B-152604, OCT. 18, 1963

B-152604: Oct 18, 1963

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 30. THE CONTRACT WAS AWARDED PURSUANT TO AN INVITATION FOR BIDS ISSUED ON JUNE 22. UNDER WHICH BIDDERS WERE REQUESTED TO SUBMIT A BASE BID AND TO LIST AMOUNTS FOR ALTERNATES A. E WERE TO BE ADDITIONS TO THE BASE BID. FIVE BIDS WERE RECEIVED AND THEY WERE OPENED AS SCHEDULED ON JUNE 27. NONE OF THE BIDS INDICATED WHETHER THE AMOUNTS STATED FOR ALTERNATE C WERE ADDITIVE TO OR DEDUCTIVE FROM THE BASE BIDS. WERE IN THE AMOUNTS OF $62. FOUR BIDDERS ADVISED THAT THEIR ALTERNATE C AMOUNTS WERE INTENDED FOR ADDITION TO THE BASE BIDS AND F. STATED THAT ITS QUOTATION WAS "A DEDUCTIVE ALTERNATE.'. THE BID OF THAT COMPANY WAS EVALUATED AT $31.

B-152604, OCT. 18, 1963

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 30, 1963, FROM THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, CONCERNING THE REQUEST OF F. S. JONES CONSTRUCTION COMPANY, INC., SEATTLE, WASHINGTON, THAT IT BE RELEASED FROM A CONTRACT (NO. GS-10B-E-00-125-00, DATED JUNE 28, 1963), COVERING ALTERATIONS AND ALARM SYSTEM FOR THE UNITED STATES SCIENCE PAVILION IN SEATTLE, WASHINGTON, ON ACCOUNT OF AN ALLEGED MISTAKE IN BID DISCOVERED AFTER AWARD OF THE CONTRACT.

THE CONTRACT WAS AWARDED PURSUANT TO AN INVITATION FOR BIDS ISSUED ON JUNE 22, 1963, UNDER WHICH BIDDERS WERE REQUESTED TO SUBMIT A BASE BID AND TO LIST AMOUNTS FOR ALTERNATES A, B, C, D AND E, WITH THE LAST TWO ALTERNATES COVERING SIMILAR ITEMS OF WORK. THE BID FORM INDICATED THAT THE AMOUNTS QUOTED FOR ALTERNATES A, B, D, AND E WERE TO BE ADDITIONS TO THE BASE BID, BUT THAT THE AMOUNT QUOTED FOR ALTERNATE C SHOULD BE SHOWN AS EITHER AN ADDITION TO OR DEDUCTION FROM THE BASE BID. ALTERNATE C COVERED "INSTALLATION OF SMOKE DETECTION TYPE OF FIRE DETECTION EQUIPMENT INSTEAD OF RATE OF RISE FIRE DETECTION EQUIPMENT.'

FIVE BIDS WERE RECEIVED AND THEY WERE OPENED AS SCHEDULED ON JUNE 27, 1963. NONE OF THE BIDS INDICATED WHETHER THE AMOUNTS STATED FOR ALTERNATE C WERE ADDITIVE TO OR DEDUCTIVE FROM THE BASE BIDS. THE BASE BID PRICES PLUS THE AMOUNTS STATED FOR ALTERNATES A, B, C AND E, WERE IN THE AMOUNTS OF $62,364, $63,228.50, $65,920, $70,755 AND $81,330, WITH THE BID OF F. S. JONES CONSTRUCTION COMPANY, INC., BEING THE FOURTH LOWEST BID. UPON INQUIRIES MADE BY THE CONTRACTING OFFICER, FOUR BIDDERS ADVISED THAT THEIR ALTERNATE C AMOUNTS WERE INTENDED FOR ADDITION TO THE BASE BIDS AND F. S. JONES CONSTRUCTION COMPANY, INC., STATED THAT ITS QUOTATION WAS "A DEDUCTIVE ALTERNATE.' THAT FIRM HAD QUOTED THE SUM OF $19,800 FOR ALTERNATE C AND, WITH CONSIDERATION OF SUCH AMOUNT AS A DEDUCTION FROM THE BASE BID, THE BID OF THAT COMPANY WAS EVALUATED AT $31,155, RATHER THAN $70,755 OR AT AN AMOUNT WHICH WAS LESS THAN ONE-HALF OF THE NEXT LOWEST BID OF $62,364.

HOWEVER, BY TELEGRAM DATED JUNE 28, 1963, F. S. JONES CONSTRUCTION COMPANY, INC., ADVISED THE PROCUREMENT OFFICE THAT INVESTIGATION HAD REVEALED THAT THE AMOUNT STATED FOR ALTERNATE C WAS TO BE AN ADDITIVE, CONTRARY TO ITS PREVIOUS STATEMENT TO THE EFFECT THAT THE AMOUNT OF $19,800 WAS INTENDED AS A DEDUCTION FROM THE BASE BID. THE TELEGRAM REPORTEDLY WAS RECEIVED ON JULY 1, 1963, THE MONDAY FOLLOWING FRIDAY, JUNE 28, 1963, THE DATE ON WHICH THE CONTRACT IN THE AMOUNT OF $31,155 WAS AWARDED TO F. S. JONES CONSTRUCTION COMPANY, INC. THE CONTRACTOR SUBSEQUENTLY SUBMITTED EVIDENCE INDICATING THAT THE PRESIDENT OF THE FIRM HAD ERRONEOUSLY ASSUMED THAT A STATED DEDUCTION OF $18,000 IN A SUPPLIER'S PRICE REPRESENTED WHAT THE FIRM'S ESTIMATOR HAD INTENDED TO BE A DEDUCTION FROM THE BASE BID. THE SUPPLIER'S PRICE WAS ORIGINALLY $36,000 FOR THE PARTICULAR ITEM BUT, BEFORE THE CONTRACTOR'S BID WAS SUBMITTED, THE SUPPLIER REDUCED SUCH PRICE BY THE AMOUNT OF $18,000 AND IT APPEARS THAT THE $19,800 FIGURE CONSISTED OF THE ADJUSTED AMOUNT OF $18,000, PLUS 10 PERCENT FOR OVERHEAD AND PROFIT. FURTHERMORE, THE GOVERNMENT HAS ON THE BASIS OF REVISED ESTIMATES CONCERNING THE COST OF THE PROJECT DETERMINED THAT APPROXIMATELY $14,000 WOULD HAVE BEEN THE MINIMUM REASONABLE ADDITIONAL PRICE FOR ALTERNATE C.

OUR ATTENTION HAS BEEN INVITED TO THE FACT THAT, WHILE THE CONTRACTING OFFICER REQUESTED INFORMATION FROM ALL BIDDERS AS TO WHETHER THE AMOUNTS STATED IN THEIR BIDS FOR ALTERNATE C WERE INTENDED TO BE EITHER ADDITIVE TO OR DEDUCTIVE FROM THEIR BASE BIDS, F. S. JONES CONSTRUCTION COMPANY, INC., WAS NOT SUBSEQUENTLY INFORMED THAT ITS BID ON ALTERNATE C WAS GROSSLY OUT OF LINE WITH OTHER BIDS ON THAT ALTERNATE. IT HAS BEEN SUGGESTED, THEREFORE, THAT RESCISSION OF THE CONTRACT WITH THAT FIRM WOULD BE CONSISTENT WITH THE CONCLUSION REACHED IN 35 COMP. GEN. 136 TO THE EFFECT THAT A PURPORTED ACCEPTANCE OF A LOW BID WAS NOT BINDING UPON THE BIDDER BECAUSE THE CONTRACTING OFFICER, WHEN REQUESTING A BID VERIFICATION, FAILED TO ADVISE THE BIDDER OF THE SPECIFIC MISTAKE HE SURMISED.

GENERALLY, AWARD OF A CONTRACT FOLLOWING VERIFICATION OF A BID UPON REQUEST OF THE CONTRACTING OFFICER RESULTS IN A BINDING CONTRACT. COMP. GEN. 942, 947; 27 ID. 17. HOWEVER, IN 35 COMP. GEN. 136, THE DECISION BY THE COURT IN UNITED STATES V. METRO NOVELTY CO., INC., 125 F.SUPP. 713, WAS QUOTED AS FOLLOWS:

"CROSS MOTIONS ARE PRESENTED FOR SUMMARY JUDGMENT. PLAINTIFF SEEKS TO RECOVER $12,000 DAMAGES FROM DEFENDANT FOR ITS FAILURE TO CARRY OUT A $6,000 BID FOR UNIFORM ORNAMENTS. DEFENDANT CLAIMS A MISTAKE IN THE COMPUTATION OF THE BID. PLAINTIFF ADMITS THAT THE ERROR WAS SO GROSS THAT IT WAS PLACED ON NOTICE. IT FURTHER ADMITS THAT THE ONLY CONSEQUENCE OF DEFENDANT'S FAILURE TO PERFORM WAS THE ACCEPTANCE OF THE SECOND LOWEST BID AND THAT THERE WAS NO DAMAGE TO THE GOVERNMENT FROM THE DELAY IN EXECUTION WHICH RESULTED FROM DEFENDANT'S PARTICIPATION IN THE BIDDING.

"PLAINTIFF'S PURCHASING AGENT SOUGHT TO AVOID THE FORCE OF KEMP V. UNITED STATES, D.C.MD. 1941, 38 F.SUPP. 568, BY TELEPHONING THE DEFENDANT AND ASKING FOR A "VERIFICATION" OF THE BID AND BY HAVING IT "CONFIRMED" BY TELEPHONE AND LETTER FROM DEFENDANT'S PRESIDENT. PLAINTIFF, HOWEVER, DID NOT PUT DEFENDANT ON NOTICE OF THE MISTAKE WHICH IT SURMISED. REAFFIRMATION OF THE BID UNDER THESE CIRCUMSTANCES DOES NOT BAR THE DEFENSE OF RESCISSION.

"DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS GRANTED.'

SEE, ALSO, KEMP V. UNITED STATES, 38 F.SUPP. 568, 572; AND C. N. MONROE MANUFACTURING COMPANY V. UNITED STATES, 143 F.SUPP. 449.

IT APPEARS REASONABLE TO CONCLUDE THAT THE CONTRACTING OFFICER IN THIS CASE WAS ON CONSTRUCTIVE MOTIVE OF PROBABLE ERROR IN THE CONTRACTOR'S BID WHEN HE RECEIVED CLARIFICATIONS FROM ALL BIDDERS RESPECTING WHAT THEY INTENDED IN REGARD TO ALTERNATE C OF THE BIDDING SCHEDULE. AT THAT POINT ONLY THE JONES COMPANY HAD INDICATED THAT ITS ALTERNATE C AMOUNT WAS TO BE CONSIDERED AS A DEDUCTION FROM THE BASE BID AND THE DIFFERENCE INVOLVED AMOUNTED TO TWICE THE SUM OF $19,800, OR $39,600, WITH THE FURTHER RESULT THAT THE BIDDER WHO WAS THE FOURTH LOWEST ON THE BASIS OF ADDING THE ALTERNATE C AMOUNTS TO THE BASE BIDS BECAME THE LOWEST BIDDER BY MORE THAN $31,000 WHEN IT WAS STATED THAT ITS ALTERNATE C PRICE WAS INTENDED AS A DEDUCTION FROM ITS BASE BID.

IN THE CIRCUMSTANCES WE AGREE WITH THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, THAT THE CONTRACTOR SHOULD HAVE BEEN ADVISED BEFORE MAKING THE CONTRACT AWARD THAT THE DISPARITY IN BIDS WAS SO TREMENDOUS AS TO INDICATE A CERTAINTY THAT A GROSS ERROR WAS MADE IN ITS BID, PARTICULARLY IN REGARD TO THE ALTERNATE C AMOUNT, SINCE ALL OF THE OTHER BIDDERS HAD STATED THAT THEIR ALTERNATE C PRICES WERE INTENDED AS ADDITIONS TO THEIR BASE BIDS. IT IS OUR OPINION THAT ACCEPTANCE OF THE BID OF F. S. JONES CONSTRUCTION COMPANY, INC., CANNOT THEREFORE BE REGARDED AS HAVING RESULTED IN A BINDING CONTRACT. ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD NOT BE REQUIRED TO OBJECT TO A CANCELLATION OF THE CONTRACT WITHOUT LIABILITY TO THAT FIRM.

AS REQUESTED IN THE LETTER DATED SEPTEMBER 30, 1963, WE ARE RETURNING THE ENCLOSURES LISTED THEREIN.