B-135272, MARCH 5, 1958, 37 COMP. GEN. 579

B-135272, MARCH 5, 1958, 37 COMP. GEN. 579

BIDS - MISTAKES - ALLEGATION AT BID OPENING - REFUSAL TO SUBSTANTIATE ERROR TO PERMIT CONSIDERATION OF A LOW BID SUBMITTED BY A BIDDER WHO AT THE OPENING ORALLY ALLEGED AN ERROR IN AN OBVIOUSLY LOW UNIT PRICE BUT WHO PREFERRED NOT TO SUBSTANTIATE THE MISTAKE BECAUSE IT WOULD ELIMINATE HIS BID FROM COMPETITION WOULD BE NOT ONLY TANTAMOUNT TO ALLOWING THE OSTENSIBLY LOW BIDDER TO ELECT, AFTER BID OPENING, WHETHER TO STAND ON THE BID OR WITHDRAW IT ON THE GROUND OF MISTAKE BUT WOULD BE UNFAIR TO OTHER BIDDERS AND CONTRARY TO THE COMPETITIVE PROCUREMENT SYSTEM.

TO THE BUREAU OF RECLAMATION, MARCH 5, 1958:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 18, 1958, 220, REQUESTING OUR ADVICE AS TO CONSIDERATION OF BIDS SUBMITTED IN RESPONSE TO AN INVITATION ISSUED ON DECEMBER 18, 1957, FOR CONSTRUCTION AND COMPLETION OF EARTH WORK AND STRUCTURES FOR APPROXIMATELY 2.1 MILES OF DRAINS, AS REQUIRED BY SPECIFICATIONS NO. 117C-485, IN CONNECTION WITH THE COLUMBIA BASIN PROJECT, WASHINGTON.

THE SCHEDULE CONTAINED IN THE SPECIFICATIONS LISTS 19 ITEMS OF WORK TO BE PERFORMED, OPPOSITE EACH OF WHICH BIDDERS WERE REQUIRED TO SHOW THE UNIT PRICE AND TOTAL AMOUNT INCLUDED IN THE BID THEREFOR. HOWEVER, BIDDERS WERE ADVISED THAT WHILE BIDS WOULD BE CONSIDERED ON THE BASIS OF THE SCHEDULE, NO BID WOULD BE CONSIDERED FOR ONLY A PART OF THE SCHEDULE. ITEM NO. 1 IN THE SCHEDULE IS " EXCAVATION FOR OPEN DRAINS 22,000 CU. YDS.'

AT THE OPENING OF BIDS ON JANUARY 23, 1958, THE BID OF DUNCAN CONSTRUCTION COMPANY, MOSES LAKE, WASHINGTON, IN THE TOTAL AMOUNT OF $18,050.38, WAS FOUND TO BE THE LOW BID, AND THE BID OF ZUBER BROTHERS CONTRACTORS AND CONTRACTORS AND EXCAVATORS, INC. (A JOINT VENTURE), PORTLAND, OREGON, IN THE TOTAL AMOUNT OF $19,457, WAS FOUND TO BE THE SECOND LOW BID OF THE 16 BIDS RECEIVED. THE GOVERNMENT ENGINEER'S ESTIMATE WAS $22,764.

YOU STATE THAT THE FOLLOWING IS AN ACCOUNT OF WHAT HAPPENED AT THE CONCLUSION OF THE OPENING OF BIDS, BASED UPON THE RECOLLECTION OF THE BID OPENING BOARD:

AFTER THE LAST BID HAD BEEN OPENED, SEVERAL ASKED THAT UNIT PRICES OF THE LOW BIDDER BE READ. MR. MCGONEGAL, CHIEF, CONTRACT ADMINISTRATION AND CONSTRUCTION BRANCH, CALLED FOR THE APPARENT LOW BID AND ANNOUNCED THAT HE WOULD READ THE ITEM NUMBER AND THE UNIT PRICE FROM THE APPARENT LOW BID SUBMITTED BY DUNCAN CONSTRUCTION COMPANY. HE BEGAN," ITEM 1, 12 CENTS.' THERE WAS AN AUDIBLE STIRRING OF THE AUDIENCE, AND SEVERAL JOKING COMMENTS WERE MADE. MR. WILLIAM N. DUNCAN, OWNER OF DUNCAN CONSTRUCTION COMPANY, SEEMED QUITE UPSET, AND STATED," I KNOW THAT'S NOT RIGHT.' WHEREUPON SEVERAL MORE COMMENTS WERE MADE BY THE AUDIENCE. MR. MCGONEGAL STATED," I REPEAT-- ITEM 1, 12 CENTS.' SEVERAL FURTHER COMMENTS CAME FROM THE AUDIENCE, AND THEN MR. DUNCAN SAID," I WON-T DO IT FOR THAT--- IT SHOULD BE 21 CENTS--- THE EXTENSION WILL SHOW THAT I MEANT TO BID 21 CENTS.' SEVERAL PEOPLE, INCLUDING A MEMBER OF THE BID OPENING BOARD, CHECKED THE EXTENSION, WHICH WAS FOUND TO BE BASED UPON A UNIT PRICE OF 12 CENTS PER CUBIC YARD. AT THIS POINT MR. DUNCAN BEGAN A WHISPERED CONVERSATION WITH A PERSON IN THE AUDIENCE, AND MADE NO OTHER STATEMENTS TO THE BOARD UNTIL THE CLOSE OF THE MEETING.

IT IS CUSTOMARY AFTER THE BID OPENINGS ARE DISMISSED TO INTERVIEW REPRESENTATIVES OF THE LOW BIDDER, IF ANY ARE PRESENT. AS THE AUDIENCE WAS LEAVING THE ROOM, MR. DUNCAN APPROACHED MR. MCGONEGAL, TO STATE THAT HIS 12-CENT BID WAS IN ERROR, AND TO ASK WHAT HE MIGHT DO ABOUT IT. HE STATED THAT HE HAD NEVER BEFORE BEEN IN SUCH A PREDICAMENT. MR. MCGONEGAL ADVISED MR. DUNCAN TO GATHER TOGETHER HIS WORK SHEETS AND ANY OTHER SUPPORTING DATA, AND BRING THEM TO HIM THE SAME AFTERNOON IF POSSIBLE. MR. DUNCAN DID NOT REPLY DIRECTLY AS TO WHETHER HE WOULD COMPLY. HOWEVER, HE STATED THAT HE COULD BEGIN WORK WITHIN A WEEK; HE EXPECTED TO SUBCONTRACT CONCRETE, AND POSSIBLE PIPE WORK.

IT APPEARS THAT NOTHING FURTHER HAD BEEN HEARD FROM MR. DUNCAN RELATIVE TO THE ALLEGED MISTAKE BY THE AFTERNOON OF JANUARY 24, 1958, IN VIEW OF WHICH THE FOLLOWING TELEGRAM WAS DISPATCHED TO THE BIDDER:

PLEASE VERIFY IMMEDIATELY YOUR BID FOR WORK UNDER SPECIFICATIONS NO. 117C -485.

MR. DUNCAN REPLIED ON BEHALF OF DUNCAN CONSTRUCTION COMPANY BY TELEGRAM OF JANUARY 27, 1958, AS FOLLOWS:

WE ARE WILLING TO PROCEED WITH WORK ON 117C-485 AS BID JANUARY 23RD 1958.

YOU STATE THAT, IN ORDER TO REDUCE THE TIME CONSUMED BY THE MECHANICS OF AWARD OF CONTRACT, A BID OPENING REPORT RECOMMENDING AWARD TO THE LOW BIDDER WAS TENTATIVELY APPROVED ON JANUARY 29, 1958, UNDER THE ASSUMPTION THAT MR. DUNCAN'S TERSE TELEGRAM WOULD BE FOLLOWED UP BY SUPPORTING EVIDENCE RELATIVE TO THE AMOUNT INTENDED TO BE INCLUDED IN THE BID FOR ITEM NO. 1. CONTRACT, PERFORMANCE AND PAYMENT BOND FORMS WERE ALSO FORWARDED TO THE BIDDER FOR EXECUTION BY THE ACTING PROJECT MANAGER'S LETTER OF THE SAME DATE, WHICH STATED IN PART:

* * * HOWEVER, THIS LETTER IS NOT TO BE CONSIDERED AN AWARD OF CONTRACT NOR A COMMITMENT THAT AWARD WILL BE MADE, AND NO WORK SHOULD BE COMMENCED UNLESS AND UNTIL YOU HAVE RECEIVED AN AWARD AND NOTICE TO PROCEED.

ON JANUARY 31, 1958, THE ACTING PROJECT MANAGER DISPATCHED THE FOLLOWING TELEGRAM TO THE BIDDER:

YOUR TELEGRAPHIC REPLY TO MY TELEGRAM ASKING FOR VERIFICATION OF YOUR BID FOR WORK UNDER SPECIFICATIONS NO. 117C-485 IS NOT CONSIDERED RESPONSIVE.

WE HAVE REASON TO BELIEVE YOUR BID MAY BE IN ERROR AND YOU ARE REQUESTED TO SUBMIT A SWORN STATEMENT WITH SUPPORTING EVIDENCE SUCH AS ORIGINAL WORK SHEETS OR OTHER DATA USED IN PREPARING THE BID FOR WORK UNDER SPECIFICATIONS NO. 117C-485, WHICH WOULD SUPPORT YOUR BID RECEIVED AND THE PRICES QUOTED THEREIN AS BEING THOSE WHICH YOU ORIGINALLY INTENDED OR THAT THE BID WAS IN ERROR.

MR. DUNCAN REPLIED ON BEHALF OF DUNCAN CONSTRUCTION COMPANY BY LETTER OF FEBRUARY 6, 1958, AS FOLLOWS:

IN REGARD TO U.S.B.R. SPECIFICATIONS NO. 117C-485, THE BID WHICH I SUBMITTED TO THE BUREAU OF RECLAMATION ON THE ABOVE SPECIFICATIONS IS MY FIRM BID AND I STAND READY AND WILLING TO PERFORM THE WORK THEREUNDER REQUIRED AT THE PRICES CONTAINED IN MY BID TO YOU ON JANUARY 23, 1958.

IN THE MEANTIME, IT APPEARS THAT A REPRESENTATIVE OF THE SURETY FOR DUNCAN CONSTRUCTION COMPANY HAD PERSONALLY DELIVERED TO THE ASSISTANT PROJECT MANAGER EXECUTED COPIES OF THE CONTRACT, PAYMENT AND PERFORMANCE BONDS, REFERRED TO ABOVE.

AS YOU INDICATE, THE BIDDER'S LETTER OF FEBRUARY 6, 1958, WAS NOT RESPONSIVE TO THE GOVERNMENT'S TELEGRAM OF JANUARY 31, 1958, AND IT FAILS COMPLETELY, AS IN THE CASE OF THE OTHER REPLIES, TO FURNISH ANY INFORMATION WHATSOEVER ON THE ISSUE INVOLVED. HOWEVER, YOU STATE THAT YOU BELIEVE THE RECORD IN THE CASE ESTABLISHES THAT DUNCAN CONSTRUCTION COMPANY MADE AN ERROR WHICH, IF CORRECTED, WOULD REMOVE IT FROM CONSIDERATION AS LOW BIDDER, AND THAT THE SAID CONCERN BY FAILING TO RESPOND TO THE REQUESTS FOR PRESENTATION OF WORKSHEETS AND SUPPORTING DATA TO EITHER SUBSTANTIATE ITS PRICE, OR CONFIRM THAT AN ERROR WAS MADE, IS ATTEMPTING TO TAKE ADVANTAGE OF THE SITUATION AT THE EXPENSE OF OTHER BIDDERS, CITING 35 COMP. GEN. 33. ACCORDINGLY, YOU STATE THAT SINCE IT WOULD NOT, FOR REASONS WHICH YOU POINT OUT, BE PRACTICABLE TO READVERTISE THE PROCUREMENT THIS LATE IN THE YEAR, YOU ARE OF THE OPINION THAT THE CONTRACT SHOULD BE AWARDED TO THE SECOND LOW BIDDER.

THE ABSTRACT OF BIDS IN THE PRESENT INSTANCE SHOWS THAT THE UNIT PRICES STATED BY THE OTHER BIDDERS FOR THE EXCAVATION WORK DESIGNATED AS ITEM NO. 1 RANGED FROM $0.22 TO $0.55 PER CUBIC YARD, THE AVERAGE BEING $0.29. THE GOVERNMENT ENGINEER'S ESTIMATE WAS $0.27. MOREOVER, A TABULATION OF THE RESULTS OF BIDDING DURING THE PAST 12 MONTHS ON THE MAJOR DRAIN CONSTRUCTION WORK IN CONNECTION WITH THE COLUMBIA BASIN PROJECT SHOWS THAT DUNCAN CONSTRUCTION COMPANY SUBMITTED BIDS ON 6 PREVIOUS JOBS IN WHICH THE UNIT PRICES STATED BY THE COMPANY FOR EXCAVATION WORK OF THE TYPE HERE INVOLVED RANGED FROM $0.20 TO $0.56 PER CUBIC YARD, THE AVERAGE BEING $0.35. ALSO, THE TABULATION SHOWS THAT IN CONNECTION WITH THE 13 PREVIOUS JOBS ADVERTISED DURING THIS PERIOD THE AVERAGE PRICE QUOTED FOR EXCAVATION WORK BY THE CONCERNS SUBMITTING THE LOW BIDS WAS $0.264 PER CUBIC YARD.

THUS, THERE WOULD APPEAR TO BE NO DOUBT BUT THAT DUNCAN CONSTRUCTION COMPANY MADE A MISTAKE IN RESPECT TO THE PRICE INCLUDED IN ITS BID FOR ITEM NO. 1, AND THAT THE UNIT PRICE INTENDED TO BE QUOTED WAS $0.21, INSTEAD OF $0.12, AS STATED BY MR. DUNCAN AT THE OPENING OF BIDS. BUT CORRECTION OF THIS MISTAKE WOULD HAVE THE EFFECT OF MAKING DUNCAN CONSTRUCTION COMPANY'S BID $20,030.38, THEREBY REMOVING IT FROM CONSIDERATION AS THE LOW BID. MR. DUNCAN APPARENTLY REALIZED THIS AFTER HE HAD MADE THE ORAL DECLARATION WITH RESPECT TO THE MISTAKE AND PREFERRED NOT TO SUBSTANTIATE THE MISTAKE LEST HIS COMPANY BE ELIMINATED FROM THE COMPETITION.

IN VIEW OF THE NOTICE WHICH THE GOVERNMENT HAD, BOTH ACTUAL AND CONSTRUCTIVE, AS TO THE FACT OF ERROR, IT SEEMS APPARENT THAT THE ACCEPTANCE OF DUNCAN CONSTRUCTION COMPANY'S BID WITHOUT FURTHER AGREEMENT OR UNDERSTANDING WOULD NOT HAVE GIVEN RISE TO THE FORMATION OF A CONTRACT. SEE MOFFETT HODGKINS AND CLARKE CO. V. ROCHESTER, 178 U.S. 373. HOWEVER, THE BIDDER NOW WOULD WAIVE THE RIGHT WHICH IT OTHERWISE HAS TO HAVE ITS BID REJECTED ON THE GROUND OF MISTAKE AND WOULD HAVE IT CONSIDERED A VALID BID. WERE THE GOVERNMENT TO ACQUIESCE, IT WOULD BE TANTAMOUNT TO ALLOWING THE OSTENSIBLE LOW BIDDER TO ELECT, AFTER BID OPENING, WHETHER TO STAND ON THE BID, OR WITHDRAW IT, ON THE GROUND OF MISTAKE, DEPENDING UPON WHICH COURSE OF ACTION APPEARED TO BE IN ITS BEST INTEREST. OBVIOUSLY, THIS WOULD NOT BE FAIR TO THE OTHER BIDDERS, WHOSE BIDS HAD BEEN DISCLOSED, AND IT WOULD BE DETRIMENTAL TO THE PURPOSES SOUGHT TO BE ACCOMPLISHED BY THE STATUTES RELATING TO COMPETITIVE BIDDING. SEE OUR DECISION B-124066, DATED JUNE 7, 1955, TO THE SECRETARY OF THE INTERIOR, RELATIVE TO THE PROPRIETY OF AWARDING A CONTRACT TO DENALI CONSTRUCTION CO., INC., AND MCCRAY MARINE CONSTRUCTION CO., AS CO- ADVENTURERS, FOR CONSTRUCTION OF A MARINE TERMINAL AT SEWARD, ALASKA.

ACCORDINGLY, YOU ARE ADVISED THAT THE BID OF DUNCAN CONSTRUCTION COMPANY SHOULD BE DISREGARDED IN MAKING THE AWARD.