B-170190, JUL. 21, 1970

B-170190: Jul 21, 1970

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AFTER NEGOTIATING CONTRACT ON BASIS OF AN OFFER THAT WAS 162% LESS THAN THE GOVT. WAS ADVISED THAT CONTRACTOR HAD OMITTED ITEM OF COST AND FURNISHED EVIDENCE OF ERROR SHOULD BE REGARDED AS HAVING BEEN ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF ERROR AND SHOULD NOT HAVE ACCEPTED OFFER WITHOUT VERIFICATION. SINCE PRICE ADJUSTMENT REQUESTED IS REASONABLE VALUE FOR OMITTED ITEMS. ADJUSTMENT IS APPROVED. SECRETARY: REFERENCE IS MADE TO LETTER DATED JUNE 26. THE ENGINEER'S ESTIMATE FOR THE JOB WAS $13. THE SOLE BID RECEIVED WAS FOR $44. 625 AND WAS REJECTED AS EXCESSIVE. IT WAS DETERMINED. IT IS REPORTED THAT NEGOTIATIONS WERE THEN OPENED LATE IN FEBRUARY 1969 AND THAT TWO OFFERS WERE RECEIVED.

B-170190, JUL. 21, 1970

CONTRACTS -- MISTAKES -- NEGOTIATED PROCUREMENT -- PRICE ADJUSTMENT DECISION TO THE SECRETARY OF INTERIOR, AUTHORIZING ADDITIONAL COMPENSATION TO R. L. MORRISON & SONS, LOW BIDDER FOR PLUMBING ITEMS OMITTED FROM CONTRACT WITH THE BUREAU OF SPORT FISHERIES AND WILDLIFE, MCCLELLANVILLE, SOUTH CAROLINA. CONTRACTING OFFICER WHO, AFTER NEGOTIATING CONTRACT ON BASIS OF AN OFFER THAT WAS 162% LESS THAN THE GOVT. ESTIMATE AND CONSIDERABLY LESS THAN ONLY OTHER OFFER, WAS ADVISED THAT CONTRACTOR HAD OMITTED ITEM OF COST AND FURNISHED EVIDENCE OF ERROR SHOULD BE REGARDED AS HAVING BEEN ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF ERROR AND SHOULD NOT HAVE ACCEPTED OFFER WITHOUT VERIFICATION, SINCE PRICE ADJUSTMENT REQUESTED IS REASONABLE VALUE FOR OMITTED ITEMS, ADJUSTMENT IS APPROVED.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER DATED JUNE 26, 1970, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, REQUESTING OUR DECISION AS TO WHETHER NEGOTIATED CONTRACT NO. 14-16-0004-190 WITH R. L. MORRISON & SONS MAY BE REFORMED BECAUSE OF AN ERROR IN BID ALLEGED AFTER AWARD. THE CONTRACT WORK HAS BEEN COMPLETED AND ACCEPTED ON OCTOBER 29, 1969, WITHIN THE TIME ALLOWED BY THE TERMS OF THE CONTRACT, INCLUDING AN 88-DAY WORK SUSPENSION ORDERED BY THE CONTRACTING OFFICER DUE TO NONDELIVERY OF GOVERNMENT-FURNISHED MATERIAL.

THE BUREAU OF SPORT FISHERIES AND WILDLIFE, MCCLELLANVILLE, SOUTH CAROLINA, ISSUED INVITATION NO. SFW4-15-69 ON JANUARY 27, 1969, FOR SITE PREPARATION AND ERECTION OF A PUBLIC COMFORT STATION AT THE BULLS ISLAND AREA, CAPE ROMAIN NATIONAL WILDLIFE REFUGE, WITH A BID OPENING DATE OF FEBRUARY 24, 1969. THE ENGINEER'S ESTIMATE FOR THE JOB WAS $13,166. THE SOLE BID RECEIVED WAS FOR $44,625 AND WAS REJECTED AS EXCESSIVE. THEREFORE, IT WAS DETERMINED, PURSUANT TO SECTION 1-3.214 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), TO NEGOTIATE THE PROCUREMENT AFTER ADVERTISING HAD FAILED DUE TO THE RECEIPT OF AN EXCESSIVELY HIGH BID.

IT IS REPORTED THAT NEGOTIATIONS WERE THEN OPENED LATE IN FEBRUARY 1969 AND THAT TWO OFFERS WERE RECEIVED, ONE FROM THE ORIGINAL BIDDER IN THE AMOUNT OF $31,783, AND THE OTHER FROM R. L. MORRISON & SONS OF MCCLELLANVILLE FOR $4,995. DESPITE THE EXTREME VARIATIONS IN OFFERS, NO EFFORT WAS MADE TO CONFIRM MORRISON'S OFFER AND IT WAS ACCEPTED ON MARCH 6, 1969.

THE RECORD SHOWS THAT THE CONTRACTOR INFORMED THE CONTRACTING OFFICER BY LETTER DATED APRIL 28, 1969, THAT HE WAS FACED WITH A DEFICIT OF $2,000 TO $2,500 DUE TO HIS UNDERESTIMATING COSTS FOR ITEMS ON WHICH HE HAD INCOMPLETE INFORMATION AT THE TIME HE MADE HIS OFFER. ALSO, HE STATES THAT HE HAD ASSUMED THAT THE PRICE HE QUOTED WOULD BE CONSIDERED TENTATIVE TO SERVE AS A BASIS FOR FURTHER NEGOTIATIONS. BY LETTER OF JULY 31, 1969, THE CONTRACTOR REPEATED HIS CLAIM OF ERROR AND REQUESTED THAT HE BE ALLOWED THE ADDITIONAL AMOUNT OF $2,993.43 FOR PLUMBING ITEMS THAT HAD BEEN OMITTED FROM HIS COMPUTATIONS WHEN HIS OFFER WAS BEING PREPARED. THE CONTRACTOR FURNISHED HIS ORIGINAL WORKSHEET SUBSTANTIATING HIS STATEMENT THAT PLUMBING ITEMS WERE OMITTED FROM HIS COMPUTATIONS, AND A LETTER SHOWING A SUBCONTRACTOR'S QUOTATION WHICH, WHILE NOT ACCEPTED, SERVES TO SHOW A CONNECTION BETWEEN THE AMOUNT QUOTED AND THE ACTUAL COSTS ASSUMED IN DOING THE PLUMBING WORK WITH HIS OWN WORK FORCE. THE CONTRACTOR IS NOT CLAIMING ANY PROFIT, ONLY HIS COSTS WHICH ARE ADMINISTRATIVELY REPORTED TO BE REASONABLE FOR THE JOB PERFORMED.

THE CONTRACTING OFFICER, WITH THE CONCURRENCE OF YOUR DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, HAS DETERMINED THAT THE CONTRACTOR MADE A BONA FIDE MISTAKE IN HIS OFFER AND THAT HE WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR BECAUSE THE GOVERNMENT ESTIMATE WAS 162 PERCENT HIGHER THAN THE OFFERED PRICE. FURTHER, IT HAS BEEN DETERMINED THAT THE UNILATERAL MISTAKE MADE BY THE CONTRACTOR WAS SO APPARENT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO THE POSSIBILITY OF A MISTAKE DUE TO THE WIDE VARIATION BETWEEN THE TWO PRICES QUOTED AND THE ENGINEER'S ESTIMATE. SEE FPR SEC. 1-2.406-1.

WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL GRANT RELIEF IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. WE AGREE WITH THE CONTRACTING OFFICER AND YOUR DEPUTY ASSISTANT SECRETARY THAT THE WIDE DISPARITY BETWEEN THE PRICE QUOTED BY THE CONTRACTOR AND THE GOVERNMENT ENGINEER'S ESTIMATE WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR AND THAT IN SUCH CASE THE OFFER SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. SE 48 COMP. GEN. 672 (1969).

SINCE WE CONCLUDE THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE OF MORRISON'S ERROR, IT FOLLOWS THAT HE CANNOT LEGALLY BE HELD TO THE CONTRACT PRICE. ACCORDINGLY, WE APPROVE AN ADDITIONAL PAYMENT IN THE AMOUNT OF $2,993.43 AS THE REASONABLE VALUE FOR THE PLUMBING ITEMS OMITTED FROM THE INITIAL OFFER AND FURNISHED UNDER THE CONTRACT. SEE 44 COMP. GEN. 383, 386 (1965). REFERENCE SHOULD BE MADE TO THIS DECISION IN THE VOUCHER ON WHICH SUCH PAYMENT IS MADE.

THE ENCLOSURES SUBMITTED WITH THE REQUEST FOR DECISION ARE RETURNED.