT TO THE REJECTION OF ALL BIDS AND THE ISSUANCE OF INVITATIONS FOR NEW BIDS ON THE SAME PROJECT?

THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT, MOFFETT, HODGKINS, AND CLARKE COMPANY V. ROCHESTER, 178 U.S. 373. BY ACCEPTING A BID WITH NOTICE OF A CLAIM OF ERROR BY THE BIDDER, THE GOVERNMENT, IN EFFECT, UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S CLAIM WAS NOT MADE IN GOOD FAITH. SEE 36 COMP. GEN. 441, 444. CONSIDERING HERE THE SPREAD IN BID PRICES BETWEEN THE LOW BID AND THE OTHER BIDS ON THE MAIN WORK, AND CONSIDERING, ALSO, THE PROOFS OF ERROR SUBMITTED BY CLARKE, INCORPORATED, WE ARE OF THE VIEW THAT THERE IS SUFFICIENT EVIDENCE OF MISTAKE IN BID HERE TO PRECLUDE A VALID ACCEPTANCE ON THE TERMS SUBMITTED.

HOWEVER, WE DO NOT REGARD THE EVIDENCE HERE TO BE SUFFICIENTLY PERSUASIVE OF THE PRICE CLARKE, INCORPORATED, ALLEGES IT INTENDED TO BID. FOR EXAMPLE, THE BIDDER DID NOT USE A PROFIT FACTOR OF 10 PERCENT IN ARRIVING AT ITS BID OF $16,900. UNDER THESE CIRCUMSTANCES WE CANNOT APPROVE CORRECTION OF THE BID. SEE 37 COMP. GEN. 210.

YOU ASK IF WE WOULD OBJECT TO THE REJECTION OF ALL BIDS AND A READVERTISEMENT ON THIS PROJECT. THE REJECTION OF ALL BIDS AFTER THE BID OPENING IS A MATTER OF SERIOUS CONCERN TO THIS OFFICE IN VIEW OF THE EFFECT IT HAS ON THE SEALED COMPETITIVE BIDDING SYSTEM. WHEN IN THE LIGHT OF ALL THE FACTS, HOWEVER, INCLUDING THOSE DISCLOSED BY THE BIDDING, IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE DESIRED WORK OR SUPPLIES, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND READVERTISING OF THE PROCUREMENT IS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF THE ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT. IT IS TO BE REGRETTED THAT ALL BIDDERS ARE THEREBY MADE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, BUT THEY ALSO ARE BETTER ADVISED AS TO THE PRICE RANGE CONSIDERED REASONABLE BY THE GOVERNMENT, AND ALL HAVE EQUAL OPPORTUNITIES TO SUBMIT NEW BIDS IF THEY WISH. 36 COMP. GEN. 364. ACCORDINGLY, WE WOULD NOT OBJECT TO THE REJECTION OF ALL BIDS AND A READVERTISEMENT IF IT BE ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT WHICH THE CONSTRUCTION PROJECT SHOULD COST.