B-151529, JUN. 26, 1963

B-151529: Jun 26, 1963

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TO THE SECRETARY OF COMMERCE: REFERENCE IS MADE TO A LETTER DATED MAY 13. TO HAVE BEEN MADE IN ITS BID ON WHICH PURCHASE ORDER NO. W63-5235 IS BASED. RECEIPT IS ALSO ACKNOWLEDGED OF MEMORANDUM FOR RECORD DATED JUNE 4. THE NEXT LOWEST BID FOR FURNISHING 101 TO 125 UNITS WAS $54.725 EACH. THE BID OF THE ILG ELECTRIC VENTILATING COMPANY WAS ACCEPTED ON MARCH 18. W63-5235 WAS ISSUED TO THE COMPANY FOR 125 UNITS AT A UNIT PRICE OF $24.85 EACH. IT IS REPORTED THAT ON MARCH 20. THE COMPANY'S SALES ENGINEER FROM THE HOME OFFICE STATED THAT HE HAD INADVERTENTLY FURNISHED TO THE COMPANY'S LOCAL REPRESENTATIVE A QUOTATION WHICH HE HAD PREVIOUSLY COMPUTED ON A CENTRIFUGAL FAN WHICH DOES NOT HAVE THE SPECIAL MOTOR AND CERTAIN CONSTRUCTION FEATURES REQUIRED BY THE INVITATION IN QUESTION AND THAT THE CORRECT PRICE FOR THE REQUIRED FAN IS $38.40 EACH.

B-151529, JUN. 26, 1963

TO THE SECRETARY OF COMMERCE:

REFERENCE IS MADE TO A LETTER DATED MAY 13, 1963, WITH ENCLOSURES, FROM MR. B. F. LOVELESS, CONTRACTING OFFICER, WEATHER BUREAU, WASHINGTON, D.C., REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE ILG ELECTRIC VENTILATING COMPANY, CHICAGO, ILLINOIS, TO HAVE BEEN MADE IN ITS BID ON WHICH PURCHASE ORDER NO. W63-5235 IS BASED. RECEIPT IS ALSO ACKNOWLEDGED OF MEMORANDUM FOR RECORD DATED JUNE 4, 1963, FROM MR. LOVELESS.

THE WEATHER BUREAU, PROCUREMENT AND SUPPLY SECTION, WASHINGTON, D.C., BY INVITATION NO. WB076-63 REQUESTED BIDS FOR FURNISHING CENTRIFUGAL FANS IN QUANTITIES OF 50 TO 75, INCLUSIVE, 76 TO 100, INCLUSIVE, AND 101 TO 125, INCLUSIVE. IN RESPONSE TO THE ILG ELECTRIC VENTILATING COMPANY SUBMITTED A BID OFFERING TO FURNISH THE FANS IN ANY QUANTITY FROM 50 TO 75, INCLUSIVE, AT A PRICE OF $28.20 EACH; IN ANY QUANTITY FROM 76 TO 100, INCLUSIVE, AT A PRICE OF $27 EACH; AND IN ANY QUANTITY FROM 101 TO125, INCLUSIVE, AT A PRICE OF $24.85 EACH. THE NEXT LOWEST BID FOR FURNISHING 101 TO 125 UNITS WAS $54.725 EACH. THE BID OF THE ILG ELECTRIC VENTILATING COMPANY WAS ACCEPTED ON MARCH 18, 1963, AND ON THE SAME DAY PURCHASE ORDER NO. W63-5235 WAS ISSUED TO THE COMPANY FOR 125 UNITS AT A UNIT PRICE OF $24.85 EACH.

IT IS REPORTED THAT ON MARCH 20, 1963, THE LOCAL REPRESENTATIVE OF THE ILG ELECTRIC VENTILATING COMPANY VISITED THE PROCUREMENT OFFICE TO ADVISE THAT HIS HOME OFFICE IN CHICAGO, ILLINOIS, HAD MADE AN ERROR IN FURNISHING HIM THE BID PRICES FOR THE CENTRIFUGAL FANS.

IN A LETTER DATED MARCH 28, 1963, THE COMPANY'S SALES ENGINEER FROM THE HOME OFFICE STATED THAT HE HAD INADVERTENTLY FURNISHED TO THE COMPANY'S LOCAL REPRESENTATIVE A QUOTATION WHICH HE HAD PREVIOUSLY COMPUTED ON A CENTRIFUGAL FAN WHICH DOES NOT HAVE THE SPECIAL MOTOR AND CERTAIN CONSTRUCTION FEATURES REQUIRED BY THE INVITATION IN QUESTION AND THAT THE CORRECT PRICE FOR THE REQUIRED FAN IS $38.40 EACH. IN SUPPORT OF HIS ALLEGATION OF ERROR, THE COMPANY'S SALES ENGINEER SUBMITTED COPIES OF QUOTATIONS DATED OCTOBER 10 AND 22, 1962, AND FEBRUARY 19, 1963, WHICH HE HAD FURNISHED TO THE COMPANY'S LOCAL REPRESENTATIVE. THE ENGINEER ALSO SUBMITTED A BREAKDOWN OF THE COMPANY'S INTENDED BID PRICE FOR THE FAN AND A COPY OF A QUOTATION RECEIVED ON THE MOTORS FOR THE FANS.

IN HIS REPORT OF MAY 10, 1963, IN WHICH HE RECOMMENDED THAT THE CONTRACT PRICE OF THE FANS BE INCREASED TO $38.40 EACH, THE CONTRACTING OFFICER STATES THAT IT IS THE OPINION OF HIS OFFICE THAT THE EVIDENCE SUBMITTED BY THE COMPANY ESTABLISHES THAT THE CHICAGO OFFICE, IN FURNISHING TO ITS WASHINGTON, D.C., REPRESENTATIVE THE PRICES TO BE QUOTED IN THE BID, INADVERTENTLY USED ITS ORIGINAL COMPUTATION OF OCTOBER 10, 1962, RATHER THAN THE REVISED QUOTATION DEVELOPED ON OCTOBER 16, 1962, FOR THE MODIFIED UNIT GS-1 SPECIAL, WHICH INCLUDES CADMIUM PLATING OF THE HOUSING AND FLANGE AND A SPECIAL MOTOR. IN HIS SUPPLEMENTAL REPORT OF JUNE 4, 1963, THE CONTRACTING OFFICER STATES THAT THE WEATHER BUREAU SHOULD HAVE BEEN ON NOTICE OF A MISTAKE IN THE BID OF THE ILG ELECTRIC VENTILATING COMPANY SINCE APPROXIMATELY ONE MONTH PRIOR TO THE ISSUANCE OF THE INVITATION, THE COMPANY INFORMED THE INSTRUMENT DIVISION THAT THE UNIT COST OF THE CENTRIFUGAL FAN WHICH IT HAD SUBMITTED TO THE WEATHER BUREAU FOR TEST PURPOSES WOULD BE APPROXIMATELY $54 FOR 25 TO 49 UNITS, $46 FOR 50 TO 99 UNITS AND $38 FOR 100 TO 125 UNITS. THE CENTRIFUGAL FAN SUBMITTED BY THE COMPANY FOR TEST PURPOSES IS IDENTICAL TO THE CENTRIFUGAL FAN REQUIRED BY THE INVITATION EXCEPT THAT IT DOES NOT HAVE THE SPECIAL CADMIUM PLATING.

THE BASIC QUESTION FOR CONSIDERATION IS WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS PRESUMED IN LAW TO EXPRESS THE UNDERSTANDING OF THE PARTIES. HOWEVER, IF A MATERIAL UNILATERAL MISTAKE IS MADE BY ONE PARTY AND ITS EXISTENCE IS OR SHOULD HAVE BEEN KNOWN TO THE OTHER PARTY, THE PARTY MAKING THE MISTAKE HAS A RIGHT OF RESCISSION. MOFFETT, HODGKINS AND CLARKE CO. V. ROCHESTER, 178 U.S. 373; C. N. MONROE MANUFACTURING CO. V. UNITED STATES, 143 F.SUPP. 449; ARMOUR AND CO. V. RENAKER, 202 F. 901; UNITED STATES V. JONES, 176 F.2D. 278; 5 WILLISTON ON CONTRACTS, 1578; 3 CORBIN ON CONTRACTS, 610, 614; 52 A.L.R.2D. 802 AND ID. FOOTNOTE 9; 37 COMP. GEN. 685, 686.

SINCE THE CONTRACTING OFFICE HAS ADMITTED THAT IT SHOULD HAVE RECOGNIZED THE POSSIBILITY OF ERROR IT MUST BE PRESUMED THAT IT WAS ON CONSTRUCTIVE NOTICE OF ERROR.

ACCORDINGLY, PURCHASE ORDER NO. WB076-63 MAY BE AMENDED TO PROVIDE FOR A UNIT PRICE OF $38.40 FOR THE CENTRIFUGAL FANS AND PAYMENT FOR THE FANS DELIVERED OR TO BE DELIVERED IS AUTHORIZED TO BE MADE ON THAT BASIS.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO THE PURCHASE ORDER.