B-150750, JUN. 26, 1963

B-150750: Jun 26, 1963

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FOUR BIDS WERE RECEIVED AS FOLLOWS: TABLE TOTAL BID 1. THE GOVERNMENT'S ESTIMATE FOR THIS PROCUREMENT IS REPORTED TO HAVE BEEN IN THE AMOUNT OF $3. IT IS REPORTED THAT ON JUNE 26. THE CONTRACTOR WAS ADVISED TO CONTINUE PERFORMANCE PENDING RESOLUTION OF THE MATTER. THE GENERAL RULE OF LAW IS THAT THE ACCEPTANCE OF A BID IN GOOD FAITH. WHILE THE INFORMATION YOU HAVE SUBMITTED IN BEHALF OF HOFLEY INDICATES THAT HOFLEY MAY HAVE MADE A MISTAKE IN BID. WE FIND NO EVIDENCE TO SHOW THAT THE CONTRACTING OFFICER WAS ACTUALLY AWARE. OR SHOULD HAVE KNOWN. THAT THE BID CONTAINED AN ERROR WHEN IT WAS ACCEPTED. THE ERROR WAS FIRST ALLEGED MORE THAN THREE WEEKS AFTER THE AWARD. 510 WAS NOT INCONSISTENT WITH THE GOVERNMENT'S ESTIMATE OF $3.

B-150750, JUN. 26, 1963

TO HINKS AND KNIGHT:

WE REFER TO YOUR LETTERS OF JANUARY 24, AND MAY 23, 1963, IN BEHALF OF HOFLEY MANUFACTURING COMPANY, REQUESTING AN ADJUSTMENT IN CONTRACT PRICE DUE TO A MISTAKE IN BID ALLEGED AFTER THE AWARD OF CONTRACT NO. DA-20-089- ORD-29846, ISSUED BY THE DEPARTMENT OF THE ARMY.

THE RECORD INDICATES THAT INVITATION FOR BIDS NO. ORD-20-089-62-53B, ISSUED BY THE UNITED STATES ARMY ORDNANCE CORPS, DETROIT ARSENAL, ON MAY 4, 1962, AND OPENED ON MAY 24, 1962, CALLED FOR BIDS ON A TOTAL OF 540 BRACKET ASSEMBLIES. FOUR BIDS WERE RECEIVED AS FOLLOWS:

TABLE

TOTAL BID

1. HOFLEY MANUFACTURING COMPANY $3,510.00

2. SECOND LOW BIDDER$4,919.40

3. THIRD LOW BIDDER $5,729.80

4. FOURTH LOW BIDDER $7,344.00

HOFLEY'S BID OF $3,510 REPRESENTED A UNIT BID OF $6.50 ON 540 UNITS. THE GOVERNMENT'S ESTIMATE FOR THIS PROCUREMENT IS REPORTED TO HAVE BEEN IN THE AMOUNT OF $3,780, REPRESENTING A UNIT PRICE OF $7.00.

ON JUNE 4, 1962, HOFLEY RECEIVED THE AWARD AT ITS BID PRICE OF $3,510.

IT IS REPORTED THAT ON JUNE 26, 1962, AFTER THE AWARD, THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICER BY TELEPHONE THAT IT HAD MADE A MISTAKE IN BID. THE CONTRACTOR WAS ADVISED TO CONTINUE PERFORMANCE PENDING RESOLUTION OF THE MATTER. BY LETTER OF JULY 19, 1962, HOFLEY REQUESTED AN INCREASE IN CONTRACT PRICE FROM $3,510 TO $5,551.20 (AN INCREASE OF $2,041.20) BASED ON ITS ALLEGED CALCULATION OF ?42 FOR THE CASTING COMPONENT IN EACH UNIT, INSTEAD OF ?42 PER POUND ON A 10 POUND CASTING FOR EACH UNIT. THE ALLEGED ERROR RESULTS IN AN UNDERSTATEMENT OF $3.78 PER UNIT (9 TIMES ?42), OR A TOTAL OF $2,041.20 ON 540 UNITS. THE CONTRACTOR ENCLOSED QUOTATIONS FROM ITS CASTING SUBCONTRACTOR WHICH INDICATES A QUOTED PRICE OF ?42 PER POUND ON CASTINGS.

THE GENERAL RULE OF LAW IS THAT THE ACCEPTANCE OF A BID IN GOOD FAITH, WITHOUT KNOWLEDGE OF ERROR THEREIN, CONSUMMATES A VALID AND BINDING CONTRACT. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, 507; 40 COMP. GEN. 326, 332.

WHILE THE INFORMATION YOU HAVE SUBMITTED IN BEHALF OF HOFLEY INDICATES THAT HOFLEY MAY HAVE MADE A MISTAKE IN BID, AS ALLEGED, WE FIND NO EVIDENCE TO SHOW THAT THE CONTRACTING OFFICER WAS ACTUALLY AWARE, OR SHOULD HAVE KNOWN, THAT THE BID CONTAINED AN ERROR WHEN IT WAS ACCEPTED. THE ERROR WAS FIRST ALLEGED MORE THAN THREE WEEKS AFTER THE AWARD, AND THE BID PRICE OF $3,510 WAS NOT INCONSISTENT WITH THE GOVERNMENT'S ESTIMATE OF $3,780. ALSO, HOFLEY'S BID WAS NOT CLEARLY OUT OF LINE WITH THE OTHER 3 BIDS RECEIVED.

ACCORDINGLY, ON THE FACTS PRESENTED, WE CONCLUDED THAT HOFLEY MAY NOT PROPERLY BE RELIEVED FROM THE TERMS OF ITS CONTRACT.