B-135774, MAY 1, 1958

B-135774: May 1, 1958

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TO CASCADE MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF MARCH 25. SINCE YOUR BID WAS CONSIDERABLY LOWER THAN THE OTHER THREE (3) BIDS. IN RESPONSE THERETO YOUR COMPANY STATED THAT THE PRICE WAS CORRECT AND THAT THE MANUFACTURE OF SUCH ITEMS WAS YOUR STOCK IN TRADE. YOUR REQUEST FOR REVIEW IS BASED UPON THE PREMISE THAT YOU MADE AN ERROR IN YOUR ESTIMATES AND FAILED TO TAKE INTO CONSIDERATION ALL THE REFERENCED SPECIFICATIONS AND THAT SINCE YOUR BID WAS CONSIDERABLY LOWER THAN THE NEXT LOWEST BID. YOU SHOULD HAVE BEEN ALERTED AS TO A POSSIBLE ERROR. IT IS REPORTED THAT THE CONTRACTING OFFICER PRIOR TO AWARD DID SUSPECT THE PROBABILITY OF AN ERROR IN YOUR BID. THE ONLY OBLIGATION PROPERLY CHARGEABLE TO THE CONTRACTING OFFICER AT THE TIME WAS TO AFFORD YOU THE OPPORTUNITY TO VERIFY THE BID.

B-135774, MAY 1, 1958

TO CASCADE MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 25, 1958, REQUESTING REVIEW AND RECONSIDERATION OF OUR OFFICE SETTLEMENT OF MARCH 12, 1958, WHICH DISALLOWED YOUR CLAIM IN THE SUM OF $4,695.48 REPRESENTING A LOSS AS THE RESULT OF AN ERROR IN YOUR BID UNDER CONTRACT NO. DA-20 113-ORD-21779, AS MODIFIED.

IT APPEARS THAT IN RESPONSE TO A REQUEST FOR BIDS OF THE DEPARTMENT OF THE ARMY, ORDNANCE CORPS, YOU QUOTED A PRICE OF $217.05 EACH FOR 56, LATER INCREASED TO 58, CYLINDER ASSEMBLY HOIST HYDRAULIC 8 INCHES, OR A TOTAL PRICE OF $12,154.80. SINCE YOUR BID WAS CONSIDERABLY LOWER THAN THE OTHER THREE (3) BIDS, THE CONTRACTING OFFICER REQUESTED YOUR COMPANY TO VERIFY YOUR PRICE. IN RESPONSE THERETO YOUR COMPANY STATED THAT THE PRICE WAS CORRECT AND THAT THE MANUFACTURE OF SUCH ITEMS WAS YOUR STOCK IN TRADE. AFTER AWARD YOUR COMPANY NOTIFIED THE GOVERNMENT THAT IT COULD NOT MAKE THE ITEM AT THE PRICE BID AND REQUESTED RELIEF.

YOUR REQUEST FOR REVIEW IS BASED UPON THE PREMISE THAT YOU MADE AN ERROR IN YOUR ESTIMATES AND FAILED TO TAKE INTO CONSIDERATION ALL THE REFERENCED SPECIFICATIONS AND THAT SINCE YOUR BID WAS CONSIDERABLY LOWER THAN THE NEXT LOWEST BID, YOU SHOULD HAVE BEEN ALERTED AS TO A POSSIBLE ERROR.

IT IS REPORTED THAT THE CONTRACTING OFFICER PRIOR TO AWARD DID SUSPECT THE PROBABILITY OF AN ERROR IN YOUR BID. HOWEVER, THE ONLY OBLIGATION PROPERLY CHARGEABLE TO THE CONTRACTING OFFICER AT THE TIME WAS TO AFFORD YOU THE OPPORTUNITY TO VERIFY THE BID, AND THAT OBLIGATION WAS FULLY MET AND SATISFIED WHEN THE CONTRACTING OFFICER NOTIFIED YOUR COMPANY AND REQUESTED VERIFICATION. IN THIS REGARD, THE RECORD SHOWS THAT ONE MR. HUCKLE HAS REPORTED HE MADE A PREAWARD SURVEY WITH A REPRESENTATIVE OF YOUR COMPANY, MR. PAGE, ON SEPTEMBER 18, 1956. MR. HUCKLE HAS STATED THAT THE PRINCIPAL REASON FOR THE SURVEY WAS THE CONFIRMATION OF THE BID PRICE AND THAT MR. PAGE WAS TOLD THAT "THE SUBJECT WAS CONSIDERED LOW AND A DETAILED CHECK SHOULD BE MADE OF ALL COSTS.' ON THAT DATE MR. PAGE SENT A LETTER TO THE SAN FRANCISCO ORDNANCE DISTRICT WHICH CONTAINED THE SOLE STATEMENT THAT THE PRICE WAS $217.05 EACH.

EVEN IF IT WERE CONCEDED THAT YOUR ATTENTION WAS NOT INVITED TO THE FACT THAT YOUR BID WAS MUCH LOWER THAN THE OTHER BIDS, THE VERY FACT, WITHOUT MORE, THAT A REQUEST WAS MADE FOR VERIFICATION OF THE BID SHOULD HAVE IMMEDIATELY PLACED YOU ON NOTICE OF THE PROBABILITY THAT AN IRREGULARITY IN THE BID WAS SUSPECTED AND, IF YOU ELECTED TO AFFIRM THE BID WITHOUT A FURTHER EXAMINATION THEREOF, IT MUST BE CONCLUDED THAT YOU ASSUMED ANY RIGHT THAT MIGHT HAVE RESULTED FROM AN ERRONEOUS OR ILL-ADVISED BID. WHEN THE CORRECTNESS OF THE BID WAS AFFIRMED THE CONTRACTING OFFICER HAD NO ALTERNATIVE BUT TO CONSIDER THE BID FURTHER FOR ACCEPTANCE NOTWITHSTANDING THAT THE PRICE REMAINED CONSIDERABLY LOWER THAN THE OTHER BIDS RECEIVED.

THERE ARE MANY REASONS WHY PARTICULAR MANUFACTURERS OR DEALERS ARE MOTIVATED TO, AND DO, QUOTE PRICES CONSIDERABLY LOWER THAN THEIR COMPETITORS AND SUBSTANTIAL VARIATIONS IN BID PRICES ARE EXPERIENCED REGULARLY BY GOVERNMENT CONTRACTING OFFICERS.

INSOFAR AS THE RECORD HERE DISCLOSES IN YOUR CASE, THE ACCEPTANCE OF YOUR BID WAS IN GOOD FAITH--- NO ERROR WAS ALLEGED UNTIL AFTER AWARD. THUS, THE ACCEPTANCE OF YOUR BID UNDER THE CIRCUMSTANCES CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES 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. ALTHOUGH YOU MAY HAVE SUSTAINED A LOSS IN THE PERFORMANCE OF THE CONTRACT, THE GOVERNMENT DOES NOT PAY ADDITIONAL COMPENSATION UNDER A CONTRACT MERELY BECAUSE A CONTRACTOR MAY HAVE SUSTAINED A LOSS. THE BID WAS NOT SO LOW AS TO REQUIRE A DETERMINATION THAT PERFORMANCE AT THE CONTRACT PRICE MUST BE REGARDED AS UNCONSCIONABLE.