B-167816, SEP. 19, 1969

B-167816: Sep 19, 1969

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000 WAS MADE ON ITEM SHOWN AS $453.60 AND RECORD SHOWS THAT GOVERNMENT ESTIMATE WAS $5. 425 AND OTHER BIDS RANGED FROM $75 TO $453.60 THE RECORD SUPPORTS CONCLUSION THAT ERROR WAS MADE AND THAT CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR. SINCE CONTRACTOR WILL CONTINUE TO BE LOW ON BASIS OF CORRECTION AND WORK HAS NOT STARTED. KUNZIG: REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 29. BIDDERS WERE REQUIRED TO SUBMIT A BASE BID FOR INSTALLATION OF ALUMINUM SIDING AND ADDITIONAL BIDS ON SIX ALTERNATES COVERING MISCELLANEOUS ITEMS OF ADDITIONAL IMPROVEMENTS WHICH THE GOVERNMENT MIGHT BE ABLE TO INCLUDE IN THE CONTRACT IF THE BASE BID WAS SUFFICIENTLY LOW. THE BIDS WERE OPENED AND OF THE THIRTEEN BIDS RECEIVED.

B-167816, SEP. 19, 1969

CONTRACTS - MISTAKES DECISION TO GENERAL SERVICES ADMINISTRATOR AUTHORIZING CORRECTION OF CONTRACT WITH SOUTHERN ROOFING CO., INC. FOR WORK AT PMDS DEPOT, BATON ROUGE, LOUISIANA. WHERE CONTRACTOR WHO, AFTER AWARD ALLEGES THAT AN ERROR OF $7,000 WAS MADE ON ITEM SHOWN AS $453.60 AND RECORD SHOWS THAT GOVERNMENT ESTIMATE WAS $5,425 AND OTHER BIDS RANGED FROM $75 TO $453.60 THE RECORD SUPPORTS CONCLUSION THAT ERROR WAS MADE AND THAT CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR. SINCE CONTRACTOR WILL CONTINUE TO BE LOW ON BASIS OF CORRECTION AND WORK HAS NOT STARTED, CONTRACT MAY BE CORRECTED.

TO MR. KUNZIG:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 29, 1969, FROM YOUR GENERAL COUNSEL, REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID BY SOUTHERN ROOFING COMPANY, INC. (SOUTHERN ROOFING), ALLEGED AFTER AWARD OF CONTRACT NO. GSA-07B-9315 BY THE PUBLIC BUILDINGS SERVICE, REGION 7, FORTH WORTH, TEXAS, FOR CERTAIN WORK TO BE PERFORMED AT THE PMDS DEPOT, BATON ROUGE, LOUISIANA.

BIDDERS WERE REQUIRED TO SUBMIT A BASE BID FOR INSTALLATION OF ALUMINUM SIDING AND ADDITIONAL BIDS ON SIX ALTERNATES COVERING MISCELLANEOUS ITEMS OF ADDITIONAL IMPROVEMENTS WHICH THE GOVERNMENT MIGHT BE ABLE TO INCLUDE IN THE CONTRACT IF THE BASE BID WAS SUFFICIENTLY LOW. ON MAY 8, 1969, THE BIDS WERE OPENED AND OF THE THIRTEEN BIDS RECEIVED, SOUTHERN ROOFING WAS THE APPARENT LOW BIDDER. ON MAY 23, THE CONTRACT WAS AWARDED TO SOUTHERN ROOFING.

HOWEVER, ON MAY 29, THE FIRM'S PRESIDENT ADVISED YOUR REGIONAL OFFICE IN FORT WORTH THAT IT HAD MADE A MISTAKE IN ITS BID ON ALTERNATE D. BY LETTER OF JUNE 3, THE FIRM SUBMITTED ITS ORIGINAL WORKSHEETS, EXPLAINING THAT A MISTAKE OF $7,000 HAD BEEN MADE IN TRANSPOSING THE FIGURES FROM THE WORKSHEETS TO THE BID FORM, AND REQUESTED A CORRECTION OF ITS BID OR PERMISSION TO WITHDRAW ITS BID. THE WORKSHEETS FOR ALTERNATE D INDICATED THE FOLLOWING:

ALTERNATE D

ERROR

(5962.60) 106 LOUVERS 56.251

5962.88

5 PERCENT 298.14

10 PERCENT 596.29

10 PERCENT 596.29

7453.60

WHILE THE ABOVE COMPUTATIONS SHOW $7,453.60 AS THE AMOUNT COMPUTED FOR ALTERNATE D, THE AMOUNT ENTERED ON THE BID FORM FOR ALTERNATE D WAS ONLY $453.60. THE FIRM ALSO SUBMITTED A LETTER WHICH IT HAD RECEIVED FROM CONSTRUCTION SERVICES COMPANY DATED MAY 20, 1969 (WHICH BOTH COMPANIES ADVISE IS A WRITTEN CONFIRMATION OF A VERBAL COMMITMENT MADE BY CONSTRUCTION SERVICES PRIOR TO THE TIME SOUTHERN ROOFING SUBMITTED ITS BID), QUOTING AN AGGREGATE PRICE OF $4,503 FOR FURNISHING THE 106 LOUVERS F.O.B. ITS FACTORY. THIS WAS THE ONLY PROPOSAL RECEIVED BY SOUTHERN ROOFING FOR THE LOUVERS. SOUTHERN ROOFING STATED IN ITS LETTER OF JUNE 16 THAT THE UNIT PRICE SHOWN ON THE WORKSHEET HAD BEEN COMPUTED BY ADDING TO THE MATERIALS PRICE, THE TRANSPORTATION, INSTALLATION COSTS, AND A PRO RATA SHARE OF SUPERVISION. BY ANOTHER LETTER DATED JUNE 23, 1969, SOUTHERN ROOFING GAVE THE FOLLOWING BREAKDOWN SHOWING THE BASIS FOR THE FIGURES ON THE BID ESTIMATE SHEET:

106 LOUVERS (CONSTRUCTION SERVICES CO.) $4,503.00

TAX 4 PERCENT 180.12

INSTALLATION 1,279.76

5 PERCENT PAYROLL BURDEN AND BOND 298.14

10 PERCENT OVERHEAD, TRUCK, ETC. 596.29

10 PERCENT PROFIT 596.29

$7,453.60

WE WERE ADVISED THAT THE GOVERNMENT'S ESTIMATE FOR ALTERNATE D WAS $5,425 ($3,657 FOR MATERIAL, $1,060 FOR INSTALLATION AND A 15 PERCENT MARK-UP OF $708 FOR OVERHEAD AND PROFIT). BIDS FROM OTHER BIDDERS FOR ALTERNATE D RANGED FROM $75 TO $6,999, THE TWO LOW BIDS FOR ALTERNATE D BEING $75, AND $453.60. IT IS NOTED THAT THE CONTRACTING OFFICER CONSIDERED BOTH BIDS AS BEING OUT OF LINE.

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, RELIEF MAY NOT BE GRANTED FOR THE ERROR SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SEE SALIGMAN V UNITED STATES, 56 F.SUPP. 505 AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF PROBABILITY OF ERROR PRIOR TO AWARD. IN SUCH CASES ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. SEE 45 COMP. GEN. 700, 706; 37 COMP. GEN. 685. OF COURSE, ANY SUCH ADJUSTMENT MAY NOT RESULT IN THE TOTAL CORRECTED PRICE EXCEEDING THE PRICE QUOTED IN THE NEXT LOW ACCEPTABLE OFFER. 37 COMP. GEN. 398; ID. 685. IN THE PRESENT CASE, WE BELIEVE THE RECORD CLEARLY SHOWS NOT ONLY THE EXISTENCE OF THE ALLEGED ERROR AND THE INTENDED BID PRICE, BUT ALSO THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF POSSIBILITY OF ERROR. WHILE ADMITTEDLY THERE WAS ONE OTHER BID FOR ALTERNATE D WHICH WAS LOWER THAN SOUTHERN ROOFING'S BID, IN VIEW OF THE FACT THAT THE GOVERNMENT'S ESTIMATE FOR ALTERNATE D WAS $4,971.40 IN EXCESS OF SOUTHERN ROOFING'S BID OF $453.60 FOR ALTERNATE D, WE THINK THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED ERROR IN BOTH OF THE LOW BIDS ON ALTERNATE D, AND REQUESTED VERIFICATION FROM SOUTHERN ROOFING BEFORE AWARDING THE CONTRACT.

ACCORDINGLY, SINCE SOUTHERN ROOFING'S BID WILL CONTINUE TO BE LOW IF CORRECTED, AND SINCE WORK UNDER THE CONTRACT HAS NOT STARTED, THE CONTRACT SHOULD BE CORRECTED AS ADMINISTRATIVELY RECOMMENDED.

THE FILE TRANSMITTED WITH THE LETTER FROM YOUR GENERAL COUNSEL IS RETURNED.