B-173507, SEP 21, 1971

B-173507: Sep 21, 1971

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

BECAUSE PACIFIC'S BID WAS 34 PERCENT LOWER THAN THE SECOND LOW BID. THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR AND HIS FAILURE TO VERIFY BEFORE AWARD IS SUFFICIENT BASIS FOR REFORMATION. SECRETARY: REFERENCE IS MADE TO A LETTER DATED AUGUST 17. PWC CONTENDS THAT IT DISCOVERED THE MISTAKE IN ITS BID PRICE SUBSEQUENT TO THE TIME IT WAS AWARDED THE CONTRACT AND HAS SUBMITTED WORKSHEETS TO OUR OFFICE WHICH CLEARLY SHOW A MATHEMATICAL ERROR IN ADDITION OF $1. PWC ALSO CLAIMS THAT ITS BID SHOULD HAVE REFLECTED $158 FOR PROFIT. THE TOTAL AMOUNT CLAIMED IS THUS $1. THE GOVERNMENT'S ESTIMATE FOR THE PROJECT WAS $8. PWC'S BID PRICE WAS $6. IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE ERROR IN PWC'S BID AND THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION FROM PWC BEFORE AWARD.

B-173507, SEP 21, 1971

CONTRACTS - MISTAKE IN BID - REFORMATION GRANTED DECISION ALLOWING REFORMATION OF A CONTRACT BETWEEN THE NAVY AND PACIFIC WEST CONSTRUCTORS, CALLING FOR THE REROOFING OF CERTAIN QUARTERS OF POINT MOLATE, RICHMOND, CALIF. THE MISTAKE, DISCOVERED AFTER AWARD OF THE CONTRACT, RESULTED FROM A MATHEMATICAL ERROR IN ADDITION OF $1,440 WHICH, IN TURN, REFLECTS INCREASES IN PROFIT, BOND PREMIUM AND OVERHEAD. BECAUSE PACIFIC'S BID WAS 34 PERCENT LOWER THAN THE SECOND LOW BID, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR AND HIS FAILURE TO VERIFY BEFORE AWARD IS SUFFICIENT BASIS FOR REFORMATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 17, 1971, FROM THE MANAGER, CONTRACT PROCEDURES BRANCH, NAVAL FACILITIES ENGINEERING COMMAND (NFEC), CONCERNING THE REQUEST OF PACIFIC WEST CONSTRUCTORS (PWC) FOR AN INCREASE IN PRICE UNDER ITS CONTRACT N62474-71-C-2865, INVOLVING THE REROOFING OF CERTAIN QUARTERS AT POINT MOLATE, RICHMOND, CALIFORNIA.

PWC CONTENDS THAT IT DISCOVERED THE MISTAKE IN ITS BID PRICE SUBSEQUENT TO THE TIME IT WAS AWARDED THE CONTRACT AND HAS SUBMITTED WORKSHEETS TO OUR OFFICE WHICH CLEARLY SHOW A MATHEMATICAL ERROR IN ADDITION OF $1,440. BASED ON THAT AMOUNT, PWC ALSO CLAIMS THAT ITS BID SHOULD HAVE REFLECTED $158 FOR PROFIT, $18 FOR BOND PREMIUM AND $144 FOR OVERHEAD. THE TOTAL AMOUNT CLAIMED IS THUS $1,760.

THE GOVERNMENT'S ESTIMATE FOR THE PROJECT WAS $8,800. PWC'S BID PRICE WAS $6,358 WHILE THE OTHER BIDS SUBMITTED REFLECTED PRICES OF $8,600; $8,628; AND $10,500. NFEC, AFTER REVIEWING THIS RANGE OF BID PRICES, IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE ERROR IN PWC'S BID AND THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION FROM PWC BEFORE AWARD. NFEC THEREFORE RECOMMENDS THAT PWC'S CONTRACT BE INCREASED IN PRICE BY $1,760.

WE AGREE WITH THE CONCLUSION REACHED BY NFEC THAT A VERIFICATION OF PWC'S BID SHOULD HAVE BEEN MADE IN VIEW OF THE 34-PERCENT DIFFERENCE BETWEEN THE PWC BID AND THAT OF THE SECOND LOW BIDDER. IN SUCH CIRCUMSTANCES, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR AND HIS FAILURE TO VERIFY THE BID IS SUFFICIENT BASIS FOR REFORMATION OF THE CONTRACT. B-167836, SEPTEMBER 19, 1969.

ACCORDINGLY, PWC'S CONTRACT MAY BE REFORMED TO REFLECT AN INCREASE IN PRICE OF $1,760. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING PAYMENTS TO THE CONTRACTOR.