B-158292, JAN. 28, 1966

B-158292, JAN. 28, 1966

TO THE HONORABLE LAWSON B. KNOTT, JR., ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 5, 1966, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY GENERAL MOTORS CORPORATION, CHEVROLET MOTOR DIVISION, TO HAVE BEEN MADE IN ITS BID ON ITEM 10 OF CONTRACT NO. GS-00S-58033.

GENERAL MOTORS CORPORATION SUBMITTED BIDS ON A NUMBER OF MOTOR VEHICLES TO BE PURCHASED BY THE GOVERNMENT IN ACCORDANCE WITH INVITATION FOR BIDS (IFB) NO. FPNMV-B-78276-A-11-2-65. ITEM 10 OF SAID IFB REQUIRED ONE TRUCK WITH SERVICE BODY AND HYDRAULIC POWER AERIAL LADDER INSTALLED. AN AWARD OF THIS ITEM WAS MADE TO GENERAL MOTORS ON NOVEMBER 23, 1965, AT ITS BID PRICE OF $3,270.27. THE ONLY OTHER BID RECEIVED ON THIS ITEM WAS SUBMITTED BY INTERNATIONAL HARVESTER COMPANY IN THE AMOUNT OF $7,970.60.

BY LETTER DATED DECEMBER 1, 1965, GENERAL MOTORS CORPORATION ALLEGED AN ERROR OF $4,000 IN ITS BID ON ITEM 10. IT IS CLAIMED THAT THE MISTAKEN BID RESULTED FROM AN ERROR, WHICH IS MADE APPARENT BY ITS WORKSHEETS WHEREIN THE AMOUNT OF $584.45 WAS INSERTED FOR THE SERVICE BODY AND AERIAL LADDER TO BE FURNISHED BY A SUBCONTRACTOR, MCCABE POWERS BODY COMPANY. THE PRICE ACTUALLY QUOTED BY THE SUBCONTRACTOR AND WHICH SHOULD HAVE APPEARED ON THE WORKSHEET IS $4,584.45.

FOR THE PURPOSE OF SUBSTANTIATING THIS ALLEGATION, THE CONTRACTOR SUBMITTED SUPPORTING EVIDENCE (AT THE TIME ITS MISTAKE WAS ASSERTED) IN THE FORM OF (A) A CLERICAL WORKSHEET ILLUSTRATING THE ERROR MENTIONED ABOVE; (B) A PRINTED CHEVROLET PRICE LISTING INDICATING A "LIST PRICE" (AT FACTORY) OF $2,736.00, AND A "LIST PRICE LESS INVOICE DISCOUNT" OF $2,106.72 FOR THE BASIC CHASSIS WITH STANDARD EQUIPMENT; (C) A REPRODUCED COPY OF THE PRICE QUOTATION SUBMITTED OCTOBER 20, 1965, BY CHEVROLET'S SUBCONTRACTOR (MCCABE-POWERS BODY CO.) FOR THE REQUIRED BODY AND AERIAL LADDER INDICATING THAT THE CORRECT QUOTATION WAS ACTUALLY $4,585.45.

FURTHER, THIS OFFICE HAS BEEN INFORMALLY ADVISED THAT THE REQUISITIONING AGENCY'S ESTIMATED COST OF THE ITEM WAS $6,800, AND SUCH INFORMATION APPEARS TO HAVE BEEN IN THE POSSESSION OF THE CONTRACTING OFFICER AT THE TIME THE CONTRACT WAS AWARDED. ADDITIONALLY, THE RECORD INCLUDES A STATEMENT WHEREIN THE CONTRACTING OFFICER STATES A BELIEF THAT THE CIRCUMSTANCES WERE SUCH AS TO PUT HIM ON CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD OF THE CONTRACT.

IT IS THE GENERAL RULE THAT ONCE THE GOVERNMENT HAS ACCEPTED A BID, A BINDING CONTRACT IS FORMED AND THE CONTRACTOR MUST BEAR THE CONSEQUENCES OF HIS OWN MISTAKE. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505 AND CASES CITED THEREIN; 27 COMP. GEN. 724, 727. HOWEVER, A VALID AND BINDING CONTRACT IS NOT CONSUMMATED WHERE THE ACCEPTANCE OF A BID IS MADE WITH ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF ERROR THEREIN. SEE 37 COMP. GEN. 706, 707 AND AUTHORITIES CITED THEREIN.

IN THE PRESENT CASE IT IS OUR OPINION THAT THE DIFFERENCE BETWEEN GENERAL MOTORS' BID PRICE ON ITEM 10 AND THE GOVERNMENT ESTIMATE, COUPLED WITH THE EVEN GREATER DIFFERENCE BETWEEN THE TWO BIDS RECEIVED ON ITEM 10, IS A SUFFICIENT BASIS ON WHICH TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF ERROR. IN VIEW THEREOF, WE MUST CONCLUDE THAT ACCEPTANCE OF THE BID DID NOT CONSTITUTE A VALID AND BINDING CONTRACT REQUIRING THE COMPANY TO PERFORM FOR THE AMOUNT QUOTED ON ITS BID. ACCORDINGLY, THE CONTRACT AWARDED TO GENERAL MOTORS MAY BE AMENDED TO REFLECT THE CORRECTED BID PRICE.

WHILE YOUR LETTER STATES THAT A DISCOUNT ALLOWANCE OF $220 WAS SUBTRACTED FROM THE GROSS FIGURE $3,490.27 IN ARRIVING AT THE ERRONEOUS NET BID PRICE OF $3,270.27, THE WORKSHEET SUBMITTED BY GENERAL MOTORS CORPORATION DOES NOT INDICATE THE BASIS ON WHICH THE DISCOUNT ALLOWANCE WAS DETERMINED. ARE THEREFORE UNABLE TO ASCERTAIN WHETHER THE CONTRACT PRICE SHOULD BE MODIFIED IN THE AMOUNT OF $4,000, OR IN THE AMOUNT OF $4,000 LESS ANY DISCOUNT ALLOWANCE WHICH WOULD HAVE BEEN DEDUCTED IF SUCH AMOUNT HAD BEEN CORRECTLY INCLUDED IN THE WORKSHEET COMPUTATION OF THE BID PRICE. THEREFORE, IF IT IS DETERMINED THAT THE ERRONEOUS PRICE OF THE SERVICE BODY AND HYDRAULIC POWER AERIAL LADDER WAS INCLUDED IN COMPUTING THE AMOUNT OF DISCOUNT, THE FINAL CONTRACT PRICE SHOULD BE RECOMPUTED BY YOUR OFFICE TO REFLECT AN APPROPRIATE DISCOUNT ALLOWANCE ON THE ADDITIONAL $4,000.