B-153402, APR. 2, 1964

B-153402: Apr 2, 1964

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO LETTER OF JANUARY 29. WAS AWARDED ON SEPTEMBER 6. THE SECOND LOW BID WAS IN THE AMOUNT OF $142. THE GOVERNMENT ESTIMATE FOR THAT SCHEDULE WAS $6. WHEREAS THE CABLES REQUIRED WERE 3-WIRE CABLES. HIS ACTUAL COST FOR MATERIAL AND LABOR IS ALLEGED TO BE ?558 PER LINEAL FOOT ON ITEM 1 AND ?359 PER LINEAL FOOT FOR ITEM NO. 2. THE GOVERNMENT'S ESTIMATES ON THE ITEMS IN QUESTION WERE $1.50 AND $1.25 PER LINEAL FOOT. THE CONTRACTING OFFICER SAYS THAT THE MISTAKE ALLEGED BY THE CONTRACTOR APPEARS TO HAVE MERIT IN VIEW OF THE DIFFERENCE BETWEEN PRICES QUOTED BY THE CONTRACTOR AND THE OTHER BIDDERS FOR THESE ITEMS. THAT THE GOVERNMENT SHOULD ASSUME A CERTAIN RESPONSIBILITY FOR NOT NOTICING THE ERROR AT THE TIME THE BIDS WERE EVALUATED PRIOR TO AWARD OF THE CONTRACT.

B-153402, APR. 2, 1964

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF JANUARY 29, 1964, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE INTERIOR, RELATIVE TO A REQUEST BY EARL TROOP FOR CORRECTION OF A MISTAKE ALLEGED AFTER AWARD OF CONTRACT NO. 14- 10-0333-1123 FOR THE CONSTRUCTION OF ROADS, BUILDINGS AND UTILITIES AT DEVIL'S GARDEN CAMPGROUND AREA, ARCHES NATIONAL MONUMENT, UTAH.

THE CONTRACT, IN THE AMOUNT OF $133,625.10, WAS AWARDED ON SEPTEMBER 6, 1963, TO EARL TROOP AS THE LOWEST RESPONSIBLE BIDDER ON AN INVITATION FOR BIDS (SWR33-10) ISSUED BY THE SOUTHWEST REGION, NATIONAL PARK SERVICE. THE SECOND LOW BID WAS IN THE AMOUNT OF $142,553.25. AN ABSTRACT OF BIDS DISCLOSES THAT FOR SCHEDULE IV THE CONTRACTOR BID $1,172.60; THE NEXT LOW BIDDER, $6,530; AND THE THIRD BIDDER, $7,068. THE GOVERNMENT ESTIMATE FOR THAT SCHEDULE WAS $6,505. THE ASSISTANT SECRETARY SAYS THAT AFTER COMPLETION OF APPROXIMATELY ONE-HALF OF THE WORK PROVIDED FOR IN THE CONTRACT, THE CONTRACTOR ALLEGED THAT HE HAD MADE A MISTAKE IN HIS BID BY STATING, FOR ITEM NO. 1 IN SCHEDULE IV, 28 CENTS PER LINEAL FOOT FOR 3,920 LINEAL FEET OF NO. 4 UNDERGROUND POWER CABLE, AND FOR ITEM NO. 2 IN SCHEDULE IV, 15 CENTS PER LINEAL FOOT FOR 500 LINEAL FEET OF NO. 10 CABLE, MAKING A TOTAL FOR SCHEDULE IV OF $1,172.60. THE CONTRACTOR SAYS THAT THE FIGURES QUOTED COVERED ONLY THE COST OF SINGLE WIRE, WHEREAS THE CABLES REQUIRED WERE 3-WIRE CABLES. HIS ACTUAL COST FOR MATERIAL AND LABOR IS ALLEGED TO BE ?558 PER LINEAL FOOT ON ITEM 1 AND ?359 PER LINEAL FOOT FOR ITEM NO. 2. THEREFORE, HE REQUESTS PERMISSION TO REVISE HIS BID PRICES ON THESE TWO ITEMS BY ADDING 10 PERCENT TO HIS COSTS, WHICH WOULD INCREASE THE PRICE ON SCHEDULE IV TO $2,600.46, OR AN INCREASE OF $1,427.86. THE GOVERNMENT'S ESTIMATES ON THE ITEMS IN QUESTION WERE $1.50 AND $1.25 PER LINEAL FOOT, RESPECTIVELY.

IN HIS REPORT, THE CONTRACTING OFFICER SAYS THAT THE MISTAKE ALLEGED BY THE CONTRACTOR APPEARS TO HAVE MERIT IN VIEW OF THE DIFFERENCE BETWEEN PRICES QUOTED BY THE CONTRACTOR AND THE OTHER BIDDERS FOR THESE ITEMS, AND THAT THE GOVERNMENT SHOULD ASSUME A CERTAIN RESPONSIBILITY FOR NOT NOTICING THE ERROR AT THE TIME THE BIDS WERE EVALUATED PRIOR TO AWARD OF THE CONTRACT.

THE PROPRIETY OF THE REQUESTED CORRECTION DEPENDS UPON WHETHER THE CONTRACTING OFFICER CAN BE SAID TO HAVE BEEN ON NOTICE, ACTUAL OR CONSTRUCTIVE, OF THE PROBABILITY OF ERROR IN THE BID.

WE AGREE WITH THE CONTRACTING OFFICER THAT, IN THE LIGHT OF THE GOVERNMENT'S ESTIMATE OF $6,505 FOR SCHEDULE IV AND THE BIDS OF $6,530 AND $7,068 ON THAT SCHEDULE BY THE SECOND AND THIRD LOW BIDDERS, MR. TROOP'S BID OF $1,172.60 WAS SO FAR OUT OF LINE AS TO SUGGEST THE PROBABILITY OF ERROR. THE QUESTION, HOWEVER, IS WHETHER THE CONTRACTING OFFICER WAS REQUIRED TO NOTICE THE AMOUNTS OF THE BIDS ON THE INDIVIDUAL SCHEDULE, AND, IF SO, WHETHER THE RELATIONSHIP BETWEEN THE BID ON SCHEDULE IV AND THOSE ON THE OTHER SCHEDULES WAS SUCH AS TO JUSTIFY A BELIEF BY THE CONTRACTING OFFICER THAT THE LOW BID ON SCHEDULE IV WAS ATTRIBUTABLE TO A DELIBERATE UNBALANCING OF THE VARIOUS ELEMENTS OF THE BIDDER'S AGGREGATE BID FOR THE ENTIRE PROJECT.

IN THIS INSTANCE, THE BID SCHEDULE OF THE INVITATION DIVIDED THE WORK INTO SEVEN SCHEDULES, EACH OF WHICH CONSISTED OF SEVERAL ITEMS. AT THE END OF THE BID SCHEDULE SPACES WERE PROVIDED FOR LISTING THE AGGREGATE PRICE FOR EACH OF THE SEVEN SCHEDULES, FOLLOWED BY THREE LINES CALLING FOR:

"TOTAL SCHEDULES I THROUGH VII $ ----------

TOTAL SCHEDULES I THROUGH V AND VII $ ----------

TOTAL SCHEDULE VI $ ----------"

IMMEDIATELY AFTER THESE LINES WERE THE FOLLOWING STATEMENTS:

"THE QUANTITIES SHOWN ABOVE SHALL BE USED FOR THE PURPOSES OF CANVASSING THE BIDS AND AWARDING THE WORK. ANY ARRANGEMENT OF SCHEDULES LISTED ABOVE IS FOR CONVENIENCE IN COMPARING BIDS; HOWEVER, AWARD WILL NOT BE LIMITED TO THESE COMBINATIONS BUT WILL BE MADE IN ACCORDANCE WITH CLAUSE 10C OF THE INSTRUCTIONS TO BIDDERS, FORM 22.

"IT IS TO THE INTEREST OF THE GOVERNMENT THAT THE WORK SHOWN ON BID SCHEDULES I, II, III, IV, V, AND VII WILL BE PERFORMED BY ONE CONTRACTOR. THEREFORE, AWARD FOR THE WORK COVERED BY BID SCHEDULES, I, II, III, IV, V, AND VII WILL NOT BE ON THE BASIS OF THE LOW BID FOR INDIVIDUAL ITEMS OR INDIVIDUAL BID SCHEDULES, BUT ON THE BASIS OF THE LOW BID FOR THE WHOLE ACCEPTED WORK COVERED BY THESE SCHEDULES.

"BID SCHEDULE VI, COMFORT STATIONS FOR THE DEVIL'S GARDEN CAMPGROUND, WILL BE AWARDED ON THE BASIS OF THE LOW BID FOR THIS INDIVIDUAL BID SCHEDULE.'

CLAUSE 10C OF STANDARD FORM 22, REFERRED TO IN THE FIRST QUOTED PARAGRAPH, RESERVES TO THE GOVERNMENT THE RIGHT TO MAKE AWARD OF ANY ITEM OR GROUP OF ITEMS UNLESS THE BIDDER SPECIFIES TO THE CONTRARY. IN THE LIGHT OF THE EMPHASIS PLACED ON THIS PROVISION, WE CANNOT READ THE QUOTED PROVISIONS AS COMMITTING THE GOVERNMENT TO AWARD ALL OF THE WORK INCLUDED IN THE SEVEN SCHEDULES, OR AS JUSTIFYING AWARD BY THE CONTRACTING OFFICER WITHOUT CONSIDERATION OF THE PRICES QUOTED FOR THE INDIVIDUAL SCHEDULES. THE LANGUAGE OF THE CONCLUDING CLAUSE OF THE SECOND PARAGRAPH REASONABLY INDICATES THAT AWARD FOR SCHEDULES OTHER THAN SCHEDULE VI WOULD BE TO THE LOW BIDDER, NOT FOR ALL THOSE SCHEDULES, BUT FOR SUCH OF THEM AS THE CONTRACTING OFFICER DECIDED TO AWARD. ONE OF THE MOST IMPORTANT FACTORS TO BE CONSIDERED IN MAKING THAT DECISION WOULD OBVIOUSLY BE PRICE; IF THE BEST PRICE AVAILABLE FOR ANY INDIVIDUAL SCHEDULE APPEARED TO THE CONTRACTING OFFICER TO BE CLEARLY EXORBITANT, HE WOULD BE BOUND TO MAKE A DETERMINATION WHETHER THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY ACCEPTING IT AS A PART OF THE TOTAL AWARD OR BY OMITTING THAT SCHEDULE FROM THE AWARD.

THESE CONSIDERATIONS WOULD NECESSARILY DETER BIDDERS FROM UNBALANCING THEIR BIDS, SINCE THEY WOULD THEN BE ASSUMING THE RISK OF HAVING THE OVERPRICED SCHEDULE OMITTED AND HAVING TO PERFORM THE UNDERPRICED WORK WITHOUT ADEQUATE COMPENSATION. IN ANY EVENT THERE IS NO INDICATION IN THE RECORD THAT MR. TROOP'S BID WAS DELIBERATELY UNBALANCED; WHILE ON SEVERAL SCHEDULES HIS BID WAS SUBSTANTIALLY HIGHER THAN THE GOVERNMENT ESTIMATE, THE BIDS OF BOTH OTHER BIDDERS SHOWED THE SAME DISCREPANCIES, AND THE RANGE BETWEEN THE THREE BIDS WAS NO MORE THAN NORMAL ON ANY SCHEDULE EXCEPT SCHEDULE IV.

CONSIDERING ALL THE FACTS AND CIRCUMSTANCES IN THE RECORD, AND ALSO THE REQUIREMENT OF FPR 1-2.406.1 THAT CONTRACTING OFFICERS SHALL EXAMINE ALL BIDS FOR MISTAKES, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER WAS PROPERLY CHARGEABLE WITH NOTICE OF THE OBVIOUSLY QUESTIONABLE PRICE QUOTED BY MR. TROOP FOR SCHEDULE IV, AND THAT THE AWARD MADE WAS THEREFORE NOT BINDING ON THE CONTRACTOR FOR THAT ITEM. SINCE THE CONTRACTING OFFICER IS NOW SATISFIED THAT THE BID WAS ERRONEOUS AND THAT THE ADJUSTMENT REQUESTED IS REASONABLE, THE CONTRACT MAY BE AMENDED AS RECOMMENDED. A COPY OF THIS LETTER SHOULD BE ATTACHED TO THE PAYMENT VOUCHER.