B-149762, SEP. 11, 1962

B-149762: Sep 11, 1962

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VETERANS ADMINISTRATION: REFERENCE IS MADE TO A LETTER DATED AUGUST 21. THE THREE OTHER BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $13. IT IS REPORTED THAT SHORTLY AFTER THE BID OPENING AND PRIOR TO AWARD. LEVINE'S INQUIRY AS TO WHAT COULD BE DONE ABOUT THE MISTAKE IN THE COMPANY'S BID HE WAS ADVISED THAT A LETTER SHOULD BE WRITTEN SETTING FORTH THE FACTS AND CIRCUMSTANCES. LEVINE REPLIED THAT SINCE HIS FIRM WAS A BIG COMPANY AND THAT SINCE THE FIRM MADE GOOD BIDS AS WELL AS BAD ONES. IT ALSO IS REPORTED THAT SINCE THE FUNDS FOR THE PROJECT HAD NOT BEEN ALLOCATED TO THE STATION BY THE TIME OF THE BID OPENING. IT WAS NECESSARY TO REQUEST AN EXTENSION OF THE BID ACCEPTANCE PERIOD FROM THE CONNECTICUT HEAT AND FUEL COMPANY AND THAT THIS EXTENSION WAS GLADLY GRANTED AFTER THE ALLEGED ERROR WAS FOUND BY THE COMPANY.

B-149762, SEP. 11, 1962

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED AUGUST 21, 1962, FILE REFERENCE 031C, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, REQUESTING A DECISION AS TO WHETHER THE RELIEF SOUGHT BY THE CONNECTICUT HEAT AND FUEL COMPANY UNDER CONTRACT NO. V5205C-41 MAY BE GRANTED.

THE VETERANS ADMINISTRATION HOSPITAL, WEST HAVEN, CONNECTICUT, BY INVITATION NO. 62-16 REQUESTED BIDS FOR THE INSTALLATION OF TWO SEPARATE COMPLETE AIR CONDITIONING SYSTEMS IN THE RADIOGRAPHIC AREAS IN BUILDINGS NOS. 1 AND 2. IN RESPONSE THE CONNECTICUT HEAT AND FUEL COMPANY SUBMITTED A BID DATED AUGUST 15, 1961, OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $11,220. THE THREE OTHER BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $13,419, $14,250 AND $14,587.

IT IS REPORTED THAT SHORTLY AFTER THE BID OPENING AND PRIOR TO AWARD, MR. SAMUEL LEVINE OF THE CONNECTICUT HEAT AND FUEL COMPANY TELEPHONED ALLEGING THAT THE COMPANY HAD MADE A MISTAKE IN ITS BID IN THAT IT HAD QUOTED A PRICE TOO LOW FOR THE JOB; THAT IN RESPONSE TO MR. LEVINE'S INQUIRY AS TO WHAT COULD BE DONE ABOUT THE MISTAKE IN THE COMPANY'S BID HE WAS ADVISED THAT A LETTER SHOULD BE WRITTEN SETTING FORTH THE FACTS AND CIRCUMSTANCES; AND THAT MR. LEVINE REPLIED THAT SINCE HIS FIRM WAS A BIG COMPANY AND THAT SINCE THE FIRM MADE GOOD BIDS AS WELL AS BAD ONES, IT WOULD PERFORM UNDER THE TERMS AND CONDITIONS OF ITS BID. IT ALSO IS REPORTED THAT SINCE THE FUNDS FOR THE PROJECT HAD NOT BEEN ALLOCATED TO THE STATION BY THE TIME OF THE BID OPENING, IT WAS NECESSARY TO REQUEST AN EXTENSION OF THE BID ACCEPTANCE PERIOD FROM THE CONNECTICUT HEAT AND FUEL COMPANY AND THAT THIS EXTENSION WAS GLADLY GRANTED AFTER THE ALLEGED ERROR WAS FOUND BY THE COMPANY. THE BID OF THE COMPANY WAS ACCEPTED ON SEPTEMBER 7, 1961, AND BY LETTER DATED SEPTEMBER 22 THE COMPANY WAS NOTIFIED TO PROCEED WITH THE WORK.

ON FEBRUARY 6, 1962, THE COMPANY SATISFACTORILY COMPLETED THE WORK AND SUBMITTED A VOUCHER FOR PAYMENT FOR $11,220, THE CONTRACT PRICE. SUBSEQUENTLY, ON FEBRUARY 26, 1962, THE COMPANY SUBMITTED A RECLAIM VOUCHER IN THE AMOUNT OF $1,542.22, REPRESENTING AN ACTUAL LOSS OF $1,454,92 SUSTAINED BY THE COMPANY IN PERFORMING THE CONTRACT WORK PLUS SIX PERCENT PROFIT ON SUCH AMOUNT. THE CLAIM OF THE COMPANY FOR ADDITIONAL COMPENSATION WAS SUBMITTED TO THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, FOR CONSIDERATION AND BY ADMINISTRATIVE DETERMINATION 62-52 DATED APRIL 3, 1962, THAT OFFICIAL DETERMINED THAT THE COMPANY WAS NOT ENTITLED TO RECEIVE ADDITIONAL COMPENSATION ON ACCOUNT OF THE ALLEGED MISTAKE IN ITS BID FOR THE REASONS STATED THEREIN.

IN A LETTER DATED JULY 23, 1962, TO OUR OFFICE, THE CONNECTICUT HEAT AND FUEL COMPANY PROTESTED THE RULING OF THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, AND IN REGARD THERETO STATED AS FOLLOWS:

"REFERENCE IS MADE TO THE ABOVE SUBJECT CLAIM AS OUTLINED IN OUR PREVIOUS LETTER OF FEBRUARY 26, 1962. (COPY ENCLOSED)

"THE UNFAVORABLE RULING WAS MADE ON THE BASIS OF "WHERE THE ERROR WAS KNOWN TO YOU PRIOR TO THE AWARD OF THE CONTRACT, THE REQUEST FOR RELIEF SHOULD HAVE BEEN MADE PRIOR TO AWARD.' THIS WAS NOT THE CASE FACT. YOU WILL PLEASE NOTE EXHIBIT "A" IS DATED AUGUST 2, 1961, AND WAS QUOTED TO US AT $1155.00, WHICH WAS THE AMOUNT WE USED IN OUR BID PRICE. THE BID OPENING WAS ON AUGUST 15TH, AND PRIOR TO THAT TIME WE HAD NO WAY OF KNOWING WHETHER OR NOT WE WERE THE SUCCESSFUL BIDDER, AND MADE NO FURTHER CHECK ON THE $1155.00 PRICE QUOTED US.

"WE WERE AT THE BID OPENING ON AUGUST 15TH, AND AT THAT TIME FOUND THAT WE WERE THE LOW BIDDER BY $2199.00 UNDER THE NEXT LOWEST BID.

"WHEN ON SEPTEMBER 22ND WE WERE GIVEN "NOTICE TO PROCEED" WE CALLED OUR SUBCONTRACTOR, THE WINTHROP SHEET METAL WORKS AND WERE NOTIFIED THEN "HE WAS GOING TO FINISH UP THE WORK HE HAD CONTRACTED FOR AND WAS NOT GOING TO TAKE ON ANY MORE WORK SO THAT HE COULD GO OUT OF BUSINESS DUE TO POOR HEALTH.'

"WE FINALLY WERE OBLIGATED TO GET ANOTHER SUBCONTRACTOR ON OCTOBER 19TH TO CONTRACT FOR THE SHEET METAL AT A COST TO US OF $3167.00 (SEE EXHIBIT "B") WHICH WAS $2012.00 OVER OUR COST SHEET ESTIMATE.

"BY ANALYZING THE ABOVE FIGURES YOU WOULD SEE THAT EVEN IF WE USED THE HIGHER FIGURE OF $3167.00 FOR SHEET METAL WORK, WE WOULD STILL HAVE BEEN THE LOW BIDDER.

"THE FOLLOWING SCHEDULE WAS THE ACTUAL BIDS RECEIVED BY YOU FOR THIS PROJECT:

TABLE

THE WESTVILLE ELECTRIC CO. $14,587.00

J. P. SALMINI CO. $14,250.00

THE GEORGE ELLIS CO. $13,419.00

CONNECTICUT HEAT AND FUEL COMPANY $11,220.00

"WE HAD NO LEGAL RECOURSE TO WINTHROP SHEET METAL AS WE DID NOT HAVE A SIGNED AGREEMENT TO DO THE JOB FOR $1155.00, AS HIS WAS ONLY A BID TO DO SO. WE HAD NO AUTHORITY TO ACCEPT HIS PROPOSAL (EXHIBIT "A") AS ON AUGUST 2ND WE HAD NO POSITIVE ASSURANCE THAT WE HAD, OR WOULD BE AWARDED A CONTRACT.

"HOWEVER, ON OCTOBER 19TH YOU WILL PLEASE NOTE THAT WE DID SIGN A PROPOSAL ACCEPTANCE WITH THE ALLINGTOWN SHEET METAL IN THE AMOUNT OF $3167.00 (EXHIBIT "B") DUE TO THE FACT THAT WE HAD A FORMAL NOTICE FROM THE CONTRACTING OFFICER THAT WE WERE THE SUCCESSFUL BIDDER, AND ON SEPTEMBER 22ND WE WERE GIVEN NOTICE TO PROCEED WITH THE WORK.' IN SUPPORT OF ITS REQUEST FOR ADDITIONAL COMPENSATION, THE COMPANY SUBMITTED COPIES OF THE QUOTATIONS RECEIVED FROM THE DEFAULTING SUBCONTRACTOR AND THE SUBCONTRACTOR WHO PERFORMED THE SHEET METAL WORK. THE COMPANY ALSO SUBMITTED A COST-OF-JOB SHEET.

AFTER VERBALLY ALLEGING ERROR IN ITS BID, THE COMPANY ENTERED INTO A FORMAL CONTRACT WHEREIN IT UNEQUIVOCALLY AGREED TO PERFORM THE WORK FOR THE PRICE SPECIFIED IN ITS BID. SUCH CONTRACT IS PRESUMED, IN LAW, TO EXPRESS THE FINAL UNDERSTANDING OF THE PARTIES. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168, 173; AND SIMPSON V. UNITED STATES, 172 U.S. 372.

THE FACTS IN THE PRESENT CASE ARE SOMEWHAT SIMILAR TO THOSE IN THE CASE OF THE MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699 (CERTIORARI DENIED 325 U.S. 866), WHEREIN THE PLAINTIFF ALLEGED ERROR IN ITS BID BY REASON OF HAVING FAILED TO INCLUDE ON THE SHEET SUMMARIZING THE VARIOUS ESTIMATE SHEETS THE CHARGE FOR USE OF CERTAIN EQUIPMENT AMOUNTING TO $88,000 APPEARING ON ONE OF THE ESTIMATE SHEETS. EVEN THOUGH THE MISTAKE WAS DISCOVERED AND BROUGHT TO THE ATTENTION OF THE GOVERNMENT BEFORE AWARD, AND THE CONTRACT EXECUTED UNDER PROTEST, THE COURT DENIED ANY RELIEF, SAYING (P. 717/---

"AT THE TIME THE CONTRACT WAS AWARDED TO THE PLAINTIFF, PURSUANT TO ITS BID, AND AT THE TIME IT SIGNED THE CONTRACT, THE PLAINTIFF WAS NOT MISTAKEN. IT HAD BECOME AWARE OF THE MISTAKE IN ITS BID, AND FACED THE PROBLEM OF WHETHER IT WAS WILLING TO SIGN A CONTRACT FOR THE FIGURE WHICH IT HAD, BY MISTAKE SINCE DISCOVERED, BID. THE GOVERNMENT WAS ALSO AWARE OF THE PLAINTIFF'S CLAIM THAT IT HAD MADE A MISTAKE IN ITS BID. THERE WAS NOT, THEN, AT THE TIME OF SIGNING THE CONTRACT, ANY LACK OF KNOWLEDGE, EITHER MUTUAL OR UNILATERAL, WHICH CAUSED EITHER OF THEM TO MAKE THE CONTRACT WHICH THEY DID MAKE, WHEN IN FACT THEY INTENDED TO MAKE A DIFFERENT CONTRACT. THAT BEING SO, IF WE SHOULD REFORM THE CONTRACT AS THE PLAINTIFF REQUESTS, WE WOULD BE MAKING FOR THE PARTIES THE VERY CONTRACT WHICH ONE OF THEM, THE GOVERNMENT, EXPRESSLY REFUSED TO MAKE AT THAT TIME, THOUGH REQUESTED TO DO SO BY THE PLAINTIFF.'

SEE ALSO BOARD OF TRUSTEES OF NATIONAL TRAINING SCHOOL FOR BOYS V. O. D. WILSON COMPANY, INC., 133 F.2D 399; 39 COMP. GEN. 405.

FOR THE REASONS ABOVE SET OUT NO VALID BASIS APPEARS FOR INCREASING THE CONTRACT PRICE.

THE FILE SUBMITTED WITH THE DIRECTOR'S LETTER OF AUGUST 21, 1962, IS RETURNED AS REQUESTED.