B-168285, DEC. 9, 1969

B-168285: Dec 9, 1969

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GENERAL RULE CONTRACTOR WHO ALLEGED MISTAKE IN BID 3 WEEKS AFTER AWARD AND REQUESTED CANCELLATION OF CONTRACT OR EXTENSION OF DELIVERY DATE AND INCREASE IN PRICE MAY NOT BE RELIEVED FROM CONTRACT AT PRICE STIPULATED UNDER RULE THAT WHERE MISTAKE IS ALLEGED AFTER AWARD NO RELIEF MAY BE GRANTED UNLESS MISTAKE IS MUTUAL OR CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. NO RELIEF CAN BE GRANTED NOR CAN CONTRACT BE REFORMED WHEN UNILATERAL MISTAKE IS ALLEGED. THE STANDS WERE TO BE MADE IN ACCORDANCE WITH FEDERAL SPECIFICATION GG-S-743 AND DELIVERY WAS CALLED FOR ON OCTOBER 24. THE INVITATION WAS OPENED ON AUGUST 20. EMERSON'S BID OF $69 ON AN "ALL OR NONE" BASIS WAS DETERMINED TO BE RESPONSIVE.

B-168285, DEC. 9, 1969

MISTAKES--ALLEGATION AFTER AWARD--GENERAL RULE CONTRACTOR WHO ALLEGED MISTAKE IN BID 3 WEEKS AFTER AWARD AND REQUESTED CANCELLATION OF CONTRACT OR EXTENSION OF DELIVERY DATE AND INCREASE IN PRICE MAY NOT BE RELIEVED FROM CONTRACT AT PRICE STIPULATED UNDER RULE THAT WHERE MISTAKE IS ALLEGED AFTER AWARD NO RELIEF MAY BE GRANTED UNLESS MISTAKE IS MUTUAL OR CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. SINCE NOTHING ON FACE OF BID INDICATED ACTUAL ERROR AND PRICE, BEING CLOSE TO COMPETITOR'S BIDS AND PREVIOUS BIDS FOR SAME ITEM, FAILED TO EVIDENCE CONSTRUCTIVE NOTICE, NO RELIEF CAN BE GRANTED NOR CAN CONTRACT BE REFORMED WHEN UNILATERAL MISTAKE IS ALLEGED, CONTRACTOR HAVING TO BEAR CONSEQUENCES OF OWN MISTAKE.

TO MR. JOHNSON:

BY LETTER DATED OCTOBER 30, 1969, REFERENCE 134G, THE DIRECTOR, SUPPLY SERVICE, HAS REQUESTED OUR DECISION CONCERNING THE ACTION TO BE TAKEN ON A MISTAKE ALLEGED AFTER AWARD IN A BID SUBMITTED BY THE EMERSON-SACK-WARNER CORP., SOMERVILLE, MASSACHUSETTS, UNDER INVITATION FOR BIDS M2-5-70, ISSUED JULY 30, 1969, CALLING FOR DELIVERY OF 155 SURGICAL INSTRUMENT STANDS AND TABLES TO THREE LOCATIONS (SOMERVILLE, NEW JERSEY; BELL, CALIFORNIA; HINES, ILLINOIS). THE STANDS WERE TO BE MADE IN ACCORDANCE WITH FEDERAL SPECIFICATION GG-S-743 AND DELIVERY WAS CALLED FOR ON OCTOBER 24, 1969.

THE INVITATION WAS OPENED ON AUGUST 20, 1969, AND TWO FIRMS BID ON THE SURGICAL INSTRUMENT STANDS. UPON EVALUATION, EMERSON'S BID OF $69 ON AN "ALL OR NONE" BASIS WAS DETERMINED TO BE RESPONSIVE. THE NEXT LOW BIDDER OFFERED DESTINATION PRICES OF $74 TO SOMERVILLE, NEW JERSEY; $79.80 TO BELL, CALIFORNIA; AND $77.05 TO HINES, ILLINOIS. A PURCHASE ORDER WAS MAILED TO EMERSON ON SEPTEMBER 10, 1969, WITH DELIVERY TIME SHOWN AS NOVEMBER 3, 1969.

ON OCTOBER 3, 1969, APPROXIMATELY 3 WEEKS AFTER THE PURCHASE ORDER WAS MAILED, EMERSON, THROUGH ITS PRESIDENT, ALLEGED A MISTAKE IN BID BY TELEPHONE AND REQUESTED TO BE RELIEVED OF THE CONTRACT OR BE PERMITTED TO COMPLETE THE CONTRACT BY EXTENDING THE DELIVERY REQUIREMENT TO 150 210 DAYS AT THE PRICES OFFERED BY THE NEXT LOW BIDDER. THIS TELEPHONE CONVERSATION WAS CONFIRMED BY LETTER DATED OCTOBER 3, 1969, ACCOMPANIED BY AN ESTIMATE SHEET DATED AUGUST 20, 1969. EMERSON ALLEGED THAT ITS INTENDED BID SHOULD HAVE READ $96 INSTEAD OF $69 AND REPORTED THAT THE ERROR WAS NOT DISCOVERED UNTIL SEPTEMBER 30, 1969. NO WORK UNDER THE CONTRACT HAS BEEN COMMENCED BY EMERSON.

WHILE IT MAY BE THAT EMERSON MADE AN ERROR IN ITS BID, THE QUESTION FOR CONSIDERATION IS NOT WHETHER IT MADE AN ERROR, BUT WHETHER THE ACCEPTANCE OF THE BID BY THE GOVERNMENT CREATED A VALID AND BINDING CONTRACT. CASES WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR 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 CONTRACT LAW AND IS EQUALLY APPLICABLE TO PRIVATE AND PUBLIC CONTRACTS. B 163970, MAY 7, 1968; B- 156542, JUNE 1, 1965; B-141294, DECEMBER 8, 1959; SEE, ALSO, 30 COMP. GEN. 509 (1951).

THE RESPONSIBILITY FOR THE PREPARATION OF A BID IS THAT OF THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V UNITED STATES, 100 CT. CL. 120, 163 (1943). IF, AS EMERSON CLAIMS, THE WRONG FIGURE FOR ITS BID PRICE WAS INADVERTENTLY USED, SUCH ERROR WAS DUE SOLELY TO EMERSON'S NEGLIGENCE AND THUS THE ERROR WAS UNILATERAL. EMERSON THEREFORE IS BOUND BY ITS BID. SEE EDWIN DOUGHERTY AND M. H. OGDEN V UNITED STATES, 102 CT. CL. 249 (1944); AND SALIGMAN ET AL. V UNITED STATES, 56 F.SUPP. 505, 507 (1944).

THERE WAS NOTHING ON THE FACE OF EMERSON'S BID TO INDICATE AN ERROR THEREIN SINCE THE DIFFERENCE IN THE PRICE QUOTED BY EMERSON AND THAT QUOTED BY THE OTHER COMPETITOR WAS NOT SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. SPECIFICALLY, EMERSON'S SUMMARY BID OF $69 ONAAN "ALL OR NONE" BASIS WAS CLOSE TO ITS COMPETITOR'S BIDS AND TO PREVIOUS BIDS FOR THE SAME ITEMS. IN A MEMORANDUM DATED OCTOBER 13, 1969, THE CONTRACTING OFFICER LISTED A PRICE HISTORY AND COMPARISON AS FOLLOWS: "PURCHASE ORDER DATE DEST. QTY COST VENDOR ---------------- ---- --- - --- ---- ------

70-MC-20010 9/10/69 S 60

B 35

H 60 SUMMARY BID 155 $69.00 EMERSON-SACK-WARNER CORP.

69-MC-20016 8/16/68 S 90 $66.00 S. BLICKMAN INC.

B 18 71.10

H 72 68.50

68-MC-60585 6/21/68 S 90 $65.00 LEVELATOR CORP. OF AMERICA

B 18 72.00

H 72 68.35

68-MC-60369 4/26/68 S 60 $67.00 LEVELATOR CORP. OF AMERICA

B 12 73.00

H 36 70.00"

CLEARLY, EMERSON'S BID WAS NOT OUT OF LINE WITH PAST BIDS AND IT CANNOT BE SAID THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE ALLEGED ERROR. IN THE FRAZIER CASE, SUPRA, 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.'

AS AN ALTERNATIVE TO BEING RELIEVED FROM PERFORMANCE UNDER THE CONTRACT EMERSON HAS ASKED TO BE ALLOWED TO COMPLETE THE CONTRACT AT AN EXTENDED DELIVERY DATE OF 150-210 DAYS AT THE PRICE OF THE NEXT LOWEST BIDDER. HOWEVER, JUST AS IT IS CLEAR THAT EMERSON CANNOT BE RELIEVED OF ITS OBLIGATION BECAUSE OF A UNILATERAL MISTAKE, IT IS WELL ESTABLISHED THAT A CONTRACT WILL NOT BE REFORMED WHEN A UNILATERAL MISTAKE IS ALLEGED. CONTRACTOR MUST BEAR THE CONSEQUENCES OF HIS OWN MISTAKE. 36 COMP. GEN. 441 (1956); 17 COMP. GEN. 575 (1938).

IT WAS CORRECTLY STATED BY THE DIRECTOR THAT OUR OFFICE HAS PREVIOUSLY HELD THAT AWARDS SHOULD BE CANCELED AND THE PROCUREMENT READVERTISED WHERE ERRONEOUS SPECIFICATIONS HAVE RESULTED IN UNDULY RESTRICTIVE COMPETITION. SEE 43 COMP. GEN. 544 (1964); 33 COMP. GEN. 567 (1954). IN THE PRESENT CASE, TWO SUPPLIERS BID UNDER THE INVITATION WHICH CONTAINED A SPECIFIC DELIVERY DATE AND IT MUST BE PRESUMED THAT THEY INTENDED TO PERFORM IN ACCORDANCE WITH THE DELIVERY SCHEDULE.

REGARDING THE 53 DAYS ALLOWED FOR DELIVERY, IT IS THE DIRECTOR'S POSITION THAT THE DELIVERY PERIOD IS UNREALISTIC AND THEREFORE MIGHT BE CONSTRUED AS AN ERROR IN THE SPECIFICATIONS. IN THIS REGARD, REFERENCE IS MADE TO A PREVIOUS PROCUREMENT INVOLVING SURGICAL TABLES WHERE AN AWARD WAS MADE ON AUGUST 16, 1968, AND DELIVERY WAS NOT COMPLETED UNTIL NOVEMBER 25, 1968, A PERIOD OF 106 DAYS.

IN B-157360, AUGUST 11, 1965, WHERE A CONTRACTOR ENTERED INTO A CONTRACT WITH A 130-DAY PERFORMANCE PERIOD, BUT LATER STATED AT LEAST 362 DAYS WOULD BE NEEDED FOR PERFORMANCE FOR INSTALLATION OF A BOILER, THE CONTRACT WAS CANCELED WITHOUT PREJUDICE TO THE CONTRACTOR. IN THAT CASE THE ACTUAL PERFORMANCE PERIOD NECESSARY WAS NEARLY THREE TIMES LONGER THAN THAT STATED IN THE CONTRACT. IN THE PRESENT CASE, THE PREVIOUS PERFORMANCE PERIOD OF 106 DAYS WAS TWICE AS LONG AS THAT STATED IN THE CONTRACT (I.E., 53 DAYS).

IF EMERSON FELT THE ORIGINAL DELIVERY PERIOD OFFERED WAS UNREALISTIC, IT SHOULD HAVE QUESTIONED THE DELIVERY SCHEDULE BEFORE BIDDING. FURTHERMORE, TO ALLOW EMERSON TO PERFORM AT A COST OF $69 PER UNIT WITH AN EXTENSION OF THE DELIVERY DATE BY 150-210 DAYS WOULD CONSTITUTE ACCEPTANCE OF AN OFFER VARYING MATERIALLY FROM THE ADVERTISED SPECIFICATIONS AND WOULD BE PREJUDICIAL TO THE OTHER BIDDER AS WELL AS TO THOSE FIRMS WHICH MIGHT HAVE SUBMITTED BIDS BUT FOR THE SHORT PERFORMANCE TIME. HOWEVER, WE NOTE THAT THE GOVERNMENT HAD 60 DAYS TO MAKE AN AWARD UNDER THE INVITATION; HENCE, IT MUST BE ASSUMED THAT EMERSON BID WITH KNOWLEDGE THAT THE GOVERNMENT COULD DELAY AWARD UP TO 60 DAYS WITHOUT EFFECTING A CORRESPONDING EXTENSION OF THE DELIVERY DATE SPECIFIED IN THE INVITATION. RATHER THAN OBLIGATING EMERSON TO EFFECT DELIVERY BY OCTOBER 24, 1969, DELIVERY WAS EXTENDED BY THE AWARD NOTICE TO NOVEMBER 3, 1969. THIS ACTION CLEARLY WAS NOT PREJUDICIAL TO EMERSON AND PERHAPS GAVE RECOGNITION TO THE FACT THAT AWARD WAS NOT MADE UNTIL ABOUT 20 DAYS AFTER BID OPENING. BUT WE FIND NOTHING IN THE FILE WHICH WOULD INDICATE THAT THE PARTIES WERE MUTUALLY MISTAKEN AS TO DELIVERY TIME. ALTHOUGH IN RETROSPECT IT COULD BE SAID THAT THE DELIVERY TIME WAS SOMEWHAT SHORT, BOTH PARTIES DEALT AT ARM'S LENGTH WITH KNOWLEDGE OF THE FACT THAT DELIVERY WAS THE ESSENCE OF THE CONTRACT. THEREFORE, WE CANNOT CONCLUDE THAT THE INVITATION OR THE RESULTING AWARD WAS LEGALLY DEFECTIVE.

ACCORDINGLY, ON THE RECORD BEFORE US, WE FIND NO LEGAL BASIS TO RELIEVE THE EMERSON-SACK-WARNER CORPORATION OF ITS OBLIGATION TO PERFORM TIMELY UNDER THE CONTRACT AT THE PRICE STIPULATED THEREIN.