B-165055, AUG. 28, 1968

B-165055, AUG. 28, 1968

TO MR. WEBB:

REFERENCE IS MADE TO A LETTER DATED AUGUST 12, 1968, REFERENCE KDI, FROM THE DIRECTOR OF PROCUREMENT, REQUESTING A DECISION AS TO WHETHER MODIFICATION NO. MICH-158 TO CONTRACT NAS 8-4016 BETWEEN CHRYSLER CORPORATION AND NASA MAY BE REFORMED TO CORRECT A MISTAKE.

THE RECORD SHOWS THAT SCHEDULE I OF THE SUBJECT CONTRACT WAS TERMINATED FOR THE GOVERNMENT'S CONVENIENCE ON OCTOBER 30, 1963. AT THAT TIME EXCESS AND OBSOLETE HARDWARE WAS SCREENED FOR USAGE IN THE REMAINING STAGES OF THE CONTRACT AND WAS LISTED ON DD FORM 543, DATED JUNE 30, 1965. THIS LIST IDENTIFIED 974 LINE ITEMS BY PART NUMBER AND ALSO CONTAINED THE AGREED PRICES WHICH CONSTITUTED THE BASIS FOR EQUITABLE ADJUSTMENT FOR TERMINATION.

IT IS REPORTED THAT FROM TIME TO TIME CERTAIN ITEMS OF THE TERMINATION INVENTORY WERE DETERMINED TO BE USABLE ON CONTINUING PROGRAMS AND IT WAS AGREED THAT WHEN SUCH ITEMS WERE USED THEY WOULD BE CONSIDERED AS GOVERNMENT FURNISHED PROPERTY (GFP) UNDER THE USING CONTRACT AND AN APPROPRIATE ADJUSTMENT MADE.

DURING PERFORMANCE OF THE CONTRACT, CHRYSLER REQUESTED THAT FIVE ITEMS LISTED ON DD FORM 543, DATED JULY 30, 1965, BE RETURNED AS GFPFOR USE ON VARIOUS STAGES OF THE CONTRACT. THE CONTRACTING OFFICER ISSUED THE APPROPRIATE CHANGE ORDER, MODIFICATION NO. MICH-116, ON JULY 25, 1967. THEREAFTER, CHRYSLER SUBMITTED TO THE CONTRACTING OFFICER A COST EXHIBIT BY WHICH IT ESTIMATED THE SAVINGS AND CREDIT TO THE GOVERNMENT RESULTING FROM THE USE OF THE EXCESS HARDWARE. IT IS CLEARLY EVIDENT THAT CHRYSLER'S EXHIBIT WAS TAKEN DIRECTLY FROM DD FORM 543, HOWEVER, THE PRICES FOR THESE ITEMS WERE MISTAKENLY TRANSCRIBED ONTO THE EXHIBIT IN THAT DECIMALS WERE OMITTED. CONSEQUENTLY, THE ITEMS WERE PRICED AT $90,126 INSTEAD OF $901.26. ON JANUARY 29, 1968, THE CONTRACTING OFFICER, WITHOUT OBSERVING THE ERROR, ACCEPTED CHRYSLER'S COST EXHIBIT AND ISSUED MODIFICATION NO. MICH-158, THEREBY EFFECTING A COST REDUCTION IN THE GOVERNMENT'S FAVOR TO THE EXTENT OF $90,126. THE MODIFICATION ALSO PROVIDED FOR A CORRESPONDINGLY ERRONEOUS REDUCTION IN THE CONTRACTOR'S FIXED FEE.

EVEN THOUGH, AS A GENERAL RULE, A PARTY TO A CONTRACT MUST BEAR THE CONSEQUENCES OF HIS MISTAKE ONCE THE OFFER IS ACCEPTED, THIS RULE IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR. IN SUCH CASES ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS MAY ALLOW APPROPRIATE RELIEF. CF. CASES CITED IN 37 COMP. GEN. 685 AND 17 ID. 575. IN THIS CASE, THERE IS NO QUESTION BUT THAT CHRYSLER MISPLACED VARIOUS DECIMAL POINTS IN TRANSPOSING UNIT PRICES FROM DD FORM 543 TO ITS PROPOSAL. SINCE THE CORRECT PRICES ON WHICH THE PREVIOUS TERMINATION SETTLEMENT AGREEMENT WAS BASED APPEARED ON THAT FORM, AND IT APPEARS TO HAVE BEEN INTENDED TO USE THE SAME PRICES IN EFFECTING MODIFICATION NO. MICH-158, WE CONCLUDE THAT THE CONTRACTING OFFICER, AS WELL AS HIS TECHNICAL AND FINANCIAL REVIEWERS, IS CHARGEABLE WITH NOTICE OF CHRYSLER'S MISTAKE. IN THE CIRCUMSTANCES, CORRECTION IS AUTHORIZED.

THE ADMINISTRATIVE FILE FORWARDED BY THE DIRECTOR OF PROCUREMENT IS RETURNED HEREWITH.