B-162916, MAR. 27, 1968

B-162916: Mar 27, 1968

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NEWTON: REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 10. THE PROJECT WAS SET-ASIDE FOR SMALL BUSINESS AND BIDDERS WERE ADVISED THAT THE ESTIMATED COST RANGE WAS LESS THAN $25. 410 WAS THE LOWEST RECEIVED. AWARD WAS MADE TO JAMSAR ON MAY 31. THE CONTRACTOR WAS ADVISED THAT THE SPECIFICATIONS FOR INTERIOR PAINTING REQUIRED THE PAINTING OF ALL WORK SPACE OR ROOMS ON THE SECOND AND THIRD STORIES IN ADDITION TO THE CORRIDORS AND RESTROOMS ON THESE FLOORS. JAMSAR STATED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN FROM PAST EXPERIENCE IN PAINTING THE STORIES OF FEDERAL BUILDING NO. 1. THAT THE BID OF JAMSAR COULD NOT POSSIBLY HAVE INCLUDED THE PAINTING OF THE EXTERIOR OF THE BUILDING AND THE ENTIRE SPACES AND AREAS ON THE SECOND AND THIRD STORIES OF SUCH BUILDING.

B-162916, MAR. 27, 1968

TO MR. L. J. NEWTON:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 10, 1967, WITH ENCLOSURES, ON BEHALF OF JAMSAR, INC., CONCERNING ITS CLAIM FOR ADDITIONAL COMPENSATION UNDER CONTRACT NO. GS-03B-15019.

ON APRIL 24, U.1967THE GENERLL SERVICES ADMINISTRATION (GSA), REGION 3, PUBLIC BUILDINGS SERVICE, ISSUED AN INVITATION FOR BIDS FOR INTERIOR AND EXTERIOR PAINTING OF FEDERAL BUILDING NO. 1, WASHINGTON, D.C. THE PROJECT WAS SET-ASIDE FOR SMALL BUSINESS AND BIDDERS WERE ADVISED THAT THE ESTIMATED COST RANGE WAS LESS THAN $25,000. MR. JAMESSARIS, PRESIDENT OF JAMSAR, ATTENDED THE BID OPENING ON MAY 23, 1967, AND OF THE SIX BIDS RECEIVED, THE BID OF JAMSAR, INC., IN THE LUMP-SUM AMOUNT OF $15,410 WAS THE LOWEST RECEIVED. AWARD WAS MADE TO JAMSAR ON MAY 31, 1967, AND MR. SARIS ACKNOWLEDGED RECEIPT OF THE NOTICE TO PROCEED ON JUNE 12, 1967.

AT A PRE-CONSTRUCTION CONFERENCE HELD ON JUNE 14, 1967, A DISPUTE AROSE BETWEEN GOVERNMENT REPRESENTATIVES AND JAMSAR AS TO THE INTERIOR PAINTING REQUIREMENTS CALLED FOR BY SECTION 4 OF THE CONTRACT SPECIFICATIONS. IN A LETTER TO GSA DATED JUNE 15, 1967, MR. SARIS STATED THAT GOVERNMENT REPRESENTATIVES CONTENDED THAT SECTION 4, INTERIOR PAINTING, CALLED FOR THE PAINTING OF ALL SURFACES OF THE ENTIRE INTERIOR OF THE SECOND AND THIRD STORIES OF FEDERAL BUILDING NO. 1. HOWEVER, MR. SARIS ADVISED REPRESENTATIVES OF THE GOVERNMENT THAT IN ESTIMATING THE JOB, HE INCLUDED ONLY THE COSTS FOR PAINTING THE AREAS IN THE CORRIDORS AND RESTROOMS IN THE SECOND AND THIRD STORIES. MR. SARIS REQUESTED THAT THE CONTRACTING OFFICER REVIEW THE MATTER AND RENDER HIS OPINION.

IN A FINAL DECISION BY THE CONTRACTING OFFICER DATED JULY 6, 1967, THE CONTRACTOR WAS ADVISED THAT THE SPECIFICATIONS FOR INTERIOR PAINTING REQUIRED THE PAINTING OF ALL WORK SPACE OR ROOMS ON THE SECOND AND THIRD STORIES IN ADDITION TO THE CORRIDORS AND RESTROOMS ON THESE FLOORS. THE CONTRACTING OFFICER STATED THAT SUBPARAGRAPHS A (1) AND (2) OF SECTION 4- 02 OF THE CONTRACT SPECIFICATIONS REQUIRE THE CONTRACTOR TO REPAIR, CLEAN, AND PAINT THE SURFACES OF ALL WORK SPACES OR ROOMS AND PUBLIC AREAS, SUCH AS CORRIDORS AND RESTROOMS, ON THE SECOND AND THIRD STORIES OF THE BUILDING.

JAMSAR APPEALED TIMELY FROM THE FINAL DECISION OF THE CONTRACTING OFFICER CONTENDING THAT THE SPECIFICATIONS DID NOT REQUIRE THE ENTIRE AREA OF THE TWO FLOORS TO BE PAINTED AND THE GOVERNMENT'S ESTIMATE DID NOT JUSTIFY SUCH AN OPERATION. JAMSAR REQUESTED ADDITIONAL COMPENSATION FOR INTERIOR REPAIRING, CLEANING, AND PAINTING OF THE TWO STORIES OF THE BUILDING, OTHER THAN THE CORRIDORS, RESTROOMS, AND WORK SPACES OR ROOMS WITHIN THE CORRIDORS. IN A SUPPORTING BRIEF WHICH ACCOMPANIED THE NOTICE OF APPEAL, JAMSAR STATED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN FROM PAST EXPERIENCE IN PAINTING THE STORIES OF FEDERAL BUILDING NO. 1, AND FROM THE GOVERNMENT ESTIMATE OF $16,200, THAT THE BID OF JAMSAR COULD NOT POSSIBLY HAVE INCLUDED THE PAINTING OF THE EXTERIOR OF THE BUILDING AND THE ENTIRE SPACES AND AREAS ON THE SECOND AND THIRD STORIES OF SUCH BUILDING, BECAUSE THE PAINTING OF THE EXTERIOR OF THE BUILDING ALONE WOULD HAVE REASONABLY APPROXIMATED $14,000. THEREFORE, JAMSAR CONTENDS THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN THE BID OF JAMSAR DID NOT INCLUDE THE PAINTING OF ALL THE SPACES AND AREAS IN THE ENTIRE SECOND AND THIRD STORIES OF THE BUILDING, OTHERWISE HE WAS DUTY BOUND TO REQUEST JAMSAR TO VERIFY ITS BIDS FOR A POSSIBLE MISTAKE BEFORE AWARD.

A HEARING WAS HELD BEFORE THE GSA BOARD OF CONTRACT APPEALS ON OCTOBER 9, 10 AND 16, 1967. AT THE CONCLUSION OF THE HEARING, YOU REQUESTED THAT THE BOARD OF CONTRACT APPEALS REFRAIN FROM ISSUING A DECISION ON THE APPEAL UNTIL AFTER THE MATTER HAD BEEN SUBMITTED TO OUR OFFICE AND A DECISION ON THE CLAIM HAD BEEN RENDERED. IT WAS DETERMINED THAT PERFORMANCE OF THE CONTRACT, INCLUDING THE PAINTING OF THE DISPUTED AREAS, WAS SUBSTANTIALLY COMPLETED ON OCTOBER 1, 1967, THE LAST DAY OF THE CONTRACT PERIOD AS EXTENDED.

IN ANALYZING YOUR CLAIM FOR ADDITIONAL COMPENSATION UNDER THE CONTRACT, IT APPEARS THAT RELIEF IS SOUGHT UNDER TWO THEORIES. THE FIRST THEORY ADVANCED IS THAT THE INTERIOR AREAS IN DISPUTE ARE NOT REQUIRED TO BE PAINTED UNDER THE CONTRACT AND THE CONTRACTING OFFICER'S DECISION THAT JAMSAR WAS REQUIRED TO PAINT THE ENTIRE AREA OF THE TWO FLOORS CONSTITUTED A CONSTRUCTIVE CHANGE FOR WHICH THE CONTRACTOR IS ENTITLED TO AN EQUITABLE ADJUSTMENT UNDER THE CONTRACT CHANGES CLAUSE.

THE SECOND BASIS OF YOUR CLAIM FOR ADDITIONAL COMPENSATION RESTS UPON YOUR CONTENTION THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE KNOWLEDGE THAT THE BID WAS CLEARLY OUT OF LINE WITH THE OTHER BIDS, AND SINCE HE DID NOT ASK JAMSAR TO VERIFY ITS BID, THE CONTRACTING OFFICER TOOK ADVANTAGE OF THE SITUATION BY HIS FAILURE TO ACT.

THE QUESTION OF WHETHER JAMSAR IS ENTITLED TO AN EQUITABLE ADJUSTMENT UNDER THE CHANGES CLAUSE IS PENDING BEFORE THE BOARD AND OUR OFFICE WILL TAKE NO ACTION REGARDING THAT MATTER SINCE, UNDER THE CONTRACT DISPUTES CLAUSE, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT MUST BE DECIDED BY THE CONTRACTING OFFICER, SUBJECT TO REVIEW BY THE BOARD OF APPEALS. SEE B-161067, MARCH 27, 1967. SHOULD THE BOARD DENY YOUR APPEAL, YOU MAY THEN, IF YOU BELIEVE SUCH DENIAL TO BE ERRONEOUS IN POINT OF FACT OR LAW, REQUEST OUR REVIEW OF THE BOARD'S DECISION FOR CONFORMANCE TO THE FINALITY STANDARDS SET FORTH IN THE WUNDERLICH ACT, 41 U.S.C. 321, 322.

HOWEVER, OUR OFFICE MAY CONSIDER THE ALLEGATION OF ERROR IN BID AND THE REQUEST FOR RELIEF ON ACCOUNT THEREOF. 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. SEE B 159930, NOVEMBER 4, 1966.

SIX BIDS WERE RECEIVED IN THE FOLLOWING AMOUNTS:$15,410; $19,000; $23,775; $23,900; $24,705; $82,000. THE GOVERNMENT ESTIMATE WAS $16,200. THE ERRORS INVOLVED IN THIS ESTIMATE WERE NOT DISCOVERED UNTIL OCTOBER 1967, WHEN THE ESTIMATOR WAS REVIEWING THE MATTER IN PREPARING TO TESTIFY AT THE HEARING BEFORE THE BOARD. BUT ON MAY 31, 1967, WHEN THE CONTRACT WAS AWARDED, THE CONTRACTING OFFICER HAD NO KNOWLEDGE THAT THE GOVERNMENT'S ESTIMATE WAS ERRONEOUS.

IN OUR OPINION, THE DIFFERENCE BETWEEN JAMSAR'S BID PRICE AND THAT OF THE OTHER BIDDERS WAS NOT SO GREAT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF AN ERROR IN THE LOW BID, PARTICULARLY IN VIEW OF THE GOVERNMENT'S ESTIMATE AT THE TIME OF THE RECEIPT OF BIDS AND THE MAKING OF THE AWARD. THE RECORD BEFORE US INDICATES THAT GSA EXPERIENCE HAS SHOWN THAT A LARGE RANGE IN THE BID PRICES IS NOT UNUSUAL WHEN LUMP-SUM BIDS ARE SOLICITED FOR PAINTING WORK. IN OUR OPINION, THE CONTRACTING OFFICER WAS UNDER NO DUTY TO REQUEST JAMSAR TO VERIFY ITS BID. SINCE THE BIDS SUBMITTED WERE LUMP SUM BIDS, THE CONTRACTING OFFICER COULD HAVE DONE NO MORE THAN POINT OUT THE DIFFERENCE BETWEEN THE JAMSAR BID AND THE OTHER BIDS RECEIVED. MR. SARIS ALREADY HAD KNOWLEDGE OF THE BID PRICES SINCE HE WAS PRESENT AT THE BID OPENING.

YOU CONTEND THAT THE CONTRACTING OFFICER KNEW OR SHOULD BE CHARGED WITH CONSTRUCTIVE KNOWLEDGE THAT THE ESTIMATE WAS NOT REALISTIC, BECAUSE IN 1965, THIS SAME BUILDING WAS PUBLICLY ADVERTISED FOR INTERIOR PAINTING. HOWEVER, THE PREVIOUS PAINTING CONTRACT WAS FOR THE INTERIOR PAINTING OF THE ENTIRE AREA OF THE FIFTH AND SIXTH FLOORS AND ALL CORRIDOR SPACES ON THE SECOND, THIRD, FOURTH AND GROUND FLOORS, AS INDICATED ON THE DRAWINGS. THE CONTRACT WHICH IS INVOLVED HERE IS FOR THE INTERIOR PAINTING OF THE SECOND AND THIRD FLOORS AND PAINTING OF ALL EXTERIOR SURFACES OF THE BUILDING PREVIOUSLY PAINTED. IN VIEW OF THE DIFFERENCES BETWEEN THE TWO CONTRACTS, IT IS APPARENT THAT THE AMOUNT OF THE 1965 CONTRACT PRICE IS OF NO VALUE IN DETERMINING WHETHER THERE WAS AN OBVIOUS MISTAKE IN JAMSAR'S BID PRICE OF $15,410.

IN VIEW OF THE ABOVE, IT IS OUR OPINION THAT THERE WAS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF A PROBABILITY OF ERROR IN THE BID. SEE 39 COMP. GEN. 405. ON THE BASIS OF THE RECORD BEFORE US, IT APPEARS THAT ACCEPTANCE OF THE BID WAS MADE IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS OF THE PARTIES THERETO. SEE M. H. OGDEN AND EDWIN DOUGHERTY V UNITED STATES, 102 CT. CL. 249; SALIGMAN ET AL. V UNITED STATES, 56 F.SUPP. 505.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD AND THE LAW APPLICABLE THERETO, THERE APPEARS TO BE NO BASIS FOR ANY RELIEF TO JAMSAR ON ACCOUNT OF THE ALLEGED MISTAKE IN BID.