A-91839, JANUARY 25, 1938, 17 COMP. GEN. 601

A-91839: Jan 25, 1938

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TO THE EFFECT THAT THE MATTER OF SUBMITTING BIDS FOR ADVERTISED NEEDS IS NOT ONE FOR SUCH NEGLECTFUL TREATMENT BY BIDDERS AS TO GIVE FREQUENT CAUSE FOR ATTEMPTED WITHDRAWALS ON THE GROUND OF ALLEGED ERRORS WHEN AFTER THE OPENING OF BIDS IT IS REVEALED THAT THE PROFIT IS NOT ALL IT MIGHT HAVE BEEN OR THAT THROUGH BIDDER'S CARELESSNESS A LOSS IS SUSTAINED. IS EQUALLY APPLICABLE TO SALES OF USED GOVERNMENT EQUIPMENT. ADVISED THAT THE LUMP-SUM BID COVERED ONLY THOSE ITEMS ON WHICH NO SPECIFIC QUOTATION WAS MADE. MISTAKE IN BID WAS NOT ALLEGED UNTIL AFTER AWARD. NO QUOTATIONS WERE INSERTED OPPOSITE THE REMAINING ITEMS. HORNSTEIN WAS NOTED. 400.00 WAS INTENDED TO BE A LUMP SUM OFFER ON THE ENTIRE TWENTY SEVEN ITEMS.

A-91839, JANUARY 25, 1938, 17 COMP. GEN. 601

SALES - MISTAKES - BIDS - BIDDERS' NEGLIGENCE, VERIFICATION OF BID PRIOR TO AWARD, AND PRICE DIFFERENCES AS CONSTRUCTIVE NOTICE OF ERROR THE HOLDING IN 8 COMP. GEN. 397, WITH REGARD TO GOVERNMENT PURCHASES, TO THE EFFECT THAT THE MATTER OF SUBMITTING BIDS FOR ADVERTISED NEEDS IS NOT ONE FOR SUCH NEGLECTFUL TREATMENT BY BIDDERS AS TO GIVE FREQUENT CAUSE FOR ATTEMPTED WITHDRAWALS ON THE GROUND OF ALLEGED ERRORS WHEN AFTER THE OPENING OF BIDS IT IS REVEALED THAT THE PROFIT IS NOT ALL IT MIGHT HAVE BEEN OR THAT THROUGH BIDDER'S CARELESSNESS A LOSS IS SUSTAINED, IS EQUALLY APPLICABLE TO SALES OF USED GOVERNMENT EQUIPMENT. WHERE AFTER OPENING OF BIDS FOR SALE OF USED GOVERNMENT EQUIPMENT BIDDER'S REPRESENTATIVE, IN REPLY TO QUERY BY THE CONTRACTING OFFICER, ADVISED THAT THE LUMP-SUM BID COVERED ONLY THOSE ITEMS ON WHICH NO SPECIFIC QUOTATION WAS MADE, AND MISTAKE IN BID WAS NOT ALLEGED UNTIL AFTER AWARD, THE BID ACCEPTED CONSTITUTES A VALID AND BINDING CONTRACT NOTWITHSTANDING THE WIDE VARIATION BETWEEN THE ACCEPTED BID AND THE NEXT HIGHEST BID, THE DIFFERENCE IN PRICES BID IN CASE OF SALE OF USED EQUIPMENT NOT BEING AS INDICATIVE OF ERROR OR NOTICE OF MISTAKE AS WOULD A LIKE DIFFERENCE IN QUOTATIONS FOR FURNISHING NEW EQUIPMENT TO THE GOVERNMENT, AND THE BIDDER, IF HE REFUSES DELIVERY, SHOULD BE CHARGED WITH ANY LOSS TO THE GOVERNMENT THROUGH DISPOSITION OF THE EQUIPMENT OTHERWISE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JANUARY 25, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 12, 1938, AS FOLLOWS:

ON DECEMBER 3, 1937, THE REGIONAL OFFICE OF THE SOIL CONSERVATION SERVICE AT DES MOINES, IOWA, ENTERED INTO A CONTRACT, NUMBERED A-IA-O SC-CIV-122, WITH A. HORNSTEIN, DOING BUSINESS UNDER THE TRADE NAME OF THE FLAT TIRE COMPANY AT 415 SOUTH JEFFERSON AVENUE, PEORIA, ILLINOIS, IN ACCEPTANCE OF HIS BID SUBMITTED IN RESPONSE TO INVITATION TO BID NUMBERED ILL-1-CCC-40, UNDER WHICH BIDS OPENED AT LE ROY, ILLINOIS, ON NOVEMBER 24, 1937.

THE INVITATION TO BID COMPRISED TWENTY-SEVEN ITEMS OF USED EQUIPMENT AND MATERIALS DECLARED NO LONGER FIT FOR SERVICE BY THE BOARD OF SURVEY. MR. HORNSTEIN INSERTED QUOTATIONS OPPOSITE ITEMS 1, 2, 3, 5, 6, 7, 11, 12, 13, 15, 16, 17, 19, 20, AND 23, WHICH ITEMS COVER USED TIRES, TUBES, AND BATTERIES. NO QUOTATIONS WERE INSERTED OPPOSITE THE REMAINING ITEMS, WHICH COVER TRUCKS, IRON, STEEL, AND MISCELLANEOUS ARTICLES. HOWEVER, ON STANDARD FORM 33 (REVISED), THERE APPEARS THE FOLLOWING NOTATION:

"TRUCKS, MISCELLANEOUS IRON AND STEEL, ETC. $1400.00.'

AT THE TIME BIDS OPENED AT THE LE ROY, ILLINOIS, PROJECT OFFICE, THE EXCEPTIONALLY HIGH OFFER SUBMITTED BY MR. HORNSTEIN WAS NOTED, AND IN ADDITION, THE QUESTION PRESENTED ITSELF AS TO WHETHER THE QUOTATION OF $1,400.00 WAS INTENDED TO BE A LUMP SUM OFFER ON THE ENTIRE TWENTY SEVEN ITEMS, INCLUDING THE USED TIRES, TUBES, AND BATTERIES SPECIFICALLY QUOTED UPON, OR A QUOTATION ON ONLY THOSE ITEMS OPPOSITE WHICH NO PRICES WERE INSERTED, NAMELY, ITEMS 4, 8, 9, 10, 14, 18, 21, 22, 24, 25, 26, AND 27. IN ORDER TO VERIFY THESE POINTS, A TELEPHONE CALL WAS MADE TO THE OFFICE OF THE FLAT TIRE COMPANY. MR. HORNSTEIN WAS NOT IN AT THE TIME, AND A CLERK IN HIS OFFICE STATED THAT IT WAS THE INTENTION TO QUOTE $1,400.00 FOR ALL OTHER ITEMS OPPOSITE WHICH NO PRICE HAD BEEN INSERTED.

THE RESULT OF THIS TELEPHONE CONVERSATION WAS NOTED ON THE ABSTRACT OF PROPOSALS AND THE ENTIRE CASE SUBMITTED TO THE REGIONAL OFFICE OF THE SOIL CONSERVATION SERVICE AT DES MOINES, IOWA, FOR AN AWARD. ON DECEMBER 3, 1937, AN AWARD WAS MADE TO MR. HORNSTEIN ON ITEMS 4, 8, 9, 10, 14, 18, 21, 22, 24, 25, 26, AND 27 ON HIS OFFER OF $1,400.00, AND ON ITEMS 7, 17, AND 23 AT THE INDIVIDUAL PRICES INSERTED, FOR THE TOTAL COST OF $1,414.50.

UPON BEING ADVISED OF THE AWARD, MR. HORNSTEIN CALLED AT THE LE ROY, ILLINOIS, PROJECT OFFICE TO ASCERTAIN WHERE THE ITEMS AWARDED TO HIM COULD BE FOUND. IT APPEARS THAT AT THAT TIME, UPON REVIEWING THE ITEMS AWARDED TO HIM, HE DISCOVERED WHAT IS NOW ALLEGED TO BE A MISTAKE IN FILLING OUT THE BID. ON DECEMBER 7, 1937, MR. HORNSTEIN ADDRESSED THE FOLLOWING LETTER TO JOHN R. MOORE, PROCUREMENT OFFICER FOR THE SOIL CONSERVATION SERVICE AT DES MOINES, IOWA:

"REGARDING BID NO. I11-1-CCC-40.

"I AM VERY SORRY THAT SUCH A MISTAKE OCCURRED AND THAT WE DID NOT EXAMINE YOUR BID MORE CLOSELY.

"I MISTOOK ITEMS FOR QUANTITY AND THAT WAS THE BASIS ON WHICH I FIGURED THE BID, SO YOU WILL SEE THAT IT WOULD HAVE BEEN VERY RIDICULOUS FOR ME TO MAKE SUCH A BID ON SO FEW ITEMS.

"I WOULD LIKE TO RECALL THAT BID AND REBID ON SAME. OUR BID NOW, THAT I HAVE IT STRAIGHTENED AROUND, WOULD BE $385.00 FOR THE FOUR TRUCKS, IRON, AND ALL MISCELLANEOUS. IF THIS IS SATISFACTORY, KINDLY WIRE OR WRITE ME AND I WILL BE GLAD TO SEND YOU THE MONEY COVERING.

"I WAS LUCKY ENOUGH TO BE ABLE TO CALL IN MY OTHER BIDS, BEFORE THEY REACHED YOUR OFFICE, AS THEY WERE ALL WRONG ALSO.

"ANYTHING THAT YOU CAN DO TO ASSIST ME IN ADJUSTING THIS ERROR IN BIDDING WILL BE APPRECIATED, AS I SINCERELY REGRET IT AND TRUST EVERYTHING CAN BE CLEARED UP SATISFACTORILY.'

IN SHORT, MR. HORNSTEIN CONTENDS THAT AS TO THOSE ITEMS OPPOSITE WHICH NO PRICE WAS INSERTED, HE MISTOOK THE ITEM NUMBER FOR THE QUANTITY. ACCORDING TO THIS CONTENTION, ITEMS 9, 25, 26, AND 27, LISTING FOUR USED TRUCKS, WOULD HAVE BEEN CONSTRUED AS AN OFFERING OF EIGHTY-SEVEN USED TRUCKS, AND A LIKE CONSTRUCTION WOULD APPLY TO OTHER ITEMS LISTING IRON, STEEL, AND MISCELLANEOUS ARTICLES. IT IS NOT CONTENDED THAT ANY CONFUSION EXISTED OR THAT ANY MISINTERPRETATION WAS PLACED UPON THOSE PARTICULAR ITEMS COVERING USED TIRES, TUBES, AND BATTERIES OPPOSITE WHICH INDIVIDUAL QUOTATIONS WERE INSERTED.

WHILE MR. HORNSTEIN IS OBLIGATED TO PAY $1,414.50 FOR THE PARTICULAR ITEMS AWARDED TO HIM, IT IS TO BE NOTED THAT NEXT HIGHEST BIDDERS OFFER $343.00 FOR THE SAME MATERIALS AND EQUIPMENT, AND $328.50 FOR THE IDENTICAL ITEMS TO WHICH MR. HORNSTEIN'S $1,400.00 QUOTATION IS APPLICABLE.

ENCLOSED ARE THE CONTRACT AWARDED TO A. HORNSTEIN, ALL REJECTED BIDS, COPY OF OTHER CONTRACTS AWARDED IN THIS CASE, AN ABSTRACT OF BIDS, AND MR. HORNSTEIN'S LETTER OF DECEMBER 7, 1937.

IT IS REQUESTED THAT THE FACTS PRESENTED HEREIN BE CONSIDERED, AND WITH THE RETURN OF ALL PAPERS, THE DEPARTMENT BE ADVISED AS TO THE PROPER ACTION TO FOLLOW.

THE BIDS HERE IN QUESTION WERE ON USED EQUIPMENT AND MATERIALS NO LONGER FIT FOR SERVICE AS DISTINGUISHED FROM BIDS FOR THE PERFORMANCE OF WORK, FOR THE FURNISHING OF SUPPLIES, EQUIPMENT, ETC. CONSEQUENTLY,THERE MIGHT BE EXPECTED A WIDE RANGE IN THE BIDS WHICH WOULD BE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY WAS TO BE PUT BY THE PARTICULAR BIDDER OR THE CHANCE OF RESALE THEREOF. THE MERE DIFFERENCE IN THE PRICES BID FOR SUCH PROPERTY WOULD NOT NECESSARILY PUT THE CONTRACTING OFFICER ON NOTICE OF A MISTAKE AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED FOR FURNISHING NEW EQUIPMENT OR SUPPLIES TO BE PURCHASED BY THE GOVERNMENT. SEE DECISION OF DECEMBER 17, 1936, 16 COMP. GEN. 596.

IN DECISION OF FEBRUARY 2, 1929, 8 COMP. GEN. 397, IT WAS STATED:

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 SAID DECISION, SUPRA, HAD REFERENCE TO FILLING THE ADVERTISED NEEDS OF THE GOVERNMENT BUT IT IS ALSO APPLICABLE TO SUCH A SITUATION AS PRESENTED IN THIS CASE.

WHILE AT THE TIME OF THE OPENING AND CANVASSING OF THE BIDS THERE WAS SOME DOUBT ON THE PART OF THE CONTRACTING OFFICER AS TO WHAT WAS INTENDED BY THE BID OF THE FLAT TIRE CO., WHICH WAS MUCH HIGHER AS TO CERTAIN ITEMS THAN THE OTHER BIDS RECEIVED, THE CONTRACTING OFFICER BROUGHT THE MATTER TO THE ATTENTION OF A REPRESENTATIVE OF THE SAID BIDDER WHO ADVISED THAT THE LUMP SUM BID OF $1,400 WAS, AS INDICATED ON THE BID, INTENDED TO COVER ALL ITEMS AS TO WHICH NO SEPARATE PRICE WAS QUOTED. AFTER SUCH VERIFICATION THERE WAS NO OTHER COURSE FOR THE CONTRACTING OFFICER TO FOLLOW EXCEPT TO MAKE AWARD TO THE SAID BIDDER. BIDS WERE REQUESTED ON 27 ITEMS AND THIS BIDDER QUOTED SEPARATE PRICES ON 15 OF THEM, AGGREGATING $151.35, AND QUOTED A LUMP SUM PRICE OF $1,400 FOR THE 12 OTHER ITEMS. THE BID WAS ACCEPTED AS TO THREE OF THE ITEMS ON WHICH SEPARATE PRICES WERE QUOTED AND AS TO THE 12 ITEMS ON WHICH THE LUMP SUM PRICE OF $1,400 WAS QUOTED. IT WAS NOT UNTIL AFTER THE BID HAD BEEN VERIFIED AND AWARD MADE THAT THERE WAS ANY ALLEGATION OF MISTAKE. EVEN NOW, IT HAS NOT BEEN CONCLUSIVELY ESTABLISHED THAT A MISTAKE WAS MADE, BUT, BE THAT AS IT MAY, THE BID AS ACCEPTED CONSTITUTES A VALID AND BINDING CONTRACT. CONSEQUENTLY, THERE CAN BE NO RELIEF GRANTED THE FLAT TIRE CO. SEE SCOTT V. UNITED STATES, 44 CT.CLS. 524; 16 COMP. GEN. 596; 17 ID. 388.

IF THE SAID BIDDER REFUSES TO ACCEPT DELIVERY OF AND PAY FOR THE ITEMS COVERED BY ITS BID, SAME, AFTER GIVING DUE NOTICE TO THE BIDDER, SHOULD BE DISPOSED OF AS INTERESTS OF THE UNITED STATES MAY REQUIRE AND ANY LOSS INCURRED BY THE UNITED STATES BY REASON THEREOF SHOULD BE CHARGED AGAINST THE FLAT TIRE CO. ..END :