B-152092, AUG. 16, 1963

B-152092: Aug 16, 1963

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BID OPENING WAS HELD ON JUNE 25. THE FOLLOWING THREE BIDS WERE RECEIVED: HYGRADE ELECTRIC COMPANY $3. AWARD WAS MADE TO HYGRADE ELECTRIC AT ITS BID PRICE OF $3. THAT ITS BID SHOULD HAVE BEEN $4. A WORK SHEET FURNISHED BY THE BIDDER DOES INDICATE AN ERROR IN ADDITION WHICH APPEARS TO HAVE CAUSED AN UNDERSTATEMENT OF AT LEAST $1. WHERE MISTAKE IN A BID IS ALLEGED AFTER ITS ACCEPTANCE. THE PRIMARY QUESTION IS WHETHER THE ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT. THAT THE BID WAS PROBABLY IN SOME WAY ERRONEOUS. THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED FROM THE RANGE IN BID PRICES RECEIVED THAT THE LOW BID WAS IN ERROR. (THE OTHER TWO BIDS ARE OVER 80 PERCENT HIGHER THAN HYGRADE'S LOW BID OF $3.

B-152092, AUG. 16, 1963

TO COMMANDANT, THE COAST GUARD:

THIS REFERS TO YOUR LETTER OF JULY 19, 1963, (FS-1), WITH ENCLOSURE PERTAINING TO A MISTAKE IN BID ALLEGED BY THE HYGRADE ELECTRIC COMPANY UNDER INVITATION FOR BIDS NO. 227-63, ISSUED AT THE 14TH COAST GUARD DISTRICT, HONOLULU, HAWAII, ON MAY 31, 1963.

THE INVITATION COVERED THE REPLACEMENT OF PANELBOARDS AND SECONDARY FEEDERS AT KILAUEA LIGHT STATION, KILAUEA, KAUAI. BID OPENING WAS HELD ON JUNE 25, 1963, AND THE FOLLOWING THREE BIDS WERE RECEIVED:

HYGRADE ELECTRIC COMPANY $3,000.00

NII'S ELECTRIC SHOP 5,776.50

UNITED ELECTRIC SERVICE 5,820.00

ON JUNE 26, 1963, AWARD WAS MADE TO HYGRADE ELECTRIC AT ITS BID PRICE OF $3,000. BY LETTER OF JUNE 27, 1963, HYGRADE ALLEGED THAT IT MADE AN ERROR IN ADDITION IN COMPUTING ITS BID; AND THAT ITS BID SHOULD HAVE BEEN $4,186 INSTEAD OF $3,000. A WORK SHEET FURNISHED BY THE BIDDER DOES INDICATE AN ERROR IN ADDITION WHICH APPEARS TO HAVE CAUSED AN UNDERSTATEMENT OF AT LEAST $1,000 IN BID PRICE.

WHERE MISTAKE IN A BID IS ALLEGED AFTER ITS ACCEPTANCE, THE PRIMARY QUESTION IS WHETHER THE ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT. IN THE ABSENCE OF NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, IMPUTABLE TO THE CONTRACTING OFFICER, THAT THE BID WAS PROBABLY IN SOME WAY ERRONEOUS, HIS ACCEPTANCE THEREOF IN GOOD FAITH WOULD CONVERT THE BIDDER'S EXPRESSED OFFER INTO A LEGAL OBLIGATION TO PERFORM IN ACCORDANCE WITH HIS OFFER. IN SUCH A CASE, PROOF OF ERROR, NO MATTER HOW CONCLUSIVE, CANNOT AFFECT THE VALIDITY OF THE CONTRACT OR CONSTITUTE A VALID BASIS FOR RESCISSION OF OR REFORMATION OF ITS TERMS. SEE 39 COMP. GEN. 36. IN THIS CASE, HOWEVER, THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED FROM THE RANGE IN BID PRICES RECEIVED THAT THE LOW BID WAS IN ERROR. (THE OTHER TWO BIDS ARE OVER 80 PERCENT HIGHER THAN HYGRADE'S LOW BID OF $3,000). ACCORDINGLY, ACCEPTANCE OF THE BID MAY NOT BE HELD TO HAVE RESULTED IN A VALID AND BINDING CONTRACT. SEE KEMP V. UNITED STATES, 38 F.SUPP. 568.

ON THE OTHER HAND, THE EVIDENCE OF ERROR DOES NOT CLEARLY AND CONVINCINGLY ESTABLISH WHAT HYGRADE INTENDED TO BID, AND SINCE NO WORK HAS BEEN DONE, NO QUESTION OF PAYMENT IS INVOLVED. UNDER THE CIRCUMSTANCES, THE NOTICE OF AWARD SHOULD BE CANCELLED AS RECOMMENDED.