B-5483, AUGUST 16, 1939, 19 COMP. GEN. 214

B-5483: Aug 16, 1939

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CONTRACTS - AWARDS - MISLEADING SPECIFICATIONS - CONTRACTOR'S LIABILITY WHERE THE ALTERNATE ITEM OF AN INVITATION FOR BIDS OMITTED SOME OF THE MAJOR ITEMS OF EQUIPMENT WHICH WERE LISTED IN THE FIRST ITEM. THERE IS JUSTIFICATION FOR A BIDDER'S BELIEF THAT THE ALTERNATE DID NOT INCLUDE ALL OF THE EQUIPMENT SPECIFIED IN THE FIRST ITEM EVEN THOUGH THE SPECIFICATIONS TO WHICH REFERENCE IS MADE IN BOTH ITEMS DESCRIBE IN DETAIL NOT ONLY THE ITEMS OF THE ALTERNATE BUT ALSO THE ITEMS OMITTED THEREFROM AND STATE THAT "ALL PARTS. WHICH ARE NECESSARY TO MAKE A COMPLETE SYSTEM * * * ARE TO BE SUPPLIED UNDER THESE SPECIFICATIONS. AS THE ACCEPTANCE OF THE ALTERNATE BID WAS ON THE BASIS OF SUPPLYING THE ITEMS ENUMERATED IN THE FIRST ITEM OF THE BID BUT AT THE PRICE SPECIFIED BY THE BIDDER FOR THE ALTERNATE ITEM.

B-5483, AUGUST 16, 1939, 19 COMP. GEN. 214

CONTRACTS - AWARDS - MISLEADING SPECIFICATIONS - CONTRACTOR'S LIABILITY WHERE THE ALTERNATE ITEM OF AN INVITATION FOR BIDS OMITTED SOME OF THE MAJOR ITEMS OF EQUIPMENT WHICH WERE LISTED IN THE FIRST ITEM, THERE IS JUSTIFICATION FOR A BIDDER'S BELIEF THAT THE ALTERNATE DID NOT INCLUDE ALL OF THE EQUIPMENT SPECIFIED IN THE FIRST ITEM EVEN THOUGH THE SPECIFICATIONS TO WHICH REFERENCE IS MADE IN BOTH ITEMS DESCRIBE IN DETAIL NOT ONLY THE ITEMS OF THE ALTERNATE BUT ALSO THE ITEMS OMITTED THEREFROM AND STATE THAT "ALL PARTS, WHETHER MENTIONED OR NOT, WHICH ARE NECESSARY TO MAKE A COMPLETE SYSTEM * * * ARE TO BE SUPPLIED UNDER THESE SPECIFICATIONS," AND, AS THE ACCEPTANCE OF THE ALTERNATE BID WAS ON THE BASIS OF SUPPLYING THE ITEMS ENUMERATED IN THE FIRST ITEM OF THE BID BUT AT THE PRICE SPECIFIED BY THE BIDDER FOR THE ALTERNATE ITEM, NO CONTRACT RESULTED REQUIRING THE FURNISHING OF ALL OF THE SAID ITEMS, AND THE TWO ALTERNATE BIDS RECEIVED IN RESPONSE TO THE SPECIFICATIONS NOT HAVING BEEN ON A COMPETITIVE BASIS--- ONE APPARENTLY INCLUDING MORE EQUIPMENT THAN THE OTHER--- THE ENTIRE MATTER SHOULD BE READVERTISED.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF AGRICULTURE, AUGUST 16, 1939:

I HAVE YOUR LETTER OF AUGUST 7, 1939, AS FOLLOWS:

ENCLOSED HEREWITH ARE TWO BIDS RECEIVED BY THIS DEPARTMENT IN RESPONSE TO SOLICITATION UNDER U.S.D.A. NO. 6476, OPENED JUNE 23, 1939, FOR FURNISHING ONE LOW PRESSURE STEAM BOILER WITH HOT WATER HEATER, OIL BURNER, OIL STORAGE TANK, HOT WATER STORAGE TANK, AND CONTROLS, FOR USE BY THE BUREAU OF PLANT INDUSTRY OF THIS DEPARTMENT AT THE U.S. FIELD LABORATORY FOR TUNG INVESTIGATIONS, GAINESVILLE, FLORIDA. THE AWARD IN THIS INSTANCE WAS MADE TO G. A. HERLIHY, GAINESVILLE, FLORIDA, UNDER HIS ALTERNATE BID IN THE AMOUNT OF $706.18, 2 PERCENT--- 20 DAYS, INCLUDING FREIGHT TO BE PAID BY THE SUCCESSFUL BIDDER.

IN WRITING UP THE LETTER OF ACCEPTANCE AND IN FORWARDING TO THE SUCCESSFUL BIDDER COVERING PURCHASE ORDER NUMBER 85213-P, ALL OF THE EQUIPMENT MENTIONED IN THE FIRST PARAGRAPH OF THE SPECIFICATIONS WAS CALLED FOR; HOWEVER, UPON RECEIPT OF THIS PURCHASE ORDER G. A. HERLIHY IMMEDIATELY CONTACTED OUR REPRESENTATIVE AT GAINESVILLE, FLORIDA, AND CALLED ATTENTION TO THE FACT THAT OUR SPECIFICATION UNDER THE ALTERNATE BID CALLED ONLY FOR THE STEAM BOILER, OIL BURNER, AND CONTROLS, AND FURTHER, THAT THE PRICE SUBMITTED BY HIM UNDER SUCH ALTERNATE BID INCLUDED ONLY THE THREE ITEMS SPECIFICALLY CALLED FOR IN THIS PART OF OUR SPECIFICATION. THE OMISSION FROM THAT PART OF THE SPECIFICATION, COVERED BY THE ALTERNATE BID, OF THE HOT WATER HEATER, OIL STORAGE TANK, AND HOT WATER TANK WAS DUE TO AN OVERSIGHT IN WRITING THE SPECIFICATIONS AND SUCH ALTERNATE BID SHOULD HAVE INCLUDED THESE ITEMS, TOGETHER WITH THE ONE LOW PRESSURE STEAM BOILER, OIL BURNER, AND CONTROLS.

ATTENTION IS DRAWN TO LETTER OF JUNE 21, RECEIVED FROM G. A. HERLIHY, WHICH WAS MADE A PART OF HIS BID, IN WHICH HE CALLS ATTENTION TO THE FACE OF HIS BID WHEREIN HE INDICATES A LUMP SUM OF $37.70 TO COVER FREIGHT TO GAINESVILLE. THIS AMOUNT OF FREIGHT, ADDED TO THE PRICE BID FOR THE MATERIAL UNDER THE ALTERNATE BID MAKES A TOTAL OF $706.18, OR $165.44 LESS THAN HIS BID FOR ALL MATERIAL DELIVERED TO GAINESVILLE, FLORIDA. FROM THIS IT IS APPARENT THAT THE BIDDER, IN QUOTING A PRICE UNDER THE ALTERNATE BID, DID NOT INCLUDE THEREIN THE HOT WATER HEATER, OIL STORAGE TANK, AND HOT WATER STORAGE TANK, AND BID ONLY ON THE ITEMS SPECIFIED UNDER THE ALTERNATE BID, THAT IS, LOW PRESSURE STEAM BOILER, OIL BURNER, AND CONTROLS.

THE OTHER BIDDER IN HIS CASE, THE UNIVERSITY CITY PLUMBING AND HEATING COMPANY, GAINESVILLE, FLORIDA, APPARENTLY BID ON ALL THE EQUIPMENT REQUIRED, BOTH UNDER THE DELIVERED PRICE AND THE ALTERNATE SHIPPING POINT PRICE. THIS ASSUMPTION, HOWEVER, HAS NOT BEEN VERIFIED.

IMMEDIATELY UPON RECEIPT OF ADVICE FROM OUR FIELD REPRESENTATIVE REGARDING THE DISCREPANCY IN OUR SPECIFICATIONS, WE TELEGRAPHED G. A. HERLIHY, GAINESVILLE, FLORIDA, UNDER DATE OF JULY 29, TO WITHHOLD DELIVERY OF ANY MATERIAL IN THIS CASE UNTIL RECEIPT OF FURTHER NOTICE.

IN VIEW OF THE FOREGOING, ADVICE IS REQUESTED AS TO WHETHER WE MAY PROCEED WITH HAVING G. A. HERLIHY FURNISH THE ITEMS SPECIFICALLY MENTIONED UNDER THE ALTERNATE BID, NAMELY, ONE LOW PRESSURE STEAM BOILER, OIL BURNER, AND CONTROLS, WHICH, OF COURSE, WOULD REQUIRE READVERTISING FOR THE ITEMS NOT INCLUDED IN THE ALTERNATE SPECIFICATIONS.

IMMEDIATE ATTENTION IN THIS CASE WILL BE APPRECIATED, INASMUCH AS THE EQUIPMENT MENTIONED IS URGENTLY NEEDED IN CONNECTION WITH EXPERIMENTAL WORK.

THE INVITATION TO BID LISTED THE ITEMS ON WHICH BIDS WERE DESIRED AS FOLLOWS:

FOR FURNISHING ONE LOW PRESSURE STEAM BOILER WITH HOT WATER HEATER, OIL BURNER, OIL STORAGE TANK, HOT WATER STORAGE TANK, AND CONTROLS, IN ACCORDANCE WITH THE FOLLOWING SPECIFICATIONS AND REQUIREMENTS, DELIVERED, ALL CHARGES PREPAID, TO DOCTOR F. S. LAGASSE, U.S. FIELD LABORATORY FOR TUNG INVESTIGATIONS, GAINESVILLE, FLORIDA.

ALTERNATE BID

FOR FURNISHING LOW PRESSURE STEAM BOILER, OIL BURNER, AND CONTROLS, IN ACCORDANCE WITH THE FOLLOWING SPECIFICATIONS AND REQUIREMENTS, F.O.B. BIDDER'S SHIPPING POINT. ( ITALICS SUPPLIED.)

IN RESPONSE TO THE INVITATION GROSS BIDS WERE RECEIVED AS FOLLOWS:

BASIC BID ALTERNATE BID

F.O.B. DESTINATION F.O.B. SHIPPING POINT G. A. HERLIHY ------------------ -------------- $871.62 $668.48

37.70 FREIGHT UNIVERSITY CITY PLUMBING AND HEATING COMPANY 852.00 844.00

IT APPEARS THE ALTERNATE BID OF G. A. HERLIHY WAS ACCEPTED ON JUNE 28, 1939, THE ACCEPTANCE READING AS FOLLOWS:

YOUR PROPOSAL OF $706.18 LESS 2 PERCENT--- 10, 20 DAYS DATED JUNE 20, 1939, AND LETTER DATED JUNE 21, 1939, FOR FURNISHING ONE LOW PRESSURE STEAM BOILER WITH HOT WATER HEATER OIL BURNER, OIL STORAGE TAN (TANK), HOT WATER STORAGE TANK, AND CONTROLS, AS PER SPECIFICATIONS, DELIVERED TO DOCTOR F. S. LAGASSE, U.S. FIELD LABORATORY FOR TUNG INVESTIGATIONS, GAINESVILLE, FLORIDA, BUREAU OF PLANT INDUSTRY, IS HEREBY ACCEPTED. ITALICS SUPPLIED.)

IT FURTHER APPEARS FROM THE FACTS REPORTED IN YOUR LETTER THAT IMMEDIATELY UPON RECEIPT OF THE ACCEPTANCE AND PURCHASE ORDER THE BIDDER, G. A. HERLIHY, CALLED ATTENTION TO THE FACT THAT HIS ALTERNATE BID WAS BASED ON FURNISHING ONLY THE BOILER, BURNER AND CONTROLS, AS SPECIFICALLY CALLED FOR UNDER THE ALTERNATE BID, WHEREAS THE ACCEPTANCE CALLED FOR DELIVERY OF THOSE ITEMS AND, IN ADDITION, A HOT/WATER HEATER, AN OIL- STORAGE TANK AND A HOT WATER STORAGE TANK, WHICH EQUIPMENT WAS SPECIFICALLY INCLUDED IN THE BASIC BID. UNDER THOSE CIRCUMSTANCES YOU REQUEST ADVICE AS TO WHETHER G. A. HERLIHY MAY BE PERMITTED TO FURNISH THE BOILER, BURNER AND CONTROLS, FOR THE ALTERNATE BID PRICE, IN WHICH EVENT IT WOULD BE NECESSARY THAT THERE BE READVERTISEMENT FOR THE HEATER

AND TANKS.

THE SPECIFICATIONS TO WHICH REFERENCE IS MADE IN BOTH ITEMS OF THE INVITATION TO BID DESCRIBE IN DETAIL NOT ONLY THE BOILER, BURNER AND CONTROLS BUT, ALSO, THE HEATER AND TANKS, AND IT IS STATED THEREIN THAT "ALL PARTS, WHETHER MENTIONED OR NOT, WHICH ARE NECESSARY TO MAKE A COMPLETE SYSTEM * * * ARE TO BE SUPPLIED UNDER THESE SPECIFICATIONS" AND THAT THE CONTRACT TO BE AWARDED WOULD BE "IN THE AGGREGATE" FOR THE EQUIPMENT DESCRIBED, ALL OF WHICH WAS "REQUIRED FOR ONE INSTALLATION.' UNDER THESE CIRCUMSTANCES THE ALTERNATE BID, STANDING ALONE, CLEARLY WOULD HAVE REQUIRED DELIVERY OF ALL THE EQUIPMENT, INCLUDING THE HEATER AND TANKS. HOWEVER, SUCH REQUIREMENT IS NOT SO CLEAR WHEN CONSIDERED IN THE LIGHT OF THE FIRST ITEM OF THE INVITATION, WHICH LISTED ALL OF THE MAJOR ITEMS OF EQUIPMENT. WITHOUT A REFERENCE TO THE SPECIFICATIONS IT IS APPARENT THAT THE FIRST ITEM, ON A DELIVERED BASIS, IS MORE INCLUSIVE THAN THE ITEM ON WHICH ALTERNATE BIDS WERE INVITED. IF BOTH ITEMS HAD EITHER OMITTED OR INCLUDED A REFERENCE TO THE HEATER AND TANKS THE PRESENT SITUATION PROBABLY WOULD NOT HAVE RESULTED. HOWEVER, THE GOVERNMENT SPECIFICALLY LISTED ALL OF THE MAJOR PARTS OF EQUIPMENT IN THE BASIC ITEM AND OMITTED SOME OF THOSE PARTS IN THE ALTERNATE. CONSEQUENTLY, THERE IS JUSTIFICATION FOR THE CONTRACTOR'S BELIEF THAT THE ALTERNATE DID NOT INCLUDE ALL OF THE EQUIPMENT SPECIFIED IN THE FIRST ITEM, OTHERWISE THERE WOULD APPEAR TO HAVE BEEN NO REASON FOR CHANGING THE DESCRIPTION OF THE ITEMS EXCEPT WITH RESPECT TO POINT OF DELIVERY.

FURTHERMORE, IT IS NOTED THAT THE ACCEPTANCE OF THE ALTERNATE BID DESCRIBED THE EQUIPMENT EXACTLY AS IT WAS DESCRIBED IN THE BASIC ITEM, AND THAT SUCH ACCEPTANCE REQUIRED DELIVERY TO DESTINATION FOR A PRICE OF $706.18. IN OTHER WORDS, ALTHOUGH THE BIDDER QUOTED A PRICE OF $871.62 FOR DELIVERING TO DESTINATION THE EQUIPMENT SPECIFICALLY CALLED FOR IN THE FIRST ITEM, THE ACCEPTANCE OF THE ALTERNATE BID PURPORTED TO OBLIGATE THE CONTRACTOR TO DELIVER THE SAME EQUIPMENT TO THE SAME DESTINATION FOR $706.18, A DIFFERENCE OF $165.44. NEEDLESS TO SAY, THE BIDDER WOULD NOT HAVE QUOTED PRICES OF $871.62 AND $706.18 FOR DELIVERY OF IDENTICAL EQUIPMENT TO ONE DESTINATION AND THIS SHOULD HAVE BEEN OBVIOUS TO THE CONTRACTING OFFICER AT THE TIME THE BIDS WERE CONSIDERED.

IN VIEW OF THE FOREGOING THERE CAN BE NO DOUBT THAT THE CONTRACTOR'S EXPLANATION CORRECTLY ACCOUNTS FOR THE DIFFERENCE IN BID PRICES, THAT THE PRICE QUOTED AS AN ALTERNATE BID WAS DUE TO A MISUNDERSTANDING INDUCED BY THE MISLEADING INVITATION TO BID ISSUED BY THE GOVERNMENT, AND THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF SOME IRREGULARITY, MISUNDERSTANDING, OR MISTAKE, AT THE TIME THE BID WAS ACCEPTED. UNDER THE CIRCUMSTANCES THE ACCEPTANCE OF THE CONTRACTOR'S BID--- WHICH ACCEPTANCE WAS NOT IN ACCORDANCE WITH THE TERMS OF THE BID -- DID NOT RESULT IN THE FORMATION OF A CONTRACT OBLIGATING THE CONTRACTOR TO DELIVER ALL OF THE EQUIPMENT INCLUDED IN THE DETAILED SPECIFICATIONS.

SINCE THE TWO ALTERNATE BIDS RECEIVED IN RESPONSE TO THE SUBJECT INVITATION TO BID WERE NOT ON A COMPETITIVE BASIS, ONE APPARENTLY INCLUDING MORE EQUIPMENT THAN THE OTHER, G. A. HERLIHY SHOULD NOT BE PERMITTED TO DELIVER THE BOILER, BURNER AND CONTROLS FOR HIS BID PRICE OF $706.18, BUT THE ENTIRE MATTER SHOULD BE READVERTISED.