B-158973, MAY 5, 1966

B-158973: May 5, 1966

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A DECISION IS REQUESTED AS TO WHETHER AN ADJUSTMENT MAY BE MADE IN THE CONTRACT PRICE UNDER PURCHASE ORDER NO. 1197. THE REQUEST WAS MADE BECAUSE OF AN ALLEGED MISTAKE IN THE PROPOSAL SUBMITTED BY THE CONTRACTOR WHICH WAS DISCOVERED AFTER THE AWARD AND PERFORMANCE OF THE CONTRACT. THREE REQUESTS WERE ISSUED AND THE ONLY RESPONSE MADE WAS FROM ACME METAL PRODUCTS. AT THE TIME OF THE AWARD IT WAS NOTED BY THE CONTRACTING OFFICER THAT THE CONTRACTOR OFFERED A DISCOUNT OF "30" PERCENT. THE PURCHASE ORDER INCORPORATING THIS DISCOUNT WAS ISSUED TO THE CONTRACTOR AND IT WAS ACCEPTED WITHOUT QUESTION. DELIVERY OF THE ITEMS WAS MADE AND CHECK NO. 53. WAS SENT TO THE CONTRACTOR. THAT THEY WERE NOT AWARE OF THE ERRONEOUSLY INSERTED DISCOUNT TERMS.

B-158973, MAY 5, 1966

TO THE ADMINISTRATOR OF VETERANS AFFAIRS, VETERANS ADMINISTRATION:

IN A LETTER DATED APRIL 15, 1966, REFERENCE 074B, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, A DECISION IS REQUESTED AS TO WHETHER AN ADJUSTMENT MAY BE MADE IN THE CONTRACT PRICE UNDER PURCHASE ORDER NO. 1197, ISSUED DECEMBER 29, 1965, TO ACME METAL PRODUCTS, INC., CHICAGO, ILLINOIS. THE REQUEST WAS MADE BECAUSE OF AN ALLEGED MISTAKE IN THE PROPOSAL SUBMITTED BY THE CONTRACTOR WHICH WAS DISCOVERED AFTER THE AWARD AND PERFORMANCE OF THE CONTRACT.

THE VETERANS ADMINISTRATION HOSPITAL, SAN FERNANDO, CALIFORNIA, ISSUED A REQUEST FOR QUOTATIONS ON DECEMBER 10, 1965, REQUESTING BIDS FOR FURNISHING STAINLESS STEEL RODENT CAGES. THREE REQUESTS WERE ISSUED AND THE ONLY RESPONSE MADE WAS FROM ACME METAL PRODUCTS, INC. AT THE TIME OF THE AWARD IT WAS NOTED BY THE CONTRACTING OFFICER THAT THE CONTRACTOR OFFERED A DISCOUNT OF "30" PERCENT, 30 CALENDAR DAYS. THE PURCHASE ORDER INCORPORATING THIS DISCOUNT WAS ISSUED TO THE CONTRACTOR AND IT WAS ACCEPTED WITHOUT QUESTION. DELIVERY OF THE ITEMS WAS MADE AND CHECK NO. 53,229,578 IN THE AMOUNT OF THE PURCHASE ORDER, LESS "30" PERCENT FOR PROMPT PAYMENT, WAS SENT TO THE CONTRACTOR. UPON RECEIPT OF THE CHECK THE CONTRACTOR BECAME AWARE OF THE ERROR DISCOVERING THAT THEY HAD MADE A TYPOGRAPHICAL ERROR IN QUOTING A DISCOUNT OF "30" PERCENT, 30 CALENDAR DAYS; THEIR INTENTION BEING TO INSERT THE WORD "NET" IN THE SPACE PROVIDED FOR SHOWING THE DISCOUNT OFFERED.

IN A LETTER REQUESTING THE UNPAID BALANCE OF THEIR BID PRICE AND ALLEGING THE TYPOGRAPHICAL ERROR THE CONTRACTOR STATED THAT THEIR BILLING DEPARTMENT DID NOT TYPE OUT THEIR OWN COMMERCIAL INVOICE WHICH ALWAYS CONTAINS THE PRINTED TERMS,"NET 30 DAYS," BECAUSE THE VETERANS ADMINISTRATION HOSPITAL SUPPLIED THEM WITH STANDARD VA FORM 07-2138, AND THAT THEY WERE NOT AWARE OF THE ERRONEOUSLY INSERTED DISCOUNT TERMS.

FURTHERMORE, THE OFFICE OF MANAGEMENT AND EVALUATION, IN COMPLIANCE WITH THE FEDERAL PROCUREMENT REGULATIONS, SECTION 1-2.406-4 (F) (2) (IV) (D), WHICH PROVIDES FOR THE COLLECTION OF EVIDENCE FOR CONSIDERATION OF MISTAKES IN BIDS ASSERTED AFTER AWARD WHERE ONLY ONE BID WAS RECEIVED, REQUESTED THE SAN FERNANDO HOSPITAL TO INFORM THEM OF ANY RECENT CONTRACTS FOR THE SUPPLIES INVOLVED. THE REPLY WAS THAT IDENTICAL AND SIMILAR ITEMS HAD BEEN PURCHASED FROM THE SAME CONTRACTOR OCTOBER 14, 1965, NET 30 DAYS, WITH NO DISCOUNT ALLOWED.

THE RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER KNEW OF THE MISTAKE. CF. 20 COMP. GEN. 652, 657. ORDINARILY, WHERE ONLY ONE BID IS RECEIVED ON A REQUEST FOR QUOTATIONS THERE IS NO BASIS FOR COMPARISON OF BIDS, AND THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. HOWEVER, WHERE 30 PERCENT IS OFFERED AS A CASH, RATHER THAN A TRADE, DISCOUNT, WE BELIEVE THIS FACT ALONE SHOULD PROMPT SUSPICION OF ERROR, UNLESS DISCOUNTS OF THIS MAGNITUDE ARE NOT UNUSUAL FOR THE COMMODITY BEING PURCHASED, AS WE UNDERSTAND TO BE THE CASE WITH BAKERY PRODUCTS. CERTAINLY IT SHOULD HAVE PROMPTED THE CONTRACTING OFFICER TO REVIEW PAST PURCHASES OF THE ITEM AND IF THIS HAD BEEN DONE, PREVIOUS PURCHASES FROM THE SAME CONTRACTOR WOULD HAVE SHOWN THAT ITS PRICES ORDINARILY OFFERED NO CASH DISCOUNT.

THE RECORD LEAVES LITTLE DOUBT THAT THE CONTRACTOR'S BID WAS ERRONEOUS. AS STATED, ACME METAL PRODUCTS PREVIOUSLY SOLD SIMILAR ITEMS TO THE SAN FERNANDO HOSPITAL WITH NO DISCOUNT FOR PROMPT PAYMENT, WHICH IS THEIR STANDARD BUSINESS PRACTICE, WE BELIEVE IT REASONABLE TO DECIDE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN THEIR BID, AND THAT ACCEPTANCE OF THE BID DID NOT CONSUMMATE A VALID AND BINDING CONTRACT. CF. 37 COMP. GEN. 706 AND 786.

ACCORDINGLY, SINCE THE CAGES HAVE BEEN DELIVERED, AN ADDITIONAL PAYMENT OF "30" PERCENT ON PURCHASE ORDER NO. 1197 IS AUTHORIZED TO BE MADE TO THE CONTRACTOR.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING SUCH PAYMENT.