B-104711, OCT 15, 1951

B-104711: Oct 15, 1951

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PRECIS-UNAVAILABLE THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER OF AUGUST 31. WHEREIN IT WAS ALLEGED THAT ERRORS WERE MADE IN THE COMPANY'S BID DATED AUGUST 21. AF 33(038)-16392 WAS AWARDED. THE BID OF THE COMPANY WAS ACCEPTED ON OCTOBER 20. BY CALL LETTER 51-1 AN ORDER WAS ISSUED FOR FURNISHING THE SUB-ITEMS SPECIFIED THEREIN INCLUDING SUB-ITEMS 66B AND 67C. THE REASON FOR OUR REFERENCE TO THESE TWO ITEMS IS THAT WE NOW FIND OURSELVES IN A MOST EMBARRASSING POSITION. IT HAS JUST COME TO LIGHT THAT THE ANODIZING CHARGE WAS OMITTED FROM OUR ORIGINAL QUOTATION ON THESE TWO ITEMS. "WE REALIZE THAT WE ACCEPTED THE CONTRACT AT THE ABOVE PRICES BUT WISH TO POINT OUT THAT THE ERROR WAS NOT NOTICED UNTIL THE WASHERS WERE ABOUT TO BE PRODUCED.

B-104711, OCT 15, 1951

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER OF AUGUST 31, 1951, WITH ENCLOSURES, FROM THE OFFICE, DIRECTOR OF FINANCE, DEPARTMENT OF THE AIR FORCE, CONCERNING A LETTER OF JULY 12, 1951, FROM L.J. BARWOOD MANUFACTURING COMPANY, INC., WILLIAMS AND NORMAN STREETS, EVERETT 49, MASSACHUSETTS, WHEREIN IT WAS ALLEGED THAT ERRORS WERE MADE IN THE COMPANY'S BID DATED AUGUST 21, 1950, ON WHICH CONTRACT NO. AF 33(038)-16392 WAS AWARDED.

BY INVITATION NO. 33-038-51-69, AIR MATERIEL COMMAND, WRIGHT PATTERSON AIR FORCE BASE, DAYTON, OHIO, REQUESTED BIDS - TO BE OPENED AUGUST 23, 1950 - FOR FURNISHING CERTAIN GASKETS, RINGS AND WASHERS UNDER ITEMS 1 TO 67, INCLUSIVE. THE INVITATION PROVIDED THAT THE ARTICLES WOULD BE ORDERED FROM TIME TO TIME BY CALLS ISSUED UNDER THE CONTRACT AWARDED PURSUANT THERETO FOR QUANTITIES REQUIRED DURING THE PERIOD OF SIX MONTHS FROM THE DATE OF THE CONTRACT. IN RESPONSE TO THE INVITATION, L.J. BARWOOD MANUFACTURING COMPANY, INC., SUBMITTED A BID OFFERING TO FURNISH SEVERAL ITEMS INCLUDING SUB-ITEM 66B COVERING A QUANTITY OF WASHERS AT $0.00239 EACH AND SUB-ITEM 67C COVERING A QUANTITY OF WASHERS AT $0.00985 EACH. THE BID OF THE COMPANY WAS ACCEPTED ON OCTOBER 20, 1950, AS TO SEVERAL ITEMS INCLUDING SUB-ITEMS 66B AND 67C.

BY CALL LETTER 51-1 AN ORDER WAS ISSUED FOR FURNISHING THE SUB-ITEMS SPECIFIED THEREIN INCLUDING SUB-ITEMS 66B AND 67C. BY LETTER OF JUNE 22, 1951, TO THE CONTRACTING OFFICER, THE COMPANY ALLEGED ERROR IN ITS BID AS TO SUB-ITEMS 66B AND 67C, STATING:

"WE REFER YOU TO THE ABOVE CONTRACT WHICH COVERS SEVERAL ITEMS OF AN SERIES WASHERS. ON ITEM 66B, WHICH CALLS FOR 250,000 AN-8013-D1, WE QUOTED .00239 EACH AND ON ITEM 67C, WHICH CALLS FOR 55,000 AN-8013-D2, WE QUOTED .00985 EACH. THE REASON FOR OUR REFERENCE TO THESE TWO ITEMS IS THAT WE NOW FIND OURSELVES IN A MOST EMBARRASSING POSITION. IT HAS JUST COME TO LIGHT THAT THE ANODIZING CHARGE WAS OMITTED FROM OUR ORIGINAL QUOTATION ON THESE TWO ITEMS.

"WE REALIZE THAT WE ACCEPTED THE CONTRACT AT THE ABOVE PRICES BUT WISH TO POINT OUT THAT THE ERROR WAS NOT NOTICED UNTIL THE WASHERS WERE ABOUT TO BE PRODUCED. IT THEN CAME TO OUR ATTENTION THAT THE WASHERS HAD TO BE ANODIZED. THE ANODIZING COST ON ITEM 66B WILL BE .00350 EACH AND THE COST ON ITEM 67C WILL BE .00385 EACH. FROM THIS YOU CAN SEE THAT WE STAND TO SUFFER A SUBSTANTIAL LOSS ON THESE TWO PARTS. SINCE WE ARE NOT A LARGE COMPANY, ABLE TO ABSORB A LOSS SUCH AS THIS, WE WILL APPRECIATE IT, IF AT ALL POSSIBLE, TO HAVE YOUR APPROVAL TO INCREASE THE PRICE ON EACH ITEM TO COVER THE ADDITIONAL COST OF ANODIZING. ***"

IN A LETTER OF SEPTEMBER 10, 1951, TO THIS OFFICE, THE COMPANY STATED:

"WE SHOULD ALSO LIKE TO POINT OUT THAT IF WE ARE NOT REIMBURSED FOR THE ANODIZING CHARGE ON THESE PARTS, WE STAND TO DECREASE OUR NOMINAL PROFIT BY OVER $1000.00, WHICH IS A VERY SUBSTANTIAL PERCENTAGE OF THE TOTAL PROFIT. ***"

THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER L.J. BARWOOD MANUFACTURING COMPANY, INC., MADE ERRORS IN ITS BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID AS TO THE SUB-ITEMS IN QUESTION. THE ABSTRACT OF BIDS SHOWS THAT THE TWO OTHER BIDS ON SUB-ITEM 66B WERE $0.00425 EACH AND $0.0056 EACH, AND THAT THE TWO OTHER BIDS ON SUB-ITEM 67C WERE $0.01285 EACH AND $0.0227 EACH. THE CONTRACTING OFFICER REPORTED THAT THE DIFFERENCES IN THE BIDS ON SAID SUB- ITEMS AND THE OTHER RESPECTIVE BIDS THEREON WERE NOT SUFFICIENT TO CAUSE SUSPICION OF ERROR. ALSO, THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT THE COMPANY HAD MADE ERRORS THEREIN. THUS, THE RECORD INDICATES THAT AT THE TIME OF ACCEPTANCE OF THE COMPANY'S BID, THE CONTRACTING OFFICER HAD NO REASON TO SUSPECT THAT ERRORS HAD BEEN MADE IN THE BID. MOREOVER, THE AWARD CONTEMPLATES ORDERS BEING PLACED UP TO, BUT NOT EXCEEDING, $88,250, AND THE COMPANY ADMITS IT WILL REALIZE A PROFIT EVEN IF NO RELIEF BE GRANTED. THUS, THE CONTRACT AS A WHOLE DOES NOT APPEAR TO BE UNCONSCIONABLE. SEE 2 COMP. GEN. 449. SO FAR AS THE PRESENT RECORD SHOWS THE ACCEPTANCE OF THE BID OF L.J. BARWOOD MANUFACTURING COMPANY, INC., WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL LONG AFTER THE AWARD. UNDER SUCH CIRCUMSTANCES, THE ACCEPTANCE OF THE COMPANY'S BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

MOREOVER, THE INVITATION FOR BIDS WAS CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT AS TO THE EXACT NEEDS OF THE GOVERNMENT. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE THERETO WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C. CLS. 120, 163. IF, AS ALLEGED BY L.J. BARWOOD MANUFACTURING COMPANY, INC., THE COST OF ANODIZING WAS NOT INCLUDED IN THE COMPUTATION OF THE BID PRICES OF THE SUB-ITEMS IN QUESTION, SUCH ERRORS WERE DUE SOLELY TO THE NEGLIGENCE OF THE COMPANY AND WERE NOT INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SUCH ERRORS AS WERE MADE WERE UNILATERAL - NOT MUTUAL - AND THEREFORE DO NOT ENTITLE THE COMPANY TO RELIEF. SEE OGDEN & DOUGHERTY V. UNITED STATES, 102 C. CLS. 249, 259; AND SALIGMAN ET AL. V. UNITED STATES, 56 F. SUPP. 505, 507.

ACCORDINGLY, I FIND NO LEGAL BASIS FOR AUTHORIZING AN INCREASE IN THE PRICES OF SUB-ITEMS 66B AND 67C. THEREFORE, L.J. BARWOOD MANUFACTURING COMPANY, INC., SHOULD BE REQUIRED TO FURNISH THE ARTICLES COVERED BY THE SAID SUB-ITEMS AT THE PRICES STIPULATED IN ITS ACCEPTED BID.