B-111325, JAN 8, 1953

B-111325, JAN 8, 1953

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 6, 1952, WITH ENCLOSURES, FROM THE DIRECTOR OF FINANCE, SUBMITTED IN RESPONSE TO LETTER DATED SEPTEMBER 11, 1952, REQUESTING A REPORT RELATIVE TO ERRORS ALLEGED BY THE CONTINENTAL CONSTRUCTION COMPANY TO HAVE BEEN MADE IN QUOTING ON ITEMS 18 AND 57 OF ITS BID, ON WHICH UNNUMBERED CONTRACT DATED JULY 25, 1952 IS BASED.

THE PROCUREMENT OFFICE, SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, MCCLELLAN, CALIFORNIA, BY INVITATION NO. 04-606-S-53-1, REQUESTED BIDS - TO BE OPENED JULY 22, 1952 - FOR THE PURCHASE OF CERTAIN SURPLUS ITEMS FROM THE GOVERNMENT AS DESCRIBED UNDER ITEMS 1 TO 72, INCLUSIVE. RESPONSE TO THE INVITATION, THE CONTINENTAL CONSTRUCTION COMPANY SUBMITTED A BID AS FOLLOWS:

ITEM DESCRIPTION AND LOCA- UNIT OF PRICE BID TOTAL

NO. TION OF PROPERTY QUANTITY MEASURE PER UNIT PRICE BID

18 CODE 318. LADDER RESIDUE,

SAFETY STEP AND WALL TYPE ALUMINUM & WOOD CONSTRUC- TION. SALVAGE 680#11 EA. $11.00 $121.00

57 CODE 268. SHOP RESIDUE

CONSISTING OF CONVEYOR PARTS BASKETS ANGLE IRON CONSTRUCTION WITH DECK TYPE BOTTOM AND

OVERHEAD CARRIER MOUNT. SALVAGE 1270#13 EA. 19.00 247.00 THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $73.60, WAS ACCEPTED AS TO ITEMS 18 AND 57 ON JULY 25, 1952.

IN FIRST INDORSEMENT DATED OCTOBER 9, 1952, THE CONTRACTING OFFICER STATED THAT HE RECEIVED A CHECK FROM THE CONTINENTAL CONSTRUCTION COMPANY FOR THE BALANCE DUE THE UNITED STATES FOR THE ITEMS AWARDED TO THE COMPANY AND THAT ON THE STUB OF SAID CHECK WAS THE FOLLOWING NOTE - "THIS MATERIAL IS BEING ACCEPTED TO FULFILL OUR CONTRACT WITH THE GOVERNMENT. WE MADE AN ERROR IN OUR BID AND WISH TO GO ON RECORD TO THE FACT THAT WE WILL REQUEST AN ADJUSTMENT."

IN A LETTER DATED OCTOBER 4, 1952, TO THIS OFFICE, THE COMPANY REQUESTED AN ADJUSTMENT IN THE CONTRACT PRICE OF ITEMS 18 AND 57 AND IN THE LETTER THE PRESIDENT OF THE COMPANY STATED THAT HE HAD INSPECTED THE MATERIAL OFFERED FOR SALE UNDER ITEMS 18 AND 57, AND THAT ON THE LEFT-HAND MARGIN OF THE BID SHEET, OPPOSITE SAID ITEMS, HE NOTED IN PENCIL THE PRICE WHICH HE CONSIDERED AS THEIR TOTAL VALUE; THAT UPON RETURNING TO HIS OFFICE, HE HANDED SAID SHEETS TO AN EMPLOYEE AND INSTRUCTED HIM TO PREPARE THE BID; THAT THE EMPLOYEE INTERPRETED THE PENCIL FIGURES OPPOSITE ITEMS 18 AND 57 AS UNIT PRICES INSTEAD OF LOT PRICES AS INTENDED FOR THE ITEMS, AND THAT HE PREPARED THE BID ACCORDINGLY; AND THAT THE COMPANY IS NOT A DEALER IN SURPLUS MATERIALS AND THAT IT BIDS ONLY OCCASIONALLY UPON SUCH ITEMS WHICH CAN BE READILY USED IN ITS CONSTRUCTION OPERATIONS. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED PHOTOSTATIC COPIES OF THE BID SHEETS ON WHICH THE PRESIDENT OF THE COMPANY HAD NOTED IN PENCIL OPPOSITE ITEMS 18 AND 57 THE AMOUNTS WHICH HE CONSIDERED TO BE THE TOTAL VALUE OF EACH OF THE RESPECTIVE ITEMS.

THE BASIC QUESTION FOR DETERMINATION IS NOT WHETHER THE CONTRACTOR MADE A MISTAKE IN ITS BID ON ITEMS 18 AND 57, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. THERE WAS NOTHING ON THE FACE OF THE COMPANY'S BID ON SAID ITEMS TO INDICATE THAT THE PRICES QUOTED WERE NOT AS INTENDED. THE ABSTRACT OF BIDS SHOWS THAT EIGHT OTHER BIDS ON ITEM 18 WERE RECEIVED RANGING FROM $2.12 TO $0.28, AND THAT ONLY ONE OTHER BID ON ITEM 57 WAS RECEIVED IN THE AMOUNT OF $1.25. ALTHOUGH THE BID OF THE COMPANY ON ITEMS 18 AND 57 WAS HIGHER THAN THE OTHER RESPECTIVE BIDS THEREON, THE CONTRACTING OFFICER DID NOT CONSIDER THE BID ERRONEOUS FOR THE REASON SET FORTH IN HIS REPORT OF OCTOBER 9, 1952, WHICH IS, IN PERTINENT PART, AS FOLLOWS:

"5. AT THE TIME OF AWARD CONTRACTOR'S BID WAS NOT QUESTIONED AS BIDS RECEIVED ON SALES INVITATIONS MANY TIMES COVERS A WIDE RANGE OF PRICES DUE TO THE INTENDED USE TO BE MADE OF ITEM BY BIDDER."

ALSO, GENERALLY, A MERE DIFFERENCE IN THE PRICES BID FOR SURPLUS PROPERTY WOULD NOT PLACE A CONTRACTING OFFICER ON NOTICE OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED TO THE GOVERNMENT. SEE 16 COMP. GEN. 596; 17 ID. 388; ID. 601; ID. 976; AND 28 ID. 550.

MOREOVER, THE INVITATION ISSUED IN THE PRESENT CASE WAS CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT THAT THE UNIT FOR ITEMS 18 AND 57 WAS EACH. THE DIFFERENCE BETWEEN THE BID SUBMITTED BY THE CONTINENTAL CONSTRUCTION COMPANY ON ITEMS 18 AND 57 AND THE OTHER BIDS RECEIVED THEREON APPARENTLY DID NOT PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN SAID BID BECAUSE OF THE REASON SET FORTH IN HIS REPORT OF OCTOBER 9, 1952. THUS, SO FAR AS THE PRESENT RECORD SHOWS THE ACCEPTANCE OF THE BID ON ITEMS 18 AND 57 WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

FURTHERMORE, AFTER DISCOVERING THE ERROR IN ITS BID, THE COMPANY FORWARDED TO THE CONTRACTING OFFICER A CHECK FOR THE BALANCE DUE UNDER THE CONTRACT FOR ITEMS 18 AND 57, AND SHORTLY THEREAFTER IT PICKED UP THE MATERIAL CALLED FOR UNDER SAID ITEMS. THE FACTS IN THE PRESENT CASE ARE SOMEWHAT SIMILAR TO THOSE IN THE CASE OF BOARD OF TRUSTEES OF NATIONAL TRAINING SCHOOL FOR BOYS V. O.D. WILSON CO., INC., 133 F. 2D 399, IN WHICH THE PLAINTIFF ATTEMPTED TO WITHDRAW HIS PROPOSAL AFTER THE OPENING OF BIDS ON THE GROUND THAT A MISTAKE HAD BEEN MADE THEREIN AND, UPON BEING DENIED THAT REQUEST, SUBSEQUENTLY ACCEPTED THE AWARD UNDER PROTEST, PERFORMED THEREUNDER, AND WAS PAID THE STIPULATED CONTRACT PRICE, BUT UNDER THE MISAPPREHENSION THAT HE WAS RESERVING ALL RIGHTS ACCRUING TO HIM BY REASON OF AN ALLEGED ERROR. IN DENYING RECOVERY OF THE ADDITIONAL AMOUNT CLAIMED, THE COURT STATED THAT THE SAID PARTY "COULD NOT ON ANY THEORY CONTRACT, PERFORM, COLLECT THE FULL CONTRACT PRICE, AND THEN REPUDIATE THE CONTRACT AND RECOVER AS IF THERE HAD BEEN NONE. IT COULD NOT ACQUIRE SUCH A RIGHT BY PURPORTING TO 'RESERVE' IT." ALSO, SEE THE MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 C. CLS. 699, CERTIORARI DENIED 325 U.S. 866; AND 23 COMP. GEN. 596.

ACCORDINGLY, YOU ARE ADVISED THAT THE PRESENT RECORD AFFORDS NO LEGAL BASIS FOR ANY MODIFICATION OF THE CONTRACT PRICES OF ITEMS 18 AND 57.