B-174686, JUN 14, 1972

B-174686: Jun 14, 1972

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A BIDDER MUST ACCEPT SOLE RESPONSIBILITY FOR A UNILATERAL MISTAKE IN ITS PROPOSAL UNLESS THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. 30 COMP. SINCE THE SUBMITTED PRICE WAS COMPATIBLE WITH THE COST HISTORY OF THE ITEM. THE CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE NOTICE OF THE ERROR AND THE COMP. SUCH CONCLUSION IS SUPPORTED BY THE FACT THAT BOEING ITSELF FAILED TO QUESTION THE SUBCONTRACTOR'S QUOTATION AND THE CASES CITED IN SUPPORT OF ITS REQUEST INVOLVE GROSS. APPARENT ERRORS WHICH ARE CLEARLY DISTINGUISHABLE. TO THE BOEING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2. IT IS REPORTED THAT ON JUNE 9. THAT WHEN THE PRICING INFORMATION FOR THE TAB ASSEMBLIES WAS TRANSMITTED FROM THE ROHR COST ESTIMATING DEPARTMENT TO THE SPARES ADMINISTRATION DEPARTMENT.

B-174686, JUN 14, 1972

CONTRACTS - ERROR IN BID - REQUEST FOR INCREASE IN PRICE CONCERNING A REQUEST OF THE BOEING COMPANY FOR AN INCREASE IN THE PRICE OF AN AIR FORCE CONTRACT FOR FURNISHING AIRCRAFT TAB ASSEMBLIES DUE TO AN ERROR IN BID. A BIDDER MUST ACCEPT SOLE RESPONSIBILITY FOR A UNILATERAL MISTAKE IN ITS PROPOSAL UNLESS THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. 30 COMP. GEN. 509 (1951). IN VIEW OF THE SHORTER DELIVERY SCHEDULE PROPOSED BY THE ONLY OTHER OFFEROR, AND SINCE THE SUBMITTED PRICE WAS COMPATIBLE WITH THE COST HISTORY OF THE ITEM, THE CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE NOTICE OF THE ERROR AND THE COMP. GEN. MUST CONCLUDE THAT HIS ACCEPTANCE OF BOEING'S OFFER CONSUMATED A BINDING AGREEMENT. SUCH CONCLUSION IS SUPPORTED BY THE FACT THAT BOEING ITSELF FAILED TO QUESTION THE SUBCONTRACTOR'S QUOTATION AND THE CASES CITED IN SUPPORT OF ITS REQUEST INVOLVE GROSS, APPARENT ERRORS WHICH ARE CLEARLY DISTINGUISHABLE. IN VIEW OF THE FOREGOING, THERE EXISTS NO BASIS FOR CHANGING THE CONTRACT PRICE.

TO THE BOEING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2, 1971, WITH ENCLOSURES, REQUESTING AN INCREASE OF $21,937.60 IN THE PRICE OF YOUR CONTRACT NO. F34601-70-A-0706, ORDER 0306, WITH THE DEPARTMENT OF THE AIR FORCE, FOR FURNISHING 32 TAB ASSEMBLIES APPLICABLE TO KC 135 SERIES AIRCRAFT.

YOUR REQUEST STEMS FROM A MISTAKE ALLEGED AFTER AWARD IN THE QUOTATION OF YOUR SUBCONTRACTOR, ROHR CORPORATION (ROHR), FOR FURNISHING 32 TAB ASSEMBLIES. IT IS REPORTED THAT ON JUNE 9, 1970, THE ROHR COST ESTIMATING DEPARTMENT COMPLETED ITS PRICING CALCULATIONS WHICH RESULTED IN A UNIT PRICE OF $1,121, A UNIT PACKAGING CHARGE OF $56, AND A LOT SET-UP CHARGE OF $484; THAT WHEN THE PRICING INFORMATION FOR THE TAB ASSEMBLIES WAS TRANSMITTED FROM THE ROHR COST ESTIMATING DEPARTMENT TO THE SPARES ADMINISTRATION DEPARTMENT, THE UNIT PRICE OF $1,121 WAS MISREAD AS $421; AND THAT ON JUNE 9, 1970, ROHR SUBMITTED TO BOEING A QUOTATION OF $421 PER TAB ASSEMBLY, PLUS A UNIT PACKAGING CHARGE OF $56 AND A LOT SET-UP CHARGE OF $484. AFTER ADDING THE USUAL MARKUP FOR ADMINISTRATION, BOEING SUBMITTED TO THE OKLAHOMA CITY AIR MATERIEL AREA (OCAMA), TINKER AIR FORCE BASE, OKLAHOMA, ITS OFFER OF $569.20 PER TAB ASSEMBLY.

THE RECORD INDICATES THAT ON MAY 19, 1970, THE BOEING COMPANY (WICHITA), FARWEST SPECIAL PRODUCTS, AND AIR MOTIVE SUPPLIERS CORP. WERE REQUESTED TO SUBMIT PROPOSALS FOR FURNISHING 32 TAB ASSEMBLIES; THAT ON JUNE 16, 1970, BOEING SUBMITTED A PROPOSAL OFFERING TO FURNISH THE TAB ASSEMBLIES AT A UNIT PRICE OF $569.20 WHICH WAS BASED ON ROHR'S QUOTE OF $421 PER TAB ASSEMBLY; THAT IN ITS PROPOSAL AIR MOTIVE SUPPLIERS CORP. OFFERED TO FURNISH THE TAB ASSEMBLIES AT A UNIT PRICE OF $995; AND THAT FARWEST SPECIAL PRODUCTS DID NOT SUBMIT A PROPOSAL. ON JULY 29, 1970, A CONTRACT FOR FURNISHING 32 TAB ASSEMBLIES WAS AWARDED TO THE BOEING COMPANY (WICHITA).

BY LETTER DATED NOVEMBER 19, 1970, YOU ADVISED THE CONTRACTING OFFICE THAT YOUR SUPPLIER, ROHR CORPORATION, HAD MADE A MISTAKE IN ITS QUOTATION TO YOUR FIRM. YOU REQUESTED THAT THE CONTRACT UNIT PRICE OF THE TAB ASSEMBLIES BE INCREASED FROM $569.20 TO $1,316.09, THEREBY INCREASING THE TOTAL CONTRACT PRICE FROM $18,214.40 TO $42,114.88.

IN YOUR LETTER OF DECEMBER 2, 1971, YOU CONTEND THAT THE DIFFERENCE BETWEEN YOUR OFFER OF $569.20 PER UNIT AND THE ONLY OTHER OFFER OF $995 PER UNIT WAS SUFFICIENT TO HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF AN ERROR IN YOUR OFFER PRIOR TO ITS ACCEPTANCE. YOU POINT OUT THAT IN OCTOBER 1969, OCAMA REQUESTED THE RENTON, WASHINGTON, BRANCH OF YOUR COMPANY TO SUBMIT A QUOTATION ON 28 OF THE SAME TYPE OF TAB ASSEMBLY AS COVERED BY THE SUBJECT PROCUREMENT; THAT ON NOVEMBER 13, 1969, YOUR FIRM QUOTED A PRICE OF $1,305 EACH; AND THAT ALTHOUGH AN ORDER NEVER MATERIALIZED FROM THAT QUOTATION, THE CONTRACTING OFFICER HAD THIS INFORMATION AVAILABLE FOR THE INSTANT PROCUREMENT. YOU CONTEND THAT THE PRINCIPLES STATED IN KEMP V. UNITED STATES, 38 F. SUPP. 568 (1941), AND C. N. MONROE MANUFACTURING COMPANY V. UNITED STATES, 143 F. SUPP. 449 (1956), ARE APPLICABLE IN YOUR CASE. IN THIS REGARD, YOU STATE THAT YOUR FIRM'S QUOTATION WAS $469, OR 44 PERCENT, LOWER THAN THE AVERAGE PRICE OF THE THREE MOST RECENT BIDS FOR THE PART IN QUESTION. YOU MAINTAIN THEREFORE THAT IT WOULD BE UNCONSCIONABLE TO REQUIRE YOUR FIRM TO FURNISH THE TAB ASSEMBLIES AT THE QUOTED UNIT PRICE.

THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER AN ERROR WAS MADE IN THE OFFER BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE. THE CONTRACTING OFFICER HAS REPORTED THAT HE HAD NO REASON TO SUSPECT AN ERROR IN YOUR OFFER OF $569.20 PER TAB ASSEMBLY SINCE YOUR FIRM HAD PREVIOUSLY FURNISHED THAT PART TO THE GOVERNMENT AT PRICES OF $413, $404, $542 AND $566 PER TAB ASSEMBLY, THE LATTER PRICE COMPARING FAVORABLY WITH YOUR OFFER OF $569.20 EACH. IN REGARD TO THE QUOTATION OF $1,305 EACH SUBMITTED BY YOUR OFFICE IN RENTON, WASHINGTON, THE CONTRACTING OFFICER STATES THAT AT THE TIME OFFERS UNDER THE SUBJECT SOLICITATION WERE BEING CONSIDERED, HE WAS AWARE OF SUCH QUOTATION BUT THAT SINCE NO AWARD WAS MADE ON THAT OFFER HE BELIEVED THAT YOUR OFFER OF $569.20 WAS AN ATTEMPT TO BECOME MORE COMPETITIVE. FURTHER, WE NOTE THAT THE AVERAGE PRICE ACTUALLY PAID FOR THE SUBJECT ASSEMBLIES, NOT INCLUDING THE AMOUNT OF ANY UNSUCCESSFUL OFFERS, FOR THE PAST SIX YEARS IS $555. REGARD TO THE PRICES QUOTED BY YOUR FIRM AND AIR MOTIVE SUPPLIERS UNDER THE SUBJECT SOLICITATION, IT IS NOTED THAT YOUR PRICE OF $569.20 WAS BASED ON DELIVERY OF THE TAB ASSEMBLIES BEING COMPLETED WITHIN 336 DAYS AFTER RECEIPT OF AN ORDER WHEREAS THE PRICE OF $995 IS BASED ON DELIVERY OF THE TAB ASSEMBLIES BEING COMPLETED WITHIN 141 DAYS AFTER RECEIPT OF AN ORDER. THUS, IT WOULD APPEAR THAT THE DIFFERENCE BETWEEN THE PRICE QUOTED BY YOUR FIRM AND THE PRICE QUOTED BY AIR MOTIVE SUPPLIERS COULD HAVE AS EASILY RESULTED, IN PART, FROM THE DIFFERENCE BETWEEN THE TWO DELIVERY SCHEDULES AS FROM A MISTAKE.

WE HAVE CONSISTENTLY HELD THAT THE RESPONSIBILITY FOR THE PREPARATION OF A BID OR PROPOSAL RESTS WITH THE BIDDER OR OFFEROR. THEREFORE, A BIDDER OR OFFEROR WHO MAKES A MISTAKE IN A BID OR OFFER WHICH HAS BEEN ACCEPTED IN GOOD FAITH BY THE GOVERNMENT MUST BEAR THE CONSEQUENCES UNLESS THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE PRIOR TO AWARD. 17 COMP. GEN. 373 (1937) AND 532 (1937); 20 ID. 652 (1941); 23 ID. 596 (1944); 30 ID. 509 (1951).

THERE WAS NOTHING ON THE FACE OF YOUR OFFER TO INDICATE AN ERROR THEREIN, AND IN VIEW OF THE FACT THAT THE PRICE QUOTED BY YOUR FIRM WAS IN LINE WITH THE PRICES PREVIOUSLY QUOTED BY YOU UPON WHICH CONTRACTS WERE AWARDED TO YOUR FIRM, THE CONTRACTING OFFICER WAS NOT PLACED ON CONSTRUCTIVE NOTICE OF AN ERROR THEREIN. ALSO, SINCE NO AWARD WAS MADE ON YOUR QUOTATION OF $1,305 PER UNIT, WE BELIEVE THAT IT WAS NOT NECESSARY FOR THE CONTRACTING OFFICER TO CONSIDER THE AMOUNT OF THAT QUOTATION FOR PURPOSES OF COMPARISON. FURTHER, WHILE THERE IS A CONSIDERABLE DIFFERENCE BETWEEN YOUR LOW OFFER OF $569.20 EACH AND THE ONLY OTHER OFFER IN THE AMOUNT OF $995 EACH, ORDINARILY, NO FAIR COMPARISON WITH OTHER OFFERS CAN BE MADE WHERE ONLY TWO WIDELY VARIANT OFFERS ARE RECEIVED, THERE BEING NO REASON FOR CONSIDERING THE LOW OFFER TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH OFFEROR IN QUOTING A PRICE TOO HIGH. SEE 20 COMP. GEN. 286, 288 (1940); 45 ID. 700, 709 (1966). MOREOVER, SINCE YOUR FIRM, AS PRIME CONTRACTOR, APPARENTLY FAILED TO QUESTION THE ACCURACY OF THE QUOTATION OF THE ROHR CORPORATION, THERE WOULD APPEAR TO BE EVEN LESS BASIS FOR EXPECTING THE CONTRACTING OFFICER TO QUESTION YOUR OFFER. CF. 17 COMP. GEN. 926 (1938); 18 ID. 28 (1938); B-168788, MAY 18, 1970.

THE CASES OF KEMP V. UNITED STATES, 38 F. SUPP. 568 (1941), AND C. N. MONROE MANUFACTURING COMPANY V. UNITED STATES, 143 F. SUPP. 449 (1956), ARE CITED BY YOU IN SUPPORT OF THE PROPOSITION THAT THE SPREAD BETWEEN YOUR FIRM'S OFFER AND THE ONLY OTHER OFFER CONSTITUTED CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF THE ALLEGED ERROR. THE COURT HELD IN THE KEMP CASE, SUPRA, THAT THE CONTRACTING OFFICER KNEW, OR HAD REASON TO KNOW, OF THE ERROR IN THE BID OF THE PLAINTIFF PRIOR TO AWARD IN VIEW OF THE GREAT DISPARITY BETWEEN THE PLAINTIFF'S BID AND THE OTHER BIDS RECEIVED - $2,953 AS OPPOSED TO UNSUCCESSFUL BIDS IN EXCESS OF $10,000. IN THE MONROE CASE, SUPRA, TEN BIDS WERE RECEIVED RANGING FROM $3.91 TO $300 PER UNIT; THE SECOND AND THIRD BIDS BEING $6.40 AND $18, RESPECTIVELY. THE AVERAGE OF THE NEXT SEVEN BIDS ABOVE THE TWO LOWEST BIDS WAS $24.96 OR SIX TIMES THE AMOUNT OF THE LOW BID AND ABOUT FOUR TIMES THE AMOUNT OF THE SECOND LOW BID. THE COURT HELD THAT THE GOVERNMENT SHOULD HAVE KNOWN OF THE CONTRACTOR'S GROSS MISTAKE WHICH WAS OBVIOUS WHEN ALL BIDS WERE COMPARED. HOWEVER, THERE DOES NOT EXIST HERE SUCH GROSS, APPARENT ERROR. IF WE COMPARE THE ONLY OTHER OFFER WITH YOUR OFFER, WE FIND THAT SUCH OFFER IS APPROXIMATELY ONLY 1.74 TIMES YOUR FIRM'S OFFER. HENCE, IN OUR OPINION, THE INSTANT CASE IS CLEARLY DISTINGUISHABLE FROM THE KEMP AND MONROE CASES ON THE FACTS WHICH CONSTITUTED THE PRINCIPAL BASIS FOR DETERMINING THAT AN OBVIOUS GROSS MISTAKE EXISTED ON THE FACE OF THE BID.

IN VIEW OF THE FOREGOING, IT IS OUR OPINION THAT ANY ERROR MADE IN YOUR OFFER, BASED ON THE QUOTATION OF THE ROHR CORPORATION, WAS UNILATERAL, NOT MUTUAL, AND THAT ACCEPTANCE OF YOUR OFFER BY THE GOVERNMENT WITHOUT NOTICE THEREOF CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS OF THE PARTIES THERETO. 36 COMP. GEN. 27 (1956) AND 40 ID. 326 (1960). THE CIRCUMSTANCES WE MUST CONCLUDE THERE IS NO BASIS FOR PAYING ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE, AND YOUR REQUEST FOR AN INCREASE IN THE CONTRACT PRICE IS THEREFORE DENIED. 39 COMP. GEN. ..END :