B-166940, MAY 23, 1969

B-166940: May 23, 1969

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TO GENERAL HEDLUND: REFERENCE IS MADE TO A LETTER OF MAY 8. BIDS WERE OPENED ON MARCH 18. AT WHICH TIME A BID WAS RECEIVED FROM LEONARD'S EQUIPMENT ON ITEM 23. THE NEXT HIGH BID ON THIS ITEM WAS IN THE AMOUNT OF $856. ITEM 23 WAS AWARDED TO LEONARD'S EQUIPMENT ON THE BASIS OF ITS HIGH BID. IT IS THE CONTENTION OF LEONARD'S EQUIPMENT THAT ITS BID ON ITEM 23 WAS AN ERROR AND THAT IT HAD INTENDED TO BID ON ITEM 24. LEONARD'S EQUIPMENT SUBMITTED ITS WORKSHEETS WHICH CLEARLY SHOW THAT THE AMOUNT BID ON ITEM 23 WAS IN FACT INTENDED FOR ITEM 24. IT IS THE OPINION OF THE SALES CONTRACTING OFFICER. THE DEFENSE SUPPLY AGENCY ASSISTANT COUNSEL THAT THE EVIDENCE IS CLEAR AND CONVINCING THAT A BONA FIDE ERROR WAS MADE BY LEONARD'S EQUIPMENT IN ITS BID AND THAT THE CONTRACT SHOULD BE CANCELED.

B-166940, MAY 23, 1969

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER OF MAY 8, 1969, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, REGARDING AN ERROR IN BID ALLEGED AFTER AWARD BY LEONARD'S EQUIPMENT AND RENTALS CO. ON SALE NO. 44-9096.

BIDS WERE OPENED ON MARCH 18, 1969, AT WHICH TIME A BID WAS RECEIVED FROM LEONARD'S EQUIPMENT ON ITEM 23,"TRUCK, PICKUP, COMPACT," IN THE AMOUNT OF $1,627.16. THE NEXT HIGH BID ON THIS ITEM WAS IN THE AMOUNT OF $856. THE ADVERTISEMENT FOR SALE, ITEM 23 SHOWED AN ACQUISITION COST OF $1,623. ITEM 24 OF THE ADVERTISEMENT COVERED A "TRUCK, BOMB SERVICE" WITH AN ACQUISITION COST OF $10,643. ITEM 23 WAS AWARDED TO LEONARD'S EQUIPMENT ON THE BASIS OF ITS HIGH BID.

IT IS THE CONTENTION OF LEONARD'S EQUIPMENT THAT ITS BID ON ITEM 23 WAS AN ERROR AND THAT IT HAD INTENDED TO BID ON ITEM 24. IN SUPPORT THEREOF, LEONARD'S EQUIPMENT SUBMITTED ITS WORKSHEETS WHICH CLEARLY SHOW THAT THE AMOUNT BID ON ITEM 23 WAS IN FACT INTENDED FOR ITEM 24. IT IS THE OPINION OF THE SALES CONTRACTING OFFICER, THE DEFENSE LOGISTICS SERVICES CENTER COUNSEL, AND THE DEFENSE SUPPLY AGENCY ASSISTANT COUNSEL THAT THE EVIDENCE IS CLEAR AND CONVINCING THAT A BONA FIDE ERROR WAS MADE BY LEONARD'S EQUIPMENT IN ITS BID AND THAT THE CONTRACT SHOULD BE CANCELED.

THE GENERAL PRINCIPLES APPLICABLE HERE WERE SET OUT IN SALIGMAN V UNITED STATES, 56 F.SUPP. 505, 507, WHERE THE COURT HELD THAT IF A PURCHASER MAKES A UNILATERAL MISTAKE IN BID, AND IS SUBSEQUENTLY AWARDED THE CONTRACT, HE WILL BE BOUND BY IT AND MUST BEAR THE CONSEQUENCES -- UNLESS THE ERROR IS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER IS ON CONSTRUCTIVE NOTICE OF THE ERROR. IN THE LATTER SITUATION, THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. SEE 5 WILLISTON ON CONTRACTS, SECTION 1598; KEMP V UNITED STATES, 38 F.SUPP. 568; WENDER PRESSES, INC. V UNITED STATES, 343 F.2D 961.

ORDINARILY, A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. HOWEVER, IN THIS CASE, THE BID PRICE OF LEONARD'S EQUIPMENT WAS NEARLY DOUBLE THE NEXT HIGH BID PRICE. MOREOVER, ITS BID PRICE WAS GREATER THAN THE ORIGINAL ACQUISITION COST TO THE GOVERNMENT STATED IN THE INVITATION UNDER ITEM 23.

ACCORDINGLY, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR AND THE BID SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. WE CONCUR IN THE RECOMMENDATION THAT THE CONTRACT PRIOR TO AWARD. WE CONCUR IN THE RECOMMENDATION THAT THE CONTRACT AWARDED TO LEONARD'S EQUIPMENT FOR ITEM 23 OF THE INVITATION SHOULD BE RESCINDED WITHOUT LIABILITY TO LEONARD'S EQUIPMENT. EDWIN DOUGHERTY AND M. H. OGDEN V UNITED STATES, 102 CT. CL. 249, 259.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V UNITED STATES, 100 CT. CL. 120, 163. ANY ERROR IN THE BID WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THEREFORE, SUCH ERROR AS WAS MADE IN THE BID WAS UNILATERAL -- NOT MUTUAL -- AND, THEREFORE, DOES NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE 37 COMP. GEN. 685; B-162811, DECEMBER 22, 1967.

MANSON DESIRES RESCISSION OF ITS CONTRACT WITHOUT FORFEITURE OF THE BID BOND WHICH WAS SUBMITTED WITH THE BID PURSUANT TO STANDARD FORM 22, INSTRUCTIONS TO BIDDERS, INCLUDED IN THE INVITATION FOR BIDS. PARAGRAPH 4 THEREOF PROVIDES IN PERTINENT PART:

"IF THE SUCCESSFUL BIDDER, UPON ACCEPTANCE OF HIS BID BY THE GOVERNMENT WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE (SIXTY DAYS IF NO PERIOD IS SPECIFIED) FAILS TO EXECUTE SUCH FURTHER CONTRACTUAL DOCUMENTS, IF ANY, AND GIVE SUCH BOND/S) AS MAY BE REQUIRED BY THE TERMS OF THE BID AS ACCEPTED WITHIN THE TIME SPECIFIED (TEN DAYS IF NO PERIOD IS SPECIFIED) AFTER RECEIPT OF THE FORMS BY HIM, HIS CONTRACT MAY BE TERMINATED FOR DEFAULT. IN SUCH EVENT HE SHALL BE LIABLE FOR ANY COST OF PROCURING THE WORK WHICH EXCEEDS THE AMOUNT OF HIS BID, AND THE BID GUARANTEE SHALL BE AVAILABLE TOWARD OFFSETTING SUCH DIFFERENCE.'

THE BID BOND, OR BID GUARANTEE, HAS AS ITS SPECIFIC PURPOSE THE PROTECTION OF THE GOVERNMENT IN REPROCUREMENT SITUATIONS ARISING FROM A CONTRACTOR'S FAILURE TO EXECUTE FURTHER CONTRACTURAL DOCUMENTS AND GIVE OTHER BONDS TO THE GOVERNMENT WHICH IT MAY REQUIRE. AS A RESULT OF MANSON'S FAILURE TO EXECUTE CONTRACTUAL DOCUMENTS OR PROVIDE BONDS, THE GOVERNMENT IS EXERCISING ITS CONTRACTUAL RIGHTS FOR WHICH IT HAD THE FORESIGHT TO PROVIDE. WITHOUT A COMPENSATING BENEFIT TO THE UNITED STATES, AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO DISPOSE OF THE MONEY OR PROPERTY OF THE UNITED STATES, TO MODIFY EXISTING CONTRACTS, OR TO SURRENDER OR WAIVE CONTRACT RIGHTS THAT HAVE VESTED IN THE GOVERNMENT. SEE UNITED STATES V AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED 280 U.S. 574; THE PACIFIC HARDWARE AND STEEL CO. V UNITED STATES, 49 CT. CL. 327, 335; AND BAUSCH AND LOMB OPTICAL COMPANY V UNITED STATES, 78 CT. CL. 584, 607.

WE RECOGNIZE THAT STRICT ADHERENCE TO THESE PRINCIPLES OF FEDERAL CONTRACT LAW OFTEN RESULTS IN FINANCIAL DIFFICULTIES FOR CONTRACTORS WHO MADE ERRORS IN THEIR BIDS BUT WHO ARE NOT LEGALLY ENTITLED TO RELIEF ON ACCOUNT OF SUCH ERRORS. BUT THE RESTRAINTS OF LEGAL AND OFFICE PRECEDENTS, TOGETHER WITH OUR INTEREST IN PRESERVING AND MAINTAINING THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM, REQUIRE US TO DENY RELIEF OTHER THAN IN PROPER CASES. WHILE WE FULLY APPRECIATE THE PROBLEM PRESENTED IN THE PARTICULAR MATTER, WE HAVE NO ALTERNATIVE BUT TO FOLLOW THE ESTABLISHED PRINCIPLES APPLICABLE TO THE FACTS IN THIS CASE.

ACCORDINGLY, UNDER THE FACTS DISCLOSED BY THE RECORD BEFORE US, NO LEGAL BASIS EXISTS FOR ALLOWING RESCISSION OF THE CONTRACT ON ACCOUNT OF THE ALLEGED MISTAKES IN BID, AND THE GOVERNMENT HAS NO ALTERNATIVE BUT TO EXERCISE ITS RIGHTS UNDER PARAGRAPH 4, QUOTED ABOVE.