B-136845, JUL. 30, 1958

B-136845: Jul 30, 1958

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED JULY 15. TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF CONTRACT NO. THE FIVE OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $11. WAS ACCEPTED ON MAY 26. IT IS CONTENDED THAT IN PREPARING THE BID IT FAILED TO INCLUDE IN THE TOTAL PRICE NECESSARY LABOR COSTS OF $3. THE CONTRACTOR SUBMITTED IN SUPPORT OF THE ALLEGED ERROR ITS WORKSHEETS SHOWING THE BASIS ON WHICH THE BID PRICE WAS COMPUTED. THE PRIMARY QUESTION INVOLVED IS NOT WHETHER AN ERROR WAS MADE IN THE BID. WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT THE PRICE QUOTED WAS NOT AS INTENDED.

B-136845, JUL. 30, 1958

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JULY 15, 1958, FROM THE ACTING ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION THAT SHOULD BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY THE PATTERSON-KELLEY COMPANY, INC., TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF CONTRACT NO. N174 11859 DATED MAY 26, 1958.

THE NAVAL POWDER FACTORY, INDIAN HEAD, MARYLAND, BY INVITATION FOR BIDS NO. 174-59-58, REQUESTED BIDS TO BE OPENED ON MAY 15, 1958, FOR FURNISHING ONE HEAVY DUTY RIBBON BLENDER. IN RESPONSE TO THE INVITATION, THE PATTERSON-KELLEY COMPANY, INC., SUBMITTED A BID OFFERING TO FURNISH THE BLENDER FOR THE SUM OF $10,608. THE FIVE OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $11,500, $12,950, $14,580, $16,400, AND $16,812. THE BID OF THE PATTERSON-KELLEY COMPANY, INC., BEING THE LOWEST RECEIVED, WAS ACCEPTED ON MAY 26, 1958, CONSUMMATING CONTRACT NO. N174-11859.

BY LETTER DATED JUNE 30, 1958, CONFIRMING ORAL CONVERSATIONS OF MAY 27 WITH THE CONTRACTING AGENCY, THE CONTRACTOR ADVISED THAT AN ERROR HAD BEEN MADE IN ITS BID. IT IS CONTENDED THAT IN PREPARING THE BID IT FAILED TO INCLUDE IN THE TOTAL PRICE NECESSARY LABOR COSTS OF $3,550 CONSISTING OF 725 HOURS AT $4.90 PER HOUR. THE CONTRACTOR SUBMITTED IN SUPPORT OF THE ALLEGED ERROR ITS WORKSHEETS SHOWING THE BASIS ON WHICH THE BID PRICE WAS COMPUTED. IN VIEW OF THE ERROR THE CONTRACTOR REQUESTED THAT IT BE RELIEVED FROM THE CONTRACT.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER AN ERROR WAS MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT THE PRICE QUOTED WAS NOT AS INTENDED. THE PRICE QUOTED WAS NOT OUT OF LINE WITH THE PRICES QUOTED BY THE OTHER BIDDERS. CONSEQUENTLY, THERE WAS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. ALTHOUGH, AFTER ACCEPTANCE, THE CORPORATION NOTIFIED THE CONTRACTING OFFICER THAT AN ERROR HAD BEEN MADE IN THE BID, IT DOES NOT APPEAR THAT, PRIOR TO ACCEPTANCE, THE CONTRACTING OFFICER HAD KNOWLEDGE OF THE FACTORS USED BY THE CORPORATION IN COMPUTING ITS BID PRICE. THE RECORD INDICATES THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED BY THE CORPORATION UNTIL AFTER AWARD. SEE IN THAT CONNECTION THE CASE OF OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259, WHEREIN THE COURT OF CLAIMS OF THE UNITED STATES SAID:

"THERE CAN BE NO DOUBT THAT UPON ACCEPTANCE OF THEIR BID PLAINTIFFS BECAME OBLIGATED TO DO THE WORK FOR THE AMOUNT BID. WHEN THE CONTRACTING OFFICER ACCEPTED THE BID HE WAS UNAWARE THAT ANY MISTAKE HAD BEEN MADE. PLAINTIFFS HAD FAILED TO NOTIFY HIM OF IT. NOR WAS THERE ANYTHING TO PUT HIM ON NOTICE THAT A MISTAKE PROBABLY HAD BEEN MADE. PLAINTIFFS DO NOT CLAIM THAT THERE WAS. WE HAVE, THEN, A UNILATERAL MISTAKE, FROM WHICH, OF COURSE, EQUITY WILL NOT RELIEVE * * *.'

FURTHERMORE, THE INVITATION ISSUED IN THE PRESENT CASE WAS CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT AS TO THE EQUIPMENT REQUIRED TO BE FURNISHED. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE THERETO WAS UPON THE BIDDER. AS STATED BY THE COURT OF CLAIMS OF THE UNITED STATES IN THE CASE OF FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

IT IS CLEAR THAT SUCH ERROR AS WAS MADE IN THE BID OF THE CORPORATION WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. ANY ERROR THAT WAS MADE IN THE BID OF THE CORPORATION WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE THE CORPORATION TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, SUPRA:AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507, WHEREIN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF PENNSYLVANIA, EASTERN DIVISION, SAID:

"* * * ORDINARILY NO RELIEF WILL BE GRANTED TO A PARTY TO AN EXECUTORY CONTRACT IN THE CASE OF A UNILATERAL MISTAKE. IN SUCH CASE WHEN A BID HAS BEEN ACCEPTED THE BIDDER WHO HAS MADE A MISTAKE WILL BE BOUND AND MUST BEAR THE CONSEQUENCES THEREOF. (CITING COURT DECISIONS.)"

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR RELIEVING THE PATTERSON KELLEY COMPANY, INC., FROM LIABILITY UNDER THE TERMS OF ITS ACCEPTED BID (CONTRACT NO. N174-11859).