B-134968, FEB. 5, 1958

B-134968: Feb 5, 1958

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER OF JANUARY 20. WAS ACCEPTED ON BEHALF OF THE CONTRACTING OFFICER BY HIS AUTHORIZED PURCHASING AGENT. THE CONTRACTOR WAS REQUESTED TO FURNISH A LATER PACK AT THE QUOTED PRICE WITH RESPECT TO LOT 1834. THE CONTRACTING OFFICER HAS STATED THAT THE OFFER WAS ACCEPTED IN GOOD FAITH WITHOUT ANY REASON TO SUSPECT ERROR ON THE PART OF THE CONTRACTOR IN ITS QUOTATIONS. THE PRICES OFFERED WERE NOT OUT OF LINE WITH THE OTHER BIDS RECEIVED. THERE IS NO JUSTIFICATION FOR CHARGING THE PROCUREMENT OFFICIALS WITH CONSTRUCTIVE KNOWLEDGE OF ERROR. UNDER THOSE CIRCUMSTANCES A VALID AND BINDING CONTRACT WAS CREATED WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES.

B-134968, FEB. 5, 1958

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER OF JANUARY 20, 1958, AND ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), TRANSMITTING FOR OUR DECISION THE REQUEST OF THE RICHMOND-CHASE COMPANY FOR AN INCREASE IN THE STIPULATED PRICES UNDER PURCHASE ORDER CONTRACTS NOS. 16818-57 AND 16821- 57, BOTH DATED APRIL 15, 1957.

THE RECORD DISCLOSES THAT IN RESPONSE TO INVITATION DATED APRIL 8, 1957, THE RICHMOND-CHASE COMPANY, THROUGH ITS REPRESENTATIVE, MR. S. B. JACOBSON, SUBMITTED A BID TO FURNISH THREE LOTS OF FROZEN BROCCOLI AT SPECIFIED UNIT PRICES, F.O.B. DESTINATION, IN ACCORDANCE WITH THE TERMS OF THE NOTICE OF INTENT TO PURCHASE. THE BID, BEING THE LOWEST PROPOSAL RECEIVED, WAS ACCEPTED ON BEHALF OF THE CONTRACTING OFFICER BY HIS AUTHORIZED PURCHASING AGENT, WITHOUT NOTICE OF ERROR ON APRIL 15, 1957. THE RECORD FURTHER DISCLOSES THAT IMMEDIATELY PRIOR TO INFORMAL ACCEPTANCE OF THE OFFER, THE CONTRACTOR WAS REQUESTED TO FURNISH A LATER PACK AT THE QUOTED PRICE WITH RESPECT TO LOT 1834, TO WHICH HE AGREED, WITHOUT REFERRING TO ANY ERROR IN THE ORIGINAL QUOTATIONS. IN THE COURSE OF THE TELEPHONE CONVERSATION NOTIFYING THE COMPANY OF THE AWARD, MR. JACOBSON STATED THAT THE COST OF TRANSPORTATION HAD BEEN INADVERTENTLY OMITTED IN COMPUTING THE PRICE QUOTED FOR LOT 1834, AND BY SUBSEQUENT CORRESPONDENCE ALLEGED ERROR IN THE COMPUTATION OF ALL THREE LOTS.

THE CONTRACTING OFFICER HAS STATED THAT THE OFFER WAS ACCEPTED IN GOOD FAITH WITHOUT ANY REASON TO SUSPECT ERROR ON THE PART OF THE CONTRACTOR IN ITS QUOTATIONS. THE PRICES OFFERED WERE NOT OUT OF LINE WITH THE OTHER BIDS RECEIVED, THE DIFFERENCE UNDER LOT NO. 2031 BEING ONLY A FRACTION OF ONE CENT BETWEEN THE BID OF THE CONTRACTOR AND THAT OF THE NEXT LOW BIDDER. THEREFORE, THERE IS NO JUSTIFICATION FOR CHARGING THE PROCUREMENT OFFICIALS WITH CONSTRUCTIVE KNOWLEDGE OF ERROR. UNDER THOSE CIRCUMSTANCES A VALID AND BINDING CONTRACT WAS CREATED WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. THE COURTS HAVE HELD REPEATEDLY THAT WHERE, AS HERE, A MISTAKE IS MADE AS A RESULT OF NEGLIGENCE OR FAILURE TO EXERCISE THAT DEGREE OF DILIGENCE WHICH MAY FAIRLY BE EXPECTED OF A REASONABLE PERSON NEITHER LAW NOR EQUITY WILL GRANT RELIEF.

ACCORDINGLY, THERE IS NO LEGAL BASIS UPON WHICH WE MAY AUTHORIZE THE PAYMENT OF ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE.