A-21320, FEBRUARY 18, 1928, 7 COMP. GEN. 493

A-21320: Feb 18, 1928

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CONTRACTS - MISTAKE IN BID WHERE A BID TO FURNISH A QUANTITY OF POWDERED SOAP WAS ACCEPTED. THE SUCCESSFUL BIDDER IS NOT ENTITLED TO ANY ADDITIONAL AMOUNT ON THE GROUND OF A MISTAKE HAVING BEEN MADE IN THE SUBMISSION OF HIS BID IN THAT THE PRICE QUOTED WAS ON SOAP POWDER INSTEAD OF POWDERED SOAP. THE MISTAKE NOT BEING APPARENT ON THE FACE OF THE BID AND THE DIFFERENCE BETWEEN THE ACCEPTED BID AND THE OTHER BIDS SUBMITTED NOT BEING SUCH AS TO HAVE PUT THE GOVERNMENT CONTRACTING OFFICER ON NOTICE THAT A MISTAKE HAD BEEN MADE WHEN THE OFFER WAS ACCEPTED AND WHICH WOULD RAISE THE IMPLICATION THAT THE OFFER WAS ACCEPTED WITH THE INTENTION OF TAKING ADVANTAGE OF SUCH MISTAKE. WHICH WAS DULY ACCEPTED MAY 7.

A-21320, FEBRUARY 18, 1928, 7 COMP. GEN. 493

CONTRACTS - MISTAKE IN BID WHERE A BID TO FURNISH A QUANTITY OF POWDERED SOAP WAS ACCEPTED, THE SOAP DELIVERED, AND THE CONTRACT PRICE PAID, THE SUCCESSFUL BIDDER IS NOT ENTITLED TO ANY ADDITIONAL AMOUNT ON THE GROUND OF A MISTAKE HAVING BEEN MADE IN THE SUBMISSION OF HIS BID IN THAT THE PRICE QUOTED WAS ON SOAP POWDER INSTEAD OF POWDERED SOAP, THE MISTAKE NOT BEING APPARENT ON THE FACE OF THE BID AND THE DIFFERENCE BETWEEN THE ACCEPTED BID AND THE OTHER BIDS SUBMITTED NOT BEING SUCH AS TO HAVE PUT THE GOVERNMENT CONTRACTING OFFICER ON NOTICE THAT A MISTAKE HAD BEEN MADE WHEN THE OFFER WAS ACCEPTED AND WHICH WOULD RAISE THE IMPLICATION THAT THE OFFER WAS ACCEPTED WITH THE INTENTION OF TAKING ADVANTAGE OF SUCH MISTAKE.

DECISION BY COMPTROLLER GENERAL MCCARL, FEBRUARY 18, 1928:

THE JOSEPH GUTRATD CO. REQUESTED DECEMBER 30, 1927, REVIEW OF SETTLEMENT 0122506, DATED NOVEMBER 21, 1927, DISALLOWING ITS CLAIM IN THE SUM OF $93.90, AS A BALANCE ALLEGED TO BE DUE FOR POWDERED SOAP DELIVERED TO THE SAN FRANCISCO GENERAL INTERMEDIATE DEPOT, FORT MASON, CALIF., ON JUNE 13, 1927, UNDER ITS PROPOSAL DATED APRIL 21, 1927, WHICH WAS DULY ACCEPTED MAY 7, 1927.

IT APPEARS THAT UNDER DATE OF APRIL 5, 1927, EDWARD BERG, CAPTAIN, QUARTERMASTER CORPS, ACTING AS PURCHASING AND CONTRACTING OFFICER, ADVERTISED FOR BIDS FOR FURNISHING SUPPLIES FOR THE USE OF THE UNITED STATES ARMY AT FORT MASON, CLAIF., INCLUDING AN ITEM OF 2,000 POUNDS OF "SOAP, POWDERED, PER SPEC. 4-79.' TEN BIDS WERE RECEIVED. THE BID OF JOSEPH GUTRATD CO., WHO BID $0.0328 PER POUND, WAS THE LOWEST BID RECEIVED AND WAS ACCEPTED UNDER DATE OF MAY 7, 1927, AND A PURCHASE ORDER SENT TO THE SAID COMPANY CALLING FOR THE DELIVERY OF THE ITEM IN ACCORDANCE WITH ITS BID. THE SAID COMPANY TENDERED DELIVERY OF SOAP POWDER, INSTEAD OF SOAP, POWDERED, WHICH WAS REJECTED AS NOT BEING IN ACCORDANCE WITH THE SPECIFICATIONS, AND THE COMPANY WAS NOTIFIED OF THE REJECTION ON OR ABOUT MAY 22, 1927. IN LETTER DATED MAY 25, 1927, THE SAID COMPANY ADVISED THE CONTRACTING OFFICER THAT IT HAD MADE A MISTAKE IN ITS BID IN THAT IT BID ON SOAP POWDER INSTEAD OF POWDERED SOAP AND REQUESTED THE GOVERNMENT TO ACCEPT THE SOAP POWDER AT THE PRICE BID OR AT A LOWER PRICE TO BE MUTUALLY AGREED UPON. THE SAID COMPANY WAS ADVISED BY LETTER DATED JUNE 3, 1927, FROM THE PURCHASING AND CONTRACTING OFFICER THAT THE SOAP POWDER COULD NOT BE ACCEPTED AND THAT IT SHOULD BE REMOVED BY THE COMPANY AND REPLACED WITH POWDERED SOAP IN ACCORDANCE WITH ITS PROPOSAL.

IT IS TO BE NOTED THAT BOTH THE REQUEST FOR BIDS AND THE COMPANY'S PROPOSAL STIPULATED IN PLAIN TERMS FOR "2,000 POUNDS SOAP, POWDERED, PER SPEC. 4-79, IN WELL-COOPERED COMMERCIAL BARRELS.'

THE POWDERED SOAP WAS EVENTUALLY DELIVERED AND PAYMENT WAS MADE THEREFOR AT THE BID PRICE, $0.0328 PER POUND. THE SAID COMPANY NOW CLAIMS THE SUM OF $93.90, WHICH AMOUNT IS THE DIFFERENCE BETWEEN THE BID PRICE OF $0.0328 PER POUND AND THE PRICE OF $0.079 PER POUND PAID BY IT TO THE LOS ANGELES SOAP CO. FOR POWDERED SOAP MEETING THE REQUIREMENTS OF THE SPECIFICATIONS.

IN REQUESTING REVIEW OF THE SETTLEMENT DISALLOWING ITS CLAIM, THE SAID COMPANY STATES IN ITS LETTER OF DECEMBER 30, 1927, THAT:

EITHER WE HAVE FAILED TO EXPRESS OUR CASE SUFFICIENTLY CLEAR, THE FACTS GIVEN YOU IN RELATION TO SAME WERE INADEQUATE FOR ALLOWANCE, OR YOUR DEPARTMENT, IN OUR OPINION, HAS MADE AN UNFAIR DECISION, AND IT IS REQUESTED THAT FURTHER CONSIDERATION BE GIVEN TO THE MATTER.

WE ADMIT THAT WHAT YOU REFER TO AS THE "ALLEGED MISTAKE" WAS INDEED A MISTAKE ON OUR PART, AND THIS IS OBVIOUS FOR THE ONE REASON ALONE, THAT WE DO NOT EVEN MANUFACTURE "SOAP, POWDERED," AND DO NOT SELL ANY MATERIALS EXCEPT THOSE MANUFACTURED ENTIRELY BY OURSELVES.

YOUR STATEMENT THAT THE BID WAS ACCEPTED IN GOOD FAITH BY THE UNITED STATES IS NOT BORNE OUT ON CLOSE ANALYSIS. SUCH A DIFFERENCE BETWEEN OUR PRICE AND CURRENT MARKET PRICES WOULD HAVE, IN THE CASE OF A COMMERCIAL BUYER, REQUIRED VALID REASONS BEFORE SUCH PURCHASE WAS MADE, AND IN THE CASE OF THE GOVERNMENT, TO ACCEPT A PRICE 75 PERCENT LOWER THAN THE CURRENT MARKET PRICE, AND 50 PERCENT LOWER THAN WAS EVER PAID FOR THE SAME MATERIAL IN THE PAST, AND BEFORE AT LEAST BRINGING THE MATTER TO THE ATTENTION OF THE BIDDER, INDICATED EITHER UNBUSINESSLIKE PROCEDURE, OR NEGLIGENCE.

YOUR PURCHASE RECORDS WILL SHOW THAT THE SOAP BUSINESS IS HIGHLY COMPETITIVE, AND THAT NO PURCHASES OF SOAP PRODUCTS HAVE BEEN MADE BY THE WAR DEPARTMENT EITHER LATELY OR IN THE PAST ON COMPETITIVE BIDS WITH SUCH A VAST DIFFERENCE IN PRICE.

REFERRING TO THE LAST PARAGRAPH OF YOUR NOTICE OF DISALLOWANCE OF CLAIM, WHEREIN YOU STATE THAT "NO RELIEF CAN BE GRANTED A CONTRACTOR FOR THE ALLEGED MISTAKE IN ITS BID, WHEN THE EVIDENCE SUBMITTED INDICATES THAT IT WAS DUE TO ITS OWN NEGLIGENCE," APPLIES IN THIS CASE TO BUT A SLIGHT DEGREE. YOUR SPECIFICATION NO. 4-79, IS WORDED "SOAP POWDERED" (FOR LAUNDRY USE) AND YOUR SPECIFICATION NO. 4-38 FOR SOAP POWDER, IS WORDED "SOAP POWDER," BUT WE HAVE SINCE LEARNED THAT THE PROPOSAL IN QUESTION CALLED FOR "SOAP POWDERED," AND DID NOT HAVE THE WORDS "FOR LAUNDRY USE" AS DEFINED AND DIFFERENTIATED FROM THE SPECIFICATION FOR SOAP POWDER.

SUBSTANTIATING THIS CONTENTION, WE ARE NOW ABLE TO REFER YOU TO THE RECENT PROPOSAL ISSUED BY THE COMMANDING OFFICER, CHICAGO QUARTERMASTER DEPOT, 1819 WEST PERSHING ROAD, CHICAGO, ILL., UNDER CIRCULAR PROPOSAL NO. 199-28-122 GS, TO BE OPENED JANUARY 17, 1928, AND PARTICULARLY TO ITEM NO. 29 CALLING FOR "SOAP, POWDERED," (FOR LAUNDRY USE), AND AS SUCH, IT IS NOW OUR OPINION THAT YOUR PROPOSAL UNDER WHICH WE BID, WAS PROBABLY INFORMAL, AND AS SUCH IT WOULD HAVE BEEN WITHIN OUR LEGAL RIGHTS TO REFUSE DELIVERY OF WHAT YOU INTENDED TO BUY, AND WHICH WAS NOT CLEARLY INDICATED BY YOUR INVITATION FOR BIDS. THE DISALLOWANCE OF THIS CLAIM HAS NO PRECEDENT IN ETHICAL BUSINESS TRANSACTIONS, AND IF NOT ALLOWED US, IT IS PERMITTING THE UNITED STATES TO PURCHASE MATERIAL FAR BELOW THE COST OF ACTUAL MANUFACTURE, SIMPLY BECAUSE A CONTRACTOR HAS MADE A SLIGHT ERROR WHICH COULD HAVE, AND WHICH SHOULD HAVE BEEN DISCOVERED BY THE PURCHASING OFFICER BEFORE AWARD WAS MADE, OR IN THE EVENT OF AN OVERSIGHT, THE FACTS HERETOFORE PRESENTED SHOULD WARRANT RELIEF, TO SAY NOTHING OF THE ERROR ON THE PART OF THE GOVERNMENT IN THE PROPOSAL WHICH NOW APPEARS TO STAND OUT WITHOUT QUESTION.

IN FORWARDING THE CLAIM FOR THE DIFFERENCE IN PRICE, THE PURCHASING AND CONTRACTING OFFICER IN HIS FIFTH INDORSEMENT OF SEPTEMBER 26, 1927, TO THE QUARTERMASTER GENERAL OF THE ARMY, STATED:

2.THE BASIS OF THE RECOMMENDATION AS CONTAINED IN PARAGRAPH 4 OF THE 3D INDORSEMENT IS A BELIEF THAT THE CLAIMANT HONESTLY BID ON "SOAP POWDER" AND NOT "POWDERED SOAP" AS DESCRIBED IN THE CIRCULAR. THIS, DESPITE THE FACT THAT THE CIRCULAR PLAINLY READ: "SOAP POWDERED" AND QUOTED THE SPECIFICATIONS GOVERNING.

3. THE ALLEGED MISTAKE WAS NOT, IN MY OPINION, OF SUCH MAGNITUDE AS TO PUT ME ON NOTICE THAT AN ERROR HAD BEEN MADE BY THE BIDDER, AS PREVIOUS PURCHASES OF THIS COMMODITY HAD BEEN MADE AT $0.06 PER POUND. THE BIDS WERE OPENED AND READ IN THE PRESENCE OF THE BIDDERS PRESENT. WHETHER A REPRESENTATIVE OF THE CLAIMANT WAS PRESENT, I DO NOT RECALL, BUT AN OPPORTUNITY FOR SUCH PRESENCE WAS AFFORDED. NO QUESTION WAS RAISED BY CLAIMANT AT TIME OF OPENING BIDS NOR UPON RECEIPT OF PURCHASE ORDER.

4. I DO NOT RECALL ANY REASON WHICH CAUSED ANY HESITANCE IN ACCEPTING THE BID. I MAY HAVE PRESUMED THAT THE BIDDER MAY HAVE HAD ON HAND A STOCK FOR WHICH HE HAD LITTLE, IF ANY CALL, AND WAS OFFERING THE COMMODITY AT A FIGURE CONSIDERABLY LOWER THAN HIS COMPETITORS. * * *

PARAGRAPH 9 OF THE CIRCULAR PROPOSAL SENT PROSPECTIVE BIDDERS PROVIDES THAT---

BIDDERS MUST EXERCISE THE NECESSARY PRECAUTIONS TO INSURE THAT THEIR PROPOSAL IS COMPLETE AND THAT THE PRICE OF EACH ARTICLE IS CORRECTLY STATED. IT MUST BE ASSUMED THAT BIDDERS HAVE FULLY INFORMED THEMSELVES AS TO THE CONDITIONS, REQUIREMENTS, AND SPECIFICATIONS BEFORE SUBMITTING THEIR PROPOSALS, AND THAT THEY CAN NOT EXPECT TO BE EXCUSED OR RELIEVED FROM RESPONSIBILITY ASSUMED BY THEIR PROPOSALS ON THE PLEA OF ERROR; BUT WHEN ERRORS HAVE BEEN MADE BY BIDDERS IN SUBMITTING THEIR PROPOSALS, WHICH WERE NOT DISCOVERED PRIOR TO OPENING OF BIDS, THE SAME MAY BE CONSIDERED WITH A VIEW TO ADJUSTMENT, PROVIDED THE INTERESTS OF THE GOVERNMENT AND OTHER BIDDERS CONCERNED WILL NOT BE JEOPARDIZED BY SUCH ACTION.

THE GENERAL RULE IS THAT WHEN THERE HAS BEEN A MISTAKE IN THE SUBMISSION OF A BID THE CONTRACTOR MUST BEAR THE CONSEQUENCES THEREOF. IN THIS CONNECTION ATTENTION IS INVITED TO THE FOLLOWING STATEMENT MADE BY JUSTICE HOLMES IN DELIVERING THE OPINION OF THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF ROCK ISLAND, ARK. AND LA.R.R.CO. V. UNITED STATES, 254 U.S. 141, 143: "MEN MUST TURN SQUARE CORNERS WHEN THEY DEAL WITH THE GOVERNMENT.'

IN ORDER TO AUTHORIZE RELIEF ON ACCOUNT OF A MISTAKE IN AN ACCEPTED BID, IT MUST APPEAR THAT THE MISTAKE WAS MUTUAL OR THAT THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE ACCEPTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. 26 COMP. DEC. 286; 2 COMP. GEN. 503; 3 ID. 821; 6 ID. 504, 526.

THE FACTS DISCLOSED IN THIS CASE DO NOT SHOW SUCH A MISTAKE AS WOULD JUSTIFY THE PAYMENT OF THE ADDITIONAL AMOUNT NOW CLAIMED. WHILE CLAIMANT'S BID WAS LOWER THAN THAT OF OTHER BIDDERS, THERE IS NOTHING THEREIN FROM WHICH KNOWLEDGE ON THE PART OF THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE CAN BE PRESUMED, NOR DOES A COMPARISON OF THE CLAIMANT'S BID WITH THE OTHER BIDS DISCLOSE ANY MISTAKE. ON THE CONTRARY, THE CONTRACTING OFFICER SPECIFICALLY STATES AS QUOTED, SUPRA, THAT "THE ALLEGED MISTAKE WAS NOT, IN MY OPINION, OF SUCH MAGNITUDE AS TO PUT ME ON NOTICE THAT AN ERROR HAD BEEN MADE BY THE BIDDER.' THERE CAN BE NO RELIEF GRANTED FOR UNILATERAL MISTAKES OF FACT IN THE ABSENCE OF FRAUD OR CONCEALMENT. ELLICOTT MACHINE CO. V. UNITED STATES, 44 CT.CLS. 127; 1 COMP. GEN. 189; DECISION OF MARCH 30, 1927, A-17846.

THE BID WAS CLEAR AND UNAMBIGUOUS ON ITS FACE AND THE MISTAKE WAS DUE SOLELY TO THE NEGLIGENCE OF CLAIMANT, AND THE BID WAS ACCEPTED BY THE CONTRACTING OFFICER IN GOOD FAITH. CLAIMANT HAS BEEN PAID THE CONTRACT PRICE FOR THE POWDERED SOAP DELIVERED AND THERE IS NO LEGAL BASIS FOR PAYMENT OF ANY AMOUNT IN ADDITION THERETO. 5 COMP. GEN. 946; 6 ID. 504; ID. 526; DECISIONS OF MARCH 30 AND APRIL 12, 1927, A-17876, A-17944.