B-145628, APR. 20, 1961

B-145628: Apr 20, 1961

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BUREAU OF RECLAMATION: WE HAVE YOUR LETTER OF APRIL 14. BIDS WERE OPENED AS SCHEDULED ON APRIL 11. WAS SUBMITTED BY THE JOINT VENTURE OF MORRISON-KNUDSEN COMPANY. WAS SUBMITTED BY THE JOINT VENTURE OF AL JOHNSON CONSTRUCTION COMPANY. THE ENGINEER'S ESTIMATE WAS $45. YOU REPORT THAT IN CHECKING EXTENSIONS OF UNIT PRICES IT WAS FOUND IN THE SECOND LOW BID. WAS SHOWN AS $3.10 BUT THAT THE TOTAL PRICE FOR THE ITEM HAD BEEN EXTENDED TO $29. FOR THE EXTENDED PRICE TO HAVE BEEN CORRECT THE UNIT PRICE WOULD HAVE HAD TO BE $310. YOU REPORT THAT SINCE THE ENGINEER'S ESTIMATE FOR THE UNIT PRICE OF ITEM NO. 235 IS $400 AND UNIT PRICES FOR THE ITEM SHOWN IN THE OTHER BIDS RANGE FROM $160 TO $500.

B-145628, APR. 20, 1961

TO ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

WE HAVE YOUR LETTER OF APRIL 14, 1961, WITH ENCLOSURES, PRESENTING FOR OUR DETERMINATION THE PROPRIETY OF A PROPOSED AWARD PURSUANT TO AN INVITATION ISSUED BY THE BUREAU OF RECLAMATION UNDER SPECIFICATIONS NO. DC -5525 FOR THE CONSTRUCTION OF YELLOWTAIL DAM AND POWER PLANT, LOWER BIGHORN DIVISION, MISSOURI RIVER BASON PROJECT.

BIDS WERE OPENED AS SCHEDULED ON APRIL 11, 1961, AT HARDIN, MONTANA. THE LOW TOTAL PRICE, AT $39,809,359, WAS SUBMITTED BY THE JOINT VENTURE OF MORRISON-KNUDSEN COMPANY, INCORPORATED; THE KAISER COMPANY; PERINI CORPORATION; WALSH CONSTRUCTION COMPANY; AND THE F AND S CONTRACTING COMPANY. THE SECOND LOW TOTAL BID, AT $39,836.166, WAS SUBMITTED BY THE JOINT VENTURE OF AL JOHNSON CONSTRUCTION COMPANY; WINSTON BROTHERS COMPANY; JOHNSON, DRAKE AND PIPER, INCORPORATED; AND FOLEY BROTHERS, INCORPORATED. OTHER BIDS RANGED TO $50,201,239.50. THE ENGINEER'S ESTIMATE WAS $45,752.418.

YOU REPORT THAT IN CHECKING EXTENSIONS OF UNIT PRICES IT WAS FOUND IN THE SECOND LOW BID, SUBMITTED BY AL JOHNSON CONSTRUCTION COMPANY, ET AL., THAT THE UNIT PRICE FOR ITEM NO. 235, INSTALLING 95 GROUPS OF INSTRUMENTS, WAS SHOWN AS $3.10 BUT THAT THE TOTAL PRICE FOR THE ITEM HAD BEEN EXTENDED TO $29,450. FOR THE EXTENDED PRICE TO HAVE BEEN CORRECT THE UNIT PRICE WOULD HAVE HAD TO BE $310. HOWEVER, IF THE UNIT PRICE SHOULD BE ADOPTED AS CORRECT AND THE EXTENDED PRICE AMENDED TO CONFORM THERETO, THE TOTAL BID PRICE FOR AL JOHNSON CONSTRUCTION COMPANY, ET AL., WOULD BE REDUCED TO $39,807,010.50, WHICH WOULD MAKE IT LOW. YOU REPORT THAT SINCE THE ENGINEER'S ESTIMATE FOR THE UNIT PRICE OF ITEM NO. 235 IS $400 AND UNIT PRICES FOR THE ITEM SHOWN IN THE OTHER BIDS RANGE FROM $160 TO $500, YOU CONSIDERED THAT THE UNIT PRICE OF $3.10 WAS AN OBVIOUS ERROR RESULTING FROM A MISPLACED DECIMAL POINT.

THE JOINT VENTURE OF AL JOHNSON CONSTRUCTION COMPANY, ET AL., HAS TAKEN THE POSITION IN A TELEGRAM DATED APRIL 12, 1961, DISPATCHED APPROXIMATELY 26 HOURS AFTER BID OPENING, THAT THE CORRECTION OF THE EXTENSION FOR TIME NO. 235 WOULD BE ACCEPTABLE TO THE BIDDER AND THE GROUP ,WILL EXPECT AN EARLY AWARD OF THE CONTRACT" TO THEM. SECTION 11 (B) OF THE INSTRUCTIONS TO BIDDERS PROVIDES:

"/B) THE GOVERNMENT RESERVES THE RIGHT TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHEN SUCH WAIVER IS IN THE INTEREST OF THE GOVERNMENT. IN CASE OF ERROR IN THE EXTENSION OF PRICES, THE UNIT PRICE WILL GOVERN.'

YOU STATE IN YOUR LETTER OF APRIL 14 THAT THE ENGINEER'S ESTIMATE OF $400 FOR ITEM NO. 235 IS A REASONABLE PRICE FOR THE WORK CONTEMPLATED, WHICH INVOLVES THE INSTALLATION OF 95 GROUPS OF STRAIN METERS WITH STRESS METERS AND JOINT METERS. YOU FURTHER STATE THAT IN EMBEDDING THESE INSTRUMENTS IN THE DAM CONCRETE AT VARIOUS LOCATIONS AND ELEVATIONS AS REQUIRED BY THE SPECIFICATIONS, CARE MUST BE TAKEN TO AVOID DAMAGE TO THE INSTRUMENTS AND TO INSURE THAT THE INSTALLATIONS ARE MADE AT THE PROPER LOCATIONS. YOU CONCLUDE,"IT IS INCONCEIVABLE THAT HIS WORK COULD BE ACCOMPLISHED FOR THE PRICE OF $3.10 FOR EACH GROUP OF INSTRUMENTS.' YOU PROPOSE TO MAKE AWARD TO THE JOINT VENTURE OF MORRISON-KNUDSEN, ET AL.

THE SPECIFIC QUESTION PRESENTED IS WHETHER THE BID SUBMITTED BY AL JOHNSON CONSTRUCTION COMPANY, ET AL., SHOULD BE REDUCED BY CONFORMING THE TOTAL PRICE FOR ITEM NO. 235 TO THE INDICATED UNIT PRICE (WHICH WOULD MAKE THAT JOINT VENTURE THE LOW BIDDER) IN VIEW OF THE PROVISIONS OF SECTION 11 (B) OF THE INSTRUCTIONS TO BIDDERS, NOTWITHSTANDING THAT THE UNIT PRICE SHOWN FOR THE ITEM IN QUESTION APPEARS TO BE AN OBVIOUS ERROR AS COMPARED TO THE EXTENDED PRICE, THE OTHER PRICES RECEIVED FOR THE ITEM, THE ENGINEER'S ESTIMATE, AND THE SCOPE OF THE WORK REQUIRED.

THE MATTER IS GOVERNED BY OUR DECISION PUBLISHED AT 39 COMP. GEN. 185, INVOLVING A SITUATION IN WHICH ALL OF THE MATERIAL FACTS WERE SIMILAR TO THOSE INVOLVED HERE, INCLUDING A SIMILAR PROVISION WITH RESPECT TO THE RULE TO BE FOLLOWED IN THE EVENT OF DISCREPANCIES BETWEEN UNIT AND EXTENDED PRICES. IN THAT CASE THE SECOND LOW BID SHOWED FOR EACH OF TWO ITEMS A UNIT PRICE OF $9.14 AND AN EXTENDED PRICE OF $1,828. THE OTHER BIDS AND THE AMOUNT OF WORK INVOLVED FOR THE ITEMS REASONABLY INDICATED THAT THE UNIT PRICES, RATHER THAN THE EXTENDED PRICES, WERE IN ERROR. HOWEVER, IF THE UNIT PRICES WERE ACCEPTED AS CORRECT THE BID WOULD THEN BECOME LOW. WE HELD THAT THE CORRECTION OF THE BID IN THE MANNER PROPOSED BY THE BIDDER WOULD BE IMPROPER. WE NOTED THAT THE EFFECT OF PERMITTING A CORRECTION ON THE BASIS OF THE UNIT PRICE WHERE SUCH UNIT PRICES ARE COMPLETELY OUT OF LINE WITH THE REASONABLE COST OR VALUE OF THE ITEM AS COMPARED TO THE EXTENDED PRICE WOULD GIVE THE BIDDER THE OPPORTUNITY TO DECIDE AFTER OPENING WHETHER TO ALLEGE THE ERROR IN THE UNIT PRICE OR IN THE EXTENSION. SUCH AN OPTION WOULD, IN OUR VIEW, BE SO PREJUDICIAL, BOTH TO THE OTHER BIDDERS AND TO THE INTEGRITY OF THE COMPETITIVE BID SYSTEM, AS TO PRECLUDE CONSIDERATION OF THE BID. THE SAME RULE APPEARS PROPERLY TO BE FOR APPLICATION IN THIS INSTANCE. ACCORDINGLY, THE BID OF AL JOHNSON CONSTRUCTION COMPANY, ET AL., MAY NOT BE CORRECTED IN THE MANNER CONSIDERED.