B-134252, NOV. 12, 1957

B-134252: Nov 12, 1957

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 29. IS BASED. TECHNOLOGY INSTRUMENT CORPORATION OFFERED TO FURNISH THE RHEOSTATS FOR $3.50 EACH AND ALSO OFFERED A 16 PERCENT QUANTITY DISCOUNT IF ALL UNITS WERE ORDERED AT ONE TIME. CONTRACT WAS AWARDED TO THE COMPANY ON AUGUST 5. TO OUR OFFICE THE COMPANY STATED THAT THE ERROR WAS CAUSED BY ONE OF ITS ENGINEERS MISREADING THE DRAWINGS. THE CONTRACTING OFFICER HAS RECOMMENDED THAT THE CONTRACT BE CANCELED BECAUSE THE COMPANY HAS ACTED IN GOOD FAITH WITH THE FACILITY IN PRIOR BUSINESS TRANSACTIONS AND THAT IT WAS STRONGLY BELIEVED THAT THEY ACTED IN GOOD FAITH IN THIS INSTANCE. FURTHER IT WAS STATED THAT THE CONTRACTING OFFICER DID NOT SUSPECT OR BELIEVE PRIOR TO AWARD THAT MISTAKE HAD BEEN MADE BY THE COMPANY BECAUSE OF PRICING.

B-134252, NOV. 12, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 29, 1957, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR TECHNOLOGY INSTRUMENT CORPORATION ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N163-5543, DATED AUGUST 5, 1957, IS BASED.

BY INVITATION NO. IFB-163/10767-57, DATED JUNE 24, 1957, THE UNITED STATES NAVAL AVIONICS FACILITY, INDIANAPOLIS, INDIANA, REQUESTED BIDS-- TO BE OPENED JULY 8, 1957--- FOR FURNISHING 12,310 RHEOSTATS TO BE IN ACCORDANCE WITH THE "BU ORD DWG. 1242188-5, REV C.' TECHNOLOGY INSTRUMENT CORPORATION OFFERED TO FURNISH THE RHEOSTATS FOR $3.50 EACH AND ALSO OFFERED A 16 PERCENT QUANTITY DISCOUNT IF ALL UNITS WERE ORDERED AT ONE TIME. CONTRACT WAS AWARDED TO THE COMPANY ON AUGUST 5, 1957, FOR FURNISHING THE ENTIRE QUANTITY. BY LETTER OF AUGUST 23, 1957, THE COMPANY ALLEGED ERROR IN ITS BID AND REQUESTED THAT THE CONTRACT BE CANCELED. LETTER OF SEPTEMBER 27, 1957, TO OUR OFFICE THE COMPANY STATED THAT THE ERROR WAS CAUSED BY ONE OF ITS ENGINEERS MISREADING THE DRAWINGS. THE CONTRACTING OFFICER HAS RECOMMENDED THAT THE CONTRACT BE CANCELED BECAUSE THE COMPANY HAS ACTED IN GOOD FAITH WITH THE FACILITY IN PRIOR BUSINESS TRANSACTIONS AND THAT IT WAS STRONGLY BELIEVED THAT THEY ACTED IN GOOD FAITH IN THIS INSTANCE. FURTHER IT WAS STATED THAT THE CONTRACTING OFFICER DID NOT SUSPECT OR BELIEVE PRIOR TO AWARD THAT MISTAKE HAD BEEN MADE BY THE COMPANY BECAUSE OF PRICING, SINCE THE UNIT PRICE RANGE WAS $2.91, $3.75, $4.71, $5.56 AND $5.60 AFTER APPLICATION OF APPLICABLE CASH AND QUANTITY DISCOUNTS.

OF COURSE THE FACT THAT THE COMPANY ACTED IN GOOD FAITH IN PRIOR BUSINESS TRANSACTIONS FORMS NO BASIS FOR CANCELLATION OF THE CONTRACT. UNDER THE FACTS REPORTED, IT DOES NOT APPEAR THAT THE DIFFERENCE BETWEEN THE CONTRACTOR'S BID AND THE OTHER BIDS WAS SO GREAT AS TO JUSTIFY THE CONCLUSION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF PROBABILITY OF ERROR. IT FOLLOWS THAT THE ACCEPTANCE OF THE BID OF THE TECHNOLOGY INSTRUMENT CORPORATION WAS IN GOOD FAITH--- NO ERROR HAVING BEEN ALLEGED BY IT UNTIL AFTER THE AWARD OF THE CONTRACT- - AND THAT SUCH ACTION CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS 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.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED SOLELY TO THE CONTRACTOR'S NEGLIGENCE AND SINCE THE ERROR UPON WHICH THE REQUEST FOR RELIEF IS BASED WAS UNILATERAL, NOT MUTUAL, THE CONTRACTOR IS NOT ENTITLED TO RELIEF FROM ITS OBLIGATIONS UNDER THE CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259, AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF OCTOBER 9, 1957, ARE RETURNED.