B-134245, NOV. 21, 1957

B-134245: Nov 21, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 22. MAY BE MODIFIED SO AS TO CORRECT CERTAIN ERRORS ALLEGED TO HAVE BEEN MADE THEREIN. SEVEN RESPONSIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE LOWEST OF WHICH WAS SUBMITTED BY THE ELECTRO IMPULSE LABORATORY. THE PRINCIPAL ITEM OF THE BID WAS ITEM NO. 1. WAS $465 PER UNIT. A PREPRODUCTION CONFERENCE WAS CONVENED AT THE CONTRACTOR'S PLANT. THE CONTRACTOR STILL WAS AWAITING QUOTATIONS FROM THE SEVERAL SUPPLIERS HE HAD PREVIOUSLY SOLICITED. IT IS REPORTED THAT BY THE CONTRACTOR'S OWN ADMISSION. IT IS CLAIMED THE $366 UNIT PRICE QUOTED FOR ITEM NO. 1. WAS UNDERSTATED BY AT LEAST $58.40 ($58.23). IS NOWHERE NEAR ITS TRUE VALUE.

B-134245, NOV. 21, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 22, 1957, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO WHETHER CONTRACT NO. DA-36-039-SC-74610 (ORDER NO. 43998-PHILA-57-58 (31) (, DATED APRIL 15, 1957, WITH THE ELECTRO IMPULSE LABORATORY, INC., RED BANK, NEW JERSEY, MAY BE MODIFIED SO AS TO CORRECT CERTAIN ERRORS ALLEGED TO HAVE BEEN MADE THEREIN.

BY INVITATION NO. SC-36-039-57-1854-58, DATED FEBRUARY 11, 1957, THE ARMY SIGNAL SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, SOLICITED BIDS ON 235 UNITS OF ITEM NO. 1, DESCRIBED AS A "DUMMY LOAD, ELECTRICAL DA 64 ( ( (UP," AND CERTAIN ANCILLARY LITERATURE AS DESCRIBED OPPOSITE ITEMS NOS. 2, 3 AND 4 OF THE INVITATION. SEVEN RESPONSIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE LOWEST OF WHICH WAS SUBMITTED BY THE ELECTRO IMPULSE LABORATORY, INC., IN THE TOTAL AMOUNT OF $87,110 ON THE FOUR ITEMS. THE PRINCIPAL ITEM OF THE BID WAS ITEM NO. 1, COVERING 235 DUMMY LOADS, AS SPECIFIED, AND THE NINE SUB-ITEMS OR COMPONENTS COMPRISING EACH UNIT, ON WHICH THE CONTRACTOR QUOTED A BID PRICE OF $366 EACH, AND A TOTAL OF $86,010 FOR THE 235 UNITS. THE NEXT HIGHEST BID ON ITEM NO. 1, AND ITS COMPONENTS, WAS $465 PER UNIT.

ON MAY 14, 1957, OR APPROXIMATELY A MONTH SUBSEQUENT TO THE AWARD, A PREPRODUCTION CONFERENCE WAS CONVENED AT THE CONTRACTOR'S PLANT, ATTENDED, AMONG OTHERS, BY MR. IRVING RUBIN, PRESIDENT OF ELECTRO IMPULSE LABORATORY, INC., AND SEVERAL REPRESENTATIVES OF THE CONTRACTING AGENCY, INCLUDING THE CONTRACT ADMINISTRATOR AND THE GOVERNMENT CONTRACTING OFFICER. FROM THE TRIP REPORT PREPARED BY THE CONTRACT ADMINISTRATOR ON THIS CONFERENCE, AND FROM OTHER OFFICIAL DOCUMENTS IN THE CASE, IT APPEARS THAT AS LATE AS MAY 14, THE CONTRACTOR STILL WAS AWAITING QUOTATIONS FROM THE SEVERAL SUPPLIERS HE HAD PREVIOUSLY SOLICITED; AND THAT DESPITE THE DECLARED URGENCY OF THE GOVERNMENT'S NEED FOR THESE DUMMY LOADS, HE HAD NOT AT THAT TIME PLACED ANY ORDERS WITH HIS SUPPLIERS. IT IS REPORTED THAT BY THE CONTRACTOR'S OWN ADMISSION, REPORTEDLY MADE IN THE PRESENCE OF THE CONTRACTING OFFICER, HE ACTUALLY FIGURED HIS BID PRICE ON ITEM NO. 1 BY DEDUCTING A FLAT $5 FROM HIS LAST SUCCESSFUL BID PRICE OF $371 ON THE ITEM, AND THAT HE NOW FINDS THIS BID UNREALISTIC AT TODAY'S PRICES.

THEREAFTER, BY LETTER DATED JUNE 4, 1957, OR APPROXIMATELY SEVEN WEEKS SUBSEQUENT TO THE AWARD, THE CONTRACTOR ADVISED THE CONTRACTING AGENCY THAT, THROUGH MISUNDERSTANDING UPON HIS PART, HE INADVERTENTLY HAD QUOTED ON ONLY ONE SET OF SUB-ITEMS FOR THE ENTIRE CONTRACT, INSTEAD OF THE 235 SETS OF COMPONENTS REQUIRED TO BE FURNISHED UNDER ITEM NO. 1. HENCE, THERE ALLEGEDLY RESULTED A BID OF ONLY $0.17 PER SET, INSTEAD OF AN INTENDED BID OF $40.40 EACH, MAKING A TOTAL "UNDERBID" OF $9,453.60 ON THE 235 SETS INVOLVED. THE SECOND ERROR IN ITS BID ALLEGEDLY CONSISTED OF THE EXTENSION OF ONLY $2 OPPOSITE SUB ITEM NO. 1-9, ITEM NO. 1, INSTEAD OF ITS INTENDED BID PRICE OF $20 FOR THIS COMPONENT. THUS, IT IS CLAIMED THE $366 UNIT PRICE QUOTED FOR ITEM NO. 1, WITH COMPONENTS, WAS UNDERSTATED BY AT LEAST $58.40 ($58.23), AND, AFTER ADDING THERETO AN ADDITIONAL 10 PERCENT EACH FOR ADMINISTRATIVE EXPENSE ($5.82) AND PROFIT ($6.41), THE CONTRACTOR NOW CLAIMS AN INCREASE OF $70.46 PER UNIT, MAKING ITS INTENDED BID PRICE $436.40 ($436.46) INSTEAD OF $366, AS QUOTED. INA SUPPLEMENTAL LETTER DATED JUNE 11, 1957, THE CONTRACTOR EXPLAINED THAT ITS EXTENDED UNIT PRICE OF $2 FOR SUB-ITEM NO. 1-9, ITEM NO. 1, IS NOWHERE NEAR ITS TRUE VALUE, AND THAT SUCH QUOTATION IS ENTIRELY OUT OF LINE WITH OTHER UNIT PRICES QUOTED BY HIM ON SMALLER ITEMS OF CABLE ALSO LISTED AS COMPONENTS UNDER THAT ITEM.

CERTAIN WORKSHEETS HAVE BEEN SUBMITTED BY THE CONTRACTOR PURPORTING TO SHOW THE BASIS UPON WHICH ITS ORIGINAL BID ON ITEM NO. 1 WAS COMPUTED BUT, FOR THE MOST PART, THEY ARE CONSIDERED INCONCLUSIVE AND INSUFFICIENT, OF THEMSELVES, TO DEFINITELY ESTABLISH THE EXISTENCE OF THE ERRORS ALLEGED.

REGARDLESS OF WHAT MAY BE SAID ABOUT HOW THE MISTAKE MAY HAVE OCCURRED, THE SUCCESSFUL BIDDER IN A CASE SUCH AS HERE INVOLVED WHO ALLEGES A MISTAKE IN THE SUBMISSION OF HIS BID IS NOT ENTITLED TO RELIEF UNLESS IT APPEARS THAT THE MISTAKE WAS SO APPARENT THAT THE CONTRACTING OFFICER IS CHARGEABLE WITH NOTICE OF ERROR.

IT LONG HAS BEEN RECOGNIZED THAT THE RESPONSIBILITY FOR THE PREPARATION OF A PROPOSAL RESTS SOLELY WITH THE BIDDER, AND HE CANNOT ESCAPE LIABILITY FROM THE CONSEQUENCES OF NEGLIGENCE UPON HIS PART IN PREPARING HIS BID. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 160; 20 COMP. GEN. 652.

WITH RESPECT TO THE CONTRACTOR'S REQUEST FOR AN INCREASE OF $70.46 PER UNIT IN THE PRICE OF ITEM NO. 1, THE LAW IS EQUALLY WELL SETTLED THAT MUTUAL MISTAKE AFFORDS THE ONLY LEGAL JUSTIFICATION FOR THE REFORMATION OR MODIFICATION OF A CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249; SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. IN THIS CONNECTION, IT HAS BEEN AFFIRMATIVELY REPORTED BY THE CONTRACTING OFFICER THAT HE ACCEPTED THE CONTRACTOR'S BID OF MARCH 1, 1957, IN ENTIRE GOOD FAITH AND WITHOUT ANY NOTICE, ACTUAL OR CONSTRUCTIVE, OF THE ERRORS ALLEGED TO HAVE BEEN MADE THEREIN. IN THE CIRCUMSTANCES, THE CONCLUSION IS INESCAPABLE THAT THE MISTAKES HERE ALLEGED WERE UNILATERAL IN CHARACTER, AND HENCE, DO NOT ENTITLE THE CONTRACTOR TO THE RELIEF REQUESTED. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683. ..END :