B-127098, MAR. 16, 1956

B-127098: Mar 16, 1956

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TO KESSLER INTERNATIONAL CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 13. YOU WERE AWARDED A CONTRACT IN THE TOTAL AMOUNT OF $105. BEFORE PAYMENT WAS MADE. YOU ALLEGED AN ERROR IN THAT THE UNIT PRICES OF ?286 AND ?303 SHOULD HAVE BEEN ?52 AND ?57. BECAUSE YOUR SUPPLIER FROM WHOM THE MATERIAL WAS PROCURED QUOTED LIST PRICES ON SOME ITEMS AND NET PRICES ONLY ON THE ITEMS IN QUESTION. IT WAS NOT UNTIL YOU RECEIVED YOUR SUPPLIER'S INVOICE OF APRIL 22. YOUR CLAIM WAS DISALLOWED IN THE SETTLEMENT FOR THE REASON THAT THE MISTAKE WAS NOT MUTUAL OR SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER WAS ON NOTICE OF THE ERROR AND SOUGHT TO TAKE ADVANTAGE OF IT. THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS ISSUED BY THE GOVERNMENT IS UPON THE BIDDER.

B-127098, MAR. 16, 1956

TO KESSLER INTERNATIONAL CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 13, 1956, WITH ENCLOSURES, REQUESTING REVIEW OF SETTLEMENT DATED JANUARY 23, 1956, WHICH DISALLOWED YOUR CLAIM FOR $149.60 STATED TO BE DUE BY REASON OF AN ERROR IN YOUR BID UNDER CONTRACT NO. CPR 11-3477 WITH THE BUREAU OF ROADS, DEPARTMENT OF COMMERCE.

IN RESPONSE TO THE PERTINENT INVITATION, REQUESTING BIDS FOR FURNISHING NUMEROUS SERVICE PARTS FOR DODGE AND CHRYSLER EQUIPMENT, YOU OFFERED, AMONG OTHERS, TO FURNISH ITEMS NOS. 714 AND 1225 AT UNIT PRICES OF ?286 AND ?313, RESPECTIVELY, OR IN THE TOTAL AMOUNTS OF $57.20 AND $125.20. YOU WERE AWARDED A CONTRACT IN THE TOTAL AMOUNT OF $105,211.51, WHICH INCLUDED THE TWO ITEMS MENTIONED. AFTER DELIVERY OF ITEMS NOS. 714 AND 1225 YOU RENDERED YOUR INVOICE NO. K0982, DATED MAY 2, 1955, IN WHICH YOU BILLED THE GOVERNMENT FOR THOSE ITEMS AT THE CONTRACT PRICES OF $57.20 AND $125.20. HOWEVER, BEFORE PAYMENT WAS MADE, OR ON JUNE 15, 1955, YOU ALLEGED AN ERROR IN THAT THE UNIT PRICES OF ?286 AND ?303 SHOULD HAVE BEEN ?52 AND ?57, RESPECTIVELY, BECAUSE YOUR SUPPLIER FROM WHOM THE MATERIAL WAS PROCURED QUOTED LIST PRICES ON SOME ITEMS AND NET PRICES ONLY ON THE ITEMS IN QUESTION. APPARENTLY, IT WAS NOT UNTIL YOU RECEIVED YOUR SUPPLIER'S INVOICE OF APRIL 22, 1955, THAT YOU REALIZED THAT YOU HAD PREPARED YOUR BID REFLECTING THE DEALER'S DISCOUNT OFFERED YOU ON SOME OF THE ITEMS TO INCLUDE ALL ITEMS UNDER THE INVITATION. YOUR CLAIM WAS DISALLOWED IN THE SETTLEMENT FOR THE REASON THAT THE MISTAKE WAS NOT MUTUAL OR SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER WAS ON NOTICE OF THE ERROR AND SOUGHT TO TAKE ADVANTAGE OF IT.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS ISSUED BY THE GOVERNMENT IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. THE BID SUBMITTED BY YOUR FIRM WAS REGULAR ON ITS FACE AND THERE APPEARS NOTHING TO INDICATE THAT THE BID PRICES OFFERED ON THE TWO ITEMS IN QUESTION WERE NOT SO INTENDED. IN FACT, THE CONTRACTING OFFICER HAS REPORTED THAT AT THE TIME YOUR QUOTATIONS WERE ACCEPTED HE DID NOT NOTICE ANY ERROR IN YOUR BID AND HE ACCEPTED THE BID IN GOOD FAITH. OBVIOUSLY, THE CONTRACTING OFFICER WAS IN NO POSITION TO KNOW THAT YOU INADVERTENTLY EXTENDED THE DISCOUNT TO THE NET PRICES YOUR SUPPLIER OFFERED YOU. HOWEVER, THE CONTRACTING OFFICER WAS ON NOTICE THAT THE CHRYSLER CORPORATION WAS THE MANUFACTURER OF THE ITEMS IN QUESTION AND HE HAD KNOWLEDGE OF THE LIBERAL DISCOUNT OFFERED ITS DEALERS, SUCH AS EXTENDED TO YOUR SUPPLIER IN THIS INSTANCE. YOU, LIKEWISE UNDERSTOOD THE CONTRACTING OFFICER'S POSITION IN THE MATTER SINCE YOU STATED IN LETTER OF FEBRUARY 25, 1955, TO THE ADMINISTRATIVE OFFICE THAT "WE UNDERSTAND, AS YOU DO, THAT THE MANUFACTURER OF THIS EQUIPMENT EXTENDS VERY FAVORABLE PRICES FOR REPLACEMENT PARTS IN ORDER TO ENCOURAGE THE INCREASED USE OF HIS EQUIPMENT IN THE FIELD.' WHILE YOU SECURED THE ITEMS FROM ANOTHER DEALER TO WHOM THE DISCOUNT PRIVILEGE WAS EXTENDED, THE ONLY OTHER BIDS RECEIVED ON THE ITEMS IN QUESTION WERE OFFERED BY THE PRIME MANUFACTURER. NATURALLY, IT WAS THE CONTRACTING OFFICER'S DUTY AND RESPONSIBILITY TO SELECT YOUR LOW BID AND WHILE THERE IS SOME VARIANCE BETWEEN YOUR BID AND THE ONLY OTHER BID RECEIVED ON THE ITEMS, THAT OFFICIAL'S DUTY OR RESPONSIBILITY, IN THE CIRCUMSTANCES HERE, WOULD NOT EXTEND ANY MORE TO ASCERTAINING WHETHER THE LOW BID WAS TOO LOW THAN TO DETERMINE WHETHER THE HIGH BID WAS TOO HIGH.

WITH YOUR REQUEST FOR REVIEW, IN ADDITION TO SUBMITTING A COPY OF YOUR DEALER'S QUOTATION AS EVIDENCE OF YOUR INTENDED BID PRICES, YOU INDICATE YOU WERE ASSURED THAT THE ADMINISTRATIVE RECOMMENDATION TO OUR OFFICE "WOULD BE THAT THE CLAIM BE HONORED" AND PAYMENT AUTHORIZED, SINCE SIMILAR RECOMMENDATIONS ARE NORMALLY FOLLOWED. YOU EXPRESS THE OPINION THAT WHERE CORRECTION OF CLERICAL ERRORS RESULTING FROM MUTUAL MISTAKE AS TO PRICE DOES NOT AFFECT THE PLACEMENT OF THE ORDER (SUGGESTING THE BID IF CORRECTED REMAINS THE LOW BID) SUCH CASES SHOULD BE EQUITABLY SETTLED. WHILE IT IS THE ESTABLISHED PRACTICE OF OUR OFFICE TO REQUIRE A COMPLETE REPORT OF THE PERTINENT FACTS AND CIRCUMSTANCES, INCLUDING AN ADMINISTRATIVE RECOMMENDATION AS TO THE DISPOSITION THEREOF, THESE CASES ARE REVIEWED AND SETTLED ON THE BASIS OF THE REPORTED FACTS AND THE LAW APPLICABLE THERETO.

IN ADDITION TO THE HOLDING IN THE FRAZIER-DAVIS CONSTRUCTION COMPANY CASE CITED ABOVE, IT IS SETTLED THAT THE ACCEPTANCE IN GOOD FAITH OF A BIDDER'S PROPOSAL CONSUMMATES A VALID AND BINDING CONTRACT, WHICH FIXES THE RIGHTS AND LIABILITIES OF THE PARTIES. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. IT IS ALSO A FUNDAMENTAL PRINCIPLE OF LAW THAT BEFORE A BIDDER CAN BE RELIEVED FROM THE CONSEQUENCES OF AN ERRONEOUS BID, IT MUST BE SHOWN THAT THE OFFEREE--- THE GOVERNMENT PROCUREMENT OFFICER--- HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR AT THE TIME OF THE AWARD. AMERICAN WATER SOFTENER COMPANY V. UNITED STATES, 50 C.CLS. 209; ELLICOTT MACHINE COMPANY V. UNITED STATES, 44 C.CLS. 127. IF THE OFFEREE DOES NOT HAVE ACTUAL NOTICE OF ERROR, OR DOES NOT HAVE ANY SOUND REASON TO SUSPECT THE CORRECTNESS OF THE BIDDER'S PROPOSAL, HIS ACCEPTANCE OF SUCH OFFER RESULTS IN A VALID AND BINDING CONTRACT DEFINITELY FIXING THE RIGHTS AND OBLIGATIONS OF THE PARTIES AND WHICH CANNOT THEREAFTER BE MODIFIED TO THE PREJUDICE OF ONE OF THE PARTIES WITHOUT ADEQUATE CONSIDERATION. OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259.

ACCORDINGLY, ON THE BASIS OF THE REPORTED FACTS AND THE LAW APPLICABLE THERETO, THE SETTLEMENT OF JANUARY 23, 1956, IS SUSTAINED.