B-159262, AUG. 25, 1966

B-159262: Aug 25, 1966

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UPON WHICH THE CONTRACT WAS BASED. FOUR BIDS WERE RECEIVED AND OPENED ON DECEMBER 7. IT APPEARED THAT BETHLEHEM STEEL'S BID WAS LOW ON TWO ITEMS ON AN ORIGIN BASIS. AWARD WAS MADE ON DECEMBER 17. BETHLEHEM ALLEGED ERROR IN ITS BID AND THE RESULTING CONTRACT IN THAT THE PROMPT PAYMENT DISCOUNT SHOULD HAVE BEEN 1/2 OF 1 PERCENT RATHER THAN 2 PERCENT OF MILL POINT VALUE. IT IS CONTENDED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN THAT BETHLEHEM MADE SUCH AN ERROR IN ITS BID. THIS POSITION IS ADVANCED BECAUSE (1) PRIOR BIDS TO THE MEMPHIS DISTRICT FOR STEEL WIRE STRAND BY BETHLEHEM HAD UNIFORMLY QUOTED A DISCOUNT OF 1/2 OF 1 PERCENT. (2) 1/2 OF 1 PERCENT IS THE STANDARD INDUSTRY DISCOUNT.

B-159262, AUG. 25, 1966

TO BETHLEHEM STEEL CORPORATION:

BY LETTER DATED MAY 23, 1966, WITH ENCLOSURES, YOU REQUESTED THAT CONTRACT NO. DA-40-041-CIVENG-66-117, AWARDED BY THE U.S. ARMY ENGINEER DISTRICT, MEMPHIS, BE REFORMED TO REFLECT DISCOUNT TERMS WHICH YOU INTENDED TO OFFER IN YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. CIVENG-40-041-66-36, UPON WHICH THE CONTRACT WAS BASED.

THE INVITATION, DATED NOVEMBER 5, 1965, REQUESTED BIDS ON VARIOUS ITEMS OF STEEL WIRE STRAND, F.O.B. ORIGIN, OR ALTERNATIVELY, F.O.B. NAMED DESTINATIONS. FOUR BIDS WERE RECEIVED AND OPENED ON DECEMBER 7, 1965, AND AFTER EVALUATION, IT APPEARED THAT BETHLEHEM STEEL'S BID WAS LOW ON TWO ITEMS ON AN ORIGIN BASIS. ON THE FACE OF ITS BID, BETHLEHEM OFFERED THE FOLLOWING DISCOUNT TERMS:

"2 PERCENT, 30 CALENDAR DAYS; AFTER DATE OF INVOICE ON MILL POINT VALUE.'

HOWEVER, BY LETTER DATED DECEMBER 14, 1965, BETHLEHEM REQUESTED THAT ITS DISCOUNT TERMS BE MODIFIED TO READ "TERMS FROM 2 PERCENT 30 DAYS AFTER DATE OF INVOICE ON MILL POINT VALUE TO READ 1/2 OF 1 PERCENT 30 CALENDAR DAYS AFTER DATE OF INVOICE ON MILL POINT VALUE.'

SINCE THE CONTRACTING OFFICER REGARDED THIS LETTER AS IN THE NATURE OF AN UNACCEPTABLE LATE BID MODIFICATION (ASPR 2-305) AND SINCE BETHLEHEM DID NOT INDICATE NOR ALLEGE AN APPARENT CLERICAL ERROR THAT COULD BE CONSIDERED FOR CORRECTION (ASPR 2-406.2), AWARD WAS MADE ON DECEMBER 17, 1965, TO BETHLEHEM AT ITS LOW BID PRICE.

THEREAFTER, BETHLEHEM ALLEGED ERROR IN ITS BID AND THE RESULTING CONTRACT IN THAT THE PROMPT PAYMENT DISCOUNT SHOULD HAVE BEEN 1/2 OF 1 PERCENT RATHER THAN 2 PERCENT OF MILL POINT VALUE. IT IS CONTENDED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN THAT BETHLEHEM MADE SUCH AN ERROR IN ITS BID. THIS POSITION IS ADVANCED BECAUSE (1) PRIOR BIDS TO THE MEMPHIS DISTRICT FOR STEEL WIRE STRAND BY BETHLEHEM HAD UNIFORMLY QUOTED A DISCOUNT OF 1/2 OF 1 PERCENT; (2) 1/2 OF 1 PERCENT IS THE STANDARD INDUSTRY DISCOUNT, AND (3) ALL BIDS RECEIVED, WITH THE EXCEPTION OF BETHLEHEM, QUOTED A DISCOUNT OF 1/2 OF 1 PERCENT.

WE DO NOT AGREE THAT THE CIRCUMSTANCES OF THIS CASE ARE GOVERNED BY THE CASES CITED IN YOUR MAY 23, 1966, LETTER FOR THE REASONS STATED BELOW, OR THAT SUCH CIRCUMSTANCES WARRANT A CONCLUSION THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE ERROR IN QUOTING DISCOUNT.

IT IS SIGNIFICANT TO NOTE THAT WHILE THE OTHER BIDDERS UNDER THE INSTANT INVITATION AND PRIOR SIMILAR INVITATIONS QUOTED DISCOUNTS OF 1/2 OF 1 PERCENT, SUCH A DISCOUNT WAS OFFERED WITHOUT REGARD TO THE FACT THAT THEIR TOTAL PRICES WERE F.O.B. ORIGIN OR F.O.B. DESTINATION. HOWEVER, IN THE CASE OF BETHLEHEM, IT OFFERED DISCOUNT BASED ON INDIVIDUAL MILL POINT VALUES FOR DESTINATION DELIVERY, AND NOT UPON ITS TOTAL BID PRICE AS WAS THE CASE WITH OTHER BIDDERS. HENCE, IT MAY BE REASONABLY CONCLUDED THAT THE DISCOUNT OFFERED BY BETHLEHEM COULD NOT BE COMPARED REALISTICALLY WITH THE OTHER OFFERED DISCOUNTS.

WHILE WE DO NOT QUESTION THAT BETHLEHEM MADE A BONA FIDE ERROR IN BID WITH RESPECT TO ITS DISCOUNT, WE BELIEVE THAT IT WOULD BE UNREASONABLE TO REQUIRE A CONTRACTING OFFICER TO REVIEW IN DETAIL PAST SIMILAR PROCUREMENTS TO SATISFY HIMSELF THAT ALL ELEMENTS OF THE BID PRICES WERE WITHOUT POSSIBILITY OF ERROR. AN OPPORTUNITY EXISTED TO PROMPTLY ALLEGE ERROR, BUT NO SUCH ALLEGATION WAS MADE UNTIL AFTER AWARD. IN THE ABSENCE OF ACTUAL NOTICE OR BASIS FOR HOLDING THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT A VALID BINDING CONTRACT RESULTED FROM THE GOVERNMENT'S ACCEPTANCE.