B-147113, SEP. 28, 1961

B-147113, SEP. 28, 1961

TO THE SECRETARY OF THE ARMY:

BY LETTER OF SEPTEMBER 1, 1961, WITH ENCLOSURES, SIGNED BY THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS), THERE HAS BEEN SUBMITTED FOR OUR CONSIDERATION A REQUEST BY THE N. T. HEED CONSTRUCTION COMPANY AND THE BOYD CONSTRUCTION COMPANY, A JOINT VENTURE, FOR CORRECTION OF A MISTAKE ALLEGED AFTER AWARD OF CONTRACT NO. DA-29-005-CIVENG-61-37.

INVITATION FOR BIDS NO. CIVENG-29-005-61-9 WAS ISSUED FEBRUARY 27, 1961, BY THE CORPS OF ENGINEERS FOR WORK IN CONNECTION WITH THE TWO RIVERS RESERVOIR PROJECT. THE INVITATION CONTAINED 27 DIFFERENT ITEMS OF WORK FOR THE MOST SIGNIFICANT OF WHICH THERE WERE INCLUDED ESTIMATED QUANTITIES. BIDDERS WERE REQUIRED TO INSERT A UNIT PRICE AND THE TOTAL PRICE FOR EACH ESTIMATED QUANTITY.

BIDS WERE OPENED ON MAY 9, 1961. THE LOW BID WAS THAT SUBMITTED BY THE REED AND BOYD JOINT VENTURE AT AN ESTIMATED COST OF $3,749,570. THIS PRICE WAS APPROXIMATELY $500,000 LESS THAN THE GOVERNMENT ESTIMATE AND $520,000 LESS THAN THE NEXT LOW BID.

THE CONTRACTING OFFICER NOTED THAT THE UNIT PRICE SUBMITTED BY THE LOW BIDDER ON ITEM NO. 5, $0.04, WAS UNUSUALLY LOW AS COMPARED BOTH TO THE GOVERNMENT ESTIMATE AND THE OTHER BIDS. THE CONTRACTING OFFICER NOTED, HOWEVER, THAT WHEN THE UNIT PRICE FOR ITEM NO. 5 WAS ADDED TO THE UNIT PRICE FOR ITEM NO. 3, WHICH INCLUDED RELATED WORK, THE LOW BID DID NOT APPEAR SIGNIFICANTLY OUT OF LINE, AS INDICATED IN THE TABULATION BELOW:

TABLE

BIDDER ITEM 5 ITEM 3 COMBINED GOV-T ESTIMATE $0.096 $0.276 $0.372 NO. 1 (LOW) .04 .3142

.3542

2 .07 .30.37

8 .09 .29 .38

6 .09 .38 .47

10 .10.32 .42

3 .12 .38 .50

4 .12 .31 .43

7 .13 .34 .47

9 .16 .39 .55

5 .25 (*) .50 (*) .75 (*)

------ ------- ------- AVERAGE 0.10 .33 .43

(*) NOT INCLUDED IN AVERAGES.

THE CONTRACTING OFFICER CONCLUDED AFTER EXAMINING THE SITUATION THAT THE MAJORITY OF THE COMMON COSTS INCURRED FOR ITEMS NO. 5 AND NO. 3 WERE PROBABLY INCLUDED IN ITEM NO. 3 IN THE LOW BID, THUS MAKING THE UNIT PRICE FOR NO. 5 APPEAR OUT OF LINE. ON THE OTHER HAND, IT SEEMS TO US THAT AN EQUALLY REASONABLE CONCLUSION WOULD HAVE BEEN THAT THERE MIGHT BE AN ERROR IN THE PRICE FOR ITEM NO. 5.

BASED ON THIS REASONING THE CONTRACTING OFFICER, WITHOUT REQUESTING VERIFICATION OF THE LOW BID, ISSUED AN AWARD. WITHIN A SHORT TIME THEREAFTER THE LOW BIDDER ALLEGED THAT AN ERROR HAD BEEN MADE IN ITEM NO. 5 AND REQUESTED CORRECTION TO THE INTENDED UNIT PRICE OF $0.094 WHICH WOULD RESULT (ON THE ESTIMATED QUANTITY) IN AN INCREASE IN THE CONTRACT PRICE OF $340,200, LESS AN AMOUNT WAIVED PURSUANT TO ARTICLE 8 OF THE INVITATION FOR BIDS OF $92,491.40, OR A NET INCREASE OF $247,708.60.

IT IS CLEAR THAT HAD THE ERROR BEEN CLAIMED PRIOR TO AWARD THE LOW BID COULD HAVE BEEN CORRECTED SINCE CORRECTION WOULD NOT DISPLACE ANOTHER BID AND SINCE IN THE CONTRACTING OFFICER'S VIEW, AS STATED IN HIS REPORT ACCOMPANYING THE SUBMISSION, THE NATURE AND AMOUNT OF THE MISTAKE AND THE INTENDED BID HAVE BEEN ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE. CF. 35 COMP. GEN. 279, 281. IN THIS INSTANCE, HOWEVER, NO CLAIM OF ERROR WAS RECEIVED UNTIL AFTER AWARD. IN SUCH CIRCUMSTANCES THE RULE HAS BEEN ESTABLISHED THAT NO CORRECTION WILL BE PERMITTED UNLESS THE CONTRACTING OFFICER COULD BE SAID TO HAVE BEEN ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD.

THE CONTRACTING OFFICER IN HIS REPORT HAS STATED, AS INDICATED ABOVE, THAT THE UNIT PRICE FOR ITEM NO. 5 IN THE LOW BID COULD WELL BE CONSIDERED OUT OF LINE WITH THE OTHER BIDS ON THAT ITEM, AND THAT THE POSSIBILITY THAT THERE HAD BEEN A DELIBERATE UNBALANCING IN THE LOW BID COULD BE DISREGARDED, SINCE THE UNIT PRICES IN THAT BID WERE CONSISTENTLY LOW. HOWEVER, AS INDICATED, THE CONTRACTING OFFICER FOUND THAT THE COMBINATION OF THE UNIT PRICES FOR ITEMS NO. 3 AND NO. 5 IN THE LOW BID WAS IN LINE WITH THE SAME COMBINATION IN THE GOVERNMENT ESTIMATE AND OTHER BIDS.

THE QUESTION WHICH ARISES UNDER THE CIRCUMSTANCES IS WHETHER THE CONTRACTING OFFICER COULD BE SAID TO HAVE BEEN ON NOTICE OF PROBABLE ERROR. THE CONTRACTING OFFICER IN HIS REPORT HAS ABLY MET OUT THE BASIS FOR THE CONCLUSION REACHED. HOWEVER, IN CONNECTION WITH THE EFFECT OF COMBINING ITEMS NO. 3 AND 5 IT IS SIGNIFICANT TO NOTE THAT SINCE THE UNIT PRICE OF THE FORMER IS SO MUCH LARGER THAN THAT OF THE LATTER THE COMBINATION OF THE TWO IS SEVERELY WEIGHTED BY THE UNIT PRICE FOR ITEM NO. 3. THEREFORE, IN OUR VIEW, THE FACT THAT THE COMBINATION OF THE TWO IS IN LINE WITH OTHER BIDS ESTABLISHES ONLY THAT THE BID ON ITEM NO. 3 IS NOT ERRONEOUS.

UNDER ASPR 2-406.1 THE CONTRACTING OFFICER IS REQUIRED TO REQUEST VERIFICATION OF THE BID IN CASES WHERE HE HAS REASON TO BELIEVE THAT A MISTAKE "MAY HAVE BEEN MADE.' HERE THE POSSIBILITY OF SUCH ERROR IS AMPLY DEMONSTRATED BY THE DETAILED CONSIDERATION OF THE MATTER BY THE CONTRACTING OFFICER. THEREFORE, UNDER THE REGULATION, HE SHOULD IN OUR JUDGMENT HAVE REQUESTED VERIFICATION OF THE UNIT PRICE FOR ITEM NO. 5 FROM THE LOW BIDDER. SINCE THE CONTRACTING OFFICER DID NOT DO SO, AND SINCE THE INTENDED BID HAS BEEN ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE, THE CONTRACT MAY NOW BE AMENDED TO REFLECT THE INTENDED BID LESS THAT PORTION OF THE ERROR WAIVED PURSUANT TO ARTICLE 8 OF THE INVITATION.