A-96239, JULY 11, 1938, 18 COMP. GEN. 28

A-96239: Jul 11, 1938

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WHERE THE BID SUBMITTED WAS THE AMOUNT INTENDED. THE CONTRACTOR MAY NOT BE RELIEVED OF ITS OBLIGATION ON THE BASIS OF MISTAKE IN BID ALLEGED BECAUSE ITS SUPPLIER REFUSES TO FURNISH THE EQUIPMENT INVOLVED AT A PRICE WHICH WILL ENABLE THE MAKING OF A PROFIT OR EVEN AVOID A SMALL LOSS. PARTICULARLY AS THERE IS NOT INVOLVED THE ENFORCEMENT OF AN UNCONSCIONABLE CONTRACT. THE BIDDER ALSO HAVING BEEN AWARDED A CONTRACT ON ANOTHER ITEM AS TO WHICH NO MISTAKE IS ALLEGED. CIRCULAR ADVERTISEMENT 38-639 WAS ISSUED BY ROCK ISLAND ARSENAL AND BIDS OPENED ON MAY 18. TWO BIDS WERE RECEIVED. ORDER WAS PLACED WITH ZIMMER BROTHERS COMPANY. ORDER WAS PLACED BY THE CONTRACTOR WITH THE EVINRUDE MOTORS. WHICH WAS THEIR SOURCE OF SUPPLY.

A-96239, JULY 11, 1938, 18 COMP. GEN. 28

CONTRACTS - MISTAKES - BIDS - ERROR ALLEGED AFTER AWARD AND RECEIPT OF SUPPLIER'S PRICE THE ACCEPTANCE OF A BID WITHOUT NOTICE OF MISTAKE IMPOSES UPON THE SUCCESSFUL BIDDER THE LEGAL OBLIGATION TO PERFORM IN ACCORDANCE WITH THE CONTRACT TERMS OR PAY ANY EXCESS COST RESULTING FROM DEFAULT IN PERFORMANCE, AND, WHERE THE BID SUBMITTED WAS THE AMOUNT INTENDED, THE CONTRACTOR MAY NOT BE RELIEVED OF ITS OBLIGATION ON THE BASIS OF MISTAKE IN BID ALLEGED BECAUSE ITS SUPPLIER REFUSES TO FURNISH THE EQUIPMENT INVOLVED AT A PRICE WHICH WILL ENABLE THE MAKING OF A PROFIT OR EVEN AVOID A SMALL LOSS, PARTICULARLY AS THERE IS NOT INVOLVED THE ENFORCEMENT OF AN UNCONSCIONABLE CONTRACT, THE BIDDER ALSO HAVING BEEN AWARDED A CONTRACT ON ANOTHER ITEM AS TO WHICH NO MISTAKE IS ALLEGED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, JULY 11, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 5, 1938, AS FOLLOWS:

ON MAY 3, 1938, CIRCULAR ADVERTISEMENT 38-639 WAS ISSUED BY ROCK ISLAND ARSENAL AND BIDS OPENED ON MAY 18, 1938. ONE OF THE ITEMS ON THIS PROPOSAL CALLED FOR A HIGH PRESSURE PUMPER. TWO BIDS WERE RECEIVED, ONE FROM ZIMMER BROTHERS COMPANY AT $288.60, AND THE OTHER FROM EVINRUDE MOTORS AT $340.00. ORDER WAS PLACED WITH ZIMMER BROTHERS COMPANY, THE LOW BIDDER, AND THAT FIRM ACCEPTED THE ORDER IN GOOD FAITH. ORDER WAS PLACED BY THE CONTRACTOR WITH THE EVINRUDE MOTORS, WHICH WAS THEIR SOURCE OF SUPPLY, AND ENCLOSURE HERETO INDICATES THAT THE EVINRUDE COMPANY WOULD CHARGE ZIMMER BROTHERS $340.33 FOR FURNISHING THIS PUMPER WITH ACCESSORIES REQUIRED IN THE PROPOSAL AND ORDER.

IT WAS NOT UNTIL THE RECEIPT OF THIS LETTER FROM THEIR SOURCE OF SUPPLY THAT ZIMMER BROTHERS REALIZED AN ERROR HAD BEEN MADE IN SUBMITTING ITS BID. LETTER DATED JUNE 17, 1938, ENCLOSED HEREWITH, FROM ZIMMER BROTHERS TO THE COMMANDING OFFICER, ROCK ISLAND ARSENAL REQUESTS RELIEF FROM THE RESPONSIBILITY OF FURNISHING MATERIAL AT THE PRICE BID. THERE APPEARS TO BE NO DOUBT BUT THAT AN ERROR WAS IN FACT MADE, AND THAT SUCH ERROR WAS DUE SOLELY TO NEGLIGENCE ON THE PART OF THE BIDDER IN NOT HAVING AVAILABLE ALL THE DATA NECESSARY FOR THE PROPER SUBMISSION OF BID. ALTHOUGH A LOSS WILL BE SUSTAINED BY ZIMMER BROTHERS OF APPROXIMATELY $50.00 IN FURNISHING THE MATERIAL ON THIS ORDER, IT WILL BE NOTED THAT THIS SAME FIRM WAS LOW BIDDER ON THE OTHER ITEM OF THE PROPOSAL, NAMELY, A GASOLINE ENGINE DRIVEN ARC WELDER, THE LOSS OF THIS ONE ITEM MAY BE MADE UP FROM THE PROFIT ON THE OTHER ITEM. IN VIEW OF THIS FACT AND OF THE NECESSITY OF IMPRESSING UPON ALL BIDDERS THE IMPORTANCE OF PAINSTAKING PREPARATION OF BIDS TO BE SUBMITTED, IT IS RECOMMENDED THAT ZIMMER BROTHERS COMPANY BE REQUIRED TO FILL THE ORDER AS PLACED BY THE COMMANDING OFFICER, ROCK ISLAND ARSENAL, BASED UPON ACTUAL BID SUBMITTED.

ENCLOSED HEREWITH ARE THE FOLLOWING PAPERS, WHICH IT IS REQUESTED BE RETURNED WITH YOUR DECISION.

LETTER FROM ZIMMER BROTHERS DATED JUNE 17, 1938, ENCLOSING LETTER FROM EVINRUDE MOTORS.

BID OF ZIMMER BROTHERS.

ABSTRACT OF BIDS RECEIVED.

ROCK ISLAND ARSENAL TENTATIVE SPECIFICATIONS NOS. RIED-318 AND RIED 319.

THE ACCEPTANCE OF THE BID SUBMITTED BY ZIMMER BROTHERS COMPANY WITHOUT NOTICE OF ANY MISTAKE IMPOSED UPON SAID COMPANY THE LEGAL OBLIGATION TO PERFORM IN ACCORDANCE WITH THE TERMS OF THE CONTRACT OR TO PAY THE UNITED STATES ANY EXCESS COSTS RESULTING FROM DEFAULT IN PERFORMANCE. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88; UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313, AND AMERICAN WATER SOFTENER CO. V. UNITED STATES, 50 CT.CLS. 209. AS A MATTER OF FACT, IT APPEARS THAT ZIMMER BROTHERS CO. SUBMITTED THE BID IN THE AMOUNT INTENDED; THAT IT MADE NO MISTAKE IN ITS BID; AND THAT ITS DIFFICULTY RESULTS FROM THE FACT THAT THE EVINRUDE MOTORS REFUSES TO SELL TO ZIMMER BROTHERS CO. THE EQUIPMENT AT SUCH A PRICE AS WILL ENABLE ZIMMER BROTHERS CO. TO MAKE A PROFIT OR EVEN TO AVOID A SMALL LOSS IN THE TRANSACTION. HOWEVER, THAT IS NO CONCERN OF THE UNITED STATES.

THIS BIDDER WAS AWARDED THE CONTRACT ON TWO ITEMS--- ONE ON WHICH IT BID $1,061.70 AS TO WHICH NO MISTAKE IS ALLEGED AND THE OTHER ON WHICH IT BID $288.60 AND ALLEGES A MISTAKE OF APPROXIMATELY $50. HENCE, THERE IS NOT INVOLVED HERE THE ENFORCEMENT OF AN UNCONSCIONABLE CONTRACT.

DEMAND SHOULD BE MADE FOR PERFORMANCE IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, AND IF THERE IS FAILURE TO PERFORM, THE EQUIPMENT MAY BE PURCHASED ELSEWHERE WITH THE EXCESS COSTS CHARGED TO ZIMMER BROTHERS CO. SEE 7 COMP. GEN. 193.