B-158537, APR. 5, 1966

B-158537: Apr 5, 1966

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER ENGGC-M DATED MARCH 7. BIDS WERE TO BE SUBMITTED FOR A LUMP-SUM PRICE. FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THEY WERE AS FOLLOWS: CHART SHINER ELECTRIC COMPANY $188. 654 THE GOVERNMENT ESTIMATE WAS 189. THIS WAS INCREASED BY TELEGRAPHIC MODIFICATION ON DECEMBER 7. THIS WAS AN INDICATION TO MR. THAT HE WAS LOW BIDDER. HIS ESTIMATE FOR THIS WORK WAS APPROXIMATELY $10. THIS WAS THE SAME DAY ON WHICH MR. SHINER AGAIN PHONED THE DISTRICT OFFICE IN OMAHA AND WAS CONNECTED WITH THE MECHANICAL ESTIMATOR WHO INFORMED HIM THAT THE GOVERNMENT ESTIMATE OF THE MECHANICAL PORTION OF THE CONTRACT WAS $31. AS THE AMOUNT INCLUDED BY SHINER ELECTRIC COMPANY IN ITS BID FOR THE MECHANICAL PORTION WAS $8.

B-158537, APR. 5, 1966

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER ENGGC-M DATED MARCH 7, 1966, WITH ENCLOSURES, FROM THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, FURNISHING A REPORT ON THE REQUEST OF SHINER ELECTRIC COMPANY FOR RELIEF BASED ON A MISTAKE IN ITS BID FOR CONSTRUCTION OF AN ELECTRICAL POWER AND SUBSTATION ADDITION AT OFFUTT AIR FORCE BASE, OMAHA, NEBRASKA, UNDER INVITATION NO. ENG-25-066-66-0035.

THE UNITED STATES ARMY ENGINEER DISTRICT, OMAHA, NEBRASKA, REQUESTED BIDS, TO BE OPENED DECEMBER 7, 1965, AT 2:00 P.M., C.S.T., FOR FURNISHING ALL PLANT, LABOR, MATERIAL AND EQUIPMENT FOR CONSTRUCTION OF THE EMERGENCY POWER AND SUBSTATION IN STRICT ACCORDANCE WITH SPECIFICATIONS, SCHEDULES AND DRAWINGS ATTACHED TO THE INVITATION. BIDS WERE TO BE SUBMITTED FOR A LUMP-SUM PRICE.

FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THEY WERE AS FOLLOWS:

CHART

SHINER ELECTRIC COMPANY $188,000

BID NO. 2 215,686

BID NO. 3 217,200

BID NO. 4 233,654

THE GOVERNMENT ESTIMATE WAS 189,174

SHINER ELECTRIC COMPANY INITIALLY SUBMITTED A BID DESCRIBED AS A "NOMINAL" BID OF $100,000 ON DECEMBER 6, 1965. THIS WAS INCREASED BY TELEGRAPHIC MODIFICATION ON DECEMBER 7, 1965, AT 10:26 A.M., BY $88,000.

ON THE AFTERNOON OF DECEMBER 7, 1965, SIDES CONSTRUCTION COMPANY, OMAHA, NEBRASKA, OFFERED SHINER ELECTRIC COMPANY AN UNSOLICITED QUOTE OF $14,000 FOR THE GENERAL CONSTRUCTION WORK ON THE SUBSTATION ADDITION. THIS WAS AN INDICATION TO MR. D. W. SHINER, PRESIDENT OF SHINER ELECTRIC COMPANY, THAT HE WAS LOW BIDDER. HIS ESTIMATE FOR THIS WORK WAS APPROXIMATELY $10,000. ON THE DAY AFTER BID OPENING, DECEMBER 8, 1965, THE DISTRICT ENGINEER'S OFFICE TELEPHONED THE LOW BIDDER AND ADVISED HIM OF THE BID RESULTS. THE FOLLOWING DAY, DECEMBER 9, 1965, MR. SHINER CALLED THE DISTRICT OFFICE AND ADVISED THAT HE DESIRED TO WITHDRAW HIS BID DUE TO AN ERROR OR MISTAKE. THIS WAS THE SAME DAY ON WHICH MR. SHINER RECEIVED AN UNSOLICITED QUOTE FROM J. H. MARTIG, INCORPORATED, OMAHA, NEBRASKA, FOR THE MECHANICAL WORK IN THE AMOUNT OF $35,240. ON DECEMBER 10, 1965, MR. SHINER AGAIN PHONED THE DISTRICT OFFICE IN OMAHA AND WAS CONNECTED WITH THE MECHANICAL ESTIMATOR WHO INFORMED HIM THAT THE GOVERNMENT ESTIMATE OF THE MECHANICAL PORTION OF THE CONTRACT WAS $31,910. AS THE AMOUNT INCLUDED BY SHINER ELECTRIC COMPANY IN ITS BID FOR THE MECHANICAL PORTION WAS $8,564.27 (INCLUDING INTEREST AND PROFIT) MR. SHINER DISPATCHED A TELEGRAM TO THE DISTRICT OFFICE IN AN ATTEMPT TO WITHDRAW THE BID. LETTER TO THE DISTRICT OFFICE DATED DECEMBER 13, 1965, MR. SHINER DESCRIBED HOW THE "MISTAKE" WAS MADE:

"* * * IN ESTIMATING THE VARIOUS ITEMS OF COST AS THEY WERE ITEMIZED ON THE ENCLOSED "PRICING SHEET" MARKED ESTIMATE NO. 309, THE PRICES OF MATERIAL AND LABOR WERE ENTERED AS APPLICABLE. WHEN THE MECHANICAL ITEMS APPEARED, A SUM OF MONEY WAS ENTERED IN ORDER TO HAVE SOME BASIS FOR A PRELIMINARY EVALUATION. THIS WAS NOT INTENDED AS A FINAL PRICE AND IT WAS INTENDED TO OBTAIN MECHANICAL PRICES AND ADJUST THE TOTAL WHEN THE LOW MECHANICAL PRICE WAS DETERMINED. NO MECHANICAL PRICE WAS RECEIVED OVER THE PHONE OR IN THE MAIL PRIOR TO BID TIME AND WITHOUT THE SUBJECT EVER COMING UP AGAIN, THE BID WAS USED WITHOUT THE MECHANICAL PRICES BEING CORRECTED.'

BOTH THE DIVISION ENGINEER, CORPS OF ENGINEERS, AND THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, DETERMINED THAT THE ONLY ERROR MADE WAS AN ERROR IN JUDGMENT, NOT AN ERROR IN BID SUCH AS WOULD AUTHORIZE WITHDRAWAL OF THE BID. THIS DETERMINATION WAS BASED UPON THE ABOVE DESCRIPTION OF MISTAKE BY MR. SHINER AND ANALYSIS OF THE PRICING SHEETS SUBMITTED BY HIM. THE GENERAL APPEARANCE WAS THAT THE BIDDER MADE AN UNDERESTIMATE OF THE MECHANICAL WORK, AND THE BID WAS AS INTENDED AT THE TIME IT WAS SUBMITTED.

IN AFFIDAVIT DATED MARCH 29, 1966, SUBMITTED TO OUR OFFICE BY MR. SHINER, FURTHER CLARIFICATION WAS MADE. IN DESCRIBING HIS USE OF THE PRICING SHEET THE AFFIDAVIT STATED:

"* * * I TOOK THE PLANS AND SPECIFICATIONS AND QUOTES RECEIVED HOME WITH ME AND MADE UP THE PRICING MONDAY NIGHT, DECEMBER 6, 1965.

"I TABULATED, FIRST, THE MAJOR ITEMS I HAD QUOTES ON, THEN WENT THROUGH THE SPECIFICATIONS AND PLANS PICKING UP THE VARIOUS ITEMS. AS I LISTED ITEMS OF THE NATURE THAT WOULD HAVE COME UNDER THE MECHANICAL SUBCONTRACTOR I PUT IN A PLUG FIGURE, WHICH I HAVE DONE AS A PRACTICE FOR MANY YEARS. ALL OF THE OTHER WORK I INTENDED TO PERFORM WITH MY OWN FORCES. I PLANNED TO CORRECT THIS PLUG FIGURE AS SOON AS I DETERMINED THE LOW MECHANICAL BID.

"TUESDAY MORNING I CARRIED MY PLANS AND SPECIFICATIONS AND WORK FILE TO THE OFFICE. I MADE PHONE CALLS TO MY SUPPLIERS TO TRY TO GET ADDITIONAL QUOTES ON THE MASTER CONTROL BOARD, MOTOR CONTROL CENTER CUBICLE AND BUS, 10,000 KVA TRANSFORMER AND LOAD INTERRUPTING SWITCHES, AND FOUND THERE WERE NO OTHER QUOTES AVAILABLE. I REALIZED THE IMPORTANCE OF THE TELEGRAM GETTING THERE IN TIME SO I RUSHED TO RECHECK THE TOTALS, FILLED OUT THE RECAP SHEET AND ARRIVED AT A FIGURE OF $188,000. BEING OF SUCH A LARGER MAGNITUDE THAN MY ORIGINAL GUESS AT THE JOB, I AUTOMATICALLY ACCEPTED IT AS A GOOD BID AND DID NOT RESTUDY MY PRICING SHEET. I DID NOT REALIZE AT THIS TIME THAT I FAILED TO GET A VALID MECHANICAL PRICE IN THE MAIL WHICH, FROM PAST EXPERIENCE, I HAD COME TO EXPECT. IF I HAD REALIZED THIS, I WOULD HAVE CALLED THE MECHANICAL CONTRACTORS ASSOCIATION IN OMAHA OR OTHER SOURCES AND GOTTEN A QUOTE. I HAVE NEVER PERFORMED MECHANICAL TYPE CONTRACTING WORK.'

WHILE MR. SHINER'S OFFICE DID RECEIVE A QUOTE AFTER BID OPENING FROM SIDES CONSTRUCTION COMPANY, OMAHA, NEBRASKA, FOR GENERAL CONSTRUCTION, WHICH WAS GREATER THAN HIS ESTIMATES FOR GENERAL CONSTRUCTION WORK ON THE PRICING SHEETS, HE DID NOT ALLEGE THIS AS A MISTAKE BECAUSE HE PLANNED TO DO THIS PART OF THE WORK HIMSELF. THE MISTAKE OCCURRED IN FAILING TO REPLACE THE PLUG FIGURES WITH A QUOTE ON THE MECHANICAL ITEMS. THIS WAS THE ONLY PART OF THE CONSTRUCTION PROJECT WHICH HE INTENDED TO SUBCONTRACT.

OBVIOUSLY, THERE IS NO BASIS WHATEVER TO PERMIT ANY CORRECTION OF THE BID. 17 COMP. GEN. 575. HOWEVER, IN VIEW OF ALL THE CIRCUMSTANCES AND SINCE THE PURPORTED "MISTAKE" IS SUBSTANTIAL WE BELIEVE THAT THERE IS EXTREME DOUBT THAT THE BID COULD NOW BE ACCEPTED IN GOOD FAITH. ACCORDINGLY, YOU ARE ADVISED THAT THE BID OF SHINER ELECTRIC COMPANY SHOULD BE DISREGARDED AND THE BIDDER RELIEVED FROM LIABILITY THEREUNDER.

THERE IS ENCLOSED A COPY OF OUR LETTER OF TODAY TO MR. MARCUS GINSBURG, ATTORNEY FOR SHINER ELECTRIC COMPANY, ADVISING HIM OF THE DECISION.