B-130397, FEB. 26, 1957

B-130397: Feb 26, 1957

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MACK LANDIS: FURTHER REFERENCE IS MADE TO YOUR LETTER POSTMARKED NOVEMBER 26. THE ONLY OTHER BIDS RECEIVED ON ITEM NO. 6 WERE AT UNIT PRICES OF $0.64 AND $4.25. AWARD WAS MADE TO IMPERIAL STEEL COMPANY AS FOW BIDDER ON ITEMS NOS. 6. IMPERIAL STEEL COMPANY STATED THAT ITS INTENDED BID ON ITEMS NOS. 6 AND 7 WAS $5.50 PER UNIT INSTEAD OF $0.50 PER UNIT AND THAT ITS INTENDED BID ON ITEM NO. 11 WAS $0.28 PER UNIT INSTEAD OF $0.10 PER UNIT. IT WAS STATED IN THE LETTER. THAT THE ERROR WAS REPORTED BY TELEPHONE AS SOON AS IT WAS DISCOVERED ON NOVEMBER 27. IT WAS STATED. THE CONTRACTOR WAS DECLARED IN DEFAULT AND THE CONTRACT TERMINATED ON AUGUST 20. ITEMS NOS. 6 AND 7 WERE OBTAINED FROM CHRYSLER CORPORATION ON AN ORDER DATED MAY 1.

B-130397, FEB. 26, 1957

TO MR. MACK LANDIS:

FURTHER REFERENCE IS MADE TO YOUR LETTER POSTMARKED NOVEMBER 26, 1956, ACKNOWLEDGED JANUARY 9, 1957, AND PRIOR CORRESPONDENCE, RELATING TO YOUR INDEBTEDNESS, AS OWNER OF IMPERIAL STEEL COMPANY, TO THE UNITED STATES IN THE AMOUNT OF $1,678.83 PLUS FREIGHT DIFFERENTIAL. THE INDEBTEDNESS REPRESENTS EXCESS COST INCURRED BY THE UNITED STATES AS A RESULT OF THE DEFAULT OF IMPERIAL STEEL COMPANY UNDER CONTRACT NO. DA-20-089-ORD-6787, DATED NOVEMBER 20, 1950, FOR FURNISHING ITEMS OF SUPPLIES SPECIFIED THEREIN.

THE FILE SHOWS THAT UNDER DATE OF SEPTEMBER 15, 1950, THE DETROIT ORDNANCE DISTRICT, DEPARTMENT OF THE ARMY, ISSUED INVITATION FOR BIDS NO. DA-20-018-ORD-51-584 FOR FURNISHING THE SUPPLIES REFERRED TO. IMPERIAL STEEL COMPANY SUBMITTED A BID OF $500 ($0.50 PER UNIT) ON ITEM NO. 6 (1,000 "SHIELD, DUST ENGINE, RIGHT ASSY.''; $1,000 ($0.50 PER UNIT) ON ITEM NO. 7 (2,000 "SHIELD, DUST, ENGINE, LEFT, ASSY.''; AND $1,500 ($0.10 PER UNIT) ON ITEM NO. 11 (15,000 "STRAP, GROUND, FRONT FENDER SPLASH SHIELD TO FRAME"). THE ONLY OTHER BIDS RECEIVED ON ITEM NO. 6 WERE AT UNIT PRICES OF $0.64 AND $4.25; ON ITEM NO. 7 ALSO AT UNIT PRICES OF $0.64 AND $4.25; AND ON ITEM NO. 11 AT A UNIT PRICE OF $0.215. ON NOVEMBER 20, 1950, AWARD WAS MADE TO IMPERIAL STEEL COMPANY AS FOW BIDDER ON ITEMS NOS. 6, 7 AND 11 (CONTRACT NO. DA-20-089 ORD-6787).

BY LETTER DATED NOVEMBER 30, 1950, TO THE NEW YORK ORDNANCE DISTRICT, IMPERIAL STEEL COMPANY STATED THAT ITS INTENDED BID ON ITEMS NOS. 6 AND 7 WAS $5.50 PER UNIT INSTEAD OF $0.50 PER UNIT AND THAT ITS INTENDED BID ON ITEM NO. 11 WAS $0.28 PER UNIT INSTEAD OF $0.10 PER UNIT, THE ERROR HAVING RESULTED FROM THE FAILURE OF A TYPIST TO INCLUDE ONE COST SHEET IN THE COMPUTATION. IT WAS STATED IN THE LETTER, ALSO, THAT THE ERROR WAS REPORTED BY TELEPHONE AS SOON AS IT WAS DISCOVERED ON NOVEMBER 27. LETTER DATED DECEMBER 28, 1950, THE BIDDER FORMALLY REQUESTED RELIEF AND BY LETTER OF JANUARY 12, 1951, IT STATED THAT ITS BUSINESS HAD BEEN DISCONTINUED BECAUSE OF LACK OF FUNDS. IN THE BIDDER'S LETTER OF JUNE 25, 1951, IT WAS STATED, IN SUBSTANCE, THAT THE BID SUBMITTED DID NOT INCLUDE THE COST OF THE DIE OR THE COST OF LABOR AND THAT THE VALUE OF THE MATERIAL REQUIRED EXCEEDED THE AMOUNT OF THE BID.

THE CONTRACTOR WAS DECLARED IN DEFAULT AND THE CONTRACT TERMINATED ON AUGUST 20, 1951. ITEMS NOS. 6 AND 7 WERE OBTAINED FROM CHRYSLER CORPORATION ON AN ORDER DATED MAY 1, 1952, AT A UNIT PRICE OF $0.68 AND ITEM NO. 11 WAS OBTAINED FROM CLARK CABLE COMPANY ON AN ORDER DATED APRIL 17, 1952, AT A UNIT PRICE OF $0.176 LESS ONE PERCENT 20 DAYS--- A TOTAL EXCESS COST OF $1,678.83 PLUS FREIGHT DIFFERENTIAL. AS FORMER OWNER OF IMPERIAL STEEL COMPANY, YOU REQUEST RELIEF FROM LIABILITY FOR THE EXCESS COST INCURRED IN OBTAINING THE SUPPLIES AFTER DEFAULT.

IN 20 COMP. GEN. 652, IT IS STATED:

"THE ESTABLISHED RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. 26 COMP. DEC. 286; 6 COMP. GEN. 526; 8 ID. 362.'

IN THE INSTANT MATTER, NO SATISFACTORY EVIDENCE HAS BEEN FURNISHED THAT THERE WAS AN ERROR IN THE BID OF IMPERIAL STEEL COMPANY OF A KIND FOR WHICH RELIEF MAY BE AUTHORIZED. ALTHOUGH THE BID MAY HAVE BEEN BASED ON AN ERRONEOUS COMPUTATION, THE ERROR WAS NOT MUTUAL AND IT WAS NOT SO APPARENT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR, IN VIEW OF THE SMALL DISPARITY BETWEEN THE IMPERIAL STEEL COMPANY BID AND THE NEXT LOW BID--- A CONCLUSION WHICH IS STRENGTHENED BY THE FACT THAT THE SUPPLIES WERE PROCURED SUBSEQUENTLY AT PRICES NOT GREATLY DIFFERENT FROM THE PRICES BID BY IMPERIAL STEEL COMPANY. ALSO, IT HAS BEEN REPORTED THAT THE CONTRACTING AGENCY DID NOT CONSIDER THE LOW BIDS TO BE "OUT OF LINE.' THE BID WHICH YOU STATE WAS INTENDED WAS MUCH MORE OUT OF LINE WITH OTHER BIDS THAN WAS THE BID ACTUALLY SUBMITTED. NEITHER WAS THE ERROR INDUCED OR CONTRIBUTED TO IN ANY MANNER BY THE GOVERNMENT.

ACCORDINGLY, THE ESTABLISHED RULE ABOVE QUOTED IS FOR APPLICATION HERE. THE ACCEPTANCE OF THE IMPERIAL STEEL COMPANY BID UNDER THE CIRCUMSTANCES 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.

FOR THE REASONS ABOVE SET FORTH, THERE APPEARS NO VALID BASIS FOR RELIEVING YOU OF ANY LIABILITY FOR PAYMENT OF THE EXCESS COSTS RESULTING FROM YOUR DEFAULT AND YOU ARE REQUESTED TO TAKE PROMPT ACTION TOWARD LIQUIDATION OF THE INDEBTEDNESS.