B-162360, SEP. 6, 1967

B-162360, SEP. 6, 1967

CONTRACTS - MISTAKES - CANCELLATION DECISION TO GSA RE AUTHORITY TO CANCEL CONTRACT WITH FEDERAL CONTRACTORS, INC., BECAUSE OF MISTAKE IN BID FOR CONSTRUCTION WORK ON POST OFFICE BUILDING IN ASTORIA, OREGON. LOW BIDDER WHO, AFTER OPENING WAS ASKED TO VERIFY BID, BUT CONTRACTING AGENCY NEVER RECEIVED LETTER OR TELEGRAM ALLEGING ERROR MAY HAVE AWARD WHICH WAS MADE BEFORE BID ACCEPTANCE PERIOD EXPIRED CANCELLED SINCE SUBSEQUENT EVIDENCE INDICATES WIDE DIFFERENCE IN PRICE BETWEEN LOW BID AND NEXT LOW BID AND GOVT. ESTIMATE SO THAT CASE COMES UNDER FPR 1-2.406-3 (D) (5). THEREFORE, SINCE CONTRACTOR HAS NOT EXECUTED CONTRACT OR FURNISHED PERFORMANCE OR PAYMENT BOND, CONTRACT MAY BE CANCELED WITHOUT LIABILITY.

TO MR. KNOTT:

REFERENCE IS MADE TO A LETTER DATED AUGUST 25, 1967, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, REQUESTING OUR DECISION AS TO WHETHER CONTRACT NO. GS-10B-E-00792-00 AWARDED TO FEDERAL CONTRACTORS INC. MAY BE CANCELED BECAUSE OF AN ERROR MADE BY THE CORPORATION IN THE BID ON WHICH THE CONTRACT IS BASED.

THE PUBLIC BUILDINGS SERVICE, REGION 10, DESIGN AND CONSTRUCTION DIVISION, AUBURN, WASHINGTON, REQUESTED BIDS--TO BE OPENED FEBRUARY 28, 1967--FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR MISCELLANEOUS IMPROVEMENTS AT THE UNITED STATES POST OFFICE AND CUSTOM HOUSE, ASTORIA, OREGON. IN RESPONSE FEDERAL CONTRACTORS INC. SUBMITTED A BID OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $10,390.13. THE NINE OTHER BIDDERS ON THE PROJECT QUOTED PRICES RANGING FROM $13,300 TO $21,549. THE GOVERNMENT'S COST ESTIMATE FOR THE WORK WAS $15,000.

IT IS REPORTED THAT BECAUSE OF THE DISPARITY BETWEEN THE LOW BID OF FEDERAL CONTRACTORS INC. AND THE NEXT LOW BID AND THE GOVERNMENT'S ESTIMATE, THE CONTRACTING OFFICER REQUESTED THE CORPORATION BY TELEPHONE ON MARCH 2, 1967, TO VERIFY ITS BID PRICE AND ADVISE WHETHER AN ERROR HAD BEEN MADE THEREIN; THAT WHEN A FOLLOWUP WAS MADE ON MARCH 24, 1967, A REPRESENTATIVE OF THE CORPORATION STATED THAT HE HAD SENT A LETTER CLAIMING AN ERROR IN THE CORPORATION'S BID, AND THAT HE WOULD SEND A COPY OF THAT LETTER AND A CONFIRMING TELEGRAM; AND THAT WHEN NEITHER THE LETTER NOR CONFIRMING TELEGRAM WAS RECEIVED, A FOLLOWUP WAS AGAIN MADE ON MARCH 27 AND 28, 1967, AT WHICH TIME A REPRESENTATIVE OF THE CORPORATION READ TO THE CONTRACTING OFFICER THE CONTENTS OF THE LETTER ALLEGED TO HAVE BEEN MAILED. SINCE ALL BIDS WERE ABOUT TO EXPIRE ON MARCH 30, 1967, ALL BIDDERS WERE REQUESTED TO GRANT A 30-DAY EXTENSION OF THE PERIOD FOR ACCEPTANCE OF THEIR BIDS. ALL BIDDERS, EXCEPT FEDERAL CONTRACTORS INC., GRANTED THE REQUESTED EXTENSION. SINCE THE PERIOD FOR ACCEPTANCE OF THE LOW BID OF FEDERAL CONTRACTORS INC. WAS ABOUT TO EXPIRE, THAT BID WAS ACCEPTED ON MARCH 30, 1967, PURSUANT TO THE PROVISIONS OF SUBPARAGRAPH 1- 2.406-3 (D) (1) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR).

IN A LETTER DATED MAY 1, 1967, IN WHICH IT REQUESTED THAT THE CONTRACT BE CANCELED, FEDERAL CONTRACTORS INC. ALLEGED THAT AN ERROR HAD BEEN MADE IN THE CORPORATION'S BID. ALTHOUGH THE PRECISE NATURE OF THE ERROR WAS NOT STATED IN THE LETTER, THE CORPORATION'S ESTIMATE SHEET DISCLOSES THAT A MATHEMATICAL ERROR WAS MADE BY THE CORPORATION IN ADDING THE COST OF CEILING TILE. THE ESTIMATE SHEET COVERING THE CEILING TILE SHOWS VARIOUS ITEMS OF COST AND THE TOTAL OF THESE ITEMS IS SHOWN AS BEING $4,162. THE CORRECT TOTAL OF THESE ITEMS IS $6,162.

WHILE FPR 1-2.406-3 (D) (1) PERMITS A CONTRACTING OFFICER TO AWARD A CONTRACT AFTER VERIFICATION IS REQUESTED AND NOT RECEIVED, AND THE LOW BIDDER REFUSES OR FAILS TO GRANT AN EXTENSION OF THE BID ACCEPTANCE TIME, WE BELIEVE THAT IN VIEW OF THE WIDE DIFFERENCE BETWEEN THE LOW BID OF FEDERAL CONTRACTORS AND THE NEXT LOW BID AND THE GOVERNMENT'S ESTIMATE, AN AWARD SHOULD NOT HAVE BEEN MADE TO THAT FIRM. WE FEEL THAT THE CASE FALLS WITHIN THE RATIONALE OF FPR 1-2.406-3 (D) (5) WHICH PROVIDES AS FOLLOWS:

"WHERE THE BIDDER FAILS OR REFUSES TO FURNISH EVIDENCE IN SUPPORT OF A SUSPECTED OR ALLEGED MISTAKE, THE CONTRACTING OFFICER SHALL CONSIDER THE BID AS SUBMITTED UNLESS THE AMOUNT OF THE BID IS SO FAR OUT OF LINE WITH THE AMOUNTS OF OTHER BIDS RECEIVED OR WITH THE AMOUNT ESTIMATED BY THE AGENCY OR DETERMINED BY THE CONTRACTING OFFICER TO BE REASONABLE, OR THERE ARE OTHER INDICATIONS OF ERROR SO CLEAR, AS REASONABLY TO JUSTIFY THE CONCLUSION THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO THE BIDDER OR TO OTHER BONA FIDE BIDDERS, IN WHICH CASE IT MAY BE REJECTED. * * *"

ACCORDINGLY, SINCE IT IS UNDERSTOOD THAT THE CONTRACTOR HAS NOT EXECUTED THE CONTRACT OR FURNISHED A PERFORMANCE OR PAYMENT BOND, CONTRACT NO. GS- 10B-E-00792-00 MAY BE CANCELED WITHOUT LIABILITY TO FEDERAL CONTRACTORS INC. AS RECOMMENDED BY THE CONTRACTING OFFICER AND YOUR GENERAL COUNSEL.

THE DOCUMENTS SUBMITTED WITH THE LETTER OF AUGUST 25, 1967, ARE RETURNED, AS REQUESTED.