B-154964, OCT. 16, 1964

B-154964: Oct 16, 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 A LETTER DATED SEPTEMBER 4. FOR AN INCREASE IN CONTRACT PRICE BECAUSE OF AN ALLEGED MISTAKE WHICH WAS MADE IN THE PREPARATION OF ITS BID ON PROJECT NO. THE INVITATION WAS ISSUED ON MAY 28. THE GOVERNMENT'S ESTIMATE OF THE APPROXIMATE COST OF THIS PROJECT WAS $1. 825 WHICH WAS LATER REVISED UPWARD TO $1. FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION WHICH WAS OPENED ON JUNE 30. A REPRESENTATIVE OF UNITED BUILDERS ADVISED THE CONTRACTING OFFICER THAT HE WOULD LIKE TO REVIEW HIS COMPANY'S BID FOR A POSSIBLE MISTAKE SINCE ITS BID WAS SO MUCH LOWER THAN THAT OF THE SECOND BIDDER. HE WAS ADVISED BY THE CONTRACTING OFFICER THAT CLAIMS OF MISTAKE IN BID MUST BE SUPPORTED WITH ADEQUATE EVIDENCE IN ORDER FOR RELIEF TO BE GRANTED.

B-154964, OCT. 16, 1964

TO THE HONORABLE BERNARD L. BOUTIN, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 4, 1964, WITH ENCLOSURES, FROM THE OFFICE OF THE GENERAL COUNSEL, FURNISHING A REPORT CONCERNING THE REQUEST OF UNITED BUILDERS, INC., SHAWNEE, OKLAHOMA, FOR AN INCREASE IN CONTRACT PRICE BECAUSE OF AN ALLEGED MISTAKE WHICH WAS MADE IN THE PREPARATION OF ITS BID ON PROJECT NO. D AND C-5007.

THE INVITATION WAS ISSUED ON MAY 28, 1964, AND SOLICITED BIDS FOR ROOF AND DUCT REPAIRS AND REPLACEMENT ON THE FEDERAL OFFICE BUILDING, KANSAS CITY, MISSOURI. THE GOVERNMENT'S ESTIMATE OF THE APPROXIMATE COST OF THIS PROJECT WAS $1,392,825 WHICH WAS LATER REVISED UPWARD TO $1,438,390. JOINT VENTURE BY TWO INDEPENDENT ARCHITECTS ESTIMATED THE COST AT $1,571,548.69. FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION WHICH WAS OPENED ON JUNE 30, 1964, AS FOLLOWS:

CHART

COMPANY BASE AMOUNTS

UNITED BUILDERS, INC. $1,476,789.00

SELLERS AND MARQUIS ROOFING CO. AND

THE QUALITY ROOFING CO. 1,729,568.00

BROWN AND KERR, INC. 1,781,948.00

CONDITIONED AIR CORPORATION 1,992,000.00

IMMEDIATELY AFTER BID OPENING, A REPRESENTATIVE OF UNITED BUILDERS ADVISED THE CONTRACTING OFFICER THAT HE WOULD LIKE TO REVIEW HIS COMPANY'S BID FOR A POSSIBLE MISTAKE SINCE ITS BID WAS SO MUCH LOWER THAN THAT OF THE SECOND BIDDER. HE WAS ADVISED BY THE CONTRACTING OFFICER THAT CLAIMS OF MISTAKE IN BID MUST BE SUPPORTED WITH ADEQUATE EVIDENCE IN ORDER FOR RELIEF TO BE GRANTED.

THEREAFTER, UNITED BUILDERS SUBMITTED A LETTER DATED JULY 8, 1964, STATING THAT A DEDUCTION OF $71,000 FOR STEEL SUPPORTS FOR DUCT WORK HAD BEEN MADE TWICE IN THE PREPARATION OF ITS ESTIMATES, AND ASKED THAT IT BE ALLOWED TO AMEND ITS BID. UNITED BUILDERS FURTHER STATED THAT IN THE EVENT THE REQUEST FOR RELIEF WAS DENIED, IT WOULD EXECUTE/A CONTRACT IN THE AMOUNT OF ITS ORIGINAL BID ,WITHOUT PREJUDICE TO FURTHER CONSIDERATION OF THE REQUESTED RELIEF.' ATTACHED TO THE LETTER WAS A NOTARIZED STATEMENT CONCERNING THE ALLEGED MISTAKE, TWO MASTER RECAP SHEETS AND CERTAIN OTHER DOCUMENTS WHICH REPRESENT PROPOSALS FROM PROSPECTIVE SUBCONTRACTORS USED IN THE PREPARATION OF ITS BID. BY LETTER DATED JULY 14, 1964, UNITED BUILDERS ALSO SUBMITTED ITS WORKING COPY OF THE BID FORM TOGETHER WITH ADDITIONAL BACKUP MATERIAL.

IN REGARD TO MISTAKES IN BID ALLEGED AFTER OPENING AND PRIOR TO AWARD, PARAGRAPH 1-2.406-3 (A) (3) OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES, IN EFFECT, THAT WHERE THE EVIDENCE DOES NOT CONVINCINGLY ESTABLISH BOTH THE EXISTENCE OF A MISTAKE AND THE BID INTENDED, A DETERMINATION MAY BE MADE THAT A BIDDER MAY NEITHER WITHDRAW NOR CORRECT HIS BID. SUCH A DETERMINATION WAS MADE, AND AWARD WAS MADE TO UNITED BUILDERS NOTWITHSTANDING THAT THE EVIDENCE SUBMITTED REASONABLY SUPPORTED THE ALLEGATION OF MISTAKE.

THE GENERAL RULE IS THAT A BIDDER MAY NOT CHANGE HIS BID AFTER THE DATE OF OPENING TO RHE PREJUDICE OF OTHER BIDDERS. NEVERTHELESS, THE STATUTES REQUIRING ADVERTISEMENT FOR BIDS AND THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDERS ARE FOR THE BENEFIT OF THE UNITED STATES IN SECURING BOTH FREE COMPETITION AND THE LOWEST COMPETITIVE PRICES IN ITS PROCUREMENT ACTIVITIES. IN CERTAIN CASES WHERE A MISTAKE HAS BEEN ALLEGED PROMPTLY AFTER OPENING OF BIDS BUT BEFORE AWARD OF THE CONTRACT, AND THERE HAS BEEN A TIMELY PRESENTATION OF CONVINCING EVIDENCE THAT A MISTAKE WAS MADE, ITS NATURE, HOW IT OCCURRED, AND WHAT THE BID PRICE WOULD HAVE BEEN EXCEPT FOR THE MISTAKE, OUR OFFICE HAS PERMITTED THE BID TO BE CORRECTED. COMPARE EDMUND J. RAPPOLI COMPANY, INC. V. UNITED STATES, 90 CT.CL. 499. OBVIOUSLY, THIS PRINCIPLE DOES NOT PREJUDICE OTHER BIDDERS SINCE ITS APPLICABILITY DEPENDS ON THE ESTABLISHMENT OF THE BID WHICH WOULD HAVE BEEN SUBMITTED FOR OPENING AT THE REQUIRED DATE BUT FOR THE MISTAKE; AND, CONSEQUENTLY, THE BIDDER GAINS NO ADVANTAGE FROM HIS KNOWLEDGE OF COMPETITIVE BIDS.

THE QUESTION FOR DETERMINATION IS WHETHER THE EVIDENCE OF RECORD ESTABLISHED THAT AN ERROR ACTUALLY WAS MADE BY UNITED BUILDERS, AS ALLEGED, AND WHETHER THE AMOUNT OF THE INTENDED BID HAS BEEN SATISFACTORILY ESTABLISHED. THE WORKSHEETS (MASTER RECAP SHEETS) SUBMITTED BY UNITED BUILDERS ARE AS FOLLOWS:

CHART

MASTER RECAP OF ROOFING AND OUTSIDE SHEET METAL WORK

ROOFING COST $745,281.00

LESS $71,000.00 FOR STEEL SUPPORTS

IN MECH. 71,000.00

TOTAL COST $674,281.00

LABOR FOREMAN $125.00

PER WK. 24 WKS. $ 3,000.00

INSURANCE 15 PERCENT 450.00

BOND 15,000.00

RENTAL AND NEW EQUIP. 10,000.00

HOIST OPERATOR

8 WKS, AT $125.00 PER WK. 1,000.00

INSUR. AND MISC. 187.00

$703,918.00

IT APPEARS FROM THE RECORD THAT THE ABOVE RECAP SHEET WAS PREPARED BY A PROSPECTIVE SUBCONTRACTOR, SOUTHWESTERN ROOFING AND SHEET METAL, AND SUBMITTED ALONG WITH THE BACKUP MATERIALS. THEREAFTER, UNITED PREPARED A MASTER RECAP SHEET WHEREIN IT INCORPORATED THE FIGURES PREPARED BY THE SUBCONTRACTOR INTO ITS OWN ANALYSIS AS FOLLOWS:

CHART

ROOF AND DUCT REPAIRS

MASTER RECAP FEDERAL BUILDING

KANSAS CITY, MISSOURI

BASE BID

SECTION ITEM QUANTITY TOTAL

6-A STRUCTURAL STEEL $ 111,000

8A CARPENTRY 1,422

9 ROOFING AND INSULATION 703,918

11-A PAINTING 7,000

12 MECHANICAL 525,000

14 CONCRETE CURBS AT $50/00 8 EA 400

SEPARATE PRICE ADM. NO. 219,059

DUCT DEMO - 12,022

$1,379,821

COST $1,379,821

G. COND-S. 27,260 ----------

1,407,081 140,708 ----------

1,547,789 STEEL 71,000

---------- $1,476,789

SINCE THE SUM OF $71,000 REPRESENTING THE COST OF STEEL SUPPORTS WAS DEDUCTED IN THE COMPUTATIONS PREPARED BY THE SUBCONTRACTOR, AND SINCE THE NET AMOUNT QUOTED BY THE SUBCONTRACTOR WAS SUBSEQUENTLY INCORPORATED INTO THE COMPUTATIONS PREPARED BY UNITED BUILDERS IN ITS MASTER RECAP SHEET, FROM WHICH $71,000 WAS ALSO DEDUCTED, IT IS REASONABLE TO CONCLUDE THAT THIS ITEM WAS DEDUCTED TWICE IN ERROR.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE IS NO ROOM FOR DOUBT THAT UNITED BUILDERS MADE AN ERROR IN ITS BID, AS ALLEGED.

HOWEVER, THERE APPEARS TO BE ANOTHER ERROR IN THE COMPUTATIONS SUBMITTED BY UNITED BUILDERS. IN THE BACKUP SHEETS PREPARED BY THE SUBCONTRACTOR, SOUTHWESTERN ROOFING AND SHEET METAL, THERE ARE INCLUDED ITEMS AMOUNTING TO $11,812.30 FOR DUCT REMOVAL IN THE FIGURES FOR THE BASE BID WORK. SUBSEQUENTLY, SOUTHWESTERN INCLUDED THIS FIGURE, AS MARKED UP, IN ITS COMPUTATIONS WHEN IT PREPARED ITS MASTER RECAP SHEET IN ARRIVING AT ITS FIGURE FOR ROOFING AND OUTSIDE SHEET METAL WORK. WHEN UNITED BUILDERS INCORPORATED THESE FIGURES INTO ITS OWN MASTER RECAP SHEET, IT ALSO INCLUDED AN ADDITIONAL AMOUNT OF $12,022 FOR DUCT REMOVAL. THEREFORE, IT APPEARS THAT THE COST OF DUCT REMOVAL HAS BEEN INCLUDED TWICE IN THE COMPUTATIONS IN A MANNER SIMILAR TO THAT BY WHICH THE FIGURE OF $71,000 CAME TO BE DEDUCTED TWICE.

THE EVIDENCE OF RECORD CLEARLY AND CONVINCINGLY ESTABLISHES THE MISTAKE AND WHILE THERE IS SOME DOUBT AS TO THE INTENDED BID PRICE, WE FEEL THAT, SINCE THE ERROR WAS ALLEGED PRIOR TO THE AWARD, AN ADJUSTMENT IN THE CONTRACT WOULD BE PROPER.

ACCORDINGLY, IN THESE CIRCUMSTANCES, THE CONTRACT AWARDED TO UNITED BUILDERS MAY BE AMENDED IN THE INCREASED AMOUNT OF $57,776, REPRESENTING THE COST OF STRUCTURAL STEEL DEDUCTED TWICE ($71,000) MINUS THE COST OF DUCT REMOVAL INCLUDED TWICE ($12,022) PLUS THE PROFIT THEREON ($1,202), OR A TOTAL OF $13,224.

THE DOCUMENTS SUBMITTED WITH THE LETTER OF SEPTEMBER 4, 1964, ARE RETURNED AS REQUESTED.