B-158184, FEB. 14, 1966, 45 COMP. GEN. 496

B-158184: Feb 14, 1966

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IS NOT WITHIN THE AUTHORITY DELEGATED TO FEDERAL AGENCIES IN SECTION 1-2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS TO REFORM ERRONEOUS CONTRACT PRICES. 1966: REFERENCE IS MADE TO LETTER 074B OF DECEMBER 14. THE SUBJECT CONTRACT IS FOR THE REPLACEMENT OF CERTAIN ELEVATORS DESIGNATED AS ITEMS 1 AND 2. IN THE INVITATION UPON WHICH THE CONTRACT IS BASED. THERE IS NO STIPULATION AS TO WHAT THE TIME FOR COMPLETION OF THE WORK SHOULD BE. THE INVITATION REQUESTED BIDDERS TO SPECIFY SEPARATELY THE NUMBER OF CALENDAR DAYS FOR COMPLETION OF EACH OF THE TWO ITEMS AND PROVIDED THAT $35 LIQUIDATED DAMAGES WOULD BE ASSESSED FOR EACH DAY THE COMPLETION OF ITEM 1 WAS DELAYED BEYOND THE STATED TIME. DOVER ELEVATOR COMPANY WAS THE LOWEST BIDDER OF THE FOUR WHICH RESPONDED TO THE INVITATION FOR BIDS.

B-158184, FEB. 14, 1966, 45 COMP. GEN. 496

CONTRACTS - MISTAKES - PERFORMANCE TIME - CORRECTION AUTHORITY A MISTAKE ALLEGED AFTER CONTRACT AWARD TO THE EFFECT THAT THE TIME FOR COMPLETING THE CONTRACT FAILED TO INCLUDE THE TIME REQUIRED FOR PREPARING AND ACQUIRING APPROVAL OF FINAL ENGINEERING DRAWINGS--- THE CONTRACT PROVIDING FOR LIQUIDATED DAMAGES--- MAY NOT BE CORRECTED TO PROVIDE ADDITIONAL TIME FOR PERFORMANCE, THE CONTRACT OFFICER HAVING NEITHER ACTUAL NOR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN THE BID, AND THE UNILATERAL MISTAKE NOT ENTITLING THE CONTRACTOR TO RELIEF, AND THE CORRECTION OF THE MISTAKE FOR OTHER THAN PRICE, EVEN THOUGH AN ASSESSMENT OF LIQUIDATED DAMAGES WOULD DECREASE THE PAYMENT TO THE CONTRACTOR, IS NOT WITHIN THE AUTHORITY DELEGATED TO FEDERAL AGENCIES IN SECTION 1-2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS TO REFORM ERRONEOUS CONTRACT PRICES, WHETHER A PRICE REDUCTION OR INCREASE RESULTS, IN AN AMOUNT NOT EXCEEDING $1,000, AND THE GENERAL ACCOUNTING OFFICE HAVING RESERVED ALL REFORMATION MATTERS NOT SPECIFICALLY GRANTED, ADMINISTRATIVE OFFICERS OF THE GOVERNMENT SHOULD CONTINUE TO SUBMIT TO THE OFFICE MISTAKES OTHER THAN ERRONEOUS CONTRACT PRICES FOR CONSIDERATION, REGARDLESS OF THE AMOUNT OF LIQUIDATED DAMAGES RESULTING FROM FAILURE TO PROVIDE CORRECTION.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, FEBRUARY 14, 1966:

REFERENCE IS MADE TO LETTER 074B OF DECEMBER 14, 1965, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, REQUESTING A DECISION REGARDING AN ERROR ALLEGED BY DOVER ELEVATOR COMPANY AFTER THE AWARD OF CONTRACT V5062C-2736 AND GUIDANCE REGARDING SECTION 1-2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) PERTAINING TO DISCLOSURE OF MISTAKES IN BIDS AFTER AWARD.

THE SUBJECT CONTRACT IS FOR THE REPLACEMENT OF CERTAIN ELEVATORS DESIGNATED AS ITEMS 1 AND 2. IN THE INVITATION UPON WHICH THE CONTRACT IS BASED, THERE IS NO STIPULATION AS TO WHAT THE TIME FOR COMPLETION OF THE WORK SHOULD BE. INSTEAD, THE INVITATION REQUESTED BIDDERS TO SPECIFY SEPARATELY THE NUMBER OF CALENDAR DAYS FOR COMPLETION OF EACH OF THE TWO ITEMS AND PROVIDED THAT $35 LIQUIDATED DAMAGES WOULD BE ASSESSED FOR EACH DAY THE COMPLETION OF ITEM 1 WAS DELAYED BEYOND THE STATED TIME. IN THAT CONNECTION, THE SPECIFICATIONS PROVIDE FOR THE COMPLETION OF ITEM 1 AFTER ITEM 2.

DOVER ELEVATOR COMPANY WAS THE LOWEST BIDDER OF THE FOUR WHICH RESPONDED TO THE INVITATION FOR BIDS. ITS TOTAL BID FOR COMPLETING BOTH ITEMS WAS $78,680 AND THE TIME IT PROVIDED FOR COMPLETING ALL THE WORK WAS 410 CALENDAR DAYS. THE ONLY BIDDER WHICH SPECIFIED A SEPARATE TIME FOR COMPLETING EACH ITEM OF THE WORK WAS THE NEXT LOW BIDDER WHICH BID A TOTAL OF $86,781 AND PROVIDED FOR COMPLETION OF ITEMS 1 AND 2 IN 252 AND 224 DAYS, RESPECTIVELY, OR IN A TOTAL OF 476 DAYS. THE REMAINING BIDS WERE IN THE AMOUNTS OF $88,803 AND $96,000 AND PROVIDED FOR COMPLETION OF THE WORK IN 450 AND 600 DAYS, RESPECTIVELY. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $85,00 AND 500 DAYS FOR COMPLETION.

APPROXIMATELY 6 MONTHS AFTER THE CONTRACT WAS AWARDED TO DOVER ELEVATOR COMPANY, IT ADVISED THE CONTRACTING OFFICER THAT IT HAD FAILED TO INCLUDE IN ITS COMPLETION TIME THE AMOUNT OF TIME REQUIRED FOR PREPARING AND ACQUIRING APPROVAL OF ITS FINAL ENGINEERING DRAWINGS. IT STATED THAT THE ERROR WAS NOT DISCOVERED UNTIL IT PREPARED A CONSTRUCTION PROGRESS CHART. IN SUPPORT OF THE ERROR, IT FURNISHED A WORKSHEET WHICH IS CAPTIONED "AFTER APPROVAL" AND WHICH ITEMIZES CONSTRUCTION TIME TOTALING 409 DAYS. IT HAS INDICATED THAT IF IT IS ALLOWED AN ADDITIONAL 60 DAYS FOR COMPLETION OF THE WORK THAT WOULD BE SATISFACTORY.

IN VIEW OF THE FOREGOING, THE DIRECTOR OF THE SUPPLY MANAGEMENT SERVICE REQUESTS TO BE ADVISED WHETHER THE CONTRACT MAY BE REFORMED TO PROVIDE ADDITIONAL TIME FOR COMPLETION. HE PROPOSES 71 DAYS, SINCE THAT WAS THE ACTUAL TIME IT TOOK THE CONTRACTOR TO PROCEED TO APPROVAL OF THE DRAWINGS AFTER THE NOTICE TO PROCEED WAS ISSUED. ADDITIONALLY, FOR FUTURE GUIDANCE, HE REQUESTS TO BE ADVISED WHETHER CORRECTIONS OF MISTAKES OF OTHER THAN CONTRACT PRICE ARE WITHIN THE AUTHORITY OF FPR SEC. 1-2.406-4, AND WHETHER THE CORRECTION OF SUCH AN ERROR AS IS INVOLVED IN THIS CASE MIGHT BE CONSIDERED TO FALL WITHIN THE REGULATION SINCE, IF THE ERROR IN THE TIME OF PERFORMANCE IS NOT CORRECTED, IT MIGHT RESULT IN LIQUIDATED DAMAGES IN EXCESS OF $1,000.

IN ORDER FOR AN ERROR IN BID ALLEGED AFTER AWARD TO BE CORRECTED, IT MUST BE ESTABLISHED THAT THE CONTRACTING OFFICER HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR IN THE BID AT THE TIME OF AWARD. THERE IS NOTHING ON THE FACE OF THE BID TO INDICATE THAT THE TIME FOR PERFORMANCE WAS NOT INTENDED AS STATED. CONSEQUENTLY, THERE WAS NOTHING IN THE BID TO PLACE THE CONTRACTING OFFICER ON ACTUAL NOTICE OF PROBABILITY OF ERROR IN BID. IT IS CONTENDED THAT THE 410 DAYS STIPULATED FOR COMPLETION OF THE WORK SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN TIME FOR COMPLETION IN VIEW OF THE NUMBER OF DAYS STIPULATED BY THE OTHER BIDDERS, AND INASMUCH AS THE 450 AND 476 DAYS STIPULATED BY TWO OF THEM WERE 90 AND 95 PERCENT OF THE GOVERNMENT 500-DAY ESTIMATE WHILE THE TIME STIPULATED BY DOVER ELEVATOR COMPANY WAS ONLY 82 PERCENT OF THE GOVERNMENT ESTIMATE. HOWEVER, SINCE TWO BIDDERS IN ADDITION TO THE LOW BIDDER QUOTED A SHORTER COMPLETION TIME THAN THE GOVERNMENT ESTIMATED, IT SEEMS INAPPROPRIATE TO USE THE GOVERNMENT ESTIMATE AS AN ABSOLUTE GUIDE. THE AMOUNT OF TIME NEEDED TO COMPLETE THE JOB IS NECESSARILY A MATTER OF JUDGMENT FOR EACH BIDDER AND WILL GENERALLY DEPEND UPON A VARIETY OF FACTORS INCLUDING THE AMOUNT OF LABOR INTENDED TO BE EMPLOYED AND THE SPEED WITH WHICH IT CAN WORK, THE TIME TO BE DEVOTED TO THE JOB EACH DAY AND ANY KNOWLEDGE WHICH MIGHT MAKE FOR EFFICIENT PERFORMANCE. THEREFORE, IT IS CONCEIVABLE THAT DIFFERENT BIDDERS WILL ESTIMATE DIFFERENT TIMES FOR COMPLETION OF THE SAME JOB. THE TIME STIPULATED BY THE LOW BIDDER DOES NOT APPEAR TO BE OUT OF LINE WITH THE TIME OFFERED BY THE NEXT TWO LOWEST BIDDERS AS THE RANGE BETWEEN THE 410-DAY COMPLETION TIME AND THE 450-DAY COMPLETION TIME OFFERED BY ANOTHER BIDDER IS 40 DAYS WHICH IS ONLY 14 MORE DAYS THAN THE TIME DIFFERENCE BETWEEN THE 450-DAY COMPLETION TIME AND THE 476-DAY COMPLETION TIME PROVIDED BY ANOTHER BIDDER.

IN THE CIRCUMSTANCES, OUR OFFICE DOES NOT BELIEVE THAT IT SHOULD BE CONSIDERED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR. THE ACCEPTANCE OF THE BID APPEARS TO HAVE BEEN IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES 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. 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.

TURNING NOW TO THE QUESTIONS PRESENTED REGARDING FPR SEC. 1-2.406 4, IT SHOULD BE UNDERSTOOD THAT IT HAS BEEN THE POSITION OF OUR OFFICE THAT, AS A GENERAL RULE, THE ADMINISTRATIVE OFFICES OF THE GOVERNMENT ARE WITHOUT AUTHORITY TO REFORM GOVERNMENT CONTRACTS AND THAT IF AN ADMINISTRATIVE OFFICE IS OF THE OPINION THAT A CONTRACT SHOULD BE ADJUSTED, IT SHOULD SUBMIT THE MATTER TO OUR OFFICE FOR CONSIDERATION AND ADJUSTMENT. COMP. GEN. 238. IN VIEW OF OUR POSITION, CERTAIN AGENCIES IN THE GOVERNMENT HAVE REQUESTED OUR OFFICE TO AUTHORIZE THEM TO CORRECT ERRORS IN BIDS ALLEGED AFTER AWARD AND OUR OFFICE HAS DELEGATED SUCH AUTHORITY TO THEM. HOWEVER, SUCH DELEGATIONS ARE NO BROADER THAN THE AGREEMENT AS TO THE EXTENT OF THE DELEGATION OF AUTHORITY. FOLLOWING THIS PROCEDURE, IN DECEMBER 1956, THE GENERAL SERVICES ADMINISTRATION (GSA) REQUESTED THAT AUTHORITY BE GRANTED TO IT TO TAKE ACTION ADMINISTRATIVELY, WITHOUT THE SUBMISSION TO OUR OFFICE FOR DECISION, ERRORS IN BID ALLEGED AFTER AWARD WHERE REFORMATION WOULD NOT EXCEED A $500 INCREASE IN CONTRACT PRICE. THE AUTHORITY WAS GRANTED ON FEBRUARY 28, 1957, IN B-130238. SUBSEQUENTLY, IN JUNE 1960, GSA PRESENTED A DRAFT OF FPR SEC. 1-2.406-4 WHICH IT REPRESENTED CONTAINED SIMILAR AUTHORITY AS IT WAS PREVIOUSLY GRANTED EXCEPT THAT IT WOULD BE EXTENDED TO ALL FEDERAL AGENCIES AND THAT THE DOLLAR LIMITATION WOULD BE INCREASED TO $1,000. APPROVAL WAS GRANTED ON AUGUST 1, 1960, B-130238, AND FPR SEC. 1-2.406-4 SUBSEQUENTLY WAS PUBLISHED BY GSA.

PARAGRAPH (B) (2) OF FPR SEC. 1-2.406-4 PROVIDES:

A DETERMINATION MAY BE MADE TO REFORM A CONTRACT, IRRESPECTIVE OF AMOUNT, (I) TO DELETE THE ITEM OR ITEMS INVOLVED IN THE MISTAKE WHERE SUCH DELETION DOES NOT REDUCE THE CONTRACT PRICE BY MORE THAN $1,000, OR (II) TO INCREASE THE PRICE WHERE SUCH INCREASE DOES NOT EXCEED $1,000 AND IF THE CONTRACT PRICE, AS CORRECTED, DOES NOT EXCEED THAT OF THE NEXT LOWEST ACCEPTABLE BID UNDER THE ORIGINAL INVITATION FOR BIDS.

AGAINST THE FOREGOING BACKGROUND AND IN VIEW OF THE FACT THAT PARAGRAPH (B) (2) OF THE REGULATION SPEAKS OF REFORMING A CONTRACT TO REDUCE OR INCREASE THE CONTRACT PRICE, THE ONLY AUTHORITY WHICH ADMINISTRATIVE OFFICES HAVE UNDER THE REGULATION IS TO REFORM CONTRACT PRICES WHICH ARE ERRONEOUS. ALL OTHER MATTERS OF REFORMATION WHICH HAVE NOT BEEN SPECIFICALLY GRANTED BY OUR OFFICE ARE CONSIDERED TO HAVE BEEN RESERVED BY OUR OFFICE AND SHOULD CONTINUE TO BE SUBMITTED FOR ITS CONSIDERATION.

ALTHOUGH THE FAILURE TO GRANT A CHANGE IN PERFORMANCE TIME MAY ULTIMATELY RESULT IN A DECREASE IN THE AMOUNT OF THE CONTRACT PRICE TO BE PAID TO THE CONTRACTOR, REFORMATION OF PERFORMANCE TIME IS NOT CORRECTION OF CONTRACT PRICE, SO THAT THERE IS NO AUTHORITY IN THE ADMINISTRATIVE OFFICES OF THE GOVERNMENT TO REFORM PERFORMANCE TIME WHERE ERROR IS ALLEGED AFTER AWARD. THEREFORE, ALL CASES INVOLVING CORRECTION OF SUCH AN ERROR AS IS INVOLVED IN THIS CASE SHOULD CONTINUE TO BE SUBMITTED TO OUR OFFICE REGARDLESS OF THE AMOUNT OF LIQUIDATED DAMAGES WHICH MIGHT RESULT FROM THE FAILURE TO PROVIDE CORRECTION.

THE DOCUMENTS WHICH WERE FURNISHED OUR OFFICE BY LETTER 074B OF DECEMBER 21, 1965, ARE RETURNED AS REQUESTED.