B-161973, JUL 14, 1967

B-161973, JUL 14, 1967

PRECIS-UNAVAILABLE DECISION TO GSA PERMITTING RECISSION OF CONTRACT FOR MISTAKE WAS IS SUPPORTED BY THE RECORD.

LAWSON B. KNOTT, JR., GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO THE LETTER DATED JULY 5, 1967, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL REQUESTING OUR DECISION AS TO WHETHER CONTRACT NO. GS -09B-C-2153-SF WITH KLAAS BROTHERS, INC., COVERING EXTERIOR PAINTING AND OTHER WORK TO BE PERFORMED AT THE UNITED STATES POST OFFICE, TERMINAL ANNEX, LOS ANGELES, CALIFORNIA, MAY BE RESCINDED ON THE BASIS OF A MISTAKE IN BID ALLEGED SUBSEQUENT TO AWARD.

ON MARCH 24, 1967, INVITATIONS FOR BIDS WERE ISSUED FOR PROJECT NO. 01861 TO BE OPENED ON APRIL 20, 1967, AT THE GENERAL SERVICES ADMINISTRATION (GSA) REGIONAL OFFICE IN SAN FRANCISCO, CALIFORNIA. ELEVEN RESPONSIVE BIDS, INCLUDING THE LOW BID OF KLAAS BROTHERS, INC., WERE RECEIVED. THE BIDS WERE AS FOLLOWS:

KLAAS BROTHERS, INC. $35,924

HELGE HULTGREN, INC. 47,738

WEST PAINTING, INC. 48,625

LARCO INDUSTRIAL

PAINTING CORPORATION 48,743

ARTHUR L. MOORE, JR. 51,100

BLAINE R. BUTCHER 51,400

RON BOREN, INC. 52,280

H. W. KIRCH & CO. 53,103

FEDERAL PAINTING COMPANY 56,590

SIMMONS WATERPROOFING &

PAINTING CO. 61,400

JOHNSON-SCURLOCK CO. 96,142

THE GSA PREBID ESTIMATE FOR THE COST OF THE WORK WAS $64,600. NOTWITHSTANDING THE WIDE VARIANCE BETWEEN THE LOW BID OF $35,924, THE OTHER BIDS RECEIVED, AND THE GOVERNMENT'S ESTIMATE, AWARD WAS MADE TO THE LOW BIDDER, WITHOUT VERIFICATION OF ITS BID PRICE, ON APRIL 28, 1967, WITH A NOTICE TO PROCEED ISSUED ON MAY 9, 1967, BY LETTER DATED MAY 19, 1967, AND PRIOR TO THE START OF ANY WORK, KLAAS BROTHERS, INC., ALLEGED THAT A MISTAKE HAD BEEN MADE IN COMPUTING ITS BID PRICE IN THAT THE COST OF PAINTING THE PARKING GARAGE AND MOTOR SERVICE BUILDINGS (TWO OF THREE BUILDINGS IN THE TERMINAL ANNEX COMPLEX) HAD NOT BEEN INCLUDED IN THE CONTRACTOR'S ESTIMATE FROM WHICH ITS BID HAD BEEN PREPARED. THE CONTRACTOR REQUESTED THAT IT BE ALLOWED TO CORRECT ITS BID, OR, IN THE ALTERNATIVE, THAT THE CONTRACT BE CANCELLED.

IN SUPPORT OF ITS ALLEGATION OF MISTAKE KLAAS BROTHER, INC., SUBMITTED A COPY OF ITS ORIGINAL WORK PAPERS FROM WHICH THE BID WAS PREPATED. EXAMINATION OF THE EVIDENCE SUBMITTED ESTABLISHES THAT THE CONTRACTOR, IN PREPARING ITS BID, FAILED TO INCLUDE IN ITS BID PRICE THE ESTIMATED COST FOR THE PAINTING OF THE PARKING GARAGE AND MOTOR VEHICLE SERVICE BUILDINGS. THE CONTRACTOR STATES THAT ITS FAILURE TO INCLUDE AN AMOUNT TO COVER THIS WORK WAS DELIBERATE, AND WAS BASED UPON A REPRESENTATION MADE BY AN EMPLOYEE OF THE POST OFFICE DEPARTMENT DURING THE CONTRACTOR'S SITE INVESTIGATION THAT THE SPECIFICATIONS DID NOT INCLUDE PAINTING THE TWO BUILDINGS IN QUESTION. FURTHER, IT IS ALLEGED THAT THE SPECIFICATIONS WERE NOT CLEAR AS TO WHETHER THE CONTRACT REQUIRED ALL THREE BUILDINGS TO BE PAINTED.

IT APPEARS THAT WORK ON THE PROJECT HAS NOT BEEN STARTED AND HAS BEEN SUSPENDED BY MUTUAL AGREEMENT PENDING A DECISION BY THIS OFFICE ON THE MATTER, AND THAT RECISSION OF THE CONTRACT WOULD BE AT NO COST TO THE GOVERNMENT. FURTHER WE HAVE BEEN INFORMED THAT IN THE EVENT THE CONTRACT IS CANCELED AND A NEW INVITATION FOR BIDS ISSUED, THE SPECIFICATIONS WILL BE REVISED TO MORE CLEARLY INDICATE THAT THE PAINTING OF ALL THREE BUILDINGS WILL BE REQUIRED.

IT IS THE GENERAL RULE THAT ONCE THE GOVERNMENT HAS ACCEPTED A BID, A BINDING CONTRACT IS FORMED AND THE CONTRACTOR MUST BEAR THE CONSEQUENCES OF HIS OWN MISTAKE. SALIGMAN V. UNITED STATES, 56 F. SUPP. 505 AND CASES CITED THEREIN; 27 COMP. GEN. 724. A VALID AND BINDING CONTRACT, HOWEVER, IS NOT CONSUMMATED WHERE THE ACCEPTANCE OF A BID IS MADE WITH ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF ERROR THEREIN. 37 COMP. GEN. 706.

THE RECORD IN THIS CASE ESTABLISHES THAT THE LOW BID OF KLAAS WAS APPROXIMATELY ONE-THIRD LOWER THAN THAT OF THE SECOND LOW BID AND SLIGHTLY MORE THAN ONE-HALF OF THE GOVERNMENT'S ESTIMATE OF THE COST OF THE PROJECT. FURTHER, 10 OTHER BIDS WERE RECEIVED, ALL SUBSTANTIALLY HIGHER THAN THE LOW BID. WE ARE THEREFORE IN AGREEMENT WITH THE CONCLUSION OF YOUR GENERAL COUNSEL THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY THAT THE LOW BIDDER'S PRICE WAS IN ERROR AND VERIFICATION THEREOF SHOULD HAVE BEEN REQUESTED PRIOR TO AWARD. WE MUST THEREFORE CONCLUDE THAT ACCEPTANCE OF THE BID DID NOT GIVE RISE TO A VALID CONTRACT, AND SINCE THERE IS NO BASIS HERE UPON WHICH THE BID COULD BE CORRECTED, THE CONTRACT IN QUESTION MAY BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR.

THE FILE IN THE MATTER IS RETURNED.