B-132534, JUL. 31, 1957

B-132534: Jul 31, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER OF JULY 11. WERE ACCEPTED AND BECAME THE BASIS OF PURCHASE ORDER NO. NOTIFIED THE CONTRACTING OFFICER THAT IT WAS UNABLE TO SUPPLY TYPE 347 STAINLESS STEEL MATERIAL AS CALLED FOR IN THE SPECIFICATIONS OF THE PURCHASE ORDER. THAT THE COMPANY DID NOT HAVE GRADE 347 STAINLESS STEEL IN STOCK WHEN ITS QUOTATIONS ON ITEMS NOS. 2 AND 7 WERE SUBMITTED. THAT ITS BID PRICES WERE ACTUALLY WORKED OUT ON THAT BASIS AND THAT THE ERROR OCCURRED IN TRANSPOSING FROM THE WORKSHEET TO THE BID FORM BY THE OMISSION OF THE INTENDED SUBSTITUTION. THE CONTRACTING OFFICER ADVISED THE CONTRACTOR THAT THE PROPOSED SUBSTITUTE MATERIAL WAS NOT ACCEPTABLE. SUBMITTED PHOTOSTATIC COPIES OF WORKSHEETS WHICH INDICATED THAT THE PRICES QUOTED BY THE COMPANY ON ITEMS NOS. 2 AND 7 WERE COMPUTED ON THE BASIS OF FURNISHING TYPE 304 STAINLESS STEEL.

B-132534, JUL. 31, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER OF JULY 11, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), SUBMITTING FOR CONSIDERATION THE MATTER OF A MISTAKE IN BID ALLEGED BY HORACE T. POTTS COMPANY, BALTIMORE, MARYLAND, IN CONNECTION WITH PURCHASE ORDER NO. FD7-404-3451, AND REQUESTING A DECISION WITH RESPECT TO THE CONTRACTOR'S APPLICATION FOR RELIEF.

BIOLOGICAL WARFARE LABORATORIES, FORT DETRICK, FREDERICK, MARYLAND, BY INVITATION TO BID NO. 18-064-57-90, ISSUED NOVEMBER 19, 1956, REQUESTED BIDS--- TO BE OPENED DECEMBER 19, 1956--- FOR FURNISHING SEVEN SEPARATE ITEMS OF STAINLESS STEEL AS DESCRIBED THEREIN. IN RESPONSE THERETO, HORACE T. POTTS COMPANY ON DECEMBER 6, 1956, SUBMITTED, AMONG OTHERS, UNQUALIFIED BIDS AT A UNIT PRICE OF $88.61 CWT AND $100.13 TOTAL COST ON ITEM NO. 2 FOR FURNISHING 113 POUNDS OF "9515, STAINLESS STEEL, SHEET, 2B/FINISH-ANNEALED, PICKLED AND COLD ROLLED, TYPE 347, 26 GA. ).019 INCHES) 36 INCHES TIMES 96 INCHES (6 EA.)," AND $66.61 CWT UNIT COST AND $219.81 TOTAL COST ON ITEM NO. 7 FOR 330 POUNDS OF "9515, STAINLESS STEEL, PLATE, TYPE 347, 1/4 INCHES TIMES 48 INCHES TIMES 48 INCHES, (2 EA.).' THE COMPANY'S BID ON ITEMS NOS. 2 AND 7, BEING THE LOWEST, WERE ACCEPTED AND BECAME THE BASIS OF PURCHASE ORDER NO. FD7-404-3451, DATED JANUARY 2, 1957.

AFTER AWARD OF THE CONTRACT, HORACE T. POTTS COMPANY, IN A LETTER DATED JANUARY 10, 1957, NOTIFIED THE CONTRACTING OFFICER THAT IT WAS UNABLE TO SUPPLY TYPE 347 STAINLESS STEEL MATERIAL AS CALLED FOR IN THE SPECIFICATIONS OF THE PURCHASE ORDER, THAT THE COMPANY DID NOT HAVE GRADE 347 STAINLESS STEEL IN STOCK WHEN ITS QUOTATIONS ON ITEMS NOS. 2 AND 7 WERE SUBMITTED, THAT IT DID NOT STOCK THIS GRADE, AND THAT IT HAD ENDEAVORED TO PROCURE TYPE 347 MATERIAL BUT HAD BEEN UNABLE TO GET IT, AND OFFERED TO SUPPLY 304 TYPE MATERIAL AS A SUBSTITUTE IF ACCEPTABLE. THE CONTRACTOR ALSO ALLEGED ERROR IN ITS BIDS ON THESE TWO ITEMS, CLAIMING THAT IT HAD INTENDED TO OFFER TYPE 304 STAINLESS STEEL AS A SUBSTITUTE FOR TYPE 347 AS REQUIRED BY THE SPECIFICATIONS SET OUT IN THE INVITATION, THAT ITS BID PRICES WERE ACTUALLY WORKED OUT ON THAT BASIS AND THAT THE ERROR OCCURRED IN TRANSPOSING FROM THE WORKSHEET TO THE BID FORM BY THE OMISSION OF THE INTENDED SUBSTITUTION. BY LETTER OF JANUARY 16, 1957, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR THAT THE PROPOSED SUBSTITUTE MATERIAL WAS NOT ACCEPTABLE, AND SET FORTH THE PROCEDURE FOR FILING A CLAIM FOR RELIEF BECAUSE OF ITS ALLEGED ERROR. THE COMPANY, BY NOTARIZED LETTER OF MARCH 4, 1957, REITERATED ITS CLAIM OF ERROR AND REQUESTED IN A GENERAL WAY, AND SUBMITTED PHOTOSTATIC COPIES OF WORKSHEETS WHICH INDICATED THAT THE PRICES QUOTED BY THE COMPANY ON ITEMS NOS. 2 AND 7 WERE COMPUTED ON THE BASIS OF FURNISHING TYPE 304 STAINLESS STEEL.

THE ABSTRACT OF BIDS SHOWS THAT TWO OTHER BIDS WERE RECEIVED ON ITEM NO. 2, ONE OF $1.7550 PER POUND (AN ALTERNATIVE BID) AND ANOTHER OF $1.0809 PER POUND, PLUS PACKING OF $16.25; AND, AS TO ITEM NO. 7, THAT FIVE OTHER BIDS WERE RECEIVED OF $0.84, $0.8437, $0.8459, $0.8476, AND $1.6325 PER POUND. THE CONTRACTING OFFICER STATES THAT THE AWARD WAS MADE IN GOOD FAITH AND THAT NEITHER HE NOR THE PURCHASING AGENT RESPONSIBLE FOR THIS PROCUREMENT SUSPECTED ERROR IN THE BID AT THE TIME OF, OR PRIOR TO, THE AWARD.

THE BASIC QUESTION IN THIS CASE IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BIDS ON ITEMS NOS. 2 AND 7, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE COMPANY'S BIDS THEREON. IT IS WELL ESTABLISHED THAT THE ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING IT WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. SEE 28 COMP. GEN. 550, 551.

EACH BID AS TO ITEMS NOS. 2 AND 7 WAS REGULAR ON ITS FACE AND THERE WAS NOTHING TO INDICATE THAT IT WAS THE INTENTION OF POTTS COMPANY TO FURNISH MATERIAL OTHER THAN THAT SPECIFIED IN THE INVITATION, AND THE FACT THAT EACH BID WAS BASED ON SUCH INTENTION DID NOT BECOME EVIDENT TO THE CONTRACTING OFFICER UNTIL AFTER ACCEPTANCE OF THE BIDS AND ISSUANCE OF THE PURCHASE ORDER WHEN THE CONTRACTOR NOTIFIED HIM THAT IT WAS UNABLE TO PERFORM AND ALLEGED ERROR IN ITS BIDS. MOREOVER, THE BID OF POTTS COMPANY OF $88.61 CWT. ON ITEM NO. 2, REDUCED TO A UNIT PRICE OF $0.8861 PER POUND, DOES NOT APPEAR OUT OF LINE WITH THE OTHER TWO BIDS RECEIVED AND WITH THE USING DIVISION'S ESTIMATED COST OF $0.6127 PER POUND. THE PRICE QUOTED BY THE CONTRACTOR OF $66.61 CWT. ON ITEM NO. 7, REDUCED TO A UNIT PRICE OF $0.6661 PER POUND, LIKEWISE DOES NOT APPEAR OUT OF LINE WITH THE PRICES QUOTED BY OTHER BIDDERS ON THIS ITEM AND WITH THE GOVERNMENT'S ESTIMATED COST OF $0.63 PER POUND.

SINCE, UNDER THESE CIRCUMSTANCES, IT DOES NOT APPEAR THAT THE CONTRACTING OFFICER HAD ANY REASON TO SUSPECT THAT THE COMPANY'S BIDS WERE NOT INTENDED AS SHOWN OR THAT HE HAD ANY INFORMATION TO PUT HIM ON NOTICE OF ANY PROBABILITY OF ERROR, IT MUST BE CONCLUDED THAT THE CONTRACTING OFFICER ACCEPTED THE COMPANY'S BIDS ON ITEMS NOS. 2 AND 7 IN GOOD FAITH AND WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR, AND SUCH ACTION 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, AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

THEREFORE, THERE IS NO LEGAL BASIS FOR RELIEVING HORACE T. POTTS COMPANY FROM ITS OBLIGATIONS UNDER PURCHASE ORDER NO. FD7-404-3451.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENTS OF FINDINGS AND RECOMMENDATIONS, ARE RETURNED.