B-182660, JAN 16, 1975

B-182660: Jan 16, 1975

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CONTRACTOR WHO BASED BID FOR WAINSCOTTING INSTALLATION ON INCORRECT QUANTITY OF MATERIAL ESTIMATED BY SUPPLIER IS AUTHORIZED CORRECTION OF JOB LUMP SUM PRICE ON BASIS OF $6.10 PER YARD PAID FOR MATERIAL INSTEAD OF $5.65 RATE USED IN PREPARING BID. SINCE (1) DISPARATE NEXT LOW BID AND GOVERNMENT ESTIMATE WERE CONSTRUCTIVE NOTICE OF ERROR. $6.10 WAS BEST RATE AVAILABLE CONSIDERING THAT UNKNOWN TO CONTRACTOR WHEN BIDDING IT HAD TO BUY SUBSTANTIALLY MORE MATERIAL THAN REQUIRED TO OBTAIN $5.65 RATE. TO HAVE BEEN MADE IN HIS BID UPON WHICH CONTRACT NO. V619C-149 WAS BASED. BIDS WERE OPENED ON JUNE 6. FOUR BIDS WERE RECEIVED RANGING IN PRICE FROM MR. THE CONTRACT WAS AWARDED TO MR. THE CONTRACTING OFFICER WAS ADVISED BY MR.

B-182660, JAN 16, 1975

CONTRACTOR WHO BASED BID FOR WAINSCOTTING INSTALLATION ON INCORRECT QUANTITY OF MATERIAL ESTIMATED BY SUPPLIER IS AUTHORIZED CORRECTION OF JOB LUMP SUM PRICE ON BASIS OF $6.10 PER YARD PAID FOR MATERIAL INSTEAD OF $5.65 RATE USED IN PREPARING BID, SINCE (1) DISPARATE NEXT LOW BID AND GOVERNMENT ESTIMATE WERE CONSTRUCTIVE NOTICE OF ERROR; (2) INTENDED BID CANNOT BE ESTABLISHED; AND $6.10 WAS BEST RATE AVAILABLE CONSIDERING THAT UNKNOWN TO CONTRACTOR WHEN BIDDING IT HAD TO BUY SUBSTANTIALLY MORE MATERIAL THAN REQUIRED TO OBTAIN $5.65 RATE.

NOAH LEWIS:

BY LETTER OF NOVEMBER 11, 1974, WITH ENCLOSURES, THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, VETERANS ADMINISTRATION (VA) REQUESTED A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY A CONTRACTOR, MR. NOAH LEWIS, TO HAVE BEEN MADE IN HIS BID UPON WHICH CONTRACT NO. V619C-149 WAS BASED.

THE VA HOSPITAL, MONTGOMERY, ALABAMA, REQUESTED BIDS ON PROJECT NO. NR- 006 FOR THE INSTALLATION OF VINYL WAINSCOTTING AT THE HOSPITAL. BIDS WERE OPENED ON JUNE 6, 1974, AND FOUR BIDS WERE RECEIVED RANGING IN PRICE FROM MR. LEWIS' LOW BID OF $8,799.25 TO A HIGH OF $20,000. THE CONTRACT WAS AWARDED TO MR. LEWIS ON JUNE 7, 1974.

BY LETTER OF AUGUST 20, 1974, THE CONTRACTING OFFICER WAS ADVISED BY MR. LEWIS THAT A MISTAKE HAD BEEN MADE IN THE BID. MR. LEWIS REQUESTED THAT THE AMOUNT OF HIS CONTRACT BE INCREASED BY $2,358.75. ACCORDING TO MR. LEWIS, HIS ORIGINAL SUPPLIER, INDURALL, ESTIMATED HE WOULD NEED 225 YARDS AND QUOTED HIM A PRICE OF $5.65 PER YARD. SUBSEQUENT TO AWARD, INDURALL ADVISED MR. LEWIS THAT A SPECIAL RUN WOULD HAVE TO BE MADE WITH A MINIMUM QUANTITY OF 2,400 YARDS. MR. LEWIS STATED THAT HE THEN CONTACTED ANOTHER SUPPLIER, CELANESE DEVOE, WHO ESTIMATED HE WOULD NEED 600 YARDS AND OFFERED TO SUPPLY THE WALL COVERING AT $6.10 PER YARD. IT WAS AT THIS POINT THAT MR. LEWIS LEARNED FOR THE FIRST TIME THAT HE NEEDED 600 YARDS RATHER THAN 225 YARDS. THE VA HAS VERIFIED FROM THE GOVERNMENT'S PLANS THAT 600 YARDS ARE REQUIRED.

AS INDICATED ABOVE, MR. LEWIS SUBMITTED THE LOW BID OF $8,799.25. THE OTHER THREE BIDS SUBMITTED WERE $11,800, $14,656 AND $20,000, RESPECTIVELY, AND THE GOVERNMENT ESTIMATE WAS $14,381. IN HIS REPORT OF SEPTEMBER 16, 1974, IN WHICH HE RECOMMENDED THAT THE CONTRACT AMOUNT BE INCREASED BY $2,088.75 (THE DIFFERENCE BETWEEN 225 YARDS AND 600 AT $5.65), THE CONTRACTING OFFICER STATED THAT $8,799.25 IS OBVIOUSLY OUT OF LINE AND SHOULD HAVE BEEN VERIFIED AND THOROUGHLY REVIEWED PRIOR TO AWARD. IT IS NOTED THAT MR. LEWIS' BID IS APPROXIMATELY 25 PERCENT LESS THAN THE NEXT LOW BID AND ABOUT 40 PERCENT LESS THAN THE GOVERNMENT ESTIMATE.

THE AMOUNT MR. LEWIS IS CLAIMING AS A RESULT OF THE ERROR IS $2,358.75, THE DIFFERENCE BETWEEN $3,660 (600 YARDS AT $6.10) AND $1,301.25 (THE AMOUNT INCLUDED IN THE BID WORKSHEET FOR THE VINYL MATERIAL). EVIDENCE FURNISHED BY MR. LEWIS ESTABLISHES THAT HE WAS QUOTED A PRICE OF $5.65 A YARD BEFORE BIDDING. THE BID WORKSHEET SHOWS THE UNIT PRICE WAS EXTENDED BY 225 YARDS TO ARRIVE AT A TOTAL OF $1,301.25. A CORRECT EXTENSION WOULD HAVE BEEN $1,271.25. HOWEVER, THE WORKSHEET SHOWS $1,301.25 WAS COMPUTED AND USED IN THE TOTAL BID. THE CONTRACTING OFFICER HAS RECOMMENDED THAT THE $6.10 RATE NOT BE USED IN THE CORRECTION BECAUSE IT WAS NOT THE INTENDED RATE WHEN THE BID WAS MADE.

OUR OFFICE HAS HELD THAT NO VALID AND BINDING CONTRACT IS CONSUMMATED WHERE THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE PROBABILITY OF ERROR, BUT NEGLECTED TO TAKE PROPER STEPS TO VERIFY THE BID. MATTER OF FRITZ A. NACHANT, INC., B-181028, JULY 11, 1974. IN THESE CIRCUMSTANCES, THE PRICE IS ORDINARILY CORRECTED UPON PRESENTATION OF EVIDENCE ESTABLISHING ERROR AND THE INTENDED PRICE. 37 COMP. GEN. 706, 707 (1958).

WE ARE OF THE VIEW THAT MR. LEWIS HAS SUBMITTED SUFFICIENT EVIDENCE TO ESTABLISH THE EXISTENCE OF A MISTAKE BUT NOT THE INTENDED BID PRICE BECAUSE HE WAS NOT AWARE AT THE TIME OF BIDDING THAT THE SUPPLIER WOULD REQUIRE A MINIMUM ORDER FOR 2,400 YARDS. HAD THE CONTRACTOR NOT PROCEEDED WITH THE WORK, OUR OFFICE COULD HAVE RELIEVED THE CONTRACTOR FROM PERFORMANCE. HOWEVER, IT IS OUR UNDERSTANDING THAT THE CONTRACT WORK HAS BEEN COMPLETED.

THEREFORE, RESCISSION OF THE CONTRACT IS NOT FEASIBLE AND PAYMENT ON A QUANTUM MERUIT BASIS FOR THE REASONABLE VALUE OF THE MATERIAL ACTUALLY FURNISHED IS APPROPRIATE. 53 COMP. GEN. 368 (1973) AND C.N. MONROE MFG. CO. V. UNITED STATES, 143 F. SUPP. 449 (E.D. MICH. 1956). SINCE THE MATERIAL WAS OBTAINED AT THE BEST AVAILABLE RATE WHEN IT IS CONSIDERED THAT THE CONTRACTOR WOULD HAVE HAD TO PURCHASE SUBSTANTIALLY MORE MATERIAL THAN IT REQUIRED TO OBTAIN THE $5.65 RATE, CORRECTION IS AUTHORIZED IN THE AMOUNT CLAIMED BY THE CONTRACTOR.