A-91328, JANUARY 4, 1938, 17 COMP. GEN. 539

A-91328: Jan 4, 1938

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CONTRACTS - MISTAKES - BIDS - DISCOUNTS WHERE LOW BIDDER ALLEGED MISTAKE IN DISCOUNT OFFERED AFTER THE BID WAS ACCEPTED BY THE CONTRACTING OFFICER IN GOOD FAITH AND AFTER DELIVERY OF A PART OF THE SUPPLIES. THERE IS NO LEGAL BASIS FOR PAYMENT OF ANY AMOUNT IN ADDITION TO THE ACCEPTED BID PRICE LESS THE PLAINLY OFFERED DISCOUNT. NOTWITHSTANDING THE DISCOUNT OFFERED FOR THE SHORTER PERIOD OF PAYMENT WAS MANY TIMES GREATER THAN THAT FOR THE LONGER PERIOD. 17 COMP. BIDS WERE RECEIVED FROM THE FOLLOWING CONCERNS: R. WAS AWARDED ITEMS 2. THE DETERMINATION OF THE AWARD ON THE ITEMS WAS BASED UPON A DECISION OF THE CLOTHING COMMITTEE WHICH INSPECTED THE SAMPLES SUBMITTED AS TO DESIRABILITY AND QUALITY.

A-91328, JANUARY 4, 1938, 17 COMP. GEN. 539

CONTRACTS - MISTAKES - BIDS - DISCOUNTS WHERE LOW BIDDER ALLEGED MISTAKE IN DISCOUNT OFFERED AFTER THE BID WAS ACCEPTED BY THE CONTRACTING OFFICER IN GOOD FAITH AND AFTER DELIVERY OF A PART OF THE SUPPLIES, THERE IS NO LEGAL BASIS FOR PAYMENT OF ANY AMOUNT IN ADDITION TO THE ACCEPTED BID PRICE LESS THE PLAINLY OFFERED DISCOUNT, NOTWITHSTANDING THE DISCOUNT OFFERED FOR THE SHORTER PERIOD OF PAYMENT WAS MANY TIMES GREATER THAN THAT FOR THE LONGER PERIOD. 17 COMP. GEN. 493, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JANUARY 4, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 20, 1937, AS FOLLOWS:

THE VETERANS ADMINISTRATION FACILITY, NEWINGTON, CONN., SOLICITED BIDS FOR FURNISHING CLOTHING DURING THE PERIOD JANUARY 1, 1937, TO JUNE 30, 1937.

BIDS WERE RECEIVED FROM THE FOLLOWING CONCERNS:

R. L. BIRNBAUM AND SONS, INC.

G. FOX AND COMPANY, INC.

N. E. MAG AND SONS, INC.

KATTEN AND SONS.

R. L. BIRNBAUM AND SONS, INC., WAS AWARDED ITEMS 2, 6, 16 TO 19, 23, AND 25. THE DETERMINATION OF THE AWARD ON THE ITEMS WAS BASED UPON A DECISION OF THE CLOTHING COMMITTEE WHICH INSPECTED THE SAMPLES SUBMITTED AS TO DESIRABILITY AND QUALITY. IT SO HAPPENED THAT THE CONCERN WAS THE LOWEST BIDDER AS TO PRICE ON THOSE ITEMS. R. L. BIRNBAUM AND SONS, INC., INSERTED "30" IN THE SPACE PROVIDED IN THE PROPOSAL FORM FOR THE OFFERING OF A DISCOUNT FOR PAYMENT WITHIN 20 DAYS AND INSERTED "2" IN THE SPACE PROVIDED FOR DISCOUNT FOR PAYMENT WITHIN 30 DAYS. THE MANAGER OF THE NEWINGTON FACILITY ADVISES THAT THE WIDE VARIANCE IN THE DISCOUNTS WAS NOT NOTICED AT THE TIME THE BIDS WERE OPENED POSSIBLY DUE TO THE FACT THAT THE AWARDS WERE CONSIDERED ON A QUALITY RATHER THAN A PRICE BASIS. THE FIRST PURCHASE UNDER THE CONTRACT WAS MADE ON FEBRUARY 8, 1937, AT WHICH TIME A REVIEW OF THE CONTRACT BROUGHT OUT THE FACT THAT THE BIDDER HAD APPARENTLY MADE A MISTAKE IN ENTERING THE FIGURE "30" IN THE DISCOUNT PROVISION. THE BIDDER ACCORDINGLY WAS REQUESTED TO VERIFY HIS BID AND IN LETTER DATED FEBRUARY 9, 1937, STATED "WHAT WE REALLY MEANT WAS THAT 2 PERCENT DISCOUNT WILL BE ALLOWED IF THE BILL WILL BE PAID WITHIN 30 DAYS.'

THE GREAT DIFFERENCE IN THE DISCOUNT FOR PAYMENT WITHIN 20 DAYS AND THE DISCOUNT FOR PAYMENT WITHIN 30 DAYS IS BELIEVED SUFFICIENT TO HAVE PUT THE CONTRACTING OFFICER ON NOTICE THAT AN ERROR HAD APPARENTLY BEEN MADE BY THE BIDDER ALTHOUGH SUCH ERROR WAS NOT NOTICED AT THE TIME OF OPENING OF BIDS. FURTHERMORE THE MANAGER OF THE FACILITY STATES THAT THE GOODS OFFERED BY THE FOUR CONCERNS WERE IN THE MAIN, OF COMPARABLE QUALITY. WILL BE NOTED THAT THE PROPOSAL OF R. L. BIRNBAUM AND SONS, INC., IS LOW ON THE ITEMS ACCEPTED REGARDLESS OF WHETHER THE DISCOUNT IS FIGURED AS 30 PERCENT FOR 20 DAYS OR 2 PERCENT FOR 30 DAYS. MOREOVER IN CONTRACT VA8R- 793 COVERING THE PERIOD JULY 1, 1935, TO JUNE 30, 1936, WHICH CONTRACT IS NOW IN FILE IN THE GENERAL ACCOUNTING OFFICE, R. L. BIRNBAUM AND SONS, INC., OFFERED ONLY ONE DISCOUNT: NAMELY, 2 PERCENT FOR PAYMENT WITHIN 30 DAYS.

YOUR DECISION IS REQUESTED AS TO WHETHER THE DISCOUNT OFFERED BY R. L. BIRNBAUM AND SONS, INC., IN CONTRACT VA8R-1162 MAY BE CONSIDERED AS 2 PERCENT FOR 30 DAYS AND THE ADDITIONAL DISCOUNT OF 30 PERCENT FOR 20 DAYS MADE IN ERROR, DISREGARDED.

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 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 AT THE TIME OF ACCEPTANCE AND SOUGHT TO TAKE ADVANTAGE THEREOF. THE RECORD IN THIS CASE SHOWS THAT THE BID WAS ACCEPTED BY THE CONTRACTING OFFICER WITHOUT NOTICE OF ANY ERROR AND IT WAS NOT UNTIL AFTER DELIVERY OF A PART OF THE SUPPLIES --- PURCHASE ORDER OF FEBRUARY 8, 1937--- THAT THERE WAS ANY ALLEGATION OF MISTAKE.

THE FACT THAT NONE OF THE OTHER BIDDERS OFFERED A DISCOUNT AND THAT THIS BID WITHOUT ANY DISCOUNT IS COMPARABLE TO THE BIDS OF THE OTHER BIDDERS CAN FORM NO LEGAL BASIS FOR DISREGARDING THE DISCOUNT OFFERED BY THIS BIDDER. THE OFFERING OF DISCOUNT BY BIDDERS IS FOR THE PURPOSE OF INDUCING PROMPT PAYMENT BY THE GOVERNMENT AND IN THIS CASE A LARGER DISCOUNT WAS OFFERED FOR PAYMENT WITHIN 20 DAYS THAN WAS OFFERED FOR PAYMENT WITHIN 30 DAYS. THIS CASE IS THUS DISTINGUISHED FROM THE CASES WHERE LARGER DISCOUNTS ARE OFFERED FOR PAYMENT WITHIN 30 DAYS AND A SMALLER DISCOUNT FOR PAYMENT WITHIN 10 OR 20 DAYS. SEE DECISION OF DECEMBER 13, 1937, A-91038, 17 COMP. GEN. 493.

SINCE THE MISTAKE WAS NOT MUTUAL AND WAS NOT ALLEGED UNTIL AFTER THE BID HAD BEEN ACCEPTED IN GOOD FAITH AND AFTER DELIVERY OF A PART OF THE SUPPLIES THERE IS NO LEGAL BASIS FOR THE PAYMENT OF ANY AMOUNT IN ADDITION TO THE ACCEPTED BID PRICE, LESS THE PLAINLY OFFERED DISCOUNT. SEE AMERICAN WATER SOFTENER COMPANY V. UNITED STATES, 50 CT.CLS. 209; 16 COMP. GEN. 779 AND 17 COMP. GEN. 373.

IT IS NOTED THAT THE PERIOD COVERED BY THE CONTRACT TERMINATED JUNE 30, 1937, AND, OF COURSE, IF PAYMENT FOR DELIVERIES THEREUNDER WAS NOT MADE WITHIN THE 20 DAY PERIOD, THERE WOULD BE NO AUTHORITY FOR DEDUCTION OF THE 30 PERCENT DISCOUNT OFFERED.