B-153739, APR. 6, 1964

B-153739: Apr 6, 1964

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TO THE POSTMASTER GENERAL: REFERENCE IS MADE TO A LETTER DATED MARCH 16. IT IS STATED THAT COMPETITIVE RENTAL BIDS WERE SOLICITED BY ADVERTISEMENT ISSUED UNDER DATE OF NOVEMBER 1. AT WHICH TIME BIDS WERE PUBLICLY OPENED IN THE OFFICE OF THE ASSISTANT POSTMASTER GENERAL. FOUR BIDS WERE TIMELY RECEIVED AND OPENED RANGING FROM THE HIGHEST BID OF $223. WAS ACCEPTED BY THE ACTING ASSISTANT POSTMASTER GENERAL UNDER DATE OF DECEMBER 23. THE AWARD WAS CONFIRMED BY TELEGRAM. WAS NOT TAKEN INTO ACCOUNT IN CALCULATING THE BID. THE MISTAKE WAS FIRST ALLEGED VERBALLY AT NEW YORK CITY ON JANUARY 13. THE ALLEGED MISTAKE WAS NOT BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER OR REPRESENTATIVES OF THE DEPARTMENT PRIOR TO MAKING THE DECEMBER 23.

B-153739, APR. 6, 1964

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO A LETTER DATED MARCH 16, 1964, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT POSTMASTER GENERAL, BUREAU OF FACILITIES, REQUESTING OUR DECISION AS TO THE ACTION TO BE TAKEN CONCERNING A MISTAKE IN BID ALLEGED BY MIDCREST HOLDING CORP., 11 WEST 42ND STREET, NEW YORK 36, NEW YORK, AFTER THE AWARD AND PARTIAL PERFORMANCE OF AN OUTLEASE CONTRACT FOR A PORTION OF BLOCK 726, BOROUGH OF MANHATTAN, CITY AND STATE OF NEW YORK.

IT IS STATED THAT COMPETITIVE RENTAL BIDS WERE SOLICITED BY ADVERTISEMENT ISSUED UNDER DATE OF NOVEMBER 1, 1963, WITH THE OBJECTIVE OF MAKING AN AWARD EFFECTIVE DECEMBER 31, 1963. THE BIDDING PERIOD CLOSED AT 2 P.M. DECEMBER 9, 1963, AT WHICH TIME BIDS WERE PUBLICLY OPENED IN THE OFFICE OF THE ASSISTANT POSTMASTER GENERAL, BUREAU OF FACILITIES, WASHINGTON, D.C. FOUR BIDS WERE TIMELY RECEIVED AND OPENED RANGING FROM THE HIGHEST BID OF $223,200 PER ANNUM BY MIDCREST TO THE LOWEST BID OF $100,000 PER ANNUM FOR THE BASIC TERM OF TWO YEARS FROM JANUARY 1, 1964, TO DECEMBER 31, 1965. THE BID OF THE MIDCREST HOLDING CORP. WAS ACCEPTED BY THE ACTING ASSISTANT POSTMASTER GENERAL UNDER DATE OF DECEMBER 23, 1963. THE AWARD WAS CONFIRMED BY TELEGRAM.

MIDCREST HOLDING CORP. ALLEGES THAT THE MISTAKE IN ITS BID OF $223,200 CONSISTS OF FAILURE TO MAKE ALLOWANCE FOR THE VACANCY FACTOR. BOTH OF ITS SUBMITTED AFFIDAVITS CONTEND THAT A 10 PERCENT VACANCY FACTOR, AMOUNTING TO $39,000 ANNUALLY, WAS NOT TAKEN INTO ACCOUNT IN CALCULATING THE BID. THE MISTAKE WAS FIRST ALLEGED VERBALLY AT NEW YORK CITY ON JANUARY 13, 1964, TO THE CHIEF OF THE REAL ESTATE BRANCH, NEW YORK REGIONAL OFFICE. THE ALLEGED MISTAKE WAS NOT BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER OR REPRESENTATIVES OF THE DEPARTMENT PRIOR TO MAKING THE DECEMBER 23, 1963, AWARD; IN FACT THE ALLEGATION WAS FIRST BROUGHT TO THE DEPARTMENT'S ATTENTION AFTER THE LEASE TERM COMMENCED AND PERFORMANCE OF THE CONTRACT WAS UNDERTAKEN. THE AFFIDAVITS SUBMITTED IN BEHALF OF MIDCREST HOLDING CORP. STATE THAT IT WAS NOT KNOWN PRIOR TO JANUARY 13, 1964, THAT RELIEF COULD BE GRANTED BY THE GOVERNMENT, AND FOR THIS REASON WAS NOT CALLED TO THE ATTENTION OF THE GOVERNMENT EARLIER. IT FURTHER ALLEGES THAT BECAUSE OF THE VACANCY FACTOR IT WILL LOSE APPROXIMATELY $50,000 A YEAR FOR EACH YEAR OF THE TWO-YEAR BASIC TERM.

THE DEPARTMENT'S ANALYSIS, WHEN THE BIDS WERE REVIEWED, SHOWS A POSSIBLE GROSS RENTAL OF $395,000 PER YEAR, AND AN OPERATING INCOME OF $263,000 WHICH INCLUDES A $20,000 VACANCY ALLOWANCE. IN ITS SOLICITATION THE GOVERNMENT WARNED THAT THE ACCURACY OF ITS RENTAL INFORMATION WAS NOT GUARANTEED; THAT IT MADE NO WARRANTY OR GUARANTEE AS TO THE RENTAL WHICH MIGHT BE DERIVED FROM THE PROPERTIES; AND ALL BIDDERS WERE URGED TO MAKE A THOROUGH INSPECTION OF THE PREMISES TO DETERMINE THEIR CONDITION AND PERCENT OF VACANCIES, IF ANY.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER THE CONTRACTOR MADE AN ERROR IN HIS BID BUT WHETHER ACCEPTANCE OF HIS BID CREATED A VALID AND BINDING CONTRACT. AT THE TIME OF ACCEPTANCE THE CONTRACTING OFFICER HAD RECEIVED NO NOTICE OR CLAIM OF ERROR. IN THE CIRCUMSTANCES WE AGREE WITH THE ADMINISTRATIVE CONCLUSION THAT THE AMOUNT OF THE MIDCREST BID WAS NOT SO HIGH AS TO HAVE PUT THE CONTRACTING OFFICER ON NOTICE OF THE LIKELIHOOD OF ERROR THEREIN. ACCEPTANCE OF THE BID WAS IN GOOD FAITH AND WITHOUT NOTICE, ACTUAL OR CONSTRUCTIVE, OF ANY ERROR. THE RESULTING CONTRACT, IN OUR OPINION, IS THEREFORE VALID AND BINDING, AND FIXES THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE EDWIN DOUGHERTY AND M. H. OGDEN V. UNITED STATES, 102 CT.CL. 249, AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505 (PA.) MOREOVER, THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION IS UPON THE BIDDER. SEE FRAZIER- DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, 163. IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED SOLELY TO THE CONTRACTOR'S OWN NEGLIGENCE OR OVERSIGHT AND SINCE THE ERROR WAS UNILATERAL--- NOT MUTUAL--- THE CONTRACTOR IS NOT ENTITLED TO RELIEF. SEE 20 COMP. GEN. 652, AND 26 ID. 415.

UPON ACCEPTANCE OF THE MIDCREST HOLDING CORPORATION'S BID, THE RIGHT VESTED IN THE GOVERNMENT TO RECEIVE PERFORMANCE STRICTLY IN ACCORDANCE WITH ITS TERMS, AND, IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER THAT RIGHT WITHOUT ADEQUATE COMPENSATION. SEE SIMPSON V. UNITED STATES, 172 U.S. 373; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED, 280 U.S. 574; PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES 49 CT.CL. 327, 335; AND BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 ID. 584, 607.

ACCORDINGLY, YOU ARE ADVISED THAT UNDER THE FACTS DISCLOSED BY THE RECORD IN THIS CASE WE CAN FIND NO LEGAL BASIS FOR REDUCING THE CONTRACT RENTAL ON ACCOUNT OF THE ALLEGED MISTAKE IN BID.