B-167836, SEP. 19, 1969

B-167836, SEP. 19, 1969

CONTRACTS - MISTAKES DECISION TO SECRETARY OF AGRICULTURE AUTHORIZING MODIFICATION OF CONTRACT BETWEEN ALLEN ELECTRIC AND FOREST SERVICE BECAUSE OF MISTAKE IN BID. BID WHICH WAS 27 PERCENT BELOW GOVERNMENT ESTIMATE AND CONSIDERABLY LESS THAN NEXT LOW BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. SINCE ERROR AS WELL AS INTENDED PRICE IS ESTABLISHED INCREASE IN PRICE IS AUTHORIZED. HOWEVER, AS TO ITEM THAT WAS OMITTED, THERE IS NO SUBSTANTIATION IN THE RECORD AND SUCH AMOUNT MAY NOT BE INCLUDED IN BID PRICE.

TO MR. SECRETARY:

WE REFER TO A LETTER (WITH ATTACHMENTS) DATED SEPTEMBER 3, 1969, FROM THE DIRECTOR OF THE OFFICE OF PLANT AND OPERATIONS, FORWARDING FOR OUR CONSIDERATION THE CLAIM OF ALLEN ELECTRIC THAT ITS BID, UPON WHICH FOREST SERVICE CONTRACT NO. 26-2268 WAS BASED, WAS ERRONEOUS.

THE ADMINISTRATIVE RECORD INDICATES THAT INVITATION FOR BIDS NO. 26 69-95 WAS ISSUED ON MAY 12, 1969, BY THE UNITED STATES FOREST SERVICE, MISSOULA, MONTANA. BIDS WERE INVITED FOR CERTAIN MODIFICATIONS TO THE ELECTRICAL SYSTEMS AT THE BELT CREEK, WHITE SULPHUR SPRINGS, AND SUN RIVER RANGER STATIONS, LEWIS AND CLARK NATIONAL FOREST, MONTANA. NO BIDDERS ATTENDED THE BID OPENING ON JUNE 3, 1969. THE ABSTRACT OF BIDS DISCLOSES THAT BIDS WERE RECEIVED FROM THE FOLLOWING BIDDERS IN THE STATED AMOUNTS:

BIDDER PROJECT

WHITE SULPHUR

BELT CREEK SPRINGS SUN RIVER

---------- ------------- --------- ALLEN ELECTRIC

$3,080 $1,760 $5,420 ROWE ELECTRIC CO. 3,215 3,050 4,004 MIDLAND ELECTRIC CO. 3,989 3,666 4,293 PALMQUIST ELECTRIC

NO BID 4,374 4,226 THE GOVERNMENT ESTIMATE FOR THE BELT CREEK JOB WAS $2,000; FOR WHITE SULPHUR SPRINGS, $2,400; AND FOR SUN RIVER, $3,100.

PROVISION WAS MADE IN THE INVITATION FOR THE AWARD OF EACH PROJECT INDIVIDUALLY TO ANY COMBINATION OF BIDDERS, OR OF ALL THREE PROJECTS TOGETHER TO THE SAME BIDDER. AFTER RECEIPT OF BIDS, IT WAS DETERMINED THAT NO AWARD WOULD BE MADE ON THE SUN RIVER PROJECT DUE TO LACK OF FUNDS. THEREFORE, SINCE ALLEN ELECTRIC WAS LOW BIDDER ON THE TWO REMAINING PROJECTS, AWARD THEREOF WAS MADE TO THAT FIRM ON JUNE 12, 1969. ALLEN ELECTRIC HAD NOT BEEN REQUESTED TO VERIFY ITS BID.

AFTER AWARD, ALLEN ELECTRIC WAS CONTACTED BY TELEPHONE TO MAKE ARRANGEMENTS FOR A PREWORK MEETING. ON THIS OCCASION, THE FOREST SERVICE WAS ADVISED THAT AN ERROR HAD BEEN MADE IN PREPARATION OF ALLEN ELECTRIC'S BID ON THE WHITE SULPHUR SPRINGS PROJECT. THE FIRM WAS REQUESTED TO TRANSMIT ITS ORIGINAL WORKSHEETS TO THE FOREST SERVICE, AND THESE PAPERS HAVE BEEN INCLUDED IN THE FILE FORWARDED TO OUR OFFICE. THE CONTRACTOR'S REQUEST TO WITHDRAW FROM THAT PORTION OF THE CONTRACT RELATING TO THE WORK AT WHITE SULPHUR SPRINGS WAS DENIED BY THE CONTRACTING OFFICE. IT APPEARS FROM THE CONTRACTING OFFICER'S STATEMENT THAT PERFORMANCE AT WHITE SULPHUR SPRINGS HAS BEEN COMPLETED.

THE ADMINISTRATIVE REPORT CONTAINS THE FOLLOWING STATEMENT BY THE CONTRACTING OFFICER: "IN VIEW OF THE CONTRACTOR'S BID OF $1,760.00 UNDER ITEM 3 (WHITE SULPHUR SPRINGS) IN RELATION TO THE ENGINEER'S ESTIMATE OF $2,400.00 AND THE NEXT LOW BID OF $3,050.00, WE SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE ERROR AND REQUESTED VERIFICATION OF THE CONTRACTOR'S BID. WE NORMALLY REQUEST VERIFICATION OF THE CONTRACTOR'S BID IN SITUATIONS SUCH AS THIS.'

WE AGREE THAT, IN VIEW OF THE CIRCUMSTANCES, THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE POSSIBILITY OF AN ERROR IN ALLEN ELECTRIC'S BID ON THE WHITE SULPHUR SPRINGS PROJECT. NOT ONLY WAS THE BID CONSIDERABLY LESS THAN THE ESTIMATE AND THE NEXT LOW BID, BUT AN EXAMINATION OF ALL THE BIDS RECEIVED IN COMPARISON WITH THE RESPECTIVE ESTIMATES SHOULD ALSO HAVE INDICATED THAT THE GOVERNMENT ESTIMATES TENDED TO BE CONSERVATIVE. THEREFORE, A BID ALMOST 27 PERCENT BELOW SUCH AN ESTIMATE SHOULD HAVE BEEN SUSPECT.

CORRECTION IS THEREFORE WARRANTED IN ORDER TO REFLECT THE BID PRICE ACTUALLY INTENDED. THE WORKSHEETS ON WHITE SULPHUR SPRINGS CONSIST OF THREE FULL PAGES, WITH A SUMMARY APPEARING ON THE TOP OF THE FOURTH. ALLEN ELECTRIC HAS STATED IN ITS LETTER OF JUNE 23, 1969, THAT TWO SEPARATE ERRORS OCCURRED. THE FIRST WAS THE FAILURE TO CARRY FORWARD TO THE FOURTH PAGE THE FULL AMOUNT OF LABOR HOURS REQUIRED. THE SUMMARY INDICATES THAT THE FIGURE OF 77 HOURS WAS USED IN COMPUTING THE BID. THIS TOTAL IS CLEARLY THE SUM OF LABOR HOURS APPEARING ON ONLY THE SECOND OF THE THREE BASIC PAGES. THE LABOR HOURS LISTED ON THE FIRST AND THIRD PAGES ARE NOT REFLECTED IN THE SUMMARY APPEARING ON THE TOP OF THE FOURTH PAGE. ALLEN ELECTRIC HAS STATED THAT THE SHORTAGE AMOUNTS TO 146 HOURS. AT $5.50 PER HOUR (THE FIGURE ACTUALLY USED IN COMPUTING THE FIRM'S LABOR COSTS), THE DOLLAR SHORTAGE IS SAID TO BE $803.

HOWEVER, IT HAS BEEN ADMINISTRATIVELY NOTED THAT THE SUM OF LABOR HOURS ON PAGES 1 AND 3 IS ACTUALLY 160. WE HAVE EXAMINED THE WORKSHEETS CAREFULLY AND, IN OUR OPINION, THE ACTUAL LABOR SHORTAGE IS IN FACT 160 HOURS. WE DO NOT KNOW THE REASON WHY ALLEN ELECTRIC'S CLAIM STATES THAT THE BID WAS SHORT ONLY 146 HOURS. IN ANY EVENT, THE EVIDENCE SUBMITTED DEMONSTRATES THAT THE ERROR WAS 160 HOURS AND THAT THE BID ACTUALLY INTENDED WOULD HAVE INCLUDED 237 HOURS OF LABOR, NOT 77. THEREFORE, USING THE HOURLY RATE OF $5.50 AND ALLEN ELECTRIC'S STATED METHOD OF COMPUTING OVERHEAD AND PROFIT, THE RESULTING INCREASE TO WHICH THE FIRM IS ENTITLED IS $1,064.80.

THE SECOND ERROR WAS THE OMISSION, IN COMPUTING THE COST OF MATERIALS, OF THE COST OF A MERCURY YARD LIGHT. THE COST IS STATED TO BE $192.50. EXAMINATION OF THE WORKSHEETS REVEALS THAT THE COST OF ONE MERCURY VAPOR LAMP AND BULB, WITH PHOTO CELL, WAS NOT LISTED. ALLEN ELECTRIC'S JUNE 23 LETTER INDICATES THAT IT WAS AWAITING A QUOTATION ON THIS ITEM, BUT THAT THE QUOTE DID NOT ARRIVE AND THE BID PRICE WAS COMPUTED WITHOUT THE QUOTATION.

EVEN ASSUMING THAT THIS OMISSION WAS INADVERTENT, THE REQUEST FOR $192.50 CANNOT BE GRANTED. THERE IS NO SUBSTANTIATION IN THE RECORD TO SUPPORT THE CONTRACTOR'S ALLEGATION CONCERNING THE COST OF THIS COMPONENT NOT INCLUDED IN THE BID PRICE.

ACCORDINGLY, ON THE BASIS OF THE PAPERS SUBMITTED TO OUR OFFICE, ALLEN ELECTRIC IS ENTITLED TO AN INCREASE OF $1,064.80 IN THE CONTRACT PRICE UNDER FOREST SERVICE CONTRACT NO. 26-2268. THE DOCUMENTS ARE RETURNED AS REQUESTED.