B-167161, JUL. 22, 1969

B-167161, JUL. 22, 1969

CONTRACTS - MISTAKES - ALLEGATION AFTER AWARD DECISION TO POSTMASTER GENERAL DENYING REFORMATION OF CONTRACT AWARDED CHARLES HAMPTON, LESSOR OF POSTAL FACILITY IN FLORESVILLE, TEXAS. ERROR IN BID WAS ALLEGED TO BE FAULTY CALCULATOR WHICH CAUSED $1,000 ERROR IN ANNUAL RENTAL RATE. ALTHOUGH EVIDENCE (CALCULATOR TAPES) TENDS TO SHOW THAT MISTAKE MAY HAVE BEEN MADE, BID WAS NOT SO OUT OF LINE WITH OTHERS OR WITH GOVERNMENT ESTIMATE TO PUT CONTRACTING OFFICER ON NOTICE OF ERROR. THEREFORE NO BASIS FOR REFORMATION EXISTS.

TO MR. POSTMASTER GENERAL:

BY LETTER DATED JUNE 4, 1969, THE DIRECTOR, REALTY DIVISION, BUREAU OF FACILITIES, REQUESTED OUR DECISION AS TO WHETHER A MISTAKE IN BID ALLEGED AFTER AWARD BY MR. CHARLES HAMPTON, JEFFERSON, TEXAS, THE LESSOR TO THE POST OFFICE DEPARTMENT OF THE POSTAL FACILITY LOCATED IN FLORESVILLE, TEXAS, MAY BE CORRECTED.

THE INITIAL BIDS UNDER THE INVITATION FOR BIDS FOR THE CONSTRUCTION AND LEASE-BACK OF THE SUBJECT POSTAL FACILITY, ISSUED UNDER THE AUTHORITY OF 39 U.S.C. 2102, WERE SUBMITTED ON THE BASIS OF A BASIC LEASE TERM OF TEN YEARS WITH SEPARATE BIDS FOR EACH OF FOUR 5-YEAR RENEWALS. BECAUSE IT WAS FELT THAT BIDS RECEIVED ON THIS BASIS WERE TOO HIGH, ALTERNATE BIDS WERE REQUESTED FOR A 20-YEAR BASIC TERM WITH SIX 5-YEAR RENEWALS. THE ALTERNATE BID OF CHARLES HAMPTON WAS THE LOWEST RECEIVED AT $6,912 PER ANNUM FOR THE BASIC TERM, AND AWARD WAS MADE TO CHARLES HAMPTON ON JUNE 17, 1968. OTHER ALTERNATE BIDS RECEIVED FOR THE BASIC TERM WERE IN THE AMOUNTS OF $8,488 AND $11,000. THE GOVERNMENT ESTIMATE OF A REALISTIC RENTAL WAS $8,000 TO $8,500 PER ANNUM.

BY LETTER DATED JULY 1, 1968, MR. HAMPTON ADVISED THE CONTRACTING OFFICER THAT A FAULTY CALCULATOR HAD CAUSED A $1,000 ERROR IN THE QUOTED $6,912 ANNUAL RENTAL RATE AND REQUESTED AN ADJUSTMENT IN THE ANNUAL RATE TO $7,912. TO SUBSTANTIATE THE CLAIMED ERROR, CALCULATOR TAPES SHOWING TOTALS OF $1,000 LESS THAN THE ACTUAL SUMS OF THE COLUMNS OF FIGURES LISTED AND AN ESTIMATE INDICATING A $1,000 ERROR IN ADDITION WERE SUBMITTED.

THE REPORT OF THE DIRECTOR, REALTY DIVISION, STATES THE OPINION THAT THE CONTRACTOR HAS NOT SUBMITTED CLEAR AND CONVINCING EVIDENCE THAT A MISTAKE WAS MADE BECAUSE IT IS NOT CLEAR THAT THE TAPES SUBMITTED WERE THOSE USED IN CALCULATING THE BID PRICE AND BECAUSE THE FIGURES LISTED IN THE ESTIMATE ARE "INCONCLUSIVE AS FAR AS ESTABLISHING THE EXISTENCE OF A MISTAKE.' THE REPORT ALSO CONCLUDES THAT THE DIFFERENCE BETWEEN THE HAMPTON BID AND THE GOVERNMENT ESTIMATE WAS NOT OF SUFFICIENT MAGNITUDE TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ANY MISTAKE. THIS REGARD THE REPORT CITES B-143796, OCTOBER 3, 1960, A CASE SIMILAR TO THE ONE AT HAND, WHICH SETS OUT REASONS WHY PRICE VARIATIONS ARE NOT NECESSARILY SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON ACTUAL OR CONSTRUCTIVE NOTICE OF A MISTAKE IN POST OFFICE DEPARTMENT CONSTRUCTION AND LEASE-BACK CONTRACTS.

IN OUR OPINION, THE EVIDENCE SUBMITTED BY MR. HAMPTON REASONABLY TENDS TO SHOW THAT A $1,000 MISTAKE MAY HAVE BEEN MADE. HOWEVER, IN ORDER TO ALLOW CORRECTION OF A MISTAKE NOT ALLEGED UNTIL AFTER AWARD IS MADE, IT MUST BE SHOWN THAT THE MISTAKE WAS MUTUAL OR THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE. 45 COMP. GEN. 700, 706. THIS IS SO BECAUSE THE ACCEPTANCE BY THE GOVERNMENT OF A BID IN GOOD FAITH RESULTS IN A VALID AND BINDING CONTRACT WHICH FIXES THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. ACCORDINGLY, NO LEGAL BASIS EXISTS FOR THE CORRECTION OF UNILATERAL MISTAKES ONCE AWARD IS MADE.

IN B-143796, CITED IN THE ADMINISTRATIVE REPORT, IT WAS STATED THAT:

"* * * SUBSTANTIAL DIFFERENCES ARE NOT UNCOMMON IN BIDS SUCH AS ARE HERE INVOLVED, SINCE THE VARIOUS BIDDERS HAVE DIFFERENT TAX STRUCTURES AND GOALS, AND THE FACILITIES INVOLVED ARE DESIGNED FOR MULTI-PURPOSE USE AND ARE READILY CONVERTED TO MANY OTHER USES UPON VACATION BY THE POST OFFICE DEPARTMENT. IN SUCH CIRCUMSTANCES THERE IS NOTHING OF SUFFICIENT MAGNITUDE WHICH WOULD WARRANT CHARGING THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF ERROR IN THE BID.'

THE DIFFERENCE BETWEEN THE HAMPTON BID AND THE NEXT LOWEST BID WAS $1,488 OR 18 PERCENT. SIMILARLY, THE DIFFERENCE BETWEEN THE HAMPTON BID AND THE LOWER OF THE TWO FIGURES COMPRISING THE GOVERNMENT ESTIMATE WAS $1,088 OR 14 PERCENT. WE MUST AGREE WITH THE ADMINISTRATIVE REPORT THAT THE HAMPTON BID WAS NOT SO OUT OF LINE WITH THE OTHERS SUBMITTED OR WITH THE GOVERNMENT ESTIMATE AS TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE ALLEGED MISTAKE.

ACCORDINGLY, WE CONCLUDE THAT NO LEGAL BASIS EXISTS FOR REFORMING THE SUBJECT CONTRACT BY ALLOWING CORRECTION OF THE ALLEGED BID MISTAKE.