B-153064, FEB. 26, 1964

B-153064: Feb 26, 1964

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TROWBRIDGE AND MADDEN REFERENCE IS MADE TO A LETTER DATED DECEMBER 11. THE DEFENSE PETROLEUM SUPPLY CENTER (DPSC) NOTIFIED ALL BIDDERS THAT THE AFOREMENTIONED INVITATION WAS CANCELLED AND THAT A NEW INVITATION WOULD BE ISSUED IN PLACE THEREOF. WE HAVE BEEN INFORMED THAT THIS DECISION RESULTED FROM A CHANGE IN REQUIREMENTS IN RESPECT TO THE TYPE OF OILING EQUIPMENT DESIRED. BIDS WERE PUBLICLY OPENED ON JULY 11. THE FOLLOWING BIDS WERE RECEIVED: * * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * * WE UNDERSTAND THAT WHILE GOVERNMENT PERSONNEL DID NOT TAKE PART IN DISCUSSION AFTER THE SCHEDULED OPENING. IT IS ADMITTED THAT REPRESENTATIVES OF SOUTHEASTERN AND INTERNATIONAL FUELING.

B-153064, FEB. 26, 1964

TO SHAW, PITTMAN, POTTS, TROWBRIDGE AND MADDEN

REFERENCE IS MADE TO A LETTER DATED DECEMBER 11, 1963, FROM SOUTHEASTERN STORAGE AND PROCESSING, INCORPORATED, CONCERNING THEIR REQUEST FOR AN UPWARD PRICE ADJUSTMENT IN CONNECTION WITH CONTRACT NO. DSA 6-651.

THE RECORD DISCLOSES THAT INVITATION FOR BIDS NO. DSA 6-62-148, DATED MAY 23, 1962, INVITED BIDS ON CERTAIN AIRCRAFT FUEL DELIVERY SERVICES TO BE PERFORMED AT THE NAVAL AIR STATION, QUONSET POINT, RHODE ISLAND, FROM SEPTEMBER 1, 1962, THROUGH NOVEMBER 30, 1963. ON JUNE 19, 1962, ONE DAY PRIOR TO THE SCHEDULED OPENING, THE DEFENSE PETROLEUM SUPPLY CENTER (DPSC) NOTIFIED ALL BIDDERS THAT THE AFOREMENTIONED INVITATION WAS CANCELLED AND THAT A NEW INVITATION WOULD BE ISSUED IN PLACE THEREOF. WE HAVE BEEN INFORMED THAT THIS DECISION RESULTED FROM A CHANGE IN REQUIREMENTS IN RESPECT TO THE TYPE OF OILING EQUIPMENT DESIRED. ACCORDINGLY, ON JUNE 22, 1962, THE DPSC ISSUED INVITATION FOR BIDS NO. 6-62-168 CONTAINING THE NECESSARY AMENDED REQUIREMENTS. AS PROVIDED, BIDS WERE PUBLICLY OPENED ON JULY 11, 1962. THE FOLLOWING BIDS WERE RECEIVED:

* * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * *

WE UNDERSTAND THAT WHILE GOVERNMENT PERSONNEL DID NOT TAKE PART IN DISCUSSION AFTER THE SCHEDULED OPENING, IT IS ADMITTED THAT REPRESENTATIVES OF SOUTHEASTERN AND INTERNATIONAL FUELING, WHO WERE PRESENT AT THAT TIME, DID HAVE SOME DISCUSSION AS TO THE DISPARITY BETWEEN THEIR BIDS.

IN THE REPORT SUBMITTED TO THIS OFFICE, DPSC READILY ADMITS THAT THE CONTRACTING OFFICER RECOGNIZED THE POSSIBILITY OF ERROR THOUGH NO INDICATION OF THE NATURE OF THE ALLEGED ERROR APPEARED IN EITHER THE INVITATION OR IN THE BID ITSELF. IN ANY EVENT, VERIFICATION WAS REQUESTED BY TELEGRAM DATED JULY 12, 1962. SINCE SOUTHEASTERN FAILED TO RESPOND AS REQUESTED, A SECOND TELEGRAM WAS DISPATCHED ON JULY 17, 1962, READING AS FOLLOWS:

"SINCE YOU HAVE FAILED TO RESPOND TO OUR WIRE OF 12 JULY YOUR BID AS STATED IS BEING CONSIDERED FOR EVALUATION.'

COINCIDENTALLY ON THE SAME DAY, I.E., JULY 17, 1962, WHILE VISITING AT THE DEFENSE PETROLEUM SUPPLY CENTER IN CONNECTION WITH OTHER BUSINESS, MESSRS. MERRIMAN AND STEVENS OF SOUTHEASTERN WERE ORALLY APPRISED OF THE SITUATION. WHILE SOUTHEASTERN DOES NOT ATTEMPT TO DISPUTE THE RECEIPT OF THESE TELEGRAMS AT THEIR OFFICE, IT WAS EXPLAINED THAT NO ONE TOOK ANY ACTION AS BOTH MR. STEVENS AND MR. MERRIMAN WERE AWAY FROM RALIEGH AND THESE WERE THE ONLY TWO MEN WHO WERE CONVERSANT WITH FEDERAL CONTRACT RELATIONS. NONETHELESS, AFTER A QUICK CHECK OF THEIR FIGURES AND FINDING NO MATHEMATICAL ERROR, A LETTER OF VERIFICATION WAS TYPED AND SIGNED BY MR. MERRIMAN. SINCE THIS HAD THE EFFECT OF REMOVING ANY REASONABLE ELEMENT OF DOUBT AS FAR AS THE AGENCY WAS CONCERNED, SOUTHEASTERN WAS AWARDED THE CONTRACT IN QUESTION ON JULY 26, 1962.

EARLY IN OCTOBER, SOUTHEASTERN REALIZED THAT IT HAD LOST A SUBSTANTIAL AMOUNT OF MONEY ON THIS PARTICULAR CONTRACT DURING THE MONTH OF SEPTEMBER. THIS FACT WAS THEREUPON COMMUNICATED TO APPROPRIATE PERSONNEL OF THE AGENCY. BY NOVEMBER, SOUTHEASTERN REALIZED THAT IT HAD AGAIN LOST MONEY AND THAT IT WAS LOSING MONEY AT AN ALARMING RATE. AS A RESULT, SOUTHEASTERN REPORTS THAT IT BEGAN A SERIOUS SEARCH TO UNCOVER THE REASONS FOR THIS CONTINUING LOSS. PARENTHETICALLY, WE SHOULD LIKE TO POINT OUT THAT WHILE SOUTHEASTERN WAS FULLY COGNIZANT OF THE FACT THAT THEY HAD UNDERESTIMATED THEIR MAN HOUR REQUIREMENT, THEY DID NOT FEEL THAT THIS FACTOR ALONE WAS THE SOLE CAUSE FOR THE APPEARANCE OF SUCH LARGE LOSSES. IN DECEMBER 1962, SOUTHEASTERN AGAIN NOTIFIED THE DPSC AND REPORTED THAT IT HAD ERRED IN COMPUTING ITS BID PRICE AND THAT IT WAS CONSIDERING MAKING APPLICATION FOR RELIEF. ON NOVEMBER 6, 1963, SOUTHEASTERN WAS NOTIFIED THAT ITS APPLICATION FOR RELIEF HAD BEEN DENIED.

IN THE MEMORANDUM SUBMITTED TO THIS OFFICE, SOUTHEASTERN IMPLIES THAT IT SHOULD BE GRANTED RELIEF SINCE ITS CASE APPEARS SIMILAR TO A CASE DECIDED IN THIS OFFICE ON JULY 24, 1962, BEARING THE NUMBER B 148775. IN THE CASE REFERRED TO, THIS OFFICE AUTHORIZED AN UPWARD PRICE ADJUSTMENT EVEN THOUGH THE CONTRACTOR HAD PREVIOUSLY VERIFIED HIS ORIGINAL ERRONEOUS BID. BELIEVE HOWEVER, THAT THE FACTS OF THE ABOVE CASE ARE CLEARLY DISTINGUISHABLE FROM THOSE PRESENT HERE. IN B 148775, THE AGENCY HAD RECEIVED ONLY TWO BIDS, ONE FOR $5,215.08 AND THE OTHER FOR $20,341.20. IN OTHER WORDS RELIEF WAS GRANTED TO A LOW BIDDER WHO HAD SUBMITTED A BID NEARLY THREE-FOURTHS LESS THAN HIS COMPETITOR. ADDITIONALLY, WHILE THE POINT WAS NOT FULLY DEVELOPED, THE CASE SUGGESTED THAT WE HAD SOME QUESTION AS TO WHETHER THE AGENCY ITSELF MAY NOT HAVE BEEN THE PRIMARY CAUSE FOR THE ERROR SINCE THE WRITTEN REQUIREMENTS AND DRAWINGS CONTAINED IN THE IFB WERE APPARENTLY INCONSISTENT. CONSEQUENTLY, IN GRANTING THE REQUESTED RELIEF WE TOOK THE POSITION THAT HAD THE CONTRACTOR ELECTED NOT TO PROCEED WITH THE CONTRACT, IT WAS DOUBTFUL WHETHER A COURT WOULD HAVE SPECIFICALLY ENFORCED HIM TO DO SO AT THE PRICE BID.

WE ARE UNABLE TO AGREE THAT THE CONTRACTING OFFICER SHOULD HAVE REALIZED THE EXISTENCE OF AN ERROR AFTER MR. MERRIMAN VERIFIED HIS BID IN WRITING. INDEED, THIS CONCLUSION WOULD BE TOTALLY UNWARRANTED IN VIEW OF THE FACT THAT MR. MERRIMAN HAD DISCUSSED THE DISPARITY IN BIDS WITH DPSC PERSONNEL IMMEDIATELY PRIOR TO THE SIGNING OF THE VERIFICATION. IN 27 COMP. GEN. 17, WE STATED:

"THE FACT THAT THE ACCEPTANCE OF THE BID WAS NOT MADE UNTIL AFTER THE COMPANY HAD BEEN GIVEN AN OPPORTUNITY TO VERIFY ITS BID, PRECLUDES ANY ASSUMPTION THAT THE CONTRACTING OFFICER EXERCISED BAD FAITH OR ATTEMPTED TO TAKE ADVANTAGE OF THE COMPANY.'

THEREFORE, ANY ERROR AND/OR RESULTING LOSS MUST BE ATTRIBUTABLE SOLELY TO THE NEGLECT AND FAILURE OF SOUTHEASTERN TO ACT PRUDENTLY IN CHECKING ITS COMPUTATIONS.

THE PRIMARY QUESTION PRESENTED IS NOT WHETHER AN ERROR IN FACT OCCURRED, BUT WHETHER AN AWARD PURSUANT TO THE FACTS AS STATED RESULTED IN A VALID AND BINDING CONTRACT. IT IS A BASIC PRINCIPLE THAT RESPONSIBILITY FOR THE PREPARATION OF A BID RESTS UPON THE BIDDER AND NOT THE GOVERNMENT. THE COURT OF CLAIMS IN FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, HELD:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

ACCORDINGLY, ANY ERROR THAT MAY HAVE BEEN MADE WAS CLEARLY UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE SOUTHEASTERN STORAGE TO THE RELIEF REQUESTED. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505.

ON PAGE 3 OF THEIR MEMORANDUM ADDRESSED TO THE COMPTROLLER GENERAL, SOUTHEASTERN STATES:

"* * * SESPI (SOUTHEASTERN STORAGE AND PROCESSING, INCORPORATED) SIMPLY CONTENDS THAT, IF DPSC HAD BEEN ADMINISTERING THESE REFUELING CONTRACTS FOR SEVERAL YEARS, ITS SUSPICION THAT A MISTAKE HAD BEEN MADE WOULD NOT HAVE BEEN LAID TO REST BY SESPI'S HURRIED VERIFICATION.' WHILE WE DEEM IT UNNECESSARY TO FULLY DISCUSS THIS CONTENTION IN VIEW OF OUR DISCUSSION ABOVE, WE SHOULD LIKE TO POINT OUT THAT DPSC HAS PROCURED COMMERCIAL AIRCRAFT FUEL DELIVERY SERVICES AT NOT LESS THAN 25 NAVAL AIR STATIONS IN THE UNITED STATES PRIOR TO THE ONE IN QUESTION. ADDITIONALLY, THE WIDE VARIANCES IN BIDS RECEIVED IN THE PRESENT CASE DO NOT APPEAR TO BE ANY GREATER THAN THOSE RECEIVED PURSUANT TO IFB DSA 6-62-120 WHICH ALSO RESULTED IN AWARD TO SOUTHEASTERN.

CONSEQUENTLY, SINCE WE FIND THAT A VALID AND BINDING AGREEMENT AROSE, THE GOVERNMENT HAS A RIGHT TO RECEIVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. WE ARE THEREFORE WITHOUT LEGAL BASIS FOR GRANTING ANY RELIEF IN THE MATTER.