B-126359, JAN. 19, 1956

B-126359: Jan 19, 1956

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TO THE HONORABLE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED DECEMBER 13. DA-41-404-AIV-157 IS BASED. PROSPECTIVE BIDDERS WERE ADVISED IN THE INVITATION THAT THE GOVERNMENT WOULD FURNISH THE TELEVOICE EQUIPMENT AND THAT THE CONTRACTOR WOULD BE REQUIRED. THE THREE OTHER BIDS WERE IN THE AMOUNT OF $5. THE GOVERNMENT ESTIMATE WAS $2. AS FOLLOWS: "WE HAVE FILLED IN THE BACK OF OUR BID AS REQUESTED IN YOUR LETTER OF JUNE 8. THIS LETTER WILL CONFIRM OUR TELEPHONE CONVERSATION OF THIS MORNING AND ALSO THE VERIFICATION OF OUR BID OF $1950.00. WE BELIEVE THE INSTALLATION PRICE OF $1950.00 WILL COVER YOUR REQUIREMENTS FOR THE GENERAL HOSPITAL AND HOSPITAL ANNEX AT FORT SILL. WE WILL HAVE TO EMPLOY A LICENSED ELECTRICIAN TO INSTALL THE ELECTRICAL WIRING UNDER OUR SUPERVISION.

B-126359, JAN. 19, 1956

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED DECEMBER 13, 1955, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO AN ERROR THE EDIPHONE COMPANY, OKLAHOMA CITY, OKLAHOMA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-41-404-AIV-157 IS BASED.

BY INVITATION NO. S41-404-55-8, THE SIGNAL SECTION, AKASI-8, HEADQUARTERS FOURTH ARMY, FORT SAM HOUSTON, TEXAS, REQUESTED BIDS---TO BE OPENED ON JUNE 8, 1955--- FOR FURNISHING THE MATERIAL AND LABOR REQUIRED FOR THE INSTALLATION OF A 24-STATION REMOTE CONTROLLED DICTATION SYSTEM IN THE STATION HOSPITAL AT FORT SILL, OKLAHOMA, IN ACCORDANCE WITH CERTAIN DRAWINGS AND SPECIFICATIONS ACCOMPANYING THE INVITATION. PROSPECTIVE BIDDERS WERE ADVISED IN THE INVITATION THAT THE GOVERNMENT WOULD FURNISH THE TELEVOICE EQUIPMENT AND THAT THE CONTRACTOR WOULD BE REQUIRED, AMONG OTHER THINGS, TO PROVIDE AND PLACE INSIDE WIRING CABLE, TERMINALS AND METALLIC RACEWAY. IN RESPONSE, THE EDIPHONE COMPANY SUBMITTED A BID DATED JUNE 3, 1955, OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $1,950. THE THREE OTHER BIDS WERE IN THE AMOUNT OF $5,200, $5,298.30, AND $7,000, AND THE GOVERNMENT ESTIMATE WAS $2,500.

UPON BEING REQUESTED TO VERIFY ITS BID, THE EDIPHONE COMPANY ADVISED BY LETTER DATED JUNE 9, 1955, AS FOLLOWS:

"WE HAVE FILLED IN THE BACK OF OUR BID AS REQUESTED IN YOUR LETTER OF JUNE 8. THIS LETTER WILL CONFIRM OUR TELEPHONE CONVERSATION OF THIS MORNING AND ALSO THE VERIFICATION OF OUR BID OF $1950.00.

"HAVING MADE THE ORIGINAL SURVEY FOR THE TELEVOICE INSTALLATION AT FORT SILL AND HAVING INSTALLED SEVERAL COMPLETE TELEVOICEWRITER INSTALLATIONS, WE BELIEVE THE INSTALLATION PRICE OF $1950.00 WILL COVER YOUR REQUIREMENTS FOR THE GENERAL HOSPITAL AND HOSPITAL ANNEX AT FORT SILL.

"AS STATED OVER THE TELEPHONE, WE WILL HAVE TO EMPLOY A LICENSED ELECTRICIAN TO INSTALL THE ELECTRICAL WIRING UNDER OUR SUPERVISION.

"UPON COMPLETION OF THE INSTALLATION, THE HOSPITAL STAFF WILL BE COMPLETELY FAMILIARIZED WITH THE NEW TELEVOICEWRITER SYSTEM.'

THE BID OF THE COMPANY WAS ACCEPTED ON JUNE 10, 1955.

IN A LETTER DATED JULY 25, 1955, THE EDIPHONE COMPANY STATED THAT WHEN IT PREPARED ITS BID, IT HAD NO IDEA THAT THE WORK HAD TO BE PERFORMED IN STRICT ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS AND DRAWINGS; THAT IN ALL OF THE INSTALLATIONS OF TELEVOICE EQUIPMENT, IT HAD NEVER USED METALLIC RACEWAY (WIRE MOLD) TO ENCLOSE THE CABLES, AS REQUIRED BY THE SUBJECT SPECIFICATIONS; THAT ITS BID PRICE OF $1,950 WAS BASED ON AN ESTIMATE PREPARED FOR A CIVILIAN INSTALLATION, IN WHICH IT USED CLEATS TO FASTEN THE CABLES TO THE WALLS OR THE CEILING; AND THAT BECAUSE IT HAS HAD TO DRILL THROUGH 24 INCH THICK GRANITE WALLS, ADDITIONAL EXPENSES HAD BEEN INCURRED WHICH, IT STATED, HAD NOT BEEN PROVIDED FOR IN ITS BID PRICE. LETTERS DATED OCTOBER 10 AND 11, 1955, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE PROJECT BE INCREASED TO $4,500 TO COVER THE COST OF THE METALLIC RACEWAY AND THE ADDITIONAL EXPENSES INCURRED BY THE COMPANY BY REASON OF DRILLING THROUGH 24 INCH GRANITE WALLS. IT IS NOT CONTENDED THAT THE WORK DONE WAS NOT CLEARLY SET FORTH IN THE SPECIFICATIONS AND DRAWINGS ON WHICH THE BID WAS BASED, OR THAT THE BID AS SUBMITTED WAS NOT EXACTLY WHAT THE BIDDER INTENDED.

IN THE CIRCUMSTANCES THE ONLY QUESTION FOR CONSIDERATION IS WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ACCEPTANCE OF THE BID. THE INVITATION TO BID WAS CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT AS TO THE WORK REQUIRED. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SUCH RESPONSIBILITY INCLUDED ASCERTAINING, PRIOR TO BIDDING, THE CONTINGENCIES INVOLVED IN ACCOMPLISHING THE WORK. IN THIS CONNECTION SEE THE CASE OF FRAZIER-DAVIS CONSTRUCTION CO. 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 CAN NOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

IF, AS ALLEGED, THE COMPANY UNDERESTIMATED THE COST OF PERFORMING THE WORK IN FAILING TO TAKE INTO CONSIDERATION THE RISK INVOLVED, IT IS CLEAR THAT SUCH ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SEE GRYMES V. SANDERS ET AL., 93 U.S. 55, 61. UNLESS THE CONTRACTING OFFICER WAS ON NOTICE OF FACTS INDICATING ERROR, SUCH ERROR AS MAY HAVE BEEN MADE IN THE BID WAS UNILATERAL--- NOT MUTUAL--- AND THEREFORE, AFFORDS NO BASIS FOR GRANTING RELIEF TO THE COMPANY. SEE SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507, AND OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249. HERE THE AMOUNT OF THE BID AS COMPARED WITH OTHERS DID SUGGEST A POSSIBILITY OF ERROR AND THE CONTRACTING OFFICER PROPERLY REQUESTED VERIFICATION. HOWEVER, THE EDIPHONE COMPANY NOT ONLY VERIFIED ITS BID PRICE BUT AT THAT TIME APPEARED SATISFIED WITH IT. THIS FACT ALONE SHOWS THAT, WHILE THE CONTRACTOR MAY HAVE UNDERESTIMATED ITS FUTURE COST OF PERFORMANCE, AT THE TIME ITS BID WAS SUBMITTED IT WAS EXACTLY AS INTENDED BY THE BIDDER, AND THE CONTRACTING OFFICER, AFTER VERIFICATION, HAD NO COURSE TO FOLLOW OTHER THAN TO ACCEPT THE BID AS SUBMITTED AND VERIFIED. SEE CARNEGIE STEEL COMPANY V. CONNELLY, 89 N.J.L. 1, 97 A. 774; AND SHRIMPTON MANUFACTURING COMPANY V. BRIN, 125 S.W. 942. IN THE CIRCUMSTANCES, THERE IS NO BASIS FOR HOLDING THAT THE ACCEPTANCE OF THE BID DID NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. ALSO, SEE 18 COMP. GEN. 942; AND 27 ID. 17.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR INCREASING THE CONSIDERATION SPECIFIED IN CONTRACT NO. DA- 41-404-AIV-157.

THE PAPERS, WITH THE EXCEPTION OF CONTRACTING OFFICER'S STATEMENT DATED OCTOBER 27, 1955, ARE RETURNED.