B-155736, JAN 4, 1965

B-155736: Jan 4, 1965

Additional Materials:

Contact:

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

 

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

SPECIFIED THE FOLLOWING: "IT IS CONTEMPLATED THAT UNIT 1 THRU UNIT 2 INCLUSIVE. WILL BE AWARDED IN THE AGGREGATE. THE RIGHT IS RESERVED TO CANCEL ANY ITEM OR ITEMS AFTER BIDS ARE OPENED BEFORE MAKING AWARD. * * *" IN RESPONSE TO THE INVITATION FIVE BIDS WERE RECEIVED. WAS SHOWN ON THE SPECIFICATIONS. AWARD WAS MADE TO TOGNA CONSTRUCTION. THAT WHILE SUCH ERROR WOULD BE OF NO IMPORTANCE IF HE WERE AWARDED BOTH ITEMS. WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD. THE CONTRACT IS NOT SUBJECT TO REFORMATION SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD.

B-155736, JAN 4, 1965

TO THE HONORABLE JOHN S. GLEASON, JR., ADMINISTRATOR, VETERANS ADMINISTRATION:

WE REFER TO LETTER OF DECEMBER 8, 1964, FILE REFERENCE 074B, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, RELATIVE TO A MISTAKE IN BID ALLEGED AFTER AWARD BY TOGNA CONSTRUCTION, INC., DOVER, NEW JERSEY, UNDER PROJECT NO. 5110-138-5 ISSUED BY THE VETERANS ADMINISTRATION (VA) HOSPITAL, LYONS, NEW JERSEY ON OCTOBER 5, 1964.

THE INVITATION REQUESTED BIDS FOR TWO ITEMS OF WORK AT THE VA HOSPITAL, ITEM 1 CONSISTING OF ENCLOSING A PORCH OF BUILDING NO. 9 FOR USE AS A PERMANENT ROOM, AND ITEM 2 CALLING FOR IDENTICAL WORK ON BUILDING NO. 56, S.W. THE BID FORM (CONSTRUCTION CONTRACT) STANDARD FORM 21, SPECIFIED THE FOLLOWING:

"IT IS CONTEMPLATED THAT UNIT 1 THRU UNIT 2 INCLUSIVE, WILL BE AWARDED IN THE AGGREGATE, BUT THE RIGHT IS RESERVED TO CANCEL ANY ITEM OR ITEMS AFTER BIDS ARE OPENED BEFORE MAKING AWARD. * * *"

IN RESPONSE TO THE INVITATION FIVE BIDS WERE RECEIVED, THE PRICES QUOTED BY EACH BIDDER BEING AS FOLLOWS:

TABLE NAME OF BIDDER ITEM 1ITEM 2 TOTAL AGGREGATE TOGNA CONSTRUCTION, INC. $ 3,700 $ 4,700 $ 8,400 J. R. PRISCO 4,650 3,930 8,580 H. C. BIERTUEMPFEL

CONSTRUCTION CO. 5,794 4,614 10,408 GEORGE GROSSU GENERAL

CONTRACTOR 13,700 12,700 26,400 SAM BALSAMEL

17,700 17,300 35,000

ON THE DAY OF BID OPENING THE CONTRACTING OFFICER ANNOUNCED THAT AN AWARD COULD NOT BE MADE FOR WORK ON ITEM 2, BECAUSE BUILDING NO. 56 S.W. WAS SHOWN ON THE SPECIFICATIONS, IN LIEU OF BUILDING NO. 56 N.W. IN VIEW OF THIS ERRONEOUS DESCRIPTION OF THE WORK BY THE GOVERNMENT, AWARD WAS MADE TO TOGNA CONSTRUCTION, INC., FOR ITEM 1 ONLY, AT ITS STATED BID PRICE. SUBSEQUENTLY, BY LETTER DATED NOVEMBER 11, 1964, MR. ENRICO TOGNA STATED THAT HE MADE AN ERROR IN HIS BID BY REVERSING HIS UNIT PRICES FOR ITEMS 1 AND 2, AND THAT WHILE SUCH ERROR WOULD BE OF NO IMPORTANCE IF HE WERE AWARDED BOTH ITEMS, HE WOULD SUSTAIN A LOSS IF AWARDED ITEM 1 ALONE.

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS NOT SUBJECT TO REFORMATION SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, 507 AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, EXPRESSES THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE KNOWN THAT AN ERROR IN THE BID OF TOGNA WAS LIKELY, SINCE THEY BID LESS ON ITEM 1 THAN FOR ITEM 2, WHEREAS THE OTHER FOUR BIDDERS BID MORE ON ITEM 1 THAN FOR ITEM 2. WE CONCUR WITH THIS OPINION. IN THE CIRCUMSTANCES, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION.

FOR THIS REASON, AND SINCE IT APPEARS THAN AN ERROR, IN FACT, WAS MADE BY THE COMPANY, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY AS RECOMMENDED.