B-140294, AUG. 10, 1959

B-140294: Aug 10, 1959

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JULY 22. OUR DECISION IS REQUESTED AS TO WHETHER THE REQUEST OF THE CONTRACTOR FOR REFORMATION OF THE CONTRACT MAY BE GRANTED. NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. PATHMAN CAME TO HIS OFFICE AND STATED THAT HE BELIEVED A MISTAKE HAD BEEN MADE IN HIS BID AND THAT HE WAS HAVING IT CHECKED. AWARD OF THE CONTRACT WAS MADE TO HIS COMPANY ON APRIL 27. IT WAS CLAIMED THAT THE ESTIMATOR HAD INSERTED A PRICE OF $2. CONTAINS THE FOLLOWING STATEMENT: "* * * IN ORDER TO AVOID ANY DELAY IN THE PROSECUTION OF THE CONTRACT WE ARE ACCEPTING THE CONTRACT AS WRITTEN AND SUBMIT FOR YOUR CONSIDERATION THE FACTS AND CIRCUMSTANCES RELATING TO THE ABOVE MENTIONED MISTAKE WITH THE HOPE THAT AFTER DUE EXAMINATION AND STUDY OF THE DATA HEREWITH SUBMITTED THAT WE MAY BE GRANTED AN ADDITION TO OUR CONTRACT PRICE.'.

B-140294, AUG. 10, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JULY 22, 1959, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATING TO A MISTAKE IN BID ALLEGED BY THE PATHMAN CONSTRUCTION COMPANY, 1735 WEST FULLERTON AVENUE, CHICAGO, ILLINOIS, AFTER THE AWARD OF CONTRACT NO. DA-11-032-7253, DATED APRIL 27, 1959, FOR THE CONSTRUCTION OF OFFICERS' QUARTERS, RELATED SITE WORK AND PARKING LOT AT THE CHANUTE AIR FORCE BASE, ILLINOIS. OUR DECISION IS REQUESTED AS TO WHETHER THE REQUEST OF THE CONTRACTOR FOR REFORMATION OF THE CONTRACT MAY BE GRANTED.

THE RECORD SHOWS THAT BY INVITATION NO. ENG-11-032-59-18, DATED MARCH 20, 1959, THE U.S. ARMY ENGINEER DISTRICT, CHICAGO, REQUESTED BIDS FOR FURNISHING ALL LABOR, EQUIPMENT, AND MATERIALS AND TO PERFORM ALL WORK REQUIRED FOR THE ABOVE-INDICATED CONSTRUCTION, THE BIDS TO BE OPENED AT 2 P.M. ON APRIL 17, 1959. NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE LOWEST BEING THAT OF THE PATHMAN CONSTRUCTION COMPANY AT THE TOTAL BID PRICE OF $509,879. THE OTHER EIGHT BIDS RANGED FROM $551,843 TO $642,748.

THE CONTRACTING OFFICER REPORTED THAT ON APRIL 21, 1959, MR. PATHMAN CAME TO HIS OFFICE AND STATED THAT HE BELIEVED A MISTAKE HAD BEEN MADE IN HIS BID AND THAT HE WAS HAVING IT CHECKED. ON APRIL 24, 1959, MR. PATHMAN AGAIN VISITED THE OFFICE OF THE CONTRACTING OFFICER AND AT THAT TIME HE STATED THAT ALTHOUGH THERE HAD BEEN A MISTAKE IN HIS BID (NO AMOUNT GIVEN) HE WOULD ACCEPT THE JOB AND ABSORB THE AMOUNT OF THE MISTAKE. SINCE MR. PATHMAN HAD INDICATED HIS WILLINGNESSS TO ACCEPT THE JOB, EVEN THOUGH HE ALLEGED THERE HAD BEEN A MISTAKE, AWARD OF THE CONTRACT WAS MADE TO HIS COMPANY ON APRIL 27, 1959.

THE RECORD FURTHER SHOWS THAT BY LETTER OF MAY 7, 1959, THE PATHMAN CONSTRUCTION COMPANY SUBMITTED EXECUTED COPIES OF THE CONTRACT AND THE SUPPORTING PERFORMANCE AND PAYMENT BONDS, IT BEING ALLEGED IN THAT LETTER THAT AN ERROR HAD BEEN MADE IN THE COMPANY'S BID IN THE AMOUNT OF $34,560. IT WAS CLAIMED THAT THE ESTIMATOR HAD INSERTED A PRICE OF $2,400 IN LIEU OF $2,400 IN LIEU OF $24,000 FOR MILLWORK WHICH CAUSED AN ERROR OF $21,600, AND THAT HE THEN USED THE SAME FIGURE IN ARRIVING AT THE ESTIMATE FOR LABOR FOR INSTALLING THE MILLWORK WHICH RESULTED IN AN ADDITIONAL ERROR OF $12,960. THE LETTER OF MAY 7, 1959, CONTAINS THE FOLLOWING STATEMENT:

"* * * IN ORDER TO AVOID ANY DELAY IN THE PROSECUTION OF THE CONTRACT WE ARE ACCEPTING THE CONTRACT AS WRITTEN AND SUBMIT FOR YOUR CONSIDERATION THE FACTS AND CIRCUMSTANCES RELATING TO THE ABOVE MENTIONED MISTAKE WITH THE HOPE THAT AFTER DUE EXAMINATION AND STUDY OF THE DATA HEREWITH SUBMITTED THAT WE MAY BE GRANTED AN ADDITION TO OUR CONTRACT PRICE.'

ALTHOUGH MR. PATHMAN ADVISED ORALLY PRIOR TO AWARD THAT HE BELIEVED A MISTAKE HAD BEEN MADE IN THE COMPANY'S BID, HE FAILED TO FURNISH ANY FACTS OR INFORMATION TO SUBSTANTIATE THE ALLEGED ERROR. ON THE CONTRARY, HE SPECIFICALLY ADVISED THAT THE COMPANY WOULD ACCEPT THE JOB AND THAT THE AMOUNT OF THE ERROR WOULD BE ABSORBED. IN THE ABSENCE OF FACTS TO SUBSTANTIATE THE ALLEGED ERROR AND IN VIEW OF THE COMPANY'S STATED WILLINGNESS TO ACCEPT THE AWARD, IT APPEARS THAT THE CONTRACTING OFFICER WAS ENTIRELY JUSTIFIED IN AWARDING THE CONTRACT TO THAT CONCERN AS THE LOWEST RESPONSIBLE BIDDER. IT MAY BE ADDED THAT THE DIFFERENCE BETWEEN THE LOW BID PRICE OF $509,879 AND THE NEXT LOW BID OF $551,843 APPEARS NOT SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR.

THERE IS NOT INVOLVED IN THIS CASE ANY QUESTION OF RESERVATION BY THE CONTRACTOR PRIOR TO AWARD OF A RIGHT TO CLAIM AN ADJUSTMENT IN PRICE BECAUSE OF THE ERROR REFERRED TO. ON THE CONTRARY, AS PREVIOUSLY STATED, THE COMPANY GAVE EVERY INDICATION THAT IT DID NOT INTEND TO PRESS ITS CLAIM OF ERROR. UNDER THE FACTS REPORTED, THERE APPEARS TO BE NO QUESTION OF LACK OF GOOD FAITH ON THE PART OF THE CONTRACTING OFFICER IN ACCEPTING THE LOWEST BID, AND WE MUST, THEREFORE, CONCLUDE THAT THE ERROR WAS UNILATERAL ONLY AND THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313. IT IS WELL ESTABLISHED THAT RIGHTS THUS VESTED IN THE GOVERNMENT MAY NOT BE SURRENDERED IN THE ABSENCE OF SOME CONCOMITANT BENEFIT FLOWING TO THE UNITED STATES. SIMPSON V. UNITED STATES, 172 U.S. 372; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED, 280 U.S. 574; PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.CLS. 327, 335; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 ID. 584, 607.

ACCORDINGLY, WE CONCLUDE THAT THERE IS NO LEGAL BASIS FOR REFORMATION OF THE CONTRACT IN THIS CASE SO AS TO AUTHORIZE PAYMENT OF THE ADDITIONAL SUM OF $34,560 CLAIMED TO BE DUE BECAUSE OF THE ALLEGED ERROR.

THE ENCLOSURES TO THE LETTER OF JULY 22, 1959, ARE RETURNED HEREWITH.