B-180681, OCT 30, 1974

B-180681, OCT 30, 1974

CONTRACTOR, SEEKING UPWARD PRICE ADJUSTMENT ON ACCOUNT OF MISTAKE MADE IN BID PREPARATION, WHICH WAS ALLEGED PRIOR TO AWARD, IS NOT ENTITLED TO RELIEF SINCE, AFTER AGENCY DETERMINED THAT THERE WAS CLEAR AND CONVINCING EVIDENCE OF MISTAKE BUT NOT OF INTENDED BID AND AFFORDED BIDDER OPPORTUNITY TO WITHDRAW BID, BIDDER, WITH COMPLETE KNOWLEDGE OF MISTAKE AND WITHOUT PROTEST OR RESERVATION OF RIGHTS TO REQUEST AN UPWARD PRICE ADJUSTMENT REQUESTED AND ACCEPTED AWARD OF CONTRACT AT ORIGINAL BID PRICE.

SHERKADE CONSTRUCTION CORP.:

THIS MATTER CONCERNS THE REQUEST BY SHERKADE CONSTRUCTION CORP. FOR AN UPWARD PRICE ADJUSTMENT IN CONTRACT NO. F08602-74-90036 DUE TO AN ALLEGED MISTAKE IN BID SUBMITTED UNDER INVITATION FOR BIS NO. F08602-74 B-0013 FOR THE REPAIR OF RUNWAY SPECIAL LIGHTING SYSTEMS AT MACDILL AIR FORCE BASE, FLORIDA.

SHERKADE SUBMITTED A BID OF $87,787, WHILE THE OTHER FOUR BIDS RANGED FROM $112,895 TO $318,500. PRIOR TO AWARD, SHERKADE ALLEGED THAT A MISTAKE HAD BEEN MADE IN THE PREPARATION OF ITS BID. SHERKADE SUBMITTED EVIDENCE IN SUPPORT OF THE ERROR TO THE PROCUREMENT ACTIVITY. SHERKADE'S CONTEMPORANEOUS WORKSHEETS DISCLOSED THAT A MATHEMATICAL ERROR HAD RESULTED FROM AN IMPROPER EXTENSION OF ITS PRICE FOR 3,100 FEET OF CONCRETE-ENCASED DUCT AT $3.00 PER FOOT AS $930 INSTEAD OF $9,300. SHERKADE SOUGHT AN UPWARD PRICE ADJUSTMENT OF $10,587, REPRESENTING THE $8,370 DIFFERENCE ABOVE PLUS AN AMOUNT REFLECTING THE OVERHEAD AND PROFIT RATES IN ITS WORKSHEETS. THE STAFF JUDGE ADVOCATE MADE A DETERMINATION UNDER ARMED SERVICES PROCUREMENT REGULATION SEC. 2-406.3(A)(3) (1973 ED.), THAT THERE WAS CLEAR AND CONVINCING EVIDENCE OF A MISTAKE BUT THAT CLEAR AND CONVINCING EVIDENCE AS TO THE BID ACTUALLY INTENDED HAD NOT BEEN PRESENTED. ACCORDINGLY. SHERKADE WAS ADVISED THAT WITHDRAWAL OF ITS BID FOR AWARD PURPOSES WAS PERMITTED BUT NOT BID MODIFICATION.

IN RESPONSE, SHERKADE SENT THE FOLLOWING TELEGRAM TO THE PROCUREMENT ACTIVITY:

"REFERENCE BID NUMBER F08602-74-B-0013. THIS CONFIRMS OUR PHONE ADVICE OF THIS DATE. WE HAVE REVIEWED OUR BID IN VIEW OF YOUR 14 DECEMBER 73 REFUSUAL TO ADJUST OUR BID TO THE INTENDED PRICE SINCE WE ARE ALREADY WORKING AT MACDILL A.F.B. (ON ANOTHER CONTRACT) WE WILL ABSORB OUR ERROR AND WILL ACCEPT THIS JOB FOR OUR BID PRICE OF $87,787, WE THEREFORE ARE NOT WITHDRAWING OUR BID."

AFTER RECEIPT OF THIS TELEGRAM, THE PROCUREMENT ACTIVITY REQUESTED FROM THE STAFF JUDGE ADVOCATE AUTHORITY TO AWARD THE CONTRACT TO SHERKADE AT ITS ORIGINAL BID PRICE. THE STAFF JUDGE ADVOCATE ADVISED THAT SHERKADE SHOULD BE ASKED TO AGAIN VERIFY ITS BID WITH PARTICULAR ATTENTION TO THE APPARENTLY LOW SHERKADE ESTIMATE OF LINEAR FOOTAGE FOR THE CONCRETE- ENCASED DUCT AS SHOWN IN THE FIRM'S WORKSHEETS. THIS REQUEST FOR VERIFICATION WAS ACCOMPLISHED. SHERKADE REPLIED BY DISCLAIMING ANY ERROR IN ITS ESTIMATE OF THE LINEAR FOOTAGE. IN ADDITION, SHERKADE REFERRED TO THIS ASPECT OF THE MATTER IN AN EARLIER TELEGRAM TO THE PROCUREMENT ACTIVITY, AS FOLLOWS: "*** WE ACKNOWLEDGE THERE IS A VARIANCE BETWEEN OUR TAKEOFF QUANTITIES FOR THE 2 WAY 4 INCH DUCT AND YOUR ESTIMATE OF THIS ITEM. WE ARE EXPECTING YOU TO MAKE AWARD TO US."

SUBSEQUENTLY, SHERKADE WAS AWARDED THE CONTRACT AT ITS ORIGINAL BID PRICE. AFTER AWARD, SHERKADE, BY LETTER, ADVISED THE PROCUREMENT ACTIVITY THAT "WE HAVE RECEIVED AND ACCEPTED THE AWARD OF THE ABOVE CONTRACT." THE SAME LETTER, SHERKADE NOTED AN APPEAL OF THE DECISION REFUSING TO PERMIT MODIFICATION OF ITS BID. WHEREUPON, THE AIR FORCE REFERRED SHERKADE TO THE GAO. SHERKADE THEN REQUESTED OUR REIVEW OF THE DENIAL OF ITS REQUEST FOR AN UPWARD PRICE ADJUSTMENT.

HERE, SHERKADE, WITH COMPLETE KNOWLEDGE OF THE MISTAKE IN ITS BID, THE FEASIBILITY OF WITHDRAWING THE MISTAKEN BID, AND WITHOUT A PROTEST OR RESERVATION OF RIGHTS TO REQUEST AN UPWARD PRICE ADJUSTMENT AGREED TO ABSORB THE ERROR AND ACCEPT THE AWARD OF THE CONTRACT AT ITS ORIGINAL BID PRICE. ON THREE OCCASIONS, SHERKADE ADVISED THE PROCUREMENT ACTIVITY OF ITS WILLINGNESS TO ACCEPT THE AWARD AT ITS ORIGINAL BID PRICE IN THE FACE OF THE ESTABLISHED MISTAKE IN PRICE AND A POSSIBLE MISTAKE IN ESTIMATING THE LINEAR FOOTAGE. IN THESE CIRCUMSTANCES, WE BELIEVE THAT A VALID CONTRACT WAS CONSUMMATED. SEE B 177281, JANUARY 23, 1973; COMPARE 49 COMP. GEN. 446 (1970) AND B 161024, JULY 3, 1967.

CONSEQUENTLY, THERE IS NO LEGAL BASIS TO GRANT THE REQUEST FOR AN UPWARD PRICE ADJUSTMENT IN THE INSTANT CONTRACT.