B-156542, JUN. 1, 1965

B-156542, JUN. 1, 1965

TO PERVO PAINT COMPANY:

YOUR LETTER OF APRIL 13, 1965, REQUESTS CONSIDERATION BY OUR OFFICE OF YOUR CLAIM FOR AN INCREASE IN THE PRICE PAID TO YOU BY THE GENERAL SERVICES ADMINISTRATION (GSA) FOR PAINT SUPPLIED UNDER NEGOTIATED CONTRACT NO. GS-OOS-52150, DATED SEPTEMBER 27, 1964. THE CLAIM HAS BEEN DENIED BY GSA.

THE RECORD BEFORE OUR OFFICE SHOWS THAT ON THE DATE OF THE CONTRACT AWARD TO YOU, GSA HAD AN EXISTING FEDERAL SUPPLY SCHEDULE CONTRACT FOR THE TYPE PAINT INVOLVED. HOWEVER, DUE TO A BACK ORDER STATUS, THERE WAS URGENT NEED FOR THE PAINT, WHICH WAS TO BE DELIVERED TO THE UNITED STATES NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, WITHIN 30 TO 40 DAYS AFTER AWARD. ADDITION, THE QUANTITY OF PAINT REQUIRED, 705 FIVE GALLON PAILS, EXCEEDED THE MAXIMUM ORDER LIMITATION PRESCRIBED IN THE SCHEDULE CONTRACT. ACCORDINGLY, NEGOTIATION OF THE PROCUREMENT WAS AUTHORIZED PURSUANT TO FEDERAL PROCUREMENT REGULATION (FPR) 1-3.202 AND SECTION 302 (C) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C) (2).

EIGHT FIRMS WERE SOLICITED BY TELEGRAM DATED SEPTEMBER 11, 1964, WHICH INCLUDED THE FOLLOWING LANGUAGE:

"IF DETERMINED BY THE GOVERNMENT THAT OFFER RECEIVED IS FAIR AND REASONABLY PRICED, AWARD MAY BE MADE WITHOUT FURTHER NEGOTIATION. ACCORDINGLY, OFFERS SUBMITTED SHOULD BE MOST FAVORABLE IN TERMS OF PRICE AND DELIVERY TERMS WHICH OFFEROR CAN INITIALLY SUBMIT TO THE GOVERNMENT.'

OF THE THREE OFFERS RECEIVED, YOUR OFFER DATED SEPTEMBER 17, PROVIDING FOR DELIVERY 35 DAYS AFTER NOTICE OF AWARD AND QUOTING A PRICE OF $25.85 PER PAIL, WAS LOW. THE OTHER TWO OFFERS QUOTED PRICES OF $29.90 AND $43.35, RESPECTIVELY. THE PRICE UNDER THE SCHEDULE CONTRACT WAS $23.50 F.O.B. LANSDALE, PENNSYLVANIA, REPORTED TO BE EQUIVALENT TO $27.31 DELIVERED TO OAKLAND. ACCORDINGLY, THE VARIATION OF 4 PERCENT BETWEEN YOUR PRICE AND THE SCHEDULE CONTRACT DELIVERED PRICE NOT BEING CONSIDERED SIGNIFICANT, YOU WERE AWARDED THE CONTRACT ON SEPTEMBER 27.

ON SEPTEMBER 30, THIRTEEN DAYS AFTER THE DATE OF YOUR OFFER AND THREE DAYS AFTER AWARD, YOU ADVISED THE PROCURING ACTIVITY THAT YOU HAD MADE A MISTAKE IN CALCULATING YOUR RAW MATERIAL COST AND WOULD THEREFORE SUSTAIN A LOSS OF $2.15 PER PAIL. ACCORDINGLY, YOU REQUESTED PERMISSION TO WITHDRAW YOUR OFFER.

BY LETTER DATED OCTOBER 9, THE PROCURING ACTIVITY REQUESTED THAT YOU FURNISH SUBSTANTIATING EVIDENCE AS TO THE ALLEGED MISTAKE AND, MEANWHILE, THAT YOU FULFILL THE TERMS AND CONDITONS OF YOUR CONTRACT. ON OCTOBER 20, YOU FORWARDED TO THE PROCURING ACTIVITY A PHOTOCOPY OF YOUR ORIGINAL WORKSHEET AS EVIDENCE THAT BUT FOR YOUR MISTAKE YOUR OFFER WITH A NOMINAL PROFIT WOULD HAVE BEEN $30.85 PER PAIL F.O.B. OAKLAND.

BY LETTER DATED DECEMBER 18, THE PROCURING ACTIVITY DENIED YOUR REQUEST FOR WITHDRAWAL OF YOUR OFFER AND ADVISED YOU AS FOLLOWS:

"REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 20, 1964 PERTAINING TO ALLEGED MISTAKE IN OFFER AFTER AWARD OF CONTRACT GS-OOS-52150-NEG. FOR PAINT, ANTIFOULING.

"IN REPLY WE WOULD LIKE TO ADVISE YOU THAT AN EXAMINATION HAS BEEN MADE OF THE EVIDENCE SUBMITTED AND IT HAS BEEN DETERMINED THAT THE ALLEGED MISTAKE WAS UNILATERAL AND WAS NOT SO APPARENT AS TO HAVE CHARGED THE CONTRACTING OFFICER WITH NOTICE OF THE PROBABILITY OF A MISTAKE. THIS DETERMINATION HAS BEEN MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1 -2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS.

"PURSUANT TO THE FOREGOING YOUR REQUEST FOR REFORMATION OF THE CONTRACT PRICE IS DENIED, AND YOU WILL BE EXPECTED TO PERFORM IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF YOUR CONTRACT.'

IN A LETTER DATED MARCH 22, 1965, ACCOMPANIED BY A WORKSHEET AND COPIES OF INVOICES FROM YOUR SUPPLIERS COVERING RAW MATERIALS FURNISHED PURSUANT TO PURCHASE ORDERS ISSUED BY YOU IN LATE NOVEMBER AND EARLY DECEMBER 1964, YOU REQUESTED GSA TO MAKE AN ADJUSTMENT OF $4,140.00 IN YOUR CONTRACT PRICE, REPRESENTING AN ALLEGED LOSS OF $5.75 PER PAIL ON 720 PAILS OF PAINT SHIPPED UNDER THE CONTRACT ON MARCH 3, 1965. THE INCREASE IN YOUR LOSS OVER THE AMOUNT OF $2.15 PER PAIL REFLECTED IN YOUR LETTERS OF SEPTEMBER 30 AND OCTOBER 20, 1964, WAS ATTRIBUTED BY YOU TO AN UPCLIMB IN THE COPPER MARKET ENCOUNTERED AT THE TIME YOU ULTIMATELY PLACED THE ORDERS WITH YOUR SUPPLIERS. THE CLAIM WAS DENIED BY GSA IN A LETTER DATED APRIL 2, 1965, FOR THE SAME REASONS THAT THE ORIGINAL CLAIM WAS DENIED ON DECEMBER 18.

IN YOUR LETTER OF APRIL 13, YOU MAKE THE FOLLOWING STATEMENTS:

"IN ALL GOOD FAITH WE MANUFACTURED THE CONTRACT BASED UPON GENERAL SERVICE ADMINISTRATION'S LETTER TO US OF OCTOBER 9 WHEREIN WE WERE REQUESTED TO CARRY OUT THE TERMS AND CONDITIONS OF THE CONTRACT AND AT A LATER DATE OFFER OUR SUPPORTING DATA REGARDING OUR ALLEGED MISTAKE. WOULD LIKE TO STATE THAT, BASED UPON THE REQUEST TO GO AHEAD CONTAINED IN GENERAL SERVICE'S LETTER OF OCTOBER 9, WE FEEL WE ARE ENTITLED TO THIS INCREASE IN CONTRACT PRICE.

"DURING THIS PAST YEAR NUMEROUS OTHER BIDDERS IN VARIOUS REGIONS HAVE BEEN RELIEVED OF THEIR CONTRACTUAL OBLIGATIONS BASED UPON FIRM BID PRICES ON DIRECT INVITATIONS FOR BIDS. THIS, HOWEVER, WAS NOT A DIRECT INVITATION FOR BID WHEREIN LOW PRICE GOVERNED - THIS WAS A NEGOTIATED CONTRACT ON WHICH WE ASKED, IN OUR LETTER OF SEPTEMBER 30, TO BE RELIEVED OF OUR BID AS SOON AS IT WAS DISCOVERED A MISTAKE HAD INADVERTENTLY BEEN MADE AND BEFORE PRODUCTION BEGAN. SINCE WE WERE REQUIRED TO PROCEED (EVEN WITH SUPPORTING DATA SHOWING THAT WE WERE OPERATING AT A LOSS) WE FEEL THAT THERE SHOULD BE NO QUESTION IN GIVING RELIEF TO A MANUFACTURER WHO HAS CARRIED OUT THIS PARTICULAR CONTRACT.'

WHILE THE RULES OF FORMAL COMPETITIVE BIDDING ARE NOT APPLICABLE TO NEGOTIATED PROCUREMENTS, FPR 1-3.101 REQUIRES THAT PROCUREMENTS NEGOTIATED UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, BE MADE TO THE BEST ADVANTAGE OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THEREFORE, THE MERE FACT THAT A PROCUREMENT IS NEGOTIATED DOES NOT OF ITSELF WARRANT DEPARTURE FROM THE WELL-ESTABLISHED RULES APPLICABLE TO GOVERNMENT PROCUREMENTS GENERALLY.

THE FACTS OF RECORD ESTABLISH THAT THE ALLEGED MISTAKE WAS NOT APPARENT ON THE FACE OF YOUR OFFER OR IN ANY WAY ATTRIBUTABLE TO ANY ACT OF THE GOVERNMENT, BUT WAS ENTIRELY UNILATERAL. IN ADDITION, ALTHOUGH THE SOLICITATION CAUTIONED OFFERORS THAT OFFERS MIGHT BE ACCEPTED WITHOUT FURTHER NEGOTIATION AND THERE WAS A LAPSE OF TEN DAYS BETWEEN SEPTEMBER 17, THE DATE YOU SUBMITTED YOUR OFFER, AND SEPTEMBER 27, THE DATE OF ITS ACCEPTANCE, NOTICE OF THE ALLEGED MISTAKE WAS NOT GIVEN TO THE CONTRACTING OFFICER UNTIL SEPTEMBER 30, THREE DAYS AFTER THE AWARD.

THE RECORD FURTHER ESTABLISHES THAT, IN THE LIGHT OF THE DELIVERED PRICE PROVIDED UNDER THE SCHEDULE CONTRACT, THERE WAS NO REASON FOR THE CONTRACTING OFFICER TO SUSPECT THAT THE PRICE QUOTED IN YOUR OFFER WAS NOT AS YOU INTENDED OR WAS LOWER THAN COULD BE EXPECTED. THEREFORE, THERE IS NOT INVOLVED THE ENFORCEMENT OF AN UNCONSCIONABLE AGREEMENT OR ANY QUESTION AS TO THE GOOD FAITH OF THE CONTRACTING OFFICER IN ACCEPTING YOUR OFFER.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID RESTS UPON THE BIDDER. 31 COMP. GEN. 323; FRAZIER-DAVIS CONSTRUCTION CO. V. UNITED STATES, 100 CT.CL. 120, 123. FURTHERMORE, WHEN A BIDDER HAS MADE A MISTAKE IN HIS BID AND THE BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE OF IT. 23 COMP. GEN. 596 AND COURT CASES CITED THEREIN. SUCH RULES HAVE BEEN APPLIED IN NEGOTIATED PROCUREMENTS (B-141294, DECEMBER 8, 1959; 30 COMP. GEN. 509), AND ARE IN FACT WELL ESTABLISHED PRINCIPLES OF GENERAL LAW APPLICABLE TO CONTRACTS BETWEEN PRIVATE PARTIES AS WELL AS TO THOSE WITH THE GOVERNMENT.

IN THE CIRCUMSTANCES, THE ACCEPTANCE OF YOUR OFFER BY THE CONTRACTING OFFICER WITHOUT NOTICE, ACTUAL OR CONSTRUCTIVE, OF THE ALLEGED MISTAKE, WHICH WAS NOT MUTUAL, RESULTED IN A VALID AND BINDING CONTRACT THAT OBLIGATED YOU TO FURNISH THE PAINT TO THE GOVERNMENT AT THE PRICE STATED IN YOUR OFFER. ACCORDINGLY, THE PROCURING ACTIVITY'S REQUEST OF OCTOBER 9 THAT YOU PROCEED TO COMPLY WITH THE CONTRACT TERMS AND CONDITIONS WAS A PROPER ACTION. MOREOVER, IT IS TO BE NOTED THAT HAD YOU PLACED YOUR ORDERS WITH YOUR SUPPLIERS AT THAT TIME, IT IS LIKELY THAT YOUR LOSS, WHICH WAS DUE TO YOUR OWN NEGLIGENCE, WOULD NOT HAVE BEEN INCREASED TO THE EXTENT CLAIMED; OR, HAD YOU DEFAULTED, THAT THE EXCESS COST FOR WHICH YOU WOULD HAVE BEEN LIABLE WOULD PROBABLY HAVE BEEN AT LEAST AS GREAT AS THE LOSS WHICH YOU INCURRED IN PERFORMANCE.