B-156621, JUN. 21, 1965

B-156621, JUN. 21, 1965

TO ADMIRAL EDWIN J. ROLAND, COMMANDANT, THE COAST GUARD:

REFERENCE IS MADE TO A LETTER DATED APRIL 22, 1965, FROM MRS. I.C. SCHULER, AUTHORIZED CERTIFYING OFFICER, FILE FP-5 .4335, RELATIVE TO THE PROPRIETY OF A REDUCTION IN THE CONTRACT PRICE OF $7,694 FOR WORK BEING PERFORMED UNDER CONTRACT NO. T13CG-3567 ENTERED INTO WITH LAKE UNION DRYDOCK COMPANY.

THE INVITATION FOR BIDS IN THIS CASE SOLICITED BIDS FOR PERFORMING VARIOUS ITEMS OF WORK, INCLUDING 27 DEFINITE ITEMS NUMBERED D-1 TO D 27, INCLUSIVE. TWO BIDS WERE RECEIVED. LAKE UNION DRYDOCK COMPANY WAS AWARDED THE CONTRACT AS SUBMITTING THE LOWEST BID RECEIVED. THE AMOUNT OF THE CONTRACT AS AWARDED IS $355,087 WHICH INCLUDES THE AMOUNT OF $295,304 SHOWN ON THE BID SCHEDULE AS THE AGGREGATE BID FOR ITEMS D-1 TO D-27. INDIVIDUAL PRICES OF THE 27 ITEMS TOTALED $287,610 ONLY BUT THIS DIFFERENCE WAS NOT NOTICED WHEN THE CONTRACTOR WAS NOTIFIED OF THE AWARD AND ORDERED TO PROCEED ON FEBRUARY 5, 1965. THEREAFTER ON FEBRUARY 10, 1965, THE CONTRACTING OFFICER ISSUED A SUPPLEMENTARY NOTICE TO PROCEED AND REDUCED THE CONTRACT PRICE BY $7,694 BECAUSE OF THE VARIANCE BETWEEN THE TOTAL OF THE 27 ITEMS AND THAT SHOWN BY THE CONTRACTOR IN THE BLANK SPACE PROVIDED FOR THE AGGREGATE BID FOR THESE ITEMS. THE CONTRACTOR DID NOT AGREE TO THIS REDUCTION AND IT WAS MUTUALLY AGREED THAT THE CONTRACTOR SHOULD PROCEED WITH THE WORK AND THE MATTER WAS TO BE DECIDED AT A LATER DATE. TO DATE APPROXIMATELY 75 PERCENT OF THE CONTRACT WORK HAS BEEN COMPLETED AND A PARTIAL PAYMENT OF 40 PERCENT OF THE CONTRACT PRICE HAS BEEN MADE.

THE CONTRACTOR CONTENDS IN ITS LETTER OF MARCH 8, 1965, THAT IT HAS MADE NO MISTAKE IN ITS BID AND THAT IT ADDED THE AMOUNT OF $7,694 TO ITS TOTAL OF THE ITEM PRICES TO COVER WORK AND COSTS WHICH WOULD BE INCURRED UNDER THE REQUIREMENTS SET OUT UNDER THE HEADING "SCOPE OF THE WORK" AND WHICH IT DID NOT ADD AS A SEPARATE ITEM BECAUSE OF THE POSSIBILITY OF ITS BID BEING REJECTED. ALSO, IT FELT THAT IF IT DIVIDED SUCH ADDITIONAL COSTS PROPORTIONATELY AMONG THE 27 ITEMS AND SOME OF THESE ITEMS WERE CANCELED BY THE GOVERNMENT DURING THE COURSE OF THE WORK IT WOULD LOSE THE AMOUNTS SO ALLOCATED BECAUSE THE COSTS REMAINED FAIRLY CONSTANT. IT STATED THAT IN ORDER TO INSURE A FULL RECOVERY OF THE COSTS TOTALING $7,694 IT HAD TO ADD THIS AMOUNT TO THE TOTAL OF THE 27 ITEMS. COPIES OF THE WORKSHEETS FURNISHED BY THE CONTRACTOR TEND TO SUPPORT ITS STATEMENTS, AND THE METHOD EMPLOYED IN COMPUTING LABOR COSTS AND OVERHEAD COSTS IN CONNECTION WITH THE AMOUNT OF $7,694 AGREES WITH THE COMPUTATION OF SUCH COSTS ON THE 27 INDIVIDUAL ITEMS.

THERE IS NO REQUIREMENT IN THE INVITATION THAT THE AGGREGATE BID ON ITEMS D-1 THROUGH D-27 MUST EQUAL THE TOTAL OF THE AMOUNTS BID ON THOSE ITEMS. WHILE IT IS NOT UNUSUAL FOR BIDS ON AN AGGREGATE BASIS TO BE LESS THAN THE TOTAL OF THE AMOUNTS BID ON THE SEPARATE ITEMS INVOLVED, AS WAS THE CASE IN 42 COMP. GEN. 746, THIS WOULD NOT, HOWEVER, PRECLUDE A BIDDER FROM SUBMITTING A HIGHER AGGREGATE BID. SINCE THE CONTRACTOR'S EXPLANATION IN REGARD TO THE MATTER WHEN CONSIDERED WITH ITS WORKSHEETS IS PLAUSIBLE AND SINCE IT WAS THE LOWEST BID SUBMITTED, THE AWARD OF THE CONTRACT ON THE BASIS OF THE AMOUNT OF $295,304 BID FOR ITEMS D-1 THROUGH D-27 MUST BE REGARDED AS HAVING RESULTED IN A VALID AND ENFORCEABLE CONTRACT. UNDERTAKING TO REDUCE THE CONTRACT PRICE THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING THAT THE CONTRACTOR MADE MISTAKE IN ITS AGGREGATE BID OF $295,304 AND THE RECORD TENDS TO INDICATE THAT THE CONTRACTOR DID NOT MAKE A MISTAKE.

ACCORDINGLY PAYMENT UNDER THE CONTRACT SHOULD BE MADE BY ALLOWING THE AMOUNT OF $295,304 FOR THE PERFORMANCE OF WORK UNDER ITEMS D-1 TO D-27, INCLUSIVE.