B-144238, OCT. 28, 1960

B-144238: Oct 28, 1960

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 11. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO REQUEST FOR PROPOSALS NO. DECISION IS REQUESTED AS TO WHETHER THE RESULTING NEGOTIATED CONTRACT NO. THE REQUEST FOR PROPOSALS WAS ISSUED MAY 12. IT WAS STATED THAT THE PRICE OF A MAIN LOGIC BOARD. WAS $2. THE GOVERNMENT'S ORIGINAL ESTIMATE FOR THIS PROCUREMENT WAS $54. THE MATTER WAS SUBMITTED TO TECHNICAL EXPERTS FOR EVALUATION OF THE NEGOTIATED PRICE. THE REVIEWING ENGINEER STATED THAT THERE WAS A POSSIBLE ERROR IN THE PRICE OF SPARE PARTS. THE PRICE WAS $2015.63 CORRESPONDING TO DWG NO. THE ESTIMATED PRICE FOR THIS ITEM IS APPROXIMATELY $4200.00. IT IS FELT THAT THE DIFFERENCE IN PRICE REFLECTS THE OMISSION OF THE MAIN LOGIC BOARD IN ITEM 1 I.'.

B-144238, OCT. 28, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 11, 1960, FROM YOUR DEPARTMENT, WITH ENCLOSURES, RELATIVE TO AN ERROR ALLEGED BY LIBRASCOPE DIVISION, GENERAL PRECISION, INC., TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO REQUEST FOR PROPOSALS NO. M-2655 ISSUED BY FRANKFORT ARSENAL, PHILADELPHIA, PENNSYLVANIA, FOR FURNISHING A SYSTEM CONSISTING OF ADDITIONAL INPUT-OUTPUT FACILITIES FOR A LIBRATROL-500 COMPUTER. DECISION IS REQUESTED AS TO WHETHER THE RESULTING NEGOTIATED CONTRACT NO. DA 36-038-ORD-21079 (M) MAY BE REFORMED SO AS TO PROVIDE FOR AN ADDITIONAL PAYMENT OF $2,200.

THE REQUEST FOR PROPOSALS WAS ISSUED MAY 12, 1960. UNDER DATE OF MAY 19, 1960, LIBRASCOPE DIVISION SUBMITTED ITS PROPOSAL IN THE LUMP SUM AMOUNT OF $51,262.83 FOR THE COMPLETE SYSTEM, INCLUDING ITEM NO. 1 (A) THROUGH 1 (I). ITEM NO. 1 (I) COVERED SPARE PARTS LISTED IN 30 ITEMS, INCLUDING A "MAIN LOGIC BOARD.' THE PRICE LIST SUBMITTED BY LIBRASCOPE DIVISION IN ACCORDANCE WITH A REQUIREMENT OF THE REQUEST FOR PROPOSALS SHOWED A PRICE OF $2,015.63 FOR THE 30 ITEMS LISTED IN ITEM NO. 1 (I) (SPARE PARTS) ALTHOUGH IN ITS LETTER OF APRIL 7, 1960, TO FRANKFORD ARSENAL, IT WAS STATED THAT THE PRICE OF A MAIN LOGIC BOARD--- ONE OF THE 30 ITEMS LISTED- -- WAS $2,200. THE GOVERNMENT'S ORIGINAL ESTIMATE FOR THIS PROCUREMENT WAS $54,000.

PRIOR TO AWARD, THE MATTER WAS SUBMITTED TO TECHNICAL EXPERTS FOR EVALUATION OF THE NEGOTIATED PRICE. THE REVIEWING ENGINEER STATED THAT THERE WAS A POSSIBLE ERROR IN THE PRICE OF SPARE PARTS, IT APPEARING TO BE APPROXIMATELY $2,200 TOO LOW. IN COMMENT NO. 1 DATED MAY 25, 1960, THE CHIEF, DEVELOPMENT ENGINEERING BRANCH, STATED:

"* * * THE PRICE FURNISHED FOR THE SPARE PARTS (ITEM 1 I) APPEARS LOW. THE PRICE WAS $2015.63 CORRESPONDING TO DWG NO. L 200006497. THE ESTIMATED PRICE FOR THIS ITEM IS APPROXIMATELY $4200.00. IT IS FELT THAT THE DIFFERENCE IN PRICE REFLECTS THE OMISSION OF THE MAIN LOGIC BOARD IN ITEM 1 I.'

IN A MEMORANDUM DATED MAY 23, 1960, IT WAS STATED THAT CONFIRMATION OF THE PRICE QUOTED FOR SPARE PARTS HAD BEEN REQUESTED AS IT WAS BELIEVED THAT THE QUOTATION WAS APPROXIMATELY $2,200 TOO LOW. IN ANOTHER MEMORANDUM OF THE SAME DATE, IT WAS STATED THAT A REPRESENTATIVE OF LIBRASCOPE DIVISION HAD ADVISED BY TELEPHONE THAT THE QUOTED PRICE OF $51,262.83 COVERED THE ENTIRE PROCUREMENT AND THAT THE PRICE OF $2,015.63 FOR SPARE PARTS COVERED ALL THIRTY OF THE ITEMS SPECIFIED UNDER ITEM 1 (I). CONFIRMATION OF THAT ADVICE WAS MADE IN A TELEGRAM DATED MAY 23, 1960, FROM LIBRASCOPE DIVISION AND THE PROPOSAL WAS ACCEPTED ON JUNE 7, 1960.

IN ITS LETTER DATED JUNE 21, 1960, LIBRASCOPE DIVISION ALLEGED ERROR IN ITS PROPOSAL, STATING THAT THE PRICE FOR SPARE PARTS--- ITEM NO. 1 (I/--- SHOULD HAVE BEEN $4,215.63 INSTEAD OF $2,015.63, SINCE THE PRICE OF A MAIN LOGIC BOARD ($2,200) HAD BEEN OMITTED; AND REQUEST WAS MADE THAT THE CONTRACT PRICE BE INCREASED $2,200 TO A TOTAL OF $53,462.83.

IN VIEW OF THE FACTS OF THIS MATTER AS ALLEGED AND SHOWN BY THE FILE, IT MAY BE REGARDED AS SATISFACTORILY ESTABLISHED THAT LIBRASCOPE DIVISION MADE A BONA FIDE ERROR IN ITS PROPOSAL AS ALLEGED AND EXPLAINED BY IT. HOWEVER, THERE IS FOR CONSIDERATION THE QUESTION WHETHER RELIEF MAY BE GRANTED NOTWITHSTANDING THE FACT THAT VERIFICATION OF THE BID WAS REQUESTED AND RECEIVED BY THE CONTRACTING OFFICER BEFORE AWARD.

GENERALLY, AWARD OF A CONTRACT FOLLOWING VERIFICATION OF THE BID UPON REQUEST OF THE CONTRACTING OFFICER RESULTS IN A BINDING CONTRACT. COMP. GEN. 942, 947; 27 ID. 17. HOWEVER, IN 35 COMP. GEN. 136 IT WAS HELD (QUOTING SYLLABUS):

"A CONTRACTOR IS NOT BOUND, EVEN AFTER AWARD, BY HIS VERIFICATION OF AN ERRONEOUS BID WHERE THE CONTRACTING OFFICER'SREQUEST FOR A GENERAL VERIFICATION FAILED TO PUT HIM ON NOTICE OF THE SPECIFIC MISTAKE SURMISED, AND, THEREFORE, THE CONTRACTOR IS NOT LIABLE FOR EXCESS COSTS INCIDENT TO REPLACEMENT CONTRACTS.'

IN THAT DECISION THERE WAS QUOTED A PORTION OF THE COURT'S DECISION IN UNITED STATES V. METRO NOVELTY MANUFACTURING CO., INC., AS FOLLOWS:

"CROSS MOTIONS ARE PRESENTED FOR SUMMARY JUDGMENT. PLAINTIFF SEEKS TO RECOVER $12,000 DAMAGES FROM DEFENDANT FOR ITS FAILURE TO CARRY OUT A $6,000 BID FOR UNIFORM ORNAMENTS. DEFENDANT CLAIMS A MISTAKE IN THE COMPUTATION OF THE BID. PLAINTIFF ADMITS THAT THE ERROR WAS SO GROSS THAT IT WAS PLACED ON NOTICE. IT FURTHER ADMITS THAT THE ONLY CONSEQUENCE OF DEFENDANT'S FAILURE TO PERFORM WAS THE ACCEPTANCE OF THE SECOND LOWEST BID AND THAT THERE WAS NO DAMAGE TO THE GOVERNMENT FROM THE DELAY IN EXECUTION WHICH RESULTED FROM DEFENDANT'S PARTICIPATION IN THE BIDDING.

"PLAINTIFF'S PURCHASING AGENT SOUGHT TO AVOID THE FORCE OF KEMP V. UNITED STATES, D.C.MD. 1941, 38 F.SUPP. 568, BY TELEPHONING THE DEFENDANT AND ASKING FOR A "VERIFICATION" OF THE BID AND BY HAVING IT "CONFIRMED" BY TELEPHONE AND LETTER FROM DEFENDANT'S PRESIDENT. PLAINTIFF, HOWEVER, DID NOT PUT DEFENDANT ON NOTICE OF THE MISTAKE WHICH IT SURMISED. REAFFIRMATION OF THE BID UNDER THESE CIRCUMSTANCES DOES NOT BAR THE DEFENSE OF RESCISSION.

"DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS GRANTED.'

IN THE INSTANT MATTER, THE CONTRACTING OFFICE HAD DEFINITE KNOWLEDGE BEFORE AWARD THAT THE PRICE QUOTED ON ITEM NO. 1 (I) (SPARE PARTS) WAS APPROXIMATELY $2,200 TOO LOW AND THAT SUCH AMOUNT WAS THE APPROXIMATE PRICE OF A MAIN LOGIC BOARD, BEING ALSO THE PRICE OF SUCH BOARD AS STATED IN THE CONTRACTOR'S LETTER OF APRIL 7, 1960, ABOVE MENTIONED. THE ENTIRE PRICE QUOTED ON ITEM NO. 1 (I) ($2,015.63) WAS LESS THAT THE KNOWN PRICE OF A MAIN LOGIC BOARD WHICH WAS ONLY ONE OF 30 ITEMS COVERED BY ITEM NO. 1 (I). LIBRASCOPE DIVISION STATED IN ITS TELEGRAM OF MAY 23, 1960, THAT THE PRICE OF $2,015.63 COVERED "30 LINES ITEM NO. 1 (I) SPARE PARTS.' HOWEVER, ITS ATTENTION HAD NOT BEEN INVITED SPECIFICALLY TO THE PROBABILITY THAT THE PRICE OF A MAIN LOGIC BOARD HAD BEEN OMITTED FROM THE QUOTATION, ALTHOUGH THE CONTRACTING OFFICER IN FACT DEFINITELY SUSPECTED SUCH OMISSION. IN SUCH CIRCUMSTANCES, THERE IS SERIOUS DOUBT THAT THE REQUEST FOR VERIFICATION AS MADE DID IN FACT MEET THE STANDARD REQUIRED BY THE METRO CASE. SEE 36 COMP. GEN. 254; CF. 37 COMP. GEN. 788.

FOR THE REASONS ABOVE SET OUT, WE OFFER NO OBJECTION TO REFORMATION OF THE CONTRACT SO AS TO PROVIDE FOR PAYMENT OF AN ADDITIONAL AMOUNT OF $2,200 TO THE CONTRACTOR AS REQUESTED. REFERENCE TO THIS DECISION SHOULD ACCOMPANY THE CONTRACT.