B-125754, JAN. 4, 1956

B-125754, JAN. 4, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 11, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO ERRORS THE SHANAHAN CONSTRUCTION COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-23-028-ENG-2525 IS BASED.

BY INVITATION NO. ENG-23-028-55-61 AND ADDENDUM NO. 1, BOTH OF WHICH WERE DATED MARCH 2, 1955, THE OFFICE OF THE DISTRICT ENGINEER, KANSAS CITY DISTRICT, CORPS OF ENGINEERS, REQUESTED BIDS--- TO BE OPENED ON MARCH 28, 1955--- FOR FURNISHING LABOR AND MATERIALS AND FOR PERFORMING ALL WORK REQUIRED FOR THE CONSTRUCTION OF STORAGE FACILITIES FOR THE ORDNANCE STORAGE DEPOT AT SEDALIA AIR FORCE BASE, KNOB NOSTER, MISSOURI, IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS AND DRAWINGS. WHILE THE INVITATION STIPULATED THAT AWARD WOULD BE MADE AS A WHOLE TO ONE CONTRACTOR, THE WORK TO BE PERFORMED WAS DIVIDED INTO 111 ITEMS FOR THE PURPOSES OF SUBMITTING BIDS AND MAKING PAYMENT FOR THE WORK. ITEMS 3 AND 10 COVER THE CONSTRUCTION OF A MAINTENANCE AND INSPECTION BUILDING, AND THE CONSTRUCTION OF AN AUXILIARY POWER PLANT, RESPECTIVELY. THE BID OF THE SHANAHAN CONSTRUCTION COMPANY WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT ITS AGGREGATE BID OF $700,191.26 INCLUDED LUMP-SUM AMOUNTS OF $112,147 AND $159,811 FOR ITEMS 3 AND 10, RESPECTIVELY. THE BID OF THE COMPANY WAS ACCEPTED ON MARCH 31, 1955.

IN A REPORT DATED JULY 26, 1955, THE CONTRACTING OFFICER STATED THAT ON APRIL 6, 1955, A REPRESENTATIVE OF THE SHANAHAN CONSTRUCTION COMPANY TELEPHONED ALLEGING THAT THE COMPANY HAD MADE CERTAIN ERRORS IN QUOTING ON ITEMS 3 AND 10 OF ITS BID. IN A LETTER DATED APRIL 9, 1955, BY WHICH IT TRANSMITTED AN EXECUTED COPY OF THE CONTRACT, THE COMPANY STATED THAT IN CHECKING ITS ESTIMATE SHEETS ON APRIL 4, 1955, IT DISCOVERED THAT IT HAD OMITTED THE COST OF ONE OF TWO 31-TON AIR CONDITIONING COMPRESSORS TO BE INSTALLED IN THE MAINTENANCE AND INSPECTION BUILDING COVERED BY ITEM 3, AND THAT IT HAD ALSO OMITTED THE COST OF 900 SQUARE FEET OF THE AREA OF THE AUXILIARY POWER PLANT BUILDING COVERED BY ITEM 10. THE COMPANY REQUESTED THAT THE PRICE OF ITEM 3 BE INCREASED BY $15,500 AND THAT THE PRICE OF ITEM 10 BE INCREASED BY $7,164.

IN A BRIEF DATED MAY 19 AND AN AFFIDAVIT DATED MAY 21, 1955, RESPECTIVELY, MR. SHANAHAN OF THE SHANAHAN CONSTRUCTION COMPANY STATED THAT BECAUSE OF THE DELAY IN RECEIVING A COPY OF THE INVITATION, THE COMPANY HAD BEEN REQUIRED TO USE HALF-SIZE DRAWINGS IN COMPUTING ITS BID PRICE; THAT IN CHECKING THE AIR CONDITIONING EQUIPMENT LIST FOR THE MAINTENANCE AND INSPECTION BUILDING (ITEM 3) WHICH, HE STATES, WAS SHOWN ON PAGE 15 OF DRAWING NO. 35-53-18, HE FAILED TO NOTE THE NUMERAL "2" IN THE QUANTITY COLUMN OPPOSITE THE DESCRIPTION OF ITEM 2-A--- "RECIPROCATING FREON-12 COMPRESSOR-31 TONS; " AND THAT HIS SUBCONTRACTOR FAILED TO SUBMIT A WRITTEN QUOTATION ON THE COMPRESSORS CALLED FOR UNDER ITEM 2-A OF THE EQUIPMENT LIST, AS REQUESTED. MR. SHANAHAN STATED FURTHER THAT ON MARCH 26, 1955, HIS SUBCONTRACTOR PROMISED HIM BY TELEPHONE THAT HE WOULD SUBMIT A QUOTATION ON ITEM 2-A BY MONDAY MORNING, MARCH 28--- THE DAY OF THE BID OPENING--- AND THAT IN THE INTERIM, HE TEMPORARILY PLACED ON THE COMPANY'S ESTIMATE SHEET A PRICE OF $500 PER TON FOR THE COMPRESSORS CALLED FOR UNDER ITEM 2-A OF THE EQUIPMENT LIST; THAT HE THEN MULTIPLIED THE AMOUNT OF $500 BY 31--- THE NUMBER OF TONS SHOWN FOR THE COMPRESSOR--- TO ARRIVE AT A TOTAL OF $15,500--- THE PRICE OF ONE COMPRESSOR--- WHICH HE STATED HE INSERTED IN THE TOTAL AMOUNT COLUMN. IT WAS ALSO STATED FURTHER BY MR. SHANAHAN THAT ON THE MORNING OF THE BID OPENING, HIS SUBCONTRACTOR TELEPHONED ALLEGING THAT HE COULD NOT SUBMIT A FIRM QUOTATION ON THE COMPRESSORS BUT THAT THE PRICE WOULD NOT EXCEED $450 PER TON; AND THAT SINCE HE HAD ALREADY INSERTED A PRICE OF $500 PER TON ON THE COMPANY'S ESTIMATE SHEET, NO CHANGES WERE MADE ON THE ESTIMATE SHEET AS TO THAT ITEM. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS ORIGINAL ESTIMATE SHEETS AND AFFIDAVITS OF ITS ESTIMATOR AND THAT OF ITS SUBCONTRACTOR.

PARAGRAPH 1B OF ADDENDUM NO. 1 DATED MARCH 2, 1955, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"B. DRAWINGS. THE CONTRACT DRAWINGS ARE REVISED AS FOLLOWS IN ACCORDANCE WITH ATTACHED PRELIMINARY SKETCH SKSAC-640.

(1) DRAWING NO. 26-03-52.

(A) INSERT NOTE ON EACH SHEET OF THIS DRAWING AS FOLLOWS: "DIESEL ENGINE- DRIVEN-GENERATORS (150 KW--- 480 VOLT--- 3 PHASE), EXCITERS, RADIATORS, MUFFLERS, AND ANCHOR BOLTS, GENERATOR PANELS 1, 2 AND 3 OF SWITCHBOARD AND SYNCHRONIZING PANEL WILL BE FURNISHED BY THE GOVERNMENT AND SHALL BE INSTALLED BY THE CONTRACTOR. ALL OTHER EQUIPMENT, INCLUDING MAIN PANEL OF SWITCHBOARD, AIR COMPRESSORS, TANKS, PIPING AND WIRING SHALL BE FURNISHED AND INSTALLED BY THE CONTRACTOR.

(B) MODIFY BUILDING AND ACCESSORIES TO PROVIDE FOR THE INSTALLATION OF 3- -- 150 KW GOVERNMENT-FURNISHED DIESEL-ENGINE-DRIVEN-GENERATORS, EXCITERS, RADIATORS, MUFFLERS AND SWITCHBOARD, AS FOLLOWS:

"1. SHEET 1.

A. REDUCE WIDTH OF BUILDING TO APPROXIMATELY 31 FEET, 4 INCHES BY INCREASING SPACING BETWEEN THE CENTER-LINE OF COLUMN LINES A AND B FROM 15 FEET, 1 INCH TO 15 FEET, 8 INCHES AND MOVING THE OUTSIDE REAR WALL (COLUMN LINE D) TO COLUMN LINE C, THEREBY ELIMINATING THE AREA BETWEEN COLUMN LINES C AND D. REDESIGN ROOF MEMBERS TO SUIT THE REDUCED SPAN. DELETE PIPE TRENCH.'

PARAGRAPH 1A OF ADDENDUM NO. 3 DATED MARCH 22, 1954 (1955), PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"A. ADDENDUM NO. 1. REFERENCE IS MADE TO ADDENDUM NO. 1 (1) ON THE FIRST PAGE OF THE ADDENDUM, PARAGRAPH 1A (1), THE FOLLOWING ITEM IS DELETED FROM THE LIST OF GOVERNMENT-FURNISHED PROPERTY:

"2 3 480-VOLT, 3-PHASE, 3 WIRE, DIESEL

ENGINE-DRIVEN GENERATOR"

(2) PARAGRAPHS 1A (3), 1A (4), 1B, AND 1B (1), INCLUDING ANY OR ALL SUBPARAGRAPHS, ARE DELETED IN THEIR ENTIRETY.

(3) AT THE END OF THE ADDENDUM THE TWO INCLOSURES ARE DELETED.

(4) BIDS WILL BE RECEIVED ON THE AUXILIARY POWER PLANT ON THE BASIS OF THE ORIGINAL PLANS AND SPECIFICATIONS WHICH INCLUDE 3-200 KW DIESEL GENERATOR SETS AND AUXILIARIES FURNISHED AND INSTALLED BY THE CONTRACTOR.'

IN CONNECTION WITH ADDENDUM NO. 1 AND ADDENDUM NO. 3, THE CONTRACTING OFFICER STATES IN HIS REPORT AS FOLLOWS:

"THE CONSTRUCTION DRAWINGS AS ORIGINALLY ISSUED WITH THE INVITATION FOR BIDS CONTAINED PLANS FOR A BUILDING AREA OF APPROXIMATELY 2700 SQUARE FEET FOR THE AUXILIARY POWER PLANT. BY ADDENDUM NO. 1, THE AREA OF THAT BUILDING WAS DECREASED IN SIZE BY APPROXIMATELY ONE THIRD. THAT CHANGE WAS ACCOMPLISHED BY NARRATIVE DESCRIPTION SET FORTH IN ADDENDUM NO. 1 AND BY MEANS OF A PRELIMINARY SKETCH ATTACHED THERETO. IT WAS CONSIDERED THAT THE BUILDING PLANS AS SO REVISED WOULD CAUSE CONFUSION IN THE PREPARATION OF BIDS. SO, BY ADDENDUM NO. 3, THE PORTIONS OF ADDENDUM NO. 1 THAT REDUCED THE BUILDING IN SIZE WERE DELETED AND INSTRUCTIONS ISSUED TO BIDDERS TO BID ON THE BASIS OF THE ORIGINAL BUILDING PLANS. WORK SHEETS ATTACHED TO EXHIBIT NO. 1 SHOW THAT IN THE PREPARATION OF THE BID FOR THIS ITEM NO. 10, THE CONTRACTOR BASED HIS BID ON THE ORIGINAL BUILDING AREA, AND THEN REDUCED HIS ESTIMATE BY THE PROPORTION THAT THE OMITTED BUILDING AREA BORE TO THE ORIGINAL BUILDING AREA. THE REDUCTION WAS LEFT IN THE ESTIMATE EVEN THOUGH THE ORIGINAL BUILDING SIZE WAS REINSTATED IN THE BIDDING PLANS BY ADDENDUM NO. 3.'

THE COMPANY CONTENDS THAT THE WORDING USED IN PARAGRAPH 1A (4) OF ADDENDUM NO. 3 WAS MISLEADING IN THAT IT GAVE THE COMPANY THE IMPRESSION THAT THE ONLY CHANGE INTENDED BY THIS SUBPARAGRAPH WAS TO GO BACK TO THE ORIGINAL PLANS AND SPECIFICATIONS INSOFAR AS FURNISHING OF THE DIESEL GENERATOR SETS WAS CONCERNED. CONCEDING ARGUENDO THAT THE ONLY CONCLUSION ONE COULD REACH FROM READING PARAGRAPH 1A (4) OF ADDENDUM NO. 3 IS THAT IT RELATED ONLY TO THE FURNISHING OF THE DIESEL GENERATOR SETS, AND NOT TO THE WIDTH OF THE AUXILIARY POWER PLANT BUILDING COVERED BY ITEM 10, THE FACT REMAINS THAT PARAGRAPH 1B (1) OF ADDENDUM NO. 1, WHICH REDUCED THE WIDTH OF THE AUXILIARY POWER PLANT BUILDING APPROXIMATELY 31 FEET 4 INCHES, WAS DELETED BY THE PROVISIONS OF PARAGRAPH 1A (2) OF ADDENDUM NO. 3, WHICH THUS RESTORED THE SIZE OF THE BUILDING TO THE WIDTH SPECIFIED IN THE ORIGINAL SPECIFICATIONS AND DRAWINGS BEFORE THEIR AMENDMENT BY ADDENDUM NO. 1. THUS, WHILE THE PROVISIONS OF PARAGRAPH 1A (4) OF ADDENDUM NO. 3, STANDING ALONE, MAY HAVE BEEN SUBJECT TO POSSIBLE MISINTERPRETATION, THE PROVISIONS OF PARAGRAPH 1A (2) OF THAT ADDENDUM COULD NOT HAVE BEEN MORE CLEARLY STATED.

THE SUBMISSION OF A BID IN RESPONSE TO THE INVITATION IN THIS CASE WAS, OF COURSE, VOLUNTARY. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID TO CONFORM TO THE SPECIFICATIONS IN ALL OF ITS PHASES RESTS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION CO. V. UNITED STATES, 100 C.CLS. 120, 163. AS STATED IN THE CASE OF GRYMES V. SANDERS ET AL., 93 U.S. 55,"MISTAKE, TO BE AVAILABLE IN EQUITY, MUST NOT HAVE ARISEN FROM NEGLIGENCE, WHERE THE MEANS OF KNOWLEDGE WERE EASILY ACCESSIBLE.' IT IS CLEAR THAT SUCH ERRORS AS WERE MADE IN THE BID OF THE SHANAHAN CONSTRUCTION COMPANY AS TO ITEMS 3 AND 10 WERE DUE TO ITS FAILURE TO PROPERLY ASCERTAIN WHAT THE SPECIFICATIONS CALLED FOR PRIOR TO SUBMITTING ITS BID. ANY ERRORS THAT WERE MADE IN THE BID OF THE COMPANY WERE UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DO NOT ENTITLE THE COMPANY TO RELIEF. SEE 20 COMP. GEN. 652.

THE ABSTRACT OF BIDS SHOWS THAT THE THREE OTHER BIDDERS QUOTED PRICES OF $779,158.50, $784,206.10 AND $856,201.27 FOR THE PROJECT. THE DIFFERENCE BETWEEN THE BID OF THE SHANAHAN CONSTRUCTION COMPANY AND THE OTHER BIDS WAS CLEARLY NOT SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. ALTHOUGH, AFTER AWARD, THE COMPANY SUBMITTED ITS ORIGINAL ESTIMATE SHEETS WHICH WERE FOUND TO SHOW THAT THE COMPANY HAD MADE THE ERRORS IN ITS BID AS TO ITEMS 3 AND 10, AS ALLEGED, IT DOES NOT APPEAR THAT, PRIOR TO AWARD, THE CONTRACTING OFFICER HAD ANY KNOWLEDGE OF THE FACTORS USED BY THE COMPANY IN COMPUTING ITS BID PRICE.

THE PRESENT RECORD INDICATES THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD, AND NO GROUND BEING FOUND FOR CHARGING THE CONTRACTING OFFICER WITH NOTICE OF POSSIBLE ERROR. IN THESE CIRCUMSTANCES A COMPLETE, VALID AND ENFORCEABLE CONTRACT CAME INTO BEING UPON ACCEPTANCE OF THE BID, WHETHER OR NOT THE FORMAL CONTRACT WAS EVER EXECUTED. SARFIELDE V. UNITED STATES, 93 U.S. 242; ACKERLIND V. UNITED STATES, 240 U.S. 531; UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; UNITED STATES V. CONTI, 119 F.2D 652.

IT IS THE ESTABLISHED RULE THAT WHEN A BIDDER HAS MADE A MISTAKE AND HIS BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER HAD OR WAS CHARGEABLE WITH ACTUAL OR CONSTRUCTIVE NOTICE OF IT, SO THAT HIS ACCEPTANCE WAS IN EFFECT FRAUDULENT. SEE SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507; AND OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD AND THE LAW APPLICABLE TO THE MATTER, THERE APPEARS TO BE NO LEGAL BASIS FOR AUTHORIZING ANY INCREASE IN THE PRICES OF ITEMS 3 AND 10 OF CONTRACT NO. DA-23-028-ENG- 2525.

A DUPLICATE SET OF THE PAPERS IN THE CASE IS BEING RETAINED. THE OTHER PAPERS ARE RETURNED.