B-176803, NOV 27, 1972

B-176803, NOV 27, 1972

CONTRACTS - REQUIREMENT DELETION - ERRONEOUS COST ESTIMATES DECISION ALLOWING THE DELETION OF 2 REQUIREMENTS FROM A CONTRACT AWARDED TO HARRY D. O'MEARA COMPANY BY GSA FOR RELOCATION OF A BOILER AND HOT WATER HEATER IN "TEMPO 8" AT NO CHANGE IN THE CONTRACT PRICE. WHERE A CONTRACTOR IS SUPPLIED AN ERRONEOUS REQUIREMENT COST ESTIMATE, WHICH, IN VIOLATION OF THE PROVISIONS OF FPR 1-3.807-2, WAS NOT REVIEWED BY THE CONTRACTING OFFICER SO THAT THE PROBABILITY OF ERROR IN THE CONTRACTOR'S BID THEREBY WENT UNDISCOVERED, THEN THESE REQUIREMENTS MAY BE DELETED FROM THE CONTRACT AT NO CHANGE IN THE CONTRACT PRICE. SEE 45 COMP. GEN. 305 (1905).

TO MR. ARTHUR F. SAMPSON:

WE REFER TO LETTERS DATED AUGUST 14, SEPTEMBER 25, AND NOVEMBER 6, 1972, FROM YOUR GENERAL COUNSEL, REQUESTING THE DELETION OF TWO REQUIREMENTS FROM CONTRACT NO. GS-03B-16446, WHICH PROVIDED FOR THE RELOCATION OF A BOILER AND A HOT WATER HEATER IN "TEMPO 8", AT NO CHANGE IN THE CONTRACT PRICE AND BECAUSE OF A MISTAKE IN THE CONTRACTOR'S OFFERED PRICE. THE REQUIREMENTS ARE QUOTED IN PERTINENT PART:

"6.1.2 *** INSTALL HIGH PRESSURE GAS PIPING FROM THE GAS MAIN LOCATED IN IDAHO AVENUE, ALONG THE SAME ROUTE AS AND ADJACENT TO THE SIDEWALK ALONG NEWARK STREET, AND INTO THE BUILDING ON THE NORTH SIDE.

"6.2.1 CONTRACTOR SHALL ASSUME FULL RESPONSIBILITY FOR THE INSTALLATION OF GAS SERVICE CONNECTION IN THE STREET, THE GAS SUPPLY PIPE TO THE BUILDINGS, THE MAIN SHUT OFF VALVES, AND THE GAS METER."

THE RECORD SHOWS THAT ONLY TWO PROPOSALS FOR THE PROJECT WERE RECEIVED BY MAY 25, 1972, THE CLOSING DATE FOR THE PROCUREMENT, AS FOLLOWS:

"HARRY D. O'MEARA COMPANY $23,000

P. W. PARKER MECHANICAL CONTRACTOR$34,890"

THE GENERAL COUNSEL ADVISES THAT THE GOVERNMENT'S ESTIMATE FOR THE PROJECT WAS $26,128; THAT SUCH ESTIMATE INCLUDED $1,370 AS THE ESTIMATED COST OF THE ABOVE QUOTED REQUIREMENTS; THAT THE WASHINGTON GAS LIGHT COMPANY SUBSEQUENTLY ADVISED YOUR ADMINISTRATION, BY LETTER OF MAY 26, 1972, TO THE ACTING CHIEF, DESIGN BRANCH, THAT THE ESTIMATED COST OF THE REQUIREMENTS WAS $10,260; AND THAT AWARD WAS THEREAFTER MADE TO THE O'MEARA COMPANY FOR THE PROJECT ON JUNE 19, 1972, AT THE PRICE SET FORTH IN ITS MAY 25 PROPOSAL.

SUBSEQUENTLY, BY LETTER OF JULY 25, 1972, THE CONTRACTOR ADVISED THE CONTRACTING OFFICER THAT HIS LOW PRICE DID NOT INCLUDE ANY ESTIMATED COST FOR THE ABOVE REQUIREMENTS; THAT A REPRESENTATIVE OF THE GAS COMPANY HAD PREVIOUSLY ADVISED THE CONCERN ON MAY 25, 1972, THAT THERE WOULD BE NO CHARGE FOR THESE REQUIREMENTS; AND THAT ON JULY 3, 1972, THE GAS COMPANY DEMANDED PAYMENT OF $10,260 BEFORE IT WOULD COMMENCE WORK. THE CONTRACTOR THEREFORE REQUESTS RELIEF BECAUSE OF THE ERRONEOUS ADVICE IT RECEIVED FROM THE GAS COMPANY ABOUT THE COST OF THIS WORK.

IN THIS REGARD, WE BELIEVE THE DOCUMENTATION SUBMITTED BY THE CONTRACTOR CLEARLY SHOWS THAT A MISTAKE WAS MADE IN THE ESTIMATED COST FURNISHED THE CONCERN FOR THE WORK IN QUESTION. WHILE THE RECORD ALSO INDICATES THAT THE CONTRACTING OFFICER HAD NO ACTUAL KNOWLEDGE OF THE GAS COMPANY'S MAY 26 ESTIMATE FOR THE WORK, IT IS OUR OPINION THAT HE SHOULD HAVE BEEN FURNISHED SUCH ESTIMATE, AND A REVISED ESTIMATE FOR THE ENTIRE PROJECT, DURING THE THREE WEEK PERIOD PRIOR TO THE AWARD OF THE CONTRACT ON JUNE 19. IT IS OUR FURTHER OPINION THAT, IF THE CONTRACTING OFFICER HAD REVIEWED SUCH REVISED ESTIMATE IN COMPLIANCE WITH THE REQUIREMENT IN FEDERAL PROCUREMENT REGULATIONS 1-3.807-2 FOR A COST OR PRICE ANALYSIS IN EVERY NEGOTIATED PROCUREMENT, THE CONTRACTOR'S PRICE FOR THE PROJECT WOULD HAVE BEEN QUESTIONED, SINCE IT WOULD HAVE BEEN APPROXIMATELY 34 PERCENT BELOW BOTH THE REVISED GOVERNMENT ESTIMATE ($35,018) FOR THE PROJECT AND THE SECOND LOWEST OFFER. SEE 45 COMP. GEN. 305 (1965); B-169901, JUNE 19, 1970.

ACCORDINGLY, AND INASMUCH AS IT IS OUR INFORMAL UNDERSTANDING THAT THE WORK REQUIREMENTS IN QUESTION HAVE ALREADY BEEN COMPLETED BY A THIRD PARTY, WE HAVE NO OBJECTION TO THE PROPOSED DELETION.

THE FILE FORWARDED WITH THE REPORT OF AUGUST 14 IS RETURNED.