B-165956, JAN. 31, 1969

B-165956, JAN. 31, 1969

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER DATED JANUARY 14, 1969, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID BY BISH'S SHEET METAL WORKS ALLEGED AFTER AWARD OF CONTRACT NO. 14-11-0008-3378.

ON OCTOBER 8, 1968, THE BUREAU OF LAND MANAGEMENT, DENVER SERVICE CENTER, ISSUED INVITATION FOR BIDS NO. DSC-69-143, CONTAINING SPECIFICATIONS AND A FABRICATION DRAWING FOR NINE METAL DORMITORY DOORS, FRAMES, AND HARDWARE FOR THE KINGMAN CIVILIAN CONSERVATION CENTER, KINGMAN, ARIZONA. OCTOBER 18, 1968, AN ADDENDUM WAS ISSUED ALLOWING AN ALTERNATIVE METHOD OF FABRICATION, AS WELL AS INFORMING BIDDERS THAT CONSIDERATION WOULD BE GIVEN TO OTHER CONSTRUCTION METHODS IF THE SYSTEM OFFERED WOULD PROVIDE THE NECESSARY SUPPORT AND SATISFACTORILY OPERATE UNDER EXISTING CONDITIONS. THREE RESPONSIVE BIDS WERE RECEIVED AND OPENED ON OCTOBER 31, 1968, AS FOLLOWS:

BIDDER UNIT PRICE TOTAL PRICE

BISH'S SHEET METAL WORKS $325.55 $2,929.95

DENVER GLASS COMPANY 825.00

7,425.00 HAHL-KERN CO. 535.00 4,815.00 THE GOVERNMENT ESTIMATE WAS $5,315.

WHILE THE LOW BIDDER, BISH'S SHEET METAL WORKS, FAILED TO RETURN A COPY OF THE ADDENDUM WITH ITS BID, IT WAS DETERMINED UNDER FEDERAL PROCUREMENT REGULATIONS 1-2.405 THAT SUCH FAILURE CONSTITUTED A MINOR INFORMALITY BECAUSE THE ADDENDUM DID NOT AFFECT THE PRICE, QUANTITY, QUALITY OR DELIVERY OF THE ITEM BID UPON, AND THAT THE WAIVER OF THE ADDENDUM RETURN REQUIREMENT WOULD NOT BE PREJUDICIAL TO THE OTHER BIDDERS. AWARD WAS MADE TO BISH'S SHEET METAL WORKS ON NOVEMBER 5, 1968, AT ITS TOTAL PRICE OF $2,929.95. SHORTLY THEREAFTER, A REPRESENTATIVE OF THE CONTRACTOR ASSERTED A MISTAKE IN BID. THE SUBSTANCE OF ITS ALLEGATION WAS THAT ITS BID WAS COMPILED IN ERROR DUE TO THE FACT THAT A SUPPLIER OF HARDWARE HAD QUOTED A PRICE OF $575 WHICH WAS INTENDED TO BE A UNIT PRICE BUT WHICH THE CONTRACTOR INTERPRETED AS A QUOTATION FOR THE ENTIRE JOB. IT IS FURTHER CONTENDED BY THE CONTRACTOR THAT BECAUSE OF THE SUBSTANTIAL DISPARITY IN THE BIDS RECEIVED, THE CONTRACTING OFFICER WAS PUT ON NOTICE OF THE POSSIBILITY OF ERROR IN THE LOW BID.

THE CONTRACTOR HAS SUBMITTED ITS ORIGINAL WORKSHEETS, ORIGINAL MEMORANDUM OF TELEPHONE CALL DATED OCTOBER 18, 1968, QUOTING PRICE OF $575 FROM SUPPLIER, AND ORIGINAL OF SUPPLIER'S LETTER OF NOVEMBER 7, 1968, ADVISING OF QUOTE OF $575 PER OPENING, OR $5,175 FOR NINE OPENINGS. THE ORIGINAL WORKSHEET REVEALS THAT HARDWARE WAS INCLUDED FOR A TOTAL ITEM PRICE OF $660, WHILE THE AMENDED WORKSHEET SHOWS THAT THIS FIGURE OF $660 WAS MULTIPLIED BY 9 TO EQUAL THE NUMBER OF OPENINGS INVOLVED OR FOR A TOTAL OF $5,940. HENCE, THE CONTRACTOR CLAIMS THAT ITS UNIT PRICE SHOULD BE $918.90 FOR A TOTAL BID OF$8,270.10.

IT IS NOTED THAT THE LOW BID IS SLIGHTLY MORE THAN HALF THE AMOUNT OF THE NEXT HIGHEST BID, APPROXIMATELY 39 PERCENT OF THE HIGHEST RESPONSIVE BID AND ONLY 55 PERCENT OF THE GOVERNMENT'S ESTIMATE. WHILE A PURCHASE ORDER HAS BEEN ISSUED, THE CONTRACTOR HAS MADE NO EFFORT TO PERFORM. IT IS THE ADMINISTRATIVE BELIEF, IN VIEW OF THE FOREGOING, THAT THE MISTAKE MADE BY THE BIDDER WAS SO APPARENT AS TO HAVE CHARGED THE CONTRACTING OFFICER WITH NOTICE OF THE PROBABILITY OF THE MISTAKE REQUIRING BID CONFIRMATION PRIOR TO AWARD.

THE GENERAL RULE IS THAT AN ACCEPTANCE OF A BID BY THE CONTRACTING OFFICER WHO NEITHER KNEW NOR HAD REASON TO KNOW OF ANY ERROR IN THE BID CONSUMMATES A VALID AND BINDING CONTRACT. HOWEVER, IN THE INSTANT CASE, AFTER REVIEWING THE RECORD AND HAVING REGARD FOR THE FACT THAT THE CONTRACTOR'S BID PRICE WAS SO LOW BY COMPARISON WITH THE OTHER PRICES BID AND THE GOVERNMENT ESTIMATE, WE AGREE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR IN THE BID, AND CONSEQUENTLY THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. SEE B-158765, DATED APRIL 8, 1966, AND B-157960, DATED NOVEMBER 23, 1965.

ACCORDINGLY, WE WILL NOT OBJECT TO CANCELLATION OF THE CONTRACT WITHOUT LIABILITY TO THE CONTRACTOR.