B-151035, APR. 2, 1963

B-151035, APR. 2, 1963

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO A LETTER DATED MARCH 11, 1963, WITH ENCLOSURES, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING OUR DECISION AS TO WHETHER THERE MAY BE RESCINDED A CONTRACT IDENTIFIED AS ORDER NO. 193-910- 63, WHICH WAS ENTERED INTO BY THE U.S. FOREST SERVICE WITH THE CHIPPEWA CONSTRUCTION COMPANY, SAULT STE, MARIE, MICHIGAN, IN VIEW OF AN ERROR ALLEGED BY THE COMPANY TO HAVE BEEN MADE IN ITS BID UPON WHICH THE CONTRACT WAS AWARDED.

IN RESPONSE TO INVITATION NO. 10-63-5, ISSUED ON NOVEMBER 15, 1962, BY THE U.S. FOREST SERVICE, ESCANABA, MICHIGAN, THE CHIPPEWA CONSTRUCTION COMPANY SUBMITTED A BID DATED NOVEMBER 23, 1962, OFFERING TO FURNISH IN ACCORDANCE WITH SPECIFICATIONS ITEM NO. 1, COVERING 1,600 REINFORCED CONCRETE BLOCKS AT THE UNIT PRICES, AND FOR THE VARIOUS QUANTITIES, SET FORTH IN THE BID TO THE THREE DESTINATIONS DESIGNATED WHICH RESULTED IN A TOTAL BID OF $2,813. THREE OTHER BIDS WERE RECEIVED FOR ITEM NO. 1 IN THE TOTAL AMOUNTS OF $4,800, $5,594.50 AND $9,387.50. ON DECEMBER 6, 1962, THE LOW BID OF $2,813 OF THE CHIPPEWA CONSTRUCTION COMPANY FOR ITEM NO. 1 WAS ACCEPTED BY THE CONTRACTING OFFICER FOR THE FOREST SERVICE, THEREBY CONSUMMATING CONTRACT ORDER NO. 193-910-63. BY LETTER DATED DECEMBER 28, 1962, THE CHIPPEWA CONSTRUCTION COMPANY ADVISED THE FOREST SERVICE THAT DUE TO CONDITIONS BEYOND ITS CONTROL THE COMPANY WOULD BE UNABLE TO FULFILL THE CONTRACT. IN A SUBSEQUENT LETTER DATED JANUARY 21, 1963, THE COMPANY EXPLAINED TO THE FOREST SERVICE THAT IN COMPUTING ITS BID NO AMOUNT WAS INCLUDED FOR LABOR COSTS WHICH, ON THE BASIS OF A LIST OF COSTS FURNISHED BY THE COMPANY FOR THE BLOCKS, TOGETHER WITH THE PROFIT FACTOR, WOULD HAVE MADE ITS BID HIGHER THAN TWO OF THE THREE OTHER BIDS RECEIVED. IN VIEW OF THIS OMISSION IN THE BID THE QUESTION ARISES AS TO WHETHER CONTRACT ORDER NO. 193-910-63 MAY BE RESCINDED WITHOUT PREJUDICE TO THE COMPANY AND WHETHER IT MAY BE PAID A FAIR PRICE FOR THE 38 REINFORCED CONCRETE BLOCKS ALREADY FABRICATED.

IN THE SUBMISSION DATED MARCH 11, 1963, THE ADMINISTRATIVE ASSISTANT SECRETARY STATES THAT "THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE POTENTIAL ERROR BY REASON OF THE DIFFERENCE BETWEEN THE CHIPPEWA CONSTRUCTION COMPANY'S BID AND THOSE OF OTHER BIDDERS.' MOREOVER, THE ASSISTANT REGIONAL FORESTER ADVISES IN HIS MEMORANDUM OF JANUARY 23, 1963, THAT IT WAS LEARNED AFTER THE BID OF THE CHIPPEWA CONSTRUCTION COMPANY WAS ACCEPTED THAT DUE TO THE PRESSURE OF OTHER WORK THE FOREST ENGINEER--- WHO APPARENTLY EVALUATES ALL BIDS OF THIS KIND--- WAS NOT GIVEN THE OPPORTUNITY TO REVIEW THE BIDS UNTIL AFTER THE AWARD WAS MADE AND THAT HE WAS CONFIDENT THAT IF THE ENGINEER HAD BEEN GIVEN SUCH AN OPPORTUNITY HE WOULD HAVE QUESTIONED THE LOW BID OF THE CHIPPEWA CONSTRUCTION COMPANY. IN THIS REGARD, WE AGREE THAT THE DISPARITY BETWEEN THE LOW BID OF THE COMPANY OF $2,813 FOR ITEM NO. 1, AS COMPARED TO THE OTHER BIDS OF $4,800, $5,594.50 AND $9,387.50, WAS SUCH AS TO CONSTITUTE CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF THE PROBABILITY OF AN ERROR IN ITEM NO. 1 OF THE CHIPPEWA CONSTRUCTION COMPANY'S BID AND, THEREFORE, THE COMPANY SHOULD HAVE BEEN REQUESTED TO VERIFY ITS BID PRIOR TO THE ACCEPTANCE THEREOF.

ACCORDINGLY, SINCE THE BID WORKSHEET FURNISHED BY THE CHIPPEWA CONSTRUCTION COMPANY LEAVES LITTLE, IF ANY, DOUBT THAT AN ERROR WAS MADE IN ITEM NO. 1 OF THE BID, AS ALLEGED, CONTRACT ORDER NO. 193-910 63 MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY AND PAYMENT MADE TO IT FOR THE 38 REINFORCED CONCRETE BLOCKS WHICH HAVE BEEN FABRICATED, AND REPORTED TO BE EXCELLENT, AT A PRICE WHICH IS BELIEVED TO REPRESENT A QUANTUM MERUIT SETTLEMENT FOR THE BLOCKS ALREADY FABRICATED, BUT IN NO EVENT SHOULD SUCH PRICE EXCEED THAT OF THE NEXT LOW BID.

THE PAPERS, WITH THE EXCEPTION OF THE MEMORANDUM DATED JANUARY 23, 1963, OF THE ASSISTANT REGIONAL FORESTER, ARE RETURNED HEREWITH, AS REQUESTED.