B-166734, MAY 9, 1969

B-166734, MAY 9, 1969

TO MR. HARRISON:

REFERENCE IS MADE TO LETTER OF APRIL 17, 1969, SIGNED BY THE COMPTROLLER, WITH ATTACHMENTS, SUBMITTING FOR OUR CONSIDERATION A REQUEST BY THE POTTER PRESS FOR AN UPWARD ADJUSTMENT IN THE CONTRACT PRICE OF PURCHASE ORDER 45119, JACKET NO. 324-204, AWARDED ON OCTOBER 30, 1968, AND FOR REFUND OF LIQUIDATED DAMAGES IN THE AMOUNT OF $4,796.64, ASSESSED UNDER THE TERMS OF THE PURCHASE ORDER BY REASON OF THE CONTRACTOR'S FAILURE TO MEET THE SPECIFIED DELIVERY DATE.

THE INVITATION FOR BIDS ISSUED ON OCTOBER 22, 1968, SOLICITED BIDS FOR 950,000 SETS OF A FIVE-PART MARGINALLY PUNCHED CONTINUOUS FORM, SIZE 14 7/8 BY 11 INCHES, WITH A MANUAL CARBON EXTRACTION FEATURE WHICH WAS COMPRISED OF A CORNER TAB. PROSPECTIVE BIDDERS WERE ADVISED THAT THE PROCUREMENT BORE AN URGENT PRIORITY RATING AND THAT COMPLETE SHIPMENT OF THE FORMS WAS REQUIRED BY DECEMBER 2, 1968. IN THIS REGARD, THE SPECIFICATIONS INCORPORATED BY REFERENCE GPO CONTRACT TERMS NO. 1, PARAGRAPH 2.19, OF WHICH PROVIDES THAT LIQUIDATED DAMAGES IN THE AMOUNT OF ONE PERCENT OF THE CONTRACT PRICE OF THE QUANTITY NOT TIMELY SHIPPED WOULD BE ASSESSED FOR EACH DAY OF UNEXCUSABLE DELAY.

THE RECORD INDICATES THAT AWARD WAS MADE ON OCTOBER 30, 1968, TO THE POTTER PRESS, WHOSE BID PRICE OF $26.99 PER THOUSAND (TOTALING $25,640.50) WAS $9.17 PER THOUSAND LOWER THAN THE ONLY OTHER BID RECEIVED IN THE AMOUNT OF $34.16 PER THOUSAND (TOTALING $32,452.00).

ON NOVEMBER 7, 1968, THE POTTER PRESS ADVISED THE CONTRACTING OFFICER THAT IN PREPARATION OF THEIR BID THEY HAD MISTAKENLY FAILED TO CONSIDER THE MANUAL CARBON EXTRACTION FEATURE AND THAT THE ENTIRE OPERATION WOULD REQUIRE AN ESTIMATED 270 PRESS HOURS TO COMPLETE INSTEAD OF 80 PRESS HOURS, AS ORIGINALLY CONTEMPLATED. AS A RESULT, THE POTTER PRESS STATED THAT HAD THEY CONSIDERED THE CORNER TAB MANUAL CARBON EXTRACTION FEATURE REQUIREMENT THEY WOULD HAVE BID $31.77 PER THOUSAND TO COVER THE ADDITIONAL TIME AND EXPENSE NECESSARY TO CONFORM TO ALL OF THE REQUIREMENTS OF THE PURCHASE ORDER. BY LETTER DATED JANUARY 27, 1969, THE POTTER PRESS SUBMITTED ITS WORKSHEETS AND REQUESTED THAT THE CONTRACT PRICE BE INCREASED TO $31.77 PER THOUSAND. THE CONTRACTOR ALSO REQUESTED THAT IT BE RELIEVED FROM ACCRUED LIQUIDATED DAMAGES WHICH HAD BEEN ASSESSED BECAUSE FINAL DELIVERY WAS NOT ACCOMPLISHED UNTIL JANUARY 10, 1969.

THE CONTRACTING OFFICER STATES THAT THE $6,812 DIFFERENCE BETWEEN THE TWO BIDS RECEIVED SHOULD HAVE CONSTITUTED NOTICE OF POSSIBLE ERROR IN THE BID AND THAT HE SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD. IN ADDITION, THE CONTRACTING OFFICER STATES THAT HE JUSTIFIED THE AWARD TO THE POTTER PRESS BY COMPARING ITS BID OF $26.99 PER THOUSAND AGAINST THE PREVIOUS CONTRACT PRICE OF $28.37 PER THOUSAND, BUT THAT SUCH JUSTIFICATION WAS IMPROPER INASMUCH AS THE PREVIOUS CONTRACTOR, WHO HAD NOT BID ON THE INSTANT PROCUREMENT,"HAD FACILITIES CAPABLE OF SUPPLYING A CORNER TAB CARBON EXTRACTION.'

ON THE RECORD BEFORE US, THE CONTRACTING OFFICER PROPERLY COMPARED THE POTTER PRESS BID AGAINST THE PRICE OF THE PREVIOUS PROCUREMENT. SINCE THE PRICE COMPARED FAVORABLY, HE HAD NO REASON AT THAT TIME TO SUSPECT ERROR. IT WAS NOT UNTIL AFTER AWARD THAT THE CONTRACTOR ADVISED OF ITS INABILITY TO MEET THE CORNER TAB CARBON EXTRACTION REQUIREMENT -- APPARENTLY DUE TO THE LACK OF EQUIPMENT -- WITHOUT THE USE OF PREMIUM TIME. WE THEREFORE CANNOT AGREE THAT THE CONTRACTING OFFICER WAS, OR SHOULD HAVE BEEN, ON CONSTRUCTIVE NOTICE OF PROBABLE ERROR. RATHER, IT APPEARS THAT THE ALLEGATION OF ERROR RELATES TO ADDITIONAL COSTS WHICH WERE INCURRED IN MEETING THE SPECIFICATIONS WITHIN THE LIMITS OF THE DELIVERY SCHEDULE. HAVE HELD THAT NO FAIR COMPARISON CAN BE MADE WHERE ONLY TWO VARIANT BIDS ARE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN CONSIDERING THE HIGH BID TOO HIGH. 45 COMP. GEN. 700, 709.

IN THESE CIRCUMSTANCES, THE ACCEPTANCE OF THE POTTER PRESS BID WAS MADE IN GOOD FAITH, NO ERROR HAVING BEEN NOTICED OR ALLEGED UNTIL AFTER AWARD; HENCE, WE MUST CONCLUDE THAT SUCH ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT. 45 COMP. GEN. 700.

FURTHERMORE, THE SOLE RESPONSIBILITY FOR THE PREPARATION OF ITS BID WAS UPON THE POTTER PRESS. FRAZIER-DAVIS CONSTRUCTION COMPANY V UNITED STATES, 100 CT.CL. 120, 163. IF THE POTTER PRESS OVERLOOKED THE EXPLICIT REQUIREMENT FOR A CARBON TAB EXTRACTION FEATURE, SUCH ERROR WAS DUE TO ITS OWN NEGLIGENCE OR OVERSIGHT. ANY ERROR THAT WAS MADE IN THE BID WAS UNILATERIAL --- NOT MUTUAL -- AND THEREFORE, THE CONTRACTOR IS NOT ENTITLED TO BE RELIEVED FROM ITS OBLIGATION UNDER THE PURCHASE ORDER. EDWIN DOUGHERTY AND M. H. OGDEN V UNITED STATES, 102 CT.CL. 249.

UNDER THE FACTS AND CIRCUMSTANCES RELATED IN YOUR LETTER, THERE DOES NOT APPEAR TO BE ANY LEGAL BASIS FOR RELIEVING THE CONTRACTOR FROM THE LIQUIDATED DAMAGES ASSESSED PURSUANT TO PARAGRAPH 2.19 OF GPO CONTRACT TERMS NO. 1. WE NOTE THAT THE CONTRACTOR'S FAILURE TO DELIVER TIMELY WAS PRIMARILY DUE TO ITS LACK OF NECESSARY EQUIPMENT TO MEET THE CORNER TAB CARBON EXTRACTION REQUIREMENT, A CAUSE OF DELAY WHICH IS NOT EXCUSABLE UNDER SUBPARAGRAPH (B) OF THE PARAGRAPH CITED ABOVE. HOWEVER, SINCE THE LETTER OF APRIL 17 SEEMS TO INDICATE THAT SOME EQUITIES MAY EXIST IN FAVOR OF THE CONTRACTOR, YOU ARE ADVISED THAT OUR OFFICE WILL CONSIDER A PROPER REQUEST BY YOU FOR REMISSION OF LIQUIDATED DAMAGES ON AN EQUITABLE BASIS UNDER THE PROVISIONS OF 41 U.S.C. 256A.

ACCORDINGLY, NO LEGAL BASIS EXISTS FOR INCREASING THE PRICE OF THE PURCHASE ORDER OR REFUNDING THE LIQUIDATED DAMAGES ASSESSED PURSUANT TO THE LIQUIDATED DAMAGES CLAUSE.

AS REQUESTED, THE ATTACHMENTS TO THE LETTER OF APRIL 17 ARE RETURNED HEREWITH.