B-84925, MAY 20, 1949

B-84925: May 20, 1949

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO LETTER DATED APRIL 22. WAS ACCEPTED BY THE CONTRACTING OFFICER ON FEBRUARY 24. NOTIFICATION OF THE AWARD WAS MAILED TO THE CONTRACTOR ON THAT DATE. THE COMPANY'S REQUEST FOR RELIEF UNDER THE AFORESAID CONTRACT IS BASED PRINCIPALLY UPON THE CONTENTIONS THAT: (1) BY LONG DISTANCE TELEPHONE CALL MADE ON THE DATE OF OPENING OF THE BIDS. IT ATTEMPTED TO ADVICE THE CONTRACTING OFFICER OF ITS ALLEGED ERROR BUT WAS UNABLE TO DO SO UNTIL THE MORNING OF THE AWARD. AT WHICH TIME THE CONTRACTING OFFICER WAS ADVISED THAT THE COMPANY HAD MISTAKENLY QUOTED ON TYPE I PAINT INSTEAD OF TYPE II. WAS SUFFICIENT. WHILE THESE AND CERTAIN OTHER ISSUES ARE RAISED IN THE COMPANY'S VARIOUS COMMUNICATIONS DIRECTED TO THE PURCHASING AGENCY PRIOR TO RECEIPT IN THIS OFFICE OF THE CONTRACTOR'S LETTER OF MARCH 30.

B-84925, MAY 20, 1949

PRECIS-UNAVAILALBLE

THE HONORABLE, THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED APRIL 22, 1949, FROM THE DIRECTOR OF FINANCE, DEPARTMENT OF THE AIR FORCE, PERTAINING TO THE REQUEST OF THE ATLANTIC VARNISH & PAINT CO., INC., RICHMOND, VIRGINIA, THAT ITS CONTRACT NO. AF 01 (097)-27, DATED FEBRUARY 24, 1949, PROVIDING FOR THE DELIVERY OF 3,000 GALLONS OF EXTERIOR PAINT TO THE MAXWELL AIR FORCE BASE, ALABAMA, BE RESCINDED ON THE GROUND THAT IT MISTAKENLY HAD BID ON TYPE I IN LIEU OF TYPE II PAINT, AS SPECIFIED IN THE INVITATION FOR BIDS AND IN THE RESULTING CONTRACT.

IN RESPONSE TO INVITATION FOR BIDS NO. (01-097) 49-63, ISSUED FEBRUARY 11, 1949, AND SCHEDULED FOR OPENING ON FEBRUARY 23, THE CONTRACTOR SUBMITTED ITS BID OF FEBRUARY 18, 1949, WHEREIN IT OFFERED TO FURNISH THE HEADQUARTERS AIR UNIVERSITY, MAXWELL AIR FORCE BASE, ALABAMA, WITH 3,000 GALLONS OF "PAINT, EXTERIOR, LEAD AND OIL, COMPLYING WITH FED. SPEC. TT-P- 40, TYPE II," AT THE UNIT PRICE OF $3.70 PER GALLON, OR FOR THE TOTAL CONSIDERATION OF $11,100 NET. THIS BID, BEING THE LOWEST OF THE 21 BIDS RECEIVED UNDER THE INVITATION, WHICH-- EXCLUSIVE OF THE CONTRACTOR'S LOW BID-- RANGED IN PRICE FROM $4.03 TO AS MUCH AS $6.50 PER GALLON, WAS ACCEPTED BY THE CONTRACTING OFFICER ON FEBRUARY 24, 1949, AND NOTIFICATION OF THE AWARD WAS MAILED TO THE CONTRACTOR ON THAT DATE.

THE COMPANY'S REQUEST FOR RELIEF UNDER THE AFORESAID CONTRACT IS BASED PRINCIPALLY UPON THE CONTENTIONS THAT: (1) BY LONG DISTANCE TELEPHONE CALL MADE ON THE DATE OF OPENING OF THE BIDS, FEBRUARY 23, IT ATTEMPTED TO ADVICE THE CONTRACTING OFFICER OF ITS ALLEGED ERROR BUT WAS UNABLE TO DO SO UNTIL THE MORNING OF THE AWARD, FEBRUARY 24, AT WHICH TIME THE CONTRACTING OFFICER WAS ADVISED THAT THE COMPANY HAD MISTAKENLY QUOTED ON TYPE I PAINT INSTEAD OF TYPE II, AS SPECIFIED IN THE INVITATION; AND THAT (2) THE DISPARITY BETWEEN THE LOW BID PRICE OF $3.70 PER GALLON, AS COMPARED TO THE AMOUNTS OF THE OTHER BIDS RECEIVED, WAS SUFFICIENT, OF ITSELF, TO ESTABLISH THE EXISTENCE OF A BONA FIDE ERROR, AS CLAIMED.

WHILE THESE AND CERTAIN OTHER ISSUES ARE RAISED IN THE COMPANY'S VARIOUS COMMUNICATIONS DIRECTED TO THE PURCHASING AGENCY PRIOR TO RECEIPT IN THIS OFFICE OF THE CONTRACTOR'S LETTER OF MARCH 30, 1949, THE CONTRACTING OFFICER HAS BEEN CONSISTENT IN HIS REFUSAL EITHER TO MODIFY OR TO RESCIND THE CONTRACT INVOLVED FOR REASONS SUBSTANTIALLY AS FOLLOWS: (1) THAT THE TELEPHONE CONVERSATION HELD ON FEBRUARY 23, THE DATE OF OPENING, BETWEEN A REPRESENTATIVE OF THE CONTRACTOR AND A REPRESENTATIVE OF THE PURCHASING AGENCY, HAD RELATION TO SUCH MATTERS AS THE COLOR OF PAINT REQUIRED TO BE FURNISHED AND THE TIME WITHIN WHICH DELIVERY UNDER THE CONTRACT COULD BE ACCOMPLISHED; (2) THAT AT ANY TIME OF RECEIPT OF THE COMPANY'S MESSAGE ON FEBRUARY 24, 1949, EXPLAINING THE ALLEGED ERROR, ITS BID ALREADY HAD BEEN ACCEPTED BY THE CONTRACTING OFFICER; (3) THAT AT THE TIME OF AWARD THERE WAS NOTHING EITHER ON THE FACE OF THE COMPANY'S PROPOSAL OR ELSEWHERE IN THE RECORD SUGGESTIVE OF ERROR AND, HENCE, THE AWARD WAS MADE BY THE PURCHASING AGENCY IN ENTIRE GOOD FAITH; AND (4) THAT THE SPECIFICATIONS INVOLVED ADMITTEDLY WERE CLEAR AS TO THE REQUIREMENT FOR TYPE II "LEAD AND OIL" PAINT AND, THEREFORE, THE SAID MISTAKE WAS DUE ENTIRELY TO THE BIDDER'S OWN NEGLIGENCE.

IT IS FUNDAMENTAL, OF COURSE, THAT A VALID AND BINDING CONTRACT IS CONSUMMATED IMMEDIATELY UPON THE ACCEPTANCE IN GOOD FAITH OF A BIDDER'S PROPOSAL, AND THIS RULE HAS BEEN HELD TO APPLY EVEN TO THOSE CASES IN WHICH THE PARTIES CONTEMPLATE OR THE STATUTES REQUIRE THAT A FORMAL CONTRACT THEREAFTER BE EXECUTED. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP COMPANY, 239 U.S. 88; ACKERLIND V. UNITED STATES, 240 U.S. 531 PURCELL ENVELOPE COMPANY V. UNITED STATES, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. IT IS CLEAR, THEREFORE, THAT IRRESPECTIVE OF HOW SOON AFTER AWARD THE CONTRACTING OFFICER ACTUALLY RECEIVED NOTIFICATION OF THE BIDDER'S ALLEGED ERROR, SINCE ITS PROPOSAL ALREADY HAD BEEN ACCEPTED IN GOOD FAITH AND THE AWARD MADE PRIOR TO RECEIPT OF THE COMPANY'S NOTIFICATION OF ERROR, THERE HAD BECOME VESTED IN THE GOVERNMENT THE ABSOLUTE LEGAL RIGHT TO HAVE PERFORMED STRICTLY IN ACCORDANCE WITH THE TERMS OF THE COMPANY'S ACCEPTED BID AND THE PLAIN REQUIREMENTS OF THE SPECIFICATIONS INCORPORATED THEREIN. THESE CIRCUMSTANCES, THE CONTRACTING OFFICER CLEARLY WAS WITHOUT AUTHORITY TO WAIVE THE VESTED CONTRACTUAL RIGHTS OF THE GOVERNMENT OR TO AUTHORIZE PAYMENT TO THE CONTRACTOR OF ANY AMOUNT IN EXCESS OF THAT EXPRESSLY STIPULATED, AND AGREED TO, BY THE PARTIES. SEE SIMPSON V. UNITED STATES, 172 U.S. 372; PLUMLEY V. UNITED STATES, 226 U.S. 545; BAUSCH & LOMB OPTICAL COMPANY V. UNITED STATES 78 C.CLS. 584.

MOREOVER, THE SPECIFICATIONS HERE INVOLVED ADMITTEDLY ARE CLEAR AND UNAMBIGUOUS IN THAT THEY EXPRESSLY SPECIFY TYPE II PAINT AND, HENCE, THE MISTAKE ALLEGED IN THIS INSTANCE CAN IN NO WAY BE CONSIDERED AS HAVING BEEN INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. GRYMES V. SANDERS ET AL. 93 U.S. 55, 61. ALSO, SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120.

CONCERNING THE COMPANY'S CONTENTION THAT A COMPARISON OF ITS LOW BID PRICE WITH THE AMOUNTS OF THE OTHER BIDS RECEIVED WAS SUFFICIENT TO ESTABLISH ITS CLAIM THAT A BONA FIDE ERROR WAS MADE, IT IS TO BE NOTED THAT THE NEXT LOWEST BID PRICE RECEIVED UNDER THE PRESENT INVITATION WAS ONLY $4.03 PER GALLON, OR 33 CENTS IN EXCESS OF THE CONTRACTOR'S LOW BID PRICE, AND THE AMOUNT OF THE OTHER BIDS RECEIVED THEREUNDER RANGED FROM THESE AMOUNTS TO $6.50 PER GALLON. HENCE, THERE APPEARS NO BASIS FOR THE CONTRACTOR'S ASSERTION THAT, EXCEPT FOR ITS LOW BID PRICE, THE AMOUNTS OF THE OTHER BIDS RECEIVED, GENERALLY, WERE UNIFORM. IN THE CIRCUMSTANCES, THERE APPEARS AMPLE JUSTIFICATION FOR THE CONTRACTING OFFICER'S STATEMENT THAT HE HAD NO APPARENT REASON TO SUSPECT THE EXISTENCE OF ERROR IN THE LOW BID AT THE TIME OF ITS ACCEPTANCE, AND THAT THE AWARD IN THIS INSTANCE WAS MADE IN ENTIRE GOOD FAITH. THEREFORE, THE MISTAKE ALLEGED HEREIN MUST BE HELD TO HAVE BEEN UNILATERAL, AND NOT MUTUAL. SEE, IN THIS CONNECTION, THE CASE OF OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, WHEREIN THE COURT STATED, AT PAGE 259:

"THERE CAN BE NO DOUBT THAT UPON ACCEPTANCE OF THEIR BID PLAINTIFFS BECAME OBLIGATED TO DO THE WORK FOR THE AMOUNT BID. WHEN THE CONTRACTING OFFICER ACCEPTED THE BID HE WAS UNAWARE THAT ANY MISTAKE HAD BEEN MADE. **** WE HAVE, THEN, A UNILATERAL MISTAKE, FROM WHICH, OF COURSE, EQUITY WILL NOT RELIEVE. ***"

ACCORDINGLY, UPON THE BASIS OF THE FACTS REPORTED IN THE MATTER, AND THE LAW APPLICABLE THERETO, I FIND NO LEGAL BASIS FOR AUTHORIZING EITHER A RESCISSION OR A MODIFICATION OF THE TERMS OF CONTRACT NO. AF 01(097)-27, DATED FEBRUARY 24, 1949. SEE THE ELLICOTT MACHINE COMPANY V. UNITED STATES, 44 C.CLS. 127, 129-130; SALIGMANEET AL. V. UNITED STATES 56 F.SUPP. 505, 507. ..END :