B-141773, FEBRUARY 9, 1960, 39 COMP. GEN. 567

B-141773, FEBRUARY 9, 1960, 39 COMP. GEN. 567

CONTRACTS - MISTAKES - ERRORS OTHER THAN PRICE - EVIDENCE - DEFAULT TERMINATION NOTICE LOW BIDDER WHO, AFTER AWARD OF CONTRACT FOR ONE ITEM OF A TWO-ITEM PROCUREMENT, ALLEGED THAT ERROR IN OMISSION OF LANGUAGE TO INDICATE THAT BID WAS SUBMITTED ON "ALL OR NONE" BASIS WAS SUBSTANTIATED BY PRICE DIFFERENCES OF 14 TO 16 PERCENT BETWEEN LOW BID AND OTHER BIDS, AND BY FACT THAT EXCESS COST FOR PROCUREMENT FROM SECOND LOW BIDDER UPON DEFAULT IS NEARLY THE SAME AS THE AMOUNT OF LOSS CLAIMED BY THE LOW BIDDER, MAY NOT HAVE SUCH PRICE DIFFERENCES CONSIDERED TO ESTABLISH AN ERROR OF OMISSION OF LANGUAGE AS DISTINGUISHED FROM ARITHMETICAL ERRORS OR ERRORS IN COMPUTATION; THEREFORE, IN ABSENCE OF ANYTHING ON FACE OF BID TO INDICATE ERROR OR THAT CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF ERROR, OMISSION MUST BE REGARDED AS UNILATERAL AND DUE TO BIDDER'S NEGLIGENCE. CONTRACTOR WHO ADVISED PROCUREMENT OFFICE THAT IT WOULD NOT DELIVER THE ONE ITEM ON WHICH AWARD WAS MADE BECAUSE OF THE LOSS RESULTING FROM ITS FAILURE TO INDICATE THAT BID WAS SUBMITTED ON "ALL OR NONE" BASIS MAY NOT BE RELIEVED FROM LIABILITY FOR EXCESS COSTS IN REPURCHASE FROM SECOND LOW BIDDER ON THE BASIS THAT WRITTEN NOTICE OF TERMINATION WAS NEVER FURNISHED AS REQUIRED BY CONTRACT TERMS WHEN RECORD SUBSTANTIATES THAT CONTRACTOR NEVER INTENDED TO COMPLY WITH TERMS AND NO DELIVERIES WERE MADE OR CONTEMPLATED.

TO THE SECRETARY OF AGRICULTURE, FEBRUARY 9, 1960:

REFERENCE IS MADE TO A LETTER DATED JANUARY 21, 1960, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING OUR DECISION ON THE FOLLOWING QUESTIONS ARISING OUT OF THE AWARD OF A CONTRACT TO YOUNG AND GREENAWALT COMPANY UNDER INVITATION FOR BIDS NO. 14-34-59 ISSUED ON MARCH 20, 1959.

1. MAY THE AWARD TO YOUNG AND GREENAWALT BE DISREGARDED AS TO ITEM 1, BECAUSE OF ITS CLAIM OF ERROR IN FAILING TO SHOW THE BID WAS INTENDED TO BE FOR " ALL OR NONE" OF BOTH ITEMS 1 AND 2?

2. IF THE BID OF YOUNG AND GREENAWALT, AND AWARD OF ITEM 1 BY THE CONTRACTING OFFICER, RESULTED IN A VALID CONTRACT SHOULD THE CONTRACTOR BE HELD LIABLE FOR EXCESS COSTS OF $540.00, THE DIFFERENCE BETWEEN THE ORIGINAL BID PRICE BY YOUNG AND GREENAWALT COMPANY FOR ITEM 1 AND THE PRICE PAID FOR THE SAME ITEM FROM THE YUBA SOUTHWEST FABRICATOR COMPANY, EVEN THOUGH THE SPECIFIC NOTICE REQUIRED BY SF 22, ART. II WAS NOT GIVEN.

THE INVITATION, AS AMENDED, REQUESTED BIDS TO BE OPENED ON APRIL 6, 1959, FOR THE FURNISHING OF TWO ITEMS OF GALVANIZED CORRUGATED METAL CULVERT PIPE, COUPLERS, AND SECTIONAL PLATE. PARAGRAPH 8 OF THE SPECIAL CONDITIONS OF THE INVITATION PROVIDED:

8. AWARD OF BID. AWARD OF THIS BID WILL BE MADE ON AN " ALL OR NONE" BASIS FOR EACH INDIVIDUAL ITEM. IF THE BIDDER WILL ACCEPT ONLY PART OF AN ITEM OR WILL ONLY ACCEPT THE COMPLETE BID (ALL ITEMS) ON AN " ALL OR NONE" BASIS, HE MUST SO INDICATE.

YOUNG AND GREENAWALT SUBMITTED BIDS OF $3,326.44 ON ITEM 1 AND $9,039.08 ON ITEM 2, LESS DISCOUNT OF ONE-HALF PERCENT FOR PAYMENT WITHIN 20 DAYS, WITHOUT ANY QUALIFICATION AS TO QUANTITY ACCEPTANCE PERMITTED BY PARAGRAPH 8. IT APPEARS FROM THE ABSTRACT OF BIDS THAT YOUNG AND GREENAWALT SUBMITTED THE LOWEST BID AS TO ITEM 1, AND THAT YUBA SOUTHWEST FABRICATORS, INC., SUBMITTED THE NEXT LOWEST BID FOR THAT ITEM IN THE AMOUNT OF $3,866.60, LESS DISCOUNT OF ONE-HALF PERCENT FOR PAYMENT WITHIN 20 DAYS. OTHER BIDS RECEIVED FOR ITEM 1 WERE IN THE AMOUNTS OF $3,913.62, $3,925.02, $3,964.54, AND $3,976.78, ALL OFFERING THE SAME ONE-HALF PERCENT DISCOUNT. SINCE YOUNG AND GREENAWALT SUBMITTED THE LOWEST BID ON ITEM 1, AWARD WAS MADE TO THEM ON APRIL 15, 1959. PROMPTLY UPON RECEIPT OF THE NOTICE OF AWARD, YOUNG AND GREENAWALT BY LETTER OF APRIL 20, 1959, ADVISED THE CONTRACTING OFFICER THAT THEY HAD PRICED THEIR BID ON THE TOTAL WEIGHT OF ITEMS 1 AND 2, AND REQUESTED PERMISSION TO WITHDRAW THEIR BID IF ONLY ITEM 1 WERE TO BE AWARDED TO THEM. SUBSEQUENTLY, BY LETTER OF APRIL 23, 1959, YOUNG AND GREENAWALT REQUESTED THAT THEY BE RELIEVED OF THEIR CONTRACT BECAUSE THEIR BID PRICES FOR BOTH ITEMS 1 AND 2 WERE SUBMITTED IN ANTICIPATION OF AN "ALL OR NONE" AWARD BUT, THROUGH TYPOGRAPHICAL ERROR, THE WORDS "ALL OR NONE" WERE OMITTED FROM THE BID. THE COMPANY POINTED OUT THAT AWARD OF ONLY ITEM 1 WOULD RESULT IN AN ADDITIONAL COST OF FREIGHT OF $537 OVER AND ABOVE THAT WHICH WOULD HAVE BEEN INCURRED HAD THEY RECEIVED AWARD OF BOTH ITEMS 1 AND 2.

BY LETTER OF APRIL 29, 1959, YOUNG AND GREENAWALT WERE REQUESTED TO MAKE DELIVERY OF ITEM 1 WITHIN THE TIME SPECIFIED IN THE INVITATION, AND WERE ADVISED AS FOLLOWS:

WE FEEL YOU HAVE NO ALTERNATIVE BUT TO PROCEED WITH THE DELIVERY OF THE CORRUGATED METAL PIPE ON ORDER 141280-59. IF DELIVERY IS NOT MADE AS REQUIRED WE SHALL HAVE TO DECLARE YOU IN DEFAULT. PLEASE REFER TO PARAGRAPH 11 OF THE STANDARD FORM 32 ( GENERAL PROVISIONS--- SUPPLY CONTRACTS) WHICH IS A PART OF OUR CONTRACT.

THEREAFTER, UPON EXPIRATION OF THE CONTRACT DELIVERY TIME, THE SECOND LOW BIDDER ON ITEM 1, YUBA SOUTHWEST FABRICATORS, INC., WAS VERBALLY REQUESTED TO FURNISH THE MATERIAL UNDER ITEM 1. THROUGH MISUNDERSTANDING, THE PURCHASING OFFICE ASSUMED THAT YUBA WOULD FURNISH ITEM 1 AT THE SAME PRICES AS BID BY YOUNG AND GREENAWALT. ON THAT BASIS, A PURCHASE ORDER WAS ISSUED TO YUBA. HOWEVER, UPON ADVICE FROM YUBA THEY COULD NOT FURNISH ITEM 1 AT THAT PRICE, THE PURCHASE ORDER WAS AMENDED TO REFLECT THE PRICES ORIGINALLY BID BY YUBA ON ITEM 1. COST OF THE MATERIAL UNDER ITEM 1 AS FURNISHED BY YUBA IS REPORTED TO BE $540 IN EXCESS OF YOUNG AND GREENAWALT'S BID PRICE.

CONCERNING THE CLAIM OF ERROR ALLEGED BY YOUNG AND GREENAWALT, IT IS STATED THAT:

THE CONTRACTING OFFICER MADE THE AWARD IN GOOD FAITH, AND EVEN AFTER THE CLAIM OF ERROR BY THE COMPANY HE DID NOT CONSIDER THE EVIDENCE WARRANTED RELEASE OF THE COMPANY FROM ITS CONTRACT. HOWEVER, IT WAS LATER NOTED THAT YUBA SOUTHWEST FABRICATORS AGREED TO FURNISH THE MATERIAL UNDER ITEM 1 ONLY AT A PRICE OF $540.00 ABOVE YOUNG AND GREENWALT'S BID. THIS IS ALMOST IDENTICAL TO YOUNG AND GREENAWALT'S CLAIM THAT THEY WOULD LOSE $537.00 IF FORCED TO DELIVER ITEM 1 ONLY, AND STRONGLY SUPPORTS THEIR CLAIM OF ERROR. IT IS NOW THE CONTRACTING OFFICER'S OPINION THAT YOUNG AND GREENAWALT DID UNINTENTIONALLY OMIT STATING THEIR BID WAS SUBJECT TO AWARD OF ALL OR MORE, AND THAT HE SHOULD HAVE REFERRED THEIR CLAIM OF ERROR TO YOUR OFFICE FOR DECISION BEFORE ORDERING THE COMPANY TO DELIVER OR BE DEFAULTED.

THE ABSTRACT OF BIDS REVEALS THAT THE BID OF YUBA SOUTHWEST FABRICATORS, INC., WAS ABOUT 14 PERCENT IN EXCESS OF THE LOW BID; THAT THE THIRD LOW BID WAS ABOUT 15 PERCENT ABOVE THE LOW BID, AND THAT THE REMAINING THREE BIDS AVERAGED ABOUT 16 PERCENT MORE THAN THE BID OF YOUNG AND GREENAWALT ON ITEM 1. WE DO NOT REGARD THE PRICE DIFFERENCES INVOLVED HERE AS GROSS OR INDICATIVE OF ERROR IN THE LOW BID, ESPECIALLY SINCE THE ALLEGED ERROR RELATED TO AN OMISSION OF LANGUAGE AND NOT TO ARITHMETICAL ERRORS OR ERRORS IN COMPUTING THE BID PRICE FOR ITEM 1. THERE WAS NOTHING ON THE FACE OF THE BID OF YOUNG AND GREENAWALT WHICH COULD HAVE INDICATED THAT AN ERROR HAD BEEN MADE, OR THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR CONCERNING THE ELECTION TO HAVE THE BID CONSIDERED ON AN "ALL OR NONE" BASIS. WE BELIEVE THAT ANY ERROR AS MAY HAVE BEEN MADE WAS UNILATERAL AND DUE SOLELY TO THE BIDDER'S NEGLIGENCE, WHICH ERROR, UNDER THE CIRCUMSTANCES HERE INVOLVED, MAY NOT BE CHARGED TO THE GOVERNMENT. QUESTION NO. 1 IS ANSWERED IN THE NEGATIVE.

WITH REFERENCE TO YOUNG AND GREENAWALT'S DEFAULT, IT IS CLEAR FROM THEIR LETTER OF MAY 4, 1959, IN WHICH THEY STATED THEY WOULD NOT BE ABLE TO COMPLY WITH TERMS OF THE CONTRACT, THAT THEY NEVER INTENDED TO COMPLY WITH THE TERMS OF THE CONTRACT. NO DELIVERIES THEREUNDER WERE MADE OR EVER CONTEMPLATED BY THE FIRM. WHILE, ORDINARILY, A WRITTEN NOTICE OF TERMINATION AND ADVICE THAT THE DEFAULTED SUPPLIES WOULD BE PROCURED ELSEWHERE IS REQUIRED BY THE PROVISIONS OF ARTICLE 11 OF THE PURCHASE ORDER UPON DEFAULT OF THE VENDOR, THE FAILURE HERE TO FURNISH A WRITTEN NOTICE OF TERMINATION IS NOT FATAL TO THE RIGHT OF THE GOVERNMENT TO RECOVER THE EXCESS COSTS IT INCURRED UPON REPURCHASE. IN CONTI V. UNITED STATES, 158 F.2D 581, 583, IT WAS HELD:

TO REQUIRE THE PLAINTIFF TO GIVE A WRITTEN NOTICE UNDER THESE CIRCUMSTANCES WOULD BE TO REQUIRE IT TO DO SOMETHING WHOLLY UNNECESSARY AND THE PLAINTIFF IS RELIEVED FROM THAT OBLIGATION. WILLISTON, CONTRACTS, REVISED EDITION, SEC. 698 (A); RESTATEMENT, CONTRACTS, SEC. 306. ARTICLE 9 IS HEADED " DELAYS--- DAMAGES---" AND CONTAINS THE WORDS "REFUSES OR FAILS TO PROSECUTE THE WORK.' A REASONABLE CONSTRUCTION OF THESE WORDS WOULD SEEM TO INDICATE THAT THE WRITTEN NOTICE IN QUESTION WOULD BE REQUIRED WHERE THE CONTRACTOR HAD BEGUN THE WORK AND REFUSED OR FAILED TO PROSECUTE IT WITH SUFFICIENT DILIGENCE TO COMPLETE IT WITHIN THE TIME LIMIT IN THE CONTRACT. BUT THIS IS NOT THE SITUATION HERE. THE DEFENDANT DID NOT EVEN BEGIN THE WORK WITHIN THE 10 DAYS REQUIRED BY THE CONTRACT AND A WRITTEN NOTICE TO TERMINATE IS NOT NECESSARY. THE PLAINTIFF MAY RECOVER THE INCREASED COST FOR CONSTRUCTION WHERE, AS HERE, THERE IS A REFUSAL EVEN TO BEGIN THE WORK.

SEE, ALSO, NATIONAL RAG AND WASTE COMPANY, INC. V. UNITED STATES, 237 F.2D 846. CF. WILLIAMS V. UNITED STATES, 26 C.1CLS. 132. ACCORDINGLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE.

THE ORIGINAL DOCUMENTS FURNISHED WITH THE LETTER OF JANUARY 21, 1960, ARE RETURNED.