B-132499, SEP. 19, 1957

B-132499, SEP. 19, 1957

TO SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED AUGUST 19, 1957, WITH ENCLOSURES, FROM THE OFFICE OF THE CHIEF, ADJUDICATIONS BRANCH, SETTLEMENTS DIVISION, AIR FORCE FINANCE CENTER, FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO AN ERROR THE GAINESVILLE SCRAP IRON AND METAL COMPANY, GAINESVILLE, FLORIDA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. AF 01 (608/S-249 IS BASED.

BY SALES INVITATION NO. 01-608-S-57-7, THE GADSDEN AIR FORCE DEPOT, GADSDEN, ALABAMA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, 3,259 FAIRING ASSEMBLIES, ALUMINUM, APPLICABLE TO FUEL TANK, UNUSED, ITEM 16. IN RESPONSE THE GAINESVILLE SCRAP IRON AND METAL COMPANY SUBMITTED A BID DATED MAY 23, 1957, OFFERING TO PURCHASE, AMONG OTHER ARTICLES, THE ASSEMBLIES COVERED BY ITEM 16 AT A PRICE OF $1.21 EACH. THE TWO OTHER BIDS ON ITEM 16 SPECIFIED PRICES OF $0.19 EACH AND $0.15 EACH.

IN A REPORT DATED AUGUST 6, 1957, THE SUCCESSOR CONTRACTING OFFICER STATED THAT, AFTER THE BIDS HAD BEEN OPENED, IT WAS DETERMINED THAT THE GAINESVILLE SCRAP IRON AND METAL COMPANY WAS THE SUCCESSFUL BIDDER ON ITEMS 16 AND 23 AND THAT SINCE THE COMPANY HAD SUBMITTED A BID BOND ON STANDARD FORM 24 IN LIEU OF A CERTIFIED OR CASHIER'S CHECK, POSTAL MONEY ORDER OR OTHER ACCEPTABLE MONETARY DEPOSIT, IT WAS CONTACTED BY TELEPHONE ON MAY 31, 1957, AND ADVISED OF THE ITEMS ON WHICH IT WAS THE SUCCESSFUL BIDDER FOR THE PURPOSE OF DEPOSITING A CASHIER'S OR CERTIFIED CHECK OR OTHER ACCEPTABLE MONETARY DEPOSIT. ALSO, THE SUCCESSOR CONTRACTING OFFICER REPORTED THAT ON JUNE 4, 1957, MR. GROSSMAN OF THE GAINESVILLE SCRAP IRON AND METAL COMPANY VERBALLY ALLEGED THAT AN ERROR HAD BEEN MADE BY THE COMPANY IN BIDDING ON ITEM 16 IN THAT IT HAD INTENDED TO QUOTE A PRICE OF $0.21 AND NOT $1.21 EACH FOR THE ASSEMBLIES COVERED BY THAT ITEM; AND THAT MR. GROSSMAN WAS REQUESTED TO SUBMIT A WRITTEN STATEMENT EXPLAINING THE ALLEGED ERROR AND THE COMPANY'S WORKSHEET AND ANY OTHER EVIDENCE IN SUPPORT OF THE ALLEGATION OF ERROR.

IN A CONFIRMING LETTER DATED JUNE 6, 1957, MR. GROSSMAN STATED THAT HE HAD MADE AN ERROR IN COPYING THE PRICE OF $0.21 EACH OF ITEM 16 AS $1.21 FROM HIS MEMORANDUM SHEET TO THE COPY HE TURNED OVER TO HIS OFFICE MANAGER, WHO, HE STATED, WROTE UP THE BID SUBMITTED AND HE REQUESTED THAT THE COMPANY'S BID ON ITEM 16 BE CORRECTED ACCORDINGLY OR THAT THE COMPANY BE PERMITTED TO WITHDRAW ITS BID ON THAT ITEM. MR. GROSSMAN SUBMITTED A COPY OF HIS ORIGINAL MEMORANDUM SHEET WHICH SHOWS, AMONG OTHERS, A PRICE OF $0.21 FOR ITEM 16--- THE COMPANY'S ALLEGED INTENDED BID PRICE FOR THAT ITEM.

THE RECORD SHOWS THAT THE DIRECTOR, PROCUREMENT AND PRODUCTION, GADSDEN AIR FORCE DEPOT, SUBMITTED THE MATTER OF THE ALLEGED ERROR BY THE GAINESVILLE SCRAP IRON AND METAL COMPANY TO THE OFFICE OF THE COMMANDER, AIR MATERIEL COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, WITH THE CONTRACTING OFFICER'S RECOMMENDATION THAT THE COMPANY BE PERMITTED TO WITHDRAW ITS BID ON ITEM 16, BUT WAS INSTRUCTED THAT THE COMPANY SHOULD NOT BE PERMITTED TO WITHDRAW ITS BID ON ITEM 16 AND THAT THE BID SHOULD BE CONSIDERED FOR AWARD IN THE FORM SUBMITTED. BY TELEGRAM DATED JULY 1, 1957, THE DIRECTOR, PROCUREMENT AND PRODUCTION, GADSDEN AIR FORCE DEPOT, ADVISED THE COMPANY THAT IT HAD BEEN ADMINISTRATIVELY DETERMINED BY HIGHER HEADQUARTERS THAT THE COMPANY COULD NOT BE PERMITTED TO EITHER WITHDRAW OR CORRECT ITS BID ON ITEM 16 FOR THE REASON THAT IT HAD FAILED TO SUBMIT CLEAR AND CONVINCING EVIDENCE IN SUPPORT OF ITS ALLEGATION OF ERROR, AND THAT AWARD WOULD BE MADE TO THE COMPANY ON THE BASIS OF ITS ORIGINAL BID PRICE. ACCORDINGLY, ON JULY 3, 1957, THE BID OF THE COMPANY WAS FORMALLY ACCEPTED AS TO ITEMS 16 AND 23.

BY LETTER DATED JULY 8, 1957, ADDRESSED TO OUR OFFICE, MR. GROSSMAN OF THE GAINESVILLE SCRAP IRON AND METAL COMPANY PROTESTED THE ACTION OF THE GADSDEN AIR FORCE DEPOT IN AWARDING THE CONTRACT TO THE COMPANY ON THE BASIS OF ITS ORIGINAL BID PRICE FOR ITEM 16 AND CONTENDED THAT THE DIFFERENCE BETWEEN THE COMPANY'S BID PRICE ON ITEM 16 AND THE PRICE QUOTED BY THE NEXT HIGHEST BIDDER ON THAT ITEM WAS SUFFICIENT TO ESTABLISH THAT AN ERROR WAS MADE IN THE COMPANY'S BID, AS ALLEGED. IN HIS LETTER MR. GROSSMAN CONTENDED FURTHER THAT, IF THE COMPANY IS FORCED TO PURCHASE ITEM 16 AT ITS ORIGINAL BID PRICE, IT WOULD SUFFER A LOSS OF $3,200 ON AN INVESTMENT OF $3,943.39.

WHILE IT IS TRUE THAT THE RESPONSIBILITY FOR THE PREPARATION OF A BID IS UPON THE BIDDER, WHO ORDINARILY MUST BEAR THE CONSEQUENCES OF AN ERROR IN THE BID UPON WHICH A CONTRACT IS BASED, THAT RULE DOES NOT ENTITLE THE GOVERNMENT TO TAKE ADVANTAGE OF A BIDDER'S ERROR WHEN, AS IN THE PRESENT CASE, IT HAS BEEN ALLEGED AND SATISFACTORILY ESTABLISHED PRIOR TO AWARD. THE GENERAL RULE IS THAT THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE NASON COAL COMPANY V. UNITED STATES, 64 C.CLS. 526; RESTATEMENT OF THE LAW OF CONTRACTS, SECTION 503; AND WILLISTON ON CONTRACTS, SECTION 1578. ALSO, SEE MOFFETT, HODGKINS, AND CLARKE COMPANY V. ROCHESTER, 178 U.S. 373; KEMP V. UNITED STATES, 38 F.SUPP. 568; ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.CLS. 466; AND 17 COMP. GEN. 575, 576.

SINCE THE WRITTEN NOTICE OF AWARD WAS GIVEN AFTER RECEIPT OF EVIDENCE BY THE CONTRACTING OFFICER REASONABLY ESTABLISHING THE BIDDER'S CLERICAL ERROR, AND SINCE IT APPEARS THAT DELIVERY OF ITEM 16 HAS NOT BEEN MADE AND THE COMPANY HAS TAKEN NO FURTHER ACTION TOWARD COMPLETION OF THE CONTRACT IN REGARD TO THAT ITEM, AWARD AS TO ITEM 16 OF CONTRACT NO. AF 01/608/S- 249 MAY BE CANCELLED WITHOUT LIABILITY TO THE COMPANY.