B-153415, MAR. 3, 1964

B-153415: Mar 3, 1964

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 LETTER OF JANUARY 31. REQUESTING OUR DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN IN REGARD TO AN ALLEGED MISTAKE MADE BY THE BEAUMONT LUMBER COMPANY IN ITS BID WHICH WAS ACCEPTED ON DECEMBER 6. DELIVERY WAS REQUESTED FOR THE EARLIEST PRACTICABLE TIME WITH A FIRM TERM NOT TO EXTEND BEYOND DECEMBER 31. THE BIDDERS WERE INFORMED THAT ANNUAL RENEWAL OPTIONS BEYOND THE FIRM TERM WERE DESIRED. WHICH WERE DESIGNATED AS ATTACHMENT NO. 1 TO GSA FORM 1362. ADEQUATE ELEVATOR OR ESCALATOR SERVICE IS REQUIRED SHOULD THE SPACE BE ABOVE STREET LEVEL FLOOR. PROPOSALS OFFERING SPACE UNDER ANY OTHER CONDITIONS WILL NOT BE CONSIDERED. BIDDER MUST SPECIFY UNDER ITEM 11 OF THE BID WHICH PROPOSITION IS BEING OFFERED AT THE RENTAL RATE QUOTED.

B-153415, MAR. 3, 1964

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER OF JANUARY 31, 1964, FROM MR. R. T. DALY, COMMISSIONER, PUBLIC BUILDINGS SERVICE, COPY ENCLOSED, REQUESTING OUR DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN IN REGARD TO AN ALLEGED MISTAKE MADE BY THE BEAUMONT LUMBER COMPANY IN ITS BID WHICH WAS ACCEPTED ON DECEMBER 6, 1963.

ON OCTOBER 21, 1963, GENERAL SERVICES ADMINISTRATION, REGION 7, PUBLIC BUILDINGS SERVICE, ISSUED INVITATION FOR BIDS NO. R7-34-64 FOR 1,700 SQUARE FEET OF OFFICE AND SPECIAL PURPOSE FLOOR SPACE AND PARKING AREA FOR SIX GOVERNMENT-OWNED AUTOMOBILES. DELIVERY WAS REQUESTED FOR THE EARLIEST PRACTICABLE TIME WITH A FIRM TERM NOT TO EXTEND BEYOND DECEMBER 31, 1968, AND THE BIDDERS WERE INFORMED THAT ANNUAL RENEWAL OPTIONS BEYOND THE FIRM TERM WERE DESIRED, BUT NOT REQUIRED. ALSO BIDDERS COULD SUBMIT PROPOSALS FOR THE SPACE WITHOUT PROVIDING CERTAIN SERVICES SUCH AS UTILITIES, REPLACEMENT OF LAMPS, ETC., AND JANITOR SERVICES AS LISTED IN THE INVITATION, UNDER PROPOSITION "A," OR SERVICED AS PART OF THE RENT UNDER PROPOSITION "B.' PARAGRAPH 3 OF THE GENERAL SPECIFICATIONS, WHICH WERE DESIGNATED AS ATTACHMENT NO. 1 TO GSA FORM 1362, SETS FORTH IN DETAIL THE SERVICES REQUIRED UNDER THE INVITATION, SUBPARAGRAPHS "A" AND "B" THEREOF CONTAINING ADVICE TO BIDDERS AS FOLLOWS:

"3. SERVICES:

"A. ADEQUATE ELEVATOR OR ESCALATOR SERVICE IS REQUIRED SHOULD THE SPACE BE ABOVE STREET LEVEL FLOOR. (IF ELEVATOR SERVICE OFFERED, BIDDER MUST INDICATE UNDER ITEM 10 OF GSA FORM 1364 WHETHER AUTOMATIC OR MANUALLY OPERATED).

"B. BIDDER MAY SUBMIT PROPOSALS ON EITHER PROPOSITION "A" OR PROPOSITION "B" DESCRIBED BELOW. PROPOSALS OFFERING SPACE UNDER ANY OTHER CONDITIONS WILL NOT BE CONSIDERED. BIDDER MUST SPECIFY UNDER ITEM 11 OF THE BID WHICH PROPOSITION IS BEING OFFERED AT THE RENTAL RATE QUOTED.

PROPOSITION "A": BIDDER TO PROVIDE ALL SPECIFIED INSTALLED EQUIPMENT AND FACILITIES AND BIDDER TO BE RESPONSIBLE FOR THE MAINTENANCE OF THE ENTIRE PREMISES AND EQUIPMENT. UNDER THIS PROPOSITION THE GOVERNMENT WOULD BE RESPONSIBLE FOR ALL THOSE SERVICES ENUMERATED IN ITEMS 1 THROUGH 7 UNDER PROPOSITION B, BUT THE BIDDER WOULD BE REQUIRED TO PROVIDE SEPARATE UTILITY METERS FOR THE SPACE OFFERED.

PROPOSITION "B": BIDDER TO PROVIDE ALL SPECIFIED INSTALLED EQUIPMENT AND FACILITIES, BIDDER TO BE RESPONSIBLE FOR THE MAINTENANCE AND OPERATION OF THE ENTIRE PREMISES AND EQUIPMENT AND BIDDER TO PROVIDE ALL UTILITIES AND SERVICES NECESSARY FOR OPERATION OF THE PREMISES, IN ACCORDANCE WITH THE FOLLOWING STANDARDS:

1. FUEL FOR HEATING;

2. ELECTRICAL CURRENT FOR ALL PURPOSES;

3. REPLACEMENT OF LAMPS, BALLASTS, AND STARTERS;

4. WATER FOR ALL PURPOSES AND SEWAGE CHARGES IF ANY;

5. SOAP, TOWELS, AND TISSUE FOR REST ROOMS;

6. REPLACEMENT OF AIR CONDITIONING FILTERS;

7. JANITOR SERVICE AND JANITORIAL SUPPLIES, INCLUDING:

A. DAILY SWEEPING, DUSTING, EMPTYING WASTEBASKETS, AND REMOVING TRASH;

B. MONTHLY FLOOR WAXING;

C. CLEANING OF LIGHT FIXTURES ONCE EACH 60 DAYS;

D. WINDOW WASHING EVERY THREE MONTHS;

E. WIPING AND DUSTING OF VENETIAN BLINDS EVERY THREE MONTHS AND WASHING ANNUALLY;

F. CLEANING OF REST ROOMS DAILY;

8. OPERATION OF ELEVATORS, INCLUDING OPERATORS, UNLESS AUTOMATIC.'

FIVE BIDS WERE RECEIVED FROM FOUR BIDDERS, ONE OF THE FOUR HAVING BID ON BOTH PROPOSITIONS. TWO OTHER BIDS ON PROPOSITION "B" WERE RECEIVED IN ADDITION TO THAT OF BEAUMONT LUMBER COMPANY.

ON DECEMBER 6, 1963, AWARD WAS MADE TO BEAUMONT LUMBER COMPANY UNDER PROPOSITION "B" AT $374 PER MONTH, AS THE LOW BIDDER AS TO TOTAL COST TO THE GOVERNMENT FOR SPACE AND SERVICES. THIS DETERMINATION WAS MADE AFTER INSPECTION OF THE SITE. THE LOW BIDDER UNDER PROPOSITION "A" SUBMITTED A BID OF $250 PER MONTH.

IT IS REPORTED THAT ON DECEMBER 10, 1963, AFTER NOTICE OF AWARD, MR. GREEN, A PARTNER OF BEAUMONT LUMBER COMPANY, NOTIFIED THE REGIONAL OFFICE THAT HE HAD NOT INTENDED TO BID UNDER PROPOSITION "B" BUT INSTEAD MEANT TO BID UNDER PROPOSITION "A" (NO SERVICES). ON DECEMBER 13, MR. GREEN INFORMED THE CONTRACTING OFFICER THAT HE COULD NOT PERFORM UNDER PROPOSITION "B" AND THAT HE HAD COMMITTED A TYPOGRAPHICAL ERROR. REQUESTED THAT HIS BID BE RECOGNIZED UNDER PROPOSITION "A" OR IN THE EVENT THIS CHANGE COULD NOT BE MADE THAT HIS BID BE WITHDRAWN UNDER PROPOSITION

IT IS REPORTED FURTHER THAT THE REGIONAL OFFICE ESTIMATED THAT IT WOULD COST THE GOVERNMENT $128 PER MONTH TO SERVICE THE SPACE OFFERED BY THE LOW BIDDER UNDER PROPOSITION "A" WHICH WOULD PRODUCE A TOTAL COST OF $378 PER MONTH, AS OPPOSED TO $374 PER MONTH BID UNDER PROPOSITION "B" BY THE BEAUMONT LUMBER COMPANY. AN EXAMINATION OF ALL BIDS AND AN ANALYSIS OF THE BEAUMONT LUMBER COMPANY BID DID NOT INDICATE THAT THE BEAUMONT BID WAS SO LOW THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE THAT BEAUMONT POSSIBLY HAD MADE AN ERROR. A PRELIMINARY APPRAISAL MADE BY MEMBERS OF THE APPRAISAL STAFF OF THE REGIONAL OFFICE INDICATED THAT IN THEIR OPINION THE BID WAS NOT EXCESSIVELY LOW SINCE THE TOTAL INCOME WAS JUDGED TO BE APPROXIMATELY 10 PERCENT OF THE ESTIMATED FAIR MARKET VALUE OF THE PREMISES WHEN COMPLETED.

A DETAILED INVESTIGATION WAS CONDUCTED BY THE FIELD OFFICE APPRAISAL STAFF IN EVALUATING THE BID MADE BY BEAUMONT LUMBER COMPANY. IN ADDITION TO ITS FINDING THAT ERROR WAS NOT APPARENT ON THE FACE OF THE RECORD, ITS CONSIDERED ESTIMATE OF THE COST OF SERVICES WHEN ADDED TO THE LOW BID UNDER PROPOSITION "A" (WITHOUT SERVICES) WAS WITHIN $4 OF THE MONTHLY CHARGE BID BY BEAUMONT UNDER PROPOSITION "B.' FURTHER, THE REGIONAL APPRAISER VALUED THE PROPERTY WHEN COMPLETED AT APPROXIMATELY $19,000, AS CONTRASTED TO THE BIDDER'S VALUATION OF $23,500. BASED ON THE REGION'S APPRAISAL, AND UPON CONSIDERATION OF AN AMORTIZATION OF 60 PERCENT OF MARKET VALUE OVER A 15- OR 20-YEAR PERIOD AS CONTRASTED WITH THE BIDDER'S SCHEDULED AMORTIZATION OVER A 10-YEAR PERIOD, THE FIGURE SUBMITTED BY THE BIDDER FELL ABOUT MIDWAY BETWEEN THE APPRAISED FAIR ANNUAL RENTAL WITHOUT SERVICES AND THE APPRAISED FAIR ANNUAL RENTAL WITH THE SERVICES LISTED IN THE INVITATION. SOME OF THE FINDINGS REVEALED BY THE REGIONAL APPRAISAL STAFF ARE THAT THE LAND VALUATION OF $6,500 BY THE BEAUMONT LUMBER COMPANY IS HIGHLY QUESTIONABLE, THAT TOTAL VALUE OF THE LAND AND IMPROVEMENTS IS NOT MORE THAN $19,000 OR $20,000; THAT AMORTIZATION OF THE CONSTRUCTION LOAN IN 10 YEARS IS HIGHLY UNREASONABLE; THAT BASED ON THE EXCESSIVELY HIGH VALUE PLACED ON THE PROPERTY BY THE BIDDER, OTHER ITEMS OF COST SUCH AS TAXES ARE INFLATED, AND THAT AT THE END OF 10 YEARS OF GOVERNMENT OCCUPANCY THE BIDDER WOULD OWN THE PROPERTY CLEAR OF DEBT.

FURTHER, IT IS REPORTED THAT ALTHOUGH THE OTHER BIDS FOR THE SPACE SERVICED IN ACCORDANCE WITH PROPOSITION "B" WERE HIGHER THAN THE BID OF BEAUMONT LUMBER COMPANY, AT THE TIME OF MAKING THE AWARD THIS FACT WAS NOT SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE THAT THE LOW BIDDER HAD MADE A MISTAKE SINCE THE OTHER TWO OFFERS TO LEASE SPACE UNDER PROPOSITION "B" DO NOT AFFORD A REASONABLE BASIS OF COMPARISON WITH THE BID OF BEAUMONT LUMBER COMPANY. ONE OTHER BID WAS NOT COMPARABLE BECAUSE THE OFFER WAS FOR 5,700 SQUARE FEET INSTEAD OF THE 1,700 SQUARE FEET REQUESTED. THE OTHER BID ALSO WAS NOT COMPARABLE BECAUSE THE LOCATION OFFERED WAS IN DOWNTOWN BEAUMONT, TEXAS, THE LAND VALUES OF WHICH ARE MUCH HIGHER THAN THE LAND VALUE OF THE BEAUMONT LUMBER COMPANY LOCATION.

IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED TO THE CONTRACTOR'S NEGLIGENCE AND SINCE THE ERROR WAS UNILATERAL--- NOT MUTUAL--- THE CONTRACTOR IS NOT ENTITLED TO RELIEF. SEE EDWIN DOUGHERTY AND M. H. OGDEN V. UNITED STATES, 102 CT.CL. 249, 259, AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, 163. THE RECORD SHOWS THAT THE ALLEGED ERROR WAS NOT APPARENT ON THE FACE OF THE BID; THAT THERE WAS NOT A WIDE RANGE BETWEEN THE LOW BID PRICE AND THE OTHER BID PRICES; THE CONTRACTING OFFICER'S ESTIMATE OF THE REASONABLE COST FOR THE PROCUREMENT WAS NOT SUBSTANTIALLY DIFFERENT FROM THE LOW BID AND THAT THERE WERE NO FACTORS IN THE CASE WHICH WOULD INDICATE TO THE CONTRACTING OFFICER THE PROBABILITY OF AN ERROR IN THE BID.

IN THESE CIRCUMSTANCES IT MUST BE HELD THAT THE ACCEPTANCE OF THE BID OF THE BEAUMONT LUMBER COMPANY WAS IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313, AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, WE FIND NO PROPER BASIS IN THE RECORD FOR AUTHORIZING A REFORMATION OR RESCISSION OF THE CONTRACT.

THE PAPERS FURNISHED WITH COMMISSIONER DALY'S LETTER OF JANUARY 31, 1964, ARE RETURNED HEREWITH AS REQUESTED.