B-145369, APR. 11, 1961

B-145369, APR. 11, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MARCH 16, 1961, WITH ENCLOSURES, FORWARDED IN BEHALF OF THE ASSISTANT SECRETARY OF THE ARMY FOR LOGISTICS, BY THE OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, REQUESTING OUR DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN REGARDING AN ERROR ALLEGED TO HAVE BEEN MADE IN THE BID OF LOUIS DULBERG, D/B/A THE H.L. ZITRIN COMPANY, UPON WHICH CONTRACT NO. O.I. 8543-1C WAS AWARDED.

IN RESPONSE TO INVITATION NO. QM-04-468-61-86, WHICH WAS ISSUED ON NOVEMBER 4, 1960, BY THE PROCUREMENT DIVISION OF THE SHARPE GENERAL DEPOT, THE H. L. ZITRIN COMPANY SUBMITTED A BID DATED NOVEMBER 10, 1960, OFFERING TO FURNISH, IN ACCORDANCE WITH THE APPLICABLE SCHEDULE, SPECIFICATIONS, ETC., ITEMS NOS. 1 THROUGH 6, COVERING VARIOUS SIZES, QUANTITIES, ETC., OF RUBBER HEELS AT $0.1325 A PAIR FOR ITEMS NOS. 1 THROUGH 4, AND AT $0.1425 A PAIR FOR ITEMS NOS. 5 AND 6. THE GOVERNMENT CONTRACTING OFFICER, NOTING THAT THE PRICES QUOTED BY THE H. L. ZITRIN COMPANY, A DEALER, WERE LOWER THAN THE PRICE OF $0.155 A PAIR QUOTED BY THE B.F. GOODRICH INDUSTRIAL PRODUCTS COMPANY, A DIVISION OF THE B.F. GOODRICH COMPANY, A MANUFACTURER, AND SUBSTANTIALLY LOWER THAN THE PRICES QUOTED BY THE OTHER BIDDERS, REQUESTED THE ZITRIN COMPANY TO VERIFY ITS BID. AFTER THE COMPANY ADVISED THE CONTRACTING OFFICER THAT THE PRICES QUOTED BY IT WERE CORRECT THE BID WAS ACCEPTED ON NOVEMBER 18, 1960, THEREBY CONSUMMATING CONTRACT NO. O.I. 8543-1C.

ON OR ABOUT NOVEMBER 29, 1960, THE ZITRIN COMPANY NOTIFIED THE PROCUREMENT DIVISION OF THE DEPOT THAT AN ERROR HAD BEEN MADE IN ITS BID ON EACH OF THE 6 ITEMS COVERED BY THE INVITATION AND THAT IT WOULD BE IMPOSSIBLE FOR IT TO COMPLY WITH ITS CONTRACT. THE ERROR ALLEGEDLY OCCURRED WHEN THE ZITRIN COMPANY'S SUPPLIER, THE ESSEX RUBBER COMPANY, QUOTED IT PRICES BASED ON FURNISHING 3/4 INCH INSTITUTIONAL HEELS INSTEAD OF THE 7/8 INCH HEELS REQUIRED BY THE APPLICABLE FEDERAL SPECIFICATION. THE REFUSAL OF THE ZITRIN COMPANY TO PERFORM UNDER THE CONTRACT ULTIMATELY RESULTED IN THE COMPANY BEING DECLARED IN DEFAULT AND THE CONTRACT TERMINATED ON DECEMBER 22, 1960. A REPLACEMENT CONTRACT WAS ENTERED INTO WHICH IT IS BELIEVED WILL RESULT IN EXCESS COSTS TO THE GOVERNMENT OF APPROXIMATELY $1,178.46. BY LETTER DATED JANUARY 4, 1961, THE ZITRIN COMPANY APPEALED THE TERMINATION ACTION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS. CONSIDERATION OF THE APPEAL IS BEING WITHHELD BY THE BOARD PENDING OUR DECISION IN THIS MATTER.

THE BASIC QUESTION HERE PRESENTED IS NOT WHETHER AN ERROR WAS MADE IN THE BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. IN THIS REGARD, THE RECORD SHOWS THAT THE ZITRIN COMPANY WAS AFFORDED THE OPPORTUNITY TO VERIFY ITS BID. AT THAT TIME THE COMPANY WAS ADVISED, AMONG OTHER THINGS, THAT ITS PRICES WERE LOWER THAN THE PRICES QUOTED BY MANUFACTURERS AND THAT CONTRACTOR TESTING AND GOVERNMENT INSPECTION WERE REQUIRED. A REPRESENTATIVE OF THE COMPANY READ THE PRICES QUOTED BY IT TO THE GOVERNMENT CONTRACTING OFFICER AND STATED THAT THEY WERE CORRECT. IT ALSO WAS STATED THAT THE COMPANY WAS AWARE THAT THE PRICES INCLUDED DELIVERY TO DESTINATION, THAT CONTRACTOR TESTING AND GOVERNMENT INSPECTION WERE REQUIRED, AND THAT THE COMPANY WAS FAMILIAR WITH THE PACKAGING AND PACKING REQUIREMENTS. THE COMPANY ALSO EXPLAINED THAT THE LOW PRICES QUOTED BY IT WERE ATTRIBUTABLE TO THE FACT THAT COMMERCIAL PACKING WAS PERMITTED BY THE INVITATION. UNDER THE CIRCUMSTANCES, IT APPEARS CLEARLY ESTABLISHED THAT THE GOVERNMENT DID ALL THAT WAS REQUIRED OF IT TO ASCERTAIN THE CORRECTNESS OF THE BID OF THE ZITRIN COMPANY AND, AFTER THE COMPANY'S VERIFICATION THEREOF, THE CONTRACTING OFFICER NOT ONLY WAS FULLY JUSTIFIED IN CONSIDERING THE BID CORRECT AND PROPER FOR AWARD BUT, IN FACT, WOULD HAVE BEEN DERELICT IN HIS DUTY TO THE GOVERNMENT HAD HE NOT MADE THE AWARD TO THE COMPANY AS THE LOWEST RESPONSIBLE BIDDER. SEE, CARNEGIE STEEL COMPANY V. CONNELLY, 97 A. 774; SHRIMPTON MFG. COMPANY V. BRIN, 125 S.W. 942; ALABAMA SHIRT AND TROUSER COMPANY V. UNITED STATES, 121 CT.CL. 313. MOREOVER, THE FACTS OF RECORD PRECLUDE ANY ASSUMPTION OF BAD FAITH OR ARBITRARY ACTION ON THE PART OF THE CONTRACTING OFFICER. 27 COMP. GEN. 17.

ACCORDINGLY, IT IS CONCLUDED THAT THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT. SEE 36 COMP. GEN. 27 AND THE COURT CASES CITED THEREIN.

THE PAPERS, WITH THE EXCEPTION OF THE REPORT AND RECOMMENDATION OF THE CONTRACTING OFFICER, ARE RETURNED HEREWITH.