B-130086, JAN. 7, 1957

B-130086, JAN. 7, 1957

TO BREWER AND COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF OCTOBER 30 AND DECEMBER 12, 1956, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED AUGUST 14, 1956, WHICH DISALLOWED YOUR CLAIM FOR $3,480.96, REPRESENTING THE LOSS ALLEGED TO HAVE BEEN SUSTAINED BY YOU IN THE PERFORMANCE OF CONTRACT NO. V1005P-4380, DATED MARCH 6, 1956.

THE BASIS FOR YOUR CLAIM IS THAT, THROUGH INADVERTENCE, YOU COMPUTED THE UNIT PRICE OF ITEMS NOS. 7, 8 AND 9 OF THE CONTRACT, COVERING DECAVITAMIN TABLETS, IN ACCORDANCE WITH AN OLDER FORMULA PRESCRIBED IN "MILITARY MEDICAL PURCHASE DESCRIPTION NO. 4," DATED JUNE 29, 1955, INSTEAD OF THE NEW FORMULA PRESCRIBED IN "SPECIFICATION BY THE V.A. OF U.S.P., " EFFECTIVE DECEMBER 15, 1955. IN SUBSTANTIATION OF YOUR ALLEGATION OF ERROR IN HAVING QUOTED ON A PRODUCT OF LOWER POTENCY THAN THAT SPECIFIED IN THE CONTRACT SPECIFICATIONS, YOU HAVE SUBMITTED CERTIFIED COPIES OF YOUR ORIGINAL WORKSHEETS, SHOWING THE MANNER IN WHICH YOUR BID PRICES FOR THESE ITEMS WERE COMPUTED, WHICH, OF COURSE, WOULD TEND TO ESTABLISH THE EXISTENCE OF BONA FIDE ERRORS IN YOUR ACCEPTED PROPOSAL.

HOWEVER, IT IS DEEMED APPROPRIATE TO POINT OUT TO YOU THAT THE PRIMARY ISSUE IN THIS CASE IS NOT WHETHER A BONA FIDE MISTAKE ACTUALLY WAS MADE IN YOUR PROPOSAL, BUT RATHER, WHETHER THE GOVERNMENT CONTRACTING OFFICER WAS AWARE OF SUCH ERROR, OR HAD SOUND AND ADEQUATE REASON TO SUSPICION ITS EXISTENCE, AT THE TIME HE ACCEPTED YOUR BID ON MARCH 6, 1956.

IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT MUTUAL MISTAKE--- ONE MADE BY BOTH PARTIES TO A CONTRACT--- AFFORDS THE ONLY LEGAL JUSTIFICATION FOR THE REFORMATION OR MODIFICATION OF THE TERMS OF AN OTHERWISE VALID CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249. IN THIS CONNECTION, THE RECORD CLEARLY SHOWS, AND THE CONTRACTING OFFICER SO STATES, THAT YOUR BID PRICES ON ITEMS NOS. 7, 8 AND 9 WERE IN LINE WITH, AND WERE NOT OUT OF PROPORTION TO, SEVERAL OTHER BIDS RECEIVED ON THOSE ITEMS UNDER THE SAME INVITATION. OTHERWISE, THE RECORD SHOWS THAT THE CONTRACTING OFFICER HAD NO ACTUAL NOTICE OF THE EXISTENCE OF ANY ERROR IN YOUR BID AT THE TIME OF ITS ACCEPTANCE BY THE GOVERNMENT. SUCH ACCEPTANCE, IN THOSE CIRCUMSTANCES, CONSTITUTED A VALID AND BINDING CONTRACT, WHICH THEREUPON ESTABLISHED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

FURTHERMORE, UPON THE ACCEPTANCE OF YOUR PROPOSAL WITHOUT NOTICE OF ERROR THEREIN, THE UNITED STATES THUS ACQUIRED CERTAIN VESTED RIGHTS, INCLUDING THE RIGHT TO DEMAND AND TO RECEIVE DELIVERY OF ALL THE CONTRACT ITEMS IN STRICT ACCORDANCE WITH THE RATES AND TERMS ESTABLISHED IN THE AGREEMENT. SUCH RIGHT, HAVING UNEQUIVOCALLY BECOME VESTED IN THE GOVERNMENT, THERE EXISTS NO AUTHORITY IN ANY OF ITS OFFICERS OR AGENCIES TO GRATUITOUSLY WAIVE OR SURRENDER THE SAME. SEE CHRISTIE V. UNITED STATES, 237 U.S. 234; SIMPSON V. UNITED STATES, 172 U.S. 372; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584, 607.

ACCORDINGLY, UPON THE BASIS OF THE FACTS OF RECORD, AND THE LAW FOUND TO BE APPLICABLE THERETO, THE OFFICE SETTLEMENT OF AUGUST 14, 1956, MUST BE SUSTAINED.