B-156005, FEB. 10, 1965

B-156005, FEB. 10, 1965

TO THE HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR, VETERANS ADMINISTRATION:

WE REFER TO LETTER OF JANUARY 25, 1965, FILE REFERENCE 074B, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, RELATIVE TO A MISTAKE IN BID ALLEGED AFTER AWARD BY JUDSON BIGELOW, INCORPORATED, LONG ISLAND CITY, NEW YORK, UNDER INVITATION FOR BIDS NO. N6 -38-65 ISSUED BY THE VETERANS ADMINISTRATION (VA) SUPPLY DEPOT, SOMERVILLE, NEW JERSEY, ON NOVEMBER 6, 1964.

THE INVITATION REQUESTED BIDS FOR THREE ITEMS CONSISTING OF 5,700 PACKAGES OF SIZE 8 ELECTROENCEPHALOGRAPH PAPER TO CONFORM TO VA DESCRIPTION NO. X-545B, DATED AUGUST 7, 1964, FOR SHIPMENT TO VA SUPPLY DEPOTS AT SOMERVILLE, NEW JERSEY, WILMINGTON, CALIFORNIA, AND HINES, ILLINOIS. THE INVITATION CONTEMPLATED AN AWARD IN THE AGGREGATE ON ITEMS 1, 2 AND 3. IN RESPONSE TO THE INVITATION TWO BIDS WERE RECEIVED AS FOLLOWS:

CHART

NAME OF TOTAL

BIDDER ITEMS AGGREGATE

1 2 3 JUDSON BIGELOW, INCORPORATED $1.65 $2.20 $1.65 $ 9,625 GRASS INSTRUMENT COMPANY 2.45 2.45 2.45 13,965

AFTER RECEIPT OF PURCHASE ORDER NO. 65-S0-60062, (CONTRACT NO. V7023P 4318) DATED DECEMBER 4, 1964, THE COMPANY ADVISED THE CONTRACTING OFFICER BY TELEPHONE THAT IT HAD MADE AN ERROR IN ITS BID AND ASKED PERMISSION TO WITHDRAW ITS BID. BY LETTER DATED DECEMBER 9, 1964, TO THE CONTRACTING OFFICER, MR. W. TARLO, VICE PRESIDENT OF THE COMPANY, STATED:

"* * * AN UNFORTUNATE ERROR HAD BEEN MADE IN THE PREPARATION OF THE BID. THE ERROR AROSE IN THE COURSE OF MY DICTATING THE PRICES TO MY SECRETARY, WHEN DUE TO SOME KIND OF MENTAL LAPSE ON MY PART, I DICTATED THE FIGURES OF $1.65 AND $2.20, INSTEAD OF MY INTENDED FIGURES OF $2.65 AND $3.20.'

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS NOT SUBJECT TO REFORMATION SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, 507 AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. IN SUCH CASES, ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. 37 COMP. GEN. 685; 17 COMP. GEN. 575. THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, EXPRESSES THE OPINION THAT IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER HAD ACCESS TO JUDSON BIGELOW'S BIDS DURING THE FISCAL YEAR 1964, WHICH WERE $2.65 AND $2.75 FOR DELIVERY OF THE SAME SIZE PACKAGES OF GRAPH PAPER TO SOMERVILLE, NEW JERSEY, AND HINES, ILLINOIS, AND $2.90 TO WILMINGTON, CALIFORNIA, AND SINCE THE PREVIOUS BIDS OF THE COMPANY WERE 60 TO 66 PERCENT HIGHER FOR DELIVERY TO SOMERVILLE AND HINES AND 31 PERCENT HIGHER TO WILMINGTON THAN ITS PRESENT OFFERS, THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. WE CONCUR WITH THIS OPINION. IN THE CIRCUMSTANCES, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION.

FOR THIS REASON, AND SINCE IT APPEARS THAT AN ERROR, IN FACT, WAS MADE BY THE COMPANY, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY AS RECOMMENDED.

THE FILE SUBMITTED WITH THE LETTER OF JANUARY 25, 1965, IS RETURNED AS REQUESTED.