B-180607, APR 2, 1974

B-180607: Apr 2, 1974

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949 CONTRACT PRICE IS IN ERROR BY $2. 460 BECAUSE IT NEGLECTED TO INCLUDE COST OF CONSTRUCTION OF DUMBWAITER HOISTWAY WHICH WAS REQUIRED BY SPECIFICATIONS. BECAUSE SUCH CONSTRUCTION IS NOT NORMALLY PERFORMED BY ELEVATOR CONTRACTOR. SHOULD HAVE CONTRACT RESCINDED WITHOUT LIABILITY. SINCE GOVERNMENT ENGINEER HAS INDICATED BID PRICE WAS OUT OF LINE WITH ORIGINAL GOVERNMENT ESTIMATE. THE GOVERNMENT'S ESTIMATE FOR THIS WORK WAS $10. MURPHY WAS AWARDED CONTRACT V603C-479 FOR THE AMOUNT BID. MURPHY NOTIFIED THE PROCURING ACTIVITY THAT IT WAS READY TO INSTALL THE DUMBWAITER AND ASKED IF THE HOISTWAY ENCLOSURE FOR THE DUMBWAITER HAD BEEN COMPLETED SO THAT WORK COULD BE BEGUN. MURPHY WAS THEN INFORMED THAT THIS WORK WAS MURPHY'S RESPONSIBILITY UNDER THE TERMS OF THE CONTRACT.

B-180607, APR 2, 1974

SOLE BIDDER WHO CLAIMS THAT $7,949 CONTRACT PRICE IS IN ERROR BY $2,460 BECAUSE IT NEGLECTED TO INCLUDE COST OF CONSTRUCTION OF DUMBWAITER HOISTWAY WHICH WAS REQUIRED BY SPECIFICATIONS, BECAUSE SUCH CONSTRUCTION IS NOT NORMALLY PERFORMED BY ELEVATOR CONTRACTOR, SHOULD HAVE CONTRACT RESCINDED WITHOUT LIABILITY, SINCE GOVERNMENT ENGINEER HAS INDICATED BID PRICE WAS OUT OF LINE WITH ORIGINAL GOVERNMENT ESTIMATE.

TO THE MURPHY ELEVATOR COMPANY, INCORPORATED:

VETERANS ADMINISTRATION HOSPITAL, LOUISVILLE, KENTUCKY, ISSUED INVITATION FOR BIDS (IFB) NO. 603-27-73, FOR THE SUPPLY AND INSTALLATION OF A DUMBWAITER. THE GOVERNMENT'S ESTIMATE FOR THIS WORK WAS $10,214. ON THE BID OPENING DATE, JUNE 20, 1973, ONLY ONE BID HAD BEEN RECEIVED FROM THE MURPHY ELEVATOR COMPANY, INCORPORATED (MURPHY) IN THE AMOUNT OF $7,949. ACCORDINGLY, ON JUNE 27, 1973, MURPHY WAS AWARDED CONTRACT V603C-479 FOR THE AMOUNT BID.

ON NOVEMBER 8, 1973, MURPHY NOTIFIED THE PROCURING ACTIVITY THAT IT WAS READY TO INSTALL THE DUMBWAITER AND ASKED IF THE HOISTWAY ENCLOSURE FOR THE DUMBWAITER HAD BEEN COMPLETED SO THAT WORK COULD BE BEGUN. MURPHY WAS THEN INFORMED THAT THIS WORK WAS MURPHY'S RESPONSIBILITY UNDER THE TERMS OF THE CONTRACT.

MURPHY ALLEGES THAT THE NORMAL PROCEDURE IN THE CONSTRUCTION BUSINESS IS THAT THE ELEVATOR CONTRACTOR DOES NOT CONSTRUCT THE HOISTWAY UNLESS THE WORDING OF THE SPECIFICATIONS EXPRESSLY STATES THAT THE ELEVATOR CONTRACTOR IS TO BE THE PRIME CONTRACTOR, WHICH IS NOT THE CASE HERE. MURPHY STATES THAT THE SPECIFICATIONS WERE THEREFORE UNCLEAR AS TO WHETHER MURPHY WAS TO CONSTRUCT THE HOISTWAY. MURPHY FURTHER ALLEGES THAT IT HAS BEEN ADVISED BY A GENERAL CONTRACTOR THAT IT WILL COST AN ADDITIONAL $2,460 TO CONSTRUCT THE HOISTWAY. MURPHY CONCLUDES THAT THE CONTRACTING OFFICER SHOULD HAVE KNOWN THAT SOMETHING WAS WRONG WITH MURPHY'S BID, SINCE ITS PRICE WAS MUCH LOWER THAN THE GOVERNMENT'S ESTIMATED COST. THEREFORE, MURPHY HAS REQUESTED A $2,460 INCREASE IN THE CONTRACT PRICE.

THE SPECIFICATIONS OF THE IFB EXPRESSLY STATE THAT THE SCOPE OF WORK UNDER THIS CONTRACT INCLUDES THE CONSTRUCTION OF THE HOISTWAY. IT IS AN ESTABLISHED LEGAL PRINCIPLE THAT A TRADE OR BUSINESS CUSTOM PRACTICE, OR PROCEDURE, SUCH AS THE ONE MURPHY ALLEGES EXISTS HERE, MAY NOT SUPERSEDE OR ALTER THE CLEAR AND UNAMBIGUOUS TERMS OF A CONTRACT. B-167993(1), OCTOBER 28, 1969.

IT IS CLEAR THAT WHERE A BIDDER HAS MADE A MISTAKE IN ITS BID THAT WAS NEITHER INDUCED NOR SHARED BY THE GOVERNMENT, THE BIDDER MUST BEAR THE CONSEQUENCES OF HIS MISTAKE, UNLESS THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. SALIGMAN V UNITED STATES, 56 F. SUPP. 505 (E.D. PA., 1944); WENDER PRESSES, INC. V. UNITED STATES, 170 CT. CL. 483 (1965); 48 COMP. GEN. 672 (1969). CONSTRUCTIVE NOTICE IS SAID TO EXIST WHEN THE CONTRACTING OFFICER, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF A CASE, SHOULD HAVE KNOWN OF THE POSSIBILITY OF AN ERROR IN BID. 44 COMP. GEN. 383, 386 (1965).

NORMALLY, WHERE ONLY ONE BID IS RECEIVED ON AN ITEM, THERE IS NO BASIS FOR COMPARISON TO OTHER BIDS, SO THAT THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF MISTAKE. 26 COMP. GEN. 415 (1946); B-180402, FEBRUARY 4, 1974. HOWEVER, BASED ON THE RECORD BEFORE OUR OFFICE, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF AN ERROR IN THE BID AND REQUESTED VERIFICATION. IN THAT REGARD, IT IS OBSERVED THAT THE ASSISTANT CHIEF, ENGINEERING SERVICE, HAS STATED THAT THE MURPHY BID IS NOT CONSIDERED TO BE TOO FAR OUT OF LINE BECAUSE AFTER MURPHY ALLEGED AN ERROR IN THE BID, THE $10,214 GOVERNMENT ESTIMATE WAS REVISED TO $8,014. IMPLICIT IN THE STATEMENT IS AN INDICATION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR BUT FOR THE REVISED ESTIMATE. HOWEVER, AS WAS STATED IN B 180402, SUPRA:

"*** WHILE IT HAS SUBSEQUENTLY BEEN SHOWN THAT THIS ESTIMATE MAY HAVE BEEN EXCESSIVE, IT STILL SHOULD HAVE BEEN USED IN EVALUATION BY THE CONTRACTING OFFICER. TO RULE OTHERWISE WOULD PERMIT GOVERNMENT ESTIMATES TO BE RATIONALIZED AWAY AT ANY TIME A CONTRACTOR MADE A SUBSTANTIAL ERROR, ESPECIALLY IN A SOLE BIDDER SITUATION, MERELY BY EVOLVING A POSSIBLE HYPOTHESIS WHICH MIGHT EXPLAIN A LOWER BID. 48 COMP. GEN. 672, 676 (1969)."

SINCE MURPHY HAS NOT PERFORMED THE CONTRACT AND TO PERMIT IT TO REVISE THE CONTRACT PRICE NOW TO INCLUDE THE COST OF WORK THAT IT DID NOT PLAN TO PERFORM WHEN IT SUBMITTED THE BID FOR THE CONTRACT WOULD BE TANTAMOUNT TO PERMITTING IT TO RECOMPUTE THE BID, THE CONTRACT SHOULD BE RESCINDED WITHOUT LIABILITY TO THE CONTRACTOR.