B-135815, APRIL 25, 1958, 37 COMP. GEN. 706

B-135815: Apr 25, 1958

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CONTRACTS - MISTAKES - VERIFICATION - AWARD BEFORE RECEIPT OF REPLY - REASONABLE TIME - EVIDENCE OF ERROR A LOW BIDDER WHO WAS AWARDED A CONTRACT 2 DAYS AFTER RECEIVING A MAILED REQUEST FOR VERIFICATION OF BID PRICES. BEFORE HIS LETTER ALLEGING ERRORS WAS RECEIVED BY THE CONTRACTING AGENCY. NOTWITHSTANDING ADMINISTRATIVE CONTENTION THAT THE PROCUREMENT WAS URGENT. PRESENTS EVIDENCE TO SHOW THAT ONE OF THE COMPONENT PRICES CONTRIBUTING TO THE UNIT BID PRICE FOR ONE ITEM WAS TRANSPOSED MAY BE ALLOWED A PRICE ADJUSTMENT WHICH WILL NOT CHANGE STANDING AS LOW BIDDER. ON BASIS OF EVIDENCE WHICH SHOWS THAT THE ERROR IN THE SECOND ITEM WAS DUE TO OMISSION OF COMPONENT STEPS AND PRICES. PRICE ADJUSTMENT TO INCLUDE FACTORS WHICH WERE NOT INTENDED AT THE TIME BID WAS MADE MAY NOT BE AUTHORIZED.

B-135815, APRIL 25, 1958, 37 COMP. GEN. 706

CONTRACTS - MISTAKES - VERIFICATION - AWARD BEFORE RECEIPT OF REPLY - REASONABLE TIME - EVIDENCE OF ERROR A LOW BIDDER WHO WAS AWARDED A CONTRACT 2 DAYS AFTER RECEIVING A MAILED REQUEST FOR VERIFICATION OF BID PRICES, AND BEFORE HIS LETTER ALLEGING ERRORS WAS RECEIVED BY THE CONTRACTING AGENCY, MAY NOT BE REGARDED AS HAVING BEEN ALLOWED A REASONABLE TIME FOR CONFIRMATION OF THE BID, NOTWITHSTANDING ADMINISTRATIVE CONTENTION THAT THE PROCUREMENT WAS URGENT. CONTRACTOR WHO, UPON REQUEST FOR VERIFICATION OF BID ERRORS, PRESENTS EVIDENCE TO SHOW THAT ONE OF THE COMPONENT PRICES CONTRIBUTING TO THE UNIT BID PRICE FOR ONE ITEM WAS TRANSPOSED MAY BE ALLOWED A PRICE ADJUSTMENT WHICH WILL NOT CHANGE STANDING AS LOW BIDDER; HOWEVER, ON BASIS OF EVIDENCE WHICH SHOWS THAT THE ERROR IN THE SECOND ITEM WAS DUE TO OMISSION OF COMPONENT STEPS AND PRICES, PRICE ADJUSTMENT TO INCLUDE FACTORS WHICH WERE NOT INTENDED AT THE TIME BID WAS MADE MAY NOT BE AUTHORIZED.

TO THE SECRETARY OF THE ARMY, APRIL 25, 1958:

REFERENCE IS MADE TO LETTER DATED APRIL 10, 1958, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY ( LOGISTICS) WHO REQUESTS A DECISION REGARDING AN ERROR FALLS CITIES BOILER AND MACHINE, NEW ALBANY, INDIANA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-15-014-AII 5994 IS BASED.

ON DECEMBER 26, 1957, THE BIDS RECEIVED IN RESPONSE TO INVITATION NO. AII -15-014-58-54, DATED DECEMBER 14, 1957, SOLICITING BIDS FOR FURNISHING METAL SMOKE STACKS TO FORT KNOX, KENTUCKY, WERE OPENED. FALLS CITIES BOILER AND MACHINE BID AS FOLLOWS: ITEM QUANTITY UNIT UNIT PRICE AMOUNT

NO.

1. 27 FEET LONG-------- 40 EACH----- $81.40 $3,256

2. 21 FEET LONG-------- 10 EACH----- 78.40 784

BY LETTER DATED DECEMBER 27, 1957, THE BIDDER WAS REQUESTED TO VERIFY ITS BID AS IT WAS CONSIDERED TO BE OUT OF LINE WITH THE OTHER EIGHT BIDS, WHICH RANGED FROM $99.70 PER UNIT TO $205 PER UNIT ON ITEM 1 AND FROM $91 PER UNIT TO $160 PER UNIT ON ITEM 2, AND WITH THE ESTIMATED TOTAL COST OF $4,900. BY LETTER DATED DECEMBER 28, 1957, THE BIDDER REFERRED TO THE LETTER DATED DECEMBER 27, 1957, AND ALLEGED AN ERROR IN ITS BID IN THAT THE PRICES ALLEGEDLY SHOULD HAVE BEEN $99.40 AND $83.40 PER UNIT ON ITEMS 1 AND 2, RESPECTIVELY. ON DECEMBER 30, 1957, BECAUSE OF THE IMMEDIATE NEED FOR THE STACKS, THE CONTRACT WAS AWARDED TO THE BIDDER AT THE PRICES STATED IN ITS BID. ON JANUARY 2, 1958, THE LETTER DATED DECEMBER 28, 1957, WAS RECEIVED IN THE CONTRACTING OFFICE. SUBSEQUENTLY, THE CONTRACTOR FURNISHED WORKSHEETS, WHICH ARE SWORN TO BE ORIGINALS, ADDING MACHINE TAPES AND A STATEMENT EXPLAINING HOW THE ERRORS IN THE BID PRICES OCCURRED.

THE ERROR ON ITEM 1 OCCURRED WHEN ONE OF THE COMPONENT PRICES CONTRIBUTING TO THE OVERALL UNIT BID PRICE WAS ADDED ON THE ADDING MACHINE AS $24.60 INSTEAD OF $42.60. THE ERROR ON ITEM 2 OCCURRED WHEN THREE COMPONENT STEPS AND PRICES THEREFOR WERE OMITTED IN PREPARING THE OVERALL UNIT BID PRICE FOR THAT ITEM.

THE ACCEPTANCE OF A BID WITH KNOWLEDGE OR SUSPICION OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. MOFFETT, HODGKINS AND CLARKE CO. V. ROCHESTER, 178 U.S. 373; EDMUND J. RAPPOLI CO., INC. V. UNITED STATES, 98 C.1CLS. 499; ALTA ELECTRIC AND MECHANICAL CO., INC. V. UNITED STATES, 90 C.1CLS. 466; NASON COAL CO. V. UNITED STATES, 64 C.1CLS. 526; C. N. MONROE MANUFACTURING CO. V. UNITED STATES, 143 F.1SUPP. 449; KEMP V. UNITED STATES, 38 F.1SUPP. 568; 2 RESTATEMENT OF THE LAW OF CONTRACT 503, ILLUSTRATION 1; 5 WILLISTON ON CONTRACTS 1578, 3 CORBIN ON CONTRACTS 610; AND 52 A.L.R.2D 797. AND WHEN A BIDDER HAS MADE AN ERROR IN ITS BID PRICE AND THE CONTRACTING OFFICER HAD REASON TO KNOW OF THE ERROR, BUT TOOK ADVANTAGE OF IT, AND THE BIDDER PERFORMED IN ACCORDANCE WITH THE AWARD, THE PRICE WILL BE CORRECTED UPON PRESENTATION OF EVIDENCE CLEARLY AND CONVINCINGLY ESTABLISHING WHAT THE PRICE WOULD HAVE BEEN BUT FOR THE ERROR. HOWEVER, THE BIDDER IS NOT PERMITTED TO RECALCULATE AND TO CHANGE HIS BID TO INCLUDE FACTORS WHICH HE DID NOT HAVE IN MIND WHEN HIS BID WAS SUBMITTED, OR AS TO WHICH HE HAS CHANGED HIS MIND. SEE 17 COMP. GEN. 575, 577.

IN THE IMMEDIATE CASE, THE CONTRACTOR IS ENTITLED TO RELIEF, SINCE THE CONTRACTING OFFICER SUSPECTED AN ERROR IN THE BID AND TOOK ADVANTAGE OF IT WITHOUT WAITING FOR THE PRICE CONFIRMATION HE HAD REQUESTED. THE CONTRACTOR HAS PRESENTED SUFFICIENT EVIDENCE THAT ITS PRICE ON ITEM 1 SHOULD HAVE BEEN $99.40. HOWEVER, ON ITEM 2 THE PRICE CANNOT BE CHANGED TO INCLUDE FACTORS WHICH WERE NOT INTENDED AT THE TIME THE BID WAS MADE.

THERE IS NO REASON TO COMPLETELY PENALIZE THE BIDDER FOR THE FAILURE OF ITS LETTER OF DECEMBER 28 TO ARRIVE BY DECEMBER 30. WHILE THE CONTRACTING OFFICER ALLEGES THAT THE PROCUREMENT WAS URGENT, THERE IS NO EVIDENCE THAT THE BIDDER KNEW THAT ITS CONFIRMATION HAD TO BE RECEIVED IN THE CONTRACTING OFFICE BY DECEMBER 30. THE CONTRACTING OFFICE ELECTED TO REQUEST VERIFICATION BY MAIL--- INSTEAD OF BY SOME MORE EXPEDITIOUS MODE OF COMMUNICATION AS TELEGRAPH--- AND THE BIDDER, THEREFORE, COULD NOT BE EXPECTED TO CHOOSE SOME FASTER MODE OF COMMUNICATION, IN THE ABSENCE OF SUCH A REQUEST OR NOTICE OF URGENCY OR DATE BY WHICH CONFIRMATION WAS TO BE RECEIVED. IT IS COMMON KNOWLEDGE THAT THE MAILS ARE ORDINARILY HEAVY AND SLOW BETWEEN CHRISTMAS AND NEW YEAR AND ALSO THERE IS EVIDENCE THAT THE BIDDER RESPONDED PROMPTLY. THEREFORE, IT APPEARS THAT THE CONTRACTING OFFICER DID NOT ALLOW THE BIDDER A REASONABLE AMOUNT OF TIME TO REPLY. B-124321, JUNE 24, 1955, WE HELD THAT THE ACTION OF THE CONTRACTING OFFICER IN MAKING THE AWARD ON THE QUESTIONED BID WITHOUT ALLOWING A REASONABLE TIME FOR CONFIRMATION BY THE BIDDER WAS SO ARBITRARY AS TO AMOUNT TO BAD FAITH.

ACCORDINGLY, THE PRICE ON ITEM 1 SHOULD BE INCREASED FROM $81.40 TO $99.40 PER UNIT, WHICH IS STILL THE LOWEST PRICE RECEIVED, BUT, FOR THE REASONS ABOVE INDICATED, NO INCREASE IN PRICE IN RESPECT TO ITEM 2 IS AUTHORIZED.

THE BID SUBMITTED WITH THE LETTER OF APRIL 10, 1958, IS RETURNED HEREWITH.