B-176258, JUL 26, 1972

B-176258, JUL 26, 1972

CONTRACT - MISTAKE IN BID - QUANTUM VALEBANT PAYMENT DECISION ALLOWING IN PART THE CLAIM OF WALLWORK BROTHERS, INC., FOR AN INCREASE IN THE CONTRACT PRICE OF A CONTRACT FOR CONDENSING UNITS AWARDED BY THE VETERANS ADMINISTRATION. SINCE THE GOVERNMENT'S ESTIMATE FOR THE TOTAL PROCUREMENT WAS 66 PERCENT HIGHER THAN EITHER OF THE TWO BIDS RECEIVED, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A PROBABLE ERROR. THEREFORE, WALLWORK MAY BE PAID ON A QUANTUM VALEBANT BASIS FOR THE UNITS ALREADY SUPPLIED, BUT THE REMAINING UNITS MUST BE RELET TO COMPETITION.

TO MR. DONALD E. JOHNSON:

REFERENCE IS MADE TO LETTER 134C, DATED JUNE 9, 1972, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, FORWARDING FOR OUR CONSIDERATION THE CLAIM OF WALLWORK BROTHERS, INCORPORATED, FOR AN INCREASE IN THE CONTRACT PRICE OF AN UNNUMBERED CONTRACT FOR CONDENSING UNITS.

THE SPECIFICATION WHICH GIVES RISE TO THIS CLAIM FOR AN ADDITIONAL $1,939, IN PERTINENT PART, STATES:

"SUPPLIES/SERVICES QUANTITY UNIT ***

"1. MODEL WH50 DH, 2 RACK

*** 2 UNITS ON

1 RACK"

WALLWORK'S TOTAL BID ON THE EQUIPMENT (ITEM 1) WAS $1,939. THERE WERE TWO OTHER ITEMS IN THE INVITATION FOR BIDS WHICH PROVIDED FOR AN AWARD IN THE AGGREGATE FOR ALL THREE ITEMS. WALLWORK'S TOTAL NET BID AFTER DISCOUNT WAS $3,940.58 OR APPROXIMATELY $25 LESS THAN THAT OF THE ONLY OTHER BIDDER. BOTH BIDDERS DESIGNATED THE SAME SUPPLIER IN THEIR BIDS. AWARD WAS MADE TO WALLWORK WHO, IN DUE COURSE, MADE DELIVERY OF TWO UNITS. IT WAS AT THIS TIME THAT THE PROCURING ACTIVITY AND WALLWORK DISCOVERED THAT THEY HAD READ THE SPECIFICATION DIFFERENTLY. THE PROCURING ACTIVITY HAD ANTICIPATED THE DELIVERY OF FOUR UNITS; THAT IS, TWO RACKS CONTAINING TWO UNITS EACH, WHEREAS WALLWORK HAD INTERPRETED THE SPECIFICATION AS REQUIRING ONE RACK WITH TWO UNITS.

TWO UNITS (ONE RACK) ARE STILL REQUIRED AND WALLWORK IS READY TO DELIVER TWO MORE UNITS FOR AN ADDITIONAL $1,939. WALLWORK CONTENDS THAT NO ONE WOULD BE PREJUDICED BY AN INCREASE IN THE CONTRACT PRICE SINCE THE ONLY OTHER BIDDER USED THE SAME SUPPLIER AND THE SUPPLIER HAD INTERPRETED THE SPECIFICATIONS IN THE SAME MANNER AS WALLWORK.

THE GOVERNMENT ESTIMATE FOR THE TOTAL PROCUREMENT WAS ABOUT 66 PERCENT HIGHER THAN EITHER OF THE TWO AGGREGATE BIDS RECEIVED. SINCE WALLWORK'S AGGREGATE BID WAS SUBSTANTIALLY BELOW THE GOVERNMENT'S ESTIMATED COST FOR THE PROCUREMENT, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF AN ERROR AND SHOULD HAVE REQUESTED VERFICATION OF THE BID PRIOR TO AWARD. IN THE CIRCUMSTANCES, AND SINCE THERE IS EVIDENCE THAT THE BIDDER DID, IN FACT, MAKE AN ERROR IN ITS BID, IT MAY BE CONCLUDED THAT NO VALID AND BINDING CONTRACT CAME INTO EXISTENCE. CONSEQUENTLY, WALLWORK MAY BE PAID FOR THE REASONABLE VALUE OF THE GOODS ALREADY DELIVERED TO THE GOVERNMENT ON A QUANTUM VALEBANT BASIS. SINCE THE BID ON THE PROCUREMENT WAS COMPUTED ON THE BASIS OF FURNISHING ONE RACK WITH TWO UNITS, TO PERMIT THE BIDDER TO REVISE ITS BID PRICE TO PROVIDE FOR TWO RACKS WITH FOUR UNITS WOULD BE TO ALLOW THE COMPUTATION OF A NEW BID AFTER BID OPENING AND IS NOT TO BE COUNTENANCED. ACCORDINGLY, THERE IS NO BASIS FOR PROCURING THE REMAINING UNITS WITHOUT RELETTING THEM TO COMPETITION. SINCE THE COST OF THE ADDITIONAL RACK WITH TWO CONDENSING UNITS WOULD APPEAR TO BE LESS THAN $2,500, IT IS RECOMMENDED THAT THE SMALL PURCHASES PROCEDURE PROVIDED IN FEDERAL PROCUREMENT REGULATIONS SUBPART 1-3.6 BE UTILIZED FOR THE PURCHASE.