B-134926, FEB. 12, 1958

B-134926: Feb 12, 1958

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED JANUARY 17. WHICH WAS IN ADDITION TO THE F.O.B. THIS FORM WAS EXECUTED IN TRIPLICATE BY THE CONTRACTING OFFICER ON JUNE 21. IT WAS COMPLETED AND RETURNED ON JUNE 27. 990 WAS NOT BASED ON SUPPLYING A 120 AMPERE HOUR EXIDE BATTERY LISTED AS ITEM 10 IN THE CONTRACT. WAS QUOTED ON THE BASIS OF A 100 AMPERE HOUR EXIDE BATTERY WHICH WAS NORMALLY FURNISHED FOR SUCH EQUIPMENT. THAT RATHER THAN HOLD UP SIGNING THE CONTRACT A DECISION HAD BEEN MADE TO COMPLETE THE CONTRACT AS IT WAS WRITTEN AND ATTEMPT TO RECOVER THE ADDITIONAL $425 BY FURTHER NEGOTIATION. THE CONTRACTING OFFICER TOOK THE POSITION THAT THE DISCLOSURE OF THE ALLEGED MISTAKE IN BID AND REQUEST FOR CHANGE IN PRICE FOR ITEM 10 WAS SUBSEQUENT TO DATE OF AWARD AND THAT HE HAD NO AUTHORITY TO ADJUST THE BID PRICE SUBSEQUENT TO AN AWARD.

B-134926, FEB. 12, 1958

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED JANUARY 17, 1958, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED TO THE AUTOMATIC ELECTRIC SALES CORPORATION, CHICAGO, ILLINOIS, FOR AN ALLEGED MISTAKE IN A PRICE QUOTATION SUBMITTED IN RESPONSE TO A REQUEST FOR QUOTATION (DD FORM 747).

IN RESPONSE TO REQUEST FOR QUOTATION NO. 21-57, DATED JUNE 17, 1957, THE HONOLULU OFFICE OF AUTOMATIC ELECTRIC SALES CORPORATION, ALLEGED SOLE SOURCE OF SUPPLY, IN THEIR LETTER OF JUNE 18, 1957, QUOTED A PRICE OF $7,750, F.O.B. MANUFACTURER, TO FURNISH, UNINSTALLED, ONE TYPE 50 PAX SYSTEM, TOTALING 70 UNITS. IN A LETTER DATED JUNE 20, 1957, THE COMPANY SUBMITTED A SUPPLEMENTARY QUOTATION TO COVER FREIGHT AND HANDLING CHARGES IN THE SUM OF $240, WHICH WAS IN ADDITION TO THE F.O.B. CHICAGO PRICE, THEREBY QUOTING A TOTAL PRICE OF $7,990 FOR THE COMPLETE LIST OF MATERIALS TO BE DELIVERED F.O.B. TO THE WAREHOUSE IN HONOLULU. ON THIS BASIS THE CONTRACTING OFFICER PREPARED A CONTRACT ON FORMS DD 351 AND DD 351-2, WITH STANDARD FORM 32 ATTACHED, CITING 10 U.S.C. 2304 (A) (10) AS AUTHORITY FOR AWARD OF THE NEGOTIATED CONTRACT. THIS FORM WAS EXECUTED IN TRIPLICATE BY THE CONTRACTING OFFICER ON JUNE 21, 1957, AND FORWARDED TO THE COMPANY FOR SIGNATURE. IT WAS COMPLETED AND RETURNED ON JUNE 27, 1957, WITH A COPY OF A LETTER FROM MR. H. S. BITTNER OF THE CHICAGO OFFICE TO THE HONOLULU OFFICE OF THE COMPANY, STATING THAT AN ERROR IN THE AMOUNT OF $425 HAD BEEN MADE IN THE BID; THAT THE PRICE OF $7,990 WAS NOT BASED ON SUPPLYING A 120 AMPERE HOUR EXIDE BATTERY LISTED AS ITEM 10 IN THE CONTRACT, BUT WAS QUOTED ON THE BASIS OF A 100 AMPERE HOUR EXIDE BATTERY WHICH WAS NORMALLY FURNISHED FOR SUCH EQUIPMENT; THAT RATHER THAN HOLD UP SIGNING THE CONTRACT A DECISION HAD BEEN MADE TO COMPLETE THE CONTRACT AS IT WAS WRITTEN AND ATTEMPT TO RECOVER THE ADDITIONAL $425 BY FURTHER NEGOTIATION. THE CONTRACTING OFFICER TOOK THE POSITION THAT THE DISCLOSURE OF THE ALLEGED MISTAKE IN BID AND REQUEST FOR CHANGE IN PRICE FOR ITEM 10 WAS SUBSEQUENT TO DATE OF AWARD AND THAT HE HAD NO AUTHORITY TO ADJUST THE BID PRICE SUBSEQUENT TO AN AWARD. IT APPARENTLY IS CONCEDED THAT THE COMPANY'S STATEMENT IS CORRECT, AS INDICATED BY ITS ESTABLISHED PRICE SCHEDULE ON PAX EQUIPMENT.

THE QUESTION PRESENTED IS WHETHER THE ISSUANCE OF A NEGOTIATED CONTRACT FORM DD351 AND ATTACHMENTS, WITH CONTRACTING OFFICER'S SIGNATURE, IN RESPONSE TO A CONTRACTOR'S PRICE QUOTATION MADE THROUGH THE USE OF DD FORM 747, CONSTITUTES A VALID ACCEPTANCE EFFECTIVELY BINDING THE CONTRACTOR, OR WHETHER IT CONSTITUTES ONLY AN OFFER BY THE GOVERNMENT WHICH MUST BE ACCEPTED BY THE CONTRACTOR BEFORE A VALID AND BINDING CONTRACT IS CONSUMMATED.

SUBSTANTIALLY THE SAME QUESTION WAS PRESENTED BY YOUR DEPARTMENT BY LETTER OF MARCH 21, 1957, FROM THE ASSISTANT SECRETARY (LOGISTICS), WITH WHICH THERE WAS FORWARDED AN OPINION OF THE JUDGE ADVOCATE GENERAL IN WHICH THE CONCLUSION WAS REACHED THAT DD FORM 747 WAS NOT INTENDED OR AUTHORIZED FOR USE AS A MEANS OF OBTAINING FIRM BIDS AND THAT A PURCHASE ORDER ISSUED ON THE BASIS OF QUOTATIONS FURNISHED UNDER THAT FORM WAS NOT A CONTRACT BINDING ON THE SELLER BUT MERELY AN OFFER BY THE GOVERNMENT. BY OUR DECISION TO YOU OF OCTOBER 18, 1957, B 131228, 37 COMP. GEN. 258, WE AGREED SUBSTANTIALLY WITH THE CONCLUSION OF THE JUDGE ADVOCATE GENERAL.

IN THE PRESENT CASE THERE ARE ALSO FOR CONSIDERATION THE PROVISIONS OF SECTION 1, PART 4, PARAGRAPH 1-403C OF THE ARMY PROCUREMENT PROCEDURES, WHICH PROVIDE THAT,"A CONTRACT MAY BE ENTERED INTO BY A CONTRACTING OFFICER ONLY IF THE CONTRACT IS WRITTEN ON A STANDARD OR AN APPROVED FORM OF CONTRACT; " AND SECTION 30, PART 2, PARAGRAPH 30 202B, WHICH STATES IN PART:

"IN CASE OF FORMAL ADVERTISING, THE PERSONAL SIGNATURE OF THE CONTRACTING OFFICER ON THE AWARD CONSUMMATES THE CONTRACT. IN THE CASE OF NEGOTIATED CONTRACTS, THE CONTRACTING OFFICER SHALL PERSONALLY SIGN ON BEHALF OF THE UNITED STATES AFTER THE CONTRACTOR HAS SIGNED, EXCEPT WHERE OTHERWISE REQUIRED BY THE PARTICULAR CONTRACT FORM * * *.'

IT THEREFORE APPEARS FROM THE FACTS IN THE PRESENT CASE THAT THE COMMUNICATIONS FROM THE AUTOMATIC ELECTRIC SALES CORPORATION, DATED JUNE 18, 1957, AND JUNE 20, 1957, IN RESPONSE TO FORM DD 747 (REQUEST FOR QUOTATION), MAY PROPERLY BE CONSIDERED MERELY AS PRELIMINARY NEGOTIATIONS AND NOT AS A BINDING OFFER, AND THAT THE ISSUANCE OF THE NEGOTIATED CONTRACT, FORM DD 351, SIGNED BY THE CONTRACTING OFFICER WAS NOT AN ACCEPTANCE CREATING A BINDING CONTRACT BUT ONLY AN OFFER TO THE CORPORATION WHICH HAD TO BE ACCEPTED. THIS CONCLUSION IS PREDICATED ON THE INTERPRETATIONS GIVEN TO THE CURRENT PROVISIONS OF PART 16 OF THE ASPR AND TO THE PRESENT ARMY PROCUREMENT PROCEDURES.

IN THESE CIRCUMSTANCES, SINCE THE COMPANY'S ACCEPTANCE OF THE CONTRACT ON JUNE 25, 1957, WAS QUALIFIED BY ITS ALLEGATION THAT AN ERROR HAD BEEN MADE IN THE PRICE QUOTATION, AND ITS ELECTION TO SUPPLY THE EQUIPMENT WAS EXPRESSLY MADE SUBJECT TO FURTHER NEGOTIATION FOR AN ADDITIONAL AMOUNT, WE HAVE NO OBJECTION TO THE GRANTING OF APPROPRIATE RELIEF BY MODIFICATION OF THE CONTRACT TO THE EXTENT DEEMED PROPER BY THE CONTRACTING OFFICER AND PAYMENT TO THE AUTOMATIC ..END :