B-154955, AUG. 26, 1964

B-154955, AUG. 26, 1964

TO THE HONORABLE JOHN S. GLEASON, JR; ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED AUGUST 13, 1964, AND ENCLOSURES, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, SUBMITTING FOR OUR DECISION A REQUEST BY THE PROPPER MANUFACTURING COMPANY, INC., FOR RELIEF UNDER CONTRACT NO. V7018P-7515 (A) AWARDED BY THE VETERANS ADMINISTRATION HOSPITAL SUPPLY DEPOT, SUMERVILLE, NEW JERSEY. THE RELIEF REQUESTED IS WITH RESPECT TO ITEM 34 OF SAID CONTRACT.

THE IFB IN THIS CASE CALLED FOR BIDS ON SOME 44 ITEMS, ON SEVERAL OF WHICH PROPPER WAS THE SUCCESSFUL BIDDER. ITEMS 34 AND 37 WERE FOR VARIOUS QUANTITIES OF COLORLESS MICROSCOPE SLIDES, WITH THE ONLY SIGNIFICANT DIFFERENCE BEING THAT ITEM 34 WAS TO BE TRANSPARENT GLASS WITH FROSTED END RATHER THEN CLEAR LABORATORY GLASS WITH PLAIN END AS SPECIFIED FOR ITEM 37.

THREE BIDS WERE RECEIVED ON EACH OF THESE ITEMS, WHICH WERE AS FOLLOWS (PROMPT PAYMENT DISCOUNTS OMITTED):

ITEM 34 ITEM 37

PROPPER MFG. COMPANY $ .797 $1.193

ERIE SCIENTIFIC CORP. .918 . 69

SCHAAR SCIENTIFIC 1.035 . 85

THE BIDS WERE OPENED ON JULY 6, 1964, AND ON JULY 7, MR. E. A. CANTOR, EXECUTIVE ASSISTANT OF PROPPER, WAS CALLED BY THE CONTRACTING OFFICER AND ASKED TO CONFIRM ITS BID ON ITEM 34, WHICH HE DID. AWARD WAS MADE ON JULY 8 AND A PURCHASE ORDER SENT TO PROPPER. MR. CANTOR CALLED THE CONTRACTING OFFICER ON JULY 20, 1964, AND ADVISED THAT HE HAD DISCOVERED A MISTAKE IN THE PRICE SUBMITTED FOR ITEM 34. HE EXPLAINED THAT THE MISTAKE OCCURRED DUE TO AN OVERSIGHT IN READING THE DESCRIPTION FOR ITEMS 34 AND 37, AND INADVERTENTLY REVERSING THEIR INSERTIONS OF THE PRICES FOR EACH ITEM.

IN FURTHER SUPPORT OF THEIR ALLEGATION OF MISTAKE IN BID,MR. CANTOR FOLLOWED-UP THE PHONE CALL BY LETTERS ON JULY 21 AND 27, ENCLOSING A PRICE LIST AND WORKSHEETS. IT IS POINTED OUT IN THE LETTER OF JULY 21 THAT THE OTHER BIDDERS' PRICES FOR ITEM 34 WERE HIGHER THAN FOR ITEM 37; THAT THE ENCLOSED PRICE LIST SHOWS ITEM 34 IS SOLD FOR APPROXIMATELY 30 PERCENT MORE THAN ITEM 37; THAT IT SHOULD HAVE BEEN CLEAR TO THE CONTRACTING OFFICER FROM PREVIOUS BIDS AND CONTRACTS THAT ITEM 34 IS CONSIDERABLY MORE EXPENSIVE THAN ITEM 37; AND THAT ITEM 34 GOES THROUGH THE SAME PROCESS AS ITEM 37 AND IN ADDITION IS FROSTED, WHICH COSTS CONSIDERABLY MORE THAN A PLAIN SLIDE.

FROM THE FOREGOING FACTS, IT APPEARS ABUNDANTLY CLEAR THAT A BONA FIDE MISTAKE WAS MADE IN THE BID AS SUBMITTED BY PROPPER. WHILE NORMALLY, SUCH A UNILATERAL MISTAKE WILL NOT PERMIT RESCISSION OR REFORMATION OF A CONTRACT MADE BY ACCEPTANCE OF THE BID, IF AT THE TIME OF ACCEPTANCE THE PARTY RECEIVING THE BID KNOWS OR HAS REASON TO KNOW THE BIDDER HAS MADE A MISTAKE, THE CONTRACT IS VOIDABLE BY THE BIDDER. UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956. ORDINARILY, WHERE A BIDDER IS REQUESTED TO AND DOES VERIFY HIS BID, SUBSEQUENT ACCEPTANCE CONSUMMATES A VALID AND BINDING CONTRACT; HOWEVER, AN EXCEPTION TO THAT PRINCIPLE WAS ENUNCIATED IN THE CASE OF UNITED STATES V. METRO NOVELTY MANUFACTURING CO., INC., 125 F.SUPP. 713, WHERE THE COURT SAID:

"CROSS MOTIONS ARE PRESENTED FOR SUMMARY, JUDGMENT, PLAINTIFF SEEKS TO RECOVER $12,000 DAMAGES FROM DEFENDANT FOR ITS FAILURE TO CARRY OUT A $6,000 BID FOR UNIFORM ORNAMENTS. DEFENDANT CLAIMS A MISTAKE IN THE COMPUTATION OF THE BID. PLAINTIFF ADMITS THAT THE ERROR WAS SO GROSS THAT IT WAS PLACED ON NOTICE. IT FURTHER ADMITS THAT THE ONLY CONSEQUENCE OF DEFENDANT'S FAILURE TO PERFORM WAS THE ACCEPTANCE OF THE SECOND LOWEST BID AND THAT THERE WAS NO DAMAGE TO THE GOVERNMENT FROM THE DELAY IN EXECUTION WHICH RESULTED FROM DEFENDANT'S PARTICIPATION IN THE BIDDING.

"PLAINTIFF'S PURCHASING AGENT SOUGHT TO AVOID THE FORCE OF KEMP V. UNITED STATES, D.C. MD. 1941, 38 F.SUPP. 568, BY TELEPHONING THE DEFENDANT AND ASKING FOR A "VERIFICATION" OF THE BID AND BY HAVING IT "CONFIRMED" BY TELEPHONE AND LETTER FROM DEFENDANT'S PRESIDENT. PLAINTIFF, HOWEVER, DID NOT PUT DEFENDANT ON NOTICE OF THE MISTAKE WHICH IT SURMISED. REAFFIRMATION OF THE BID UNDER THESE CIRCUMSTANCES DOES NOT BAR THE DEFENSE OF RESCISSION.

"DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS GRANTED.'

IN THE PRESENT CASE, WHILE THE POSSIBILITY OF ERROR WAS GENERALLY BROUGHT TO THE BIDDER'S ATTENTION BY THE TELEPHONE CALL ON JULY 6 ADVISING THE BIDDER "IN COMPARISON WITH THE OTHER BIDS RECEIVED THEIR PRICE WAS LOW" , IT DOES NOT APPEAR THAT THE REQUEST FOR VERIFICATION WAS SUCH AS TO DIRECT PROPPER'S ATTENTION TO THE NATURE OF THE MISTAKE WHICH MUST HAVE BEEN, OR SHOULD HAVE BEEN, IN THE CONTRACTING OFFICER'S MIND; THAT IS, THAT A FIRM WOULD NOT NORMALLY BID LESS FOR A FROSTED MICROSCOPE SLIDE THAT COSTS MORE TO PRODUCE THAN FOR A PLAIN MICROSCOPE SLIDE OF THE SAME SIZE. SINCE IT WAS OBVIOUS ON THE FACR OF THE ABSTRACT OF THE BIDS ON THE TWO ITEMS REFERRED TO THAT PROPPER WAS BIDDING LESS ON THE MORE COSTLY ITEM, WE BELIEVE IT WAS INCUMBENT UPON THE CONTRACTING OFFICER TO CALL THE BIDDER'S ATTENTION TO THAT FACT IN CONSONANCE WITH THE METRO CASE. SEE 35 COMP. GEN. 136.

IN VIEW THEREOF, AND SINCE NO DELIVERIES OF ITEM 34 HAVE BEEN MADE, WE HAVE NO OBJECTION TO CANCELLATION OF THE CONTRACT AS TO ITEM 34 WITHOUT FURTHER LIABILITY.