A-25183, FEBRUARY 2, 1929, 8 COMP. GEN. 397

A-25183: Feb 2, 1929

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - MISTAKE IN BID WHERE A BID TO FURNISH ARTICLES OR SUPPLIES TO THE GOVERNMENT WAS SO LOW THAT THE CONTRACTING OFFICER BELIEVED A MISTAKE HAD BEEN MADE BUT ACCEPTED THE BID. THEREAFTER SATISFACTORILY DISCLOSES THE FACTS OF THE MISTAKE BUT IS DIRECTED TO FURNISH THE ARTICLES OR SUPPLIES. THE PAYMENT IS AUTHORIZED OF THE ACTUAL COST TO THE CONTRACTOR. HAS REASON TO THINK AND DOES THINK THAT THE LOWEST BID WAS THE RESULT OF A MISTAKE ON THE PART OF THE BIDDER. IF THE NEEDS OF THE GOVERNMENT WILL PERMIT OF THE DELAY INCIDENT THERETO. THE GOVERNMENT'S NEEDS WILL NOT PERMIT OF THE DELAY INCIDENT TO SUCH PROCEDURE THE BID SHOULD BE ACCEPTED AND THE BIDDER INSTRUCTED TO PERFORM LEAVING THE MATTER OF PRICE TO BE DETERMINED SUBSEQUENTLY BY THE COMPTROLLER GENERAL.

A-25183, FEBRUARY 2, 1929, 8 COMP. GEN. 397

CONTRACTS - MISTAKE IN BID WHERE A BID TO FURNISH ARTICLES OR SUPPLIES TO THE GOVERNMENT WAS SO LOW THAT THE CONTRACTING OFFICER BELIEVED A MISTAKE HAD BEEN MADE BUT ACCEPTED THE BID, AND, UPON BEING NOTIFIED OF THE ACCEPTANCE, THE BIDDER ALLEGES A MISTAKE IN SUBMISSION OF ITS BID, AND THEREAFTER SATISFACTORILY DISCLOSES THE FACTS OF THE MISTAKE BUT IS DIRECTED TO FURNISH THE ARTICLES OR SUPPLIES, AND DOES SO FURNISH THEM, THE PAYMENT IS AUTHORIZED OF THE ACTUAL COST TO THE CONTRACTOR, THE SAID AMOUNT BEING LESS THAN THE LOWEST CORRECT BID RECEIVED. WHERE A CONTRACTING OFFICER, AT THE TIME FOR ACCEPTANCE OF BID, HAS REASON TO THINK AND DOES THINK THAT THE LOWEST BID WAS THE RESULT OF A MISTAKE ON THE PART OF THE BIDDER, HE SHOULD, BEFORE AWARDING THE CONTRACT, IF THE NEEDS OF THE GOVERNMENT WILL PERMIT OF THE DELAY INCIDENT THERETO, ASK THE BIDDER TO VERIFY ITS BID AND, IF THE BIDDER THEN CLAIMS ERROR, SUBMIT THE FACTS WITH REFERENCE TO THE ERROR TO THE COMPTROLLER GENERAL FOR DETERMINATION WHETHER THE ERRONEOUS BID MAY BE WITHDRAWN. THE GOVERNMENT'S NEEDS WILL NOT PERMIT OF THE DELAY INCIDENT TO SUCH PROCEDURE THE BID SHOULD BE ACCEPTED AND THE BIDDER INSTRUCTED TO PERFORM LEAVING THE MATTER OF PRICE TO BE DETERMINED SUBSEQUENTLY BY THE COMPTROLLER GENERAL.

COMPTROLLER GENERAL MCCARL TO MAJ. T. N. EMERSON, UNITED STATES ARMY, FEBRUARY 2, 1929:

BY FIFTH INDORSEMENT DATED NOVEMBER 14, 1928, THE CHIEF OF ENGINEERS TRANSMITTED YOUR REQUEST OF AUGUST 22, 1928, FOR DECISION WHETHER PAYMENT WAS AUTHORIZED ON A VOUCHER IN THE SUM OF $697.06 IN FAVOR OF THE UNITEDIRON WORKS FOR FURNISHING TWO DISCHARGE ELBOWS AND COVERS TO THE DISTRICT ENGINEER, SECOND DISTRICT, SAN FRANCISCO, CALIF.

THE FACTS WITH REFERENCE TO THE MATTER ARE STATED IN THE SAID LETTER OF AUGUST 22, 1928, TO BE AS FOLLOWS:

CIRCULAR ADVERTISEMENT WAS ISSUED FROM THIS OFFICE ON APRIL 30, 1928, INVITING BIDS FOR MISCELLANEOUS CASTINGS AND INCLUDING THE ITEM OF 2 DISCHARGE ELBOWS AND MANHOLE COVERS. THE DATE OF OPENING OF BIDS WAS MAY 10, 1928. ABSTRACT OF BIDS WAS MADE AND RECOMMENDATION AND APPROVAL OF AWARDS DECIDED AS SHOWN ON THE PHOTOSTAT COPY OF ABSTRACT INCLOSED. WILL BE NOTED THAT IT WAS FELT AT THE TIME OF AWARD THAT AN ERROR HAD BEEN MADE BY BOTH BIDDERS NO. 3 AND NO. 7, IN FACT BIDDER NO. 7 WROTE THIS OFFICE A LETTER UNDER DATE OF MAY 12, 1928, STATING:

"IN CHECKING OUR QUOTATION WHICH WAS TO BE OPENED ON MAY 10TH, YOUR INVITATION FOR BIDS NO. 9654/1296, WE FIND AN ERROR ON ITEM 2 REQUESTING PRICE ON 2 CAST-IRON DISCHARGE PIPE ELBOWS WITH COVERS, AND IN VIEW OF THIS ASK THAT WE BE RELIEVED OF THIS QUOTATION IF POSSIBLE * * *.'

THIS LETTER WAS RECEIVED AFTER AWARD HAD BEEN MADE. UNDER DATE OF MAY 17, 1928, THREE DAYS AFTER ISSUANCE OF ORDER, THE UNITED IRON WORKS (BIDDER NO. 3) WROTE THIS OFFICE AS FOLLOWS:

"IN REFERENCE TO YOUR ORDER DATED MAY 15TH, NO. 9654/1296, FOR TWO (2) DISCHARGE PIPE ELBOWS AND COVERS AT $245, EACH * * * $490.00, WE WOULD APPRECIATE YOUR CANCELLING THIS ORDER.

"IN GOING OVER OUR ESTIMATE, WE FIND THAT WE HAVE MADE A MISTAKE, AND COULD NOT EXECUTE SAME WITHOUT A LOSS. UNDER THE CIRCUMSTANCES, WE WOULD APPRECIATE YOUR TAKING THIS MATTER UP AND CANCELLING THIS ORDER, IF YOU CAN POSSIBLY DO SO.'

UNDER DATE OF MAY 22, 1928, THIS OFFICE REPLIED AS FOLLOWS:

"REPLYING TO YOUR LETTER OF THE 17TH INST. REQUESTING THAT ORDER NO. 9654/1296 FOR TWO DISCHARGE PIPE ELBOWS AND COVERS AT $245 EACH BE CANCELLED, I REGRET THAT I AM WITHOUT AUTHORITY TO COMPLY WITH YOUR REQUEST. THE NEXT LOWEST BIDDER FOR THIS ITEM WAS THE MONARCH FOUNDRY OF STOCKTON, CALIF. THAT BIDDER QUOTED A PRICE OF $275 EACH. THERE WAS NOTHING ON THE FACE OF YOUR BID TO INDICATE ERROR NOR IS THE DIFFERENCE BETWEEN YOUR BID AND THE NEXT LOWEST SO GROSS AS TO OBVIOUSLY SHOW THAT A MISTAKE WAS MADE IN THE PRICE.

"IT IS REQUESTED, THEREFORE, THAT THE ARTICLES BE FURNISHED IN ACCORDANCE WITH THE ORDER AND SPECIFICATIONS. IF, AFTER COMPLYING WITH THE ORDER, YOU DESIRE TO SUBMIT THE MATTER TO THE COMPTROLLER GENERAL OF THE UNITED STATES, IT IS SUGGESTED THAT YOU SUBMIT TO THIS OFFICE ANY INFORMATION OR DATA WHICH YOU MAY HAVE WHICH WILL DEMONSTRATE THAT YOU MADE A MISTAKE IN THE PRICE OFFERED. THE MATTER WILL THEN BE SUBMITTED TO THE COMPTROLLER GENERAL FOR DECISION AS TO THE PRICE TO BE PAID FOR THE ARTICLES FURNISHED.'

3. IN COMPLIANCE WITH PARAGRAPH 623 1/2 O. AND R., THE MATTER IS SUBMITTED FOR DECISION OF THE COMPTROLLER GENERAL AS IT IS BELIEVED THAT THE FACTS AS STATED BY THE UNITED IRON WORKS, OAKLAND, CALIF., ARE TRUE AND JUST. BY COMPARISON WITH THE ABSTRACT IT IS APPARENT THAT BOTH BIDDER NO. 3 AND NO. 7 MADE AN ERROR IN THEIR QUOTATIONS AND THAT THE THIRD LOWEST BID (V--- PHOENIX IRON WORKS) WITH A PRICE OF $749.90 WAS ABOUT WHAT THE ARTICLES ARE REASONABLY WORTH CONSIDERING CURRENT PRICES OF MATERIALS. THESE ITEMS ARE REGULARLY PURCHASED BY THIS OFFICE AND THE RECORDS SHOW THAT THE LOWEST PRICE PAID FOR THE MANUFACTURE OF THESE ITEMS DURING THE LAST SEVEN YEARS WAS $303.30 EACH, CONSIDERABLY IN EXCESS OF THE UNITED IRON WORKS' BID ($245.00 EACH). THE CLAIM HEREWITH TOTALS $697.06 AND IS BELIEVED A JUST CHARGE.

THE MATTER OF SUBMITTING BIDS FOR ADVERTISED NEEDS OF THE UNITED STATES IS NOT ONE FOR SUCH NEGLECTFUL TREATMENT BY BIDDERS AS TO GIVE FREQUENT CAUSE FOR ATTEMPTED WITHDRAWALS ON THE GROUND OF ALLEGED ERROR. THE BUSINESS OF THE GOVERNMENT CAN NOT GO ORDERLY FORWARD IF BIDDERS BE ENCOURAGED OR PERMITTED TO SUBMIT INADEQUATELY CONSIDERED PROPOSALS WITH UNDERSTANDING THEY MAY WITHDRAW BY SIMPLY ALLEGING ERROR ON THEIR PART, WHEN, AFTER OPENING OF THE BIDS IT SHOULD BE REVEALED THAT THE PROFIT IS NOT ALL THAT IT MIGHT HAVE BEEN OR THAT THROUGH BIDDER'S CARELESSNESS A LOSS IS TO BE SUSTAINED. THE PURCHASING OFFICERS OF THE GOVERNMENT HAVE OTHER BUSINESS THAN TO ACT AS GUARDIAN FOR THOSE INDULGING IN POOR BUSINESS METHODS.

NO DOUBT THERE WILL BE OCCASIONS WHERE ERROR WILL OCCUR EVEN WHEN ALL REASONABLE CARE IS EXERCISED AND THERE IS PRECEDENT FOR THE CARE OF SUCH BONA FIDE SITUATIONS. HOWEVER, EVEN WHEN SUCH AN ERROR IS MADE IN SUBMISSION OF A BID AND IT IS NOT CALLED TO THE ATTENTION OF THE CONTRACTING OFFICER BY THE BIDDER UNTIL AFTER THE BID IS ACCEPTED, THE BIDDER MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED 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. 526; 7 ID. 493.

IN THE INSTANT CASE THE MISTAKE WAS NOT CLEARLY APPARENT FROM THE RECORD AND THE BIDDER DID NOT CALL THE ATTENTION OF THE CONTRACTING OFFICER THERETO UNTIL AFTER THE BID HAD BEEN DULY AND REGULARLY ACCEPTED. DUE TO THE WIDE EXPERIENCE OF THE CONTRACTING OFFICER IN SUCH MATTERS, HOWEVER, IT OCCURRED TO HIM THAT BIDDER WAS EXCEPTIONALLY LOW AND HAD POSSIBLY MADE AN ERROR, BUT THIS CONJECTURE COULD HAVE BEEN VERIFIED BY HIM ONLY BY ASKING BIDDER TO CHECK ITS FIGURES. IN SUCH SITUATION, AND ASSUMING THE REQUIREMENTS OF THE UNITED STATES FOR THE SUPPLIES WOULD PERMIT OF THE DELAY, IT WOULD NOT HAVE BEEN IMPROPER FOR THE CONTRACTING OFFICER TO HAVE ASKED BIDDER TO CHECK ITS FIGURES TO ASCERTAIN WHETHER AN ERROR HAD BEEN COMMITTED. IF AN ERROR WAS THEN CLAIMED THE FACTS OF THE ERROR--- HOW IT OCCURRED AND BIDDER'S REASONS FOR SEEKING RELIEF FROM ITS BID--- THAT IS, THE ENTIRE MATTER, WOULD HAVE BEEN FOR SUBMISSION TO THIS OFFICE BEFORE ADMINISTRATIVE ACTION ON THE BIDS. THE REQUIREMENT OF THE GOVERNMENT FOR SUPPLIES WILL NOT ALWAYS PERMIT OF SUCH DELAY, HOWEVER, AND IN SUCH CIRCUMSTANCES THE PROCEDURE MUST BE AS WAS TAKEN IN THIS CASE.

THE BIDDER AS DIRECTED BY THE CONTRACTING OFFICER TO DO, FURNISHED THE SUPPLIES BID UPON, AND NOW CLAIMS RELIEF BECAUSE OF ITS SAID ERROR. THE AMOUNT OF ITS BID WAS $490 AND IT APPEARS TO HAVE SUSTAINED AN ACTUAL LOSS OF $207.06 BY BEING REQUIRED TO EXPEND IN FURNISHING THE SUPPLIES, $697.06, WHICH AMOUNT IT IS WILLING TO ACCEPT IN COMPLETE DISCHARGE OF THE UNITED STATES. IT IS REPORTED BY THE CONTRACTING OFFICER THAT THE NEXT LOWEST BID, AS TO WHICH NO ERROR IS CLAIMED, WAS $749.90; THAT SUCH SUPPLIES ARE REGULARLY PURCHASED BY HIS OFFICE AND THAT THE LOWEST PRICE OBTAINED DURING THE LAST SEVEN YEARS, WAS $303.30 EACH.

IT THUS APPEARING THAT AN ERROR WAS ACTUALLY MADE AND WAS SUCH AS TO ATTRACT THE ATTENTION OF THE CONTRACTING OFFICER AT THE TIME; THAT BIDDER IS WILLING TO ACCEPT IN PAYMENT THE EXACT AMOUNT EXPENDED BY IT IN FURNISHING THE SUPPLIES, AND THAT SUCH AMOUNT IS LESS THAN ANY CORRECT BID RECEIVED, PAYMENT OF SAID $697.06 WILL BE APPROVED BY THIS OFFICE.