B-161242, APR. 24, 1967

B-161242, APR. 24, 1967

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED APRIL 6, 1967, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, FILE 1340, WITH REGARD TO A MISTAKE IN BID ALLEGED AFTER AWARD BY TALLARDY ELECTRIC, INC., UNDER CONTRACT NO. V5098C-172, ISSUED BY THE VETERANS ADMINISTRATION HOSPITAL, CASTLE POINT, NEW YORK.

THE INVITATION REQUESTED BIDS FOR THE INSTALLATION OF A NURSING CALL SYSTEM AND BIDS WERE OPENED ON FEBRUARY 24, 1967. THE BID OF TALLARDY WAS $18,489. THE ONLY OTHER BID RECEIVED WAS $38,864, AND THE GOVERNMENT ESTIMATE WAS $39,754. A LETTER OF ACCEPTANCE WAS MAILED TO TALLARDY ON THE SAME DAY THE BIDS WERE OPENED.

ON MARCH 1, 1967, A LETTER WAS RECEIVED FROM TALLARDY ALLEGING SEVERAL MULTIPLICATION ERRORS IN ITS ESTIMATED INSTALLATION TIME FOR WIRING, AS WELL AS A FAILURE TO INCLUDE THE COST OF WIRE AND CABLE TO BE FURNISHED BY THE CONTRACTOR. WORKSHEETS WERE SUBMITTED WITH THE LETTER WHICH, IN THE OPINION OF THE CONTRACTING OFFICER AND THE DIRECTOR, SUPPLY SERVICE, PROVIDED THE EXISTENCE OF A MISTAKE. THE LETTER REQUESTED THAT THE TALLARDY BID PRICE BE INCREASED TO $29,844.20.

SUBSEQUENTLY, TALLARDY SUBMITTED A LETTER DATED MARCH 6, 1967, STATING THAT IT COULD ABSORB THE ADDITIONAL MATERIAL COSTS, AND REQUESTING AN INCREASE IN THE CONTRACT PRICE TO $23,997, AS OPPOSED TO THE INCREASE TO $29,844.20 INITIALLY REQUESTED.

IN A LETTER DATED MARCH 20, 1967, TALLARDY CLARIFIED ITS EXPLANATION OF HOW ITS ORIGINAL BID PRICE OF $18,489 HAD BEEN DETERMINED AND SUBMITTED A THIRD BID PRICE OF $26,587.

THE CONTRACTING OFFICER'S REPORT STATES THAT THE BID SUBMITTED BY TALLARDY DID NOT PUT HIM ON CONSTRUCTIVE NOTICE OF A MISTAKE. HOWEVER, THE DIRECTOR, SUPPLY SERVICE, STATES "THERE CAN BE NO DOUBT THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN EVEN AFTER VERBAL VERIFICATION, THAT THE TALLARDY BID WAS SO FAR OUT OF LINE THAT THE FIRM COULD NOT HAVE UNDERSTOOD THE BASIC REQUIREMENTS OF THE SPECIFICATIONS.'

WE AGREE THAT THE TALLARDY BID WAS SO MUCH LOWER THAN THE OTHER BID AND THE GOVERNMENT ESTIMATE THAT THE CONTRACTING OFFICER WAS PLACED ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF A MISTAKE AND SHOULD HAVE SOUGHT VERIFICATION OF THE BID. WE ALSO AGREE WITH THE CONCLUSION OF THE CONTRACTING OFFICER AND OF THE DIRECTOR, SUPPLY SERVICE, THAT TALLARDY HAS SHOWN THAT A BONA FIDE MISTAKE WAS MADE.

WE DO NOT, HOWEVER, FEEL THAT REFORMATION SHOULD BE PERMITTED IN THIS INSTANCE. IN ORDER FOR A CONTRACT TO BE REFORMED WHERE A MISTAKE IS ALLEGED AFTER AWARD, IT IS NECESSARY FOR THE BIDDER, IN ADDITION TO PROVING THAT THE MISTAKE WAS MADE AND THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE, TO SHOW BY CLEAR AND CONVINCING EVIDENCE THE AMOUNT OF HIS INTENDED BID. THE REASON FOR THIS REQUIREMENT IS THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT BIDS NOT BE CHANGED AFTER OPENING. WHILE TALLARDY COULD SHOW ITS INTENDED BID PRICE WITH REGARD TO ITS MULTIPLICATION ERRORS IN THE ESTIMATED INSTALLATION TIME FOR WIRING, IT COULD NOT SHOW THE AMOUNT OF ITS INTENDED BID FOR THE WIRE AND CABLE TO BE FURNISHED BY THE CONTRACTOR BECAUSE IT WAS NOT AWARE THAT THESE ITEMS WERE SUPPOSED TO BE INCLUDED IN ITS BID PRICE UNTIL AFTER BIDS WERE OPENED. FURTHER, THE FACT THAT THREE DIFFERENT BID PRICES WERE SUBMITTED AFTER THE ALLEGATION OF MISTAKE WAS MADE IS AN INDICATION THAT THE BIDDER HIMSELF IS NOT SURE WHAT HIS BID PRICE WOULD HAVE BEEN ABSENT THE MISTAKE. WE THEREFORE CANNOT SAY WHICH OF THE THREE PRICES IS THE ONE WHICH WOULD HAVE BEEN SUBMITTED IF THERE HAD BEEN NO MISTAKE.

ACCORDINGLY, WHILE WE CONCLUDE THAT THE CONTRACT CANNOT BE REFORMED, WE HAVE NO OBJECTION, IF TALLARDY WISHES TO WITHDRAW FROM THE CONTRACT, TO CANCELLATION THEREOF WITHOUT LIABILITY TO EITHER PARTY.