B-162543, NOV. 27, 1967

B-162543: Nov 27, 1967

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

A LOW BIDDER WHO ALLEGED AN ERROR BUT WHO DID NOT SUBMIT EVIDENCE TO SUBSTANTIATE ERROR UNTIL AFTER THE CONTRACT AND BONDS HAD BEEN EXECUTED MAY NOT HAVE THE RULE REQUIRING THE SUBMISSION OF CLEAR AND CONVINCING EVIDENCE OF THE ERROR. THE MANNER IT WAS MADE. SINCE THE EVIDENCE OF ERROR IS NOT CLEAR AND DOES NOT SHOW HOW IT WAS MADE NOR THE PRICE INTENDED THE CONTRACT MAY NOT BE REFORMED. SECRETARY: REFERENCE IS MADE TO LETTER ENGGC-M DATED SEPTEMBER 20. FIVE BIDS WERE RECEIVED. WAS $2. THE REPRESENTATIVE STATED THAT A DECISION AS TO WHETHER THE MISTAKE WOULD BE ALLEGED AS A BASIS FOR RELIEF WOULD BE MADE BY ANOTHER MEMBER OF THE FIRM AND THAT HE WAS SURE DIXIE CONTRACTORS WOULD RATHER HAVE THE JOB AT THE BID PRICE THAN LOSE IT.

B-162543, NOV. 27, 1967

BIDS - MISTAKES - AFTER AWARD DECISION TO SECY. OF THE ARMY CONCERNING PROPRIETY OF REFORMATION OF CONTRACT WITH DIXIE CONTRACTORS, INC. FOR CONSTRUCTION OF NAVIGATION CHANNEL IN VERDIGRIS RIVER, OKLA., BY ARMY ENGINEERS. A LOW BIDDER WHO ALLEGED AN ERROR BUT WHO DID NOT SUBMIT EVIDENCE TO SUBSTANTIATE ERROR UNTIL AFTER THE CONTRACT AND BONDS HAD BEEN EXECUTED MAY NOT HAVE THE RULE REQUIRING THE SUBMISSION OF CLEAR AND CONVINCING EVIDENCE OF THE ERROR, THE MANNER IT WAS MADE, AND THE INTENDED BID PRICE ALTERED BY AN AWARD AFTER ALLEGATION OF ERROR. THEREFORE, SINCE THE EVIDENCE OF ERROR IS NOT CLEAR AND DOES NOT SHOW HOW IT WAS MADE NOR THE PRICE INTENDED THE CONTRACT MAY NOT BE REFORMED.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER ENGGC-M DATED SEPTEMBER 20, 1967, WITH ENCLOSURES, FROM THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, REQUESTING A DECISION WHETHER CONTRACT DACW56-67-C-0261 AWARDED TO DIXIE CONTRACTORS, INC., SHOULD BE REFORMED BECAUSE OF AN ALLEGED ERROR IN BID.

INVITATION DACW56-67-B-0098, ISSUED ON APRIL 28, 1967, BY THE UNITED STATES ARMY ENGINEER DISTRICT, TULSA, OKLAHOMA, REQUESTED BIDS TO BE OPENED ON JUNE 1, 1967, FOR CONSTRUCTION OF NAVIGATION CHANNEL SEGMENT II, LOCK AND DAM 17, VERDIGRIS RIVER, OKLAHOMA. FIVE BIDS WERE RECEIVED, THE THREE LOWEST BEING SUBMITTED BY DIXIE CONTRACTORS, INC., IN THE AMOUNT OF $2,032,334; ATLAS CONSTRUCTION CO., INC., IN THE AMOUNT OF $2,175,624; AND BOYD CONSTRUCTION COMPANY, IN THE AMOUNT OF $2,590,725. THE GOVERNMENT'S ESTIMATE, EXCLUDING PROFIT, WAS $2,335,289.

ON JUNE 6, 1967, A REPRESENTATIVE OF DIXIE CONTRACTORS, INC., ORALLY ADVISED THE DISTRICT ENGINEER OFFICE THAT A MISTAKE HAD BEEN MADE IN THE BID IN HOME OFFICE OVERHEAD AND IN CONTRACTOR INSPECTION SYSTEM, BUT DID NOT PROVIDE ANY DETAILS CONCERNING THE ERROR. THE REPRESENTATIVE STATED THAT A DECISION AS TO WHETHER THE MISTAKE WOULD BE ALLEGED AS A BASIS FOR RELIEF WOULD BE MADE BY ANOTHER MEMBER OF THE FIRM AND THAT HE WAS SURE DIXIE CONTRACTORS WOULD RATHER HAVE THE JOB AT THE BID PRICE THAN LOSE IT.

SINCE NO FURTHER COMMUNICATION CONCERNING THE ALLEGED MISTAKE HAD BEEN RECEIVED BY JUNE 14, 1967, AWARD WAS MADE TO DIXIE CONTRACTORS AND CONTRACT DACW56-67-C-0261 WITH PERFORMANCE AND PAYMENT BONDS WAS SENT TO THE COMPANY FOR EXECUTION. ON JUNE 15, 1967, THE DISTRICT ENGINEER OFFICE RECEIVED A LETTER FROM DIXIE CONTRACTORS DATED JUNE 12, 1967, ALLEGING MISTAKE IN BID AND REQUESTING CORRECTION. DIXIE CONTRACTORS ALLEGED THAT ITS BID INCLUDED $4,800 FOR HOME OFFICE OVERHEAD AND THAT THE AMOUNT SHOULD HAVE BEEN $48,000; THAT THE BID CONTAINED NOTHING FOR THE CONTRACTOR INSPECTION SYSTEM AND SHOULD HAVE CONTAINED $41,790; AND THAT PROFIT SHOULD BE ADDED TO THE FOREGOING FOR A TOTAL INCREASE IN BID OF $88,393.

IN A LETTER DATED JUNE 20, 1967, THE CONTRACTING OFFICER ADVISED THE COMPANY OF THE DATA REQUIRED TO BE FURNISHED TO SUPPORT THE ALLEGATION OF MISTAKE. BY LETTER DATED JUNE 22, 1967, DIXIE CONTRACTORS RETURNED TO THE CONTRACTING OFFICE CONTRACT AND BONDS PROPERLY EXECUTED AND WITHOUT ANY EXCEPTION BEING TAKEN AS TO CONTRACT PRICE. NOTICE TO PROCEED WAS ISSUED ON JUNE 30, 1967, AND WAS ACKNOWLEDGED BY THE CONTRACTOR ON JULY 3, 1967.

BY LETTER DATED JULY 1, 1967, TO THE CONTRACTING OFFICE, DIXIE CONTRACTORS SUBMITTED THE WORKPAPERS USED IN PREPARATION OF THE BID. THE LETTER STATES THAT THE $41,790 ASSERTED AS CONTRACTOR INSPECTION SYSTEM COST COULD BE SAID TO BE TOO LITTLE OR TOO MUCH BUT THAT SOME AMOUNT CERTAINLY SHOULD BE INCLUDED. THE LETTER FURTHER STATES THAT THE LISTING OF OVERHEAD LABOR CLASSIFICATIONS DOES NOT INCLUDE ANY PROVISION FOR CONTRACTOR INSPECTION SYSTEM. IN SUPPORT OF THE CLAIM FOR HOME OFFICE EXPENSE, THE LETTER STATES THAT THE ERROR IS MATHEMATICAL AS EVIDENCED BY ITS WORKSHEET TITLED "VERDIGRIS RIVER CHANNEL JOB OVERHEAD.' DIXIE CONTENDS THAT THE WORKSHEET CLEARLY INDICATES THAT THE COMPANY INTENDED TO INCLUDE THE AMOUNT OF 24 MONTHS AT $2,000 PER MONTH IN LIEU OF THE $4,800 SHOWN IN THE TOTAL COLUMN. THE CONTRACTING OFFICER IN HIS REPORT STATES AS FOLLOWS:

"I AM OF THE OPINION THAT NO BONA FIDE MISTAKE HAS BEEN SHOWN IN THIS BID. THE ERRORS ALLEGED WERE KNOWN TO THE CONTRACTOR PRIOR TO AWARD, AND YET THE CONTRACT WAS SIGNED WITHOUT QUALIFICATION. THE APPARENT LOW BIDDER'S PRICE ON ITEM NO. 1, CLEARING, EXCEEDED THE GOVERNMENT ESTIMATE BY $99,000.00, SO THE TOTAL ALLEGED ERRORS PLUS PROFIT, $88,393.00, COULD BE INCLUDED IN ITEM NO. 1, CLEARING. THE WORK SHEET SUBMITTED BY THE BIDDER TITLED -VERDIGRIS RIVER CHANNEL JOB OVERHEAD- (EXHIBIT I-2) SHOWS HOME OFFICE 24 MO 2,000 MO SUPPLIES 4800 TOTAL 4800. THE APPARENT LOW BIDDER'S LETTER DATED 1 JULY 1967 SAYS THIS CLEARLY INDICATES THEY INTENDED TO INCLUDE THE SPECIFIC AMOUNT OF 24 MONTHS AT $2,000.00 PER MONTH IN LIEU OF THE $4,800.00 SHOWN IN THE TOTAL COLUMN. IT WOULD BE JUST AS APPROPRIATE TO SAY THE 2000 MO NOTATION ON THE WORKSHEET WAS IN ERROR AND THE $4800 SHOWN FOR SUPPLIES AND IN THE TOTAL COLUMN WAS CORRECT AND WAS THE INTENDED BID. SINCE THERE ARE TWO POSSIBLE AREAS OF MATHEMATICAL ERROR, THE INTENDED BID IS NOT CLEAR AND NO ADJUSTMENT SHOULD BE MADE. IN ANALYZING OTHER ENTRIES IN THE OVERHEAD SECTION FOR SUPPLIES, THE $4,800.00 DOES NOT APPEAR TO BE OUT OF LINE. A SIMILAR COMPUTATION FOR JOB OFFICE SUPPLIES APPEARS AS 24 MOS. X 200 (MO.) EQUALS $4,800.00. THE ALLEGED OMISSION COULD BE EXCESSIVE. THE GOVERNMENT ESTIMATE INCLUDES $12,000.00 FOR HOME OFFICE EXPENSE AS COMPARED TO THE APPARENT LOW BIDDER'S ASSERTED $48,000.00. THE APPARENT LOW BIDDER'S LETTER DATED 1 JULY 1967 SAYS THAT THE $41,790.00 ASSERTED AS CONTRACTOR INSPECTION SYSTEM COST OMITTED FROM THE BID COULD BE ARGUED TO BE TOO LITTLE OR TOO MUCH BUT THAT SOME AMOUNT CERTAINLY SHOULD BE INCLUDED. SOME AMOUNTS INCLUDED IN THE APPARENT LOW BIDDER'S WORK SHEET TITLED VERDIGRIS RIVER CHANNEL JOB OVERHEAD- (EXHIBIT I-2) COULD HAVE BEEN FOR CONTRACTOR INSPECTION SYSTEM. INCLUDED BESIDE OTHER PERSONNEL AND EQUIPMENT ARE 1 ENGINEER $17,500.00, 3 HELPERS $24,000.00, AND 1 PICKUP $3,150.00, FOR A TOTAL OF $44,650.00. THE GOVERNMENT ESTIMATE INCLUDES $30,530.00 FOR CONTRACTOR INSPECTION SYSTEM. THE BIDDER CONTENDS THAT HE HAS OMITTED A PRICE FOR THIS ITEM AND THEN PROCEEDS TO WORK UP AN ESTIMATE OF WHAT HE THINKS HE IS ENTITLED TO. * * *"

THE RULE IS SETTLED THAT A BIDDER, TO PERMIT CORRECTION OF A BID EITHER PRIOR TO OR AFTER AWARD, MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAS BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED AND THE INTENDED BID PRICE. 35 COMP. GEN. 279; 31 ID. 183; 23 ID. 596; 17 ID. 599. NEITHER THE RULE NOR THE PROOF REQUIRED IS ALTERED BY AN AWARD WHICH IS MADE SUBSEQUENT TO A BIDDER'S ALLEGATION OF ERROR BUT PRIOR TO THE SUBMISSION OF EVIDENCE TO SUBSTANTIATE THE ALLEGED ERROR. 38 COMP. GEN. 218. IN THE PRESENT CASE, THE EVIDENCE IS NOT CLEAR AND CONVINCING THAT AN ERROR WAS MADE IN THE BID OR WHAT BID PRICE WAS INTENDED AT THE TIME OF BID PREPARATION.

ACCORDINGLY, IN THE CIRCUMSTANCES, THE CONTRACT SHOULD NOT BE REFORMED.