B-163970, MAY 7, 1968

B-163970: May 7, 1968

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TO GENERAL MCKEE: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 10. NEGOTIATIONS WERE CONDUCTED WITH THREE CONSTRUCTION FIRMS. THE GOVERNMENT'S ESTIMATE FOR THE COST OF SAID PROJECT WAS $422. AFTER PRICE NEGOTIATIONS THE CONTRACT WAS AWARDED TO W. THE ERROR BY THE SUPPLIER WAS STATED TO HAVE BEEN MADE BY ITS SECRETARY ON AUGUST 15. FOR WHICH THE PRICE QUOTED WAS "$829.100. WHILE IT APPEARS FROM THE ORIGINAL WORKSHEET OF THE SUPPLIER AND OTHER EVIDENCE SUBMITTED THAT THE ERROR WAS MADE AS ALLEGED. THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER AN ERROR WAS MADE IN THE CONTRACTOR'S PRICE QUOTATION. WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE BY THE GOVERNMENT.

B-163970, MAY 7, 1968

TO GENERAL MCKEE:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 10, 1968, WITH ENCLOSURES, SUBMITTING FOR OUR DETERMINATION THE REQUEST OF W. H. SELLERS AND SON CONSTRUCTION COMPANY FOR ADDITIONAL COMPENSATION BY VIRTUE OF A MISTAKE, ALLEGED AFTER AWARD, IN ITS PROPOSAL ON CONTRACT NO. FA67SO-4312 FOR THE CONSTRUCTION OF AN AIR TRAFFIC CONTROL TOWER AT COLUMBIA, SOUTH CAROLINA.

NEGOTIATIONS WERE CONDUCTED WITH THREE CONSTRUCTION FIRMS, WHOSE INITIAL PROPOSALS RANGED FROM $474,237 TO $513,987, FOR CONSTRUCTION OF THE FACILITY IN QUESTION. THE GOVERNMENT'S ESTIMATE FOR THE COST OF SAID PROJECT WAS $422,512. AFTER PRICE NEGOTIATIONS THE CONTRACT WAS AWARDED TO W. H. SELLERS AND SON CONSTRUCTION COMPANY ON OCTOBER 11, 1966, IN THE AMOUNT OF $440,052.

SOME 11 MONTHS LATER, ON SEPTEMBER 23, 1967, THE CONTRACTING OFFICER RECEIVED A LETTER FROM THE CONTRACTOR ALLEGING THAT A SUPPLIER HAD MADE A MISTAKE IN THE PREPARATION OF ITS QUOTATION ON THE PROJECT TO THE HEATING AND COOLING SUBCONTRACTOR AND THIS ERROR HAD BEEN INCORPORATED IN THE SUBCONTRACTOR'S QUOTATION TO W. H. SELLERS AND SON CONSTRUCTION COMPANY AND USED BY IT IN ITS PROPOSAL. THE ERROR BY THE SUPPLIER WAS STATED TO HAVE BEEN MADE BY ITS SECRETARY ON AUGUST 15, 1966, IN PRICING ONE YORK - SHIPLEY 20 H.P. BOILER, FOR WHICH THE PRICE QUOTED WAS "$829.100," INSTEAD OF $2,891.00.

WHILE IT APPEARS FROM THE ORIGINAL WORKSHEET OF THE SUPPLIER AND OTHER EVIDENCE SUBMITTED THAT THE ERROR WAS MADE AS ALLEGED, THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER AN ERROR WAS MADE IN THE CONTRACTOR'S PRICE QUOTATION, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE BY THE GOVERNMENT.

IN CASES WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, THIS OFFICE WILL GRANT RELIEF ONLY IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. THIS IS A WELL-ESTABLISHED PRINCIPLE OF THE LAW OF CONTRACTS, AND IS EQUALLY APPLICABLE TO PRIVATE AND PUBLIC CONTRACTS, WHETHER MADE BY NEGOTIATION OR BY FORMAL ADVERTISING (B 141294, DECEMBER 8, 1959; B-156542, JUNE 1, 1965; 30 COMP. GEN. 509).

THERE WAS NOTHING ON THE FACE OF THE QUOTATION OF THE COMPANY TO INDICATE AN ERROR THEREIN AND NO ALLEGATION OF ERROR WAS MADE UNTIL 11 MONTHS AFTER AWARD OF THE CONTRACT. IT IS CLEAR ALSO THAT THE DIFFERENCE IN THE TOTAL PRICE QUOTED BY THE CONTRACTOR AND THAT QUOTED BY THE TWO OTHER COMPANIES WAS NOT SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE QUOTATION OF THE CONTRACTOR. SPECIFICALLY, A BREAKDOWN OF THE TOTAL NEGOTIATED SUM SHOWED THAT THE CONTRACTOR'S COST OF $57,859 FOR ITEM 19, HEATING AND AIR-CONDITIONING (INCLUDING THE BOILER), WAS NOT OUT OF LINE WITH PRICES QUOTED BY THE OTHER SOLICITED FIRMS OR THE GOVERNMENT'S ESTIMATE FOR SAID ITEM, THE AVERAGE FIGURE ON THAT ITEM HAVING BEEN $58,514. MOREOVER, THE INVITATION ISSUED IN THE PRESENT CASE WAS CLEAR AND UNAMBIGUOUS AS TO THE NEEDS OF THE GOVERNMENT. THE RESPONSIBILITY FOR THE PREPARATION OF THE OFFER SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE CONTRACTOR. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT. CL. 120, 163, WHEREIN THE COURT OF CLAIMS STATED:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

IF THE CONTRACTOR SUBMITTED AN OFFER BASED UPON AN ERRONEOUS QUOTATION FROM ITS SUBCONTRACTOR WHO HAD BASED ITS QUOTATION ON THE SAME ERROR INITIALLY COMMITTED BY THE SUPPLIER, THAT IS ORDINARILY A MATTER FOR ADJUSTMENT BETWEEN THE PRIME CONTRACTOR OR SUBCONTRACTOR AND THE SUPPLIER. THE ERROR THAT WAS MADE IN THE QUOTATION OF THE PRIME CONTRACTOR WAS UNILATERAL -- NOT MUTUAL -- AND THE ACCEPTANCE OF THE OFFER BY THE GOVERNMENT WITHOUT NOTICE THEREOF CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS OF THE PARTIES THERETO. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 120 CT. CL. 245; SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. SEE ALSO 20 COMP. GEN. 652, 26 ID. 415, 36 ID. 27 AND 40 ID. 326.

FOR THE REASONS STATED WE CONCLUDE THAT THERE IS NO BASIS FOR THE PAYMENT OF ANY AMOUNT IN ADDITION TO THE CONTRACT PRICE.