B-130793, APR. 26, 1957

B-130793, APR. 26, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 19, 1957, FROM THE ASSISTANT SECRETARY (LOGISTICS), RELATIVE TO THE CLAIM OF SHENANGO CHINA, INC., FOR AN ADDITIONAL AMOUNT OF $9,223.66 UNDER CONTRACT NO. DA-36-030-QM-8059, DATED JUNE 28, 1956.

ON APRIL 16, 1956, THE PHILADELPHIA QUARTERMASTER DEPOT, BY INVITATION FOR BIDS NO. 36-030-56-652--- RESTRICTED TO SMALL BUSINESS FIRMS--- REQUESTED BIDS ON SEVERAL ITEMS OF CHINAWARE. ITEM NO. 5 COVERED THE FURNISHING OF 56,784 "CUPS, DRINKING, COFFEE, CHINA, 8 OZ., " F.O.B. ORIGIN, IN ACCORDANCE WITH FEDERAL SPECIFICATION NO. M-C 301A, DATED 21 APRIL 1943, 23,520 BEING FOR DOMESTIC AND 33,264 FOR EXPORT PACK. FIVE BIDS WERE RECEIVED ON ITEM NO. 5. THE LOW BID OF $0.389 EACH FOR DOMESTIC PACK AND $0.4201 EACH FOR EXPORT PACK, LESS A DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN 15 CALENDAR DAYS, WAS RECEIVED FROM SHENANGO CHINA, INC., A LARGE BUSINESS. THE BIDS RECEIVED FROM SMALL BUSINESS FIRMS RANGED FROM $0.42 TO $0.648 FOR DOMESTIC PACK AND $0.485 TO $0.5736 FOR EXPORT PACK. SINCE THE INVITATION WAS RESTRICTED TO SMALL BUSINESS FIRMS, THE BID OF SHENANGO CHINA, INC., WAS NOT RESPONSIVE TO THE INVITATION. HOWEVER, IN VIEW OF THE DIFFERENCE BETWEEN THE BID SUBMITTED BY SHENANGO CHINA AND THE BIDS RECEIVED FROM SMALL BUSINESS FIRMS, IT WAS DECIDED TO REJECT ALL BIDS AND TO READVERTISE THE PROCUREMENT WITHOUT RESTRICTIONS.

THE READVERTISEMENT WAS MADE BY INVITATION FOR BIDS NO. QM-36-030-56 907, ISSUED JUNE 11, 1956, OPENED ON JUNE 22, 1956, FOR THE SAME QUANTITIES OF CUPS AND UNDER THE SAME SPECIFICATION AS IN THE PREVIOUS INVITATION. PAGE 1 OF THE SCHEDULE REFERRED BIDDERS TO PAGES 3 AND 4 FOR THE SPECIFICATION. ON PAGE 3 IT WAS STATED THAT THE CUPS WERE TO BE IN ACCORDANCE WITH FEDERAL SPECIFICATION M-C-301A, DATED 21 APRIL 1943, WITH THE FOLLOWING EXCEPTION, AMONG OTHERS:

"E-4B. THICK WARE (ENLISTED MEN'S SERVICE). - THE COFFEE MUG SHALL HAVE A WELDED HANDLE AND SHALL BE IN ACCORDANCE WITH FIGURE 8, PIECE NUMBER 7.'

IN RESPONSE TO THIS INVITATION SHENANGO CHINA, INC., SUBMITTED A BID QUOTING THE SAME PRICES AS IT DID ON THE PREVIOUS INVITATION, NAMELY $0.389 FOR DOMESTIC PACK AND $0.4201 FOR EXPORT PACK, LESS A DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN 15 CALENDAR DAYS. ONLY ONE OTHER BID WAS RECEIVED. THIS OTHER BIDDER WAS THE SAME BIDDER WHO WAS THE SECOND LOW BIDDER ON THE FIRST INVITATION AND THIS TIME IT QUOTED PRICES OF $0.385 FOR DOMESTIC PACK AND $0.4175 FOR EXPORT PACK, NET. TAKING INTO ACCOUNT DISCOUNT AND FREIGHT COSTS, THE TOTAL COST TO THE GOVERNMENT UNDER THE BID OF SHENANGO CHINA WAS DETERMINED TO BE FRACTIONALLY LOWER THAN UNDER THAT OF THE OTHER BIDDER AND, THEREFORE, AWARD WAS MADE TO SHENANGO CHINA BY CONTRACT NO. 36-030-QM-8059 (O.I. 9083-G-56) DATED JUNE 28, 1956.

IT APPEARS THAT SHORTLY PRIOR TO AUGUST 31, 1956, THE CONTRACTOR COMPLETED THE MANUFACTURE OF THE CUPS AND REQUESTED INSPECTION. UPON INSPECTION THE CUPS MANUFACTURED WERE REJECTED AS NOT BEING THE ITEM REQUIRED BY THE CONTRACT. ON AUGUST 31, 1956, AND THEREAFTER, THE CONTRACTOR NOTIFIED THE PURCHASING OFFICE THAT IT HAD MISINTERPRETED THE ITEM REQUIRED AND HAD MANUFACTURED THE WRONG TYPE OF CUP. IT WAS STATED THAT THE COMPANY HAD MISINTERPRETED THE NOMENCLATURE APPEARING ON PAGE 1 "CUPS, DRINKING, COFFEE, CHINA, 8 OZ., " TO MEAN THE ITEM KNOWN TO IT AS A BOSTON TEACUP (A 7 1/2 OZ. CUP) WHICH IT HAD PREVIOUSLY SUPPLIED UNDER ANOTHER CONTRACT. THE CUP MANUFACTURED WAS THE CUP SHOWN IN FIGURE 1, PIECE NO. 8 OF FEDERAL SPECIFICATION M-C 301A, DATED 21 APRIL 1943, RATHER THAN THE "MUG" SHOWN IN FIGURE 8, PIECE NO. 7, AS REQUIRED BY THE CONTRACT HERE INVOLVED. SUBSEQUENTLY, THE CONTRACTOR FURNISHED THE TYPE OF CUP (MUG) REQUIRED AND THE CLAIM FOR $9,223.66 REPRESENTS THE ALLEGED DIFFERENCE IN COST BETWEEN THE TYPE OF CUP UPON WHICH THE BID WAS BASED AND THE CUP (MUG) REQUIRED BY THE CONTRACT.

THE INVITATION ADEQUATELY DESCRIBED THE TYPE CUP (MUG) DESIRED. THE CONTRACTOR MERELY ALLEGES THAT IT OVERLOOKED THE REQUIREMENTS AND ASSUMED THAT THE CUP DESIRED WAS THE SAME TYPE AS IT PREVIOUSLY FURNISHED TO ANOTHER PURCHASING OFFICE UNDER A DIFFERENT CONTRACT. A BIDDER'S OVERSIGHT OR NEGLIGENCE IN FAILING TO ASCERTAIN THE REQUIREMENTS OF THE SPECIFICATIONS AFFORDS NO LEGAL BASIS FOR RELIEVING IT FROM LIABILITY UNDER THE CONTRACT. THE ESTABLISHED RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE OF IT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259 AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

IN THE INSTANT CASE THE CONTRACTOR HAD TWO OPPORTUNITIES TO ASCERTAIN THE TYPE OF CUP (MUG) REQUIRED. WHILE UNDER THE FIRST INVITATION SHENANGO CHINA'S BID PRICES WERE SOMEWHAT LOWER THAN THOSE OF THE SECOND LOW BIDDER, UNDER THE INVITATION HERE INVOLVED THE SECOND LOW BIDDER, WHO WAS ALSO THE SECOND LOW BIDDER UNDER THE FIRST INVITATION, QUOTED PRICES WHICH WERE ACTUALLY LOWER THAN SHENANGO CHINA'S ON AN F.O.B. ORIGIN BASIS AND IT WAS ONLY THE TRANSPORTATION COSTS AND DISCOUNT WHICH MADE SHENANGO CHINA'S BID A FRACTION LOWER. THUS, IT IS CLEAR THAT THERE IS NOTHING ON THE FACE OF THE BID, OR IN THE ATTENDANT CIRCUMSTANCES, OF A SUFFICIENT NATURE TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR. THE RECORD INDICATES THAT THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL LONG 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. THE LAW IS CLEAR THAT ONCE A CONTRACTUAL OR OTHER RIGHT HAS BECOME VESTED IN THE UNITED STATES, AS IN THIS CASE, THERE EXISTS NO AUTHORITY IN ANY OF ITS OFFICERS OR AGENTS TO GRATUITOUSLY WAIVE OR SURRENDER THE SAME. SEE UNITED STATES V. AMERICAN SALES COMPANY, 27 F.2D 389, AFFIRMED 32 F.2D 141; PACIFIC HARDWARE V. UNITED STATES, 78 C.CLS. 584 AND SIMPSON V. UNITED STATES, 172 U.S. 372.

ACCORDINGLY, SINCE SHENANGO CHINA, INC., HAS BEEN PAID THE CONSIDERATION SPECIFIED IN THE CONTRACT FOR FURNISHING THE SUPPLIES REQUIRED THEREUNDER, THERE IS NO LEGAL BASIS FOR THE PAYMENT OF ANY AMOUNT IN ADDITION THERETO.