B-146124, SEP. 1, 1961

B-146124, SEP. 1, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER OF JULY 26, 1961, FROM THE OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, FORWARDING A REPORT AND RECOMMENDATION REGARDING THE ACTION TO BE TAKEN RELATIVE TO THE ALLEGATION BY THE CHESAPEAKE WINDOW CLEANING COMPANY OF AN ERROR IN ITS BID ON WHICH PURCHASE ORDER NO. 61-5318, DATED MAY 25, 1961, IS BASED.

INFORMAL NEGOTIATION NO. 8/N/-61 FOR FIXED PRICE BID PROPOSAL FOR WASHING APPROXIMATELY 1,148 WINDOWS AND SILLS AND CLEANING APPROXIMATELY THE SAME NUMBER OF VENETIAN BLINDS OF SPECIFIED BUILDINGS AT FORT HOLABIRD, MARYLAND, WERE CONDUCTED BY THE CONTRACTING OFFICER UPON RECEIPT OF A PURCHASE REQUEST FROM THE POST ENGINEER. THE PURCHASE REQUEST CONTAINED AN ESTIMATED COST OF $2,500 FOR THE WORK REQUIRED.

TWO BIDS WERE RECEIVED DURING THE NEGOTIATIONS. THE ORIOLE GENERAL CLEANING SERVICES BID $2,438 AND THE CHESAPEAKE WINDOW CLEANING COMPANY BID $1,198. THE CONTRACTING OFFICER NOTED THE WIDE VARIATION IN THE TWO BIDS AND THEIR RELATION TO THE GOVERNMENT ESTIMATE, BUT HE DID NOT REQUEST VERIFICATION OF THE LOW BID. IN VIEW OF THE PROCEDURES USED IN THE INFORMAL NEGOTIATION, THE CONTRACTING OFFICER CONCLUDED THE LOW BID WAS CORRECT AND ISSUED PURCHASE ORDER NO. 61-5318 ON MAY 25, 1961.

THE CONTRACTOR COMMENCED WORK ON THE PROJECT ON JUNE 5, 1961. BY LETTER OF JUNE 12, 1961, TO THE FINANCE AND ACCOUNTING OFFICE THE CONTRACTOR ALLEGED THAT HE INTENDED HIS BID TO BE $1,998 INSTEAD OF $1,198 AND HE ENCLOSED THE MEMO PAD SHEETS USED IN PREPARATION OF HIS BID TO SUBSTANTIATE HIS ALLEGATION OF ERROR.

THE CONTRACTING OFFICER MET WITH THE CONTRACTOR ON JULY 10, 1961, TO DISCUSS THE ALLEGED ERROR. WHEN ASKED WHY HE DID NOT REPORT THE ALLEGED ERROR DURING A MEETING ON JUNE 2, 1961, AT WHICH TIME THE COMMENCEMENT DATE OF THE PROJECT WAS DISCUSSED, THE CONTRACTOR ADVISED THAT HE STATED TO THE POST ENGINEER SUPERVISOR IN CHARGE OF THE PROJECT THAT HE MADE A MISTAKE IN HIS BID. THE SUPERVISOR DID NOT ADVISE THE CONTRACTING OFFICER OF THAT STATEMENT UNTIL JULY 13 OR 14, 1961.

IN RESPONSE TO THE CONTRACTING OFFICER'S INQUIRY ABOUT THE ESTIMATE OF $2,500, THE POST ENGINEER STATED THAT WAS THE AMOUNT SET ASIDE FOR THE PROJECT AND NOT THE ACTUAL ESTIMATE. BY MEMORANDUM OF JULY 11, 1961, THE POST ENGINEER FURNISHED A DETAILED ESTIMATE IN THE AMOUNT OF $1,424.

THE CONTRACTING OFFICER CONCLUDED THAT THE WORK SHEETS SUBMITTED BY THE CONTRACTOR SHOWED THAT A BONA FIDE ERROR HAD BEEN MADE IN THE BID, BUT DUE TO CERTAIN DISCREPANCIES IN EXTENSIONS OF INDIVIDUAL ITEMS, THE WORK SHEETS DID NOT ESTABLISH THAT THE BID SHOULD HAVE BEEN $1,998. BASED ON PREVIOUS CONTRACT PRICES AND STANDARD PRICING PRACTICE IN THE AREA, THE CONTRACTING OFFICER DETERMINED THAT $1,595.50 IS A FAIR AND EQUITABLE PRICE FOR THE COMPLETION OF THE PROJECT. BY LETTER OF JULY 17, 1961, THE CONTRACTOR AGREED TO ACCEPT $1,595.50 AS A FAIR AND REASONABLE PRICE FOR THE WORK PERFORMED.

IN VIEW OF THE COST ESTIMATE OF $2,500, WHICH WAS AVAILABLE TO THE CONTRACTING OFFICER AT THE TIME BIDS WERE CONSIDERED, AND THE BID OF $2,438 FROM ORIOLE, THE PROBABILITY OF ERROR IN CHESAPEAKE'S BID OF $1,198 WAS APPARENT. IN THE CIRCUMSTANCES, WE DO NOT BELIEVE CHESAPEAKE'S BID SHOULD HAVE BEEN ACCEPTED WITHOUT VERIFICATION. IT APPEARS, THEREFORE, THAT ACCEPTANCE OF THE BID DID NOT CONSUMMATE A VALID AND BINDING CONTRACT.

SINCE THE RECORD SHOWS THAT CHESAPEAKE HAS UNDERTAKEN PERFORMANCE, PAYMENT FOR THE WORK IS AUTHORIZED ON A QUANTUM MERUIT BASIS IN THE AMOUNT OF $1,595.50, WHICH IS A FAIR AND REASONABLE PRICE IN ACCORDANCE WITH PREVIOUS CONTRACTS AND CURRENT PRICING PRACTICE IN THE AREA. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING PAYMENT FOR THE WORK.