B-170982, NOV. 18, 1970

B-170982, NOV. 18, 1970

CONTRACTS - MISTAKE IN BID - CANCELLATION APPROVING RECOMMENDATION THAT CONTRACT FOR INSTALLATION OF VINYL WALL COVERING BY JENKINS LINELEUM & TILE CO., AWARDED BY THE VETERANS ADMINISTRATION HOSPITAL, FAYETTEVILLE, N.C., BE CANCELLED FOR ERROR ALLEGED AFTER AWARD. WHEN AN ERROR BASED ON COSTS COMPUTED FROM A 54 INCH HEIGHT WALL COVERING INSTEAD OF THE REQUIRED FLOOR-TO CEILING COVERING, RESULTS IN A BID THAT IS 100% BELOW THE GOVERNMENT'S ESTIMATE FOR THE JOB, CONTRACTING OFFICER IS CONSTRUCTIVELY ON NOTICE OF ERROR IN THE BID AND CONTRACT MAY BE CANCELLED WITHOUT LIABILITY TO THE CONTRACTOR.

TO MR. JOHNSON:

THIS IS IN RESPONSE TO A LETTER DATED OCTOBER 7, 1970, REFERENCE 134G, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, IN WHICH HE RECOMMENDS CANCELLATION OF CONTRACT NO. V565C-199 AWARDED BY THE VETERANS ADMINISTRATION HOSPITAL, FAYETTEVILLE, NORTH CAROLINA, ON SEPTEMBER 2, 1970, UNDER INVITATION NO. 71-17 TO THE JENKINS LINOLEUM AND TILE COMPANY (JENKINS) FOR THE INSTALLATION AT THE HOSPITAL OF VINYL WALL COVERING AND STAINLESS STEEL CORNER GUARDS. THIS ACTION IS RECOMMENDED BECAUSE OF A MISTAKE IN BID ALLEGED BY THE CONTRACTOR FOURTEEN DAYS AFTER AWARD.

INVITATION NO. 71-17, ISSUED ON JULY 27, 1970, REQUESTED BIDS FOR THE FURNISHING OF LABOR, TOOLS AND MATERIAL TO INSTALL APPROXIMATELY 9000 SQUARE FEET OF VINYL WALL COVERING AND 22 STAINLESS STEEL CORNER GUARDS IN BUILDING NO. 1 AT THE HOSPITAL. SEVEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION WHICH WAS OPENED ON AUGUST 25, 1970. THE BIDS RANGED FROM JENKINS' LOW BID PRICE OF $4,622.54 TO THE HIGH BID PRICE OF $6,595. THE GOVERNMENT'S ESTIMATE WAS $9,500.

JENKINS ALLEGES THAT IT FIRST BECAME AWARE OF A MISTAKE IN ITS BID ON SEPTEMBER 16, WHEN ONE OF ITS REPRESENTATIVES, WHILE IN THE COMPANY OF THE ACTING ENGINEERING OFFICER, WAS INSPECTING THE HOSPITAL SITE IN CONNECTION WITH SIMILAR WORK BEING PROPOSED. AT THAT TIME THE ACTING ENGINEERING OFFICER INQUIRED WHETHER JENKINS PLANNED TO FURNISH WALL COVERING EIGHT OR NINE FEET IN HEIGHT FOR THE PROPOSED WORK. JENKINS' REPRESENTATIVE INDICATED THAT IT PLANNED TO FURNISH 54 INCH HEIGHT WALL COVERING, WHICH WAS THE SAME AS THAT TO BE FURNISHED FOR CONTRACT V565C 199. AT THIS POINT THE ACTING ENGINEERING OFFICER ADVISED THE JENKINS REPRESENTATIVE THAT CONTRACT V565C-199 REQUIRED A FLOOR CEILING WALL COVERING. JENKINS' REPRESENTATIVE STATED THAT HE WAS NOT AWARE OF THIS AND THAT JENKINS' BID ON CONTRACT-199 HAD BEEN COMPUTED ON THE BASIS THAT THE BID SPECIFICATIONS ONLY REQUIRED A WALL COVERING OF 54 INCHES IN HEIGHT, WHICH WAS THE SAME AS THAT BEING REPLACED IN CERTAIN AREAS ON THE JOB SITE. HE FURTHER STATED THAT THE EXISTENCE OF 54 INCH WALL COVERING IN A PORTION OF THE AREA LED HIM TO BELIEVE THAT THE NEW WALL COVERING WAS ALSO TO BE ONLY 54 INCHES HIGH.

BY A LETTER DATED SEPTEMBER 17, ACCOMPANIED BY A WORKSHEET, JENKINS CONFIRMED ITS ERROR AND SUBMITTED THE FOLLOWING EXPLANATION:

"IN FIGURING PLANS AND CHECKING HOSPITAL AREA THE PLANS WERE NOT CLEAR TO US AND WE WERE BIDDING ON 54 INCH MATERIAL THAT WAS TO BE HUNG AS THE MATERIAL IS NOW HANGING. WE WERE NOT AWARE THAT THE MATERIAL WAS TO BE HUNG TO THE CEILING IN THIS AREA. PLEASE RECONSIDER AS THIS WAS AN ERROR AND WITH AN ADDITIONAL $1800.00 WE WILL BE ABLE TO PROCEED WITH THE CONTRACT."

THERE IS NO EVIDENCE ON THE FACE OF THE WORKSHEETS THAT JENKINS WAS BIDDING ON THE BASIS OF 54 INCH COVERING RATHER THAN FLOOR TO CEILING COVERING. HOWEVER, PARAGRAPH 1A OF THE "GENERAL REQUIREMENTS" SECTION OF THE INVITATION STATES THAT "THE CONTRACTOR SHALL FURNISH NECESSARY LABOR, TOOLS AND MATERIALS TO INSTALL STAINLESS STEEL CORNER GUARDS AND CEILING HEIGHT VINYL WALL COVERING IN BASEMENT CORRIDOR, BUILDING NO. 1, AS PER SPECIFICATIONS AND DRAWINGS." FURTHER IT IS NOTED THAT JENKINS' ESTIMATE OF HOW MUCH VINYL MATERIAL WOULD BE REQUIRED WAS 666 SQUARE YARDS, WHEREAS THE GOVERNMENT'S ESTIMATE OF THE VINYL REQUIREMENTS WAS 1000 SQUARE YARDS. WE BELIEVE THIS ADEQUATELY ESTABLISHES THAT JENKINS WAS BIDDING ON THE BASIS OF AN ERRONEOUS HEIGHT FOR THE VINYL COVERING, AND WE THEREFORE CONCLUDE THAT JENKINS SUBMITTED AN ERRONEOUS BID PRICE.

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. B-169780, MAY 26, 1970; B-168895, FEBRUARY 12, 1970; B-167745, SEPTEMBER 2, 1969. FACTORS SUCH AS THE PRICES QUOTED BY OTHER BIDDERS AND THE GOVERNMENT'S COST ESTIMATE HAVE BEEN CONSIDERED RELEVANT TO A DETERMINATION WHETHER A CONTRACTING OFFICER IS CHARGEABLE WITH NOTICE OF ERROR IN A BID PRICE AND SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO ITS ACCEPTANCE.

IN THE PRESENT CASE JENKINS' BID WAS 25 PERCENT LOWER THAN THE SECOND LOW BID AND OVER 100 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE. WHILE IT NOW APPEARS, FROM A COMPARISON WITH THE BIDS RECEIVED, THAT THE GOVERNMENT'S ESTIMATE WAS HIGH, IT IS OUR OPINION THAT THE DISCREPANCY BETWEEN JENKINS' BID PRICE, THE OTHER BIDS, AND THE GOVERNMENT'S ESTIMATE WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR AND REQUIRE HER TO REQUEST CONFIRMATION OF JENKINS' BID.

SINCE ACCEPTANCE OF A BID WITH KNOWLEDGE, EITHER CONSTRUCTIVE OR ACTUAL, OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT, AND SINCE NO WORK HAS BEEN PERFORMED UNDER THE CONTRACT, THE CONTRACT MAY BE CANCELLED, AS ADMINISTRATIVELY RECOMMENDED, WITHOUT LIABILITY TO THE CONTRACTOR.

THE FILE ENCLOSED WITH THE DIRECTOR'S LETTER OF OCTOBER 7 IS RETURNED.