B-151735, SEP. 11, 1963

B-151735, SEP. 11, 1963

TO MEYERS CORRUGATED BOX COMPANY:

WE REFER TO LETTER OF JUNE 3, 1963, RECEIVED FROM YOUR CLEVELAND OFFICE, REQUESTING THE IMMEDIATE CANCELLATION OF CONTRACT NO. CS-05S 1288 AWARDED ON APRIL 4, 1963, BY THE CHICAGO OFFICE OF THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION.

THE ABOVE CONTRACT WAS EXECUTED PURSUANT TO INVITATION FOR BIDS NO. CH-FT -383, ISSUED BY GSA ON FEBRUARY 6, 1963, TO SOLICIT BIDS FOR FURNISHING CORRUGATED BOXES REQUIRED BY GAS STORE DEPOTS LOCATED IN REGION 5. THE VARIOUS BOXES REQUIRED WERE DESCRIBED ON PAGES 6 THROUGH 33 OF THIS INVITATION AND THESE PAGES ALSO LISTED THE ITEM NUMBERS OF THIS PROCUREMENT AS 1 THROUGH 220. FOR EACH STOCK ITEM DESCRIBED IN THE INVITATION, TWO DELIVERY DESTINATIONS FOR THE ITEMS WERE ALSO INDICATED, AND THE BIDDER WAS REQUIRED TO QUOTE A PRICE FOR EACH DESTINATION OF THE STOCK ITEMS ON WHICH A BID WAS SUBMITTED. THE INVITATION PROVIDED THAT AGGREGATE AWARD WOULD BE MADE ON A STOCK ITEM BASIS TO THE LOW AGGREGATE BIDDER, DETERMINED BY MULTIPLYING THE UNIT PRICES BY ESTIMATED 12-MONTH REQUIREMENTS AND ADDING THE RESULTANT EXTENSIONS. CONTRACTS EXECUTED PURSUANT TO THIS INVITATION WERE TO BE TERM CONTRACTS BEGINNING ON MARCH 1, 1963, AND ENDING ON FEBRUARY 29, 1964. GSA WAS REQUIRED BY THIS INVITATION TO PURCHASE CORRUGATED BOXES TO THE EXTENT NECESSARY TO FILL ACTUAL REQUIREMENTS OF THE VARIOUS STORE DEPOTS. PAGE 5 OF THE INVITATION PROVIDED THAT EITHER THE GOVERNMENT OR THE CONTRACTOR COULD CANCEL A CONTRACT ENTERED INTO PURSUANT TO THIS INVITATION AFTER SUCH CONTRACT WAS IN EFFECT FOR 6 MONTHS FROM THE BEGINNING OF THE CONTRACT TERM BY GIVING 60 DAYS WRITTEN NOTICE TO THE OTHER PARTY.

IN RESPONSE TO THIS SOLICITATION 9 BIDS INCLUDING YOURS WERE RECEIVED AND OPENED ON FEBRUARY 26, 1963. AN EVALUATION OF YOUR BID CAUSED THE CONTRACTING OFFICER TO SUSPECT THAT AN ERROR HAD BEEN MADE IN THE PREPARATION OF YOUR BID AND ON MARCH 8, 1963, THE CONTRACTING OFFICER DIRECTED A SPEEDLETTER TO THE OFFICE OF MEYERS CORRUGATED BOX COMPANY, LOCATED IN CLEVELAND, OHIO, REQUESTING VERIFICATION OF PRICES FOR ITEMS 7 THROUGH 10; 185 THROUGH 194; 197 THROUGH 200; 209 AND 210; AND 217 AND 218. ON MARCH 13, 1963, MISS D. L. KRAUSE, IDENTIFIED AS A STENOGRAPHER, VERIFIED BY LETTER THE ACCURACY OF THE PRICES QUESTIONED BY GSA. IN THIS REGARD THERE IS CONFLICTING EVIDENCE WHETHER MISS KRAUSE HAD AUTHORITY TO MAKE THIS VERIFICATION. ON MARCH 15, 1963, A TELEPHONE CONTACT WAS MADE BETWEEN MILTON G. MEYERS, PRESIDENT OF YOUR CLEVELAND OFFICE AND GSA. THIS TIME MR. MEYERS WAS INFORMED THAT THE MEYERS' BID WAS OUT OF LINE WITH OTHER BIDS, THAT PRICES WERE LESS THAN PRICES IN OTHER MEYERS' CONTRACTS TO FURNISH THESE ITEMS TO GSA, AND THAT GSA THEREFORE SUSPECTED ERROR. ON MARCH 19, 1963, MR. MEYERS SENT A HANDWRITTEN LETTER TO GSA WHICH GENERALLY CONFIRMED ALL THE PRICES SUBMITTED IN THE MEYERS' BID MAKING SPECIFIC REFERENCE TO THIS INVITATION.

ON APRIL 3, 1963, AN AGGREGATE AWARD OF 94 ITEMS, CONSISTING OF ITEMS 7 THROUGH 14; 19 AND 20; 25 THROUGH 32; 39 AND 40; 43 AND 44; 47 THROUGH 56; 61 THROUGH 64; 67 AND 68; 79 AND 80; 121 THROUGH 128; 131 AND 132; 135 THROUGH 148; 157 AND 158; 185 THROUGH 210; AND 215 THROUGH 218, WAS MADE TO YOUR CLEVELAND OFFICE. ON APRIL 10, 1963, THE CLEVELAND DIVISION, INCORPORATED, OF CONSOLIDATED PAPER COMPANY AS PARENT OF THE MEYERS CORRUGATED BOX COMPANY ALLEGED AN ERROR IN BID AND REQUESTED THAT ALL "PER BUNDLE PRICES" BE DOUBLED. FOLLOWING A DISCUSSION BETWEEN GSA AND REPRESENTATIVES OF YOUR WASHINGTON, D.C., GOVERNMENT SALES OFFICE HELD ON MAY 14, 1963, YOUR WASHINGTON, D.C. SALES MANAGER DIRECTED A LETTER TO GSA ON MAY 21, 1963, REQUESTING THAT THIS CONTRACT BE DECLARED NULL AND VOID. ANOTHER LETTER OF MAY 21, 1963, ALSO SIGNED BY YOUR WASHINGTON, D.C. SALES MANAGER REQUESTED A CANCELLATION PURSUANT TO THE CANCELLATION CLAUSE WHICH WOULD BE EFFECTIVE AUGUST 31, 1963. ON JUNE 17, 1963, A SIMILAR REQUEST FOR CANCELLATION PURSUANT TO THE CANCELLATION CLAUSE WAS RECEIVED FROM MR. MILTON G. MEYERS, WHO WAS THEN THE SALES MANAGER OF YOUR CLEVELAND OFFICE. ON JULY 1, 1963, GSA AGREED TO A CANCELLATION, EFFECTIVE ON AUGUST 31, 1963, PURSUANT TO THE PROVISIONS OF THE CANCELLATION CLAUSE. ON JUNE 3, 1963, YOUR CLEVELAND OFFICE REQUESTED AN IMMEDIATE CANCELLATION OF YOUR CONTRACT BY THIS OFFICE.

THE QUESTION PRESENTED IN THIS CASE IS WHETHER AN AWARD PURSUANT TO THE FACTS AS STATED ABOVE RESULTED IN A VALID AND BINDING CONTRACT. IN REGARD TO SITUATIONS OF THIS NATURE IT IS WELL ESTABLISHED THAT THE RESPONSIBILITY FOR THE PREPARATION OF BIDS IS ON THE BIDDER WHO IS PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICES WHICH CAN BE CHARGED IN ORDER FOR A BIDDER TO REALIZE A REASONABLE PROFIT. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CLS. 120, 163. THE FEDERAL PROCUREMENT REGULATIONS 1-2.406-1 PLACED A DUTY ON A CONTRACTING OFFICER TO VERIFY A BID IF THERE IS AN APPARENT MISTAKE IN THE BID OR IF THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT A MISTAKE HAS BEEN MADE. HOWEVER, IF THE BIDDER DOES VERIFY HIS BID AND AWARD IS MADE PURSUANT TO SUCH VERIFICATION ANY PRESUMPTION OF BAD FAITH ON THE PART OF THE CONTRACTING OFFICER IS PRECLUDED. SEE 27 COMP. GEN. 17. MOREOVER, UPON AN UNEQUIVOCAL VERIFICATION THE CONTRACTING OFFICER HAS A DUTY TO MAKE THE AWARD TO THE LOW AGGREGATE BIDDER AND AN AWARD MADE ON SUCH BASIS HAS BEEN HELD TO BE FULLY JUSTIFIED. SEE CARNEGIE STEEL CO. V. CONNELLY, 89 N.J.L. 1, 97 A. 774; SHRIMPTON MANUFACTURING COMPANY V. BRIN, 59 TEX.CIV.APP. 352, 125 S.W. 942; AND ALABAMA SHIRT AND TROUSER COMPANY V. UNITED STATES, 121 CT.CL. 313.

THE RECORD ESTABLISHES THAT THE AWARD IN THIS CASE MADE PURSUANT TO VERIFICATION WAS IN GOOD FAITH AND IN ACCORD WITH THE CITED AUTHORITIES, AND CONSEQUENTLY, WE FIND THAT A VALID AND BINDING CONTRACT RESULTED BETWEEN YOUR CLEVELAND OFFICE AND THE GOVERNMENT. THE RIGHT IS THEREFORE VESTED IN THE GOVERNMENT TO RECEIVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, WHICH RIGHT CANNOT BE SURRENDERED BY ANY OFFICER OF THE GOVERNMENT WITHOUT ADEQUATE CONSIDERATION UNLESS SPECIFICALLY PROVIDED OTHERWISE BY STATUTE. IN THIS REGARD SEE 36 COMP. GEN. 27.

IN VIEW OF THE FOREGOING REASONS YOUR REQUEST FOR IMMEDIATE CANCELLATION IS DENIED.