B-157716, JAN. 25, 1966

B-157716, JAN. 25, 1966

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A REPORT BY LETTER DATED JANUARY 6, 1966, FROM THE BUREAU OF YARDS AND DOCKS (REFERENCE 43.413/LAW:LAC, NBY-67151) RELATIVE TO THE REQUEST OF THE LAW FIRM OF BROWNE, RENOUF, MERCER, COADY AND RICHE, ATTORNEYS FOR JAMES T. O-REILLY, THAT MR. O-REILLY BE EXCUSED FROM PERFORMANCE UNDER CONTRACT NO. NBY-67151.

BY INVITATION FOR BIDS DATED JUNE 2, 1965, THE UNITED STATES NAVAL STATION, ARGENTIA, NEWFOUNDLAND, CANADA, SOLICITED BIDS FOR THE REHABILITATION OF POWER AND COMMUNICATIONS MANHOLES. THE WORK WAS SET FORTH AS ITEMS 1 AND 2. THE FOUR BIDS RECEIVED WERE OPENED ON JUNE 22, AS SCHEDULED, AND TABULATED AS FOLLOWS:

TABLE

BID ITEM 1 BID ITEM 2

JAMES T. O-REILLY $25,300.00 $18,000.00

ALLIED CONSTRUCTION CO., LTD. 33,600.00 25,200.00

COLONIAL CONSTRUCTION CO., LTD. 44,200.00 40,700.00

SEWARD CONSTRUCTION CO., LTD. 88,000.00 68,000.00

BY LETTER DATED JULY 14, THE CONTRACTING OFFICER NOTIFIED MR. O REILLY OF THE ACCEPTANCE OF HIS BID OF $25,300 ON ITEM 1, ON WHICH THE GOVERNMENT ESTIMATE WAS $23,400. THE BID ACCEPTANCE WAS ACKNOWLEDGED BY MR. O-REILLY ON AUGUST 2. HOWEVER, BY LETTER DATED AUGUST 14, MR. O-REILLY ADVISED THE OFFICER IN CHARGE OF CONSTRUCTION AT THE NAVAL STATION THAT HE HAD DISCOVERED THAT THE SCALE ON THE GOVERNMENT DRAWING FOR THE PROJECT READ 1 INCH EQUALS 40 FEET RATHER THAN 1 INCH EQUALS 400 FEET; THAT HE HAD BASED THE COST OF THE CABLE INCLUDED IN HIS BID ON THE ERRONEOUS SCALE; AND THAT HE STOOD TO LOSE $8,000 UNLESS PROVISION SHOULD BE MADE FOR A PRICE INCREASE, OR FOR SOME OTHER ARRANGEMENT. MR. O-REILLY HAS DECLINED TO EXECUTE THE FORMAL CONTRACT DOCUMENTS AND, PENDING OUR DECISION ON THE REQUEST FILED WITH OUR OFFICE BY HIS ATTORNEYS, HAS NOT PROSECUTED THE WORK.

THE CONTRACTOR'S ATTORNEYS STATE THAT THE CONTRACTOR, WHO HAS HAD NO PREVIOUS ELECTRICAL CONTRACTING EXPERIENCE, ESTIMATED THAT HE WOULD REQUIRE 300 FEET OF CABLE FOR THE WORK, BASED ON THE ERRONEOUS SCALE ON THE GOVERNMENT DRAWING, AND THAT HE FIRST BECAME AWARE OF THE MISTAKE AFTER AWARD WHEN THE SMALL QUANTITY OF CABLE HE PROPOSED TO USE WAS QUESTIONED BY THE ELECTRICIAN WHOM HE INTENDED TO ENGAGE FOR THE PROJECT. ALTHOUGH IT IS STATED THAT THERE ARE NO WORKSHEETS TO COVER THIS PORTION OF MR. O-REILLY'S BID, THERE HAS BEEN FURNISHED A COPY OF A STATEMENT FROM A SUPPLIER TO THE EFFECT THAT ON JUNE 15, ONE WEEK PRIOR TO BID OPENING, MR. O-REILLY HAD ASKED FOR A QUOTE ON 500 FEET OF CABLE, AND THAT THE SUPPLIER QUOTED A PRICE ON THAT QUANTITY AT $5,557 PER 1,000 FEET. ADDITIONALLY, MR. O-REILLY CONTENDS THAT HE FAILED TO NOTICE HIS ERROR EARLIER BECAUSE THE BID OF THE SECOND LOW BIDDER WAS COMPUTED ON THE BASIS OF PURCHASING CABLE AT A BARGAIN PRICE WHICH ANOTHER CONTRACTOR FAILED TO USE ON ANOTHER JOB.

THE BUREAU OF YARDS AND DOCKS CONCEDES THAT THE SCALE ON THE GOVERNMENT DRAWING IS IN ERROR, AS ASSERTED BY THE CONTRACTOR AND HIS ATTORNEYS, BUT CONTENDS THAT THE ERROR SHOULD HAVE BEEN OBVIOUS SINCE THE 1,000-FOOT GRID LINES WERE CORRECTLY SHOWN ON THE DRAWING. MOREOVER, IT IS STATED, THE CONTRACT PROVIDES PROCEDURES UNDER THE "DISPUTES" CLAUSE FOR PAYMENT OF JUSTIFIED CLAIMS, WHICH MR. O-REILLY HAS ELECTED NOT TO FOLLOW. THEREFORE, IT IS THE BUREAU'S POSITION THAT THE AWARD WAS PROPERLY MADE TO MR. O-REILLY AND THAT THE CONTRACT PROVIDES THE PROPER MEANS FOR RESOLVING THE MATTER.

THE EVIDENCE OF RECORD DOES NOT ESTABLISH THE EXACT AMOUNT OF THE MISTAKE MADE BY THE BIDDER, HOWEVER, IT DOES INDICATE THAT A MISTAKE WAS MADE, AND THAT THE GOVERNMENT'S ERROR ON ITS DRAWING EITHER CAUSED, OR CONTRIBUTED TO, THE BIDDER'S MISTAKE. WHILE THE BIDDER'S ALLEGATION WITH RESPECT TO THE BASIS ON WHICH THE SECOND LOW BID WAS COMPUTED IS NOT SUPPORTED BY OTHER EVIDENCE, IT WOULD APPEAR FROM THE AMOUNT OF THAT BID, COUPLED WITH THE FACT THAT MR. O-REILLY IS UNWILLING TO PERFORM THE CONTRACT WORK AT HIS BID PRICE OF $25,300, THAT THE GOVERNMENT'S ESTIMATE, WHICH APPEARS TO HAVE CONTRIBUTED TO BOTH THE TARDINESS OF MR. O-REILLY'S ALLEGATION OF ERROR AND TO THE CONTRACTING OFFICER'S FAILURE TO REQUEST VERIFICATION OF HIS BID, MAY ALSO BE IN ERROR.

IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE ACCEPTANCE OF THE LOW BID DID NOT RESULT IN AN ENFORCEABLE CONTRACT, THE GOVERNMENT HAVING CONTRIBUTED TO THE BIDDER'S MISTAKE, AND THAT THE CONTRACT SHOULD BE CANCELLED WITHOUT LIABILITY ON THE PART OF THE CONTRACTOR. B-130864, MARCH 14, 1957.