B-127290, APR. 2, 1956

B-127290: Apr 2, 1956

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO LETTER OF MARCH 8. RELATIVE TO AN ERROR ALLEGED TO HAVE BEEN MADE BY LINDE AIR PRODUCTS COMPANY IN ITS CORRECTED QUOTATION DATED NOVEMBER 16. WAS BASED. THE COMPANY WAS REQUESTED TO VERIFY ITS PRICE FOR THE VALVES. THE ABOVE-CITED PURCHASE ORDER WAS ISSUED FOR SIX VALVES AT $28.20 EACH. THE PURCHASE ORDER WAS ACCEPTED AND ACKNOWLEDGED BY LETTER OF JANUARY 28. FOUR OF THE SIX VALVES WERE DELIVERED ON FEBRUARY 21. WERE DELIVERED ON NOVEMBER 1. WOULD HAVE BEEN $191 EACH F.O.B. IT ALLEGED THAT THE VALVES WERE HANDMADE SPECIALLY FOR THE ORDER AND ALTHOUGH ITS INTENDED PRICE WAS $191 EACH. THAT IT WAS WITHOUT AUTHORITY TO MAKE THE PROPOSED ADJUSTMENT IN THE CONTRACT PRICE.

B-127290, APR. 2, 1956

TO THE HONORABLE LEWIS L. STRAUSS, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO LETTER OF MARCH 8, 1956, WITH ENCLOSURES, FROM THE GENERAL MANAGER OF YOUR COMMISSION, FILE FAC:RDH, RELATIVE TO AN ERROR ALLEGED TO HAVE BEEN MADE BY LINDE AIR PRODUCTS COMPANY IN ITS CORRECTED QUOTATION DATED NOVEMBER 16, 1954, ON WHICH UNNUMBERED CONTRACT, PURCHASE ORDER NO. OR55-0806 DATED NOVEMBER 22, 1954, WAS BASED.

THE RECORD SHOWS THAT BECAUSE OF THE DISCREPANCY BETWEEN THE PRICE OF $2.15 PER VALVE QUOTED BY THE COMPANY IN RESPONSE TO REQUEST FOR QUOTATION DATED OCTOBER 7, 1954, AND THE PRICE OF $26.05 IT HAD PREVIOUSLY QUOTED THEREFOR IN ITS LETTER OF SEPTEMBER 7, 1954, THE COMPANY WAS REQUESTED TO VERIFY ITS PRICE FOR THE VALVES. IN RESPONSE TO THIS REQUEST THE COMPANY ADVISED THAT THE PRICE PER VALVE SHOULD BE AS FOLLOWS:

TABLE

"PART NO. 142439 (LEVER HANDLE) $2.15

PART NO. 142686 - - - - - - - 9.30

PART NO. 142687 - - - - - - - 16.75

PLUS $2.00 FOR PACKING ON LAST TWO ITEMS"

UPON RECEIPT OF THE ABOVE CORRECTED BID AND SUBSEQUENT ADVICE THAT IT TOOK ALL THREE PARTS TO MAKE A COMPLETE VALVE, THE ABOVE-CITED PURCHASE ORDER WAS ISSUED FOR SIX VALVES AT $28.20 EACH, OR $169.20 FOR ALL, PLUS $2 FOR PACKING. THE PURCHASE ORDER WAS ACCEPTED AND ACKNOWLEDGED BY LETTER OF JANUARY 28, 1955, AND FOUR OF THE SIX VALVES WERE DELIVERED ON FEBRUARY 21, 1955, AND TWO VALVES, THE BALANCE OF THE ORDER, WERE DELIVERED ON NOVEMBER 1, 1955.

IN A LETTER DATED APRIL 20, 1955, THE CONTRACTOR ADVISED THAT IT HAD MADE AN ERROR DUE TO THE MISPLACEMENT OF A DECIMAL POINT IN THE COMPUTATION OF ITS BID PRICE AND THAT THE BID, IF NOT FOR THE ERROR, WOULD HAVE BEEN $191 EACH F.O.B. ITS FACTORY. BY LETTER OF JULY 11, 1955, IT ALLEGED THAT THE VALVES WERE HANDMADE SPECIALLY FOR THE ORDER AND ALTHOUGH ITS INTENDED PRICE WAS $191 EACH, IT PROPOSED THAT AN ADJUSTED PRICE OF $166 EACH, ITS ACTUAL COST OF MANUFACTURE, BE PAID FOR THE VALVES, AND REQUESTED PERMISSION TO ISSUE AN INVOICE ON THAT BASIS. THE CONTRACTING OFFICER ADVISED BY LETTER OF JULY 15, 1955, THAT IT WAS WITHOUT AUTHORITY TO MAKE THE PROPOSED ADJUSTMENT IN THE CONTRACT PRICE, BUT IN ORDER TO PROCESS THE CLAIM FOR REFERENCE TO HIGHER AUTHORITY, IT WAS SUGGESTED THAT THE COMPANY FURNISH ALL AVAILABLE EVIDENCE TO SUBSTANTIATE ITS ALLEGATIONS OF ERROR, SUCH AS ITS ORIGINAL WORKSHEET, TO SHOW HOW THE ERROR WAS MADE BY MISPLACEMENT OF A DECIMAL POINT, AS ALLEGED, AND TO ESTABLISH THE BASIS FOR ITS REQUESTED PRICE ADJUSTMENT. IN RESPONSE THE COMPANY FORWARDED WITH ITS LETTER OF OCTOBER 28, 1955, ONLY THE PHOTOSTATIC COPIES OF TWO ALLEGEDLY REPRESENTATIVE COST SCHEDULES, EACH FOR TWO VALVES, AND, BY REFERENCE THERETO, IT EXPLAINED ITS METHOD OF ARRIVING AT THE ALLEGED ACTUAL COST OF $166 PER VALVE. A PERCEPTIBLE VARIANCE IN THE COSTS SHOWN ON THE TWO SCHEDULES WAS NOT EXPLAINED NOR WAS THERE ANY MENTION OF ITS FAILURE TO FURNISH THE REQUESTED PROOF THAT AN ERROR WAS MADE AS ALLEGED. THEREFORE, THE CONCLUSION IS WARRANTED THAT THE EVIDENCE FURNISHED IS NEITHER SUFFICIENT NOR CONVINCING AND, CONSEQUENTLY, IT MAY NOT BE ACCEPTED AS ESTABLISHING EITHER THAT AN ERROR WAS MADE, OR THAT A BID PRICE OF $191 PER VALVE WAS INTENDED, AS ALLEGED.

AFTER REQUESTING A VERIFICATION OF THE BID AND RECEIVING THE COMPANY'S CORRECTED QUOTATION IT APPEARS THAT THE CONTRACTING OFFICER WAS ENTITLED TO BELIEVE THAT THE COMPANY INTENDED TO OFFER TO FURNISH THE VALVES AT THE PRICE SO CORRECTED AND, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THE CONTRARY TO BE TRUE, THE CONCLUSION IS WARRANTED THAT THE ACCEPTANCE OF THE COMPANY'S OFFER BY THE ISSUANCE OF THE PURCHASE ORDER WAS IN GOOD FAITH. BY THAT ACCEPTANCE A VALID AND BINDING CONTRACT WAS CONSUMMATED 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.

THE FACTS OF RECORD DISCLOSE NO REASON FOR THE CONTRACTING OFFICER TO SUSPECT THAT THE CORRECTED BID PRICE WAS NOT AS INTENDED. IF THE CONTRACTOR MADE A MISTAKE IN COMPUTING ITS BID, AS FIRST ALLEGED IN ITS LETTER OF APRIL 20, 1955, APPROXIMATELY FIVE MONTHS AFTER THE PURCHASE ORDER WAS ISSUED AND ACCEPTED, THE MISTAKE WAS DUE SOLEY TO ITS OWN LACK OF PROPER CARE AND WAS NOT INDUCED OR CONTRIBUTED TO IN ANY MANNER BY THE GOVERNMENT. SEE GRYMES V. SANDERS, ET AL., 93 U.S. 55, 61. SUCH ERROR AS WAS MADE WAS UNILATERAL, NOT MUTUAL, AND THEREFORE DOES NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507; AND OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259.

ACCORDINGLY, THERE IS NO BASIS FOR RELEASING THE CONTRACTOR FROM ITS OBLIGATION TO FURNISH THE VALVES AT ITS ACCEPTED BID PRICE PURSUANT TO THE TERMS OF THE CONTRACT.