B-145144, MAR. 21, 1961

B-145144: Mar 21, 1961

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TEN BIDS WERE RECEIVED BY BID OPENING ON DECEMBER 5. THE LOW BID WAS SUBMITTED BY BERKELEY STEEL CONSTRUCTION COMPANY IN THE AMOUNT OF $1. 225.20 AND THE OTHER BIDS WERE QUOTED AT $1. THE ENGINEER'S ESTIMATE WAS IN THE AMOUNT OF $1. BERKELEY STEEL CONSTRUCTION COMPANY WAS GIVEN THE AWARD ON DECEMBER 8. THE LABOR COST ESTIMATE WOULD HAVE BEEN EVALUATED AND A LABOR ALLOWANCE AND PROFIT WOULD HAVE BEEN SET. THESE STEPS WERE OVERLOOKED. AN APPARENT ORIGINAL WORK SHEET WAS FURNISHED INDICATING THAT THE CONTRACTOR'S BID FIGURE OF $1. THE CONTRACTING OFFICER REPORTS THAT ALTHOUGH BERKELEY'S BID WAS NEARLY 30 PERCENT LOWER THAN THE SECOND LOW BID. HE DID NOT QUESTION THE BID SINCE IT WAS LESS THAN 6 PERCENT LOWER THAN THE ENGINEER'S ESTIMATE.

B-145144, MAR. 21, 1961

TO THE SECRETARY OF THE INTERIOR:

WE REFER TO A LETTER DATED FEBRUARY 21, 1961, FROM YOUR ASSISTANT SECRETARY, REQUESTING OUR DECISION WITH RESPECT TO AN ERROR IN BID ALLEGED BY BERKELEY STEEL CONSTRUCTION COMPANY AFTER THE AWARD AND ISSUANCE OF PURCHASE ORDER NO. (D) 90,567-A. THE CONTRACTOR HAS REQUESTED THAT IT BE RELIEVED FROM PERFORMANCE.

THE BUREAU OF RECLAMATION, DENVER, COLORADO, ISSUED REQUEST NO. (D) 90,567-A AND ITS SUPPLEMENTAL NOTICE NO. 1 OF NOVEMBER 23, 1960, FOR THE FURNISHING OF LADDERS AND GRATINGS INCLUDING EXPANSION ANCHORS, CAP SCREWS AND TUBING COMPLETE IN ACCORDANCE WITH ATTACHED SPECIFICATIONS AND DRAWINGS. TEN BIDS WERE RECEIVED BY BID OPENING ON DECEMBER 5, 1960. THE LOW BID WAS SUBMITTED BY BERKELEY STEEL CONSTRUCTION COMPANY IN THE AMOUNT OF $1,225.20 AND THE OTHER BIDS WERE QUOTED AT $1,745.00, $1,810, $1,925.00, $2,506.15, $2,614.00, $2,874.00, $3,199.36, $3,700.00 AND $4,920.00. THE ENGINEER'S ESTIMATE WAS IN THE AMOUNT OF $1,300. BERKELEY STEEL CONSTRUCTION COMPANY WAS GIVEN THE AWARD ON DECEMBER 8, 1960.

ON DECEMBER 13, 1960, THE CONTRACTOR SIGNED AND RETURNED AN ACKNOWLEDGMENT INDICATING ITS ACCEPTANCE OF THE PURCHASE ORDER. DECEMBER 30, 1960, A BUREAU INSPECTOR VISITED THE CONTRACTOR'S PLANT AND REPORTED WITH REGARD TO THE SUBJECT ORDER.

THEREAFTER, BY LETTER OF JANUARY 11, 1961, THE CONTRACTOR ALLEGED AN ERROR IN ITS QUOTATION, STATING THAT ITS BID FIGURES INCLUDED MATERIAL AND FREIGHT BUT EXCLUDED LABOR, OVERHEAD AND PROFIT. THE CONTRACTOR REQUESTED WITHDRAWAL OF ITS QUOTATION AND CANCELLATION OF THE ORDER. THE CONTRACTOR FURTHER EXPLAINED, IN A LETTER OF JANUARY 24, 1961, THAT IN NORMAL COURSE, THE LABOR COST ESTIMATE WOULD HAVE BEEN EVALUATED AND A LABOR ALLOWANCE AND PROFIT WOULD HAVE BEEN SET, BUT IN THIS CASE, DUE TO URGENCY OF TIME, THESE STEPS WERE OVERLOOKED. AN APPARENT ORIGINAL WORK SHEET WAS FURNISHED INDICATING THAT THE CONTRACTOR'S BID FIGURE OF $1,225.20 INCLUDES ONLY MATERIAL AND FREIGHT.

THE CONTRACTING OFFICER REPORTS THAT ALTHOUGH BERKELEY'S BID WAS NEARLY 30 PERCENT LOWER THAN THE SECOND LOW BID, HE DID NOT QUESTION THE BID SINCE IT WAS LESS THAN 6 PERCENT LOWER THAN THE ENGINEER'S ESTIMATE.

THE EVIDENCE SUBMITTED BY THE CONTRACTOR TENDS TO SHOW THAT IT MADE AN ERROR OF OMISSION IN THE COMPUTATION OF ITS BID PRICE. HOWEVER THE ERROR WAS NOT ALLEGED UNTIL AFTER THE AWARD. IN SUCH CASES A VALID AND BINDING CONTRACT IS CONSUMMATED DESPITE THE ERROR UNLESS THE CONTRACTING OFFICER ACCEPTS THE BID WITH NOTICE, ACTUAL OR OTHERWISE, OF THE ERROR. 26 COMP. GEN. 415 AND CASES CITED THEREIN.

THE RECORD SHOWS THAT THE CONTRACTOR DID NOT ALLEGE ITS ERROR UNTIL OVER ONE MONTH PAST AWARD, AFTER IT HAD RETURNED A SIGNED ACKNOWLEDGMENT OF THE AWARD AND HAD APPARENTLY RAISED NO OBJECTION DURING A GOVERNMENT INSPECTION OF ITS PLANT AFTER AWARD. DESPITE THE DISPARITY BETWEEN BERKELEY'S BID PRICE AND THE OTHER BID PRICES, WE CANNOT FIND THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE MISTAKE WHEN THE CONTRACTOR DID NOT ALLEGE ERROR UNTIL OVER A MONTH AFTER IT HAD ACKNOWLEDGED AND ACCEPTED THE AWARD.

ACCORDINGLY, YOU ARE ADVISED THAT NO LEGAL BASIS EXISTS FOR RELIEVING BERKELEY STEEL CONSTRUCTION COMPANY FROM ITS OBLIGATION TO FURNISH THE SUPPLIES AND SERVICES INVOLVED FOR THE AMOUNT OF ITS BID PRICE, OR TO PAY THE EXCESS COST OF REPURCHASE ELSEWHERE.