B-147341, NOV. 7, 1961

B-147341: Nov 7, 1961

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TO SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 29. TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT DA 94-600-PAC-2283 IS BASED. THE WORK TO BE PERFORMED WAS DIVIDED INTO FOUR ITEMS FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT FOR THE WORK. 487 AND THE GOVERNMENT'S REVISED ESTIMATE FOR THE WORK WAS $39. THE CONTRACTING OFFICER STATES THAT WHEN THE BIDS FOR THE PROJECT WERE OPENED IT WAS NOTED THAT THE BID OF J. A TELEPHONE CALL WAS PLACED WITH J. TING OF THAT FIRM WAS INFORMED THAT THE COMPANY'S BID WAS SO FAR BELOW THE NEXT LOWEST BID AS TO RAISE A DOUBT IN THE CONTRACTING OFFICER'S MIND AS TO THE POSSIBILITY OF A MISTAKE IN THE COMPANY'S BID. TING WAS REQUESTED TO REVIEW THE PLANS.

B-147341, NOV. 7, 1961

TO SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 29, 1961, WITH ENCLOSURES, FROM THE CHIEF, CONTRACTS DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY J. W. PODMORE AND SONS, LTD., TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT DA 94-600-PAC-2283 IS BASED.

THE PURCHASING AND CONTRACTING BRANCH, ENGINEER SUPPLY AND MAINTENANCE CENTER, SCHOFIELD BARRACKS, HAWAII, BY INVITATION NO. 61 82, REQUESTED BIDS FOR FURNISHING ALL EQUIPMENT EXCEPT A DIESEL GENERATOR, LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE REPLACEMENT OF A STAND- BY GENERATOR FOR HEADQUARTERS, USARPAC FACILITIES, FORT SHAFTER, HAWAII. THE WORK TO BE PERFORMED WAS DIVIDED INTO FOUR ITEMS FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT FOR THE WORK. IN RESPONSE J. W. PODMORE AND SONS, LTD., SUBMITTED A BID OFFERING TO PERFORM THE WORK FOR AN AGGREGATE TOTAL PRICE OF $26,884. THE TWO OTHER BIDDERS ON THE PROJECT QUOTED AGGREGATE PRICES OF $41,258 AND $48,487 AND THE GOVERNMENT'S REVISED ESTIMATE FOR THE WORK WAS $39,497.

IN HIS REPORT OF AUGUST 9, 1961, THE CONTRACTING OFFICER STATES THAT WHEN THE BIDS FOR THE PROJECT WERE OPENED IT WAS NOTED THAT THE BID OF J. W. PODMORE AND SONS, LTD., FOR THE FOUR BASIC ITEMS TOTALED APPROXIMATELY $3,500 ABOVE THE GOVERNMENT'S ORIGINAL ESTIMATE OF $23,386 AND APPROXIMATELY $14,500 BELOW THE AMOUNT OF THE NEXT LOWEST BID RECEIVED ON THE PROJECT; THAT ON THE DAY OF THE BID OPENING, JUNE 28, 1961, A TELEPHONE CALL WAS PLACED WITH J. W. PODMORE AND SONS, LTD., AND MR. TING OF THAT FIRM WAS INFORMED THAT THE COMPANY'S BID WAS SO FAR BELOW THE NEXT LOWEST BID AS TO RAISE A DOUBT IN THE CONTRACTING OFFICER'S MIND AS TO THE POSSIBILITY OF A MISTAKE IN THE COMPANY'S BID; AND THAT MR. TING WAS REQUESTED TO REVIEW THE PLANS, SPECIFICATIONS AND THE COMPANY'S WORKSHEETS AND TO CONFIRM THE COMPANY'S BID PRICES. IT IS ALSO STATED THAT LATER THE SAME DAY A REPRESENTATIVE OF THE COMPANY SUBMITTED A LETTER IN WHICH IT INDICATED THAT AT THE REQUEST OF THE CONTRACTING OFFICER IT HAD REVIEWED THE PLANS AND SPECIFICATIONS AND THAT IT HAD FOUND THE COMPANY'S BID PRICES TO BE CORRECT. THE BID OF THE COMPANY WAS ACCEPTED ON JUNE 29, 1961.

IN A LETTER DATED JULY 6, 1961, J. W. PODMORE AND SONS, LTD., ADVISED THAT IT WISHED TO WITHDRAW ITS BID ON THE PROJECT BECAUSE OF AN ERROR MADE BY ITS SUBCONTRACTOR, JACK ENDO ELECTRIC, INC., IN QUOTING A PRICE OF $16,000 FOR THE CIRCUIT BREAKERS COVERED BY ITEM 2 OF THE INVITATION. WAS ALLEGED THAT THE QUOTATION WAS BASED ON USING THE OIL CIRCUIT BREAKER TYPE INSTEAD OF THE AIR CIRCUIT BREAKER TYPE AS REQUIRED BY THE SPECIFICATIONS; THAT THE OIL CIRCUIT BREAKER TYPE IS APPROXIMATELY $10,000 CHEAPER THAN THE AIR CIRCUIT BREAKER TYPE; AND THAT THE SUBCONTRACTOR'S QUOTATION TO THE COMPANY SHOULD HAVE BEEN IN THE AMOUNT OF $26,000. WITH ITS LETTER THE COMPANY SUBMITTED A COPY OF THE LETTER RECEIVED FROM ITS SUBCONTRACTOR AND CERTAIN WORKSHEETS.

IN A LETTER DATED JULY 19, 1961, THE COMPANY EXPLAINED THAT THE $16,000 ENTRY FOR "ELECTRICAL" ON ITEM 2 OF ITS WORKSHEET HAD REPLACED AN EARLIER ENTRY OF $30,941, WHICH WAS BASED ON AN EARLIER QUOTATION OF ANOTHER SUPPLIER, WHEN JACK ENDO ELECTRIC, INC., BY TELEPHONE ON JUNE 28, 1961, QUOTED A PRICE OF $16,000 FOR THE ELECTRICAL EQUIPMENT REQUIRED BY ITEM 2 OF THE INVITATION.

THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A BONA FIDE MISTAKE IN ITS BID BUT WHETHER A VALID CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID IN THIS CASE. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 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.'

IT IS CLEAR FROM THE RECORD THAT THE ERROR IN BID MADE BY THE COMPANY IN THIS CASE WAS DUE TO THE NEGLIGENCE OF THE COMPANY'S SUBCONTRACTOR AND ITS OWN NEGLIGENCE AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THE COMPANY WAS NEGLIGENT IN VERIFYING ITS BID WITHOUT AN ADEQUATE CHECK, ESPECIALLY WHEN IT HAD KNOWLEDGE OF ANOTHER QUOTATION WHICH WAS ALMOST DOUBLE IN AMOUNT TO THE ONE USED IN COMPUTING THE COSTS FOR ITEM 2 OF THE INVITATION. ANY ERROR THAT MAY HAVE BEEN MADE WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE THE COMPANY TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505. SEE, ALSO, 20 COMP. GEN. 652; AND 26 ID. 415. IN VIEW OF THE UNEQUIVOCAL VERIFICATION OF THE BID, THE CONTRACTING OFFICER WAS NOT ONLY JUSTIFIED IN AWARDING THE CONTRACT TO THE COMPANY ON THE BASIS THAT ITS BID WAS THE LOWEST RECEIVED, BUT WOULD HAVE FAILED IN HIS DUTY HAD HE DONE OTHERWISE. SEE CARNEGIE STEEL CO. V. CONNELLY, 89 N.J.L. 1, 97 A. 774; SHRIMPTON MFG.CO. V. BRIN, 59 TEX.CIV.APP. 352, 125 S.W. 942; AND ALABAMA SHIRT AND TROUSER CO. V. UNITED STATES, 121 CT.CL. 313. THE FACT THAT THE COMPANY CONFIRMED ITS BID PRIOR TO AWARD, PRECLUDES ANY ASSUMPTION THAT THE CONTRACTING OFFICER EXERCISED BAD FAITH OR SOUGHT TO TAKE ADVANTAGE OF THE COMPANY. 27 COMP. GEN. 17.

THE ACCEPTANCE OF THE BID IN THIS CASE 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 STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER THAT RIGHT WITHOUT ADEQUATE CONSIDERATION. 36 COMP. GEN. 27.

ACCORDINGLY, THERE APPEARS TO BE NO LEGAL BASIS FOR THE CANCELLATION OF THE CONTRACT IN THIS CASE.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF AUGUST 9, 1961, ARE RETURNED.