A-60463, SEPTEMBER 21, 1935, 15 COMP. GEN. 233

A-60463: Sep 21, 1935

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CONTRACTS - MISTAKE IN BID - CODES OF FAIR COMPETITION THE FACT THAT AN OFFER AND ACCEPTANCE BY CORRESPONDENCE IS MADE IN EXPRESS CONTEMPLATION OF A MORE FORMAL DOCUMENT DOES NOT PREVENT THEIR CONSTITUTING A CONTRACT. A CONTRACTING OFFICER WAS NOT AUTHORIZED TO DETERMINE WHETHER A BID AS MADE CONTRAVENED ANY CODE. IT WAS HIS DUTY TO SEE THAT THE CONTRACT ENTERED INTO CONTAINED THE APPLICABLE PROVISIONS RELATIVE TO CODE COMPLIANCE. A CONTRACTOR MAY NOT BE RELIEVED FROM RESPONSIBILITY BY REASON OF AN ALLEGED MISTAKE IN ITS BID WHERE IT IS MANIFEST THAT THE BID SUBMITTED WAS THE PRICE INTENDED. THAT THE BID IS CLEAR AND UNAMBIGUOUS ON ITS FACE. THAT THE DIFFERENCE BETWEEN ITS BID AND THE OTHER BIDS SUBMITTED IS NOT SUFFICIENT TO HAVE PUT THE CONTRACTING OFFICER ON NOTICE.

A-60463, SEPTEMBER 21, 1935, 15 COMP. GEN. 233

CONTRACTS - MISTAKE IN BID - CODES OF FAIR COMPETITION THE FACT THAT AN OFFER AND ACCEPTANCE BY CORRESPONDENCE IS MADE IN EXPRESS CONTEMPLATION OF A MORE FORMAL DOCUMENT DOES NOT PREVENT THEIR CONSTITUTING A CONTRACT. A CONTRACTING OFFICER WAS NOT AUTHORIZED TO DETERMINE WHETHER A BID AS MADE CONTRAVENED ANY CODE, BUT IT WAS HIS DUTY TO SEE THAT THE CONTRACT ENTERED INTO CONTAINED THE APPLICABLE PROVISIONS RELATIVE TO CODE COMPLIANCE. A CONTRACTOR MAY NOT BE RELIEVED FROM RESPONSIBILITY BY REASON OF AN ALLEGED MISTAKE IN ITS BID WHERE IT IS MANIFEST THAT THE BID SUBMITTED WAS THE PRICE INTENDED, THAT THE BID IS CLEAR AND UNAMBIGUOUS ON ITS FACE, THAT THE DIFFERENCE BETWEEN ITS BID AND THE OTHER BIDS SUBMITTED IS NOT SUFFICIENT TO HAVE PUT THE CONTRACTING OFFICER ON NOTICE, THAT THE BID WAS ACCEPTED IN GOOD FAITH, AND THAT THE ALLEGED MISTAKE WAS NOT BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER UNTIL AFTER AWARD. THE RIGHTS AND LIABILITIES OF CONTRACTORS WITH THE UNITED STATES, UNDER OBLIGATIONS AND CONTRACTS VOLUNTARILY ASSUMED AND INVOLVING COMPLIANCE WITH APPLICABLE CODES OF FAIR COMPETITION, ARE NOT AFFECTED BY THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF SCHECHTER POULTRY COMPANY, ETC., HOLDING UNCONSTITUTIONAL THE CODE PROVISIONS OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

DECISION BY COMPTROLLER GENERAL MCCARL, SEPTEMBER 21, 1935:

THERE IS FOR CONSIDERATION THE CLAIM OF THE WHITAKER PAPER CO. OF BALTIMORE, MD., IN THE AMOUNT OF $581.44, REPRESENTING AMOUNT DEDUCTED ON VOUCHER NO. 5512 OF THE MAY 1935, ACCOUNTS OF W. N. HUGHES, CAPTAIN (S.C.), UNITED STATES NAVY, UNDER CONTRACT NOS-41386, APRIL 6, 1935, TO COVER THE INDEBTEDNESS OF SAID COMPANY TO THE UNITED STATES AS EXCESS COST OF PURCHASES MADE AGAINST ITS ACCOUNT DUE TO CANCELLATION OF CONTRACT NOS- 38484, SEPTEMBER 28, 1934, FOR FURNISHING 2,400 REAMS OF BOND TYPEWRITING PAPER TO THE NAVY DEPARTMENT.

THE RECORD DISCLOSES THAT THE CLAIMANT COMPANY SUBMITTED A BID OPENED SEPTEMBER 25, 1934, TO FURNISH 2,400 REAMS OF BOND TYPEWRITER PAPER UNDER SCHEDULE 3410, LOT 369, TO THE NAVAL SUPPLY DEPOT, SEWALL'S POINT, VA., AT A UNIT PRICE OF $2.3272 PER REAM OR FOR A TOTAL OF $5,585.28, WHICH BID WAS ACCEPTED AND NOTICE OF AWARD MAILED SEPTEMBER 28, 1934. AFTER THE NOTICE OF AWARD HAD BEEN MAILED, THERE WAS RECEIVED FROM THE WHITAKER PAPER CO. A LETTER DATED SEPTEMBER 28, 1934, STATING THAT THROUGH A TYPOGRAPHICAL ERROR A MISTAKE HAD BEEN MADE IN ITS BID, THAT SAID BID WAS NOT IN ACCORDANCE WITH THE APPLICABLE CODE OF FAIR COMPETITION, AND REQUESTING THAT ITS BID ON THE ITEM BE WITHDRAWN. UPON DETERMINATION BY THE NATIONAL RECOVERY ADMINISTRATION THAT THE AMOUNT OF THE COMPANY'S BID VIOLATED THE APPLICABLE CODE OF FAIR COMPETITION, AWARD TO THE WHITAKER PAPER CO. WAS CANCELED AND THE CONTRACTOR WAS NOTIFIED THAT THE EXCESS COST OF THE PAPER TO THE GOVERNMENT UNDER A REAWARD WOULD BE CHARGED TO ITS ACCOUNT. UNDER DATE OF NOVEMBER 21, 1934, THE CONTRACTOR WAS INFORMED THAT SUCH EXCESS COST AMOUNTED TO $581.44 AND DEMAND WAS MADE FOR PAYMENT OF THAT SUM. THE CONTRACTOR DID NOT MAKE PAYMENT AND THE AMOUNT WAS DEDUCTED IN THE PAYMENT OF AMOUNTS OTHERWISE DUE THE CLAIMANT UNDER CONTRACT NOS-41386, SUPRA.

THE COMPANY NOW HAS FILED CLAIM WITH THIS OFFICE FOR REFUND OF THE AMOUNT, RELYING, FIRST, UPON THE ALLEGED MISTAKE IN ITS BID, AND, SECOND, UPON THE CONTENTION THAT THE RECENT DECISION OF THE UNITED STATES SUPREME COURT IN THE CASE OF SCHECHTER POULTRY COMPANY, ETC. V. UNITED STATES, DECIDED MAY 27, 1935---

* * * CLEARLY RENDERS INVALID THE GOVERNMENT'S ACTION IN DEDUCTING AND RETAINING $581.44 AS THE DAMAGES CLAIMED BY IT FOR OUR ALLEGED VIOLATION OF EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, IN THIS INSTANCE.

IT APPEARS FROM THE RECORD THAT THE INVITATION FOR BIDS SOLICITED PROPOSALS ON THE BASIS OF PRICE PER REAM FOR THE PAPER. THE WHITAKER PAPER CO. REQUESTED PRICES FROM ITS SUPPLIER, THE CHAMPION COATED PAPER CO., HAMILTON, OHIO, WHICH QUOTED A PRICE OF $12.951 PER HUNDRED POUNDS AND IT THEREUPON BECAME NECESSARY TO CONVERT THE PRICE QUOTED BY THE OF A TABLE SHOWING WEIGHTS PER 500 SHEETS OF PAPER OF VARIOUS SIZES AND SUBSTANCES, AND IN MAKING THE CONVERSION THE COMPANY ALLEGES THAT THE CONVERSION FIGURES 17.97 WERE USED INSTEAD OF THE FIGURES 21.56, WHICH, IT IS STATED, WERE THE PROPER FIGURES. THE CONVERSION RESULTED IN A PRICE OF $2.3272 PER REAM, WHICH WAS TRANSFERRED FROM THE WORK SHEET AND SUBMITTED AS THE BID OF THE WHITAKER PAPER CO.

IT IS MANIFEST THAT THE PRICE SUBMITTED BY THE COMPANY WAS THE PRICE IT INTENDED TO SUBMIT, AND THE FACT THAT IN ARRIVING AT SUCH PRICE THE COMPANY NEGLIGENTLY MADE USE OF ERRONEOUS FIGURES COULD NOT SERVE AS A BASIS FOR THE WITHDRAWAL OF ITS BID AFTER OPENING. STANDARD GOVERNMENT INSTRUCTIONS TO BIDDERS SPECIFICALLY NOTIFY ALL CONCERNED THAT ERRORS CONFER NO RIGHT TO WITHDRAWAL OF BIDS AFTER THEY HAVE BEEN OPENED AND THAT A BIDDER MAY NOT SECURE RELIEF BY REASON OF ERROR ALLEGED AFTER OPENING OF THE BIDS. FURTHERMORE, THE BIDDING WAS NO RESPONSIBILITY OF A CONTRACTING OFFICER AND IT WAS NO PART OF HIS AUTHORITY TO DETERMINE WHETHER A BID AS MADE CONTRAVENED ANY CODE. IT WAS HIS DUTY TO ACCEPT THE LOWEST RESPONSIBLE BID AND TO SEE THAT THE CONTRACT ENTERED INTO WITH SUCH LOW BIDDER CONTAINED THE APPLICABLE PROVISIONS RELATIVE TO CODE COMPLIANCE, 13 COMP. GEN. 238. THE BID AS SUBMITTED WAS CLEAR AND UNAMBIGUOUS ON ITS FACE; THERE WAS NOTHING TO INDICATE A MISTAKE; THE DIFFERENCE BETWEEN THE BID OF THE WHITAKER PAPER CO. AND THE OTHER BIDS SUBMITTED WAS NOT SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE, AND THE BID WAS ACCEPTED IN GOOD FAITH. THE ERROR OF THE CONTRACTOR IN USING THE WRONG PRICE CONVERSION FIGURES WAS DUE TO ITS OWN NEGLIGENCE, AND WHILE THE USE OF SUCH FIGURES MAY HAVE RESULTED IN THE SUBMISSION OF A LOWER PRICE THAN OTHERWISE WOULD HAVE BEEN MADE, THE PRICE SUBMITTED WAS THE PRICE INTENDED. UPON THE FACTS, THERE WAS NO AUTHORITY FOR RELIEVING THE CONTRACTOR FROM RESPONSIBILITY BY REASON OF THE ALLEGED MISTAKE IN ITS BID.

EXECUTIVE ORDER NO. 6646, MARCH 14, 1934, EXPRESSLY AUTHORIZED THE GOVERNMENT TO CANCEL A CONTRACT FOR FAILURE OF THE CONTRACTOR TO COMPLY WITH THE CODE OF FAIR COMPETITION OF ITS INDUSTRY AND TO MAKE OPEN MARKET PURCHASES OR HAVE THE WORK CALLED FOR BY THE CONTRACT OTHERWISE PERFORMED AT THE EXPENSE OF THE CONTRACTOR. IN THIS CASE, THE BID AS SUBMITTED AND THE ACCEPTANCE OF SEPTEMBER 28, 1934, CONSTITUTED THE CONTRACT WHICH WAS BINDING ON THE CONTRACTOR, AND THE PROVISIONS OF EXECUTIVE ORDER NO. 6646 BECAME OPERATIVE. THE FACT THAT NO FORMAL CONTRACT IN WRITING HAD BEEN EXECUTED IS NOT FOR CONSIDERATION AS SUGGESTED BY THE CONTRACTOR. THE FACT THAT AN OFFER AND ACCEPTANCE BY CORRESPONDENCE ARE BOTH MADE IN EXPRESS CONTEMPLATION OF A MORE FORMAL DOCUMENT DOES NOT PREVENT THEIR CONSTITUTING A CONTRACT. AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313.

THE DECISION OF THE SUPREME COURT IN THE SCHECHTER POULTRY CO. CASE, SUPRA, IS NOT TO BE CONSIDERED AS CONTROLLING THE RIGHTS OF THE PARTIES IN THE CASE HERE PRESENTED. IN THE SCHECHTER CASE, CERTAIN MEMBERS OF THE WHOLESALE POULTRY INDUSTRY WERE RESISTING CRIMINAL PROSECUTION FOR NONCONFORMITY WITH THE APPLICABLE CODE OF FAIR COMPETITION. THE SUPREME COURT CONSIDERED THE CASE UPON TWO GROUNDS, TO WIT, THE DELEGATION OF LEGISLATIVE POWER TO THE PRESIDENT BY THE CONGRESS, AND THE ATTEMPTED REGULATION OF INTRASTATE TRANSACTIONS WHICH AFFECT INTERSTATE COMMERCE ONLY INDIRECTLY. ON THOSE GROUNDS AND IN THOSE RESPECTS, THE COURT HELD THE CODE PROVISIONS OF THE NATIONAL INDUSTRIAL RECOVERY ACT UNCONSTITUTIONAL AND REVERSED THE JUDGMENT OF CONVICTION.

NO SUCH QUESTION IS INVOLVED HERE. THE APPLICABLE CODE OF FAIR COMPETITION WAS FORMULATED BY THE INDUSTRY INVOLVED AND SUBMITTED TO AND OF THE CODE WAS A VOLUNTARY ACTION ON THE PART OF THE INDUSTRY CONCERNED. EXECUTIVE ORDER NO. 6646, MARCH 14, 1934, REQUIRED THAT ALL INVITATIONS FOR BIDS THEREAFTER ISSUED BY ANY GOVERNMENT AGENCY SHOULD CONTAIN A PROVISION THAT NO BID WOULD BE CONSIDERED UNLESS ACCOMPANIED BY A CERTIFICATE THAT THE BIDDER WAS COMPLYING AND WOULD CONTINUE TO COMPLY WITH APPLICABLE CODES OF FAIR COMPETITION; THAT NO BID WHICH DID NOT COMPLY WITH SUCH REQUIREMENT SHOULD BE CONSIDERED OR ACCEPTED; THAT ALL CONTRACTS AND PURCHASE ORDERS AUTHORIZED BY ANY GOVERNMENT AGENCY SHOULD CONTAIN A PROVISION THAT THE CONTRACTOR SHOULD COMPLY WITH EACH APPROVED CODE OF FAIR COMPETITION TO WHICH HE WAS SUBJECT AND THAT THE UNITED STATES SHOULD HAVE THE RIGHT TO CANCEL ANY CONTRACT FOR FAILURE TO COMPLY WITH SUCH PROVISION AND TO MAKE OPEN MARKET PURCHASES AT THE EXPENSE OF THE CONTRACTOR. THE WHITAKER PAPER CO. VOLUNTARILY SUBMITTED A BID ACCOMPANIED BY THE REQUIRED CERTIFICATE WHICH, WHEN ACCEPTED, CONSUMMATED A CONTRACT BY THE PROVISIONS OF WHICH THE GOVERNMENT HAD THE RIGHT OF CANCELLATION FOR VIOLATION OF CODE REQUIREMENTS. THE FILING OF THE CERTIFICATE OF COMPLIANCE AND THE UNDERTAKING TO COMPLY WITH THE APPLICABLE CODE WERE VOLUNTARY ACTS ON THE PART OF THE BIDDER AND CONTRACTOR AND A PART OF ITS UNDERTAKING. THE DECISION IN THE SCHECHTER CASE DID NOT CONSIDER ANY QUESTION INVOLVING THE RIGHTS OF CONTRACTORS WITH THE GOVERNMENT UNDER OBLIGATIONS AND CONTRACTS VOLUNTARILY ASSUMED AND THE DECISION HAS NO APPLICATION TO THIS CASE.

THE CANCELLATION OF THE AWARD, WHEN IT DEVELOPED THAT THE BID PRICE WAS IN VIOLATION OF THE CODE, THE REAWARD OF THE CONTRACT, AND THE COLLECTION OF THE EXCESS COST FROM THE WHITAKER PAPER CO. WERE ALL PURSUANT TO THE UNDERTAKING OF THE COMPANY.

UNDER THE FACTS AND THE LAW, THERE APPEARS NO LEGAL BASIS FOR REFUNDING TO THE CONTRACTOR THE AMOUNT OF $581.44 COLLECTED AND THE CLAIM MUST BE AND IS DISALLOWED.