B-162068, AUG. 8, 1967

B-162068: Aug 8, 1967

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DESTINATION BASIS MAY HAVE CONTRACT CANCELLED SINCE IF BIDDER HAD SUBMITTED BID ON F.O.B. ORIGIN BASIS IT WOULD HAVE BEEN NECESSARY FOR CONTRACTING OFFICER TO COMPUTE FREIGHT RATES IN WHICH CASE ERROR WOULD HAVE BEEN DISCOVERED. WHILE GENERALLY CONTRACTING OFFICERS DO NOT HAVE TO COMPARE PRICES. IN INSTANT CASE ERROR SHOULD HAVE BEEN SUSPECTED. SECRETARY: REFERENCE IS MADE TO A LETTER DATED JULY 17. AWARD OF CONTRACT WAS TO BE MADE BY GROUP OR AS A WHOLE TO ONE BIDDER. SEVEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. WERE LOW ON BOTH GROUPS AND ON THE WHOLE. CONTRACT AWARD WAS MADE TO WHELAN ON JUNE 22. WHELAN ADVISED THE CONTRACTING OFFICER THAT AN ERROR WAS MADE IN THE PREPARATION OF ITS BID BY OMITTING IN ITS COMPUTATIONS THE FREIGHT CHARGES.

B-162068, AUG. 8, 1967

CONTRACTS - MISTAKES - CANCELLATION DECISION TO SECRETARY OF INTERIOR RE MISTAKE ALLEGED AFTER AWARD BY R. H. WHELAN FOR PURCHASE OF TIMBER UNDER CONTRACT WITH BONNEVILLE POWER ADMINISTRATION. BIDDER WHO AFTER AWARD UNDER INVITATION PERMITTING BIDS ON EITHER F.O.B. ORIGIN OR DESTINATION BASIS, ALLEGED ERROR IN OMISSION OF COMPUTATION OF FREIGHT CHARGES ON F.O.B. DESTINATION BASIS MAY HAVE CONTRACT CANCELLED SINCE IF BIDDER HAD SUBMITTED BID ON F.O.B. ORIGIN BASIS IT WOULD HAVE BEEN NECESSARY FOR CONTRACTING OFFICER TO COMPUTE FREIGHT RATES IN WHICH CASE ERROR WOULD HAVE BEEN DISCOVERED. WHILE GENERALLY CONTRACTING OFFICERS DO NOT HAVE TO COMPARE PRICES, IN INSTANT CASE ERROR SHOULD HAVE BEEN SUSPECTED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED JULY 17, 1967, WITH ENCLOSURES FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION, REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID ALLEGED BY R. H. WHELAN AFTER AWARD OF CONTRACT NO. 14-03-74462 BY THE BONNEVILLE POWER ADMINISTRATION FOR THE PURCHASE OF QUANTITIES OF WESTERN RED CEDAR AND DOUGLAS FIR POLES.

BY INVITATION NO. 825 OF MAY 26, 1967, THE ADMINISTRATION SOLICITED BIDS FOR SPECIFIED QUANTITIES AND LENGTHS OF WESTERN RED CEDAR OR DOUGLAS FIR POLES. THE BIDDING SCHEDULE CONTAINED TWO DIFFERENT LOTS OF POLES, GROUP I SPECIFYING DESTINATION AS VENETA, OREGON, AND GROUP II STATING DESTINATION AS PASCO, WASHINGTON. AWARD OF CONTRACT WAS TO BE MADE BY GROUP OR AS A WHOLE TO ONE BIDDER, EITHER F.O.B. DESTINATION OR F.O.B. BIDDER'S SHIPPING POINT.

SEVEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. WHELAN'S BIDS, $17,302 FOR BOTH GROUPS, $9,160 FOR GROUP I, AND $8,142 FOR GROUP II, WERE LOW ON BOTH GROUPS AND ON THE WHOLE. ACCORDINGLY, CONTRACT AWARD WAS MADE TO WHELAN ON JUNE 22, 1967, FOR BOTH GROUPS. ON JUNE 28, 1967, WHELAN ADVISED THE CONTRACTING OFFICER THAT AN ERROR WAS MADE IN THE PREPARATION OF ITS BID BY OMITTING IN ITS COMPUTATIONS THE FREIGHT CHARGES. THIS CLAIM OF ERROR WAS SUBSTANTIATED BY EVIDENCE CONSISTING OF WHELAN'S WORKSHEETS, AND YOUR DEPARTMENT NOW RECOMMENDS THIS CONTRACT BE CANCELLED. THE LETTER DATED JULY 17, 1967, ASSERTS THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE MISTAKE IN THAT HE SHOULD HAVE OBSERVED THE IDENTICAL PRICES CONTAINED IN THE BIDS FOR THE POLES INTENDED FOR DELIVERY AT DIFFERENT DESTINATIONS.

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, RELIEF MAY NOT BE GRANTED FOR THE ERROR SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V. UNITED STATES, 56 F. SUPP. 505 AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. SUCH CASES ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. 37 COMP. GEN. 685; 17 COMP. GEN. 575. DETERMINATION AS TO WHETHER THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED A MISTAKE MUST BE REACHED ON A CASE-BY CASE BASIS IN LIGHT OF ALL THE EVIDENCE. A HARD AND FAST RULE CANNOT BE SET FORTH AS TO THE WEIGHT TO BE GIVEN DIFFERENT TYPES OF EVIDENCE OR AS TO WHAT AMOUNT OF EVIDENCE WILL IMPUTE CONSTRUCTIVE KNOWLEDGE OF A MISTAKE TO THE CONTRACTING OFFICER.

THE PRESENT INVITATION PERMITTED BIDS ON EITHER AN F.O.B. ORIGIN OR DESTINATION BASIS, OR BOTH. THE BIDS RECEIVED WERE ALL ON A DESTINATION BASIS. IF WHELAN HAD SUBMITTED AN F.O.B. ORIGIN BID ON EITHER GROUP, IT PROBABLY WOULD HAVE BEEN NECESSARY FOR THE CONTRACTING OFFICER TO COMPUTE FREIGHT RATES, IN WHICH CASE WHELAN'S ERROR UNDOUBTEDLY WOULD HAVE BEEN DISCOVERED. IT IS NOTED ALSO THAT THE INVITATION SPECIFICALLY REQUIRED BIDDERS TO QUOTE UNIT PRICES AND TO PERMIT DISCLOSURE OF SUCH UNIT PRICES TO THE PUBLIC.

WHILE A CONTRACTING OFFICER ORDINARILY IS NOT UNDER A DUTY TO COMPARE BID PRICES ON INDIVIDUAL ITEMS WHERE AWARD IS TO BE MADE IN THE AGGREGATE (17 COMP. GEN. 534, 535; 42 ID. 383, 384), IN VIEW OF THE CIRCUMSTANCES IN THE INSTANT CASE WE CONCUR IN YOUR CONCLUSION AND THAT OF THE CONTRACTING OFFICER THAT THE ERROR IN WHELAN'S BID PROBABLY SHOULD HAVE BEEN SUSPECTED.

ACCORDINGLY, THIS CONTRACT SHOULD BE CANCELLED AND AWARD MAY BE MADE TO THE NEXT LOW BIDDERS ON GROUP I AND GROUP II IF THEIR RESPECTIVE BIDS ARE STILL AVAILABLE FOR ACCEPTANCE.