B-4968, AUGUST 9, 1939, 19 COMP. GEN. 168

B-4968: Aug 9, 1939

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THE AMOUNT OF THE BID SUBMITTED BY THE BIDDER-CONTRACTOR TO THE GOVERNMENT WAS THE AMOUNT THAT WAS INTENDED TO BE BID. THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER ATTEMPTED TO TAKE AN UNFAIR ADVANTAGE IN THE ACCEPTANCE OF THE BID NOTWITHSTANDING THE RANGE IN THE BID PRICES RECEIVED. NO BASIS FOR ASSUMING THAT SUCH ADVANTAGE WAS TAKEN BECAUSE OF THE CHARACTER OF THE EQUIPMENT CONTRACTED FOR AND THE FACT THAT THE CONTRACTOR. 1939: THERE WAS RECEIVED YOUR LETTER OF JULY 14. BIDS WERE OPENED AT PICATINNY ARSENAL IN RESPONSE TO INVITATION NO. 672-39-771. THE BIDS RECEIVED ARE AS FOLLOWS: HENRY PRENTISS AND COMPANY. CONTRACT NUMBERED W-672-ORD-1956 WAS FORWARDED AND SIGNED BY THE CONTRACTOR.

B-4968, AUGUST 9, 1939, 19 COMP. GEN. 168

CONTRACTS - MISTAKES - BIDS - BIDDER'S RELIANCE ON SUPPLIER'S ERRONEOUS QUOTATION WHERE AFTER AWARD THE CONTRACTOR ALLEGED ERROR IN BID IN THAT IT HAD QUOTED ON THE BASIS OF THE PRICE ERRONEOUSLY FURNISHED BY ITS SUPPLIER, BUT THE AMOUNT OF THE BID SUBMITTED BY THE BIDDER-CONTRACTOR TO THE GOVERNMENT WAS THE AMOUNT THAT WAS INTENDED TO BE BID, AND THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER ATTEMPTED TO TAKE AN UNFAIR ADVANTAGE IN THE ACCEPTANCE OF THE BID NOTWITHSTANDING THE RANGE IN THE BID PRICES RECEIVED, AND NO BASIS FOR ASSUMING THAT SUCH ADVANTAGE WAS TAKEN BECAUSE OF THE CHARACTER OF THE EQUIPMENT CONTRACTED FOR AND THE FACT THAT THE CONTRACTOR, A REGULAR DEALER IN MACHINERY, DID NOT QUESTION THE QUOTATION OF RELIEF, A MERE INADEQUACY OF THE CONSIDERATION, WHERE NOT SUCH AS TO DEMONSTRATE SOME GROSS IMPOSITION OR UNDUE INFLUENCE, OR UNANTICIPATED EXPENSE IN THE PERFORMANCE, NOT BEING A SUFFICIENT GROUND FOR AVOIDING A CONTRACT, EVEN IN EQUITY, AND NO OFFICER OF THE GOVERNMENT HAVING ANY AUTHORITY TO GIVE AWAY OR SURRENDER THE RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER SAID CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, AUGUST 9, 1939:

THERE WAS RECEIVED YOUR LETTER OF JULY 14, 1939, AS FOLLOWS:

ON MAY 31, 1939, BIDS WERE OPENED AT PICATINNY ARSENAL IN RESPONSE TO INVITATION NO. 672-39-771. THE BIDS RECEIVED ARE AS FOLLOWS:

HENRY PRENTISS AND COMPANY, INC. ------------ $ 8,422.00

KEMP MACHINERY COMPANY ----------------------- 2,953.65

KINGSBURY MACHINE TOOL CORP. ---------------- 11,291.00

THE LOWEST BID BEING THAT OF THE KEMP MACHINERY COMPANY, THE COMMANDING OFFICER, PICATINNY ARSENAL, AWARDED A CONTRACT TO THAT FIRM. CONTRACT NUMBERED W-672-ORD-1956 WAS FORWARDED AND SIGNED BY THE CONTRACTOR. AFTER RECEIPT OF CONTRACT, THE CONTRACTOR, KEMP MACHINERY COMPANY, PLACED AN ORDER WITH ITS SOURCE OF SUPPLY, THE W. K. MILLHOLLAND MACHINERY COMPANY. IMMEDIATELY THEREAFTER THE CONTRACTOR WAS NOTIFIED BY THE MILLHOLLAND MACHINERY COMPANY THAT AN ERROR HAD BEEN MADE IN QUOTING A PRICE ON THIS MACHINE TO THE CONTRACTOR. THE PRICE QUOTED WAS $2,063.00.

IN VIEW OF THIS ERROR THE CONTRACTOR HAS REQUESTED BY LETTER DATED JUNE 22, 1939, INCLOSED HEREWITH, TO BE RELIEVED OF THE CONTRACT. IT IS APPARENT FROM THE CORRESPONDENCE INCLOSED HEREWITH THAT THE BID AS ACCEPTED BY THE COMMANDING OFFICER, PICATINNY ARSENAL WAS AS INTENDED BY THE BIDDER, THE ERROR HAVING BEEN MADE BY ITS SOURCE OF SUPPLY. THERE ARE INCLOSED HEREWITH THE FOLLOWING PAPERS:

FROM THE ABOVE, IT WILL BE NOTED THAT THE ARSENAL MADE THE AWARD TO THE KEMP MACHINERY COMPANY FOR THE DRILLING MACHINE WITH POWER INDEXING AT A TOTAL OF $2,953.65 AS THE LOWEST EVALUATED BID IN ACCORDANCE WITH PICATINNY ARSENAL TENTATIVE SPEC. PED-1215 AND THAT THE CONTRACTOR EXECUTED THE CONTRACTOR SECTION ON PAGE 5 OF THE CONTRACT AND THAT THE ALLEGED ERROR WAS NOT DISCOVERED UNTIL AFTER THE CONTRACTOR HAD ORDERED THE DRILLING MACHINE FROM THE MANUFACTURER.

A RECHECK OF THE MATTER INDICATES THAT THE MILLHOLLAND MACHINE IS WORTH A GREAT DEAL MORE THAN THE PRICE AT WHICH IT WAS OFFERED. SHOULD THE KEMP MACHINERY COMPANY BE PERMITTED TO CORRECT ITS BID, SUCH BID WOULD BE THE HIGHEST RECEIVED AND NOT FOR CONSIDERATION IN MAKING THE AWARD. THE MACHINE OFFERED BY THE KINGSBURY MACHINE TOOL CORPORATION, AT A TOTAL COST OF $12,133.00, INCLUDING POWER INDEXING, WILL THEN BE THE LOWEST EVALUATED BID AND WOULD MEET THE REQUIREMENTS OF THE PICATINNY ARSENAL. ON AN EVALUATED BASIS THE KINGSBURY MACHINE IS 5.66, WHILE THE HENRY PRENTISS AND COMPANY MACHINE IS 10.74.

ALL FACTS HERE PRESENTED CLEARLY INDICATE THAT THE BID AS SUBMITTED BY THE KEMP MACHINERY COMPANY WAS THE BID INTENDED FOR CONSIDERATION. ON THE OTHER HAD, THE BID SUBMITTED WAS A REPETITIVE ERROR RESULTING FROM A MISQUOTATION OF PRICE FURNISHED THE KEMP COMPANY BY THE MANUFACTURER OF THE EQUIPMENT UNDER CONSIDERATION. THE DISCLOSURE OF THIS LATTER ERROR WAS NOT MADE UNTIL AFTER THE CONTRACT HAD BEEN SIGNED. IN VIEW OF THE FACT THAT THE CONTRACT HAS ALREADY BEEN AWARDED AND ENTERED INTO, IT IS CONSIDERED THAT THE WAR DEPARTMENT IS WITHOUT AUTHORITY TO CANCEL IT AND THAT, IF ANY RELIEF IS TO BE AFFORDED, IT SHOULD BE BASED ON CLAIM SUBMITTED TO YOUR OFFICE BY THE CONTRACTOR AFTER COMPLETION OF THE CONTRACT.

THE DRILLING MACHINE IS URGENTLY NEEDED AT PICATINNY ARSENAL FOR THE CONDUCT OF WORK NOW BEING PERFORMED. ACCORDINGLY AN EARLY DECISION AS TO WHETHER THE KEMP MACHINERY COMPANY WILL BE REQUIRED TO ADHERE TO THE TERMS OF ITS BID IS REQUESTED. ALL OF THE INCLOSED PAPERS SHOULD BE RETURNED WITH YOUR DECISION.

THE INVITATION REFERRED TO IN YOUR LETTER REQUESTED BIDS TO BE OPENED MAY 31, 1939, FOR ONE MOTOR-DRIVEN DRILLING MACHINE, IN ACCORDANCE WITH PICATINNY ARSENAL TENTATIVE SPECIFICATION PED-1215, DATED APRIL 11, 1939. AFTER AWARD TO THE KEMP MACHINERY CO. ON THE BASIS OF ITS BID IN THE AMOUNT OF $2,953.65 FOR A POWER INDEXING MILLHOLLAND DRILLING MACHINE, AND EXECUTION OF THE FORMAL CONTRACT BY SAID COMPANY, THE CONTRACTOR ADVISED IN LETTER OF JUNE 20, 1939, AS FOLLOWS:

WE REFER TO CONTRACT 70-672-ORD.-1956 CALLING FOR A SPECIAL DRILLING MACHINE. WE ARE ADVISED BY OUR MANUFACTURERS, THE W. K. MILLHOLLAND MACHINERY CO., THAT IN SUBMITTING THEIR QUOTATION TO US THEY MADE AN ERROR OF $18,731.70 BY MISPLACING OF THE DECIMAL POINT WHICH MADE THE FIGURE READ IN THOUSANDS INSTEAD OF TEN THOUSANDS. THIS WOULD MAKE IT IMPOSSIBLE FOR US TO SUPPLY THE MACHINE AT THE PRICE IN OUR BID WHICH RESULTED FROM THE OBVIOUS ERROR, AND WE REQUEST THAT YOU RELIEVE US OF THE CONTRACT.

IN REPLY TO REQUEST OF THE PICATINNY ARSENAL FOR FURTHER DETAILS, THE CONTRACTOR STATED IN LETTER OF JUNE 22, 1939, AS FOLLOWS:

IN RESPONSE TO YOUR TELEGRAM OF THIS DATE IN RE SUBJECT CONTRACT, WE ENCLOSE HEREWITH TWO LETTERS OF THE W. K. MILLHOLLAND MACHINERY CO., OUR MANUFACTURERS, DATED MAY 27, AND HAVE INDICATED BY RED PENCIL ARROWS ON THESE PHOTOSTAT COPIES THE QUOTATION WHICH IS ADDRESSED TO YOU AND ACCOMPANIED THE LETTER ADDRESSED TO US ON THE SAME DATE AND ONE WHICH OUR QUOTATION TO YOU WAS BASED. ALSO COPY OF OUR ORDER NO. 4300 TO THE W. K. MILLHOLLAND MACHINERY CO., A COPY OF TELEGRAM FROM THE W. K. MILLHOLLAND MACHINERY CO. TO US DATED JUNE 17TH, AND THEIR LETTER ALSO TO US DATED JUNE 19TH IS ENCLOSED. YOU WILL NOTE FROM THE LATTER TWO COMMUNICATIONS OUR MANUFACTURER'S STATEMENT WITH RESPECT TO THE ERROR.

WE PRAY YOUR RELEASE OF US FROM THE CONTACT WHICH WOULD BE RUINOUS TO US TO EXECUTE.

WE REGRET EXCEEDINGLY BEING PLACED IN THE POSITIONS WE ARE AS WE EXERCISE MORE THAN USUAL CARE IN TRYING TO HAVE OUR QUOTATIONS TO YOU CORRECT AND ACCURATE, AND WE MAKE SEVERAL THOUSAND QUOTATIONS YEARLY TO VARIOUS GOVERNMENT INSTITUTIONS. THE ERROR IS OBVIOUS WHEN THE COMPLEXITY AND NUMBER OF UNITS INVOLVED IN THE MACHINE IS CONSIDERED AS INDICATED IN OUR MANUFACTURER'S LETTER OF JUNE 19TH, AND ALSO CONSIDERING THE AMOUNT OF TOOLING INVOLVED. WHEN WE MADE OUR BID TO YOU, WE WERE NOT CONVERSANT WITH THE PROBABLE COST OF THE MACHINE AS WE WOULD HAVE BEEN HAD THE MACHINE BEEN OF STANDARD TYPE AND CONSTRUCTION. CONSEQUENTLY, WE WERE WITHOUT KNOWLEDGE WITH WHICH TO CHECK OUR MANUFACTURER'S QUOTATION.

THE LETTER OF THE W. K. MILLHOLLAND MACHINERY CO., DATED JUNE 19, 1939, REFERRED TO IN THE CONTRACTOR'S LETTER OF JUNE 22, 1939, IS AS FOLLOWS:

WE HAVE YOUR LETTER OF JUNE 16TH TOGETHER WITH YOUR ORDER NO. 4300 COVERING ACCOUNT NO. 18924, CONTRACT 70-672-ORD.-1956 COVERING ONE MILLHOLLAND COMBINATION VERTICAL AND HORIZONTAL STATION TYPE INDEXING MACHINE, PRICE $2,813.00.

WE WIRED YOU IMMEDIATELY UPON RECEIPT OF YOUR LETTER AS FOLLOWS:

RECORDER PICTINNY ARSENAL PRICE TYPOGRAPHICAL ERROR SHOULD READ $20,813.00. PLEASE ACKNOWLEDGE.

WE CHECKED UP OUR QUOTATION OF MAY 27TH SUBJECT TO PROPOSAL 672-39 770 AND FIND THAT IN MAKING QUOTATION WE MADE A TYPOGRAPHICAL ERROR ON PAGE 2 AND LEFT OUT ONE NAUGHT IN THE QUOTATION. THE QUOTATION SHOULD READ: " THE PRICE OF THE MACHINE COMPLETE WITH MOTORS F.O.B. CARS PICATINNY, INCLUDING SERVICE OF A DEMONSTRATOR FOR TWO WEEKS IS $20,063.00 ( TWENTY THOUSAND AND SIXTY-THREE DOLLARS).'

EXTRA FOR POWER INDEXING TABLE IN PLACE OF HAND INDEXING TABLE INCLUDING MOTOR AND PUSH BUTTON IS $750.00 ( SEVEN HUNDRED AND FIFTY DOLLARS).

WE ARE EXTREMELY SORRY THAT WE DID NOT CATCH THIS ERROR BEFORE AND WE ARE RETURNING YOUR ORDER SO THAT YOU MAY CANCEL SAME. WE TRUST THAT YOU HAVE NOTIFIED THE GOVERNMENT.

THIS MACHINE IS QUITE COMPLICATED AND HAS ELEVEN INDIVIDUAL MOTOR DRIVEN UNITS, EACH EQUIPPED WITH A 2-SPINDLE MULTIPLE HEAD BESIDES FIXTURES AND ETC. WE ESTIMATED THAT THE SMALL TOOLS ALONE WOULD COST $1,200.00 SO YOU CAN READILY APPRECIATE THE IMPOSSIBILITY OF THE PRICE.

PLEASE ACKNOWLEDGE RECEIPT OF THIS LETTER.

THE ESTABLISHED RULE IS THAT TO AUTHORIZE RELIEF FROM A BID ON THE BASIS OF A MISTAKE ALLEGED AFTER ACCEPTANCE, THE EVIDENCE MUST BE SUCH AS TO SHOW CONCLUSIVELY THAT A MISTAKE WAS MADE AND THAT IT WAS MUTUAL OR SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER, AT THE TIME OF ACCEPTANCE, KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. COMP. DEC. 286; 6 COMP. GEN. 526; 8 ID. 362.

THERE IS NOTHING ON THE FACE OF THE BID OF THE KEMP MACHINERY CO. TO INDICATE THAT THE AMOUNT THEREOF IS OTHER THAN THAT INTENDED BY THE BIDDER. IN FACT, IT APPEARS THAT THERE WAS NO MISTAKE IN THE BID SUBMITTED. IN OTHER WORDS, THE BID WAS EXACTLY AS INTENDED BY THE BIDDER AND THE ACCEPTANCE WAS AS INTENDED BY THE CONTRACTING OFFICER, AND THERE WAS NO MISUNDERSTANDING ON THE PART OF EITHER PARTY TO THE CONTRACT AS TO THE EQUIPMENT TO BE FURNISHED OR THE PRICE TO BE PAID THEREFOR. THE FACT THAT THE CONTRACTOR RELIED IN THE PREPARATION OF ITS BID ON A QUOTATION FURNISHED BY ITS SUPPLIER, WHICH QUOTATION LATER PROVED TO BE ERRONEOUS, IS NOT SUFFICIENT TO AUTHORIZE RELIEF FROM THE OBLIGATIONS OF THE CONTRACT VOLUNTARILY ENTERED INTO WITH THE GOVERNMENT. SEE 6 COMP. GEN. 504; 18 ID. 28; SEE, ALSO, STEINMEYER ET AL. V. SCHROEPPEL, 226 ILL. 9, 80 N.E. 564, 10 L.R.A. ( N.S.) 114; TATUM V. COAST LUMBER CO., 16 IDAHO 471, 101 PAC. 957, 23 L.R.A. ( N.S.) 1109.

THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER ATTEMPTED TO TAKE UNFAIR ADVANTAGE OF THE CONTRACTOR IN ACCEPTING ITS BID, AND IN VIEW OF THE RANGE IN THE BIDS RECEIVED, THE CHARACTER OF THE EQUIPMENT CONTRACTED FOR, AND THE FACT THAT THE CONTRACTOR, A REGULAR DEALER IN MACHINERY, DID NOT QUESTION THE QUOTATION OF ITS SUPPLIER, THERE WOULD APPEAR NO BASIS FOR ASSUMING THAT THE CONTRACTING OFFICER TOOK ANY SUCH UNFAIR ADVANTAGE. NEITHER A MERE INADEQUACY OF THE CONSIDERATION, WHERE NOT SUCH AS TO DEMONSTRATE SOME GROSS IMPOSITION OR SOME UNDUE INFLUENCE, NOR AN UNANTICIPATED EXPENSE IN THE PERFORMANCE, IS A SUFFICIENT GROUND FOR AVOIDING A CONTRACT, EVEN IN EQUITY. SEE EYRE V. POTTER, 15 HOW. ( U.S.) 42, 59; COLUMBUS RAILWAY AND POWER COMPANY V. COLUMBUS, 249 U.S. 399.

IN VIEW OF THE FACTS OF RECORD, IT MUST BE HELD THAT A VALID AND BINDING CONTRACT WAS CREATED BY ACCEPTANCE OF THE BID OF THE KEMP MACHINERY CO., AND THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER THE RIGHT THUS VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER SAID CONTRACT. SEE DECISION OF JUNE 19, 1939, 18 COMP. GEN. 942, TO YOU, AND CASES THEREIN CITED.

ACCORDINGLY, THE KEMP MACHINERY CO. SHOULD BE INSTRUCTED TO PERFORM IN ACCORDANCE WITH THE TERMS OF ITS CONTRACT OR TO PAY TO THE GOVERNMENT ANY DAMAGES RESULTING FROM ITS FAILURE OR REFUSAL TO RENDER SUCH PERFORMANCE.