A-86331, NOVEMBER 23, 1937, 17 COMP. GEN. 422

A-86331: Nov 23, 1937

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WAS CORRECTED AFTER CERTIFICATION WITH BIDDER WHO ADVISED "OTHERWISE OUR BID STANDS. IS LIABLE FOR THE INCREASED COST OCCASIONED BY PURCHASE OF SUPPLIES ELSEWHERE AGAINST ITS ACCOUNT. THE GOVERNMENT WAS NOT OBLIGATED. TO BUY AGAINST ITS ACCOUNT EXCEPT AS NECESSARY TO COVER DELIVERIES IN DEFAULT AND IN SUCH CIRCUMSTANCES THERE WAS NO AGGRAVATION OF DAMAGES BY FAILURE TO PURCHASE ELSEWHERE THE ENTIRE CONTRACT QUANTITY PRIOR TO DEFAULT AS TO SUCH QUANTITY. YOU URGE THAT NO CONTRACT LEGALLY WAS FORMED BY THE ATTEMPTED ACCEPTANCE OF YOUR BID BECAUSE YOUR BID WAS ERRONEOUS AND WAS KNOWN BY THE PURCHASING OFFICER TO BE ERRONEOUS AT THE TIME OF THE ATTEMPTED ACCEPTANCE. IN THAT YOUR PRICE ON THE ITEM WAS OUR OF LINE.

A-86331, NOVEMBER 23, 1937, 17 COMP. GEN. 422

CONTRACTS - INCREASED COSTS - DEFAULTING CONTRACTOR - LIABILITY UNDER CONTRACT AWARDED AFTER VERIFICATION AND CORRECTION OF BID - GOVERNMENT'S OBLIGATION AS TO PURCHASES ELSEWHERE UNDER CONTRACT REQUIRING PERIODIC DELIVERIES WHERE LOW BID, APPEARING TO CONTRACTING OFFICER TO BE ERRONEOUS, WAS CORRECTED AFTER CERTIFICATION WITH BIDDER WHO ADVISED "OTHERWISE OUR BID STANDS," THE ACCEPTANCE OF THE CORRECTED BID FORMED A VALID CONTRACT--- THE DIFFERENCE BETWEEN THE CORRECTED BID AND THE OTHER BIDS BEING CLEARLY INSUFFICIENT TO CHARGE CONTRACTING OFFICER WITH BAD FAITH IN THE ACCEPTANCE--- AND THE CONTRACTOR, HAVING DEFAULTED, IS LIABLE FOR THE INCREASED COST OCCASIONED BY PURCHASE OF SUPPLIES ELSEWHERE AGAINST ITS ACCOUNT. WHERE CONTRACT PROVIDED FOR WEEKLY DELIVERIES OF SUPPLIES, AND CONTRACTOR DID NOT DEFINITELY REFUSE TO PERFORM CONTRACT UNTIL SEVERAL WEEKS AFTER THE AWARD, THE GOVERNMENT WAS NOT OBLIGATED, IN ORDER TO LESSEN THE DAMAGE TO THE CONTRACTOR, TO BUY AGAINST ITS ACCOUNT EXCEPT AS NECESSARY TO COVER DELIVERIES IN DEFAULT AND IN SUCH CIRCUMSTANCES THERE WAS NO AGGRAVATION OF DAMAGES BY FAILURE TO PURCHASE ELSEWHERE THE ENTIRE CONTRACT QUANTITY PRIOR TO DEFAULT AS TO SUCH QUANTITY.

ACTING COMPTROLLER GENERAL ELLIOTT TO R. P. ATWOOD AND COMPANY, NOVEMBER 23, 1937:

YOUR LETTER OF AUGUST 12, 1937, IN EFFECT REQUESTS RECONSIDERATION OF DECISIONS OF JUNE 7, 1937, AND JULY 28, 1937, A-86331, SUSTAINING SETTLEMENT OF APRIL 7, 1937, WHICH DISALLOWED $3,224.13 OF YOUR CLAIM FOR $3,236.82, WITHHELD FROM AMOUNTS OTHERWISE DUE YOU TO COVER EXCESS COSTS INCURRED BY THE UNITED STATES IN PURCHASES AGAINST YOUR ACCOUNT UPON YOUR FAILURE TO DELIVER OATS AT FORT CLARK, TEX., PURSUANT TO YOUR BID ACCEPTED MAY 27, 1936, CONTRACT NO. W-503-QM-16257.

YOU URGE THAT NO CONTRACT LEGALLY WAS FORMED BY THE ATTEMPTED ACCEPTANCE OF YOUR BID BECAUSE YOUR BID WAS ERRONEOUS AND WAS KNOWN BY THE PURCHASING OFFICER TO BE ERRONEOUS AT THE TIME OF THE ATTEMPTED ACCEPTANCE, IN THAT YOUR PRICE ON THE ITEM WAS OUR OF LINE, IN COMPARISON WITH OTHER BIDS RECEIVED, BOTH AS ORIGINALLY ENTERED ON THE BID BLANK AND AS REVISED BY THE PURCHASING OFFICER AFTER RECEIPT OF YOUR TELEGRAM OF MAY 25, 1936. YOU CONTEND FURTHER THAT THE PURCHASING OFFICER DELIBERATELY AGGRAVATED THE DAMAGES BY BUYING PIECEMEAL AGAINST YOUR ACCOUNT INSTEAD OF CONTRACTING IMMEDIATELY WITH THE NEXT LOW BIDDER, AND SUGGEST SETTLEMENT ON THE BASIS OF CHARGING YOU ONLY THE DIFFERENCE BETWEEN YOUR BID PRICE AND THAT OF THE NEXT LOW BIDDER.

THERE APPEARS NO MERIT IN EITHER CONTENTION. YOUR ORIGINAL BID OF $0.001129 A POUND TO FURNISH OATS AT FORT CLARK WAS OBVIOUSLY IN ERROR, AS WERE OUR BIDS ON ALL OTHER ITEMS FOR FURNISHING OATS TO VARIOUS ARMY POSTS. WHEN THIS WAS DISCOVERED UPON OPENING THE BIDS, THE PURCHASING OFFICER WIRED YOU TO "VERIFY YOUR PRICE ALL ITEMS OATS BID ON BIDS OPENED TODAY. BELIEVE YOU HAVE ADDED ONE CIPHER TOO MANY ADVISE BY WIRE.' YOU ANSWERED THE SAME DAY---

RETEL DATE OATS CORRECT ONE CIPHER TOO MANY ADDED OTHERWISE OUR BID STANDS.

YOU HAVE CONTENDED THAT YOU DID NOT INTEND BY THIS TELEGRAM TO AUTHORIZE A CORRECTION OF YOUR BID ON THE ITEMS FOR FURNISHING OATS, BUT ONLY THAT YOUR BID ON OTHER ITEMS SHOULD STAND AS MADE. THIS APPEARS CLEARLY UNTENABLE FOR THE SIMPLE REASON, IF THE MATTER WERE OTHERWISE IN DOUBT, THAT IT APPEARS YOU HAD NOT BID ON ANY ITEMS EXCEPT OATS. YOU BID ONLY ON ITEMS FOR FURNISHING OATS AND YOUR BID PRICE AS TO EACH SUCH ITEM CONTAINED THE EXTRA CIPHER. THIS WAS OBVIOUSLY TYPOGRAPHICAL, AND YOUR TELEGRAM CLEARLY MEANT ONLY ONE THING -- TO DELETE THE EXTRA CIPHER AND ,OTHERWISE OUR BID STANDS.' AS THUS CORRECTED YOUR BID OF $0.01129 A POUND, OR $1,129 A HUNDRED POUNDS, FOR OATS TO BE DELIVERED AT FORT CLARK, WAS THE LOWEST RECEIVED. OTHER BIDS ON THIS ITEM RANGED FROM $1.21 TO $1.525 A HUNDRED POUNDS AT FORT CLARK. THIS DIFFERENCE BETWEEN YOUR CORRECTED BID AND THE OTHER BIDS IS CLEARLY INSUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH BAD FAITH IN ACCEPTING YOUR CORRECTED BID ON THE BASIS THAT HE KNEW YOUR CORRECTED BID ALSO WAS ERRONEOUS, PARTICULARLY AS YOU HAD PREVIOUSLY BEEN CALLED UPON TO VERIFY YOUR BID. ON THE CONTRARY, THE ASSUMPTION WOULD APPEAR WARRANTED THAT YOUR CORRECTED BID WAS EXACTLY WHAT YOU INTENDED TO BID. AT LEAST THE CONTRACTING OFFICER WOULD APPEAR TO HAVE BEEN JUSTIFIED IN SO CONCLUDING, AND, CONSEQUENTLY, THE ACCEPTANCE OF SUCH BID MUST BE HELD TO HAVE FORMED A VALID CONTRACT, OBLIGATING YOU TO PERFORM STRICTLY IN ACCORDANCE WITH ITS TERMS, OR TO PAY DAMAGES FOR ANY DEFAULT. THE CIRCUMSTANCE THAT THE RISING MARKET PRICE FOR OATS MADE PERFORMANCE ONEROUS DID NOT, OF COURSE, RELIEVE YOU OF SUCH CONTRACTUAL OBLIGATION.

ON THE MATTER OF AGGRAVATION OF DAMAGES THE RECORD IS CLEAR THAT PURCHASES WERE MADE AGAINST YOUR ACCOUNT ONLY AS REQUIRED BY YOUR DEFAULTS. YOU HAD BEEN AWARDED THE CONTRACT REQUIRING WEEKLY DELIVERIES AT FORT CLARK. WHILE YOU COMPLAINED OF THE AWARD, YOU DID NOT DEFINITELY REFUSE PERFORMANCE UNTIL SEVERAL WEEKS LATER. IN THE MEANTIME YOU HAD NOT ONLY THE OBLIGATION BUT THE CONTRACTUAL RIGHT TO MAKE SUCH WEEKLY DELIVERIES. IF THE MARKET HAD GONE IN YOUR FAVOR YOU COULD, AND PRESUMABLY WOULD, HAVE MADE SUCH DELIVERIES. IN ANY EVENT YOU WERE NOT IN DEFAULT UNTIL YOU FAILED TO MAKE DELIVERIES WHEN DUE, AND THE PURCHASING OFFICER WOULD NOT HAVE BEEN JUSTIFIED IN BUYING AGAINST YOUR ACCOUNT EXCEPT AS NECESSARY TO COVER DELIVERIES IN DEFAULT. WHEN YOU FINALLY ADVISED THE PURCHASING OFFICER THAT YOU DID NOT INTEND TO MAKE ANY DELIVERIES, THE BALANCE OF THE UNDELIVERED OATS WAS CONTRACTED FOR ON THE BEST TERMS AVAILABLE. YOU WERE NOT ENTITLED TO STAND NONCOMMITTAL AS TO WHETHER YOU WOULD PERFORM ANY OR ALL OF YOUR CONTRACT, WHILE THE MARKET PRICE FOR OATS WAS CHANGING AND RISING, AND THEN COMPLAIN BECAUSE PURCHASES WERE NOT MADE AGAINST YOUR ACCOUNT AT AN EARLIER TIME WHEN THE MARKET WAS MORE FAVORABLE.