B-164845, JUN. 18, 1969

B-164845, JUN. 18, 1969

TO E. AND E. J. PFOTZER:

WE REFER TO YOUR LETTERS DATED MARCH 31, APRIL 4, AND JUNE 6, 1969, WITH ENCLOSURES, WHEREIN YOU AGAIN REQUESTED RECONSIDERATION OF OUR DENIAL OF YOUR CLAIM UNDER CONTRACT NO. DA-49-080-ENG-27, ISSUED BY THE CORPS OF ENGINEERS FOR THE CONSTRUCTION OF SIX ADDITIONAL FILTERS FOR THE DALECARLIA FILTRATION PLANT, WASHINGTON, D.C. THE CLAIM HAS BEEN PREVIOUSLY CONSIDERED AND REJECTED BY DECISIONS DATED OCTOBER 11, DECEMBER 4, 1968, JANUARY 27, AND MARCH 20, 1969.

IN THOSE DECISIONS WE DENIED YOUR CLAIM BECAUSE WE SAW NO VALID BASIS ON WHICH THE CONTRACTING OFFICER COULD BE CHARGED WITH CONSTRUCTIVE NOTICE OF ERROR IN YOUR BID AT THE TIME OF CONTRACT AWARD. WE DECIDED THIS MATTER IN LIGHT OF THE FACT THAT YOUR BID WAS ONLY 18 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE, AND 2 PERCENT LOWER THAN THE NEXT LOWEST BID RECEIVED, WHICH WAS 16 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE.

YOU APPEAR TO CONCEDE THAT COMPARING THE PERCENTAGE DIFFERENCE BETWEEN THE ACCEPTED LOW BID AND THE NEXT LOW BID IS ONE OF THE MOST FREQUENTLY USED TOOLS IN ANALYZING MISTAKE IN BID CLAIMS PRESENTED AFTER AWARD, TO DETERMINE WHETHER OR NOT A CONTRACTOR'S UNILATERAL BID MISTAKE WAS SO OBVIOUS THAT THE CONTRACTING OFFICER SHOULD BE CHARGED WITH KNOWLEDGE OF IT. EXAMINATION OF DECIDED CASES APPLYING THE "OBVIOUSNESS" TEST SHOWS THAT LOWEST-BID-TO-NEXT-LOW-BID DIFFERENTIALS RANGING FROM 5 PERCENT TO 38 PERCENT HAVE BEEN HELD TO BE INSUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF ERROR; WHEREAS THE OPPOSITE CONCLUSION HAS BEEN REACHED WHEN THE DISPARITY RANGES FROM 35 PERCENT TO 300 PERCENT. YOUR ATTENTION IS DIRECTED TO A DECISION OF THE DEPARTMENT OF TRANSPORTATION CONTRACT ADJUSTMENT BOARD DATED NOVEMBER 12, 1968, ON THE APPLICATION OF THE AMERICAN SHIP BUILDING COMPANY, DOCKET NO. 85-804-3, WHICH CITES AND QUOTES A TABULATION BY CECIL T. LAKES, IN "EXTRAORDINARY CONTRACTUAL REMEDIES," DOCTORAL DISSERTATION NO. 5877, GEORGE WASHINGTON UNIVERSITY LAW LIBRARY. OUR RECENT DECISIONS FALL WITHIN THE SAME GROUPINGS -- SEE B -156291, APRIL 6, 1965; 40 COMP. GEN. 321; B-158235, JANUARY 27, 1966; B- 165090, SEPTEMBER 10, 1968 -- AND DECISIONS OF SEVERAL AGENCY CONTRACT ADJUSTMENT BOARDS ALSO FOLLOW THE SAME PATTERN, FOR EXAMPLE, SEE C AND M ASSOCIATES, AFCAB NO. 175, JUNE 2, 1965; SINGER BRIDGEPORT, ACAB NO. 1040, MAY 25, 1962; BELILOVE COMPANY, NASACAB NO. 2, SEPTEMBER 22, 1960. WE ARE AWARE OF NO CASES IN WHICH CONSTRUCTIVE NOTICE HAS BEEN FOUND AND RELIEF GRANTED SOLELY ON THE BASIS OF A DIFFERENCE BETWEEN LOW AND NEXT TO LOW BIDS AS NARROW AS THAT PRESENT IN THIS CASE.

WHILE YOU CONTEND THAT THE DIFFERENCE BETWEEN THE NEXT LOWEST BID AND THE GOVERNMENT ESTIMATE WAS SO GREAT AS TO MAKE IT OBVIOUS THAT IT WAS ALSO ERRONEOUS, AND ARGUE FROM THAT THAT YOUR BID SHOULD PROPERLY BE COMPARED WITH THE NEXT BID ABOVE THE GOVERNMENT ESTIMATE, OR WITH THE GOVERNMENT ESTIMATE PLUS PROFIT, WE DO NOT BELIEVE THAT THE NEXT BID CAN BE SO EASILY IGNORED. THE ONLY AUTHORITY OF WHICH WE ARE AWARE WHICH WOULD LEND ANY SUPPORT TO YOUR CONTENTION IS THE CASE OF C. N. MONROE MANUFACTURING COMPANY V U.S., 143 F. SUPP. 449. IN THAT CASE, A SUPPLIER OF CERTAIN ORDNANCE EQUIPMENT WAS ALLOWED TO RECOVER THE DIFFERENCE BETWEEN HIS LOW BID AND THE THIRD LOWEST BID. HOWEVER, THAT CASE IS CLEARLY DISTINGUISHABLE FROM YOURS, IN THAT THE MARKET PRICE FOR THE RAW MATERIAL (STEEL, FOR WHICH CURRENT PRICES WERE READILY ASCERTAINABLE) FOR THE REQUIRED ITEM WAS MORE THAN TWICE THE UNIT PRICE QUOTED BY THE LOW BIDDER FOR THE MANUFACTURED ARTICLE, AND IT WAS CLEARLY SHOWN THAT THE ITEMS COULD NOT HAVE BEEN PRODUCED BY ANY OTHER CONTRACTOR FOR LESS THAN THE THIRD LOWEST BID. IN ADDITION, THE LOW BIDDER'S UNIT PRICE WAS 39 PERCENT LOWER THAN THE SECOND LOW BID AND 79 PERCENT LOWER THAN THE THIRD LOW BID. WE DO NOT BELIEVE THAT THE MONROE DECISION MAY PROPERLY BE EXTENDED TO REQUIRE THE IMPUTATION OF NOTICE OF ERROR TO A CONTRACTING OFFICER RECEIVING BIDS ON A LARGE CONSTRUCTION PROJECT MERELY BY REASON OF DIFFERENCES BETWEEN THE LOW BIDS AND THE GOVERNMENT ESTIMATE OF THE MAGNITUDE PRESENT IN YOUR CASE.

IN ADDITION TO THE MONROE CASE, SUPRA, YOUR BRIEFS OF MARCH 31 AND APRIL 4, 1969, CITE THE FOLLOWING CASES AND AUTHORITIES IN SEVERAL CONTEXTS AS SUPPORTING YOUR POSITION: CHRIS BERG, INC. V U.S., COURT OF CLAIMS NO. 235 -68; M. AND B. CHERNICK V U.S., 372 F. 2D 492, OUR DECISIONS B-130407, B- 163284, B-144300, B-148412, B-158651, WELCH, MISTAKES IN BIDS, 18 FED. B.J. 75, DOKE, MISTAKES IN GOVERNMENT CONTRACTS ERROR DETECTION DUTY OF CONTRACTING OFFICERS, 18 SOUTHWESTERN L. J. 21, GRIMES, UNILATERAL MISTAKES IN CONSTRUCTION BIDS: METHODS OF PROOF AND THEORIES OF RECOVERY - A MODERN APPROACH, 5 B.C.L.R. 213,RESTATEMENT, CONTRACTS, SEE 488, NASH, FEDERAL PROCUREMENT LAW 2D EDITION. NONE OF THESE CASES AND AUTHORITIES, IN OUR OPINION, SUPPORTS YOUR POSITION, UNLESS IT IS FIRST CONCEDED THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE OF ERROR IN BOTH YOUR BID AND THE SECOND LOW BID. SINCE WE DO NOT, FOR THE REASONS STATED ABOVE, BELIEVE THERE IS ANY AUTHORITY TO SUPPORT THAT POSITION, WE MUST ADHERE TO THE CONCLUSIONS STATED IN OUR PRIOR DECISIONS.

WHILE WE ENDEAVOR TO AFFORD TO CLAIMANTS EVERY REASONABLE OPPORTUNITY TO PRESENT AND ARGUE THE MERITS OF THEIR CLAIM, WE BELIEVE THAT ADEQUATE CONSIDERATION HAS BEEN GIVEN TO EVERY ASPECT OF THE CLAIM PRESENTED, AND IT SEEMS DOUBTFUL THAT ANY USEFUL PURPOSE WILL BE SERVED BY FURTHER CORRESPONDENCE CONCERNING THIS MATTER. ANY FURTHER REQUESTS FOR RECONSIDERATION WHICH ARE MERELY REPETITIVE OF ARGUMENTS PREVIOUSLY CONSIDERED MAY THEREFORE BE FILED WITHOUT REPLY.