B-129806, MAY 13, 1957

B-129806, MAY 13, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTERS DATED NOVEMBER 14, 1956, AND APRIL 15, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE DI TULLIO PLUMBING AND HEATING COMPANY, TRENTON, NEW JERSEY, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-28-013-AI-1706 WAS AWARDED.

THE POST PURCHASING AND CONTRACTING OFFICE, FORT DIX, NEW JERSEY, BY INVITATION DATED JUNE 5, 1956, REQUESTED BIDS--- TO BE OPENED JUNE 18, 1956--- FOR FURNISHING MATERIALS AND LABOR AND FOR PERFORMING ALL WORK NECESSARY FOR THE REPLACEMENT OF EXISTING HOT WATER HEATERS, AND OF ALL EXISTING GALVANIZED PIPING AND FITTINGS IN HEATER ROOMS WITH COPPER, IN 100 BARRACK BUILDINGS THROUGHOUT THE FORT. IN RESPONSE THE DI TULLIO PLUMBING AND HEATING COMPANY SUBMITTED A BID DATED JUNE 18, 1956, OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $22,740. THE BID OF THE COMPANY WAS ACCEPTED ON JUNE 22, 1956.

IN A LETTER DATED JULY 9, 1956, IN WHICH IT REQUESTED THAT IT BE PERMITTED TO WITHDRAW OR CORRECT ITS BID ON THE PROJECT, THE DI TULLIO PLUMBING AND HEATING COMPANY ADVISED THAT IT HAD MADE AN ERROR OF $18,045 IN ITS BID BY FAILING TO INCLUDE THEREIN THE COST OF CERTAIN COPPER PIPING; THAT IT HAD RECENTLY PERFORMED A JOB AT THE FORT SIMILAR TO THAT REQUIRED UNDER THE SUBJECT CONTRACT AND HAD ERRONEOUSLY ASSUMED THAT THIS JOB WAS IDENTICAL TO THE PREVIOUS ONE AND HAD THEREFORE USED THE ESTIMATE SHEETS PREPARED FOR THE PREVIOUS JOB IN COMPUTING ITS BID PRICE FOR THE JOB IN QUESTION. WITH ITS LETTER THE COMPANY SUBMITTED THE ESTIMATE SHEETS WHICH, IT STATED, WERE PREPARED FOR THE JOB PERFORMED DURING THE PREVIOUS YEAR AND ON WHICH, IT STATED, ITS BID PRICE OF $22,740 WAS BASED. THE COMPANY ALSO SUBMITTED REVISED ESTIMATE SHEETS FOR THE JOB WHICH SHOW A TOTAL PRICE OF $40,785. IN REGARD TO THE WORK COVERED BY THE PREVIOUS YEAR'S CONTRACT AND THE CURRENT CONTRACT, IT WAS STATED IN A MEMORANDUM (COMMENT NO. 2) DATED JULY 30, 1956,FROM THE POST ENGINEER TO THE PURCHASING AND CONTRACTING OFFICE, FORT DIX, AS FOLLOWS:

"1. IF A COMPARISON IS TO BE DRAWN BETWEEN THIS YEARS CONTRACT AND LAST YEARS CONTRACT, THEN THE COMPARATIVE COST WILL BE THE VALUE OF THE ADDITIONAL COPPER ADDED TO LAST YEARS CONTRACT PRICE.

"2. THE WORK REQUIRED UNDER THE CURRENT CONTRACT (DA-28-013-AI 1706) IS IDENTICAL WITH THE WORK PERFORMED BY DI TULLIO PLUMBING AND HEATING CO., UNDER THEIR CONTRACT DA-28-013-AI-1428 OF MARCH 1955, EXCEPT THAT THE CURRENT CONTRACT CALLS FOR A GREATER AMOUNT OF COPPER TUBING. IF THE SPECIFICATIONS FOR BOTH CONTRACTS ARE COMPARED, THEY WILL BE FOUND TO BE SIMILAR,"WORD FOR WORD" EXCEPT, THAT PARAGRAPH 1 10 IS ADDED TO COVER THE ADDITIONAL COPPER PIPE IN THE VARIOUS GROUPS. LAST YEARS CONTRACT CALLS FOR THE REPLACEMENT WITH COPPER OF ALL EXISTING IRON PIPE ON THE CIRCULATING LINES BETWEEN HEATER AND TANK. THEREFORE, THE DIFFERENCE IN THE TWO CONTRACTS IS THE REPLACEMENT OF PIPE FROM THE STORAGE TANK TO POINTS DESIGNATED ON THE CONTRACT DRAWING PE NO. 187-148.

"3. THE GOVERNMENTS ESTIMATE OF $20,000 WAS MADE PRIOR TO THE INCLUSION OF COPPER BEYOND THE STORAGE TANK AND THEREFORE, IS LOW. A FAIR AND SUBSTANTIAL ESTIMATE IS $28,367.00.'

THE RECORD INDICATES THAT BY LETTER DATED JULY 30, 1956, THE DI TULLIO PLUMBING AND HEATING COMPANY WAS NOTIFIED TO PROCEED WITH THE CONTRACT WORK; THAT BY LETTER DATED OCTOBER 4, 1956, THE COMPANY ADVISED THAT IT DID NOT WISH TO WITHDRAW ITS BID ON THE PROJECT BUT THAT IT STILL DESIRED CORRECTION OF ITS BID; AND THAT BY LETTER DATED OCTOBER 22, 1956, THE COMPANY ADVISED THE CONTRACTING OFFICER THAT IT WISHED TO WITHDRAW ITS REQUEST FOR AN INCREASE IN THE CONTRACT PRICE OF THE PROJECT UNTIL THE COMPLETION THEREOF, AT WHICH TIME IT WOULD RENEW ITS REQUEST AND SUBMIT A RECORD OF THE COSTS INCURRED BY IT IN PERFORMING THE CONTRACT WORK.

IN A LETTER DATED FEBRUARY 11, 1957, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE JOB BE INCREASED BY $8,982.15--- THE DIFFERENCE BETWEEN ITS ORIGINAL BID PRICE FOR THE JOB OF $22,740 AND ITS ALLEGED ACTUAL COST OF $31,722.15--- AND IN SUPPORT OF ITS CLAIM SUBMITTED ITEMIZED COST ANALYSIS SHEETS DATED FEBRUARY 6, 1957, SHOWING THE MATERIAL AND LABOR COSTS. IN A SUPPLEMENTAL REPORT DATED MARCH 11, 1957, THE CONTRACTING OFFICER STATED THAT THE AMOUNTS PERTAINING TO LABOR COSTS SHOWN ON THE COMPANY'S COST DATA SHEETS DATED FEBRUARY 6, 1957, HAVE BEEN VERIFIED FROM THE WEEKLY PAYROLLS SUBMITTED BY THE COMPANY AND THAT, EXCEPT FOR A FEW ITEMS, HAVE BEEN FOUND TO BE TRUE AND CORRECT; THAT IT WAS HIS OPINION THAT THE COMPANY IS NOT JUSTIFIED IN TAKING A TEN PERCENT OVERHEAD CHARGE AND TEN PERCENT PROFIT CHARGE ON THE WELFARE AND PENSION FUND, INSURANCE ON LABOR AND CARFARE; AND THAT HE CONSIDERED THE AMOUNT OF $8,798.82 TO BE A REASONABLE PRICE FOR THE OMITTED MATERIAL AND LABOR.

THE ABSTRACT OF BIDS SHOWS THAT THE SEVEN OTHER BIDS ON THE PROJECT RANGED FROM $33,127.86 TO $61,635. IT IS REPORTED THAT THE GOVERNMENT'S ORIGINAL ESTIMATE OF $20,000 WAS ERRONEOUS, HAVING BEEN BASED ON ONLY A PART OF THE WORK CALLED FOR, AND THAT THE GOVERNMENT'S REVISED ESTIMATE FOR THE JOB WAS $28,367. IN VIEW OF THE DIFFERENCE OF $10,387.86 BETWEEN THE COMPANY'S BID OF $22,740 AND THE NEXT LOW BID IN THE AMOUNT OF $33,127.86, THE PROBABILITY OF ERROR WAS APPARENT AND, IN THESE CIRCUMSTANCES, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

IN THE CIRCUMSTANCES, AND SINCE THERE APPEARS TO BE NO DOUBT THAT THE COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED, PAYMENT IS AUTHORIZED OF THE ADDITIONAL AMOUNT OF $8,798.82, AS RECOMMENDED BY THE CONTRACTING OFFICER.

REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING THE PAYMENT HEREIN AUTHORIZED.