B-146542, SEP. 19, 1961

B-146542: Sep 19, 1961

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JULY 27. THE TWO ITEMS COMPRISE LOT NO. 1 OF THE INVITATION AND THE GRADE AND SPECIES PERMITTED ARE AS FOLLOWS: "NO. 1 SOU. THE BID OF THE COMPANY WAS ACCEPTED AS TO BOTH ITEMS ON DECEMBER 14. ITS BID ON THE LUMBER REQUIRED UNDER LOT NO. 1 WAS BASED ON FURNISHING NO. 2 GRADE YELLOW PINE. THE COMPANY STATED THAT IT WOULD SUFFER A CONSIDERABLE LOSS IF IT WAS REQUIRED TO FURNISH THE THE LUMBER AT ITS ORIGINAL BID PRICES AND IT REQUESTED THAT IT BE RELIEVED OF THE OBLIGATION OF PERFORMING THE CONTRACT. THE CONTRACTING OFFICER ADVISED THE COMPANY THAT THE ALLEGED ERROR WAS NOT APPARENT UPON COMPARISON WITH OTHER BIDS RECEIVED SO AS TO CHARGE HIM WITH KNOWLEDGE OF AN ERROR.

B-146542, SEP. 19, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JULY 27, 1961, WITH ENCLOSURES, FROM THE ACTING CHIEF, CONTRACTS DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, REQUESTING A DECISION AS TO WHETHER THERE MAY BE GRANTED THE RELIEF SOUGHT BY THE EVANS LUMBER COMPANY UNDER CONTRACT NO. DA-09-026 -ENG-68113.

THE PROCUREMENT BRANCH, U.S. ARMY ENGINEER DIVISION, SOUTH ATLANTIC, CORPS OF ENGINEERS, ATLANTA, GEORGIA, BY INVITATION NO. ENG-09-026-61 202, REQUESTED BIDS FOR FURNISHING 20,000 FEET OF 1 INCH BY 8 INCHES LUMBER IN LENGTHS 6 FEET TO 16 FEET OR LONGER, AND FOR FURNISHING 5,000 FEET OF 6/4 INCHES BY 8 INCHES LUMBER IN LENGTHS 6 FEET UP AVERAGING 12 FEET OR LOWER, ITEMS 6B AND 21. THE TWO ITEMS COMPRISE LOT NO. 1 OF THE INVITATION AND THE GRADE AND SPECIES PERMITTED ARE AS FOLLOWS:

"NO. 1 SOU. (SPIB)

CONSTRUCTION, 25/32 INCHES THICKNESS REQUIRED,

(ON ITEM 6B ONLY) D. FIR, W. C. HEMLOCK (WCLIB)

NO. 2 D. FIR, W. LARCH (WPA).'

THE INVITATION SPECIFIED THAT INDIVIDUAL PRICES WOULD BE SUBMITTED FOR EACH ITEM IN LOT NO. 1 AND THAT AWARD WOULD BE MADE AS A WHOLE. RESPONSE THE EVANS LUMBER COMPANY SUBMITTED A BID OFFERING TO FURNISH THE LUMBER UNDER ITEMS 6B AND 21 AT UNIT PRICES OF $94.50 AND $97.50 PER M B. M., RESPECTIVELY. THE BID OF THE COMPANY WAS ACCEPTED AS TO BOTH ITEMS ON DECEMBER 14, 1960.

BY LETTER DATED DECEMBER 21, 1960, THE EVANS LUMBER COMPANY ADVISED THAT THROUGH AN OVERSIGHT ON ITS PART, ITS BID ON THE LUMBER REQUIRED UNDER LOT NO. 1 WAS BASED ON FURNISHING NO. 2 GRADE YELLOW PINE, WHEREAS THE INVITATION SPECIFIED THE NO. 1 GRADE STOCK. THE COMPANY STATED THAT IT WOULD SUFFER A CONSIDERABLE LOSS IF IT WAS REQUIRED TO FURNISH THE THE LUMBER AT ITS ORIGINAL BID PRICES AND IT REQUESTED THAT IT BE RELIEVED OF THE OBLIGATION OF PERFORMING THE CONTRACT. IN A LETTER DATED JANUARY 5, 1961, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT THE ALLEGED ERROR WAS NOT APPARENT UPON COMPARISON WITH OTHER BIDS RECEIVED SO AS TO CHARGE HIM WITH KNOWLEDGE OF AN ERROR; THAT THE ERROR AS ALLEGED WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT; THAT UNDER SUCH CIRCUMSTANCES, ACCEPTANCE OF THE BID CREATED A VALID AND BINDING CONTRACT; AND THAT THE CONTRACT MUST BE COMPLETED IN ACCORDANCE WITH ITS TERMS AND CONDITIONS.

BY TELEGRAM DATED JANUARY 24, 1961, AND LETTER DATED JANUARY 31, 1961, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT ITS RIGHT TO PROCEED WITH THE CONTRACT WAS TERMINATED AND THAT THE SUPPLIES ON WHICH IT HAD DEFAULTED WOULD BE PROCURED BY THE GOVERNMENT FROM OTHER SOURCES AND THAT IT WOULD BE HELD RESPONSIBLE FOR ANY EXCESS COSTS OR DAMAGES OCCASIONED THE GOVERNMENT AS A RESULT OF SUCH PROCUREMENT. SUBSEQUENTLY, A REPLACEMENT CONTRACT FOR THE SAME TYPE AND GRADE OF LUMBER WAS ENTERED INTO WITH MORVAY PLANING MILL, INC., AT AN EXCESS COST OF $103.99 TO THE GOVERNMENT. BY LETTER DATED FEBRUARY 15, 1961, DEMAND WAS MADE UPON THE COMPANY FOR PAYMENT OF EXCESS COSTS IN THE AMOUNT OF $103.99, PLUS THE GOVERNMENT'S ESTIMATED ADMINISTRATIVE COSTS OF $50, A TOTAL OF $153.99, AS PROVIDED BY SUBPARAGRAPH (F) OF ARTICLE 11,"DEFAULT," OF THE GENERAL PROVISIONS OF THE CONTRACT. IN A LETTER DATED FEBRUARY 3, 1961, THE COMPANY REITERATED ITS ALLEGATION OF ERROR AND STATED THAT IT UNDERSTOOD THAT ITS PRICES WERE VERY MUCH IN LINE WITH THE OTHER PRICES RECEIVED ON THE LUMBER AND THAT IT HOPED THAT THE CONTRACTING OFFICER COULD REPURCHASE THE LUMBER AT NO ADDITIONAL COST TO THE COMPANY. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS WORKSHEET, WHICH SHOWS THAT ITS BID PRICES WERE BASED ON FURNISHING NO. 2 GRADE YELLOW PINE.

THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY THE COMPANY TO INDICATE THAT IT WAS OFFERING TO FURNISH NO. 2 GRADE YELLOW PINE. THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON NOTICE OF ERROR PRIOR TO THE ACCEPTANCE OF THE BID SINCE THE COMPANY'S BID PRICES WERE IN LINE WITH THE OTHER CORRECT BID PRICES RECEIVED AND THE PRICES PREVIOUSLY PAID FOR THE SAME GRADE OF LUMBER. THE ABSTRACT OF BIDS SHOWS THAT THE FOUR OTHER BIDS ON ITEM 6B WERE IN THE AMOUNTS OF $82.25, $100, $103.83 AND $115.72 AND THAT ON ITEM 21 THEY WERE IN THE AMOUNTS OF $88.75, $90.25, $100, AND $123.83. IT IS REPORTED THAT THE BID OF MORVAY PLANING MILL, INC., WHICH CONTAINED UNIT PRICES OF $82.25 AND $90.25 FOR ITEMS 6B AND 21, RESPECTIVELY, WAS NOT CONSIDERED FOR AWARD BECAUSE OF AN ERROR THEREIN, WHICH ERROR WAS SUSPECTED BY THE CONTRACTING OFFICER AND CONFIRMED BY THE BIDDER PRIOR TO AWARD. THE MARTIN TIMBER COMPANY, INC., BIDDER NO. 2, QUOTED PRICES OF $115.72 AND $88.75 FOR ITEMS 6B AND 21, RESPECTIVELY. THAT REGARD, THE CONTRACTING OFFICER STATES THAT THE PRICE OF $115.72 ON ITEM 6B IS SO EXCESSIVE IT CAN ONLY BE ASSUMED THAT BIDDER NO. 2 INCLUDED IN THAT PRICE HIS PROFIT ON LOT NO. 1 AND THAT HE SIMPLY USED A NO-PROFIT FIGURE FOR ITEM 21. IN THAT CONNECTION, IT IS NOTED THAT ALL OF THE OTHER BIDDERS, WITH THE EXCEPTION OF BIDDER NO. 5 WHO QUOTED AN IDENTICAL PRICE FOR BOTH ITEMS, QUOTED A HIGHER PRICE FOR ITEM 21 THAN FOR ITEM 6B, WHEREAS BIDDER NO. 2 QUOTED A LOWER PRICE FOR ITEM 21 THAN FOR ITEM 6B. THE RECORD INDICATES THAT THE IDENTICAL 1 INCH BY 8 INCHES MATERIAL AS THAT SPECIFIED UNDER ITEM 6B WAS PREVIOUSLY PROCURED AT A UNIT PRICE OF $94.99 PER M B. M. AND THAT THE MATERIAL COVERED BY ITEM 21 WAS PREVIOUSLY PROCURED AT A UNIT PRICE OF $109.37 PER M B. M. IT IS ALSO REPORTED THAT THE NO. 2 GRADE LUMBER ON WHICH THE EVANS LUMBER COMPANY ALLEGES ITS BID PRICE ON ITEM 6B WAS BASED WAS PREVIOUSLY FURNISHED BY THE COMPANY AT A PRICE OF $72 PER M B. M.--- $22.50 LESS THAN ITS ALLEGED ERRONEOUS BID PRICE OF $94.50 PER M B. M. IN VIEW OF THE OTHER BIDS RECEIVED AND THE PREVIOUS PRICES PAID FOR THE IDENTICAL LUMBER, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF THE COMPANY. ALTHOUGH, AFTER AWARD, THE COMPANY FURNISHED ITS WORKSHEET, IT DOES NOT APPEAR THAT, PRIOR TO AWARD, THE CONTRACTING OFFICER HAD KNOWLEDGE OF THE FACTORS USED BY THE COMPANY IN COMPUTING ITS BID PRICES ON ITEM 6B AND 21. SO FAR AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH--- NO ERROR HAVING BEEN ALLEGED BY THE COMPANY UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249; SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505.

MOREOVER, THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, 163. IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED SOLELY TO THE CONTRACTOR'S NEGLIGENCE AND SINCE THE ERROR IN THIS CASE WAS UNILATERAL--- NOT MUTUAL--- THE COMPANY IS NOT ENTITLED TO RELIEF. SEE 20 COMP. GEN. 652 AND 26 ID. 415.

THE RECORD SUBMITTED IN THIS CASE FULLY SUPPORTS THE ACTION OF YOUR DEPARTMENT IN TERMINATING THE CONTRACT FOR DEFAULT AND AWARD OF A NEW CONTRACT TO MORVAY PLANING MILL, INC. THERE CAN BE NO QUESTION THAT UPON THE AWARD OF THE CONTRACT HEREIN THE UNITED STATES BECAME VESTED WITH THE RIGHT TO HAVE THE CONTRACT COMPLETED IN ACCORDANCE WITH ITS TERMS AND TO RECOVER ANY EXCESS COSTS IN THE EVENT OF A DEFAULT. IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER A RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. SEE SIMPSON V. UNITED STATES, 172 U.S. 372; UNITED STATES. V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, AND CERTIORARI DENIED, 280 U.S. 574. SEE ALSO THE CASE OF PACIFIC HARDWARE CO. V. UNITED STATES, 49 CT.CL. 327.

ACCORDINGLY, DEMAND SHOULD AGAIN BE MADE UPON THE EVANS LUMBER COMPANY FOR PAYMENT OF THE EXCESS COSTS DETERMINED TO BE DUE AND IN THE EVENT THE DEFAULTING CONTRACTOR REFUSES TO REMIT THE AMOUNT OF SUCH COSTS THE MATTER SHOULD BE REFERRED TO OUR CLAIMS DIVISION FOR APPROPRIATE ACTION.