B-157555, SEP. 3, 1965

B-157555: Sep 3, 1965

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO LETTER OF AUGUST 24. THE SUBJECT CONTRACT IS FOR THE CONSTRUCTION OF A LOOP ROAD. THE INVITATION FOR BIDS UPON WHICH THE CONTRACT IS BASED WAS DIVIDED INTO SEVEN SECTIONS. THE CONTRACTOR'S BID FOR EACH OF FIVE UNITS IN ITEM 9 OF SECTION IV (COMPLETE FIRE HYDRANT UNITS) WAS $325. ALTHOUGH BIDS WERE OPENED ON AUGUST 18. THE CONTRACT WAS AWARDED ON SEPTEMBER 4. IT IS STATED THAT THE ERROR DID NOT BECOME APPARENT TO THE CONTRACTOR UNTIL ABOUT JANUARY 18. WHEN THE CONTRACTING OFFICER SOUGHT A QUOTATION FOR THE REDUCTION OF THE PRICE ON ITEM 9 IN THE EVENT THE FIRE HOSE AND FIRE HOSE HOUSES WERE DELETED FROM THE CONTRACT ITEM. THE CONTRACTING OFFICER AND THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION RECOMMEND THAT THE CONTRACTOR BE GRANTED RELIEF BY INCREASING THE PRICE FOR ITEM 9 UP TO $750 WHICH WAS THE AMOUNT OF THE GOVERNMENT'S ESTIMATE FOR ITEM 9 AND THE AMOUNT BID BY THE SECOND LOW BIDDER.

B-157555, SEP. 3, 1965

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF AUGUST 24, 1965, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION REQUESTING A DECISION WHETHER THE PRICE FOR ITEM 9 OF SECTION IV OF CONTRACT 14-10-0333-1354, WITH MCGECHIE CONSTRUCTION COMPANY, INC., MAY BE CORRECTED AS A RESULT OF AN ERROR ALLEGED BY THE CONTRACTOR AFTER AWARD.

THE SUBJECT CONTRACT IS FOR THE CONSTRUCTION OF A LOOP ROAD, PARKING AREAS, HEADQUARTERS ROADS AND UTILITIES AT NATURAL BRIDGES NATIONAL MONUMENT IN UTAH. THE INVITATION FOR BIDS UPON WHICH THE CONTRACT IS BASED WAS DIVIDED INTO SEVEN SECTIONS, EACH OF WHICH CONTAINED A NUMBER OF ITEMS OF CONSTRUCTION. THE CONTRACTOR'S BID FOR EACH OF FIVE UNITS IN ITEM 9 OF SECTION IV (COMPLETE FIRE HYDRANT UNITS) WAS $325. ALTHOUGH BIDS WERE OPENED ON AUGUST 18, 1964, AND THE CONTRACT WAS AWARDED ON SEPTEMBER 4, 1964, IT IS STATED THAT THE ERROR DID NOT BECOME APPARENT TO THE CONTRACTOR UNTIL ABOUT JANUARY 18, 1965, WHEN THE CONTRACTING OFFICER SOUGHT A QUOTATION FOR THE REDUCTION OF THE PRICE ON ITEM 9 IN THE EVENT THE FIRE HOSE AND FIRE HOSE HOUSES WERE DELETED FROM THE CONTRACT ITEM.

THE CONTRACTOR ALLEGES THAT THE $325 PRICE INCLUDES ONLY THE FURNISHING AND INSTALLATION OF FIRE HYDRANTS AND DOES NOT INCLUDE THE COST OF OTHER ITEMS OF EQUIPMENT REQUIRED TO BE FURNISHED WITH THE HYDRANTS. IN SUPPORT OF ITS CONTENTION, THE CONTRACTOR HAS FURNISHED QUOTATIONS FROM TWO SUPPLIERS. IT STATES THAT IN FIGURING ITS BID IT USED THE $229.35 QUOTATION FURNISHED BY ONE SUPPLIER FOR THE HYDRANTS AND ADDED ONTO THAT AN INSTALLATION CHARGE TO ARRIVE AT $325, BUT THAT IT OVERLOOKED THE QUOTATION FROM ANOTHER SUPPLIER FOR THE ADDITIONAL EQUIPMENT REQUIRED BY THE SPECIFICATION WITH THE RESULT THAT IT UNDERBID THE ITEM BY $479.95 PER UNIT.

THE CONTRACTING OFFICER AND THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION RECOMMEND THAT THE CONTRACTOR BE GRANTED RELIEF BY INCREASING THE PRICE FOR ITEM 9 UP TO $750 WHICH WAS THE AMOUNT OF THE GOVERNMENT'S ESTIMATE FOR ITEM 9 AND THE AMOUNT BID BY THE SECOND LOW BIDDER.

THE ESTABLISHED RULE IS THAT IN ORDER FOR A CONTRACTOR TO BE GRANTED RELIEF FOR AN ERROR IN BID ALLEGED AFTER AWARD OF A CONTRACT, THE CONTRACTING OFFICER EITHER HAD TO HAVE ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR IN THE BID AT THE TIME OF AWARD. HOWEVER, THERE IS NOTHING IN THE ENCLOSURES ACCOMPANYING THE DEPUTY ASSISTANT SECRETARY'S LETTER WHICH INDICATES THAT THE CONTRACTING OFFICER WAS AWARE AT THE TIME OF AWARD THAT ANY MISTAKE WAS MADE BY THE CONTRACTOR. MOREOVER, WHILE THE BID ON ITEM 9 WAS WELL BELOW THE NEXT LOW BID AND THE GOVERNMENT'S ESTIMATE FOR THE ITEM, WE OBSERVE THAT THERE ARE SEVERAL OTHER ITEMS ON WHICH THE BID IS WELL ABOVE THE NEXT LOW BID AND THE GOVERNMENT'S ESTIMATE. IN ADDITION, WE OBSERVE THAT THE INVITATION PROVIDED THAT THE CONTRACT WOULD BE AWARDED TO A SINGLE CONTRACTOR AND THAT "AWARD 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.'" IN THESE CIRCUMSTANCES, SINCE THE AWARD WAS TO BE MADE TO A SINGLE CONTRACTOR ON THE BASIS OF THE TOTAL WORK ACCEPTED AND WOULD NOT BE ON THE BASIS OF THE LOW BID FOR INDIVIDUAL ITEMS, IT WOULD BE REASONABLE TO ATTRIBUTE THE LOW PRICES ON SOME ITEMS AND THE HIGH PRICES ON OTHER ITEMS TO UNBALANCING IN THE BID, WHICH IS NOT UNCOMMON IN BIDS ON CONSTRUCTION CONTRACTS, RATHER THAN TO ERROR. THEREFORE, WE DO NOT BELIEVE THAT THE CONTRACTING OFFICER WAS PLACED ON CONSTRUCTIVE NOTICE OF ERROR. WHILE WE ARE AWARE THAT THE TOTAL BID UPON WHICH THE AWARD WAS MADE WAS SOME $7,000 LESS THAN THE GOVERNMENT'S ESTIMATE FOR THE WORK, ON A CONTRACT AWARD OF $362,606 THAT IS ONLY ABOUT A 2-PERCENT DIFFERENCE, WHICH IN OUR OPINION IS NOT SUFFICIENT TO PLACE A CONTRACTING OFFICER ON NOTICE OF ERROR.

ANY ERROR WHICH WAS MADE IN THE BID WAS UNILATERAL AND THEREFORE DOES NOT ENTITLE THE CLAIMANT 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.

IN VIEW OF THE FOREGOING, IT APPEARS THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO SURRENDER OR WAIVE SUCH VESTED RIGHTS WITHOUT A COMPENSATING BENEFIT PASSING TO THE UNITED STATES. 15 COMP. GEN. 25; 18 ID. 114, 116; 19 ID. 48; 22 ID. 260; 35 ID. 56 AND 40 ID. 684.