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PURSUANT TO WHICH YOU WERE AWARDED CONTRACT NO. THE TIME FOR OPENING WAS EXTENDED BY AMENDMENT TO 2:00 P.M. THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $309. WHICH WAS INCORPORATED IN THE IFB. AS FOLLOWS: "/D) MODIFICATIONS OF BIDS ALREADY SUBMITTED WILL BE CONSIDERED IF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS BY THE TIME SET FOR OPENING OF BIDS. TELEGRAPHIC MODIFICATIONS WILL BE CONSIDERED. LATE BIDS AND MODIFICATIONS OR WITHDRAWALS (JAN 1964) "/A) BIDS AND MODIFICATIONS OR WITHDRAWALS THEREOF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS AFTER THE EXACT TIME SET FOR OPENING OF BIDS WILL NOT BE CONSIDERED UNLESS: (I) THEY ARE RECEIVED BEFORE AWARD IS MADE.

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B-157318, OCT. 22, 1965

TO MR. ROBERT L. WILSON, GENERAL CONTRACTOR:

YOUR LETTER OF JULY 21, 1965, REQUESTS THAT OUR OFFICE AUTHORIZE EQUITABLE RELIEF TO YOU FOR A MISTAKE IN A BID SUBMITTED BY YOU UNDER INVITATION FOR BIDS (IFB), SPECIFICATION NO. 64282/65, ISSUED JUNE 9, 1965, BY THE DEPARTMENT OF THE NAVY, BUREAU OF YARDS AND DOCKS, PURSUANT TO WHICH YOU WERE AWARDED CONTRACT NO. NBY-64282.

THE IFB SOLICITED BIDS, TO BE OPENED AT 2:00 P.M., PACIFIC DAY LIGHT SAVING TIME, JUNE 30, 1965, AT THE DISTRICT PUBLIC WORKS OFFICE, TWELFTH NAVAL DISTRICT, SAN BRUNO, CALIFORNIA, FOR THE CONSTRUCTION OF AN ADDITION TO A BUILDING AT HAMILTON AIR FORCE BASE, CALIFORNIA. THE TIME FOR OPENING WAS EXTENDED BY AMENDMENT TO 2:00 P.M. JULY 2. THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS, AND THE GOVERNMENT ESTIMATE FOR THE WORK WAS $309,175.

STANDARD FORM 22, INSTRUCTIONS TO BIDDERS (CONSTRUCTION CONTRACT), WHICH WAS INCORPORATED IN THE IFB, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"/D) MODIFICATIONS OF BIDS ALREADY SUBMITTED WILL BE CONSIDERED IF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS BY THE TIME SET FOR OPENING OF BIDS. TELEGRAPHIC MODIFICATIONS WILL BE CONSIDERED, BUT SHOULD NOT REVEAL THE AMOUNT OF THE ORIGINAL OR REVISED BID.

"7. LATE BIDS AND MODIFICATIONS OR WITHDRAWALS (JAN 1964)

"/A) BIDS AND MODIFICATIONS OR WITHDRAWALS THEREOF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS AFTER THE EXACT TIME SET FOR OPENING OF BIDS WILL NOT BE CONSIDERED UNLESS: (I) THEY ARE RECEIVED BEFORE AWARD IS MADE; AND EITHER (II) THEY ARE SENT BY REGISTERED MAIL, OR BY CERTIFIED MAIL FOR WHICH AN OFFICIAL DATED POST OFFICE STAMP (POSTMARK) ON THE ORIGINAL RECEIPT FOR CERTIFIED MAIL HAS BEEN OBTAINED, OR BY TELEGRAM IF AUTHORIZED; AND IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO DELAY IN THE MAILS, OR DELAY BY THE TELEGRAPH COMPANY, FOR WHICH THE BIDDER WAS NOT RESPONSIBLE; OR (III) IF SUBMITTED BY MAIL (OR BY TELEGRAM IF AUTHORIZED), IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO MISHANDLING BY THE GOVERNMENT AFTER RECEIPT AT THE GOVERNMENT INSTALLATION; PROVIDED THAT TIMELY RECEIPT AT SUCH INSTALLATION IS ESTABLISHED UPON EXAMINATION OF AN APPROPRIATE DATE OR TIME STAMP (IF ANY) OF SUCH INSTALLATION OR OF OTHER DOCUMENTARY EVIDENCE OF RECEIPT AT SUCH INSTALLATION (IF READILY AVAILABLE) WITHIN THE CONTROL OF SUCH INSTALLATION OR OF THE POST OFFICE SERVING IT.'

ON FRIDAY, JULY 2, THE FIVE BIDS RECEIVED UNDER THE IFB WERE OPENED AS SCHEDULED. THE STANDING OF THE BIDDERS WAS AS FOLLOWS:

CHART

NAME AMOUNT

ROBERT L. WILSON $249,880

GIL CONSTRUCTION CO. 269,269

RELIANCE ENTERPRISES 269,352

MARTINELLI CONSTRUCTION CO. 270,725

MERZ BROTHERS 287,777

IMMEDIATELY AFTER THE BID OPENING, YOUR REPRESENTATIVE, MR. A. J. BURKHART, WHO WAS PRESENT, WAS ADVISED THAT SINCE THE DIFFERENCE BETWEEN YOUR LOW BID AND THE NEXT TWO LOW BIDS WAS LESS THAN 10 PERCENT, A FORMAL LETTER REQUESTING BID CONFIRMATION WOULD NOT BE SENT TO YOU. IT WAS SUGGESTED TO MR. BURKHART, HOWEVER, THAT YOU REVIEW YOUR BID AND PROMPTLY ADVISE THE PROCURING ACTIVITY OF ANY DISCREPANCY; OTHERWISE, THE AWARD WOULD BE MADE WITHOUT FURTHER INQUIRY BY THE NAVY. BECAUSE OF THE JULY 4 HOLIDAY, THE NEXT WORKING DAY OF THE CONTRACTING AGENCY FOLLOWING BID OPENING WAS JULY 6, AT WHICH TIME NO WORD HAD BEEN RECEIVED FROM YOU IN RESPECT TO VERIFICATION OF YOUR BID, AND THE NOTICE OF AWARD TO YOU WAS THEREFORE EXECUTED AND MAILED TO YOU. THE NOTICE WAS NOT RECEIVED BY YOU UNTIL JULY 8.

ON JULY 7, YOU TELEPHONED THE PROCURING ACTIVITY AND STATED THAT YOU HAD MADE AN ERROR IN BID OF $14,755 PLUS VARIOUS MARK-UPS. BY LETTER OF THE SAME DATE, YOU SUBMITTED COPIES OF WORKSHEETS LABELED "GENERAL SUMMARY," SHOWING YOUR BID PRICE OF $249,880, AND "GENERAL CONDITIONS," SHOWING VARIOUS ITEMS TOTAL ING $14,755. ON THE BASIS THAT YOU HAD ERRONEOUSLY OMITTED THE "GENERAL CONDITIONS" TOTAL AND OTHER MARKUPS (NOT IDENTIFIED) FROM YOUR BID PRICE, YOU REQUESTED THAT WITHDRAWAL OF YOUR BID BE PERMITTED.

BY LETTER DATED JULY 8, THE PROCURING ACTIVITY ADVISED YOU THAT SINCE YOUR BID HAD BEEN ACCEPTED WITHOUT NOTICE OF ERROR, A BINDING CONTRACT RESULTED AND WITHDRAWAL WOULD NOT BE PERMITTED. SUBSEQUENTLY, YOU EXECUTED THE CONTRACT UNDER PROTEST RESERVING THE RIGHT TO PURSUE YOUR CLAIM OF ERROR.

IN YOUR LETTER OF JULY 21, YOU MAKE THE FOLLOWING STATEMENTS:

"ON FRIDAY AFTERNOON, FOLLOWING THE OPENING OF THE BIDS, MY OFFICE REVIEWED MY BID, CHECKED WITH SUBCONTRACTORS AND FOUND NO ERROR AT THAT TIME. ON TUESDAY, JULY 6, 1965, WE CONTINUED OUR REVIEW OF MY BID FOR THE PURPOSE OF DETERMINING IF ANY ERROR HAD BEEN MADE, AND IT WAS NOT UNTIL APPROXIMATELY 10:30 A.M. ON WEDNESDAY, JULY 7, 1965, THE SECOND BUSINESS DAY FOLLOWING THE SUBMISSION OF THE BID, THAT WE DISCOVERED AN ERROR AMOUNTING TO $14,755.00 PLUS VARIOUS MARK-UPS. IN OTHER WORDS, I INTENDED THAT MY BID BE IN THE AMOUNT OF $268,580.00 INSTEAD OF $249,880.00.

"IT IS MY UNDERSTANDING THAT THE GOVERNMENT HAD UNTIL MONDAY, JULY 12, 1965, WITHIN WHICH TO MAKE THE AWARD AND WHILE I RECOGNIZE THERE IS NOTHING TO PREVENT THE CONTRACTING OFFICER FROM MAKING THE AWARD PRIOR TO THAT TIME, IT HAS BEEN MY EXPERIENCE THAT IT IS SELDOM AND UNUSUAL THAT THE AWARD IS MADE THE FIRST BUSINESS DAY AFTER THE BIDS ARE SUBMITTED.

"IN THE CASE OF A MISTAKE IN BID ON ANY PUBLIC WORK FOR THE STATE OF CALIFORNIA THE CONTRACTOR BY STATUTE HAS FIVE DAYS WITHIN WHICH TO NOTIFY THE CONTRACTING OFFICER OF A MISTAKE IN BID. IT IS MY UNDERSTANDING THERE IS NO SUCH TIME LIMIT IN THE CASE OF CONTRACTS FOR THE FEDERAL GOVERNMENT. HOWEVER AS A MATTER OR PRACTICE AND CUSTOM IN THE INDUSTRY, I AM INFORMED THAT NORMALLY THE FEDERAL GOVERNMENT WILL CONSIDER REQUESTS FOR A WITHDRAWAL OF THE BID IN THE EVENT OF A MISTAKE WITHIN FOUR OR FIVE WORKING DAYS. BY REASON OF ALL OF THIS I WAS VERY MUCH SURPRISED THAT THE CONTRACT WAS AWARDED THE FIRST BUSINESS DAY AFTER THE BID WAS SUBMITTED WHICH DID NOT GIVE ME THE PROPER TIME TO REVIEW MY FIGURES TO DETERMINE WHETHER OR NOT AN ERROR HAD BEEN MADE.

"YOU WILL NOTE FROM THE FOREGOING FIGURES THAT MY BID, HAD IT BEEN PROPERLY SUBMITTED WITHOUT THE ERROR, WOULD STILL HAVE BEEN $687.00 LOWER THAN THE SECOND BID AND $40,595.00 LOWER THAN THE GOVERNMENT'S ESTIMATE.

"IT IS RESPECTFULLY REQUESTED THAT YOUR OFFICE TAKE APPROPRIATE STEPS TO RECTIFY THIS SITUATION AND GRANT SUCH EQUITABLE RELIEF AS IN YOUR OPINION IS JUSTIFIED UNDER THE CIRCUMSTANCES.'

IT IS THE POSITION OF THE DEPARTMENT OF THE NAVY THAT THE ALLEGED MISTAKE WAS NOT MUTUAL; THAT THERE IS NO ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR IN YOUR BID PRIOR TO ITS ACCEPTANCE; AND THAT THERE IS NO CLEAR AND CONVINCING EVIDENCE THAT YOU ACTUALLY MADE AN UNINTENTIONAL ERROR IN YOUR BID. IT IS THEREFORE RECOMMENDED THAT YOUR REQUEST FOR CONTRACT PRICE ADJUSTMENT BE DENIED.

THE PROCUREMENT IN QUESTION WAS CONDUCTED UNDER THE PROVISIONS OF 10 U.S.C. 2301-2314 GOVERNING PROCUREMENTS BY THE DEPARTMENT OF DEFENSE AND THE OTHER AGENCIES SPECIFIED IN 10 U.S.C. 2303. THE ARMED SERVICES PROCUREMENT REGULATION, ISSUED IN IMPLEMENTATION OF THE STATUTE, ALSO APPLIES TO THE PROCUREMENT.

THE GENERAL RULE IS THAT PROPOSALS WHICH HAVE BEEN SUBMITTED IN RESPONSE TO GOVERNMENT ADVERTISEMENTS FOR BIDS MAY NOT BE WITHDRAWN AFTER THEY HAVE BEEN OPENED, EVEN BEFORE AWARD IS MADE, AND THE BIDDER IS BOUND TO ACCEPT THE AWARD. REFINING ASSOCIATES, INC. V. UNITED STATES, 109 F.SUPP. 259. ALSO, A BIDDER WHO MAKES A MISTAKE IN A BID WHICH HAS BEEN ACCEPTED BY THE GOVERNMENT MUST BEAR THE CONSEQUENCES UNLESS THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE PRIOR TO AWARD. THE DETERMINING FACTOR IN YOUR CASE, THEREFORE, IS WHETHER A VALID AWARD HAD BEEN EFFECTED BY THE GOVERNMENT PRIOR TO JULY 7, THE TIME THAT YOU GAVE NOTICE TO THE PROCURING ACTIVITY OF A MISTAKE IN YOUR BID.

WITH RESPECT TO YOUR ADVICE THAT BIDDERS ON PROCUREMENTS BY THE STATE OF CALIFORNIA ARE GIVEN FIVE DAYS BY STATE STATUTE IN WHICH TO ALLEGE ERROR IN THEIR BIDS, THERE IS NO REQUIREMENT IN FEDERAL PROCUREMENT STATUTES OR IN THE ARMED SERVICES PROCUREMENT REGULATION THAT AWARD OF A CONTRACT MUST BE DEFERRED FOR ANY SPECIFIED PERIOD AFTER THE SCHEDULE TIME OF BID OPENING. THE FACT THAT AN AWARD IS MADE PROMPTLY AFTER BID OPENING IS THEREFORE NOT ORDINARILY SUBJECT TO QUESTION. HOWEVER, IN THE INSTANT CASE, SINCE THE NAVY REPRESENTATIVE SUGGESTED TO YOUR REPRESENTATIVE AT THE BID OPENING THAT YOU REVIEW YOUR BID AND PROMPTLY ADVISE THE NAVY OF ANY ERROR, IT IS OUR VIEW THAT YOU WERE ENTITLED TO A REASONABLE TIME TO REVIEW YOUR BID AND TO GIVE SUCH NOTICE TO THE GOVERNMENT. SINCE YOU GAVE NOTICE OF YOUR ERROR TO THE NAVY ON THE MORNING OF JULY 7, THE SECOND WORKDAY AFTER THE BOD OPENING ON FRIDAY, JULY 2, IT IS OUR FURTHER VIEW THAT YOU ACTED WITHIN A REASONABLE TIME, AND THAT THE PURPORTED ACCEPTANCE OF YOUR BID ON JULY 6, WAS NOT BINDING UPON YOU. IN VIEW THEREOF, AND SINCE YOU ACCEPTED THE AWARD UNDER PROTEST AND PRESUMABLY HAVE COMPLETED A SUBSTANTIAL PART OF THE WORK, WE ARE ADVISING THE SECRETARY OF THE NAVY THAT THE CONTRACT SHOULD BE MODIFIED SO AS TO PERMIT PAYMENT OF AN ADDITIONAL AMOUNT OF $14,755, WITHOUT MARKUP, FOR THE ITEMS INCLUDED UNDER GENERAL CONDITIONS AND REFLECTED ON THE WORKSHEETS FORWARDED TO NAVY WITH YOUR LETTER OF JULY 7.

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