B-145763, MAY 25, 1961

B-145763, MAY 25, 1961

TO MR. GRANT BLOODGOOD, ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER OF MAY 2, 1961, FILE D-150, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH REGARD TO THE BID OF KEHNE ELECTRIC COMPANY, INC., SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS UNDER SPECIFICATIONS NO. DC-5526.

THE INVITATION REQUESTED BIDS--- TO BE OPENED MARCH 30, 1961--- FOR THE CONSTRUCTION OF THE SECOND CIRCUIT ADDITIONS TO WATERTOWN, SOUTH DAKOTA- GRANITE FALLS, MINNESOTA, 230-KILOVOLT TRANSMISSION LINE, MISSOURI RIVER BASIN PROJECT. THE SCHEDULE OF THE WORK AND MATERIALS REQUIRED TO BE PERFORMED OR FURNISHED WAS DIVIDED INTO 9 ITEMS. TEN BIDS WERE RECEIVED. THE LOW BID IS THAT SUBMITTED BY THE KEHNE ELECTRIC COMPANY, INC. THE COMPANY ERRONEOUSLY TOTALED ITS EXTENDED ITEM AMOUNTS AT $650,385.85 INSTEAD OF THE ACTUAL TOTAL OF $656,536.02. THE NEXT LOW BID IS IN THE AMOUNT OF $681,023.98. THE GOVERNMENT'S ESTIMATE WAS $676,796. AS TO ITEM NO. 5 OF THE SCHEDULE KEHNE QUOTED THE SUM OF $186.75 FOR BOTH THE UNIT PRICE AND EXTENDED AMOUNT. THIS ITEM CALLED FOR 0.08 MILE OF 2 ONE- HALF INCH GALVANIZED STEEL HIGH-STRENGTH OVERHEAD GROUND WIRES. AS TO ITEM NO. 6 OF THE SCHEDULE KEHNE QUOTED THE SUM OF $320 FOR BOTH THE UNIT PRICE AND EXTENDED TOTAL. THIS ITEM CALLED FOR 1 ONE-HALF INCH GALVANIZED -STEEL HIGH-STRENGTH OVERHEAD GROUND WIRES. AS TO ITEM NO. 6 OF THE SCHEDULE KEHNE QUOTED THE SUM OF $320 FOR BOTH THE UNIT PRICE AND EXTENDED TOTAL. THIS ITEM CALLED FOR 1 ONE-HALF INCH GALVANIZED-STEEL HIGH- STRENGTH OVERHEAD GROUND WIRE. IN EACH INSTANCE THE UNIT WAS 1 MILE OF LINE. FROM THE AMOUNT OF THE GOVERNMENT'S ESTIMATE AND THE PRICES QUOTED BY THE OTHER BIDDERS IT WAS OBVIOUS THAT THE SUMS QUOTED FOR ITEMS NOS. 5 AND 6 WERE INTENDED TO REPRESENT THE EXTENDED AMOUNTS RATHER THAN THE UNIT PRICES. AFTER CALLING THESE ERRORS TO THE ATTENTION OF KEHNE AND AFTER ITS CONFIRMATION THE BID PRICE HAS BEEN CORRECTED BY ADDING THE AMOUNT OF $395.01 ($415.01) AND THE CORRECTED BID PRICE OF KEHNE IS STATED TO BE $656,931.03.

YOUR LETTER OF APRIL 11, 1961, REQUESTED KEHNE TO CHECK ITS BID COMPUTATIONS WITH RESPECT TO, AND CONFIRM, ITS QUOTED UNIT PRICE OF $5.50 UNDER ITEM NO. 7 FOR FURNISHING AND ATTACHING 3,201 DAMPERS SINCE THAT PRICE WAS SUBSTANTIALLY BELOW THE GOVERNMENT'S ESTIMATE AND THE PRICES QUOTED BY OTHER BIDDERS. REPRESENTATIVES OF THE BIDDER CALLED AT YOUR OFFICE ON APRIL 17 AND INFORMED YOU THAT THEY HAD MADE A MISTAKE IN QUOTING THE $5.50 UNIT PRICE AS A RESULT BASICALLY OF TRANSPOSING FROM $35,000 TO $53,000, A DISCOUNT OFFERED THE BIDDER BY ITS CONTEMPLATED SUPPLIER. THIS FIGURE OF $35,000 IS ALLEGED TO HAVE BEEN GIVEN TO THE BIDDER'S ESTIMATOR IN A TELEPHONE CONVERSATION. AT THE TIME OF FINAL COMPUTATION OF THE BID PRICE THE ESTIMATOR ALSO DEDUCTED A DISCOUNT OF $0.40 PER INSULATOR OR A TOTAL OF $5,586. THERE WAS ADDED THE AMOUNT OF 1 PERCENT FOR COST OF BOND AND THE AMOUNT OF $1,426 FOR "LAGGING" WAS DEDUCTED. THIS ITEM OF $1,426--- NOT FULLY EXPLAINED--- IS THE SAME AMOUNT USED IN COMPUTING THE UNIT PRICE OF $5.50 FOR DAMPERS AS WELL AS IN COMPUTING THE INTENDED UNIT PRICE OF $11.95. THE UPWARD REVISION, IF THE BID WERE CORRECTED, WOULD BRING THE BID OF KEHNE, APPROXIMATELY $3,420 BELOW THE NEXT LOW BID OF $681,023.98 AND SLIGHTLY ABOVE THE GOVERNMENT'S ESTIMATE OF $676,796.

THE EVIDENCE FURNISHED, AS WELL AS THE OTHER FACTS IN THIS CASE, MAY BE ACCEPTED AS SHOWING THE EXISTENCE OF A MISTAKE IN BOTH ITEMS NOS. 5 AND 6, AND AS SHOWING THE INTENDED BID PRICE ON THESE ITEMS. WITH REGARD TO THE ALLEGED MISTAKE IN CONNECTION WITH ITEM NO. 7, WHILE THE EVIDENCE SUBMITTED, AS WELL AS THE FACT THAT THE AMOUNT BID IS COMPLETELY OUT OF LINE WITH OTHER BIDS AND THE GOVERNMENT ESTIMATE, MAY BE REGARDED AS JUSTIFYING THE WITHDRAWAL OF THE BID IT MAY NOT BE REGARDED AS SUFFICIENT TO ESTABLISH DEFINITELY THE AMOUNT OF THE INTENDED BID. SEE 38 COMP. GEN. 76, 78. ALSO, SEE 36 COMP. GEN. 441.

ACCORDINGLY, THE BID OF KEHNE ELECTRIC COMPANY, INC., SHOULD BE DISREGARDED IN MAKING AWARD UNLESS THE COMPANY WISHES TO ACCEPT AWARD AT ITS BID PRICE PLUS THE CORRECTION IN THE ADDITION OF THE VARIOUS ITEMS AND THE CORRECTION ON ACCOUNT OF THE MISTAKES ON ITEMS NOS. 5 AND 6.