B-176002, JUN 7, 1972

B-176002: Jun 7, 1972

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THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO HYDRO-MECHANICAL SINCE THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR. V600C-192 BECAUSE OF AN ERROR ALLEGEDLY MADE IN COMPUTING ITS BID PRICE UPON WHICH THE CONTRACT IS BASED. WHEN BIDS WERE OPENED ON FEBRUARY 25. HYDRO MECHANICAL WAS FOUND TO HAVE SUBMITTED THE LOW BID OF $4. AWARD TO THAT FIRM WAS RECOMMENDED AND WAS MADE. THE ONLY OTHER BID RECEIVED UNDER THE INVITATION WAS FOR $9. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $6. NO DRAWING COVERING THE WORK TO BE DONE WAS AVAILABLE PRIOR TO BID OPENING OR AT THE TIME OF THE JOB WALK. IT IS CONCEDED THAT NO DRAWINGS COVERING THE WORK TO BE DONE WERE AVAILABLE AT THE TIMES NOTED BY THE CONTRACTOR AND THAT THE INVITATION DID NOT SPECIFY THE NUMBER OF MOTORS AND VACUUM PUMPS WHICH WOULD BE REQUIRED TO DO THE CONTRACT WORK.

B-176002, JUN 7, 1972

CONTRACTS - ERROR IN BID - PROPRIETY OF RECISSION CONCERNING THE PROPRIETY OF RECISSION OF A CONTRACT AWARDED TO HYDRO MECHANICAL COMPANY UNDER AN IFB ISSUED BY THE VETERANS ADMINISTRATION. THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO HYDRO-MECHANICAL SINCE THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR.

TO MR. DONALD E. JOHNSON:

WE REFER TO LETTER 134C OF MAY 17, 1972, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO WHETHER THE HYDRO-MECHANICAL COMPANY MAY BE RELIEVED OF ITS OBLIGATION TO PERFORM UNDER CONTRACT NO. V600C-192 BECAUSE OF AN ERROR ALLEGEDLY MADE IN COMPUTING ITS BID PRICE UPON WHICH THE CONTRACT IS BASED.

INVITATION FOR BIDS NO. 600-260-70 REQUESTED BIDS ON THE FURNISHING AND INSTALLING OF A COMBINED MEDICAL AND LABORATORY CENTRAL SUCTION SYSTEM AT THE VETERANS ADMINISTRATION HOSPITAL, LONG BEACH, CALIFORNIA. WHEN BIDS WERE OPENED ON FEBRUARY 25, 1972, HYDRO MECHANICAL WAS FOUND TO HAVE SUBMITTED THE LOW BID OF $4,620. SUBSEQUENTLY, AWARD TO THAT FIRM WAS RECOMMENDED AND WAS MADE. THE ONLY OTHER BID RECEIVED UNDER THE INVITATION WAS FOR $9,933. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $6,500.

BY LETTERS OF MARCH 9 AND APRIL 5, 1972, HYDRO-MECHANICAL ADVISED THE CONTRACTING OFFICER THAT IT HAD COMPUTED ITS BID PRICE IN THE BELIEF THAT ONLY ONE MOTOR AND ONE VACUUM PUMP WOULD BE REQUIRED. NO DRAWING COVERING THE WORK TO BE DONE WAS AVAILABLE PRIOR TO BID OPENING OR AT THE TIME OF THE JOB WALK, AND THE SPECIFICATIONS INCLUDED IN THE INVITATION DID NOT INDICATE THAT MORE THAN ONE MOTOR AND PUMP WOULD BE REQUIRED. HOWEVER, PROPER PERFORMANCE OF THE WORK REQUIRES THE INSTALLATION OF MORE THAN ONE MOTOR AND PUMP.

IT IS CONCEDED THAT NO DRAWINGS COVERING THE WORK TO BE DONE WERE AVAILABLE AT THE TIMES NOTED BY THE CONTRACTOR AND THAT THE INVITATION DID NOT SPECIFY THE NUMBER OF MOTORS AND VACUUM PUMPS WHICH WOULD BE REQUIRED TO DO THE CONTRACT WORK. FURTHER, IT IS THE OPINION OF THE CONTRACTING OFFICER THAT HE SHOULD HAVE BEEN ON NOTICE OF A MISTAKE IN BID PRIOR TO AWARD DUE TO THE GREAT DISPARITY IN PRICE WHICH EXISTED BETWEEN THE HYDRO- MECHANICAL BID AND BOTH THE BID PRICE OF THE ONLY OTHER BIDDER AND THE GOVERNMENT ESTIMATE FOR THE WORK. NOTWITHSTANDING THIS DISPARITY, HOWEVER, THE LOW BIDDER WAS NOT REQUESTED TO VERIFY ITS BID PRICE.

AFTER REVIEWING THE RECORD, WE BELIEVE THAT A MISTAKE DID OCCUR AND THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR IN THE BID BECAUSE OF THE GREAT VARIANCE BETWEEN HYDRO MECHANICAL'S BID AND BOTH THE NEXT LOW BID AND THE GOVERNMENT ESTIMATE. CONSEQUENTLY, HE SHOULD HAVE REQUESTED VERIFICATION OF THE LOW BIDDER BEFORE ACCEPTING ITS BID. B-172645, MAY 12, 1971.

SINCE ACCEPTANCE OF A BID WITH KNOWLEDGE, EITHER CONSTRUCTIVE OR ACTUAL, OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT, THE CONTRACT MAY BE RESCINDED, AS ADMINISTRATIVELY RECOMMENDED, WITHOUT LIABILITY TO THE CONTRACTOR.

WE ARE RETURNING THE ENCLOSURES SENT WITH THE LETTER OF MAY 17.