B-135510, APR. 4, 1958

B-135510, APR. 4, 1958

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MARCH 13, 1958, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR GEORGE T. GERHARDT COMPANY, INC.,ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-33 031-QM-20469, DATED NOVEMBER 22, 1957, IS BASED.

BY INVITATION NO. QM-33-031-58-126 THE QUARTERMASTER PURCHASING AGENCY, COLUMBUS GENERAL DEPOT, COLUMBUS, OHIO, REQUESTED BIDS ON VARIOUS QUANTITIES OF CUPS, SOUP PLATES, DINNER PLATES, SUGAR BOWLS, AND SALT SHAKERS, ALL IN ACCORDANCE WITH THE NAMED SPECIFICATION, WITH CERTAIN EXCEPTIONS. THE FOLLOWING BIDS SUBMITTED BY GEORGE T. GERHARDT COMPANY, INC., WERE THE LOWEST RECEIVED ON ITEMS 1 THROUGH 4:

CHART

ITEM 1 $0.55

ITEM 2 0.275

ITEM 3 0.275

ITEM 4 0.97

OTHER BIDS ON THOSE ITEMS RANGED AS FOLLOWS:

CHART

ITEM 1 $0.69 TO $1.58

ITEM 2 0.544 TO 1.28

ITEM 3 0.565 TO 1.28

ITEM 4 1.20 TO 1.77

BECAUSE OF THE WIDE DISCREPANCY IN THE BIDS, THE COMPANY WAS ASKED TO VERIFY ITS BID PRICES. THE COMPANY CONFIRMED THE PRICES ON ITEMS 1, 2, AND 3, STATING THAT IT HAD MADE THESE ITEMS BEFORE, BUT REQUESTED THAT THE BID ON ITEM 4 BE DISREGARDED SINCE IT HAD FAILED TO INCLUDE THE DIE COST. WORKSHEETS AND OTHER DATA ON ITEM 4 WERE SUBMITTED IN SUPPORT OF THE ERROR ALLEGED AND THE COMPANY WAS PERMITTED TO WITHDRAW ITS BID ON THIS ITEM. AWARD WAS MADE ON NOVEMBER 22, 1957, FOR ITEMS 1, 2, AND 3 AT THE BID PRICES. BY SUPPLEMENTAL AGREEMENT, DATED DECEMBER 12, 1957, ITEM 1 WAS CANCELED AT NO COST TO THE GOVERNMENT, AS THE ITEM WAS NO LONGER NEEDED.

BY LETTER OF DECEMBER 24, 1957, THE CONTRACTOR ALLEGED IT HAD MADE AN ERROR IN ITS BID ON ITEMS 2 AND 3 IN THAT IN ESTIMATING THE AMOUNT OF ALUMINUM REQUIRED FOR EACH ITEM IT HAD USED A FIGURE OF 25 PERCENT OF A POUND, WHEREAS IT SHOULD HAVE USED 65 PERCENT OF A POUND, AND THAT THE COST OF THE ALUMINUM ALONE WOULD EXCEED THE CONTRACT PRICE. A WORKSHEET SUBMITTED WITH THIS LETTER INDICATED THAT THE CONTRACTOR HAD USED THE SAME COSTS FOR BOTH THE SOUP PLATES AND DINNER PLATES RESULTING IN A COST OF $0.275 EACH, THE AMOUNT BID. THE CONTRACTOR REQUESTED AN INCREASE IN ITEMS 2 AND 3 TO $0.47635 EACH. THE COST AND PRICE ANALYSIS BRANCH OF THE DEPOT QUESTIONED THE 65 PERCENT OF A POUND FIGURE AND FURTHER INQUIRY WAS MADE OF THE CONTRACTOR AS TO HOW HE HAD ARRIVED AT SUCH FIGURE. THE CONTRACTOR FURNISHED CERTAIN INFORMATION SHOWING HOW HE ARRIVED AT THE PRICE INCREASE. THE REPORT OF THE SUCCESSOR CONTRACTING OFFICER STATES THAT THE CONTRACTOR'S FIGURES WERE NOT CORRECTLY COMPUTED ON THE CORRECT WEIGHT OF ALUMINUM REQUIRED, BUT THAT, IF FIGURED AT THE CORRECT WEIGHT, THE REVISED PRICE SHOULD AMOUNT TO $0.45719 PER UNIT OR A TOTAL INCREASE IN THE CONTRACT PRICE OF $4,197.66.

THE BASIC QUESTION INVOLVED IS NOT WHETHER THE BIDDER MADE AN ERROR IN ITS BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE COMPANY'S BID. WHILE IT IS TRUE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE BY REASON OF COMPARATIVE PRICES THAT AN ERROR MAY HAVE BEEN MADE IN THE LOW BID ON ITEMS 2 AND 3, THE RECORD DOES NOT INDICATE THAT THE PRICE DIFFERENCES WERE SO GREAT THAT THE LOW BID PRICE NECESSARILY MUST HAVE BEEN ERRONEOUS. UNDER THE CIRCUMSTANCES, THE ONLY DUTY IMPOSED ON THE CONTRACTING OFFICER PRIOR TO AWARD WAS TO VERIFY THAT THE BIDDER INTENDED TO SUBMIT A BID OF $0.275 EACH ON THE ITEMS AND INTENDED TO BE BOUND BY THE CONTRACTING OFFICER'S ACCEPTANCE THEREOF. SUCH DUTY WAS COMPLETELY DISCHARGED WHEN THE CONTRACTING OFFICER REQUESTED VERIFICATION OF THE PRICES BID. THE COMPANY REPLIED THAT THE PRICES BID ON ITEMS 2 AND 3 WERE "PERFECTLY SATISFACTORY" AS IT HAD MADE THESE ITEMS BEFORE.

THE GENERAL RULE IS THAT WHERE A BIDDER IS AFFORDED A PROPER OPPORTUNITY TO VERIFY HIS BID PRICE PRIOR TO AWARD, THE CONTRACTING OFFICER IS UNDER NO OBLIGATION TO MAKE FURTHER INQUIRY AS TO THE CORRECTNESS OF THE BID. SEE CARNEGIE STEEL COMPANY V. CONNELLY, 97A. 774; SHRIMPTON MFG. COMPANY V. BRIN, 125 S.W. 942.

ON THE BASIS OF THE PRESENT RECORD IT MUST THEREFORE BE CONCLUDED THAT ANY ERROR WHICH WAS DISCOVERED IN THE BID PRICE AFTER VERIFICATION WAS UNILATERAL--- NOT MUTUAL--- SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507; OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259, AND THAT ACCEPTANCE OF THE VERIFIED BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

UNDER THE CIRCUMSTANCES, WE FIND NO LEGAL BASIS ON WHICH PAYMENTS IN EXCESS OF THE CONTRACT PRICE MAY BE MADE TO THE CONTRACTOR.

THE PAPERS, WITH THE EXCEPTION OF A COPY OF THE SUCCESSOR CONTRACTING OFFICER'S REPORT AND RECOMMENDATION, WITH ATTACHMENTS, ARE RETURNED HEREWITH.