B-174706, FEB 8, 1972

B-174706, FEB 8, 1972

CONTRACTS - MISTAKES IN BID DECISION ALLOWING RELIEF TO CITY ELECTRIC, INC., MANSON CONSTRUCTION AND ENGINEERING CO., AND OSBERG CONSTRUCTION COMPANY FOR MISTAKES IN BID ON A CONTRACT AWARDED BY THE BUREAU OF RECLAMATION FOR CONSTRUCTION ON THE COLUMBIA BASIN PROJECT, GRAND COULEE, WASH. SINCE CLAIMANTS HAVE SATISFACTORILY ESTABLISHED THE ERROR IN BID, THE COMP. GEN. HAS NO OBJECTION TO ADJUSTMENT OF THE CONTRACT UNIT PRICES.

TO MR. SECRETARY:

WE REFER TO LETTER OF DECEMBER 7, 1971, FROM THE DEPUTY ASSISTANT SECRETARY, REQUESTING A DECISION ON THE CLAIM OF THE JOINT VENTURE OF CITY ELECTRIC, INC., MANSON CONSTRUCTION AND ENGINEERING CO., AND OSBERG CONSTRUCTION COMPANY (CMO), FOR A CONTRACT PRICE ADJUSTMENT TO CORRECT MISTAKES IN THE BID SUBMITTED UNDER SPECIFICATIONS NO. DC-6905, ISSUED BY THE BUREAU OF RECLAMATION FOR CONSTRUCTION ON THE COLUMBIA BASIN PROJECT, GRAND COULEE, WASHINGTON.

BIDS ON THE SPECIFICATIONS WERE OPENED SEPTEMBER 28, 1971. THE CMO BID IN THE TOTAL AMOUNT OF $6,360,000.02 WAS THE LOWEST RECEIVED. AFTER THE OPENING OF BIDS, CMO ALLEGED ERRORS IN THE BID. AS THE BID WAS LOWER THAN THE NEXT LOW BID BY AN AMOUNT GREATER THAN THE AMOUNT OF ERRORS ALLEGED, THE CONTRACTING OFFICE, WITH THE CONSENT OF THE LOW BIDDER, MADE AN AWARD TO CMO, SUBJECT TO ITS RIGHT TO SUBMIT A CLAIM FOR AN ADJUSTMENT IN THE CONTRACT PRICE BECAUSE OF THE MISTAKES IN THE BID.

CMO HAS ALLEGED AN ERROR IN THE BID IN THE TOTAL AMOUNT OF $305,650. FURTHER, CMO HAS AGREED TO A WAIVER OF $144,706 IN ACCORDANCE WITH THE PROVISIONS AND FORMULA IN THE SOLICITATION FOR BIDS "MISTAKES IN BIDS" CLAUSE. THE BIDDER HAS ALSO OFFERED TO REDUCE ITS CLAIM BY AN ADDITIONAL $100.

CMO HAS CONTENDED THAT ITS BID PRICE PER UNIT ON ITEM 7 SHOULD HAVE BEEN $5.98 INSTEAD OF $2.83 AND THAT ON ITEM 8 IT SHOULD HAVE BEEN $5.61 INSTEAD OF $2.46. ITEM 7 CALLS FOR FURNISHING AND PLACING AN ESTIMATED 35,000 CUBIC YARDS OF GRAVEL SURFACING AND ITEM 8 FOR FURNISHING AND STOCKPILING AN ESTIMATED 10,000 CUBIC YARDS OF GRAVEL SURFACING. CMO HAS ALLEGED THAT IT FAILED TO INCLUDE THE COST OF $3.15 PER CUBIC YARD FOR MATERIALS FOR THESE ITEMS IN ITS ORIGINAL WORKSHEETS AND IN THE FINAL SPREAD SHEET WHICH WERE SUBMITTED AS EVIDENCE BY THE BIDDER. THESE DOCUMENTS SHOW COSTS FOR LABOR, EQUIPMENT AND SUPPLIES, BUT NOT FOR MATERIAL. CMO HAS STATED THAT THE COST FOR THE GRAVEL MATERIAL WAS OVERLOOKED IN THE RUSH OF COMPILING THE BID. THIS IS SUPPORTED BY AFFIDAVITS OF TWO CMO OFFICIALS RESPONSIBLE FOR PREPARING THIS PART OF THE BID. OMISSION OF THE GRAVEL MATERIAL UNIT PRICE FROM THE BID COMPUTATION HAS RESULTED IN AN UNDERESTIMATE OF $110,250 ON ITEM 7 AND $31,500 ON ITEM 8.

CMO HAS ALLEGED NEXT A MISTAKE IN THE BID ON ITEM 47 FOR INSTALLING NINE 500-KILOVOLT POWER CIRCUIT BREAKERS WITH CURRENT TRANSFORMERS. IT HAS CONTENDED THAT THE UNIT PRICE OF $4,454 SHOULD BE $16,054. THIS MISTAKE OCCURRED WHEN LABOR COSTS WERE CALCULATED FOR THE INSTALLATION. THE WORKSHEET FIGURE OF 1,320 MAN-HOURS PER UNIT WAS EITHER DEFECTIVELY RECORDED BY A CALCULATING MACHINE AS 320 OR MISREAD 320 BY THE ESTIMATOR. THE RESULT OF MULTIPLYING 320 BY NINE UNITS WAS 2,880 MAN-HOURS. HOWEVER, THE CORRECT EXTENSION SHOULD HAVE BEEN 11,880 MAN-HOURS. AT THE $11.60 LABOR RATE PER HOUR SHOWN ON THE WORKSHEETS, THE CORRECT TOTAL FOR ITEM 47 SHOULD HAVE BEEN $144,486. THE BID ON ITEM 47 IS THEREFORE UNDERSTATED BY $104,400 OR $11,600 PER UNIT.

THE FINAL ERROR ALLEGED BY CMO IS IN ITEM 59 PROVIDING FOR THE FURNISHING AND INSTALLING OF GROUNDING CONNECTIONS. THE WORKSHEETS FURNISHED BY CMO SHOW THAT THE MAN-HOURS FOR THE ITEM WERE ESTIMATED AT 7,422, BUT THAT THEY WERE CARRIED FORWARD TO SUMMARY SHEET AS 2,422 MAN HOURS WHERE THEY WERE EXTENDED BY AN $11.90 PER HOUR LABOR RATE. AS A RESULT OF THE 5,000 MAN-HOUR ERROR, THE BID ON ITEM 59 WAS UNDERESTIMATED BY $59,500. COMPLY WITH THE OFFERED $100 REDUCTION IN THE CLAIM, CMO HAS PROPOSED THAT THE UNIT PRICE FOR ITEM 59 BE INCREASED BY ONLY $.60 PER UNIT FOR THE 99,000 POUNDS OF MATERIAL ESTIMATED IN THE BID SCHEDULE, WHICH WOULD RESULT IN A TOTAL INCREASE OF $59,400.

CMO HAS SATISFACTORILY ESTABLISHED THE ERROR IN THE BID AND THE INTENDED UNIT PRICES FOR THE ITEMS INVOLVED. ACCORDINGLY, THE CONTRACT UNIT PRICES MAY BE ADJUSTED IN THE MANNER PROPOSED BY CMO. OF COURSE, THE EXACT AMOUNT OF THE TOTAL ADJUSTMENTS WILL DEPEND UPON THE QUANTITIES ACTUALLY PROVIDED UNDER THE CONTRACT.

THE ENCLOSURES THAT ACCOMPANIED THE DECEMBER 7, 1971, LETTER ARE RETURNED AS REQUESTED.