B-169379, JUN. 18, 1970

B-169379: Jun 18, 1970

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PRICE LESS THAN GOVERNMENT ESTIMATE NOTWITHSTANDING GENERAL RULE THAT WHEN ONLY ONE OFFER IS RECEIVED. CONTRACT SHOULD BE RESCINDED WHERE TOTAL BID PRICE WAS ABOUT 28 PERCENT OF GOVERNMENT ESTIMATE BECAUSE LESSOR'S BUILDER HAD UNDERESTIMATED BUILDING ALTERATION COSTS BY SOME $18. 000 SINCE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO POSSIBILITY OF ERROR AND REQUESTED VERIFICATION. POSTMASTER GENERAL: REFERENCE IS MADE TO A LETTER DATED MARCH 20. REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE TROY REALTY CORPORATION (TROY) TO HAVE BEEN MADE IN ITS OFFER FOR REMODELING AND EXPANDING EXISTING POSTAL PREMISES LEASED TO THE GOVERNMENT. THE RECORD INDICATES THAT THERE WAS NO FORMAL ADVERTISEMENT REQUESTING BIDS AND THAT TROY'S OFFER WAS SUBMITTED AFTER NEGOTIATION BETWEEN TROY AND A DEPARTMENTAL REAL ESTATE OFFICER.

B-169379, JUN. 18, 1970

CONTRACTS--MISTAKES--CONTRACTING OFFICER'S ERROR DETECTION DUTY--PRICE LESS THAN GOVERNMENT ESTIMATE NOTWITHSTANDING GENERAL RULE THAT WHEN ONLY ONE OFFER IS RECEIVED, NO BASIS EXISTS FOR COMPARISON OF BIDS TO PLACE CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR, CONTRACT SHOULD BE RESCINDED WHERE TOTAL BID PRICE WAS ABOUT 28 PERCENT OF GOVERNMENT ESTIMATE BECAUSE LESSOR'S BUILDER HAD UNDERESTIMATED BUILDING ALTERATION COSTS BY SOME $18,000 SINCE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO POSSIBILITY OF ERROR AND REQUESTED VERIFICATION. SEE COMP. GEN. DECS. CITED.

TO MR. POSTMASTER GENERAL:

REFERENCE IS MADE TO A LETTER DATED MARCH 20, 1970, FROM THE ASSISTANT GENERAL COUNSEL, REAL PROPERTY AND PROCUREMENT DIVISION, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE TROY REALTY CORPORATION (TROY) TO HAVE BEEN MADE IN ITS OFFER FOR REMODELING AND EXPANDING EXISTING POSTAL PREMISES LEASED TO THE GOVERNMENT.

THE RECORD INDICATES THAT THERE WAS NO FORMAL ADVERTISEMENT REQUESTING BIDS AND THAT TROY'S OFFER WAS SUBMITTED AFTER NEGOTIATION BETWEEN TROY AND A DEPARTMENTAL REAL ESTATE OFFICER. ON SEPTEMBER 9, 1968, TROY SUBMITTED ITS OFFER TO EXPAND AND MAKE IMPROVEMENTS TO THE PREMISES AND RELEASE THEM TO THE GOVERNMENT FOR A TERM OF 9 YEARS AT AN ANNUAL RENTAL OF $6,167.50, WITH TWO 5-YEAR RENEWAL OPTIONS AT THE SAME RATE. THE OFFER WAS ACCEPTED SEPTEMBER 20, 1968.

IN A LETTER DATED DECEMBER 16, 1968, TROY INFORMED THE CONTRACTING OFFICER, CHIEF, REAL ESTATE BRANCH, THAT ITS BUILDER HAD UNDER ESTIMATED THE COST OF THE BUILDING ALTERATIONS BY SOME $18,000. IN SUPPORT OF ITS ALLEGATION OF MISTAKE, TROY SUBMITTED PHOTOSTATIC COPIES OF THE ESTIMATES FURNISHED TO IT BY ITS BUILDER. THE ORIGINAL ESTIMATE OF MAY 21, 1968, WAS IN THE AMOUNT OF $17,050 AND THE FINAL "BID" FROM TROY'S BUILDER DATED DECEMBER 10, 1968, OR AFTER AWARD, WAS IN THE AMOUNT OF $38,176.26. TROY STATED THAT BECAUSE OF THIS LATEST FINAL BID IT WOULD BE IMPOSSIBLE FOR IT TO COMPLETE THE CONTRACT.

WE HAVE HELD THAT WHERE ONLY ONE BID (OFFER) IS RECEIVED, THERE IS NO BASIS FOR COMPARISON AND, HENCE, THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. 17 COMP. GEN. 560 (1938); 26 ID. 415 (1946); B-155177, NOVEMBER 18, 1964; B 167474, AUGUST 4, 1969. HOWEVER, THERE IS AN ADDITIONAL FACTOR WHICH IS OF PARAMOUNT CONSIDERATION HERE, NAMELY, THE VERY SUBSTANTIAL DIFFERENCE BETWEEN TROY'S OFFER ($17,050) AND A GOVERNMENT ESTIMATE FOR THE WORK ($61,031.25). IN VIEW OF THE FACT THAT THE OFFER WAS ABOUT 28 PERCENT OF THE GOVERNMENT'S ESTIMATE FOR SUCH WORK, WE BELIEVE IT REASONABLE TO CONCLUDE THAT THE CONTRACTING OFFICER SHOULD HAVE ADVISED TROY OF THE GOVERNMENT'S ESTIMATE IN THE COURSE OF NEGOTIATIONS SO THAT TROY COULD HAVE DETERMINED FOR ITSELF WHETHER TO REQUEST VERIFICATION OF ITS BUILDER'S PROPOSAL OF MAY 21, 1968. IN ANY EVENT, WE BELIEVE THAT VERIFICATION OF THE OFFER SHOULD HAVE BEEN REQUESTED BEFORE AWARD.

IN VIEW OF THE FOREGOING AND OUR HOLDING IN B-157843, JANUARY 17, 1966, TO YOUR PREDECESSOR, THE CONTRACT SHOULD BE RESCINDED AS ADMINISTRATIVELY RECOMMENDED.

THE FILES FORWARDED WITH THE LETTERS OF MARCH 20 AND APRIL 23, 1970, ARE RETURNED AS REQUESTED.