B-132173, JUN. 28, 1957

B-132173, JUN. 28, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JUNE 11, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA 09-038-AIII-1019 WAS AWARDED.

THE PURCHASING AND CONTRACTING OFFICE, FORT BENNING, GEORGIA, BY INVITATION NOS. 09-038-57-189, REQUESTED BIDS--- TO BE OPENED APRIL 27, 1957,--- FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE REPLACEMENT OF DEFECTIVE STREET LIGHTING CABLE IN CIRCUITS NOS. 1, 2 AND 3 AT THE FORT. THE WORK TO BE PERFORMED WAS DIVIDED INTO THREE ITEMS FOR THE PURPOSES OF SUBMITTING BIDS AND MAKING PAYMENT FOR THE WORK. IN RESPONSE THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., SUBMITTED A BID, AS AMENDED BY TELEGRAM DATED APRIL 26, 1957, OFFERING TO PERFORM THE WORK REQUIRED ON CIRCUITS NOS. 1, 2 AND 3 FOR THE TOTAL AGGREGATE BID PRICE OF $31,378.68. THE AGGREGATE BID OF THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., ON THE THREE CIRCUITS WAS ACCEPTED ON APRIL 30, 1957.

BY TELEGRAM FILED AT 6:30 P.M. ON MAY 1, 1957, THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., ADVISED THE CONTRACTING OFFICE THAT AN ERROR HAD BEEN MADE IN ITS BID AND REQUESTED THAT IT BE PERMITTED TO WITHDRAW ITS BID ON THE PROJECT. IN CONFIRMING LETTERS DATED MAY 2 AND 3, 1957, THE CORPORATION STATED THAT IN EXTENDING ITS UNIT PRICE OF $0.75 PER FOOT FOR HAND TRENCHING ON EACH OF ITS ESTIMATE SHEETS FOR CIRCUITS NOS. 1, 2 AND 3, ITS SECRETARY MISREAD SUCH UNIT PRICE AND USED A UNIT PRICE OF $0.15 PER FOOT. THE CORPORATION STATED FURTHER THAT BECAUSE OF THIS ERROR, ITS BID PRICE FOR THE PROJECT WAS UNDERSTATED BY THE AMOUNT OF $17,374.50 AND THAT ITS BID PRICE FOR THE JOB SHOULD HAVE BEEN $48,653.18. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED ITS ORIGINAL ESTIMATE SHEETS ON CIRCUITS NOS. 1 AND 2, WHICH SHOW THAT THE CORPORATION ESTIMATED THAT 5,000 LINEAL FEET OF HAND TRENCHING AT $0.75 PER FOOT WAS REQUIRED ON EACH OF THE CIRCUITS AND THAT IN EXTENDING THIS ITEM ON EACH OF THE ESTIMATE SHEETS, IT INSERTED A TOTAL OF $800. THE CORRECT EXTENSION FOR EACH OF THESE ITEMS IS $3,750. THE CORPORATION ALSO SUBMITTED ITS ORIGINAL ESTIMATE SHEET ON CIRCULAR NO. 3 WHICH SHOWS THAT IT ESTIMATED THAT 12,500 LINEAL FEET OF HAND TRENCHING AT $0.75 PER FOOT WAS REQUIRED AND THAT IN EXTENDING THIS ITEM, IT INSERTED A TOTAL OF $1,875. THE CORRECT EXTENSION FOR THIS ITEM IS $9,375.

IN HIS STATEMENT OF MAY 8, 1957, THE CONTRACTING OFFICER STATES THAT THE POST ENGINEER SECTION'S ESTIMATE OF THE COST OF THE WORK WAS $27,190 AND THAT ALTHOUGH THERE WAS SOMEWHAT OF A SPREAD BETWEEN THE AGGREGATE BID OF THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., IN THE AMOUNT OF $31,278.68 AND THE NEXT LOWEST AGGREGATE BID OF $47,200, HE DID NOT CONSIDER SUCH SPREAD SUFFICIENT TO PLACE HIM ON NOTICE OF A PROBABLE ERROR IN THE CORPORATION'S BID, IN VIEW OF THE LOWER ESTIMATE OF THE POST ENGINEER SECTION. THE ABSTRACT OF BIDS SHOWS THAT FOUR OTHER AGGREGATE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $50,607, $51,644, $62,017.68, AND $94,170. CONSIDERING THE FACT THAT THE NEXT THREE LOWEST BIDS ON THE PROJECT FALL WITHIN A RANGE OF $4,500 ON A $47,000 JOB, AND THE ADDITIONAL FACT THAT THE AGGREGATE BID OF THE GULF ELECTRIC CONSTRUCTION COMPANY, INC., IS $15,921.32 LOWER THAN THE LOWEST OF THESE AGGREGATE BIDS, THE PROBABILITY OF ERROR IN THE LOW BID APPEARS TO BE SUFFICIENTLY OBVIOUS TO HAVE REQUIRED VERIFICATION BEFORE ACCEPTANCE OF THE CORPORATION'S BID, UNLESS DETAILED REVIEW OF THE GOVERNMENT ESTIMATE WOULD HAVE JUSTIFIED THE CONCLUSION THAT ALL OTHER BIDS WERE EXCESSIVE.

IN VIEW OF THE CIRCUMSTANCES APPEARING IN THIS CASE, PARTICULARLY THE GREAT DIFFERENCE BETWEEN THE BID PRICES, THERE IS AT LEAST SERIOUS DOUBT THAT THE ACCEPTANCE OF THE BID CONSTITUTED A VALID AND BINDING CONTRACT REQUIRING THE CORPORATION TO PERFORM THE WORK FOR THE AMOUNT QUOTED IN ITS BID. SEE ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.CLS. 466, 476, AND KEMO V. UNITED STATES, 36 F.SUPP. 568.

ACCORDINGLY, AND SINCE IT IS REPORTED THAT NO WORK HAS BEEN PERFORMED BY THE CORPORATION, CONTRACT NO. DA 09-038-AIII-1019 SHOULD BE CANCELED AND THE CORPORATION RELIEVED OF ALL LIABILITY UNDER ITS BID.

THE ABSTRACT OF BIDS AND THE CONTRACTING OFFICER'S REPORT OF MAY 8, 1957, ARE BEING RETAINED. THE OTHER PAPERS IN THE CASE ARE RETURNED.