B-111982, DEC 3, 1952

B-111982: Dec 3, 1952

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PRECIS-UNAVAILABLE THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED NOVEMBER 6. FOR RELIEF ON ACCOUNT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. DA-36-034-ORD-848(G) WAS BASED. THE RECORD SHOWS THAT THE TWO OTHER BIDS RECEIVED ON ITEM 1 WERE IN THE AMOUNTS OF $210 AND $250 EACH AND THAT THE THREE OTHER BIDS RECEIVED ON ITEM 2 WERE IN THE AMOUNTS OF $3. THE COMPANY WAS REQUESTED BY TELEPHONE. THE BID OF DANCO TOOL & MOLD COMPANY ON BOTH ITEMS WAS ACCEPTED ON MARCH 19. IT APPEARS THAT AFTER PERFORMANCE OF THE CONTRACT THE CONTRACTOR REQUESTED THE PHILADELPHIA ORDNANCE DISTRICT FOR RELIEF IN VIEW OF THE ERRORS ALLEGED TO HAVE BEEN MADE IN ITS BID AND THAT SUCH REQUEST WAS DENIED.

B-111982, DEC 3, 1952

PRECIS-UNAVAILABLE

THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 6, 1952, FROM THE OFFICE OF THE CHIEF OF FINANCE, FILE REFERENCE FINEY 167/48700 DANCO TOOL & MOLD COMPANY, FORWARDING THE REPORT REQUESTED BY THIS OFFICE WITH RESPECT TO THE REQUEST OF DANCO TOOL & MOLD COMPANY, CLIFTON HEIGHTS, PENNSYLVANIA, FOR RELIEF ON ACCOUNT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. DA-36-034-ORD-848(G) WAS BASED.

THE PHILADELPHIA ORDNANCE DISTRICT ON FEBRUARY 29, 1952, UNDER AUTHORITY OF SECTION 2(C)(1) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, REQUESTED PROPOSALS TO BE SUBMITTED ON OR BEFORE MARCH 8, 1952, FOR FURNISHING TWO CONCENTRICITY ASSEMBLY GAGES (ITEM 1), AND THREE INDICATOR ASSEMBLY GAGES (ITEM 2), IN ACCORDANCE WITH CERTAIN DRAWINGS. IN RESPONSE THERETO, DANCO TOOL & MOLD COMPANY SUBMITTED A BID DATED MARCH 8, 1952, OFFERING TO FURNISH ITEM 1 FOR $185 EACH AND ITEM 2 FOR $1,665 EACH, LESS A DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN TEN CALENDAR DAYS AND PROVIDING FOR DELIVERY OF THE GAGES WITHIN EIGHT WEEKS AFTER RECEIPT OF NOTICE OF AWARD.

THE RECORD SHOWS THAT THE TWO OTHER BIDS RECEIVED ON ITEM 1 WERE IN THE AMOUNTS OF $210 AND $250 EACH AND THAT THE THREE OTHER BIDS RECEIVED ON ITEM 2 WERE IN THE AMOUNTS OF $3,600, $4,050 AND $5,640 EACH. IN VIEW OF THE DIFFERENCE BETWEEN THE AMOUNT OF THE BID OF DANCO TOOL & MOLD COMPANY, AND THE OTHER BIDS, THE COMPANY WAS REQUESTED BY TELEPHONE, ON MARCH 18, TO CONFIRM ITS UNIT PRICE AND DELIVERY, AND BY TELEGRAM OF THE SAME DATE THE COMPANY CONFIRMED ITS BID. THE BID OF DANCO TOOL & MOLD COMPANY ON BOTH ITEMS WAS ACCEPTED ON MARCH 19, 1952, CONSUMMATING CONTRACT NO. DA-36 -034-ORD-848(G).

IT APPEARS THAT AFTER PERFORMANCE OF THE CONTRACT THE CONTRACTOR REQUESTED THE PHILADELPHIA ORDNANCE DISTRICT FOR RELIEF IN VIEW OF THE ERRORS ALLEGED TO HAVE BEEN MADE IN ITS BID AND THAT SUCH REQUEST WAS DENIED. BY LETTER DATED SEPTEMBER 16, 1952, TO THIS OFFICE, THE CONTRACTOR REQUESTED THAT IT BE GRANTED RELIEF ON THE BASIS THAT IN COMPUTING ITS BID OF $4,995 FOR THE THREE GAGES COVERED BY ITEM 2 IT INADVERTENTLY UNDERESTIMATED THE SIZE OF THE JOB, COST OF MATERIALS, LABOR TIME INVOLVED AND SCRAPING AND FITTING PROCESSES; THAT ITS ACTUAL COST OF MANUFACTURING THE THREE GAGES WAS $6,132.56 WITHOUT INCLUDING ANY AMOUNT FOR FACTORY OVERHEAD, ADMINISTRATION AND OVERTIME PAY; THAT WHEN IT WAS REQUESTED TO CONFIRM ITS BID NO WARNING WAS GIVEN THAT ITS QUOTATION WAS TOO LOW; AND THAT ITS PRICE OF $4,995 IS ENTIRELY OUT OF LINE WITH THE NEXT LOWEST BID OF $10,800 FOR THE THREE GAGES.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER AN ERROR WAS MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. WHILE THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE AMOUNT OF $4,995 QUOTED BY THE CONTRACTOR AND $10,800, THE AMOUNT OF THE NEXT LOWEST BID RECEIVED FOR THE THREE GAGES, THE REQUISITION RECEIVED BY THE CONTRACTING OFFICER FROM THE FRANKFORD ARSENAL GAGE DEPARTMENT SHOWED AN ESTIMATE OF $5,200 AS THE COST OF THE THREE GAGES. THUS, THE AMOUNT QUOTED BY THE CONTRACTOR WAS APPROXIMATELY THE SAME AS THE GOVERNMENT'S ESTIMATE. HOWEVER, IN VIEW OF THE DIFFERENCE BETWEEN THE BIDS RECEIVED THE CONTRACTOR WAS REQUESTED TO VERIFY ITS BID AND IT DID SO. UNDER THE CIRCUMSTANCES IT DOES NOT APPEAR THAT THE CONTRACTING OFFICER WAS, OR SHOULD HAVE BEEN, ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. THE PRESENT RECORD INDICATES THAT THE BID WAS ACCEPTED 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. 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 RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE PROPOSAL WAS UPON THE BIDDER. SEE IN THIS CONNECTION THE CASE OF FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C. CLS. 120, 163, WHEREIN THE COURT SAID:

"*** THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS."

IF, AS ALLEGED, DANCO TOOL & MOLD COMPANY MADE ERRORS IN ITS BID IN UNDERESTIMATING THE SIZE OF THE JOB AND CERTAIN ITEMS OF COST, IT IS CLEAR THAT SUCH ERRORS WERE DUE SOLELY TO ITS OWN NEGLIGENCE AND OVERSIGHT AND WERE IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SUCH ERRORS AS MAY HAVE BEEN MADE IN THE BID WERE UNILATERAL - NOT MUTUAL - AND THEREFORE DO NOT ENTITLE THE COMPANY TO RELIEF. SEE OGDEN & DOUGHERTY V. UNITED STATES, 102 C. CLS. 249, SALIGMAN, ET AL. V. UNITED STATES, 56 F. SUPP. 505, 507.

ACCORDINGLY, I FIND NO LEGAL BASIS FOR THE PAYMENT OF ANY AMOUNT IN EXCESS OF THAT SPECIFIED IN CONTRACT NO. DA-36-034-ORD-848(G).