B-173824, NOV 18, 1971

B-173824: Nov 18, 1971

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THE ERROR WAS OBVIOUS. THE ERROR IS INDICATED BY THE FACT THAT THE PRICE FOR DELIVERY OF PAINT TO FRANCONIA. WAS LESS THAN THE PRICE FOR DELIVERY TO METUCHEN. THE CONTRACTING OFFICER MAY BE CONSIDERED TO HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR. KUNZIG: REFERENCE IS MADE TO A LETTER DATED AUGUST 4. WAS FOR A REQUIREMENTS CONTRACT SPECIFYING ESTIMATED SIX-MONTHS REQUIREMENTS FOR ALKYD GLOSS ENAMEL IN QUARTS AND GALLON CANS AND FIVE-GALLON PAILS. 5 AND 6) WAS LOW AND IT WAS AWARDED A CONTRACT FOR THAT GROUP ON MARCH 4. CHEMRAY ADVISED THE CONTRACTING OFFICER THAT AN ERROR WAS MADE IN ITS BID PRICE FOR ITEM 5 IN THAT THE FIGURE 7 WAS INADVERTENTLY INSERTED IN THE UNIT PRICE RATHER THAN THE FIGURE 9.

B-173824, NOV 18, 1971

CONTRACTS - MISTAKE - RECISION DECISION THAT GSA CONTRACT WITH CHEMRAY COATINGS CORPORATION OF MIDDLESEX, N.J. MAY BE RESCINDED WITHOUT LIABILITY BECAUSE OF A MISTAKE IN BID. THE ERROR WAS OBVIOUS, AS THE PRICE PER GALLON CAN, IF MULTIPLIED BY 5, RESULTED IN A LOWER PRICE THAN THE BID PRICE ON A 5-GALLON PAIL. FURTHER, THE ERROR IS INDICATED BY THE FACT THAT THE PRICE FOR DELIVERY OF PAINT TO FRANCONIA, VIRGINIA FROM MIDDLESEX, N.J. WAS LESS THAN THE PRICE FOR DELIVERY TO METUCHEN, N.J. UNDER THESE CIRCUMSTANCES, THE CONTRACTING OFFICER MAY BE CONSIDERED TO HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR.

TO MR. ROBERT L. KUNZIG:

REFERENCE IS MADE TO A LETTER DATED AUGUST 4, 1971, FROM THE GENERAL COUNSEL REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID ALLEGED BY CHEMRAY COATINGS CORPORATION (CHEMRAY), MIDDLESEX, NEW JERSEY, AFTER AWARD OF CONTRACT NO. GS-03S-35863, ISSUED BY THE FEDERAL SUPPLY SERVICE, REGION 3, GENERAL SERVICES ADMINISTRATION.

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

"THIS IS AN OBVIOUS ERROR AS THE PRICE DIFFERENTIAL BETWEEN THE ONE GALLON PRICE AND PAIL PRICE IS $.156 PER GALLON IN FAVOR OF THE ONE GALLON CAN PRICE WHEN ALL OTHER PRICES SUBMITTED GIVE A PRICE CONSIDERATION IN FAVOR OF THE PAIL PRICE. ALSO, IT SHOULD BE NOTED THAT OUR F.O.B. METUCHEN, N.J. PRICE IS $1.87 WHICH IS CONSIDERABLY GREATER THAN THE $1.71 F.O.B. FRANCONIA, VA. OBVIOUSLY OUR SHIPPING COST TO METUCHEN IS MUCH LESS THAN OUR FREIGHT COST TO FRANCONIA."

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, RELIEF MAY NOT BE GRANTED FOR THE ERROR SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V UNITED STATES, 56 F. SUPP. 505 (1944) AND CASES CITED THEREIN. THIS GENERAL RULE, HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. IN SUCH CASES ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. 37 COMP. GEN. 685 (1958); 17 COMP. GEN. 575 (1938). WHETHER THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED A MISTAKE MUST BE DECIDED ON A CASE-BY-CASE BASIS IN LIGHT OF ALL THE EVIDENCE. HARD AND FAST RULE CANNOT BE SET FORTH AS TO THE WEIGHT TO BE GIVEN DIFFERENT TYPES OF EVIDENCE OR AS TO WHAT AMOUNT OF EVIDENCE WILL IMPUTE CONSTRUCTIVE KNOWLEDGE OF A MISTAKE TO THE CONTRACTING OFFICER.

IN THE INSTANT CASE, IT IS STATED THAT THE ERROR WAS OBVIOUS SINCE THE BID PRICE PER GALLON CAN, IF MULTIPLIED BY 5, RESULTS IN A LOWER PRICE THAN THE BID PRICE ON A 5-GALLON PAIL. ANOTHER INDICATION OF THE OBVIOUS ERROR IS THE FACT THAT THE PRICE FOR DELIVERY OF THE PAINT TO FRANCONIA, VIRGINIA, IS LESS THAN THE PRICE FOR DELIVERY OF THE PAINT TO METUCHEN, NEW JERSEY. THE CONTRACTOR'S PLANT IS LOCATED IN MIDDLESEX, NEW JERSEY AND THE SHIPPING COST TO METUCHEN WOULD BE LESS THAN THE SHIPPING COST TO FRANCONIA. FOR THESE REASONS, YOUR GENERAL COUNSEL, IN THE LETTER OF AUGUST 4, CONCLUDED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE PROBABILITY OF A MISTAKE NOTWITHSTANDING THE GENERAL RULE THAT THERE IS NO DUTY TO COMPARE BID PRICES ON INDIVIDUAL ITEMS IN A GROUP WHERE AN AWARD IS MADE IN THE AGGREGATE.

IN VIEW OF THE CIRCUMSTANCES WE AGREE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR. SEE B-162049, JULY 28, 1967.

ACCORDINGLY, AS RECOMMENDED, THE CONTRACT FOR GROUP 2 MAY THEREFORE BE RESCINDED WITHOUT LIABILITY TO CHEMRAY.