B-153453, SEP. 25, 1964

B-153453, SEP. 25, 1964

TO THE HONORABLE BERNARD L. BOUTIN, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED JUNE 8, 1964, FROM YOUR GENERAL COUNSEL, FURNISHING A REPORT ON THE CLAIM OF LEVIN BROTHERS, INCORPORATED, FOR AN ADDITIONAL AMOUNT UNDER ITEMS 1 AND 3 OF CONTRACT NO. GS-OOS-47121 DATED JULY 22, 1963, ON ACCOUNT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN THE BID UPON WHICH THE CONTRACT IS BASED.

BRIEFLY STATED, THE RECORD SHOWS THAT THE BUYER HAD UNDER CONSIDERATION FOR AWARD BIDS RECEIVED UNDER TWO INVITATIONS, INCLUDING ITEM 3 OF FPNFH-V -48444 COVERING 416 DAVENPORTS FOR DELIVERY TO OAKLAND, CALIFORNIA, AND ITEM 2 OF FPNFH-V-48440 CALLING FOR 1,106 OF THE IDENTICAL DAVENPORTS, ALSO TO BE DELIVERED TO OAKLAND, CALIFORNIA. LEVIN BROTHERS, INCORPORATED, WAS LOW BIDDER FOR THESE ITEMS UNDER BOTH INVITATIONS. THE BUYER NOTED THAT A PRICE OF $103.90 EACH WAS QUOTED FOR THE SMALLER QUANTITY, WHEREAS A PRICE OF $108.40 WAS QUOTED FOR THE LARGER QUANTITY. BOTH INVITATIONS ALSO COVERED A QUANTITY OF THE SAME TYPE OF UPHOLSTERED CHAIRS (673 ON V-48444 AND 2,431 ON V-48440) AND, AS MIGHT BE EXPECTED, A LOWER PRICE WAS QUOTED FOR THE LARGER QUANTITY THAN FOR THE SMALLER QUANTITY.

BELIEVING THAT A VOLUNTARY PRICE REDUCTION MIGHT BE GIVEN ON THE LARGER QUANTITY IF THE SITUATION WITH RESPECT TO THE DAVENPORTS WAS CALLED TO THE BIDDER'S ATTENTION, THE BUYER CALLED MR. SINYKIN OF LEVIN BROTHERS ON JULY 18, 1963. WHAT WAS SAID IN THIS TELEPHONE CONVERSATION IS IN DISPUTE. THE BUYER UNDERSTOOD MR. SINYKIN TO MAKE A STATEMENT TO THE EFFECT THAT LEVIN BROTHERS APPARENTLY ERRED IN THE PRICE QUOTED UNDER THE FIRST INVITATION (V-48444) BUT THAT THEY WOULD HAVE TO "LIVE WITH IT.' MR. SINYKIN APPARENTLY IS OF THE OPINION THAT HE STATED THAT HE WAS SURPRISED AND WOULD CHECK IT OUT AND SEND A LETTER OF EXPLANATION.

ON JULY 23, 1963, MR. SINYKIN CALLED THE CONTRACTING OFFICER AND ADVISED THAT AN ERROR HAD BEEN MADE IN THE PRICE QUOTED UNDER INVITATION V-48444 (SMALLER QUANTITY) AND THAT THE PRICE FOR ITEM 3 SHOULD HAVE BEEN $108.90 EACH, RATHER THAN $103.90 EACH. THE CONTRACTING OFFICER ADVISED MR. SINYKIN TO SUBMIT A LETTER OF EXPLANATION, TOGETHER WITH SUBSTANTIATING WORKSHEETS, ETC; SHOWING HOW THE ERROR WAS MADE. THIS WAS DONE BY LETTER DATED JULY 30, 1963. LEVIN BROTHERS ALLEGES THAT, IN ADDING THE FINAL COST FIGURES, $5 WAS OMITTED FROM THE INTENDED UNIT PRICE FOR ITEM 3, AND THE SAME ERROR WAS CARRIED OVER TO ITEM 1, WHICH COVERS IDENTICAL DAVENPORTS BUT PACKED DIFFERENTLY AND TO BE DELIVERED TO A DIFFERENT DESTINATION. LEVIN BROTHERS REQUESTED THAT THE BID PRICES OF ITEMS 1 AND 3 OF INVITATION V-48444 BE INCREASED BY $5 PER UNIT.

IN THE MEANWHILE, HOWEVER, THE BUYER, BELIEVING THAT MR. SINYKIN HAD STATED THAT IF AN ERROR HAD BEEN MADE ON ITEM 3 OF THE FIRST INVITATION THEY WOULD HAVE TO LIVE WITH IT, RECOMMENDED ACCEPTANCE OF THE BID AND THE BID WAS ACCEPTED ON JULY 22, 1963. IT IS REPORTED THAT THE STATEMENT MADE IN THE TELEPHONE CONVERSATION WAS SO CASUAL THAT IT WOULD NOT PLACE THE CONTRACTING OFFICER (THROUGH THE BUYER) ON NOTICE THAT THE BIDDER WAS ALLEGING THAT A MISTAKE HAD BEEN MADE IN THE BID UNDER THE FIRST INVITATION; THAT THERE WAS NOTHING OTHERWISE TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR; AND THAT SINCE ERROR WAS NOT ACTUALLY ALLEGED UNTIL AFTER AWARD, THE AWARD WAS MADE IN GOOD FAITH WITHOUT NOTICE OF ERROR.

WHILE IT MAY BE THAT THERE WAS NOTHING IN THE FIRST INVITATION WHICH IN AND OF ITSELF WAS SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF PROBABLE ERROR, THE BUYER NOTED FROM THE COMPARISON OF PRICES QUOTED ON THE TWO INVITATIONS THAT AN UNUSUAL PRICING SITUATION EXISTED. THE BUYER'S TELEPHONE CALL MAY HAVE BEEN MADE FOR THE PURPOSE OF OBTAINING A VOLUNTARY PRICE REDUCTION UNDER THE SECOND INVITATION RATHER THAN TO CONFIRM A SUSPECTED ERROR UNDER THE FIRST INVITATION; NEVERTHELESS, THE BIDDER WAS THEREBY CALLED UPON TO VERIFY THE LOWER PRICE FOR THE SMALLER QUANTITY. IN SUCH CIRCUMSTANCES IT MAY WELL HAPPEN, AS IT DID HERE, THAT THE HIGHER PRICE IS FOUND TO BE CORRECT AND THE LOWER PRICE ERRONEOUS. WHEN THIS IS IN FACT THE OUTCOME, IT CAN HARDLY BE SAID THAT THE CONTRACTING OFFICER (THROUGH THE BUYER) WAS NOT ON NOTICE OF THE POSSIBILITY OF ERROR IN THE FIRST INVITATION. AS A PRACTICAL MATTER, HAVING BEFORE HIM BIDS FOR THE IDENTICAL ITEM OF $103.90 FOR A QUANTITY OF 416 AND $108.40 FOR A QUANTITY OF 1,106, IT SEEMS TO US THAT, HAVING NOTICED THIS PRICE DISCREPANCY, THE CONTRACTING OFFICER MIGHT WELL BE CHARGED WITH CONSTRUCTIVE NOTICE OF ERROR IN ONE OF THE TWO PRICES, EVEN IF VERIFICATION HAD NOT BEEN REQUESTED. WHATEVER MAY HAVE BEEN THE MOTIVATION FOR THE BUYER'S CALL, AND WHATEVER MAY HAVE BEEN HIS OBLIGATION TO COMPARE THE TWO BIDS, HE WAS, PRIOR TO AWARD, ON ACTUAL NOTICE OF CLAIM OF ERROR UNDER SUCH CIRCUMSTANCES AS TO LEAVE LITTLE DOUBT OF THE BONA FIDES OF THE CLAIM. IN SUCH A SITUATION, WE CANNOT CONCLUDE THAT A VALID AND BINDING CONTRACT RESULTED FROM THE AWARD. SEE 37 COMP. GEN. 706, 707.

THE EVIDENCE OF RECORD PROVIDES NO BASIS TO QUESTION THE BIDDER'S ALLEGATION THAT AN ERROR OF $5 PER UNIT WAS IN FACT MADE IN THE PRICE QUOTED FOR ITEMS 1 AND 3 OF INVITATION V-48444. ACCORDINGLY, AND SINCE THE ERROR WAS ALLEGED PROMPTLY AND SINCE THE BID OF LEVIN BROTHERS WOULD STILL HAVE BEEN LOW EVEN IF CORRECTED, LEVIN BROTHERS, INCORPORATED, SHOULD BE PAID AN ADDITIONAL $5 PER UNIT FOR THE DAVENPORTS FURNISHED UNDER ITEMS 1 AND 3 OF CONTRACT NO. GS-OOS-47121 DATED JULY 22, 1963 (INVITATION FPNFH-V-48444).

BY LETTER OF TODAY, COPY HEREWITH, THE ATTORNEYS FOR LEVIN BROTHERS ARE BEING ADVISED OF THIS DECISION.