B-157632, SEP. 23, 1965

B-157632, SEP. 23, 1965

TO SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 7, 1965, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION WHETHER CHANGE ORDER 3 TO CONTRACT 14-20- 0150-730 WITH L. R. FOY CONSTRUCTION CO; INC; MAY BE REFORMED.

WHILE THE CONTRACTOR WAS PROCEEDING WITH WORK UNDER THE CONTRACT, IT WAS REQUESTED TO SUBMIT A PROPOSAL FOR CERTAIN CONTEMPLATED CHANGES, ONE BEING THE INSTALLATION OF FOUR SHOWERS. THE FINISH INSTRUCTIONS REQUIRED CERAMIC TILE ON THE FLOOR, BASE AND WALLS OF THE SHOWERS. THE CONTRACTOR, HOWEVER, SUBMITTED AN ITEMIZED PROPOSAL WHICH LISTED PRICES TOTALING $186 BEFORE OVERHEAD, PROFIT AND BOND FOR CERAMIC TILE FLOORS AND BASE, BUT WHICH SAID NOTHING ABOUT CERAMIC TILE WALLS. BASED ON THE CONTRACTOR'S PROPOSAL, CHANGE ORDER 3 WAS ISSUED ON AUGUST 5, 1964, INCREASING THE CONTRACT PRICE FOR ITEMS WHICH INCLUDED THE SHOWER INSTALLATION ACCORDING TO THE FINISH INSTRUCTIONS IN THE REQUEST FOR PROPOSAL. THE CHANGE ORDER WAS SUBMITTED TO THE CONTRACTOR FOR ITS ACCEPTANCE AND IT EXECUTED ITS APPROVAL ON AUGUST 10, 1964.

THE CHANGE ORDER WAS ISSUED PURSUANT TO THE "CHANGES" ARTICLE IN THE CONTRACT, ARTICLE 3, WHICH PROVIDES FOR AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE, THROUGH AGREEMENT IF POSSIBLE, WHENEVER THERE IS A CHANGE IN THE CONTRACT SPECIFICATIONS.

SUBSEQUENTLY, ON OCTOBER 7, 1964, BEFORE COMMENCING THE WORK, THE CONTRACTOR WROTE A LETTER IN WHICH IT EXPLAINED THAT AT THE TIME IT SUBMITTED ITS PROPOSAL IT DID NOT HAVE A CERAMIC TILE BID FROM ANY PROSPECTIVE SUBCONTRACTORS AND THAT IN PREPARING ITS PROPOSAL IT NEGLECTED TO INCLUDE AN ESTIMATE FOR THE CERAMIC TILE WALLS AND PART OF THE CERAMIC TILE BASE. IT STATED FURTHER THAT IT HAD OBTAINED A QUOTATION DATED AUGUST 17, 1964, FROM REICHERT TILE COMPANY, FOR THE CERAMIC TILE WORK INVOLVED AND THAT COMPANY, WITH WHICH IT SUBCONTRACTED, QUOTED A PRICE OF $980 FOR THE JOB. AS A RESULT, THE CONTRACTOR REQUESTED THAT THE CHANGE ORDER BE REVISED TO ALLOW FOR THE $794 DIFFERENCE OVER ITS ORIGINAL PROPOSAL.

IT IS REPORTED THAT UPON RECEIPT OF THE CONTRACTOR'S REVISED PROPOSAL, THE GOVERNMENT'S CONSTRUCTION MANAGEMENT ENGINEER PREPARED AN ESTIMATE FOR THE CERAMIC TILE WORK AND ARRIVED AT A FIGURE OF $1,002.26, WHICH SEEMS TO SUPPORT THE REASONABLENESS OF THE $980 QUOTATION.

IN THE CIRCUMSTANCES, IT APPEARS THAT A BONA FIDE MISTAKE WAS MADE AS ALLEGED AND THAT THE GOVERNMENT PERSONNEL REVIEWING THE ORIGINAL PROPOSAL OVERLOOKED AN OBVIOUS OMISSION ON THE PART OF THE CONTRACTOR WHICH SHOULD HAVE PLACED THEM ON NOTICE OF POSSIBLE ERROR. ACCORDINGLY, THE CHANGE ORDER MAY BE REVISED TO INCREASE THE AMOUNT FOR THE TILE WORK BY $794 PLUS OVERHEAD AND PROFIT AS PROPOSED. HOWEVER, UNLESS BONDING COSTS (IT IS PRESUMED THIS HAS REFERENCE TO THE STATUTORY PERFORMANCE AND PAYMENT BONDS) WILL ACTUALLY INCREASE AS A RESULT OF THE REVISION OF THE CHANGE ORDER AT THIS LATE DATE, NO ADDITIONAL ALLOWANCE FOR BONDING SEEMS WARRANTED.

THE ENCLOSURES ACCOMPANYING THE SEPTEMBER 7 LETTER ARE RETURNED AS REQUESTED.