B-141736, JAN. 27, 1960

B-141736: Jan 27, 1960

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JANUARY 15. OUR DECISION IS REQUESTED AS TO WHETHER THE CONTRACTOR'S APPLICATION FOR RELIEF MAY BE GRANTED. TEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE NEXT TWO HIGHER BIDS WERE IN THE AMOUNTS OF $87. THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $91. THE CONTRACTING OFFICER REPORTS THAT AWARD OF THE CONTRACT WAS MADE BY NOTICE OF AWARD DATED OCTOBER 22. WHICH WAS DEPOSITED IN THE MAIL FOR TRANSMISSION TO THE CONTRACTOR ON OCTOBER 26. HE WAS ADVISED THAT THE CONTRACT HAD ALREADY BEEN AWARDED TO THE SCHULMAN COMPANY AND THAT THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO PERMIT WITHDRAWAL OF THE BID. AS WOULD HAVE BEEN THE CASE IF THE MISTAKE HAD BEEN DISCLOSED PRIOR TO AWARD.

B-141736, JAN. 27, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 15, 1959, (1960), WITH ENCLOSURES, FROM COLONEL CHARLES A. SANFORD, CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, RELATING TO A MISTAKE IN BID ALLEGED BY THE A. S. SCHULMAN ELECTRIC COMPANY AFTER THE AWARD OF CONTRACT NO. DA-04-353-ENG-6921, DATED OCTOBER 22, 1959. OUR DECISION IS REQUESTED AS TO WHETHER THE CONTRACTOR'S APPLICATION FOR RELIEF MAY BE GRANTED.

THE RECORD SHOWS THAT BY INVITATION NO. ENG-04-353-60-19, DATED SEPTEMBER 21, 1959, THE U.S. ARMY ENGINEER DISTRICT, LOS ANGELES, CALIFORNIA, REQUESTED BIDS--- TO BE OPENED OCTOBER 22, 1959--- FOR CONSTRUCTION OF AN ELECTRICAL DISTRIBUTION SYSTEM AT THE BORON AIR FORCE STATION, BORON, CALIFORNIA. TEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE LOWEST BEING THAT SUBMITTED BY THE SCHULMAN COMPANY AT THE BID PRICE OF $82,860. THE NEXT TWO HIGHER BIDS WERE IN THE AMOUNTS OF $87,850 AND $93,498, AND THE REMAINING SEVEN BIDS RANGED FROM $107,400 TO $132,957. THE GOVERNMENT ESTIMATE WAS IN THE AMOUNT OF $91,421.

THE CONTRACTING OFFICER REPORTS THAT AWARD OF THE CONTRACT WAS MADE BY NOTICE OF AWARD DATED OCTOBER 22, 1959, WHICH WAS DEPOSITED IN THE MAIL FOR TRANSMISSION TO THE CONTRACTOR ON OCTOBER 26, 1959, THE SAME BEING RECEIVED BY THE CONTRACTOR ON OCTOBER 27, 1959. ON THAT DAY MR. LESTER L. BENNETT--- WHO PREPARED THE BID--- PERSONALLY VISITED THE OFFICE OF THE CONTRACTING OFFICER AND STATED THAT HE HAD MADE A MISTAKE IN PREPARING THE BID. HE WAS ADVISED THAT THE CONTRACT HAD ALREADY BEEN AWARDED TO THE SCHULMAN COMPANY AND THAT THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO PERMIT WITHDRAWAL OF THE BID, AS WOULD HAVE BEEN THE CASE IF THE MISTAKE HAD BEEN DISCLOSED PRIOR TO AWARD.

THEREAFTER, BY LETTER OF NOVEMBER 11, 1959, THE SCHULMAN COMPANY TRANSMITTED AN AFFIDAVIT EXECUTED BY MR. BENNETT TOGETHER WITH THREE EXHIBITS, SHOWING THE MANNER IN WHICH THE ALLEGED MISTAKE WAS MADE. THE CONTRACTING OFFICER STATED THAT AN EXAMINATION OF ALL OF THE CONTRACTOR'S BIDDING PAPERS INDICATES THAT THE $14,423 TOTAL FOR THE CONCRETE PAD WAS, IN FACT, OMITTED FROM THE BID. THE CONTRACTING OFFICER STATED FURTHER, HOWEVER, THAT THE MISTAKE WAS NOT PATENT ON THE FACE OF THE BID, AND NEITHER WAS THE BID SUFFICIENTLY OUT OF LINE WITH THE SECOND LOW BID AND THE GOVERNMENT ESTIMATE TO PLACE HIM ON CONSTRUCTIVE NOTICE OF ERROR IN BID PRIOR TO AWARD OF THE CONTRACT, AND THAT, THEREFORE, HE INTENDED TO AWARD A CONTRACT IN THE AMOUNT OF $82,860 IN ACCORDANCE WITH THE CONTRACTOR'S BID. UPON THE BASIS OF THE RECORD IN THIS CASE THE CONTRACTING OFFICER RECOMMENDED THAT THE CONTRACTOR'S REQUEST FOR RELIEF BE DENIED.

THE RECORD ALSO INDICATES THAT THE CONTRACTOR HAS RAISED A QUESTION AS TO WHETHER A CONTRACT CAME INTO EXISTENCE UPON MAILING OF THE NOTICE OF AWARD BY THE GOVERNMENT ON OCTOBER 26, 1959, OR UPON ITS RECEIPT ON OCTOBER 27, 1959. FOR THE REASONS SET FORTH IN THE CONTRACTING OFFICER'S STATEMENT IN THIS CASE WE AGREE WITH HIS VIEW THAT A CONTRACT CAME INTO EXISTENCE UPON THE MAILING OF THE NOTICE OF AWARD ON OCTOBER 26, 1959.

THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER THE CONTRACTOR MADE A BONA FIDE MISTAKE IN BID BUT RATHER WHETHER A VALID CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID IN THIS CASE. THE RESPONSIBILITY FOR THE PREPARATION OF THE BIDS SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163, WHEREIN THE COURT OF CLAIMS STATED AS FOLLOWS:

"* * * 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.'

INSOFAR AS THE RECORD SHOWS, THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH- -- NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD--- AND UNDER THE CIRCUMSTANCES CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES THERETO.

UPON ACCEPTANCE OF THE COMPANY'S BID, THE RIGHT VESTED IN THE GOVERNMENT TO RECEIVE PERFORMANCE STRICTLY IN ACCORDANCE WITH ITS TERMS, AND, IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER THAT RIGHT WITHOUT ADEQUATE CONSIDERATION. SEE 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; AND BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 ID. 584, 607.

ACCORDINGLY, WE ARE OF THE VIEW THAT THE CONTRACT IN THIS CASE MAY NOT BE CANCELLED ON THE BASIS OF THE ALLEGED MISTAKE IN BID.