B-163031, FEB. 9, 1968

B-163031: Feb 9, 1968

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ALLEGED MISTAKE IN THAT PRICE WAS BASED ON FURNISHING CASE OF 24 NUMBER 303 CANS RATHER THAN A CASE OF 6 NUMBER 10 CANS. SHOULD HAVE HAD ATTENTION DIRECTED TO THE NATURE OF THE MISTAKE BECAUSE HE HAD BID LESS ON THE MORE COSTLY ITEM THAN ON ANOTHER CHEAPER ITEM AND. THEREFORE SINCE DELIVERIES HAVE NOT BEEN MADE OF THE ITEM. DRIVER: REFERENCE IS MADE TO A LETTER DATED DECEMBER 1. THE RELIEF REQUESTED IS WITH RESPECT TO ITEM 23 OF THE CONTRACT. OR 10 DAYS AFTER BIDS WERE OPENED. WAS CALLED BY THE CONTRACTING OFFICER AND ASKED MERELY TO CONFIRM THE BID ON ITEM 23. AWARD WAS MADE THE SAME DAY TO J.C. IN THAT THE PRICE WAS BASED ON A CASE OF 24 NUMBER 303 CANS RATHER THAN ON A CASE OF 6 NUMBER 10 CANS AS SPECIFIED.

B-163031, FEB. 9, 1968

CONTRACTS - MISTAKES - VERIFICATION DECISION TO VETERANS ADMINISTRATION CONCERNING REQUEST OF J.C. WRIGHT SALES CO. FOR RELIEF UNDER CONTRACT FOR CANNED FRUITS BECAUSE OF ERROR IN BID. BIDDER WHO, AFTER CONFIRMATION OF BID PRICE FOR CANNED FRUITS AND AWARD, ALLEGED MISTAKE IN THAT PRICE WAS BASED ON FURNISHING CASE OF 24 NUMBER 303 CANS RATHER THAN A CASE OF 6 NUMBER 10 CANS, SHOULD HAVE HAD ATTENTION DIRECTED TO THE NATURE OF THE MISTAKE BECAUSE HE HAD BID LESS ON THE MORE COSTLY ITEM THAN ON ANOTHER CHEAPER ITEM AND, THEREFORE SINCE DELIVERIES HAVE NOT BEEN MADE OF THE ITEM, THE CONTRACT MAY BE CANCELLED WITHOUT LIABILITY.

TO MR. DRIVER:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 1, 1967, WITH ENCLOSURES (REFERENCE 134G), FROM MR. DONALD P. WHITWORTH, DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, SUBMITTING FOR OUR DECISION A REQUEST BY THE J.C. WRIGHT SALES COMPANY FOR RELIEF UNDER CONTRACT NO. V797P-4948, AWARDED BY THE VETERANS ADMINISTRATION MARKETING CENTER, HINES, ILLINOIS. THE RELIEF REQUESTED IS WITH RESPECT TO ITEM 23 OF THE CONTRACT.

THE SOLICITATION INVOLVED CALLED FOR BIDS ON 25 ITEMS OF APPLE PRODUCTS. ITEM 23 REQUESTED BIDS ON A PER CASE BASIS FOR 215 CASES OF APPLESAUCE WITH STRAINED RED RASPBERRIES, EACH CASE TO CONTAIN 6 NUMBER 10 CANS. ITEM 15 CALLED FOR PER CASE BIDS FOR PLAIN APPLESAUCE IN CASES CONTAINING 6 NUMBER 10 CANS. J.C. WRIGHT BID $4.88 PER CASE ON ITEM 23 AND THE C.H. MUSSELMAN COMPANY BID $6.50 PER CASE ON THAT ITEM. ON ITEM 15, J.C. WRIGHT BID $4.93 PER CASE, OR $0.05 HIGHER THAN THE MORE COSTLY PRODUCT DESCRIBED IN ITEM 23.

ON OCTOBER 19, 1967, OR 10 DAYS AFTER BIDS WERE OPENED, MR. CALLAHAN, SALES MANAGER OF J.C. WRIGHT, WAS CALLED BY THE CONTRACTING OFFICER AND ASKED MERELY TO CONFIRM THE BID ON ITEM 23. MR. CALLAHAN VERBALLY CONFIRMED THE BID. AWARD WAS MADE THE SAME DAY TO J.C. WRIGHT FOR ITEMS NOS. 10 AND 23 IN THE TOTAL AMOUNT OF $2,054.17. MR. CALLAHAN NOTIFIED THE CONTRACTING OFFICER ON OCTOBER 24, 1967, THAT A MISTAKE IN THE BID HAD BEEN MADE IN BIDDING ON ITEM 23, IN THAT THE PRICE WAS BASED ON A CASE OF 24 NUMBER 303 CANS RATHER THAN ON A CASE OF 6 NUMBER 10 CANS AS SPECIFIED. IN SUPPORT OF THE ALLEGATION OF MISTAKE IN BID, THE CONTRACTOR FURNISHED EVIDENCE FROM ITS SUPPLIER THAT THE PRODUCT DESCRIBED IN ITEM 23 IS ONLY PACKED IN NUMBER 303 CANS, 24 CANS TO THE CASE. IN VIEW OF THE FOREGOING, THE CONTRACTOR HAS REQUESTED THAT ITEM 23 BE CANCELLED FROM THE CONTRACT.

IT IS REPORTED THAT THE CONTRACTING OFFICER SUSPECTED AN ERROR IN THE BID ON ITEM 23 BECAUSE PRICES PAID FOR THAT ITEM DURING 1967, 1966 AND 1965 WERE $6.85, $5.89 AND $5.48, RESPECTIVELY. FURTHER, THE CONTRACTING OFFICER WAS ON NOTICE THAT APPLESAUCE WITH STRAINED RASPBERRIES IS A MORE COSTLY PRODUCT THAN PLAIN APPLESAUCE AND THAT J.C. WRIGHT HAD BID LESS ON THE MORE COSTLY PRODUCT. BECAUSE OF THESE FACTORS, THE CONTRACTING OFFICER WAS PROMPTED TO REQUEST BID VERIFICATION FROM J.C. WRIGHT BEFORE AWARD.

FROM THE FOREGOING FACTS, IT APPEARS CLEAR THAT J.C. WRIGHT MADE AN ERROR IN ITS BID ON ITEM 23. WHILE SUCH A UNILATERAL MISTAKE ORDINARILY WILL NOT PERMIT RESCISSION OR REFORMATION OF A CONTRACT MADE BY ACCEPTANCE OF THE BID, IF AT THE TIME OF ACCEPTANCE THE PARTY RECEIVING THE BID KNOWS OR HAS REASON TO KNOW THE BIDDER HAS MADE A MISTAKE, THE CONTRACT IS VOIDABLE BY THE BIDDER. UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956. ORDINARILY, WHERE A BIDDER IS REQUESTED TO AND DOES VERIFY HIS BID, SUBSEQUENT ACCEPTANCE CONSUMMATES A VALID AND BINDING CONTRACT; HOWEVER, AN EXCEPTION TO THAT PRINCIPLE WAS ENUNCIATED IN THE CASE OF UNITED STATES V. METRO NOVELTY MANUFACTURING CO., INC., 125 F.SUPP. 713, WHERE THE COURT SAID:

"CROSS MOTIONS ARE PRESENTED FOR SUMMARY, JUDGMENT, PLAINTIFF SEEKS TO RECOVER $12,000 DAMAGES FROM DEFENDANT FOR ITS FAILURE TO CARRY OUT A $6,000 BID FOR UNIFORM ORNAMENTS. DEFENDANT CLAIMS A MISTAKE IN THE COMPUTATION OF THE BID. PLAINTIFF ADMITS THAT THE ERROR WAS SO GROSS THAT IT WAS PLACED ON NOTICE. IT FURTHER ADMITS THAT THE ONLY CONSEQUENCE OF DEFENDANT'S FAILURE TO PERFORM WAS THE ACCEPTANCE OF THE SECOND LOWEST BID AND THAT THERE WAS NO DAMAGE TO THE GOVERNMENT FROM THE DELAY IN EXECUTION WHICH RESULTED FROM DEFENDANT'S PARTICIPATION IN THE BIDDING.

"PLAINTIFF'S PURCHASING AGENT SOUGHT TO AVOID THE FORCE OF KEMP V. UNITED STATES, D.C. MD. 1941, 38 F.SUPP. 568, BY TELEPHONING THE DEFENDANT AND ASKING FOR A -VERIFICATION- OF THE BID AND BY HAVING IT CONFIRMED- BY TELEPHONE AND LETTER FROM DEFENDANT'S PRESIDENT. PLAINTIFF, HOWEVER, DID NOT PUT DEFENDANT ON NOTICE OF THE MISTAKE WHICH IT SURMISED. REAFFIRMATION OF THE BID UNDER THESE CIRCUMSTANCES DOES NOT BAR THE DEFENSE OF RESCISSION.

"DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS GRANTED.'

THE PRINCIPLE STATED IN THIS CASE HAS BEEN ADOPTED BY THE FEDERAL PROCUREMENT REGULATIONS (FPR) 1-2.406-3 (D) (1) WHICH READ IN PART AS FOLLOWS: "WHENEVER THE CONTRACTING OFFICER SUSPECTS THAT A MISTAKE MAY HAVE BEEN MADE IN A BID, HE SHALL IMMEDIATELY REQUEST THE BIDDER TO VERIFY THE BID. SUCH REQUEST SHALL INFORM THE BIDDER WHY THE REQUEST FOR VERIFICATION IS MADE -- THAT A MISTAKE IS SUSPECTED AND THE BASIS FOR SUCH SUSPICION; E.G., THAT THE BID IS SIGNIFICANTLY OUT OF LINE WITH THE NEXT LOW OR OTHER BIDS OR WITH THE GOVERNMENT'S ESTIMATE. * * *"

IN THE PRESENT CASE, WHILE THE POSSIBILITY OF ERROR WAS GENERALLY BROUGHT TO THE BIDDER'S ATTENTION BY THE TELEPHONE CALL OF OCTOBER 19, REQUESTING VERIFICATION OF ITEM 23, IT DOES NOT APPEAR THAT THE REQUEST FOR VERIFICATION WAS SUCH AS TO DIRECT THE ATTENTION OF THE BIDDER TO THE NATURE OF THE MISTAKE WHICH WAS IN THE CONTRACTING OFFICER'S MIND; THAT IS, THAT J.C. WRIGHT BID LOW ON AN APPLE PRODUCT WHOSE PRICES HAD BEEN STEADILY INCREASING FOR AT LEAST 3 YEARS, AND THAT J.C. WRIGHT HAD BID A HIGHER PRICE ON APPLESAUCE THAN ON THE MORE EXPENSIVE APPLESAUCE WITH RASPBERRIES. SINCE THE CONTRACTING OFFICER WAS AWARE OF THESE FACTS AT THE TIME HE REQUESTED BID VERIFICATION, WE BELIEVE THAT IT WAS INCUMBENT UPON THE CONTRACTING OFFICER TO CALL THE BIDDER'S ATTENTION TO THESE FACTS AS REQUIRED BY BOTH THE FPR AND THE METRO CASE. SEE 35 COMP. GEN. 136.

IN VIEW THEREOF, AND SINCE NO DELIVERIES OF ITEM 23 HAVE BEEN MADE, ITEM 23 OF THE CONTRACT MAY BE CANCELLED WITHOUT LIABILITY TO THE CONTRACTOR.