B-105592, JAN 7, 1952

B-105592: Jan 7, 1952

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

PRECIS-UNAVAILABLE THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 14. TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. WAS BASED. WAS ACCEPTED ON JUNE 8. THAT AFTER IT BEGAN PRODUCTION IT WAS DISCOVERED THAT SOME OF THE ESTIMATED COSTS WERE INCORRECT AND THAT OTHER ITEMS OF COST HAD BEEN OMITTED FROM THE ESTIMATE. IN SAID LETTER IT WAS STATED THAT IT WAS THEN ESTIMATED THAT THE COST OF LABOR AND MATERIALS NECESSARY TO MANUFACTURE THE WASHERS WOULD TOTAL $6. THAT IF OVERHEAD AND A 10 PERCENT PROFIT WERE ADDED THERETO THE TOTAL AMOUNT WOULD BE $8. THE PRIMARY QUESTION INVOLVED IS NOT WHETHER ERRORS WERE MADE IN THE BID. WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF.

B-105592, JAN 7, 1952

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 14, 1951, FROM THE DIRECTOR OF FINANCE, FILE REFERENCE AFAFN-1 163 (KOOL VENT AWNING MFG. CORP.), FORWARDING THE REPORT REQUESTED BY OFFICE LETTER DATED OCTOBER 12, 1951, WITH RESPECT TO ERRORS ALLEGED BY THE KOOL VENT METAL AWNING CORPORATION, 7818 W. GRAND AVENUE, ELMWOOD PARK, ILLINOIS, IN LETTERS OF SEPTEMBER 8 AND 28, 1951, TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. AF 33(038) 28049 DATED JUNE 8, 1951, WAS BASED.

HEADQUARTERS, AIR MATERIEL COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, BY INVITATION NO. 33-038-51-1661, REQUESTED BIDS FOR 14 ITEMS OF VARIOUS TYPES OF WASHERS. IN RESPONSE TO THE INVITATION, KOOL VENT METAL AWNING CORPORATION SUBMITTED A BID DATED MAY 16, 1951, OFFERING TO FURNISH, AMONG OTHERS, ITEM 7 COVERING 700,000 WASHERS, FLAT FOR WOOD 1/4-INCH BOLT, IN ACCORDANCE WITH AFNA STANDARD DRAWING AN970 DATED JULY 25, 1942, FOR $0.0038 EACH, OR A TOTAL OF $2,660. THE BID OF THE CORPORATION ON ITEM 7, BEING THE LOWEST RECEIVED, WAS ACCEPTED ON JUNE 8, 1951, CONSUMMATING CONTRACT NO. AF 33(038)28049.

BY LETTER DATED AUGUST 21, 1951, KOOL VENT METAL AWNING CORPORATION ADVISED THAT DUE TO ITS GENERAL BACKGROUND IN METAL FABRICATING IT FELT FULLY QUALIFIED TO SUBMIT A QUOTATION ON THE WASHERS; THAT IN ORDER TO ASSURE ITSELF OF A PROPER QUOTATION IT ENGAGED AN ENGINEERING COMPANY TO FIGURE THE COSTS; THAT IT USED THE FIGURES SUBMITTED BY THE ENGINEERING COMPANY AS A BASIS FOR ITS BID WITH THE BELIEF THAT THEY REPRESENTED THE AMOUNT FOR WHICH THE WASHERS COULD BE MANUFACTURED WITH THE EXPECTATION OF A LEGITIMATE PROFIT; AND THAT AFTER IT BEGAN PRODUCTION IT WAS DISCOVERED THAT SOME OF THE ESTIMATED COSTS WERE INCORRECT AND THAT OTHER ITEMS OF COST HAD BEEN OMITTED FROM THE ESTIMATE. IN SAID LETTER IT WAS STATED THAT IT WAS THEN ESTIMATED THAT THE COST OF LABOR AND MATERIALS NECESSARY TO MANUFACTURE THE WASHERS WOULD TOTAL $6,581, AND THAT IF OVERHEAD AND A 10 PERCENT PROFIT WERE ADDED THERETO THE TOTAL AMOUNT WOULD BE $8,308. THE CORPORATION REQUESTED THEREIN THAT IT BE GRANTED RELIEF IN THE MATTER. BY LETTER DATED AUGUST 27, 1951, THE CONTRACTING OFFICER RECOMMENDED TO THE CORPORATION THAT IT PERFORM THE CONTRACT IN ACCORDANCE WITH ITS TERMS; THAT THEREAFTER IT COULD FILE A CLAIM WITH THE GENERAL ACCOUNTING OFFICE FOR THE LOSS SUFFERED IN THE PERFORMANCE OF THE CONTRACT; AND THAT FAILURE TO PERFORM THE CONTRACT MIGHT RESULT IN TERMINATION FOR DEFAULT IN ACCORDANCE WITH ARTICLE 11 OF THE CONTRACT.

IN THE REFERRED TO LETTER OF SEPTEMBER 8, 1951, THE COMPANY REITERATED THE STATEMENTS MADE IN ITS LETTER OF AUGUST 27 TO THE CONTRACTING OFFICE AND REQUESTED, IN VIEW OF THE GREAT DIFFERENCE BETWEEN THE CONTRACT PRICE AND ITS ESTIMATED COST TO PERFORM THE CONTRACT, THAT IT BE GRANTED SOME RELIEF IN THE MATTER.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER ERRORS WERE MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON NOTICE OF ERROR PRIOR TO THE ACCEPTANCE OF THE BID. THE ABSTRACT OF BIDS SHOWS THAT THE FIVE NEXT LOWEST BIDS RECEIVED ON ITEM 7 WERE IN THE AMOUNTS OF $0.00456, $0.00475, $0.00496, $0.005, AND $0.0053 EACH. THE DIFFERENCE BETWEEN THE BID OF KOOL VENT METAL AWNING COMPANY ON ITEM 7 OF $0.0038 EACH AND THE OTHER BIDS THEREON IS NOT SO GREAT AS TO WARRANT THE CONCLUSION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR. THUS, THERE APPEARS TO HAVE BEEN NOTHING ON THE FACE OF THE BID, OR IN THE ATTENDANT CIRCUMSTANCES, TO INDICATE TO THE CONTRACTING OFFICER THE PROBABILITY OF ERROR. SO FAR AS THE PRESENT RECORD SHOWS THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO.

MOREOVER, THE INVITATION WAS CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT AS TO THE TYPE OF WASHERS DESIRED. 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. ANY ERRORS IN THE BID WERE IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THEREFORE, SUCH ERRORS AS WERE MADE IN THE BID WERE UNILATERAL - NOT MUTUAL - AND DO NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE SALIGMAN ET AL. V. UNITED STATES, 56 F. SUPP. 505, 507; AND OGDEN & DOUGHERTY V. UNITED STATES, 102 C. CLS. 249, 259. ALSO, SEE STEINMEYER ET AL. V. SCHROEPPEL, 226 ILL. 9, 80 N.E. 564.

ALTHOUGH THERE IS CONSIDERABLE DIFFERENCE BETWEEN THE CONTRACT PRICE OF $2,660 AND THE AMOUNT OF $8,308 WHICH THE CONTRACTOR ALLEGES IT WILL COST IT TO PERFORM, SUCH ALLEGED COST IS FAR IN EXCESS OF THE FIVE NEXT LOWEST TOTAL BIDS OF $3,192, $3,325, $3,472, $3,500 AND $3,710. IN THAT CONNECTION THE RECORD INDICATES THAT THE CONTRACTOR HAS BEEN OR WILL BE AUTHORIZED TO SUBCONTRACT THE WORK AND HAS BEEN OR WILL BE GIVEN THE NAMES OF COMPANIES WHICH ARE EQUIPPED TO MANUFACTURE THE WASHERS.

ACCORDINGLY, I FIND NO LEGAL BASIS FOR RELIEVING KOOL VENT METAL AWNING CORPORATION FROM LIABILITY FOR FURNISHING THE WASHERS AT THE PRICE SPECIFIED IN THE CONTRACT.