B-124245, FEB. 16, 1956

B-124245, FEB. 16, 1956

TO HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 28, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN IN VIEW OF THE ADDITIONAL FACTS FURNISHED WITH HIS LETTER WHICH WERE NOT BEFORE OUR OFFICE WHEN DECISION TO YOU OF JULY 28, 1955, B-124245, WAS RENDERED CONCERNING ERRORS ALLEGED BY THE OTTINGER CONSTRUCTION COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. DA-41-443-ENG-4618 WAS AWARDED FOR FURNISHING MATERIALS AND LABOR AND PERFORMING THE WORK REQUIRED FOR THE CONSTRUCTION OF FOUR 60- ROOM BACHELOR OFFICERS' QUARTERS AND APPURTENANCES AT FORT HOOD, TEXAS.

THE DECISION OF JULY 28, 1955, WHEREIN AUTHORIZATION WAS GRANTED TO RELEASE THE OTTINGER CONSTRUCTION COMPANY AND ITS SURETY FROM ANY LIABILITY RESULTING FROM THE ACCEPTANCE OF ITS BID, WAS BASED ON THE FACTS BEFORE OUR OFFICE WHICH INDICATED THAT NO WORK HAD BEEN PERFORMED UNDER THE CONTRACT AT THAT TIME. IT IS NOW REPORTED, HOWEVER, THAT PRIOR TO RECEIPT OF THE DECISION OF JULY 28, 1955, A CONTRACT BASED ON THE AWARD OF MAY 19, 1955, WAS EXECUTED AND NOTICE TO PROCEED WITH THE REQUIRED WORK WAS ISSUED TO THE OTTINGER CONSTRUCTION COMPANY ON JUNE 23, 1955. ALSO, IT IS FURTHER REPORTED THAT THE CONTRACTOR HAS EARNED $273,716.33 AS OF NOVEMBER 25, 1955, AND IS PRESENTLY WORKING ON THE PROJECT.

IT WAS CONCLUDED IN THE DECISION OF JULY 28, 1955, THAT SINCE THE COMPANY ALLEGED ERROR IMMEDIATELY AFTER THE BID OPENING AND SUBMITTED SATISFACTORY EVIDENCE IN SUPPORT THEREOF PRIOR TO AWARD, THE ACCEPTANCE OF THE BID IN THE CIRCUMSTANCES INVOLVED DID NOT CONSUMMATE A VALID AND BINDING CONTRACT. SINCE THE FORMAL CONTRACT WAS EXECUTED BY THE CONTRACTOR WHILE ITS ALLEGATION OF ERROR WAS UNDER CONSIDERATION HERE, AND SUBJECT TO OUR RULING THEREON, AND THE ORDER TO PROCEED WAS GIVEN OVER THE CONTRACTOR'S REPEATED PROTESTS--- AND ON THE SAME DATE THAT THE ASSISTANT SECRETARY SUBMITTED THE MATTER TO OUR OFFICE WITH A REQUEST FOR "EARLY DECISION AS TO ACTION WHICH THE DEPARTMENT OF THE ARMY SHOULD TAKE IN THE MATTER"--- WE DO NOT THINK THAT THE EXECUTION OF THE CONTRACT OR THE COMMENCEMENT OF WORK MAY PROPERLY BE REGARDED AS A WAIVER BY THE CONTRACTOR OF ANY OF ITS RIGHTS OR A CONSENT TO BE BOUND BY THE TERMS OF THE BID WHICH IT CLAIMED WAS ERRONEOUS.

IN THESE CIRCUMSTANCES WE CONSTRUE THE CONTRACT AS ONE TO PERFORM THE WORK FOR A PRICE TO BE LATER DETERMINED, OR IN THE ABSENCE OF SUCH DETERMINATION, FOR THE VALUE OF THE WORK. AS STATED IN OUR PREVIOUS DECISION, THE AMOUNT OF THE CONTRACTOR'S INTENDED BID WAS NOT ESTABLISHED WITH SUFFICIENT DEFINITENESS TO PERMIT OF CORRECTION OF THE BID. THE IMPROPER ACCEPTANCE OF THE BID, WITH ACTUAL NOTICE OF THE MISTAKE, WHICH WAS ADMITTED BY THE CONTRACTING OFFICER, OBLIGATED THE GOVERNMENT EITHER TO NEGOTIATE A PRICE SATISFACTORY TO BOTH PARTIES OR TO PAY THE REASONABLE VALUE OF THE WORK.

IT APPEARING FROM THE PRESENT RECORD THAT REASONABLE PRICES FOR THE PORTIONS OF THE WORK AS TO WHICH THE CONTRACTOR CLAIMS MISTAKES IN ITS BID HAVE APPARENTLY BEEN DETERMINED AND SUBSTANTIALLY AGREED ON BETWEEN THE PARTIES, WE WILL NOT OBJECT TO A SUPPLEMENTAL AGREEMENT FIXING A NEW CONTRACT PRICE ON THE BASIS OF THE AMOUNTS SO DETERMINED. IN THE EVENT OF INABILITY TO AGREE ON SUCH AMOUNTS THE CONTRACTOR'S CLAIM FOR COMPENSATION IN EXCESS OF THE AMOUNT STATED IN THE CONTRACT SHOULD BE SUBMITTED TO OUR OFFICE UPON COMPLETION OF THE WORK.

A REFERENCE TO THIS DECISION, AS WELL AS TO THE DECISION OF JULY 28, 1955, SHOULD BE MADE ON THE SUPPLEMENTAL AGREEMENT.

A COPY OF CONTRACT NO. DA-41-443-ENG-4618 IS RETURNED. THE OTHER PAPERS IN THE CASE ARE BEING RETAINED.