B-163660, MAR. 7, 1968

B-163660, MAR. 7, 1968

CONTRACTS - MISTAKES DECISION TO SECRETARY OF AGRICULTURE RE MISTAKE IN BID ALLEGED AFTER AWARD OF FOREST SERVICE CONTRACT FOR CRUSHED GRAVEL. BIDDER WHO, AFTER AWARD, ALLEGED THAT HIS BID, WHICH WAS 28 PERCENT LESS THAN GOVERNMENT ESTIMATE AND 63 PERCENT LESS THAN NEXT LOW BID, WAS SUBMITTED ON BASIS OF WRONG LOCATION WHICH WAS NOT CLEARLY SHOWN IN MAP WITH INVITATION SHOULD HAVE HAD BID QUESTIONED BEFORE AWARD AND THEREFORE CANCELLATION OF THE CONTRACT WITHOUT LIABILITY IS PROPER.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 23, 1968, WITH ENCLOSURES, FROM THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID ALLEGED BY MR. DAYTON E. PERCELL IN CONNECTION WITH THE CONTRACT AWARDED TO HIM UNDER INVITATION FOR BIDS NO. 13-68-1, ISSUED BY THE UNITED STATES DEPARTMENT OF AGRICULTURE, FOREST SERVICE.

THE SUBJECT INVITATION, ISSUED ON AUGUST 14, 1967, REQUESTED BIDS FOR LOADING, HAULING AND DUMP-SPREADING CRUSHED GRAVEL FROM A FOREST SERVICE STOCKPILE ON THE SAN JUAN NATIONAL FOREST, DURANGO, COLORADO. THE INVITATION INVITED BIDS ON AN ESTIMATED QUANTITY OF CRUSHED GRAVEL OF 2,200 CUBIC YARDS AND BIDDERS WERE TO INSERT A UNIT PRICE AND A TOTAL AMOUNT UNDER THE SCHEDULE. THREE BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE AS FOLLOWS: DAYTON E. PERCELL, $1.26 PER CUBIC YARD ($2,772); GEORGE SMITH, JR., INC., $2 PER CUBIC YARD ($4,400); AND BURNETT CONSTRUCTION COMPANY, $2.22 PER CUBIC YARD ($4,884). IT IS REPORTED THAT THE GOVERNMENT'S ESTIMATE WAS $1.75 PER CUBIC YARD. AWARD OF THE CONTRACT WAS MADE TO THE LOW BIDDER, MR. PERCELL, BY PURCHASE ORDER 13-168-68, DATED AUGUST 29, 1967.

MR. PERCELL GAVE WRITTEN NOTICE OF AN ALLEGED MISTAKE IN HIS BID ON SEPTEMBER 9, 1967, AND HE REQUESTED AN INCREASE IN HIS UNIT PRICE FROM $1.26 PER CUBIC YARD TO $1.86 PER CUBIC YARD ON THE BASIS THAT HE HAD SUBMITTED HIS BID BASED ON A WRONG GRAVEL STOCKPILE. HE ALLEGED THAT THE LOCATION MAP ACCOMPANYING THE INVITATION DID NOT CLEARLY SHOW THE PROPER STOCKPILE OF GRAVEL. THIS MISTAKE HAD BEEN VERBALLY ALLEGED ON SEPTEMBER 5 TO A GOVERNMENT ENGINEER ASSIGNED TO SHOW THE CONTRACTOR THE PROJECT AREA AND IT WAS AT THIS TIME THAT MR. PERCELL FIRST REALIZED HIS MISTAKE REGARDING THE LOCATION OF THE GRAVEL STOCKPILE. SINCE MR. PERCELL'S LETTER OF SEPTEMBER 9, 1967, WAS NOT ACCOMPANIED BY ANY EVIDENCE TO SUPPORT THE REQUESTED INCREASE OF $0.60 PER CUBIC YARD, HE WAS REQUESTED TO FURNISH A STATEMENT CONCERNING THE ALLEGED MISTAKE IN BID. IN RESPONSE THERETO, BY LETTER OF OCTOBER 3, 1967, MR. PERCELL SUBMITTED TWO WORKSHEETS, ONE SHOWING THE BACKGROUND OF HIS ORIGINAL BID OF $1.26 PER CUBIC YARD AND THE SECOND WORKSHEET TO SUPPORT HIS PROPOSED INCREASE IN BID PRICE TO $1.86 PER CUBIC YARD, MAINLY BASED ON HIGHER TRANSPORTATION COSTS FOR THE GRAVEL INVOLVED.

THE CONTRACTING OFFICER'S REPORT STATES THAT AFTER THE ALLEGATION OF MISTAKE IN BID BY MR. PERCELL, A LARGER SCALE MAP OF THE PROJECT AREA WAS PREPARED WHICH APPEARS TO SUPPORT THE REASON FOR MR. PERCELL'S MISTAKE IN THE LOCATION OF THE FOREST SERVICE STOCKPILE, AND THE CONTRACTING OFFICER FURTHER STATES THAT HE BELIEVES MR. PERCELL MADE A BONA FIDE MISTAKE IN BID. THE CONTRACTING OFFICER DID NOT ATTEMPT TO VERIFY MR. PERCELL'S BID EVEN THOUGH IT WAS 28 PERCENT UNDER THE GOVERNMENT'S ESTIMATE FOR THE PROJECT. IN THIS CONNECTION, WE NOTE THAT PERCELL'S BID, IN ADDITION TO BEING 28 PERCENT BELOW THE GOVERNMENT'S ESTIMATE, WAS 63 PERCENT UNDER THE NEXT LOW BID OF $2 PER CUBIC YARD.

THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, RECOMMENDS CANCELLATION OF THE SUBJECT CONTRACT ON THE BASIS THAT, WHILE THE CONTRACTOR HAS SUBMITTED EVIDENCE TO SUBSTANTIATE THAT A MISTAKE WAS IN FACT MADE, THE CONTRACTOR HAS NOT ESTABLISHED WITH CERTAINTY WHAT HIS BID WOULD HAVE BEEN HAD HE ORIGINALLY COMPUTED THE BID USING THE PROPER STOCKPILE OF GRAVEL. IT IS REPORTED THAT MR. PERCELL HAS NOT PERFORMED ANY WORK UNDER THE CONTRACT TO DATE.

THE GENERAL RULE IS THAT AN ACCEPTANCE OF A BID BY THE CONTRACTING OFFICER WHO NEITHER KNEW NOR HAD CONSTRUCTIVE NOTICE OF ANY ERROR IN THE BID CONSUMMATES A VALID AND BINDING CONTRACT. HOWEVER, IN THE INSTANT CASE, HAVING REGARD FOR THE FACT THAT THE CONTRACTOR'S BID WAS APPROXIMATELY 28 PERCENT LESS THAN THE GOVERNMENT'S ESTIMATE AND 63 PERCENT LESS THAN THE NEXT LOW BID, WE FEEL THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN PLACED ON NOTICE OF AN ERROR IN THE BID AND, CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT FIRST REQUESTING VERIFICATION THEREOF. SEE B-161890, JULY 20, 1967.

ACCORDINGLY, WE WILL NOT OBJECT TO CANCELLATION OF THE SUBJECT CONTRACT, AS RECOMMENDED BY THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, WITHOUT LIABILITY TO THE CONTRACTOR.