B-171499, MAR 23, 1971

B-171499, MAR 23, 1971

BID PROTEST - MISTAKE IN BID DECISION CONCERNING REQUEST BY SHELDON L. POLLACK CORPORATION, LOW BIDDER, FOR CANCELLATION OF CONTRACT AWARDED FOR THE CONSTRUCTION AND LEASEBACK OF THE NEW BRIGHTON BRANCH POST OFFICE, ST. PAUL, MINNESOTA. ALTHOUGH PROTESTANT FAILED TO ACKNOWLEDGE THE ADDENDA WHICH WERE FAVORABLE TO THE BIDDER, SUCH FAILURE WAS PROPERLY DETERMINED TO BE A MINOR INFORMALITY AND WAS PROPERLY WAIVED BY THE CONTRACTING OFFICER. FURTHER, THE RECORD INDICATES THAT PROTESTANT DID NOT ALLEGE AN ERROR IN ITS BID UNTIL AFTER THE CONTRACT WAS AWARDED, AND ALTHOUGH EVIDENCE HAS BEEN SUPPLIED TO SUPPORT THE ALLEGATION THAT THE LOW BID OF $46,000 WAS BASED ON 13,042 SQUARE FEET OF BUILDING AREA AND SHOULD HAVE BEEN $73,000 BECAUSE THE BUILDING AREA WAS ACTUALLY 23,794 SQUARE FEET, SUCH AN ERROR IN BID PREPARATION IS ATTRIBUTABLE SOLELY TO THE COMPANY'S NEGLIGENCE AND SINCE THE ERROR WAS UNILATERAL, THE COMPANY IS NOT ENTITLED TO RELIEF.

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO LETTER JPD:NLR 41-A DATED MARCH 5, 1971, AND PRIOR CORRESPONDENCE FROM THE ASSISTANT GENERAL COUNSEL, REAL PROPERTY AND PROCUREMENT DIVISION, REGARDING THE REQUEST OF THE SHELDON L. POLLACK CORPORATION FOR CANCELLATION OF THE CONTRACT AWARDED FOR THE CONSTRUCTION AND LEASEBACK OF THE NEW BRIGHTON BRANCH POST OFFICE, ST. PAUL, MINNESOTA.

THE POST OFFICE DEPARTMENT, MINNEAPOLIS REGIONAL OFFICE, SOLICITED BIDS FOR THE CONSTRUCTION OF THE NEW BRIGHTON BRANCH POSTAL FACILITY TO BE LEASED TO THE POST OFFICE DEPARTMENT FOR A BASE PERIOD OF 20 YEARS, PLUS SIX RENEWAL OPTIONS OF 5 YEARS EACH. SIX BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. POLLACK SUBMITTED A BID OFFERING TO CONSTRUCT AND LEASE THE FACILITY FOR AN ANNUAL RENTAL OF $46,000 FOR THE BASIC 20-YEAR TERM. THE OTHER BIDS RANGED FROM $55,376 TO $78,000. ALTHOUGH POLLACK FAILED TO ACKNOWLEDGE THE RECEIPT OF ADDENDUM NO. 1 AND ADDENDUM 39B-1B, THE CONTRACTING OFFICER DECIDED TO WAIVE, AS AN INFORMALITY, POLLACK'S FAILURE TO ACKNOWLEDGE SUCH ADDENDA. ON SEPTEMBER 4, 1970, THE CONTRACTING OFFICE ACCEPTED POLLACK'S BID.

BY LETTER DATED SEPTEMBER 4, 1970, POLLACK REQUESTED RECONSIDERATION OF THE AWARD. IN LETTERS DATED OCTOBER 14 AND 15, 1970, POLLACK STATED THAT ON THE MORNING OF BID OPENING - JULY 6, 1970 - IT DISCOVERED THAT ITS RENTAL RATE WAS ERRONEOUSLY BASED ON THE BUILDING AREA SIZE BEING 13,042 SQUARE FEET RATHER THAN 23,794 SQUARE FEET; THAT ITS BID SHOULD HAVE REFLECTED A TOTAL BUILDING COST OF $584,700 INSTEAD OF $326,050; AND THAT IT BEGAN PREPARING A TELEGRAM TO INCREASE ITS BASIC ANNUAL RENTAL RATE FROM $46,000 TO $73,937, BUT DID NOT SEND THE TELEGRAM AFTER DISCOVERING THAT ADDENDUM NO. 39B-1B HAD NOT BEEN SUBMITTED WITH ITS ORIGINAL BID. POLLACK CLAIMS THAT SINCE THE ADDENDUM HAD TO BE SIGNED AND SUBMITTED WITH ITS BID, IT CONCLUDED THAT ITS BID WOULD BE NONCONFORMING AND WOULD BE REJECTED BY THE GOVERNMENT AS BEING NONRESPONSIVE TO THE INVITATION AND, THEREFORE, IT WAS UNNECESSARY FOR THE FIRM TO SEND THE TELEGRAPHIC MODIFICATION. IN SUPPORT OF ITS ALLEGATION OF ERROR, POLLACK HAS SUBMITTED THE WORKSHEETS USED IN COMPUTING THE ANNUAL RENTAL RATE. ONE OF THE WORKSHEETS LISTS VARIOUS ITEMS OF COST AND ONE OF THESE ITEMS IS "BLDG. 13,042 25/ 326,050."

IN ITS LETTER OF OCTOBER 15, 1970, POLLACK STATES THAT ON JULY 7, 1970, MR. G. W. ELDEN, REAL ESTATE OFFICER FOR THE POST OFFICE DEPARTMENT IN MINNEAPOLIS, MINNESOTA, CONTACTED MR. HAUSER, WHO HAD SIGNED POLLACK'S BID, TO INFORM HIM OF THE BID RESULTS; THAT AT THIS TIME MR. HAUSER NOTIFIED MR. ELDEN THAT HIS FIRM HAD CONCLUDED THAT ITS BID WAS INVALID BECAUSE IT HAD FAILED TO INCLUDE ADDENDUM NO. 39B-1B IN ITS BID PACKAGE AND THAT IT HAD NOT THEREFORE MODIFIED ITS BID PRICE TO REFLECT A SUBSTANTIAL ERROR MADE IN ITS BID; AND THAT NO FURTHER ACTION WAS TAKEN BY MR. HAUSER AFTER HIS CONVERSATION WITH MR. ELDEN BECAUSE IT WAS HIS BELIEF THAT HIS FIRM HAD SUBMITTED AN INVALID BID. IN CONNECTION WITH THE REFERRED-TO TELEPHONE CONVERSATION, MR. ELDEN STATES IN HIS AFFIDAVIT DATED DECEMBER 28, 1970, AS FOLLOWS:

"2. THAT ON JULY 6 OR 7, 1970, I TELEPHONED MR. HAUSER, TREASURER OF THE SHELDON L. POLLACK CORPORATION OF LOS ANGELES, CALIFORNIA. I ASKED TO SPEAK TO MR. HAUSER, BECAUSE HIS SIGNATURE WAS ON THE BID DOCUMENTS, WHICH CONSTITUTES THE BID FROM THE POLLACK CORPORATION FOR CONSTRUCTION AND LEASE OF THE NEW BRIGHTON BRANCH OF THE SAINT PAUL POST OFFICE, MINNESOTA.

"3. THAT THE PURPOSE OF MY TELEPHONE CALL WAS TO INFORM THE POLLACK CORPORATION OF THE BID RESULTS AND ASK THEM TO SUBMIT TWO ADDENDA TO THE BID WHICH HAD BEEN LEFT OUT OF THEIR SUBMISSION.

"4. THAT IN THE TELEPHONE CALL, MR. HAUSER ADVISED ME THAT HE THOUGHT THEIR BID WAS NOT RESPONSIVE. I ADVISED HIM THAT THEY WERE THE LOW BIDDER AND THAT THEIR BID WAS BEING FORWARDED TO WASHINGTON WHERE THE DECISION WOULD BE MADE ON ACCEPTANCE AND WHERE ANY QUESTION ON WHETHER OR NOT THEIR BID WAS RESPONSIVE WOULD BE MADE. I PLAINLY STATED THAT THESE DECISIONS WERE BEYOND MY AUTHORITY. MY RECOLLECTION WAS THAT MR. HAUSER STATED THEY WOULD HAVE TO REVIEW THEIR CALCULATIONS. I DO NOT RECALL THAT HE USED THE TERM INVALID WITH RESPECT TO THEIR BID BUT RATHER THAT HE SAID HE THOUGHT THEIR BID WAS NOT RESPONSIVE.

"5. THAT OUR CONVERSATION WAS CONCLUDED WITHOUT ANY STATEMENT OF OPINION AS TO WHETHER OR NOT I THOUGHT THE BID RESPONSIVE."

IT IS REPORTED THAT POLLACK HAS FAILED TO MENTION IN ITS REQUEST FOR RELIEF THAT IN ADDITION TO ADDENDUM 39B-1B, ADDENDUM NO. 1 WAS OMITTED FROM ITS BID; AND THAT THE ONLY SIGNIFICANT CHANGE MADE BY ADDENDUM NO. 1 WAS RELIEVING THE LESSOR OF THE DUTY OF MAINTAINING AND SERVICING GASOLINE STORAGE TANKS, AIRHOSE EQUIPMENT, AND A GASOLINE DISPENSING PUMP AND IMPOSING THAT RESPONSIBILITY UPON THE GOVERNMENT. IT ALSO IS REPORTED THAT ADDENDUM 39B-1B REFERRING TO THE MATERIALS TO BE USED IN THE CONSTRUCTION OF THE CEILING (POD 39B, CHAPTER 3, SECTION "G") MADE A MINOR CHANGE IN THE SPECIFICATIONS. IT IS STATED THAT THE ADDENDA HAD NO EFFECT ON QUALITY OR QUANTITY AND WOULD HAVE A NEGLIGIBLE DOWNWARD EFFECT ON PRICE SINCE THE ADDENDA WERE FAVORABLE TO THE BIDDERS.

THE FIRST QUESTION FOR CONSIDERATION IS WHETHER POLLACK'S FAILURE TO ACKNOWLEDGE THE ADDENDA WAS A MINOR INFORMALITY WHICH THE CONTRACTING OFFICER COULD PROPERLY WAIVE IN THE CIRCUMSTANCES. SECTION 1-2.405 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDES, WITH REFERENCE TO MINOR INFORMALITIES OR IRREGULARITIES IN BIDS, THAT THE CONTRACTING OFFICER SHALL EITHER GIVE THE BIDDER AN OPPORTUNITY TO CURE THE DEFICIENCY OR SHALL WAIVE SUCH DEFICIENCY, WHICHEVER IS TO THE ADVANTAGE OF THE GOVERNMENT. FPR SEC. 1-2.405(D)(2) CITES AS AN EXAMPLE OF A MINOR INFORMALITY OR IRREGULARITY THE FAILURE OF A BIDDER TO ACKNOWLEDGE RECEIPT OF AN AMENDMENT THAT "INVOLVES ONLY A MATTER OF FORM OR IS ONE WHICH HAS EITHER NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, QUANTITY, QUALITY, OR DELIVERY OF THE ITEM BID UPON. FURTHER, IN 41 COMP. GEN. 550 (1962), IT WAS HELD THAT THE FAILURE OF THE LOW BIDDER TO ACKNOWLEDGE AN ADDENDUM WHICH HAD THE EFFECT OF REDUCING THE COST OF THE PROCUREMENT WAS AN INFORMALITY THAT COULD BE WAIVED. SEE ALSO B-156631, MAY 17, 1965, AND B-156651, JUNE 21, 1965. ACCORDINGLY, WE CONCUR THAT POLLACK'S FAILURE TO ACKNOWLEDGE THE ADDENDA IN QUESTION WAS A MINOR INFORMALITY PROPERLY WAIVED IN THE CIRCUMSTANCES.

THE QUESTION THEN IS WHETHER POLLACK IS ENTITLED TO RELIEF ON A MISTAKE- IN-BID THEORY. THE RECORD INDICATES THAT POLLACK DID NOT ALLEGE AN ERROR IN ITS BID UNTIL AFTER THE CONTRACT WAS AWARDED. THEREFORE, THE SOLE QUESTION FOR CONSIDERATION IS NOT WHETHER AN ERROR WAS MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. THE CONTRACTING OFFICER HAS REPORTED THAT HE HAD NO REASON TO SUSPECT AN ERROR IN THE BID. THE RECORD INDICATES THAT THE FIVE OTHER BIDS WERE IN THE AMOUNTS OF $55,376, $58,900, $69,745, $70,138, AND $78,000 AND THAT THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $51,587. VIEW OF THE WIDE RANGE OF BIDS RECEIVED AND THE GOVERNMENT ESTIMATE, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. ALTHOUGH, AFTER AWARD, THE COMPANY FURNISHED EVIDENCE TO SUPPORT ITS ALLEGATION OF ERROR, IT DOES NOT APPEAR THAT PRIOR TO AWARD THE CONTRACTING OFFICER HAD KNOWLEDGE OF THE DIFFERENT FACTORS USED BY THE COMPANY IN COMPUTING THE BID PRICE. THE RECORD INDICATES THAT ALTHOUGH PRIOR TO AWARD THE COMPANY KNEW OF THE ERROR IN THE BID, IT DID NOT MAKE THIS FACT KNOWN TO THE CONTRACTING OFFICER UNTIL AFTER AWARD. SO FAR AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH - NO ERROR HAVING BEEN ALLEGED BY THE COMPANY UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE EDWIN DOUGHERTY AND M. H. OGDEN V UNITED STATES, 102 CT. CL. 249, 259 (1944); SALIGMAN ET AL. V UNITED STATES, 56 F. SUPP. 505, 507 (1944).

MOREOVER, THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V UNITED STATES, 100 CT. CL. 120, 163 (1943). IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED SOLELY TO THE COMPANY'S NEGLIGENCE AND SINCE THE ERROR WAS UNILATERAL - NOT MUTUAL - THE COMPANY IS NOT ENTITLED TO RELIEF. SEE 20 COMP. GEN. 652 (1941); 26 ID. 415 (1946); AND 40 ID. 326, 332 (1960).

ACCORDINGLY, THERE IS NO LEGAL BASIS TO AUTHORIZE THE RELIEF REQUESTED BY POLLACK.