B-139757, JULY 15, 1959, 39 COMP. GEN. 36

B-139757, JULY 15, 1959, 39 COMP. GEN. 36

CONTRACTS - MISTAKES - CONTRACTING OFFICER'S ERROR DETECTION DUTY - NOTICE OF ERROR THE DUTY OF THE CONTRACTING OFFICER WITH RESPECT TO NOTICE OF THE PROBABILITY OF ERRORS IN BIDS WHERE THE RANGE OF BID PRICES IS NOT GREAT AND THERE IS NOTHING APPARENT ON THE LOW BID TO INDICATE ERROR DOES NOT INCLUDE A REQUIREMENT THAT THE BID PRICES BE COMPARED WITH PRICES OF PRIOR PROCUREMENTS ESPECIALLY WHERE THE QUANTITIES VARIED SUBSTANTIALLY FROM THE PRESENT PROCUREMENT OR THAT THE PRICES BE COMPARED WITH WHOLESALE PRICE INDICES AND, THEREFORE, A CONTRACTOR WHO AFTER AWARD ALLEGES AN ERROR DUE TO A FAULTY ADDING MACHINE AND FAILURE TO INCLUDE AN ITEM FROM THE BILL OF MATERIALS IS REGARDED AS HAVING MADE A UNILATERAL ERROR FOR WHICH RELIEF MAY NOT BE GRANTED.

TO THE SECRETARY OF THE ARMY, JULY 15, 1959:

REFERENCE IS MADE TO A LETTER DATED MAY 29, 1959, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS), REQUESTING OUR DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE ELECTRONICS DIVISION OF GLOBE INDUSTRIES, INC., ALLEGES IT MADE IN ITS BID UPON WHICH CONTRACT NO. DA-36-039-SC-76813 WAS BASED.

THE SIGNAL SUPPLY AGENCY BY INVITATION FOR BIDS NO. SC-36-039-59 1078-C2 REQUESTED BIDS--- TO BE OPENED ON JANUARY 12, 1959--- FOR FURNISHING 750 PP-34 ( ( ( MSM RECTIFIER POWER UNITS. IN RESPONSE THERETO, GLOBE SUBMITTED A BID OFFERING TO FURNISH THE RECTIFIERS AT A PRICE OF $223.97 PER UNIT. SEVEN OF THE OTHER 13 BIDS RECEIVED FOR THE UNIT WERE AS FOLLOWS:

AIR-DESIGN CORPORATION--------------------------------$250.00

BRIDGE ELECTRONICS CO., INC.----------------------- 279.00

GENERAL INSTRUMENT CORP.----------------------------- 281.00

NUCLEAR ELECTRONICS CORP.---------------------------- 333.30

SILTRONICS, INC. ( LAST PRODUCER/-------------------- 338.64

GENERAL TRANSFORMER CO.------------------------------ 343.70

CORNELL DUBILIER-------------------------------------- 359.28

THE BID OF GLOBE WAS ACCEPTED ON JANUARY 29, 1959, AT THE PRICE STIPULATED THEREIN. ON JANUARY 30, 1959, OR PRIOR TO RECEIPT OF THE NOTICE OF AWARD BY THE CONTRACTOR ON FEBRUARY 2, 1959, A REPRESENTATIVE OF THE CONTRACTOR ORALLY CONTACTED THE CONTRACTING OFFICER TO ADVISE HIM OF AN ERROR IN ITS BID. IT IS REPORTED THAT ON FEBRUARY 9, 1959, THE CONTRACTOR ORALLY ADVISED THE CONTRACTING OFFICER THAT ALTHOUGH THE COST ($23.62) OF A MAGNETIC CONTRACTOR WAS ERRONEOUSLY OMITTED FROM ITS BID, THE COST OF SUCH COMPONENT WOULD BE ABSORBED AND THAT THE CONTRACT WOULD BE PERFORMED AS WRITTEN. IN LETTER DATED FEBRUARY 11, 1959, THE CONTRACTOR ADVISED THAT, IN ADDITION TO THE MISTAKE IT MADE IN OMITTING THE COST OF THE MAGNETIC CONTACTOR, IT HAD DISCOVERED THAT THE ADDING MACHINE USED WAS MECHANICALLY DEFECTIVE AND TOTALED $37.82 LESS THAN IT SHOULD HAVE, HAD IT NOT BEEN DEFECTIVE.

IN AN AFFIDAVIT DATED JUNE 8, 1959, THE CONTRACTOR'S REPRESENTATIVE MADE THE FOLLOWING TATEMENT:

AT APPROXIMATELY 8:26 A.M., JANUARY 30, 1959, I RECEIVED A TELEPHONE CALL FROM MR. BERNARD DAVID, THE PLANT MANAGER OF THE ELECTRONICS DIVISION OF GLOBE, LOCATED AT BELLEVILLE, NEW JERSEY. MR. DAVID CALLED ME AT MY HOME AND TOLD ME THAT GLOBE HAD MADE AN ERROR IN ITS BID IN THAT A SPECIFIC COMPONENT, A MAGNETIC CONTRACTOR, COSTING APPROXIMATELY $24.00 PER UNIT, HAD BEEN OMITTED FROM ITS BID CALCULATION. MR. DAVID ASKED ME TO IMMEDIATELY CONTACT THE CONTRACTING OFFICER, CAPTAIN ABRAMS, AND INFORM HIM THAT GLOBE'S BID WAS ERRONEOUS IN THAT A SERIOUS MISTAKE HAD BEEN MADE. HE INSTRUCTED ME TO INITIATE ANY STEPS WHICH WERE NECESSARY TO RECTIFY THIS SITUATION.

AS A RESULT OF THIS TELEPHONE CONVERSATION I PROCEEDED TO THE OFFICE OF THE U.S. SIGNAL SUPPLY AGENCY IN PHILADELPHIA AND AT APPROXIMATELY 11:30 A.M., MET WITH CAPTAIN ABRAMS, WHO WAS THE CONTRACTING OFFICER. INFORMED HIM THAT GLOBE HAD MADE A SERIOUS MISTAKE IN ITS BID AND WISHED TO TAKE THE ACTION NECESSARY TO RECTIFY THIS SITUATION. CAPTAIN ABRAMS, AS SOON AS I MENTIONED THAT GLOBE HAD MADE A MISTAKE IN ITS BID STATED TO ME THAT IT WAS UNFORTUNATE FROM GLOBE'S POINT OF VIEW THAT GLOBE HAD NOT BEEN AWARE OF ITS ERROR EARLIER BECAUSE THE NOTICE OF AWARD ALREADY HAD BEEN ISSUED. HE STATED THAT AS A RESULT GLOBE COULD NOT PROCEED IN ACCORDANCE WITH THE RULES RELATING TO MISTAKES IN BID RAISED PRIOR TO AWARD, BUT WOULD BE REQUIRED, IF IT DESIRED TO DO SO, TO PROCEED IN ACCORDANCE WITH THE RULES RELATING TO MISTAKES IN BID RAISED AFTER AWARD. I TOLD CAPTAIN ABRAMS THAT THE MISTAKE WHICH HAD BEEN CALLED TO MY ATTENTION WAS THE OMISSION OF A MAJOR COMPONENT FROM THE BILL OF MATERIALS, NAMELY, A MAGNETIC CONTACTOR, WHICH COST APPROXIMATELY $24.00. HE TOLD ME, AS A RESULT OF MY INQUIRY, THAT SINCE THE AWARD HAD BEEN MADE THE ONLY THING THAT GLOBE COULD DO WOULD BE TO WRITE A LETTER SETTING FORTH THE MISTAKE AND RELATED CIRCUMSTANCES AND REQUEST WHATEVER RELIEF GLOBE THOUGHT WAS APPROPRIATE. HE STATED THAT THIS REQUEST WOULD BE PROCESSED IN ACCORDANCE WITH NORMAL PROCEDURE.

BY LETTER OF FEBRUARY 11, 1959, THE CONTRACTOR REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY $61.44 PER UNIT OR A TOTAL OF $46,080 BECAUSE OF ERROR IN BID. IN LETTER OF JUNE 5, 1959, IT IS STATED THAT THE ERROR PER UNIT WAS $53.25 RATHER THAN $61.44. SPECIFICALLY, THESE ERRORS RELATE TO AN ARITHMETICAL MISTAKE CAUSED BY A FAULTY ADDING MACHINE WHICH YIELDED A BILL OF MATERIALS TOTAL OF $164.88 RATHER THAN $194.51 PER ITEM AND THE OMISSION OF THE COST OF THE MAGNETIC CONTACTOR ($23.62) FROM THE BILL OF MATERIALS.

THE CONTRACTING OFFICER HAS REPORTED THAT THE EVIDENCE SUBMITTED BY GLOBE TO SUBSTANTIATE ITS CLAIM OF ERROR IS NOT CONVINCING, ESPECIALLY SINCE THE ADDING MACHINE TAPES FURNISHED TO SHOW THE MATHEMATICAL ERROR WERE PREPARED SUBSEQUENT TO AWARD. IT IS FURTHER REPORTED BY THE CONTRACTING OFFICER THAT THE RANGE OF BIDS RECEIVED AND THE PRICES PAID UNDER PREVIOUS PROCUREMENTS DID NOT PLACE HIM ON NOTICE OF PROBABLE ERROR.

THE ONLY QUESTION FOR CONSIDERATION HERE IS NOT WHETHER AN ERROR WAS MADE IN THE BID AS ALLEGED, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. THERE WAS NOTHING IN THE BID OF GLOBE TO INDICATE AN ERROR THEREIN AND THE ADMINISTRATIVE OFFICE HAS REPORTED THAT NO ALLEGATION OF ERROR WAS MADE UNTIL AFTER THE AWARD. MOREOVER, THE EVIDENCE SUBMITTED IN THE FORM OF ADDING MACHINE TAPES AND BILL OF MATERIALS, TOGETHER WITH THE OTHER EVIDENCE OF RECORD, DOES NOT WARRANT THE RELIEF CLAIMED. NEITHER DID THERE EXIST SUCH A DIFFERENCE IN BID PRICES RECEIVED UNDER THE INVITATION AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. THE FACT THAT THIS TYPE OF RECTIFIER WAS PROCURED IN PRIOR YEARS AT UNIT PRICES SOMEWHAT IN EXCESS OF GLOBE'S UNIT BID PRICE IS NOT SIGNIFICANT SINCE THOSE QUANTITIES VARIED SUBSTANTIALLY FROM THE PRESENT PROCUREMENT. IN ANY EVENT, WE DO NOT BELIEVE THAT KNOWLEDGE OF PRICE DIFFERENCES AS MAY HAVE EXISTED WITH RESPECT TO PRIOR PROCUREMENTS SHOULD BE IMPUTED TO A CONTRACTING OFFICER IN EVALUATING BIDS IN A SITUATION SUCH AS HERE INVOLVED WHERE THE SPREAD OF BID PRICES WOULD NOT HAVE PUT HIM ON NOTICE OF PROBABILITY OF ERROR. ALSO, WE CANNOT AGREE WITH THE ATTORNEYS FOR GLOBE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE WHOLESALE PRICE INDICES ON MATERIALS AND LABOR IN DETERMINING THE LOWEST RESPONSIBLE BIDDER. WOULD BE ENTIRELY UNREASONABLE TO IMPOSE A DUTY ON A CONTRACTING OFFICER TO VERIFY PRICES AGAINST PRICE INDICES TO ASSURE FOR HIMSELF THAT THE BIDDERS HAVE SUBMITTED COST PLUS A PROFIT BID PRICES. THIS IS CLEARLY A RESPONSIBILITY OF THE INDIVIDUAL BIDDERS WHICH MAY NOT BE SHIFTED TO THE GOVERNMENT UNDER COMPETITIVE BIDDING PROCEDURES. SEE 25 COMP. GEN. 536; 28 ID. 527; GRYMES V. SANDERS, ET AL., 93 U.S. 55.

SUCH ERRORS AS WERE MADE WERE DUE SOLELY TO THE NEGLIGENCE OF GLOBE AND WERE NOT INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. HENCE, THE ERRORS WERE UNILATERAL--- NOT MUTUAL--- AND DO NOT ENTITLE GLOBE TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.1CLS. 249, 259; SALIGMAN, ET AL. V. UNITED STATES, 56 F.1SUPP. 505, 507.

ACCORDINGLY, NO LEGAL BASIS EXISTS FOR THE ALLOWANCE OF ANY AMOUNT IN EXCESS OF THE PRICE STATED IN CONTRACT NO. DA-36-039-SC-76813.