B-140043, AUG. 17, 1959

B-140043, AUG. 17, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JUNE 25, 1959, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE CARDAN COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-04-353-ENG-6493, DATED DECEMBER 30, 1958, IS BASED.

BY INVITATION NO. ENG-04-353-59-43, ISSUED DECEMBER 12, 1958, THE UNITED STATES ARMY ENGINEER DISTRICT, LOS ANGELES, CORPS OF ENGINEERS, REQUESTED BIDS FOR THE CONSTRUCTION OF A MISSILE ASSEMBLY BUILDING AND APPURTENANT FACILITIES AT VANDENBERG AIR FORCE BASE, LOMPOC, CALIFORNIA. NINE BIDS WERE RECEIVED. THE CARDAN COMPANY SUBMITTED THE LOW BID OF $337,544. THE NEXT LOW BID WAS $354,953.61 AND THE HIGHEST BID WAS $398,499.98. ON THE DAY THE BIDS WERE OPENED, DECEMBER 30, 1958, THE COMPANY WAS NOTIFIED OF THE AWARD BY MAIL. THE NOTICE OF AWARD WAS RECEIVED BY THE CONTRACTOR THE NEXT MORNING. ON THE SAME DAY THE CONTRACTOR WENT TO THE CONTRACTING OFFICER AND ALLEGED THAT IT HAD MADE AN ERROR IN ITEMS NOS. 15 AND 16 OF THE BID, FOR WHICH IT BID THE RESPECTIVE AMOUNTS OF $980 AND $112, IN LIEU OF $9,800 AND $1,125. THE ERRORS ALLEGEDLY WERE BASED ON THE CONTRACTOR'S FAILURE TO PROPERLY PLACE DECIMAL POINTS IN THE EXTENDED AMOUNTS UNDER THESE ITEMS. THE CONTRACTOR'S BID FAILED TO ENTER ANY UNIT PRICES BUT MERELY SHOWED THE TOTAL AMOUNTS FOR EACH ITEM. THE UNIT PRICES WERE SUPPLIED BY THE CONTRACTING OFFICER'S REPRESENTATIVE BY DIVIDING THE TOTAL AMOUNT BID FOR EACH ITEM BY THE ESTIMATED QUANTITY FOR THAT ITEM. THE UNIT PRICE THUS ESTABLISHED FOR ITEM 15 WAS $0.40 PER CUBIC YARD AND $4.48 PER TON FOR ITEM 16. THE OTHER BIDS ON ITEM 15 RANGE FROM $3.72 TO $6.75 PER CUBIC YARD AND ON ITEM 16 FROM $40 TO $54 PER TON. THE GOVERNMENT'S ESTIMATE WAS $5.80 PER CUBIC YARD FOR ITEM 15 AND $43 PER TON FOR ITEM 16.

BY LETTER DATED JANUARY 2, 1959, COPIES OF THE CONTRACT DRAWN IN ACCORDANCE WITH THE CONTRACTOR'S BID, TOGETHER WITH PERFORMANCE AND PAYMENT BONDS, WERE FORWARDED TO THE CONTRACTOR FOR EXECUTION. BY LETTER OF JANUARY 5, 1959, THE CONTRACTOR, THROUGH ITS ATTORNEY, FORMALLY ADVISED THE CONTRACTING OFFICER OF THE ALLEGED ERROR AND REQUESTED THAT, DUE TO SUCH ERROR, THE CONTRACT PRICE BE MODIFIED FROM $337,544 TO$347,377 OR, IN LIEU THEREOF, THAT THE CONTRACT BE CANCELLED. BY LETTER OF JANUARY 14, 1959, THE CONTRACTOR, THROUGH ITS ATTORNEY, WITHDREW ITS REQUEST FOR CANCELLATION AND REQUESTED THAT THE CONTRACT BE MODIFIED. FURTHER, IT WAS STATED THAT ,OUR CLIENT DESIRES TO PROCESS THE REQUESTED MODIFICATION OF THE CONTRACT PRICE, AND IS PREPARED TO EXECUTE THE FORMAL WRITTEN CONTRACT AND PROCEED WITH THE WORK WHILE HIS REQUESTED MODIFICATION OF THE CONTRACT PRICE IS BEING PROCESSED AND WITHOUT PREJUDICE TO HIS RIGHT TO PROCESS HIS REQUESTED MODIFICATION IN THE MANNER PROVIDED BY APPLICABLE STATUTES AND REGULATIONS.' IT APPEARS THAT THE FORMAL CONTRACT WAS SUBSEQUENTLY EXECUTED BY THE CONTRACTOR IN ACCORDANCE WITH ITS BID.

THE RECORD INDICATES THAT THE CONTRACTOR WAS TOLD, APPARENTLY PRIOR TO ITS LETTER OF JANUARY 14, 1959, THAT IT HAD THREE CHOICES: (1) TO REQUEST CORRECTION, (2) TO REQUEST CANCELLATION OR (3) TO FORMALIZE THE CONTRACT. THUS, IT APPEARS THAT THE ADVICE THE CONTRACTOR RECEIVED DID NOT PUT HIM ON NOTICE THAT SIGNING THE CONTRACT MIGHT PRECLUDE HIM FROM PROCEEDING FURTHER WITH HIS REQUEST FOR CORRECTION. CF. 31 COMP. GEN. 384.

ORDINARILY, THE CONTRACTING OFFICER IS UNDER NO DUTY TO COMPARE BIDDER'S UNIT PRICES WHERE BIDS ARE REQUESTED AND SUBMITTED ON A LOT BASIS. HOWEVER, IN THE PRESENT CASE THE CONTRACTING OFFICER DETERMINED THE UNIT PRICES OF ITEMS 15 AND 16 BY DIVIDING THE TOTAL AMOUNT BID FOR EACH ITEM BY THE ESTIMATED QUANTITY FOR THAT ITEM. IN VIEW OF THE GREAT DIFFERENCE BETWEEN THE CONTRACTOR'S BID AND THE OTHER BIDS AND THE GOVERNMENT'S ESTIMATE FOR THESE ITEMS, IT WOULD APPEAR THAT A REQUEST FOR VERIFICATION OF THE BID WOULD HAVE BEEN IN ORDER BEFORE ITS ACCEPTANCE.

ACCORDINGLY, THE CONTRACT MAY BE MODIFIED AS REQUESTED BY THE CONTRACTOR. A REFERENCE TO THIS DECISION SHOULD BE MADE IN THE MODIFICATION.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF APRIL 3, 1959, ARE RETURNED.