B-12600, NOVEMBER 28, 1940, 20 COMP. GEN. 286

B-12600, NOVEMBER 28, 1940, 20 COMP. GEN. 286

CONTRACTS - MISTAKES - BIDS - PRICE DIFFERENCES ORDINARILY, IN DETERMINING WHETHER A GOVERNMENT CONTRACTING OFFICER SHOULD HAVE NOTED AN ERROR IN BID BECAUSE OF A VARIANCE IN PRICES, NO FAIR COMPARISON CAN BE MADE WHERE ONLY TWO WIDELY VARIANT BIDS ARE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, UNITED STATES MARITIME COMMISSION, NOVEMBER 28, 940:

I HAVE YOUR LETTER OF OCTOBER 18, 1940, AS FOLLOWS:

I AM IN RECEIPT OF YOUR LETTER OF OCTOBER 10, 1940, RELATIVE TO PURCHASE ORDER MC-41-349, DRAWN ON THE RIGGS AND BROS. COMPANY, 310 MARKET STREET, PHILADELPHIA, PENNSYLVANIA, COVERING NAVIGATING INSTRUMENTS.

INVITATION TO BID NO. P AND S-1136, COVERING NAVIGATING INSTRUMENTS WAS ISSUED UNDER DATE OF AUGUST 16, 1940, TO 19 PROSPECTIVE BIDDERS. THE ABOVE INVITATION INCLUDED, AMONG OTHER ITEMS, TEN TRANSPARENT ARM PROTRACTORS WHICH WERE TO BE IN ACCORDANCE WITH NAVY DEPARTMENT SPECIFICATIONS NO. 18-P 6A. IN RESPONSE TO THIS INVITATION TWO QUOTATIONS WERE RECEIVED ON THE ITEM OF PROTRACTORS. AWARD WAS MADE UNDER DATE OF AUGUST 27, 1940, TO THE RIGGS AND BROS. COMPANY, LOW BIDDER, INASMUCH AS NO EXCEPTION TO THE SPECIFICATIONS PERTAINING TO THE PROTRACTORS WAS TAKEN BY THEM IN THEIR BID. PURCHASE ORDER MC-41 349, WAS DRAWN IN THEIR FAVOR UNDER DATE OF AUGUST 27, 1940, WHICH ORDER INCLUDED, IN ADDITION TO THE PROTRACTORS, SEVERAL OTHER ITEMS OF NAVIGATING INSTRUMENTS.

UPON RECEIPT OF THE PURCHASE ORDER THE CONTRACTOR ADVISED THIS OFFICE, IN LETTER OF AUGUST 31, 1940, THAT A MISTAKE HAD BEEN MADE IN THEIR QUOTATION FOR THE PROTRACTORS, IN THAT IN PLACE OF THE $4.25 QUOTATION SUBMITTED, A "NO BID" HAD BEEN INTENDED, AND ASKED THAT THE ITEM BE CANCELLED FROM THEIR ORDER. IN REPLY TO THIS REQUEST, DATED SEPTEMBER 10, 1940, THIS COMMISSION STATED THAT INASMUCH AS AWARD WAS MADE TO THEM IN GOOD FAITH AND AS A RESULT OF COMPETITIVE BIDDING, THIS OFFICE WAS WITHOUT AUTHORITY TO CANCEL THE ITEM FROM THE ORDER. THE CONTRACTOR WAS ALSO ADVISED THAT DUE TO URGENT DELIVERY REQUIREMENTS, IMMEDIATE STEPS WERE BEING TAKEN TO PURCHASE THE PROTRACTORS FROM THE NEXT LOW BIDDER, WITH THE EXCESS COST OCCASIONED THE GOVERNMENT THEREBY TO BE CHARGED TO HIS ACCOUNT.

THE ABOVE ACTION WAS TAKEN IN VIEW OF THE FACT THAT DUE TO THE TIME THAT ELAPSED BETWEEN THE SUBMISSION OF THE BID AND THE ACKNOWLEDGMENT OF THE PURCHASE ORDER DRAWN IN RESPONSE TO THAT BID, THE CONTRACTOR DID NOT CALL IT TO THE ATTENTION OF THIS OFFICE THAT AN ERROR HAD BEEN MADE. WHEN THE MATTER WAS CALLED TO OUR ATTENTION THE PERTINENT PAPERS INVOLVED HAD REACHED THE STAGE WHERE RECALL OF SAME WAS IMPRACTICABLE.

IN ACCORDANCE WITH REQUEST, THERE IS ATTACHED HERETO COPY OF BID OF RIGGS AND BROS. COMPANY, WHICH INCORPORATES THE SPECIFICATIONS REFERRED TO, TOGETHER WITH ABSTRACT OF BIDS RECEIVED AND LETTERS REFERRED TO ABOVE.

EXAMINATION OF THE ENCLOSURES TRANSMITTED WITH YOUR LETTER SHOWS THAT INVITATION NO. P AND S-1336, REFERRED TO IN YOUR LETTER AS NO. P AND S- 1136, COVERED TEN ITEMS OF NAVIGATIONAL INSTRUMENTS FOR USE ON TEN DESIGNATED CARGO VESSELS BEING CONSTRUCTED FOR THE ACCOUNT OF THE UNITED STATES MARITIME COMMISSION, ONE-TENTH OF THE TOTAL QUANTITY OF EACH ITEM BEING FOR USE ON EACH VESSEL. THE INVITATION DECLARED THAT TIME WAS TO BE CONSIDERED AS THE ESSENCE OF THE CONTRACT, AND THAT NO BID WOULD BE CONSIDERED THAT FIXED DELIVERY SO THAT THE INSTRUMENTS WOULD REACH DESTINATION LATER THAN SEPTEMBER 15, 1940, IN THE CASE OF MC HULLS 67 AND 79 OR LATER THAN OCTOBER 1, 1940, IN THE CASE OF MC HULLS 68 AND 80. RIGGS AND BRO. SUBMITTED BIDS ON EIGHT ITEMS AND ON AUGUST 27, 1940, WAS AWARDED FOUR ITEMS AMOUNTING TO $131.50, LESS PROMPT PAYMENT DISCOUNT, INCLUDING, UNDER ITEM 7, TEN PROTRACTORS, THREE-ARM TRANSPARENT, MARK II, CONFORMING TO NAVY SPECIFICATION 18 P6A, AT A PRICE OF $4.25 EACH. THEREAFTER, IN A LETTER DATED AUGUST 31, 1940, SIGNED BY EMILY M. HOSKINS FOR RIGGS AND BRO., THE COMMISSION WAS ADVISED AS FOLLOWS:

YOUR ORDER MC-41-349 RECEIVED AUGUST 30TH, 9 A.M.

REFERRING TO THIS ORDER, MR. RIGGS HAVING GONE ON VACATION AUGUST 19TH SIGNED THE QUOTATION AND LEFT PRICES FOR ME, HIS SECRETARY, TO FILL IN. IN DOING SO, I QUOTED ON THE PROTRACTORS THAT WE FURNISHED ON YOUR ORDERS MC- 39-264 AND MC 40-32. THESE WERE THE THREE ARM TRANSPARENT, BUT NOT THE MARK II NAVY TYPE. I SHOULD HAVE PUT NO BID OR SPECIFIED THE PROTRACTOR I BID ON.

WILL YOU KINDLY OMIT THIS IN THE ORDER GIVEN US OR ADVISE ACCORDINGLY.

IN REPLY OF SEPTEMBER 10, 1940, TO THE CONTRACTOR, THE CHIEF OF THE PURCHASE AND SALES SECTION OF THE COMMISSION STATED:

SUBJECT: PURCHASE ORDER MC-41-349.

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 31, 1940, RELATIVE TO YOUR INABILITY TO DELIVER THE NAVY TYPE PROTRACTORS COVERED BY THE SUBJECT PURCHASE ORDER, AND YOUR DESIRE TO HAVE SAME CANCELLED FROM OUR ORDER.

INASMUCH AS THE AWARD FOR ABOVE-MENTIONED PROTRACTORS WAS MADE YOUR COMPANY IN GOOD FAITH AND AS A RESULT OF COMPETITIVE BIDDING, THIS OFFICE IS UNABLE TO CANCEL THE PROTRACTORS FROM THE SUBJECT PURCHASE ORDER.

IN VIEW OF THE FOREGOING, AND OF THE URGENT DELIVERY REQUIREMENTS, IMMEDIATE STEPS ARE BEING TAKEN TO PURCHASE THE PROTRACTORS FROM THE NEXT LOW BIDDER, WITH THE EXCESS COSTS OCCASIONED THE GOVERNMENT THEREBY CHARGED TO YOUR ACCOUNT.

IT APPEARS FROM OTHER EVIDENCE OF RECORD THAT THE PROTRACTORS WERE PURCHASED FROM KEUFFEL AND ESSER, THE ONLY OTHER BIDDER ON ITEM 7, AT ITS BID PRICE OF $12.50 EACH, AND THAT THE RESULTING EXCESS COST OF $83.35 WAS COLLECTED BY DEDUCTION FROM THE AMOUNT OTHERWISE DUE RIGGS AND BRO. FOR THE ITEMS WHICH IT FURNISHED UNDER ITS ACCEPTED BID.

SINCE THE CONTRACT HAD BEEN AWARDED TO RIGGS AND BRO. BEFORE THERE WAS ANY ALLEGATION OF ERROR, THE QUESTION HERE INVOLVED IS NOT WHETHER THE CONTRACTOR MADE A BONA FIDE MISTAKE IN THE PREPARATION OF ITS BID, BUT WHETHER, NEVERTHELESS, A LEGAL AND BINDING CONTRACT WAS FORMED BY THE ACCEPTANCE OF THE BID. THERE WAS NO ERROR APPARENT ON THE FACE OF THE CONTRACTOR'S BID ON ITEM 7. WHILE THERE IS A CONSIDERABLE DIFFERENCE BETWEEN THE LOW BID IN THE AMOUNT OF $4.25 EACH AND THE ONLY OTHER BID IN THE AMOUNT OF $12.50 EACH, ORDINARILY NO FAIR COMPARISON WITH OTHER BIDS CAN BE MADE WHERE ONLY TWO WIDELY VARIANT BIDS ARE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH.

SINCE THE MISTAKE WAS NOT MUTUAL AND WAS NOT ALLEGED UNTIL AFTER ACCEPTANCE OF THE BID, THERE WOULD APPEAR NO LEGAL BASIS FOR RELIEVING THE CONTRACTOR FROM THE OBLIGATION IMPOSED UPON IT BY THE ACCEPTANCE IN GOOD FAITH OF ITS BID, OR FOR THE REFUND OF THE AMOUNT APPARENTLY COLLECTED AS EXCESS COST BY REASON OF THE CONTRACTOR'S DEFAULT ON ITEM 7. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88; UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; AMERICAN WATER SOFTENER CO. V. UNITED STATES, 50 CT.1CLS. 209; 7 COMP. GEN. 414; 11 ID. 473; 15 ID. 233; 18 ID. 28; ID. 942.