B-133821, NOV. 6, 1957

B-133821: Nov 6, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 16. (SPEC'S AND DRAWINGS ARE AVAILABLE) (PD NO. 58/S46-21502) NOTE: REFER TO. BIDDERS WERE ALLOWED A CHOICE AS TO PACKAGING AND PACKING REQUIREMENTS OF EITHER OPTION A OR OPTION B UNDER PROVISION 7 OF THE INVITATION. WAS ACCEPTED AND CONTRACT WAS AWARDED TO IT IN A TOTAL AMOUNT OF $1. - EXPLAINED THAT ITS UNIT BID PRICE WAS FOR FURNISHING ONLY "CONTACT ASSEMBLY. THE CONTRACTOR WAS ADVISED THAT THE DESCRIPTION ALSO REFERENCED DRAWING NO. SM-B-207924 WHICH IS CITED IN THE CONTRACT ITEM DESCRIPTION. COVERING THE ELECTRICAL CONTACT SPRINGS IS THE ONLY OTHER DRAWING WRITTEN INTO THE ITEM DESCRIPTION. THIS DRAWING AND THE OTHER DRAWINGS MENTIONED BELOW ALSO APPLY BECAUSE THEY ARE EITHER LISTED IN DRAWING SM-B-207924 OR REFERENCED IN CHAIN SEQUENCE TO THESE DRAWINGS.

B-133821, NOV. 6, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 16, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), SUBMITTING FOR CONSIDERATION AND DECISION THE MATTER OF A MISTAKE IN BID ALLEGED BY THE BENMAR COMPANY, CLEVELAND, OHIO, AFTER AWARD OF PURCHASE ORDER NO. 37479-P -57-58 (51), DATED JANUARY 4, 1957.

BY INVITATION NO. SC-36-039-57-1317-58, ISSUED NOVEMBER 19, 1956, THE ARMY SIGNAL SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, SOLICITED 28 SUPPLIERS FOR BIDS--- TO BE OPENED ON DECEMBER 14, 1956--- ON ITEM 1, PAGE 4 OF THE INVITATION, AT A UNIT PRICE EACH, FOR FURNISHING 1940 UNITS, DESCRIBED AS---

"/4Z3331) (FSN NO. 5805-392-7937) (497 761 525)

CONTACT ASSEMBLY: ELECTRICAL; 2 EACH SPRING CONTACTS;

SIG/C DWG NO. SM-B-207913, 1.813 INCHES DIA BY 0.740 INCHES H., 2 SCREW

TERMS; FORMS ACOUSTICAL CAVITY; MTS BY-PASS CAPACITOR,

9 BARRIERS ON UNDERSIDE TO PREVENT SHORTING; P/O JCENS

HANDSET H-60/PT., SIG/C DWG NO. SM-B-207924.

(SPEC'S AND DRAWINGS ARE AVAILABLE)

(PD NO. 58/S46-21502)

NOTE: REFER TO; SIG/C DWG NO. SM-B-207924

MS35272-25 - S/S 100-6B6-3.'

BIDDERS WERE ALLOWED A CHOICE AS TO PACKAGING AND PACKING REQUIREMENTS OF EITHER OPTION A OR OPTION B UNDER PROVISION 7 OF THE INVITATION. ONLY THREE BIDDERS RESPONDED TO THE INVITATION, THE UNIT PRICE QUOTATION IN THE RESPECTIVE BIDS BEING $0.58, $5.45, AND $8.

BENMAR COMPANY SUBMITTED A BID DATED DECEMBER 13, 1956, IN WHICH IT QUOTED A PRICE OF $0.58 EACH, LESS DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN 20 DAYS, FOR OPTION A PACKAGING AND PACKING REQUIREMENTS, AND COMPLETE DELIVERY "90 DAYS AFTER NOTIFICATION OF AWARD. (12 APRIL 1957).' THE COMPANY'S BID, BEING THE LOWEST, WAS ACCEPTED AND CONTRACT WAS AWARDED TO IT IN A TOTAL AMOUNT OF $1,125.20 BY PURCHASE ORDER NO. 37479-P-57-58 (51), DATED JANUARY 4, 1957.

THE RECORD INDICATES THAT AFTER RECEIPT OF THE AWARD BENMAR COMPANY, IN A TELEPHONE CALL TO THE ARMY SIGNAL SUPPLY AGENCY, CHICAGO REGIONAL OFFICE-- - CONFIRMED BY LETTER DATED FEBRUARY 5, 1957--- EXPLAINED THAT ITS UNIT BID PRICE WAS FOR FURNISHING ONLY "CONTACT ASSEMBLY, TWO (2) EACH, SPRING CONTACTS, SIGNAL CORPS, DRAWING SM-B-207913," AND REQUESTED A CLARIFICATION OF THE SPECIFICATION REQUIREMENTS COVERING THE CONTACT ASSEMBLY ON THE INVOLVED PURCHASE ORDER. IN REPLY, IN LETTER DATED FEBRUARY 7, 1957, THE CONTRACTOR WAS ADVISED THAT THE DESCRIPTION ALSO REFERENCED DRAWING NO. SM-B-207924, THAT "OTHER THAN THE ABOVE, THE LETTER SHALL NOT BE CONSTRUED AS AUTHORIZING OR DIRECTING WORK IN EXCESS OF (OR) DIFFERENT FROM THAT CALLED FOR IN THE NTRACT," AND THAT THE CONTRACT CONSIDERATION REMAINED UNCHANGED. SUBSEQUENTLY, BY LETTER DATED FEBRUARY 28, 1957, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR MORE SPECIFICALLY CONCERNING ITS REQUEST FOR CLARIFICATION OF SPECIFICATION REQUIREMENTS, AS FOLLOWS:

"EXAMINATION OF THE CONTRACT AND APPLICABLE DRAWINGS DISCLOSES THAT THIS CONTACT ASSEMBLY SHOULD BE FURNISHED COMPLETE AS INDICATED BY DRAWING NO. SM-B-207924 WHICH IS CITED IN THE CONTRACT ITEM DESCRIPTION. ALTHOUGH DRAWING NO. SM-B-20713 (207913), COVERING THE ELECTRICAL CONTACT SPRINGS IS THE ONLY OTHER DRAWING WRITTEN INTO THE ITEM DESCRIPTION, THIS DRAWING AND THE OTHER DRAWINGS MENTIONED BELOW ALSO APPLY BECAUSE THEY ARE EITHER LISTED IN DRAWING SM-B-207924 OR REFERENCED IN CHAIN SEQUENCE TO THESE DRAWINGS.

"THE COMPLETE ASSEMBLY CONSISTS OF 2 EACH SPRING CONTACTS PER DRAWING SM- B-207913, FASTENED BY 2 EACH EYLETS PER DRAWING NO. SM-B 207924 RIVETED OR SPUN DOWN TIGHT TO A TRANSMITTER ELEMENT HOUSING PER DRAWING NO. SM-D- 207926. AFTER ASSEMBLY TO THE HOUSING, THE EYLETS ARE THREADED WITH A 6- 40 NF2B TAP, TO WHICH IS MOUNTED A CAPACITOR PER DRAWING SM-B-20739 AND SM -C-207910 THAT IS SOLDERED TO 2 EACH TERMINAL LUGS PER DRAWING NO. SM-B- 207931, AND CONNECTED TO EACH EYLET BY MEANS OF 2 SCREWS PER DRAWING NO. 100-6B6-3 (NO. 6-40 BY 3/16 IN. FILLISTER HEAD BRASS MACHINE SCREWS). WORDING IN THE DESCRIPTION,"9 BARRIERS ON UNDERSIDE TO PREVENT SHORTING," IS MERELY A REFERENCE TO INTEGRAL PROTRUSIONS MOLDED ON THE UNDERSIDE OF THE PLASTIC HOUSING PER DRAWING NO. SM-D-207926.

"OTHER THAN THE ABOVE, THIS LETTER SHALL NOT BE CONSTRUED AS AUTHORIZING OR DIRECTING WORK IN EXCESS OF OR DIFFERENT FROM THAT CALLED FOR IN THE CONTRACT. ALSO, THE CONTRACT CONSIDERATION REMAINS UNCHANGED.'

BY LETTER DATED MARCH 5, 1957, TO THE ARMY SIGNAL SUPPLY AGENCY, BENMAR COMPANY CONFIRMED ITS EARLIER STATEMENT THAT THE COMPANY'S BID PRICE WAS BASED ON ITS INTERPRETATION THAT THE SPECIFICATIONS COVERED A UNIT CONSISTING OF "CONTACT ASSEMBLY, TWO (2) EACH, SPRING CONTACTS, SIGNAL CORPS DRAWING SM-B-207913," WITH THE BALANCE OF THE DESCRIPTION GIVING THE DIMENSIONS OF THESE PARTS, THE LOCATION AND MOUNTING, AND STATING THAT THE TWO CONTACTS WERE PART OF THE JCENS HANDSET AS SHOWN ON DRAWING SM-B- 207924; AND THAT THE COMPANY HAD NOT CONSIDERED FURNISHING THE PARTS LISTED ON DRAWING SM-B-207924. THE COMPANY INDICATED THAT IT WAS WILLING TO PERFORM ON THE CONTRACT AND FURNISH THE PARTS AS REFERENCED ON DRAWING SM-B-207913, BUT CONTENDED THAT IT WOULD BE QUITE OBVIOUS FROM ITS BID PRICE THAT THE COMPANY HAD NOT CONSIDERED FURNISHING THE PARTS LISTED ON DRAWING SM-B-207924. SUBSEQUENTLY, IN LETTER OF MARCH 27, THE COMPANY REQUESTED THAT THE CONTRACT ORDER BE RESCINDED.

THE CONTRACTING OFFICER REPORTS THAT IT IS THE OPINION OF THE GOVERNMENT ENGINEER THAT BENMAR COMPANY'S UNIT BID PRICE OF $0.58 REFLECTS THE COST OF THE SPRINGS ALONE AND NOT THAT OF THE CONTACT ASSEMBLY. THE RECORD DOES NOT INDICATE THAT BENMAR COMPANY WAS REQUESTED TO VERIFY ITS BID PRIOR TO ACCEPTANCE. THE CONTRACTING OFFICER STATES THAT IT IS HIS OPINION THAT THE BIDDER MADE A BONA FIDE MISTAKE IN ITS BID AS A RESULT OF A MISINTERPRETATION OF THE SPECIFICATIONS, AND HE, THEREFORE, RECOMMENDS THAT THE CONTRACT BE RESCINDED AS REQUESTED BY THE COMPANY.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD THERE APPEARS NO DOUBT THAT BENMAR COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED, DUE TO ITS MISINTERPRETATION OF THE SPECIFICATIONS IN THE INVITATION. THE BASIC QUESTION FOR CONSIDERATION, HOWEVER, IS NOT WHETHER BENMAR COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID.

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 THAT THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE OF IT. SALIGMAN V. UNITED STATES, 58 F.SUPP. 506, 507; OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249; B-125754, JANUARY 4, 1956.

ALTHOUGH THE RECORD SUPPORTS THE ALLEGATION OF THE COMPANY THAT IT MADE AN ERROR IN ITS BID BECAUSE OF A MISUNDERSTANDING AS TO WHAT WAS REQUIRED BY THE INVITATION, IT DOES NOT APPEAR THAT THERE WAS AT ANY TIME ANY QUESTION ON THE PART OF THE PROCURING OFFICE AS TO WHAT THE SPECIFICATIONS REQUIRED. IT IS OBVIOUS, THEREFORE, THAT THERE WAS NOT A MUTUAL MISTAKE OF THE PARTIES AS TO THE REQUIREMENTS OF THE SPECIFICATIONS. IT MUST ALSO BE DETERMINED, HOWEVER, WHETHER THE CONTRACTING OFFICER WAS ON NOTICE--- EITHER ACTUAL OR CONSTRUCTIVE--- OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE OF THE COMPANY'S BID AN ACT OF BAD FAITH.

THE RECORD SHOWS THAT THE OTHER TWO BIDS SUBMITTED ON THIS ITEM WERE RESPECTIVELY 9.4 AND 13.8 TIMES THAT OF BENMAR COMPANY. IN VIEW OF THIS EXCESSIVE VARIANCE BETWEEN THE BID OF BENMAR COMPANY AND THE OTHER BIDS AND THE FACT THAT IT IS THE GOVERNMENT ENGINEER'S OPINION THAT THE COMPANY'S UNIT BID PRICE OF $0.58 REFLECTS THE COST OF THE SPRINGS ALONE AND NOT THAT OF THE CONTACT ASSEMBLY, THE PROBABILITY OF ERROR IN THE COMPANY'S BID APPEARS SUFFICIENTLY OBVIOUS TO HAVE PUT THE CONTRACTING OFFICER ON NOTICE THEREOF. IN THE CIRCUMSTANCES, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID. SINCE THIS WAS NOT DONE, ACCEPTANCE OF BENMAR COMPANY'S BID DID NOT RESULT IN A LEGAL AND BINDING CONTRACT.

ACCORDINGLY, AND SINCE THE ERROR WAS ALLEGED PROMPTLY UPON RECEIPT OF NOTICE OF AWARD AND SINCE IT IS ADMINISTRATIVELY REPORTED THAT PERFORMANCE OF THE CONTRACT HAS NOT BEEN STARTED BY THE COMPANY AND NO PAYMENT HAS BEEN MADE BY THE GOVERNMENT, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO THE COMPANY.

THE PAPERS, EXCEPT THE ABSTRACT OF BIDS AND THE STATEMENTS OF THE CONTRACTING OFFICER AND THE CHIEF OF THE LEGAL DIVISION, ARE RETURNED.