B-180993, MAY 29, 1974

B-180993: May 29, 1974

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790 AND TWO OTHER BIDS WERE $439. SINCE LOW BID WAS 19 PERCENT LESS THAN NEXT LOWEST BID AND 32 PERCENT LESS THAN GOVERNMENT ESTIMATE. CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR. DACW41-74-B-0038 WAS ISSUED BY THE U.S. WERE IN THE AMOUNTS OF $439. THE GOVERNMENT'S COST ESTIMATE WAS IN THE AMOUNT OF $520. DACW41-74-C-0118 WAS AWARDED TO EDERER AFTER A PREAWARD SURVEY HAD BEEN CONDUCTED. WE BELIEVE THAT EDERER MADE A MISTAKE IN ITS BID AND THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR BECAUSE OF THE VARIANCE OF APPROXIMATELY 19 PERCENT BETWEEN EDERER'S BID AND THE NEXT LOW BID. IT IS OUR OPINION THAT THE DIFFERENCE OF APPROXIMATELY 32 PERCENT BETWEEN EDERER'S BID AND THE GOVERNMENT ESTIMATE WAS AN ADDITIONAL FACTOR WHICH SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR.

B-180993, MAY 29, 1974

UNDER INVITATION FOR BIDS FOR DESIGN AND FABRICATION OF GANTRY CRANE, CONTRACTOR SUBMITTED LOW BID OF $351,790 AND TWO OTHER BIDS WERE $439,327 AND $661,475. SINCE LOW BID WAS 19 PERCENT LESS THAN NEXT LOWEST BID AND 32 PERCENT LESS THAN GOVERNMENT ESTIMATE, CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR, AND THEREFORE, CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO CONTRACTOR.

TO EDERER, INCORPORATED:

ON SEPTEMBER 10, 1973, INVITATION FOR BIDS NO. DACW41-74-B-0038 WAS ISSUED BY THE U.S. ARMY ENGINEER DISTRICT, KANSAS CITY, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, KANSAS CITY, MISSOURI. THE SOLICITATION REQUESTED BIDS FOR THE DESIGN, FABRICATION, AND DELIVERY OF A 150-TON INTAKE STRUCTURE GANTRY CRANE AND ACCESSORIES FOR INSTALLATION AS A PART OF THE POWER GENERATING STRUCTURE AT THE HARRY S. TRUMAN DAM AT WARSAW, MISSOURI. IN RESPONSE, EDERER, INCORPORATED (EDERER), OFFERED TO FURNISH THE GANTRY CRANE, ACCESSORIES, AND SERVICES OF ERECTING ENGINEERS FOR THE AGGREGATE TOTAL AMOUNT OF $351,790. THE TWO OTHER AGGREGATE BIDS OPENED AS SCHEDULED ON NOVEMBER 27, 1973, WERE IN THE AMOUNTS OF $439,327 AND $661,475. THE GOVERNMENT'S COST ESTIMATE WAS IN THE AMOUNT OF $520,000 BASED ON 1972 COSTS AS ESCALATED. ON JANUARY 7, 1974, CONTRACT NO. DACW41-74-C-0118 WAS AWARDED TO EDERER AFTER A PREAWARD SURVEY HAD BEEN CONDUCTED.

IN A TELEGRAM DATED JANUARY 11, 1974, EDERER ADVISED THE CONTRACTING OFFICE THAT A MISTAKE HAD BEEN MADE IN COMPUTING ITS BID PRICE FOR THE CRANE IN THAT IT HAD FAILED TO INCLUDE THE TOTAL COST OF THE ELECTRIFICATION OF ONE OF THE TWO TROLLEYS. EDERER REQUESTED THAT IT BE PERMITTED TO WITHDRAW ITS BID.

SUBSEQUENTLY, IN FEBRUARY 1974, EDERER ALLEGED THAT IT HAD DISCOVERED TWO ADDITIONAL ERRORS IN ITS BID: (1) INCORRECT LABOR RATES, AND (2) BASIC ESTIMATING ERRORS INVOLVING MATERIALS AND ENGINEERING HOURS. EDERER REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY $69,019 TO $420,809 OR, IN THE ALTERNATIVE, THE CONTRACT BE CANCELED WITHOUT LIABILITY. SUPPORT OF ITS ALLEGATION OF ERROR, EDERER SUBMITTED ITS ORIGINAL WORKSHEETS, A REVISED ESTIMATE, AND A COPY OF A LETTER FROM A CERTIFIED ACCOUNTING FIRM REGARDING EDERER'S OVERHEAD RATE COMPUTATION METHODS.

AFTER REVIEWING THE RECORD, WE BELIEVE THAT EDERER MADE A MISTAKE IN ITS BID AND THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR BECAUSE OF THE VARIANCE OF APPROXIMATELY 19 PERCENT BETWEEN EDERER'S BID AND THE NEXT LOW BID. ALSO, IT IS OUR OPINION THAT THE DIFFERENCE OF APPROXIMATELY 32 PERCENT BETWEEN EDERER'S BID AND THE GOVERNMENT ESTIMATE WAS AN ADDITIONAL FACTOR WHICH SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR. CONSEQUENTLY, HE SHOULD HAVE REQUESTED VERIFICATION OF EDERER BEFORE ACCEPTANCE. B-176002, JUNE 7, 1972; B-176160, JUNE 30, 1972; B 176686, NOVEMBER 14, 1972; B-177232, DECEMBER 19, 1972; AND B-178711, JUNE 14, 1973.

ACCORDINGLY, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO EDERER.