B-150593, JAN. 28, 1963

B-150593: Jan 28, 1963

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JANUARY 8. IT APPEARS FROM THE ABSTRACT OF BIDS THAT ONLY TWO BIDS WERE RECEIVED. THE CONTRACT WAS AWARDED TO THE BENDIX CORPORATION AS THE LOW BIDDER. THAT A REVIEW OF THE CONTRACTOR'S COST AND PRICE ANALYSIS APPEARS TO BEAR OUT HIS STATEMENT THAT THE TOTAL PRICE INCLUDED FOR MATERIALS WAS $8. WHEREAS HE SHOULD HAVE BID THAT AMOUNT FOR EACH OF THE THREE UNITS. - THE CONTRACTING OFFICER STATED THAT A MORE THOROUGH REVIEW OF THE BID PRICES AT THE TIME THE BIDS WERE OPENED SHOULD HAVE PLACED HIM ON NOTICE OF THE POSSIBILITY OF ERROR. THAT POSITION WAS SOMEWHAT SUPPORTED BY THE CONTRACTING OFFICER'S STATEMENTS IN PARAGRAPH 5 OF THE REPORT CONCERNING THE COSTS INVOLVED IN CONNECTION WITH A PREVIOUS CONVERSION UNDER ESSENTIALLY THE SAME SPECIFICATIONS.

B-150593, JAN. 28, 1963

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 8, 1963, WITH ENCLOSURES, FROM COLONEL ARTHUR H. WILLIAMS, JR., ASSISTANT DIRECTOR OF PROCUREMENT, OFFICE OF THE ASSISTANT SECRETARY, SUBMITTING FOR OUR CONSIDERATION A REQUEST BY THE BENDIX FIELD ENGINEERING CORPORATION, OWINGS MILLS, MARYLAND, FOR REFORMATION OF CONTRACT NO. DA-15-029-ENG 6129, DATED MARCH 19, 1962, BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD.

THE RECORD INDICATES THAT BY INVITATION FOR BIDS NO. ENG-15-029-62 43, DATED FEBRUARY 15, 1962, THE U.S. ARMY ENGINEER DISTRICT, LOUISVILLE, KENTUCKY, REQUESTED BIDS--- TO BE OPENED AT 10:00 M., ON MARCH 8, 1962--- FOR THE CONVERSION OF THREE CUMMINS MODEL LGA-601-100 DIESEL ENGINE DRIVEN GENERATORS FROM 100 KW TO 200 KW. IT APPEARS FROM THE ABSTRACT OF BIDS THAT ONLY TWO BIDS WERE RECEIVED, THE LOWEST BEING SUBMITTED BY THE BENDIX CORPORATION AT THE BID PRICE OF $42,626.35, AND THE OTHER BY CUMMINS DIESEL ENGINES, INC., AT THE BID PRICE OF $58,110. THE CONTRACT WAS AWARDED TO THE BENDIX CORPORATION AS THE LOW BIDDER.

BY LETTER DATED APRIL 9, 1962, THE CONTRACTOR ALLEGED A MISTAKE IN BID, AND BY FURTHER LETTERS DATED MAY 21 AND AUGUST 13, 1962, THE CONTRACTOR SUBMITTED ITS WORK SHEETS AND ADDITIONAL INFORMATION IN SUPPORT OF ITS CLAIM OF ERROR. IN HIS REPORT AND RECOMMENDATION IN THIS CASE, DATED SEPTEMBER 7, 1962, THE CONTRACTING OFFICER STATED, IN EFFECT, THAT A REVIEW OF THE CONTRACTOR'S COST AND PRICE ANALYSIS APPEARS TO BEAR OUT HIS STATEMENT THAT THE TOTAL PRICE INCLUDED FOR MATERIALS WAS $8,917 FOR THE THREE UNITS, WHEREAS HE SHOULD HAVE BID THAT AMOUNT FOR EACH OF THE THREE UNITS, OR A TOTAL BID PRICE OF $26,751 AS THE COST OF MATERIALS--- AN INCREASE OF $17,834 OVER HIS ACTUAL BID PRICE. THE ERROR ALLEGEDLY AROSE OUT OF A MISUNDERSTANDING OF THE QUOTATION MADE BY CUMMINS DIESEL ENGINES, INC.--- THE SUBCONTRACTOR--- FOR CONVERTING THE THREE UNITS. THE CONTRACTING OFFICER EXPRESSED THE OPINION THAT THE CONTRACTOR HAS SUBMITTED CLEAR AND CONVINCING EVIDENCE OF A BONA FIDE MISTAKE IN BID AND, BASED UPON OUR EXAMINATION OF THE RECORD, WE AGREE.

AS A BASIS FOR RECOMMENDING THAT THE CONTRACT PRICE BE INCREASED TO THE SUM OF $58,110--- THE AMOUNT OF THE BID BY CUMMINS DIESEL ENGINES, INC.--- THE CONTRACTING OFFICER STATED THAT A MORE THOROUGH REVIEW OF THE BID PRICES AT THE TIME THE BIDS WERE OPENED SHOULD HAVE PLACED HIM ON NOTICE OF THE POSSIBILITY OF ERROR, THUS REQUIRING VERIFICATION PRIOR TO AWARD. THAT POSITION WAS SOMEWHAT SUPPORTED BY THE CONTRACTING OFFICER'S STATEMENTS IN PARAGRAPH 5 OF THE REPORT CONCERNING THE COSTS INVOLVED IN CONNECTION WITH A PREVIOUS CONVERSION UNDER ESSENTIALLY THE SAME SPECIFICATIONS. HOWEVER, IN A SUPPLEMENTAL REPORT DATED DECEMBER 19, 1962, THE CONTRACTING OFFICER STATED, AMONG OTHER THINGS, THAT HE ADVISED THE CONTRACTOR OF THE AMOUNT OF THE BID SUBMITTED BY CUMMINS DIESEL ENGINES, INC., BUT THAT HE WAS NOT INFORMED THAT HIS BID WAS OUT OF LINE WITH THE OTHER BID; ALSO, THAT HE (THE CONTRACTING OFFICER) DID NOT SUSPECT A MISTAKE BASED UPON THE PRICES FOR PREVIOUS CONVERSION WORK, AS DESCRIBED IN PARAGRAPH 5 OF THE BASIC REPORT, IT APPEARING RATHER THAT THE CUMMINS' BID PRICE WAS EXCESSIVE.

IN A FIRST ENDORSEMENT DATED OCTOBER 30, 1962, COLONEL ROBERT W. LOCKRIDGE, DEPUTY DIVISION ENGINEER, CONCLUDED THAT CLEAR AND CONVINCING EVIDENCE HAD BEEN FURNISHED AS TO THE MISTAKE AND THE INTENDED BID PRICE AND THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR IN BID AT THE TIME OF AWARD OF THE CONTRACT. HOWEVER, BOTH THE DISTRICT ENGINEER AND THE CHIEF OF ENGINEERS DISAGREED WITH THE CONTRACTING OFFICER'S RECOMMENDATION, IT BEING THEIR VIEW THAT THE CONTRACTOR'S REQUEST FOR REFORMATION OF THE CONTRACT SHOULD BE DENIED.

IN A DECISION DATED NOVEMBER 28, 1940, B-12600, TO THE CHAIRMAN, UNITED STATES MARITIME COMMISSION--- PUBLISHED AT 20 COMP. GEN. 286--- IT WAS HELD THAT, ORDINARILY, IN DETERMINING WHETHER A GOVERNMENT CONTRACTING OFFICER SHOULD HAVE NOTED AN ERROR IN BID BECAUSE OF A VARIANCE IN PRICE, NO FAIR COMPARISON CAN BE MADE WHERE ONLY TWO WIDELY VARIANT BIDS ARE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH. THAT HOLDING HAS BEEN FOLLOWED IN NUMEROUS SUBSEQUENT DECISIONS OF OUR OFFICE AND IT WOULD APPEAR TO HAVE PARTICULAR APPLICATION TO THE INSTANT MATTER IN VIEW OF THE CONTRACTING OFFICER'S REPORT THAT HE CONSIDERED THE CUMMINS' BID--- THE HIGH BID--- WAS EXCESSIVE. UNDER THE FACTS IN THIS CASE IT IS DIFFICULT TO FIND A BASIS FOR THE CONTRACTING OFFICER'S VIEW THAT HE WAS ON CONSTRUCTIVE NOTICE OF ERROR, PARTICULARLY SINCE THE DIFFERENCE BETWEEN THE BIDS IN QUESTION IS NOT IN EXCESS OF DIFFERENCES FREQUENTLY ENCOUNTERED IN GOVERNMENT PROCUREMENTS.

THE QUESTION HERE FOR CONSIDERATION IS WHETHER THE ACCEPTANCE OF THE LOW BID CONSUMMATED A VALID AND BINDING CONTRACT. ON THE BASIS OF THE RECORD BEFORE US WE CONCLUDE THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD, AND THAT THE ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313, AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

THE RESPONSIBILITY OF 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. ANY ERROR THAT WAS MADE IN THE CONTRACTOR'S BID WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249, 259, AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. SEE ALSO 20 COMP. GEN. 652, AND 26 ID. 415.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR REFORMING THE CONTRACT SO AS TO INCREASE THE CONTRACT PRICE AS REQUESTED BY THE CONTRACTOR.