B-128027, JUN. 4, 1956

B-128027, JUN. 4, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED MAY 21, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), RELATIVE TO AN ALLEGED ERROR IN A BID DATED MARCH 18, 1955, SUBMITTED BY ART METAL CONSTRUCTION COMPANY, INC., ON WHICH CONTRACT NO. DAI-36-038-507-ORD-P-1034 DATED MAY 12, 1955, WAS BASED. YOU REQUEST A DECISION AS TO WHETHER, IN VIEW OF THE ALLEGATION OF ERROR, THE CONTRACT PRICE MAY BE INCREASED FROM $1,679.86 TO $3,359.72 FOR THE TWO CASES OR WHETHER, IN THE ALTERNATIVE, THE CONTRACT MAY BE CANCELLED.

IT IS REPORTED THAT IN FEBRUARY 1955, THE ARSENAL, BELIEVING THAT ITEM NO. 1, COVERING TWO MAP CASES, ART METAL, OR EQUAL, AS SPECIFIED, COULD BE ACQUIRED FOR A PRICE NOT IN EXCESS OF $1,000, ATTEMPTED TO NEGOTIATE A CONTRACT AND, FOR THAT PURPOSE,SOLICITED AND RECEIVED A QUOTATION FROM THE CORPORATION. IT IS FURTHER REPORTED THAT SINCE BY CORPORATION'S ORAL QUOTATION RECEIVED AT THAT TIME EXCEEDED $1,000 BY A SUBSTANTIAL AMOUNT, PROCUREMENT BY FORMAL ADVERTISING WAS UNDERTAKEN. ALTHOUGH THE INVITATION FOR BIDS TO BE OPENED APRIL 15, 1955, WAS ISSUED ON MARCH 18 AND SENT TO THIRTEEN SOURCES OF SUPPLY, THE CORPORATION'S BID OF $839.93 PER CASE, A TOTAL OF $1,679.86, WAS THE ONLY BID RECEIVED. AFTER FIRST RECEIVING A VERIFICATION OF THE AUTHORITY OF THE MANAGER OF THE CORPORATION'S PHILADELPHIA BRANCH OFFICE TO SUBMIT ITS BID, AND A FAVORABLE REPORT OF A PRE-AWARD SURVEY OF THE CORPORATION'S PLANT, THE CONTRACTING OFFICER ACCEPTED THE BID ON MAY 12, 1955. TWO MONTHS LATER THE CONTRACTOR, BY LETTER DATED JULY 11, 1955, CONFIRMING A PRIOR TELEPHONE CONVERSATION OF THE SAME DAY, ADVISED THAT IT HAD MADE AN ERROR IN ITS BID AND THAT THE PRICE SHOULD HAVE BEEN $1,679.86 PER CASE, OR A TOTAL OF $3,360.10, INSTEAD OF THE TOTAL OF $1,679.86 FOR THE TWO CASES AS SUBMITTED. IN THIS LETTER IT EXPLAINED HOW THE ERROR OCCURRED, AS FOLLOWS:

"ORIGINALLY, WE REQUESTED FROM OUR FACTORY THE PRICE ON TWO PIGEON HOL/D) MAP CASES AND WHEN THE FACTORY FURNISHED US A PRICE, WE ASSUMED THAT IT COVERED TWO SUCH CASES AS WE REQUESTED. ONLY UNTIL TODAY DID WE LEARN THAT THE PRICE THEY GAVE US COVERED ONLY ONE SUCH CASE AND WE SHOULD HAVE DOUBLED THAT FIGURE BEFORE SENDING A QUOTATION TO YOU TO COVER TWO PIGEON HOLE MAP CASES.'

THE INITIAL ERROR WAS MADE BY THE PHILADELPHIA OFFICE AS EXPLAINED ABOVE IN SUBMITTING, BY TELEPHONE, THE ORAL QUOTATION TO THE ARSENAL IN FEBRUARY 1955. WHEN THE INVITATION FOR A FORMAL BID WAS RECEIVED IN MARCH 1955, THE SECOND ERROR WAS MADE IN SUBMITTING AS ITS FORMAL BID THE QUOTATION IT HAD PREVIOUSLY RECEIVED IN FEBRUARY FROM THE FACTORY, STILL BEING UNDER THE FALSE IMPRESSION THAT THE QUOTATION COVERED THE TWO CASES.

IN SUPPORT OF ITS ALLEGATION OF ERROR THE CONTRACTOR FURNISHED PHOTOSTATIC COPIES OF THE FACTORY'S WORKSHEET AND TELEGRAM, BOTH DATED FEBRUARY 22, 1955, AND INDICATING THAT THE CORRECT AND INTENDED PRICE PER CASE WAS $1,604.10 NET F.O.B. FACTORY.

THE BASIC QUESTION FOR DETERMINATION IN THIS CASE IS NOT WHETHER THE CONTRACTOR MADE AN ERROR IN ITS BID, BUT WHETHER A VALID AND BINDING CONTRACT RESULTED FROM THE ACCEPTANCE THEREOF. IN HIS REPORT DATED DECEMBER 13, 1955, TO THE CHIEF OF ORDNANCE, THE CONTRACTING OFFICER STATES IN SUBSTANCE THAT HE HAD NO REASON TO SUSPECT ANY ERROR IN THE CONTRACTOR'S BID; THAT SINCE THERE WAS ONLY ONE BID RECEIVED A COMPARISON OF BIDS WAS IMPOSSIBLE; THAT THE ARSENAL HAD NO APPLICABLE PRICE LIST OR HISTORICAL PRICE DATA; AND THAT INASMUCH AS THE SUPPLIES BEING PROCURED CONSTITUTED A PROPRIETARY ITEM OF THE BIDDER, HE ASSUMED THAT THE BID PRICE WAS CORRECT AND AS INTENDED, SINCE IT WAS THE SAME PRICE THAT HAD BEEN QUOTED ORALLY FOR THE IDENTICAL ITEM, APPROXIMATELY A MONTH EARLIER, BY THE SAME BIDDER. IN THIS CONNECTION IT IS ALSO NOTED THAT PRIOR TO THE RECEIPT OF THE CONTRACTOR'S ORAL QUOTATION IN FEBRUARY 1955, THE CONTRACTING OFFICER, AS HEREINABOVE INDICATED, WAS OF THE BELIEF THAT THE APPLICABLE PURCHASE PRICE OF THE TWO CASES WOULD NOT EXCEED $1,000. HENCE IT IS REASONABLE TO ASSUME THAT HE WOULD HAVE NO REASON TO BELIEVE THAT THE CONTRACTOR'S BID OF $1,679.86 FOR THE TWO WAS NOT AS INTENDED. THESE CIRCUMSTANCES, AND SINCE THE MANAGER OF THE PHILADELPHIA BRANCH OFFICE, WHO SUBMITTED THE BID AS THE CONTRACTOR'S AUTHORIZED AGENT, ALSO BELIEVED THE PRICE QUOTED WAS CORRECT, OUR OFFICE WOULD NOT BE JUSTIFIED IN FINDING THAT THE CONTRACTING OFFICER SHOULD BE CHARGED WITH CONSTRUCTIVE NOTICE OF ERROR IN THE CONTRACTOR'S BID.

BOTH THE INVITATION AND THE BID RECEIVED IN RESPONSE THERETO WERE CLEAR AND UNAMBIGUOUS. THE RESPONSIBILITY FOR THE PREPARATION AND SUBMISSION OF A BID IS, OF COURSE, THAT OF THE BIDDER, AND A MISTAKE IN BID, TO BE AVAILABLE IN RELIEVING HIM FROM A BID ACCEPTED WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR, MUST NOT HAVE ARISEN FROM NEGLIGENCE OR A FAILURE TO EXERCISE THAT DEGREE OF DILIGENCE WHICH FAIRLY MAY BE EXPECTED FROM A REASONABLE PERSON. SEE GRYMES V. SANDERS, ET AL., 93 U.S. 55, 61; 20 COMP. GEN. 652.

THE ALLEGATION OF ERROR IN THIS CASE WAS NOT RECEIVED UNTIL TWO MONTHS AFTER THE BID HAD BEEN ACCEPTED IN GOOD FAITH. THE ACCEPTANCE OF THE CONTRACTOR'S BID, UNDER THE CIRCUMSTANCES HERE INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. SINCE THE ERROR, AS ALLEGED BY THE CONTRACTOR, WAS DUE SOLELY TO ITS OWN LACK OF DUE CARE AND WAS NOT INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT, SUCH ERROR WAS UNILATERAL, NOT MUTUAL, AND THEREFORE DOES NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 259; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

ACCORDINGLY, THE GOVERNMENT IS LEGALLY ENTITLED TO DEMAND AND RECEIVE DELIVERY OF THE TWO MAP CASES AT THE PRICE SPECIFIED IN THE CONTRACT. HOWEVER, THE CONTRACTING OFFICER IN HIS 4TH INDORSEMENT DATED APRIL 20, 1956, ADVISED THE CHIEF OF ORDNANCE AS FOLLOWS:

"A. NO DELIVERY OR PAYMENT HAS BEEN EFFECTED UNDER THE CONTRACT.

"B. A REQUIREMENT STILL EXISTS FOR A QUANTITY OF ONE (1) OF THE TWO (2) UNITS ORIGINALLY ORDERED.'

IN VIEW THEREOF, IF IT BE ADMINISTRATIVELY DETERMINED THAT THE NEED NO LONGER EXISTS FOR TWO CASES AND THAT IT WOULD BE IN THE INTEREST OF THE GOVERNMENT TO PURCHASE ONLY ONE CASE AT THIS TIME, OUR OFFICE WILL INTERPOSE NO OBJECTION TO AN AMENDMENT TO THE CONTRACT, BY MUTUAL AGREEMENT OF THE PARTIES, TO PROVIDE FOR THE FURNISHING OF ONE CASE AT THE CONTRACT PRICE OF $839.93, INSTEAD OF TWO CASES FOR $1,679.86, AS THEREIN NOW PROVIDED.

IN THE EVENT THE CONTRACT IS MODIFIED, HOWEVER, A REFERENCE TO THIS DECISION SHOULD BE MADE ON ..END :