B-130892, MAR. 7, 1957

B-130892: Mar 7, 1957

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DEPARTMENT OF JUSTICE: REFERENCE IS MADE TO YOUR COMMUNICATION OF FEBRUARY 11. ONLY ONE OTHER BID WAS RECEIVED AND THAT AMOUNTED TO $13.25 PER CASE FOR A CERTAIN KIND OF ORANGE DRY SYRUP. MONARCH FINER FOODS INFORMED THE CONTRACTING OFFICER THAT THE ERROR IN ITS BID WAS DUE TO THE FACT THAT A NEW EMPLOYEE HAD HANDLED THE BID AND THAT HE HAD FAILED TO NOTICE THAT ITEM 42 OF THE INVITATION CALLED FOR ORANGE JUICE CONCENTRATE AND THAT IT BID ON PLAIN ORANGE JUICE. IT IS REPORTED THAT. THE CONTRACTING OFFICER WAS ON NOTICE OF THE OBVIOUS ERROR OF THE BIDDER. THE QUESTION TO BE DETERMINED IS WHETHER THERE WAS MERELY A UNILATERAL MISTAKE ON THE PART OF THE BIDDER OR WHETHER THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE.

B-130892, MAR. 7, 1957

TO MR. J. D. MILLER, FISCAL OFFICER, BUREAU OF PRISONS, DEPARTMENT OF JUSTICE:

REFERENCE IS MADE TO YOUR COMMUNICATION OF FEBRUARY 11, 1957, IN WHICH YOU ENCLOSE CONTRACT DATED DECEMBER 12, 1956, ENTERED INTO BY MONARCH FINER FOODS, 503 S. FRONT STREET, COLUMBUS, OHIO, WITH FEDERAL REFORMATORY, CHILLICOTHE, OHIO, RESULTING FROM INVITATION NO. 5-4906, ISSUED DECEMBER 3, 1956.

MONARCH FINER FOODS ALLEGES AN ERROR IN ITS BID OF $3.50 PER CASE ON ITEM 42 OF THE INVITATION, ORANGE JUICE CONCENTRATE, SIX NO. 10 CANS TO THE CASE, AS TO WHICH IT PROPOSED TO FURNISH TWELVE 46-OZ. OR NO. 5 CANS TO THE CASE, AND WHILE NOT SO STATED IN ITS BID, IT INTENDED TO FURNISH ORANGE JUICE. ONLY ONE OTHER BID WAS RECEIVED AND THAT AMOUNTED TO $13.25 PER CASE FOR A CERTAIN KIND OF ORANGE DRY SYRUP, PACKED IN TWELVE 2 1/2 POUND BAGS TO THE CASE. A PREVIOUS PURCHASE OF ORANGE JUICE CONCENTRATE HAD BEEN MADE FROM ANOTHER FIRM AT A PRICE OF $22 PER CASE.

THE RECORD SHOWS THAT AFTER THE AWARD, MONARCH FINER FOODS INFORMED THE CONTRACTING OFFICER THAT THE ERROR IN ITS BID WAS DUE TO THE FACT THAT A NEW EMPLOYEE HAD HANDLED THE BID AND THAT HE HAD FAILED TO NOTICE THAT ITEM 42 OF THE INVITATION CALLED FOR ORANGE JUICE CONCENTRATE AND THAT IT BID ON PLAIN ORANGE JUICE. IT IS REPORTED THAT, PRIOR TO THE AWARD, THE CONTRACTING OFFICER WAS ON NOTICE OF THE OBVIOUS ERROR OF THE BIDDER--- PRESUMABLY BECAUSE OF THE AMOUNT PAID FOR A PRIOR PURCHASE--- BUT FAILED TO REQUEST THE BIDDER TO CONFIRM ITS BID.

THE QUESTION TO BE DETERMINED IS WHETHER THERE WAS MERELY A UNILATERAL MISTAKE ON THE PART OF THE BIDDER OR WHETHER THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE. ORDINARILY, WHEN A BID HAS BEEN ACCEPTED BY THE GOVERNMENT WITHOUT ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF AN ERROR, THE BIDDER IS BOUND AND MUST BEAR THE CONSEQUENCES OF ANY MISTAKE IN HIS BID. HOWEVER, IT IS WELL ESTABLISHED THAT WHERE THE PARTY RECEIVING THE OFFER OR BID KNOWS, OR HAS REASON TO KNOW, THAT THE BIDDER MADE A MISTAKE, THE OFFEREE WILL NOT BE PERMITTED TO TAKE ADVANTAGE OF THE ERROR. IN OTHER WORDS, WHERE THERE IS A PRESUMPTION OF ERROR ON THE FACE OF THE BID EITHER BECAUSE OF A WIDE DISPARITY AS BETWEEN THE LOW BID AND OTHER BIDS OR, AS APPEARS TO BE THE CASE HERE, BECAUSE OF THE COST OF SUPPLIES ON A PRIOR PURCHASE, AN AWARD BY A GOVERNMENT CONTRACTING OFFICER DOES NOT GIVE RISE TO A BINDING CONTRACT IF THE RECORD ESTABLISHES THAT A BONA FIDE ERROR WAS MADE. MASON COAL CO. V. UNITED STATES, 64 C.CLS. 533.

IN VIEW OF THE FOREGOING, THE CONTRACTOR SHOULD BE RELIEVED OF ITS OBLIGATION TO FURNISH ANY ORANGE JUICE CONCENTRATE AS REQUIRED BY SAID ITEM 42 OF SAID CONTRACT.