B-143878, SEP. 13, 1960

B-143878: Sep 13, 1960

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED AUGUST 31. THE OTHER RESPONSIVE BIDS RECEIVED WERE $8. WAS ACCEPTED AND CONTRACT NO. DA-41-117-ORD 5080 WAS AWARDED THEREON. IT WAS EXPLAINED THAT THE COMPANY'S ESTIMATING ENGINEER IN PREPARING ITS BID ESTIMATE INCLUDED IN ITS TOTAL COST THE LABOR COST FOR ONE UNIT ONLY. WHICH AMOUNT WAS ROUNDED OFF TO A TOTAL BID OF $62. THE CONTRACTOR STATED THAT ITS TOTAL LABOR COST FOR THE EIGHT PRESSES SHOULD HAVE BEEN $33. 800 AND THAT HAD THE ERROR NOT BEEN MADE OR HAD IT BEEN DISCOVERED PRIOR TO SUBMITTING THE BID ITS BID PRICE WOULD HAVE BEEN $11. IN SUPPORT OF ITS ALLEGATION OF ERROR AND WHAT ITS CORRECT BID SHOULD HAVE BEEN THE COMPANY FORWARDED A PHOTOSTATIC COPY OF ITS WORKSHEETS.

B-143878, SEP. 13, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 31, 1960, FROM THE CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, CONCERNING A MISTAKE IN BID ALLEGED BY MOLLENBERG BETZ MACHINE CO., INC., BUFFALO, NEW YORK, AFTER AWARD OF CONTRACT NO. DA- 41-117-ORD-5080.

BY BID INVITATION NO. ORD-41-117-60-130-RGH ISSUED JUNE 13, 1960, RED RIVER ARSENAL, TEXARKANA, TEXAS, SOLICITED BIDS--- OPENING DATE JUNE 28, 1960--- FOR FURNISHING AND DELIVERING IN ACCORDANCE WITH THE FEDERAL SPECIFICATIONS AND DRAWINGS INDICATED EIGHT EACH HYDRAULIC PRESSES, FOR USE IN REBUILD OF ROAD WHEELS, DESCRIBED AS FOLLOWS:

"4910-NSN MOLD AND PRESS, RUBBER CURING STEAM HEATED, HYD. OPER., ADJ FOR ROADWHEELS SIZES 6 IN. TO 30 IN. DIA, PNEU WHEEL EJECTION DEVICE; 220/440 V, 3 PH, 60 CY, ELEC POWERED 15 HP, 11.5 GPM, 1500 PSI HYD PUMP UNIT. COMP. W/1 SET OF ALUMINUM CAVITIES FOR 26 IN. BY 6 IN. MATRICES AND ALL NECESSARY VALVING AND CONTROLS IN ACCORDANCE WITH ALL PROVISIONS OF THIS INVITATION.'

IN RESPONSE TO THE INVITATION MOLLENBERG-BETZ MACHINE CO. SUBMITTED AN UNQUALIFIED UNIT PRICE BID OF $7,750, AND A TOTAL PRICE OF $62,000 FOR THE EIGHT PRESSES. THE OTHER RESPONSIVE BIDS RECEIVED WERE $8,950, $9,252.72, AND $11,636. THE BID OF MOLLENBERG-BETZ MACHINE CO., BEING THE LOWEST, WAS ACCEPTED AND CONTRACT NO. DA-41-117-ORD 5080 WAS AWARDED THEREON. AFTER RECEIPT OF THE NOTICE OF AWARD THE CONTRACTOR IN SEVERAL TELEPHONE CONVERSATIONS, CONFIRMED BY LETTER DATED JULY 7, 1960, ADVISED THE CONTRACTING OFFICER THAT AN ERROR HAD BEEN DISCOVERED IN ITS ORIGINAL ESTIMATE. IT WAS EXPLAINED THAT THE COMPANY'S ESTIMATING ENGINEER IN PREPARING ITS BID ESTIMATE INCLUDED IN ITS TOTAL COST THE LABOR COST FOR ONE UNIT ONLY, RESULTING IN A TOTAL ESTIMATE FOR THE EIGHT PRESSES OF ONLY $61,730.11 ($57,505.11 TOTAL MATERIAL COST FIGURE PLUS $4,225 LABOR COST FOR ONE PRESS ONLY), WHICH AMOUNT WAS ROUNDED OFF TO A TOTAL BID OF $62,000 FOR THE EIGHT PRESSES AND A UNIT PRICE OF $7,750 PER PRESS. THE CONTRACTOR STATED THAT ITS TOTAL LABOR COST FOR THE EIGHT PRESSES SHOULD HAVE BEEN $33,800 AND THAT HAD THE ERROR NOT BEEN MADE OR HAD IT BEEN DISCOVERED PRIOR TO SUBMITTING THE BID ITS BID PRICE WOULD HAVE BEEN $11,400 FOR EACH PRESS AND A TOTAL OF $91,200 FOR THE EIGHT UNITS REQUIRED. IN SUPPORT OF ITS ALLEGATION OF ERROR AND WHAT ITS CORRECT BID SHOULD HAVE BEEN THE COMPANY FORWARDED A PHOTOSTATIC COPY OF ITS WORKSHEETS.

IT IS WELL ESTABLISHED THAT THE ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. SEE IN THIS REGARD 28 COMP. GEN. 550, 551.

THE CONTRACTING OFFICER HAS STATED THAT WHILE IT IS HIS OPINION THAT A MISTAKE WAS MADE BY THE CONTRACTOR, AS ALLEGED, SUCH MISTAKE WAS UNILATERAL AND NOT MUTUAL, AND HE DOES NOT FEEL THAT HE WAS ON CONSTRUCTIVE NOTICE OF ERROR, PRIOR TO AWARD, BECAUSE HYDRAULIC PRESSES ARE A SPECIALTY TYPE PRESS AND HAD NOT BEEN PURCHASED PREVIOUSLY AT RED RIVER ARSENAL, COMPARATIVE COMMERCIAL PRICES WERE NOT AVAILABLE, SOME BIDDERS IN DISCUSSING THE SPECIFICATIONS, ETC., PRIOR TO BID OPENING EXPRESSED UNSOLICITED INFORMAL OPINIONS THAT THE PRESS WOULD COST FROM $7,000 TO $10,000, AND BECAUSE OF THE CLOSE RANGE OF THE BIDS RECEIVED. IT IS THE CONTRACTING OFFICER'S BELIEF, ALSO, THAT TO GRANT THE RELIEF REQUESTED WOULD BE PREJUDICIAL TO THE OTHER BIDDERS AND HE, THEREFORE, RECOMMENDS THAT RELIEF BE DENIED.

NO ERROR WAS ALLEGED BY MOLLENBERG-BETZ MACHINE CO., INC., UNTIL AFTER ACCEPTANCE OF ITS BID AND AWARD OF THE CONTRACT. THE COMPANY'S BID WAS REGULAR ON ITS FACE AND THE VARIANCE BETWEEN ITS BID AND THE NEXT LOWEST ACCEPTABLE BID DOES NOT APPEAR TO BE OUT OF LINE. THE RECORD DOES NOT INDICATE THAT THE CONTRACTING OFFICER OTHERWISE WAS PLACED ON NOTICE OF PROBABILITY OF ERROR IN THE COMPANY'S BID. THEREFORE, INSOFAR AS THE PRESENT RECORD SHOWS, THE COMPANY'S BID WAS ACCEPTED IN GOOD FAITH BY THE CONTRACTING OFFICER. SUCH ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT WHICH VESTED IN THE GOVERNMENT IS AUTHORIZED TO WAIVE OR RELEASE. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, THERE IS NO LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED BY MOLLENBERG-BETZ MACHINE CO., INC., ON CONTRACT NO. DA-41 117-ORD-5080.