B-158763, MAY 2, 1966, 45 COMP. GEN. 667

B-158763: May 2, 1966

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AN AMOUNT THAT IS EVALUATED IN DETERMINING THE LOW BID. IF ONLY THE EVIDENCE OF AN ERROR IS ALLEGED. WITHDRAWAL OF THE BID IS AUTHORIZED. THE CONTRACTOR IS PRECLUDED FROM RECOVERY. 1966: REFERENCE IS MADE TO YOUR LETTER OF MARCH 16. IS ENTITLED TO ADDITIONAL COMPENSATION UNDER DEPARTMENT OF THE ARMY CONTRACT DA-36-058-CIVENG-60-282 AWARDED JUNE 30. THE INVITATION FOR BIDS UPON WHICH THE CONTRACT IS BASED SOLICITED BIDS FOR THE CONSTRUCTION OF ERIE RAILROAD STRUCTURES 4 AND 5 AND APPURTENANT WORK AT SHENANGO RIVER RESERVOIR. THE BID FORM UPON WHICH BIDDERS WERE REQUESTED TO SUBMIT BIDS INCLUDED A STATEMENT THAT THE BIDDER * * * AGREES THAT THE FOLLOWING CLAUSE SHALL APPLY: MISTAKES IN BIDS.

B-158763, MAY 2, 1966, 45 COMP. GEN. 667

BIDS - MISTAKES - GENERAL RULE UNDER AN INVITATION PROVIDING FOR A BIDDER TO WAIVE A PORTION OF ANY ALLEGED MISTAKE IN BID, EXCLUDING OBVIOUS ERRORS, ETC., AND MISTAKES THAT WOULD RESULT IN A BID PRICE REDUCTION, THE CONTRACT PRICE TO EXCLUDE ANY CORRECTION THAT EXCEEDS THE AMOUNT WAIVED, AN AMOUNT THAT IS EVALUATED IN DETERMINING THE LOW BID, A SMALL BUSINESS CONCERN THAT CONFIRMED ITS LOW BID AFTER DENIAL OF A BID CORRECTION FOR AN OMITTED ITEM OF UNDETERMINED COST, MAY NOT BE ALLOWED A CLAIM MADE 13 MONTHS AFTER AWARD IN AN AMOUNT LARGER THAN THAT ORIGINALLY PRESENTED, THE WAIVER CLAUSE NOT HAVING CHANGED THE RULES THAT TO CORRECT A BID MISTAKE, THE BID ACTUALLY INTENDED MUST BE ESTABLISHED, AND IF ONLY THE EVIDENCE OF AN ERROR IS ALLEGED, WITHDRAWAL OF THE BID IS AUTHORIZED, AND THE LOW BID HAVING BEEN VERIFIED PRIOR TO AWARD, THE CONTRACTOR IS PRECLUDED FROM RECOVERY, AND A SMALL BUSINESS STATUS DOES NOT ENTITLE THE LOW BIDDER TO PREFERENTIAL TREATMENT, THE SMALL BUSINEWS ACT INDICATING NO INTENT TO ABROGATE LEGAL PRINCIPLES IN THE SETTLEMENT OF CONTRACT CLAIMS FROM SMALL BUSINESS CONCERNS.

TO SCHUCHERT, SCHUCHERT AND SHEERER, MAY 2, 1966:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 16, 1966, WITH ENCLOSURES, CLAIMING THAT, BECAUSE OF AN ERROR IN BID, TRI-W CONSTRUCTION CO., INC., IS ENTITLED TO ADDITIONAL COMPENSATION UNDER DEPARTMENT OF THE ARMY CONTRACT DA-36-058-CIVENG-60-282 AWARDED JUNE 30, 1960.

THE INVITATION FOR BIDS UPON WHICH THE CONTRACT IS BASED SOLICITED BIDS FOR THE CONSTRUCTION OF ERIE RAILROAD STRUCTURES 4 AND 5 AND APPURTENANT WORK AT SHENANGO RIVER RESERVOIR, PENNSYLVANIA. THE BID FORM UPON WHICH BIDDERS WERE REQUESTED TO SUBMIT BIDS INCLUDED A STATEMENT THAT THE BIDDER

* * * AGREES THAT THE FOLLOWING CLAUSE SHALL APPLY:

MISTAKES IN BIDS. THE BIDDER HEREBY WAIVES THAT PORTION OF ANY ALLEGED MISTAKE OR MISTAKES IN HIS BID WHICH FALLS WITHIN THE FOLLOWING AMOUNTS:

IF BID IS $250,000 OR LESS--- 5 PERCENT OF THE BID;

IF BID IS MORE THAN $250,000 AND LESS THAN $500,000--- $12,500 PLUS 4 PERCENT OF THE BID OVER $250,000;

IF BID IS $500,000 OR MORE, AND LESS THAN $1,000,000--- $22,500 PLUS 3 PERCENT OF THE BID OVER $500,000;

IF BID IS $1,000,000 OR MORE--- $37,500 PLUS 2 PERCENT OF THE BID OVER $1,000,000.

IN CASES WHERE THE ALLEGATION OF MISTAKE EXCEEDS THE ABOVE WAIVED AMOUNTS AND THE REQUESTS FOR CORRECTION IS ALLOWED, SUCH AMOUNT WILL BE EXCLUDED FROM THE CONTRACT PRICE; HOWEVER, THE AMOUNT WAIVED AS PROVIDED HEREIN WILL NOT BE DEDUCTED FOR THE PURPOSE OF EVALUATING BIDS TO DETERMINE THE LOW BIDDER.

THE ABOVE WAIVER DOES NOT APPLY TO ANY CLERICAL MISTAKE WHICH IS OBVIOUS OR APPARENT ON THE FACE OF THE BID INCLUDING BUT NOT LIMITED TO (1) A MISTAKE IN THE EXTENSION OF UNIT PRICE OR PRICES; (2) A MISTAKE IN TOTALING THE SUMS OF VARIOUS BID ITEMS; (3) OBVIOUSLY MISPLACED DECIMAL POINT OR (4) FAILURE TO INSERT THE UNIT PRICE WHERE AMOUNT INTENDED CAN BE DETERMINED FROM FACE OF BID.

THIS CLAUSE IS NOT APPLICABLE TO ALLEGATIONS OF MISTAKES WHICH, IF ALLOWED, WOULD RESULT IN A REDUCTION IN THE BID PRICE;

THE BID FROM TRI-W IN THE AMOUNT OF $872,403.50 WAS THE LOWEST BID RECEIVED IN RESPONSE TO THE INVITATION FOR BIDS. THE BALANCE OF THE BIDS RANGED FROM $1,009,497 TO $1,369,704.18.

AFTER THE BID OPENING ON JUNE 28, 1960, AN OFFICER OF TRI-W INFORMED A REPRESENTATIVE OF THE BID OPENING OFFICE BY TELEPHONE THAT THE COMPANY MADE A $57,720 ERROR IN ITS BID IN THAT IT FAILED TO INCLUDE ANYTHING IN ITS PRICE FOR ERECTING STEEL IN ITEMS 42A AND 42B. THE GOVERNMENT REPRESENTATIVE ADVISED THE COMPANY OFFICER OF THE ERROR IN BID PROCEDURES AND THE LATTER STATED HE WOULD LATER ADVISE AS TO TRI W'S INTENTION IN THAT REGARD. WHEN THE GOVERNMENT REPRESENTATIVE DID NOT HEAR FROM THE COMPANY OFFICER BY THE NEXT MORNING, HE CALLED TO INQUIRE WHAT THE COMPANY PLANNED TO DO. THE COMPANY OFFICER REITERATED THAT AN ERROR IN BID HAD BEEN MADE BUT THAT THE COMPANY WANTED THE JOB AND THAT IT BELIEVED THAT THE SITUATION COULD BE WORKED OUT. SUBSEQUENTLY, THE SAME DAY, THE COMPANY OFFICER, ACCOMPANIED BY ANOTHER OFFICER, MET WITH THE DISTRICT COUNSEL OF THE CONTRACTING OFFICE AND DISCUSSED THE TRI-W SITUATION. THEY SHOWED THE COUNSEL A LETTER THAT HAD BEEN DRAFTED CONCERNING THE ERROR AND INQUIRED WHAT WOULD OCCUR IF IT WERE SUBMITTED. THE COUNSEL ADVISED THAT IF THE LETTER WERE SUBMITTED THE TRI-W BID WOULD PROBABLY BE DISREGARDED, BUT THAT CORRECTION PROBABLY WOULD NOT BE ALLOWED BECAUSE THE INTENDED AMOUNT OF THE TRI-W BID COULD NOT BE DETERMINED. THE COMPANY OFFICERS STATED THAT, MISTAKE OR NOT, THE COMPANY HAD A BID ON WHICH IT COULD MAKE A PROFIT AND THEY DID NOT WANT THE BID DISREGARDED. LATER THAT DAY, THERE WAS RECEIVED FROM THE COMPANY A TELEGRAM AS FOLLOWS:

* * * WE HEREBY CONFIRM OUR BID DATED JUNE 28, 1960 AND ACCEPT A CONTRACT FOR THE BID PRICE OF $872403.50 RE RAILROAD STRUCTURES SHENANGO RESERVOIR.

THE NEXT DAY, AT A PREAWARD CONFERENCE, THE COMPANY OFFICERS SAID THE BID HAD BEEN RECHECKED AND THEY REAFFIRMED THE WILLINGNESS TO ACCEPT A CONTRACT FOR THE BID PRICE OF $872,403.50. IN ADDITION, THE GOVERNMENT REPRESENTATIVES DISCUSSED ALL MAJOR ASPECTS OF THE WORK WITH THE COMPANY OFFICERS AND, IN EACH INSTANCE, THEY RECEIVED ASSURANCE FROM THE OFFICERS THAT THE COMPANY COULD PERFORM AT THE BID PRICE. AT THE CLOSE OF THE MEETING, THE CONTRACT WAS AWARDED TO TRI W.

THIRTEEN MONTHS LATER, BY LETTER OF JULY 31, 1961, THE CONTRACTOR FILED A CLAIM WITH THE CONTRACTING OFFICE FOR $123,042 FOR AN ERROR IN BID CONSISTING OF THE ORIGINAL $57,720 ERROR ALLEGED AND OTHER COSTS ALLEGED TO HAVE BEEN OMITTED IN COMPUTING THE BID FOR ITEMS 42A AND 42B.

THE CLAIM FOR CORRECTION WAS DENIED ON MARCH 14, 1962, AND AGAIN IN FEBRUARY 1966. THE ORIGINAL DISALLOWANCE HELD THAT THE CONTRACTOR HAD AFFIRMED THE CONTRACT IN ALL ITS TERMS AND WAIVED WHATEVER RIGHTS IT MIGHT OTHERWISE HAVE HAD. THE SECOND DISALLOWANCE, IN AFFIRMING THE FIRST, HELD THAT THE CONTRACTING OFFICER FULFILLED HIS RESPONSIBILITY BY OBTAINING A VERIFICATION OF THE BID PRIOR TO AWARD AND THAT A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID.

YOU CONTEND THAT THE ADMINISTRATIVE DISPOSITION OF THE CLAIM WAS INCORRECT. IT IS YOUR POSITION THAT THE CONTRACTING OFFICER WAS REQUIRED TO MAKE AN AWARD TO TRI-W REGARDLESS OF THE CIRCUMSTANCES AND THEN MAKE AN ADJUSTMENT UNDER THE "MISTAKES IN BIDS" CLAUSE. IT IS YOUR FURTHER POSITION THAT TRI-W WAS ENTITLED TO SPECIAL CONSIDERATION IN THE DISPOSITION OF ITS CLAIM BECAUSE THE COMPANY IS A SMALL BUSINESS CONCERN AND THE SMALL BUSINESS ACT, 15 U.S.C. 631, STATES THAT IT IS THE POLICY OF THE CONGRESS THAT THE GOVERNMENT SHOULD AID COUNSEL, ASSIST AND PROTECT SMALL BUSINESS CONCERNS INSOFAR AS POSSIBLE.

WE RECOGNIZE THAT A CONTRACTING OFFICER IS REQUIRED TO REQUEST VERIFICATION OF A BID FROM A BIDDER BEFORE MAKING AN AWARD IF HE KNOWS OR SHOULD KNOW THAT A BID IS ERRONEOUS. IF, IN RESPONSE TO THE CONTRACTING OFFICER'S REQUEST, THE BIDDER VERIFIES THE BID, THE CONTRACTING OFFICER ORDINARILY IS REQUIRED TO CONSIDER IT FOR AWARD. IF, HOWEVER, THE BIDDER PETITIONS FOR CORRECTION OF THE BID AND IS ABLE TO ESTABLISH THE BID ACTUALLY INTENDED, THE BID MAY BE CORRECTED. WHERE THE EVIDENCE ONLY ESTABLISHES THAT AN ERROR WAS MADE, BUT DOES NOT ESTABLISH THE BID ACTUALLY INTENDED, THE BIDDER MAY BE ALLOWED TO WITHDRAW ITS BID FROM CONSIDERATION. THESE PRINCIPLES ARE SET FORTH WITH PARTICULARITY IN THE SUBPARAGRAPHS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR), PARAGRAPH 2 -406 (PARAGRAPH 2 405 OF THE ASPR IN EFFECT AT THE TIME OF AWARD). THEREFORE, YOUR CONTENTION THAT THE CONTRACTING OFFICER WAS REQUIRED TO MAKE AN AWARD TO TRI-W WITHOUT ANY FURTHER CONSIDERATION OF THE SITUATION IS INCORRECT. THE "MISTAKES IN BIDS" CLAUSE,INCLUDED IN THE BID FORM, MAKES NO REFERENCE TO THE RULES WHICH ARE TO BE APPLIED IN DETERMINING WHETHER A BID SHOULD BE CORRECTED, AND THE CLAUSE IS NOT CONSIDERED TO HAVE CHANGED THOSE RULES. IT IS TO BE OBSERVED TOO THAT THE CLAUSE PROVIDES THAT WHEN CORRECTION IS ALLOWED THE AMOUNT OF THE ERROR IS TO BE CONSIDERED A PART OF THE BID PRICE "FOR THE PURPOSE OF EVALUATING BIDS TO DETERMINE THE LOW BIDDER.' THIS INDICATES, CONTRARY TO YOUR CONTENTION, THAT THE CONTRACTING OFFICER WAS AUTHORIZED BY THE BID FORM TO CONSIDER ERRORS IN BIDS BEFORE MAKING AN AWARD AND WAS NOT RESTRICTED TO SUCH A CONSIDERATION UNDER AFTER THE AWARD WAS MADE. ORDINARILY, WHEN IT IS DECIDED THAT A BID SHOULD BE CORRECTED, THE BID IS INCREASED BY THE AMOUNT OF THE CORRECTION. THE "MISTAKES IN BIDS" CLAUSE MODIFIED THIS PRINCIPLE ONLY, SINCE THE CLAUSE PROVIDES FOR A DEDUCTION FROM THE AMOUNT OF ANY CORRECTION WHICH MIGHT BE AUTHORIZED IN A BID PRICE. IN OTHER RESPECTS, THE APPLICABLE RULES REMAIN UNCHANGED. THEREFORE, THE VERIFICATION OF THE BID BY TRI-W BEFORE THE AWARD WAS MADE TO IT WAS PROPER AND IS CONSIDERED TO PRECLUDE THE CONTRACTOR FROM RECOVERING ON A CLAIM OF ERROR MADE 13 MONTHS AFTER AWARD. THE RELIANCE OF THE CONTRACTING AGENCY UPON 31 COMP. GEN. 384, HOLDING THAT A BIDDER WHICH VERIFIES ITS BID PRIOR TO AWARD IS BOUND TO ITS CONTRACT PRICE UPON AN ALLEGATION OF ERROR AFTER AWARD, WAS CORRECT. IN ACCORD, SEE 27 COMP. GEN. 17 AND 38 ID. 218.

MOREOVER, WHILE IT IS ALLEGED THAT THE SMALL BUSINESS ACT REQUIRES PREFERENTIAL TREATMENT FOR SMALL BUSINESS CONCERNS, THERE IS NOTHING IN THE ACT WHICH INDICATES THAT ACCEPTED LEGAL PRINCIPLES ARE TO BE ABROGATED IN THE SETTLEMENT OF CONTRACT CLAIMS FROM SMALL BUSINESS CONCERNS.

ACCORDINGLY, WE CONCLUDE THAT THE ADMINISTRATIVE DISALLOWANCE OF THE TRI- W CLAIM WAS CORRECT.