B-158862, MAY 16, 1966, 45 COMP. GEN. 700

B-158862: May 16, 1966

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THE PRICES FOR ONE AREA ARE NOT DETERMINATIVE OF PRICE REASONABLENESS IN ANY OTHER AREA. CONTRACTS - AWARDS - EFFECTIVE DATE UNDER AN INVITATION FOR BIDS PROVIDING THAT A BINDING CONTRACT WILL RESULT WHEN A WRITTEN AWARD IS "MAILED OR OTHERWISE FURNISHED" TO THE SUCCESSFUL BIDDER WITHIN THE ACCEPTANCE TIME SPECIFIED IN THE BID AND WITHOUT FURTHER ACTION BY EITHER PARTY. A BIDDER WHO HAD TAKEN NO EXCEPTION TO THE PROVISION IS NOT ENTITLED TO THE CORRECTION OF A MISTAKE IN BID ALLEGED AFTER THE MAILING OF NOTICE OF AWARD BUT PRIOR TO RECEIPT OF THE NOTICE. 1966: REFERENCE IS MADE TO YOUR LETTER OF APRIL 1. DSA-4-081462-PC400 INCIDENT TO AN ALLEGED MISTAKE IN THE BID PURSUANT TO WHICH THE CONTRACT WAS AWARDED TO OCTAGON.

B-158862, MAY 16, 1966, 45 COMP. GEN. 700

CONTRACTS - MISTAKES - ALLEGATION AFTER AWARD - PRIOR TO RECEIPT OF AWARD NOTICE A PRICE MISTAKE ALLEGED BY A SMALL BUSINESS CONCERN BIDDING SEPARATELY ON QUANTITY INCREMENTS FOR DELIVERY TO THREE GEOGRAPHICAL AREAS PRIOR TO RECEIPT OF NOTICE OF AWARD TO FURNISH THE AREAS I AND II REQUIREMENTS, MAILED A MONTH BEFORE THE ALLEGATION, MAY NOT BE CORRECTED, NOTWITHSTANDING ALLEGED NONRECEIPT OF THE INITIAL NOTICE AND THE ISSUANCE OF A DUPLICATE, THE INVITATION PROVIDING FOR A BINDING CONTRACT UPON THE MAILING OF THE NOTICE OF AWARD, REGARDLESS OF ITS RECEIPT BY THE BIDDER, LANGUAGE TO WHICH THE BIDDER TOOK NO EXCEPTION, AND THE MISTAKE HAVING BEEN ALLEGED AFTER NOTICE OF CONTRACT AWARD, THE GOVERNMENT CANNOT BE CHARGED WITH ACCEPTING THE BID WITH ACTUAL NOTICE OF THE MISTAKE, NOR WITH HAVING CONSTRUCTIVE NOTICE OF THE ERROR ON THE BASIS THE WIDE VARIANCE IN BID PRICES ON AREA III PROCUREMENT INDICATED ERROR IN AREAS I AND II BIDS, SEPARATE BIDS HAVING BEEN SOLICITED ON THE THREE GEOGRAPHICAL AREAS, THE PRICES FOR ONE AREA ARE NOT DETERMINATIVE OF PRICE REASONABLENESS IN ANY OTHER AREA, AND THE ERROR BEING UNILATERAL, THE CONTRACT MAY NOT BE TERMINATED, NOR AN ADDITIONAL AMOUNT PAID. CONTRACTS - AWARDS - EFFECTIVE DATE UNDER AN INVITATION FOR BIDS PROVIDING THAT A BINDING CONTRACT WILL RESULT WHEN A WRITTEN AWARD IS "MAILED OR OTHERWISE FURNISHED" TO THE SUCCESSFUL BIDDER WITHIN THE ACCEPTANCE TIME SPECIFIED IN THE BID AND WITHOUT FURTHER ACTION BY EITHER PARTY, A BIDDER WHO HAD TAKEN NO EXCEPTION TO THE PROVISION IS NOT ENTITLED TO THE CORRECTION OF A MISTAKE IN BID ALLEGED AFTER THE MAILING OF NOTICE OF AWARD BUT PRIOR TO RECEIPT OF THE NOTICE, THE AWARD HAVING BECOME EFFECTIVE ON DEPOSIT OF AWARD NOTICE IN THE MAIL BY THE GOVERNMENT, REGARDLESS OF WHEN RECEIVED BY THE BIDDER, AND NOTWITHSTANDING POSTAL REGULATIONS THAT PERMIT RECALL OF MAIL BY THE SENDER BEFORE DELIVERY TO THE ADDRESSEE; THEREFORE, THE MISTAKE IN BID HAVING BEEN ALLEGED "AFTER AWARD," AND THE GOVERNMENT HAVING ACCEPTED THE BID IN GOOD FAITH WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF MISTAKE, THE CONTRACT MAY NOT BE TERMINATED NOR THE CONTRACTOR PAID AN AMOUNT IN ADDITION TO THE ORIGINAL CONTRACT PRICE. UNDER THE CONTRACT IN QUESTION.

TO STRASSER, SPIEGELBERG, FRIED, FRANK AND KEMPELMAN, MAY 16, 1966:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 1, 1966, AND ENCLOSURES, AS SUPPLEMENTED BY YOUR LETTER OF APRIL 14, 1966, PROTESTING ON BEHALF OF OCTAGON PROCESS INC. (OCTAGON), EDGEWATER, NEW JERSEY, THE DENIAL BY THE DEFENSE SUPPLY AGENCY (DSA) OF OCTAGON'S REQUEST FOR RELIEF UNDER CONTRACT NO. DSA-4-081462-PC400 INCIDENT TO AN ALLEGED MISTAKE IN THE BID PURSUANT TO WHICH THE CONTRACT WAS AWARDED TO OCTAGON.

INVITATION FOR BIDS (IFB) NO. DSA-4-66-1432, ISSUED SEPTEMBER 16, 1965, BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), RICHMOND, VIRGINIA, SOLICITED BIDS TO SUPPLY DSA'S REQUIREMENT FOR AMMONIUM HYDROXIDE DURING THE PERIOD COMMENCING THE DATE OF AWARD AND CONTINUING TO OCTOBER 15, 1966. PRICES WERE REQUESTED ON INCREMENTS OF 50 TO 2,500 BOTTLES AND OF 2,501 OR MORE BOTTLES, EACH BOTTLE TO HAVE A CAPACITY OF 5 PINTS AND TO CONTAIN 4 POUNDS. SEPARATE BIDS WERE REQUESTED FOR EACH OF THREE GEOGRAPHICAL AREAS, ON EITHER AN ORIGIN OR DESTINATION BASIS, AND ON TWO LEVELS OF PACK (A AND B). THE GEOGRAPHICAL AREAS WERE DESIGNATED AS AREA I, BASICALLY THE EASTERN UNITED STATES, AREA II BASICALLY THE CENTRAL UNITED STATES, AND AREA III, THE WESTERN UNITED STATES. THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS.

PAGE 1 OF THE IFB SPECIFIED THAT A MINIMUM BID ACCEPTANCE PERIOD OF 60 DAYS WAS REQUIRED AND THAT AWARD WOULD BE MADE ON THE BID FORM (STANDARD FORM 33), OR ON STANDARD FORM 26 (AWARD (SUPPLY CONTRACT) (, OR BY OTHER OFFICIAL WRITTEN NOTICE. FURTHER, BIDDERS WERE INFORMED THAT ALL BIDS WERE SUBJECT TO BIDDING INSTRUCTIONS, TERMS AND CONDITIONS (SUPPLY CONTRACT), STANDARD FORM 33-A, A COPY OF WHICH WAS ATTACHED TO THE IFB.

PARAGRAPH 6 OF STANDARD FORM 33-A PROVIDED FOR CONSIDERATION OF BID MODIFICATIONS OR WITHDRAWALS RECEIVED BEFORE BID OPENING AS WELL AS LATER MODIFICATIONS OR WITHDRAWALS TIMELY DISPATCHED BUT DELAYED THROUGH NO FAULT OF THE BIDDER IF RECEIVED BEFORE AWARD AND SUBJECT TO CERTAIN EVIDENTIARY REQUIREMENTS. PARAGRAPH 8 (D), GOVERNING AWARD, READS AS FOLLOWS:

(D) A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY.

ON OCTOBER 11, BIDS WERE OPENED AT 2:30 P.M; EASTERN STANDARD TIME, AS SCHEDULED. OF THE 59 FIRMS SOLICITED, ONLY THREE SUBMITTED BIDS, ALL OF WHICH WERE ON AN F.O.B. ORIGIN BASIS.

OCTAGON AND ANOTHER BIDDER FROM NEW JERSEY EACH QUOTED ONE SET OF PRICES FOR ALL THREE AREAS. THE REMAINING BIDDER, A CALIFORNIA FIRM, BID ONLY ON AREA III. OCTAGON QUOTED UNIT PRICES OF $1.02 FOR ALL INCREMENTS IN LEVEL A PACK AND $ .688 FOR ALL INCREMENTS IN LEVEL B PACK. THE OTHER NEW JERSEY BIDDER QUOTED UNIT PRICES OF $2 FOR SMALL INCREMENTS AND $1.75 FOR LARGE INCREMENTS IN LEVEL A PACK AND $1.75 FOR SMALL INCREMENTS AND $1.50 FOR LARGE INCREMENTS IN LEVEL B PACK. THE THIRD BIDDER QUOTED UNIT PRICES OF $1.35 FOR LARGE INCREMENTS AND $1.41 FOR SMALL INCREMENTS IN LEVEL A PACK AND $ .89 FOR LARGE INCREMENTS AND $ .96 FOR SMALL INCREMENTS IN LEVEL B PACK.

THE ONLY PRIOR PROCUREMENT OF THE ITEM BY THE RICHMOND DGSC HAD BEEN A GROUP OF PURCHASES IN JULY AND AUGUST 1965, ON WHICH UNIT PRICES OF .705 WERE PAID FOR 14,000 BOTTLES AND $ .56 FOR 7,500 BOTTLES, LEVEL B PACK, F.O.B. FOUR DESTINATIONS IN PENNSYLVANIA, GEORGIA, VIRGINIA AND TENNESSEE. BASED ON SUCH INFORMATION, AND NOTWITHSTANDING THE F.O.B. ORIGIN PRICES UNDER THE IFB IN QUESTION MIGHT BE EXPECTED TO BE LOWER THAN SUCH DESTINATION PRICES, OCTAGON'S ORIGIN BID OF $ .688 IN LEVEL B PACK WAS CONSIDERED REASONABLE FOR AREAS I AND II. HOWEVER, THE OTHER NEW JERSEY BID FOR THOSE AREAS, WITH ITS ORIGIN PRICES RANGING FROM $1.50 TO $2 PER UNIT, WAS CONSIDERED TO BE EXCESSIVE. AS TO AREA III, UPON CONSIDERATION OF THE FREIGHT COSTS WHICH WOULD BE FOR PAYMENT BY THE GOVERNMENT, AS WELL AS THE FACT THAT MUCH LOWER PRICES HAD PREVIOUSLY BEEN OBTAINED FROM WEST COAST FIRMS, THE CONTRACTING OFFICER ISSUED A DETERMINATION THAT ALL THREE BIDS WERE EXCESSIVE AND, THEREFORE, SHOULD BE REJECTED AND THE REQUIREMENTS READVERTISED. (IN THIS CONNECTION, THE RECORD SHOWS THAT READVERTISEMENT OF THE AREA III REQUIREMENTS HAS RESULTED IN THE RECEIPT OF LOWER BID PRICES.)

UPON APPROVAL OF THE PROPOSED AWARD TO OCTAGON FOR AREAS I AND II, THE CONTRACTING OFFICER ISSUED STANDARD FORM 26, AWARD (SUPPLY CONTRACT), DATED NOVEMBER 9, 1965, ADDRESSED TO OCTAGON, ADVISING OCTAGON AND VARIOUS GOVERNMENT OFFICES OF THE ACCEPTANCE OF OCTAGON'S BID FOR THOSE AREAS. THE LOWER LEFT CORNER OF PAGE 1 OF THE AWARD NOTICE CARRIES THE FOLLOWING NOTATION:

THIS AWARD CONSUMMATES THE CONTRACT, WHICH CONSISTS OF THE FOLLOWING DOCUMENTS INCLUDING ANY CONTINUATION SHEETS THERETO: (A) THE GOVERNMENT'S INVITATION FOR BIDS AND YOUR BID, (B) THE SCHEDULE, (C) THE GENERAL PROVISIONS, AND (D) THE GOVERNMENT'S AWARD. NO FURTHER CONTRACTUAL DOCUMENT IS NECESSARY.

THE RECORD SHOWS THAT THE AWARD NOTICE WAS MAILED TO OCTAGON ON THE DATE OF ISSUANCE.

ON DECEMBER 6, 1965, THE DGSC BUYER RECEIVED A TELEPHONE CALL FROM AN OCTAGON REPRESENTATIVE INQUIRING AS TO THE STATUS OF OCTAGON'S BID. UPON BEING ADVISED THAT AWARD FOR AREAS I AND II HAD BEEN MADE TO OCTAGON ON NOVEMBER 9, THE OCTAGON REPRESENTATIVE STATED THAT THE CONTRACT HAD NEVER BEEN RECEIVED AND, FURTHER, ALLEGED AN ERROR IN BID, STATING THAT THE ABSTRACT OF BIDS WOULD INDICATE THE ERROR. AT THAT TIME, THE DGSC BUYER INFORMED THE OCTAGON REPRESENTATIVE THAT OCTAGON'S PRICES DID NOT APPEAR TO BE OUT OF LINE WITH PAST PROCUREMENTS, AND LATER THE SAME DAY DGSC MAILED TO OCTAGON SIGNED COPIES OF THE CONTRACT WHICH HAD BEEN FORWARDED ON NOVEMBER 9 AND WHICH APPARENTLY HAD NOT BEEN RETURNED TO THE SENDER BY THE POSTAL AUTHORITIES.

IN A LETTER DATED DECEMBER 6, OCTAGON ADVISED THE DGSC THAT ALL OF ITS BID PRICES SHOULD HAVE BEEN INCREASED BY $ .20 PER BOTTLE. COPIES OF WHAT WERE ALLEGED TO BE OCTAGON'S WORKSHEETS WERE FURNISHED, REFLECTING THE FOLLOWING COST DATA ON LEVEL B PACK:

AMMONIA .016X4 0.0640

BOTTLE 0.2135

BAKELITE CAP 0.0160

CELLOSEAL 0.0040

LABEL 0.0150

INNER CARTON 295M 0.2950

275 DOUBLE WALL, T&B PAD, LINER - 1 PIECE

OUTER CARTON 200 T $.195 DIVIDED BY 4 0.0460

0.6535 (SUBTOTAL)

LOSS ON EVAPORATION 0.0020

LOSS ON PACKAGING MATERIALS

LABOR & OVERHEAD & PROFIT 0.2000

4%0.0260

FOB EDGEWATER, N.J. 0.6815

ROUNDED OUT $.688 AND BEARING A WRITTEN NOTATION "SHOULD BE $.888."

IN ITS LETTER, OCTAGON EXPLAINED THAT THE FIGURES ON ITS WORKSHEET TOTAL $ .8815 PER BOTTLE FOR LEVEL B PACK, WHICH OCTAGON INTENDED TO ROUND TO $ .888 RATHER THAN TO $ .688, AND THAT THE ERRONEOUS FIGURE WAS CARRIED OVER IN ITS COMPUTATION OF ITS BID PRICE FOR LEVEL A PACK. ACCORDINGLY, IT WAS STATED, THE CORRECT PRICES SHOULD HAVE BEEN $ .888 PER BOTTLE FOR LEVEL B PACK AND $1.22 PER BOTTLE FOR LEVEL A PACK. IT WAS FURTHER STATED THAT THE WIDE DISPARITY IN BID PRICES IS INDICATIVE OF THE ERROR MADE IN OCTAGON'S QUOTATION. THEREFORE, REQUEST WAS MADE THAT THE BID PRICES BE CORRECTED OR THE CONTRACT CANCELED.

BY LETTER DATED FEBRUARY 17, 1966, THE DGSC FORWARDED TO OCTAGON ITS DETERMINATION OF THE SAME DATE DENYING THE REQUEST FOR RESCISSION OR REFORMATION OF THE CONTRACT AND STATING THAT THE ERROR, IF ANY, WAS NOT MUTUAL BUT SOLELY THE FAULT OF OCTAGON AND THAT THERE WAS NO EVIDENCE INDICATING THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE MISTAKE PRIOR TO AWARD. THE DETERMINATION INCLUDES THE FOLLOWING PERTINENT STATEMENTS:

E. AWARD TO OCTAGON AS THE LOW BIDDER ON AREAS I AND II WAS APPROVED BY THE CONTRACTING OFFICER ON 2 NOVEMBER 1965 AND THE FILE REFLECTS THAT THE AWARD WAS MAILED TO OCTAGON ON 9 NOVEMBER 1965. SINCE IFB DSA 4-66-1432 PROVIDED THAT A WRITTEN AWARD MAILED TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY, IT IS CONSIDERED THAT A BINDING CONTRACT CAME INTO BEING ON 9 NOVEMBER 1965. THE CONTRACT NUMBER IS DSA 4-081462-PC400.

G. BY LETTER DATED 6 DECEMBER 1965 OCTAGON ALLEGED THAT IT HAD MADE A MISTAKE IN ITS BID IN THAT THERE WAS A MATHEMATICAL ERROR IN TOTALLING ITS COST FIGURES UPON WHICH THE BID PRICE WAS BASED. OCTAGON ALSO STATED "OUR COPY OF THE BID ABSTRACT REVEALS A WIDE DISPARITY IN PRICES AND IS INDICATIVE OF THE ERROR WE MADE IN OUR QUOTATION.' OCTAGON ASKED THAT ITS BID PRICES BE MODIFIED BY THE ADDITION OF $ .20 PER BOTTLE OR THAT ITS BID BE WITHDRAWN. A COPY OF TWO DOCUMENTS WHICH PURPORT TO BE THE COMPANY'S WORK SHEETS WERE ATTACHED TO THIS LETTER. THE WORK SHEET SHOWS A LIST OF COSTS WHICH TOTAL $ .8815; HOWEVER, THE TOTAL FIGURE FOR THE LIST OF COSTS SHOWN ON THE WORK SHEET IS $ .6815. THE BID PRICE WAS "ROUNDED OUT" TO $ .688. IN THE ORDER LISTED COSTS ARE SHOWN AS MATERIALS INCLUDING BOTTLES AND LABELS $ .3125; COST OF THE INNER AND OUTER CARTONS $ .3410; EVAPORATION LOSS $ .002; LABOR, OVERHEAD AND PROFIT $ .20; AND AN IMMEDIATELY SUBSEQUENT FIGURE OF $ .0260 WHICH IS SIMPLY LABELED "4 PERCENT.' OCTAGON'S WORK SHEET INCLUDES A SUBTOTAL OF $ .6535 IMMEDIATELY AFTER ALL MATERIAL AND PACKING COSTS AND IMMEDIATELY PRIOR TO ITS LOSS ON EVAPORATION FIGURE OF $ .0020. FOUR PERCENT OF THE $ .6555 WOULD BE $ .02622 OR ROUNDED OFF TO THE NEAREST MILL THE FIGURE THE CONTRACTOR ACTUALLY SHOWS--- $ .0260. IN OTHER WORDS, ABSENT THE $ .20 ENTRY FOR LABOR, OVERHEAD AND PROFIT, THE ENTRY OF 4 PERCENT OF THE TOTAL OF MATERIALS AND CARTONS WOULD APPEAR TO REPRESENT LABOR, OVERHEAD AND PROFIT. IF $ .20 FOR LABOR, OVERHEAD AND PROFIT IS INCLUDED IN THE SUBTOTAL, 4 PERCENT OF THE SUBTOTAL WOULD BE $ .03422. ALL ENTRIES EXCEPT THE "4 PERCENT" ARE IDENTIFIED IN DETAIL. THE CONTRACTOR ORIGINALLY CLAIMED NO MISTAKE EXCEPT A SIMPLE ERROR IN ADDITION OF THE FIGURES LISTED. SUBSEQUENT TO THE ORIGINAL ALLEGATION OF MISTAKE, THE CONTRACTOR'S ATTORNEY EXPLAINED THAT DESPITE ITS POSITION ON THE WORK SHEET THE 4 PERCENT BELONGS WITH THE ENTRY ON THE WORK SHEET IDENTIFIED AS "LOSS ON PACKAGING MATERIALS" AND THAT THE FIGURE OF $ .0260 REPRESENTS PRIMARILY EXPECTED BOTTLE BREAKAGE.

H. THE CONTRACTING OFFICER HAS REPORTED THAT HE DID NOT SUSPECT THAT ANY MISTAKE HAD BEEN MADE BY OCTAGON. IN VIEW OF THE IMMEDIATELY PRIOR PURCHASE PRICES HE SHOULD NOT HAVE SUSPECTED THAT ANY MISTAKE HAD BEEN MADE. FOR THE TWO AREAS FOR WHICH OCTAGON RECEIVED AN AWARD, THERE WAS NO RANGE OF BIDS BUT SIMPLY ONE OTHER BID WHICH WAS CONSIDERED VERY HIGH. PREVIOUSLY NOTED, ALL PRICES FOR AREA III WERE CONSIDERED SO EXCESSIVE AFTER EVALUATION AS TO REQUIRE REJECTION OF ALL BIDS.

IN YOUR LETTERS TO OUR OFFICE, REQUESTING THAT OCTAGON BE GRANTED RELIEF, YOU EXPLAIN THAT OCTAGON DID NOT DISCOVER THE MISTAKE UNTIL DECEMBER 6, WHEN, WITH A VIEW TO VOLUNTARILY EXTENDING ITS 60-DAY BID ACCEPTANCE PERIOD BECAUSE IT ALLEGEDLY HAD NOT HEARD FROM DGSC REGARDING AWARD, OCTAGON ANALYZED ITS BID. YOU STATE THAT OCTAGON IMMEDIATELY NOTIFIED THE DGSC BUYER OF THE MISTAKE BY TELEPHONE, REQUESTING EITHER BID MODIFICATION OR WITHDRAWAL, AND BY LETTER OF THE SAME DATE TRANSMITTED TO DGSC COPIES OF ITS WORKSHEETS. YOU ACKNOWLEDGE THAT ON DECEMBER 8, WHICH WAS WITHIN THE 60-DAY BID ACCEPTANCE PERIOD, OCTAGON RECEIVED IN THE MAIL A COPY OF THE AWARD NOTICE DATED NOVEMBER 9. YOU FURTHER STATE THAT, IN VIEW OF THE DENIAL BY DGSC OF ITS REQUEST FOR RELIEF, OCTAGON HAS TAKEN STEPS TO FILL THE FIRST ORDER PLACED BY DGSC ON MARCH 14, 1966, AGAINST THE CONTRACT.

YOU CONTEND THAT OCTAGON'S NOTICE OF ITS BID MISTAKE WAS GIVEN TO DGSC PRIOR TO THE RECEIPT BY OCTAGON OF THE DGSC NOTICE OF AWARD, AND, THEREFORE, THE AWARD AT THE ORIGINAL BID PRICE WAS INEFFECTIVE. SUPPORT OF YOUR POSITION, YOU CITE AN UNPUBLISHED DECISION OF OUR OFFICE, B-156773, SEPTEMBER 1, 1965, THE POSTAL REGULATIONS REFERENCED THEREIN, AND RHODE ISLAND TOOL CO. V. UNITED STATES, 130 CT.CL. 698. IN OUR DECISION OF SEPTEMBER 1, 1965, WE HELD THAT A CONSTRUCTION CONTRACT COULD BE MODIFIED TO PERMIT PAYMENT OF AN ADDITIONAL AMOUNT FOR A MISTAKE IN BID ALLEGED BY THE CONTRACTOR AFTER MAILING OF AWARD NOTICE BY THE GOVERNMENT BUT PRIOR TO ITS RECEIPT BY THE CONTRACTOR. YOU POINT TO THE FACT THAT THE CONSTRUCTION CONTRACT BID FORM IN QUESTION, LIKE THE IFB SUPPLY CONTRACT FORM IN THE INSTANT CASE, PROVIDED THAT WRITTEN ACCEPTANCE OF THE BID WOULD BE MAILED OR OTHERWISE FURNISHED TO THE BIDDER. YOU CONTEND, THEREFORE, THE ,B 156773 MUST STAND FOR THE HOLDING THAT AN AWARD IS NOT EFFECTIVE UNTIL RECEIVED BY THE CONTRACTOR EVEN THOUGH THE IFB PROVIDED THAT A BINDING CONTRACT WOULD RESULT UPON MAILING THE AWARD," AND, THEREFORE, B 156773 CANNOT BE DISTINGUISHED FROM THE INSTANT CASE. YOU FURTHER CONTEND THAT OCTAGON HAS FURNISHED EVIDENCE OF ITS MISTAKE AND OF ITS INTENDED BID PRICE; THEREFORE, AS A CONTRACTOR WHOSE BID WAS ACCEPTED BY THE GOVERNMENT WITH NOTICE OF MISTAKE, OCTAGON IS ENTITLED IN LINE WITH EDMUND J. RAPPOLI CO., INC. V. UNITED STATES, 98 CT.CL. 499, AND B-156773, SUPRA, TO ADDITIONAL COMPENSATION.

REGARDING THE QUESTION RAISED BY DGSC AS TO WHAT THE 4 PERCENT FIGURE OF $ .0260 ON OCTAGON'S WORKSHEETS COVERS, YOU STATE SUCH FIGURE REPRESENTS LOSS ON PACKAGING MATERIALS AND IS EQUIVALENT TO 4 PERCENT OF THE SUBTOTAL OF $ .6555 ON THE WORKSHEET. YOU POINT TO THE FACT THAT EVEN WITH A UNIT PRICE INCREASE OF $0.20, OCTAGON'S BID PRICES WOULD STILL BE APPRECIABLY LOWER THAN THE OTHER BIDS ON AREAS I AND II.

AS AN ALTERNATIVE TO REFORMATION OF THE CONTRACT, YOU REQUEST THAT THE CONTRACT BE RESCINDED AND THAT OCTAGON BE PAID ON A QUANTUM MERUIT BASIS FOR THE SUPPLIES DELIVERED BEFORE RESCISSION. IN THIS REGARD, YOU CITE SEVERAL COURT CASES AND TWO OF OUR PUBLISHED DECISIONS, 36 COMP. GEN. 441 AND 17 ID. 575, FOR THE PROPOSITION THAT IT WOULD BE INEQUITABLE TO REQUIRE A BIDDER TO PERFORM UNDER HIS ORIGINAL BID WHEN THE GOVERNMENT HAS ACTUAL NOTICE OF A MISTAKE IN BID PRIOR TO AWARD. THEREFORE, YOU CONTEND, IT WOULD BE UNCONSCIONABLE FOR THE GOVERNMENT TO REQUIRE OCTAGON TO SO PERFORM.

FINALLY, YOU CONTEND THAT EVEN IF DGSC DID NOT HAVE ACTUAL NOTICE OF OCTAGON'S BID MISTAKE, IT HAD CONSTRUCTIVE NOTICE THEREOF IN VIEW OF THE SUBSTANTIAL DISPARITY BETWEEN OCTAGON'S PRICES AND THE PRICES OF THE OTHER BIDDERS ON AREA III. SUCH DISPARITY, YOU STATE, SHOULD HAVE PUT DGSC ON NOTICE OF A POSSIBLE MISTAKE IN BID IN OCTAGON'S UNIT PRICES ON AREAS I AND II. ADDITIONALLY, YOU STATE THAT COMPARISON OF OCTAGON'S BID PRICES ON THE INSTANT PROCUREMENT WITH OCTAGON'S BID OF $ .78 PER UNIT FOR LEVEL B PACK ON THE SAME PRODUCT UNDER IFB NO. DSA 4-65-2650, OPENED JUNE 17, 1965, SHOULD HAVE SERVED AS CONSTRUCTIVE NOTICE OF A MISTAKE IN OCTAGON'S BID.

THE GENERAL RULE IS THAT BIDS SUBMITTED IN RESPONSE TO ADVERTISED GOVERNMENT PROCUREMENTS MAY NOT BE WITHDRAWN AFTER THEY HAVE BEEN OPENED, EVEN BEFORE AWARD IS MADE, AND THE BIDDER IS BOUND TO ACCEPT THE AWARD. REFINING ASSOCIATES, INC. V. UNITED STATES, 124 CT.CL. 115, 109 F.SUPP. 259. 35 COMP. GEN. 272; 29 ID. 341. ALSO, A BIDDER WHO MAKES A MISTAKE IN A BID WHICH HAS BEEN ACCEPTED BY THE GOVERNMENT MUST BEAR THE CONSEQUENCES UNLESS THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE PRIOR TO AWARD. 23 COMP. GEN. 596; 20 ID. 652; 17 ID. 532. ACCORDINGLY, TWO FACTORS ARE DETERMINATIVE OF THE INSTANT CASE--- FIRST, WHETHER THERE WAS AN EFFECTIVE AWARD AND, SECOND, WHETHER THE GOVERNMENT HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE, PRIOR TO SUCH AWARD, OF A MISTAKE, AS ALLEGED.

AS YOU ACKNOWLEDGE, BY THE TERMS OF THE IFB THE MAILING OF AN AWARD NOTICE TO THE SUCCESSFUL BIDDER WAS TO CREATE A BINDING CONTRACT. NOTWITHSTANDING SUCH PROVISIONS, YOU URGE THAT OUR DECISION B-156773, SUPRA, SHOULD BE DECISIVE OF WHEN AWARD WAS EFFECTIVE, THAT IS, THAT THE DATE OF RECEIPT BY THE BIDDER OF THE NOTICE OF AWARD SHOULD GOVERN. ACCORDINGLY, YOU FURTHER URGE THAT OCTAGON'S NOTIFICATION TO DGSC ON DECEMBER 6 OCCURRED PRIOR TO AWARD BECAUSE OCTAGON NEVER RECEIVED THE ORIGINAL NOTICE OF AWARD WHICH WAS MAILED TO IT BY DGSC ON NOVEMBER 9.

A READING OF B-156773, SUPRA, WILL DISCLOSE THAT THE BIDDER IN THAT CASE ACTUALLY RECEIVED THE NOTICE OF AWARD 2 DAYS AFTER IT HAD BEEN PLACED IN THE MAIL BY THE GOVERNMENT BUT THAT ON THE DAY THE NOTICE OF AWARD WAS DELIVERED TO THE BIDDER, AND SOMETIME PRIOR TO ITS RECEIPT, THE BIDDER GAVE NOTICE TO THE CONTRACTING AGENCY OF THE MISTAKE IN ITS BID, AND ON THE FOLLOWING DAY THE BIDDER SUBSTANTIATED ITS CLAIM OF MISTAKE WITH EVIDENCE OF THE MISTAKE AND OF ITS INTENDED BID. THE ONLY REFERENCE IN OUR DECISION TO THE POSTAL REGULATIONS AND THE RHODE ISLAND TOOL CO. CASE IS CONTAINED IN THE PENULTIMATE PARAGRAPH, WHICH READS AS FOLLOWS:

"THE CURRENT POSTAL MANUAL PROVIDES FOR CERTAIN PROCEDURES IN THE RECALL OF MAIL, AND INDICATES THAT THE MAILER HAS NOT LOST CONTROL OF THE ITEM MAILED UNTIL ACTUALLY DELIVERED TO THE ADDRESSEE. SEE POSTAL MANUAL, 1954 EDITION, PARAGRAPH 153.5. SEE ALSO RHODE ISLAND TOOL CO. V. UNITED STATES, 130 CT.CLS. 698. WE ARE OF THE OPINION THAT THE COURT OF CLAIMS WOULD HOLD THAT THE AWARD MADE ON DECEMBER 28 WAS NOT EFFECTIVE UNTIL RECEIVED BY THE CONTRACTOR ON DECEMBER 30, 1964.

IT IS TO BE NOTED THAT OUR DECISION DID NOT STATE THAT THIS OFFICE HAD ADOPTED THE INTERPRETATION PLACED BY THE COURT OF CLAIMS ON THE POSTAL REGULATIONS. FURTHER, A SIGNIFICANT FACTOR IN THE DECISION OF THE COURT OF CLAIMS IN RHODE ISLAND TOOL CO. CASE, WHICH WAS NOT NOTED IN B-156773, SUPRA, WAS LANGUAGE IN THE BID SOLICITATION STATING THAT THE SUCCESSFUL BIDDER WOULD RECEIVE NOTICE OF AWARD, WHICH LANGUAGE IS NOT INCLUDED IN THE IFB IN THE INSTANT CASE OR IN THE IFB WITH WHICH OUR DECISION B-156773 WAS CONCERNED.

WHILE OUR OFFICE GIVES CAREFUL CONSIDERATION TO DECISIONS OF THE COURT OF CLAIMS IN RELATION TO MATTERS COMING BEFORE US THE RESPONSIBILITY FOR DETERMINING WHETHER FUNDS APPROPRIATED BY THE CONGRESS ARE LEGALLY AVAILABLE FOR A PARTICULAR USE RESTS WITH OUR OFFICE. 14 COMP. GEN. 648; 31 ID. 73.

TO OUR KNOWLEDGE, THE SUPREME COURT OF THE UNITED STATES HAS NOT RULED ON THE EFFECT OF THE CHANGES IN THE POSTAL REGULATIONS IN QUESTION WITH RESPECT TO THE EFFECTIVE DATE OF A MAILED BID ACCEPTANCE WHERE THE INVITATION FOR BIDS CONTEMPLATES ACCEPTANCE BY MAIL AND DOES NOT REQUIRE RECEIPT OF THE OFFEREE'S ACCEPTANCE BY THE OFFEROR AS A CONDITION TO CREATION OF A BINDING CONTRACT. MOREOVER, NOT ALL AUTHORITIES ARE IN AGREEMENT WITH THE VIEW EXPRESSED BY THE COURT OF CLAIMS IN THE RHODE ISLAND TOOL CO. CASE THAT ACCEPTANCE OF A BID BY MAIL IS NOT ACCOMPLISHED UNTIL RECEIPT BY THE OFFEROR. CORBIN ON CONTRACTS, SECTION 80, PAGE 342 ET SEQ., ESPOUSES THE VIEW THAT THE QUESTION WHETHER AN OFFER HAS BEEN ACCEPTED AT THE TIME OF MAILING OF THE ACCEPTANCE SHOULD NOT TURN UPON THE TOTAL LOSS OF POWER TO CONTROL, BUT, RATHER, UPON THE REASONABLENESS OF REGARDING THE MAILING AS A PROPER METHOD OF ACCEPTING AN OFFER. CORBIN STATES THAT IF THE OFFEROR EXPRESSLY SAYS THAT ACCEPTANCE MAY BE BY THE MAILING OF A LETTER, THE OFFEREE HAS POWER TO ACCEPT AS THUS AUTHORIZED,AND THAT IN VIEW OF COMMON PRACTICES, IN VIEW OF THE DIFFICULTIES INVOLVED IN INTERCEPTING A LETTER, AND IN VIEW OF THE DECISIONS AND PRINTED DISCUSSIONS DEALING WITH ACCEPTANCE BY POST, THE FACT THAT A LETTER MAY BE LAWFULLY INTERCEPTED BY THE SENDER SHOULD NOT PREVENT THE ACCEPTANCE FROM BEING OPERATIVE ON MAILING. MOREOVER, THE UNITED STATES DISTRICT COURT, EASTERN DISTRICT, LOUISIANA, ON SEPTEMBER 14, 1965 (2 WEEKS AFTER OUR DECISION B-156773, SUPRA, WAS ISSUED), HELD IN UNITED STATES V. CONTINENTAL CASUALTY CO., 245 F.SUPP. 871, THAT THE REQUIREMENT IN THE MILLER ACT, 40 U.S.C. 270B (A), THAT NOTICE OF CLAIM FOR LABOR PERFORMED OR MATERIALS SUPPLIED UNDER A GOVERNMENT CONTRACT BE GIVEN BY REGISTERED MAIL TO THE PRIME CONTRACTOR WITHIN 90 DAYS FROM THE LAST DATE THE LABOR WAS PERFORMED OR MATERIALS WERE SUPPLIED, IS SATISFIED BY THE PLACING OF THE REGISTERED LETTER IN THE MAIL ON THE 90TH DAY. FURTHER, THE COURT, CITING VARIOUS LEGAL AUTHORITIES, STATED THAT WHEN THE TERM "NOTICE" IS COUPLED WITH AN EXPRESSION OF THE MODE IN WHICH NOTICE IS TO BE EFFECTED, IT INDICATES AN INTENTION TO CONSIDER THE COMMUNICATION "RECEIVED" WHEN THE OFFEREE DISPATCHES THE NOTICE BY THE MODE SPECIFIED. SUCH VIEWS ARE IN CONSONANCE WITH THE GENERAL RULE LONG FOLLOWED BY OUR OFFICE, THAT WHERE AN ACCEPTANCE BY MAIL IS AUTHORIZED, THE ACCEPTANCE, UNLESS OTHERWISE SPECIFIED, IS EFFECTIVE FROM THE TIME IT IS MAILED. SEE 35 COMP. GEN. 272, 274, AND THE COURT CASES AND DECISIONS OF OUR OFFICE THEREIN CITED.

IN THE LIGHT OF SUCH AUTHORITATIVE OPINIONS, AND IN THE ABSENCE OF A CONTRARY RULING BY THE SUPREME COURT, WE ARE UNABLE TO SUBSCRIBE TO THE VIEW URGED BY YOU THAT, NOTWITHSTANDING THE PROVISION IN A BID SOLICITATION THAT A BINDING CONTRACT WILL BE CONSUMMATED UPON THE MAILING OF AWARD, RECEIPT BY THE BIDDER OF NOTICE OF AWARD IS ESSENTIAL TO THE CREATION OF THE CONTRACT, AND, THEREFORE, AWARD IS NOT EFFECTIVE UNTIL DELIVERY OF THE AWARD NOTICE TO THE BIDDER. RATHER, IT IS OUR VIEW THAT WHERE SUCH LANGUAGE IS INCLUDED IN A BID SOLICITATION AND THE BIDDER TAKES NO EXCEPTION THERETO, UPON THE MAILING OF THE NOTICE OF AWARD, REGARDLESS OF WHETHER IT IS RECEIVED BY THE BIDDER, A BINDING CONTRACT COMES INTO EXISTENCE. ACCORDINGLY, B-156773, SUPRA, IS NOT TO BE INTERPRETED AS AUTHORITY FOR ANY VIEW TO THE CONTRARY.

IN THE INSTANT CASE, OCTAGON HAVING TAKEN NO EXCEPTION TO THE LANGUAGE IN THE IFB REGARDING THE CONSUMMATION OF A BINDING CONTRACT UPON MAILING OF AWARD, WE MUST CONCLUDE THAT THE AWARD WAS EFFECTIVE ON NOVEMBER 9, 1965, THE DATE THE RECORD SHOWS THAT DGSC MAILED TO OCTAGON THE STANDARD FORM 26 ADVISING THAT THE CONTRACT WAS THEREBY CONSUMMATED AND THAT NO FURTHER CONTRACTUAL DOCUMENT WAS NECESSARY.

HAVING CONCLUDED THAT THE AWARD TO OCTAGON WAS EFFECTIVE ON NOVEMBER 9, 1965, IT FOLLOWS THAT WE MUST FURTHER CONCLUDE THAT OCTAGON'S NOTICE TO DGSC 27 DAYS LATER, ON DECEMBER 6, 1965, OF AN ALLEGED MISTAKE IN ITS BID OCCURRED AFTER AWARD. IT IS CLEAR, THEREFORE, THAT THE GOVERNMENT CANNOT BE CHARGED WITH ACCEPTING OCTAGON'S BID WITH ACTUAL NOTICE OF A MISTAKE.

ABSENT ACTUAL NOTICE TO THE GOVERNMENT, PRIOR TO AWARD, OF THE ALLEGED MISTAKE IN OCTAGON'S BID, THERE IS NOW FOR DETERMINATION WHETHER THE CIRCUMSTANCES WERE SUCH AS TO PLACE THE DGSC ON CONSTRUCTIVE NOTICE OF A MISTAKE IN THE F.O.B. ORIGIN UNIT PRICE OF $0.688, LEVEL B PACK, QUOTED BY OCTAGON. YOU CONTEND THAT THE WIDE VARIANCE IN THE BID PRICES ON AREA III WAS SUFFICIENT TO INDICATE THAT OCTAGON'S BID ON AREAS I AND II WAS IN ERROR. IN THIS CONNECTION, IT IS TO BE NOTED THAT SINCE THE AWARDS FOR ALL THREE AREAS WERE TO BE MADE ON A SEPARATE BASIS, THERE WAS NO REQUIREMENT THAT THE PRICES SUBMITTED ON ANY ONE AREA BE DETERMINATIVE OF THE REASONABLENESS OF THE PRICES SUBMITTED ON ANY OTHER AREA. FURTHER, WHILE YOU URGE THAT OCTAGON'S BID WAS TOO LOW, THERE CANNOT BE OVERLOOKED THE FACT THAT DGSC CONSIDERED OCTAGON'S UNIT PRICE OF $ .688, LEVEL B PACK, AS TOO HIGH FOR AREA III. ALSO, SINCE ONLY TWO BIDS, OCTAGON'S AND ONE OTHER, WERE SUBMITTED ON AREAS I AND II, THERE WAS NO MORE REASON FOR DGSC TO SUSPECT THAT OCTAGON HAD MADE A MISTAKE IN ITS LOW BID THAN FOR CONSIDERING THAT THE OTHER BIDDER HAD MADE A MISTAKE BY QUOTING PRICES WHICH WERE TOO HIGH. SEE 20 COMP. GEN. 286.

YOU FURTHER CONTEND THAT THE FACT THAT OCTAGON QUOTED AN F.O.B. ORIGIN UNIT PRICE OF $ .78, LEVEL B PACK, IN A PRIOR PROCUREMENT SERVED AS NOTICE TO DGSC THAT ITS F.O.B. ORIGIN UNIT PRICE OF $ .688, LEVEL B PACK, IN THE INSTANT PROCUREMENT WAS IN ERROR. AS STATED PREVIOUSLY, THE ONLY PROCUREMENT BY DGSC OF THE ITEM IN QUESTION WAS ON AN F.O.B. DESTINATION BASIS, THAT IS, THE TRANSPORTATION COSTS WERE BORNE BY THE SUCCESSFUL BIDDERS. WHILE THERE IS NO INDICATION ON THE RECORD BEFORE OUR OFFICE AS TO THE BID SUBMITTED ON THAT PROCUREMENT BY OCTAGON, WHICH, IN ORDER TO BE RESPONSIVE, SHOULD HAVE BEEN ON AN F.O.B. DESTINATION BASIS RATHER THAN ON AN F.O.B. ORIGIN BASIS, AS YOU ALLEGE, THE RECORD DOES SHOW THAT AWARDS WERE MADE TO A CALIFORNIA BIDDER AT A UNIT PRICE OF $ .705 AND TO A PENNSYLVANIA BIDDER AT A UNIT PRICE OF $ .56, BOTH LEVEL B PACK, THE TRANSPORTATION COSTS TO THE FOUR DESIGNATED DESTINATIONS BEING BORNE BY THE CONTRACTORS. SUCH EVIDENCE, IN OUR OPINION, INDICATES THAT, IF ANYTHING, OCTAGON'S UNIT BID PRICE OF $ .688 FOR LEVEL B PACK, F.O.B. ORIGIN, WAS HIGHER THAN MIGHT HAVE BEEN EXPECTED. IN VIEW THEREOF, WE FIND NO BASIS TO QUESTION EITHER THE CONTRACTING OFFICER'S DETERMINATION THAT OCTAGON'S LEVEL B PACK PRICE WAS REASONABLE FOR AREAS I AND II OR HIS STATEMENT THAT HE DID NOT SUSPECT AN ERROR IN OCTAGON'S BID. THEREFORE, WE MUST CONCUR WITH THE VIEW OF DGSC THAT THERE WAS NOTHING IN THE RECORD WHICH SHOULD HAVE SERVED AS CONSTRUCTIVE NOTICE OF A MISTAKE IN OCTAGON'S BID. ACCORDINGLY, THE BID HAVING BEEN ACCEPTED BY THE GOVERNMENT IN GOOD FAITH, WITHOUT NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF A MISTAKE, AND SUCH MISTAKE, IF ANY, NOT BEING MUTUAL BUT DUE SOLELY TO OCTAGON'S OWN CARELESSNESS, THERE IS NO LEGAL BASIS FOR TERMINATION OF THE CONTRACT OR FOR PAYMENT OF ANY AMOUNT IN ADDITION TO THE ORIGINAL CONTRACT PRICE. COMP.GEN. 373. IN VIEW OF OUR CONCLUSION, NO DETERMINATION IS REQUIRED ON THE MATTER OF WHETHER THE EXISTENCE OF A MISTAKE HAS BEEN PROVEN BY OCTAGON.

FOR THE REASONS STATED, WE CONCUR WITH THE ACTION OF DSA IN DENYING OCTAGON'S REQUEST FOR RELIEF ..END :