B-140483, AUG. 27, 1959

B-140483, AUG. 27, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 13, 1959, (FILE NO. R11.2 L8) L8/NT4-28), WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY THE ARTHUR CHEMICAL COMPANY, NEW YORK, NEW YORK, TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. N228S-39882 WAS AWARDED.

THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, BY INVITATION NO. B 222-59- 228, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, ITEM 31 CONSISTING OF 2,843 FIVE-POUND CANS OF DDT DUSTING POWER, DESCRIBED AS APPARENTLY UNUSED AND IN GOOD CONDITION, WHICH WAS ACQUIRED BY THE GOVERNMENT AT A TOTAL COST OF $5,117.40. IN RESPONSE, THE ARTHUR CHEMICAL COMPANY OFFERED TO PURCHASE THE ITEM AT A PRICE OF $0.253 FOR EACH CAN OR FOR A TOTAL PRICE OF $719.28. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE OF $150-- IN COMPLIANCE WITH REQUIRED BID DEPOSIT OF AT LEAST 20 PERCENT OF THE TOTAL AMOUNT BID, WAS ACCEPTED ON JUNE 9, 1959.

BY LETTERS OF JUNE 11, JUNE 19, AND JULY 1, 1959, THE COMPANY WAS REQUESTED TO FORWARD THE BALANCE REMAINING DUE OF $569.28 ($719.28 LESS $150) AND TO REMOVE THE PROPERTY PURCHASED. BY LETTER OF JUNE 24, 1959, RECEIVED JUNE 29, THE COMPANY ALLEGED THAT IT HAD MADE A BOOKKEEPING ERROR IN ITS BID AND, IN RESPONSE TO REQUESTED SUBSTANTIATION OF THE ERROR, ALLEGED IN LETTER OF JULY 13, 1959, TRANSMITTING A PURPORTED COPY OF ITS WORK SHEET, THAT IT MISPLACED A DECIMAL POINT IN ITS QUOTED UNIT PRICE AND INTENDED TO BID $0.0253 FOR EACH CAN OF INSECTICIDE. IT IS REPORTED THAT, IN ACCORDANCE WITH PARAGRAPH 18 OF THE SALES CONTRACT--- PROVIDING FOR THE ASSESSMENT OF 20 PERCENT OF THE PURCHASE PRICE IN THE EVENT OF THE PURCHASER'S FAILURE TO PERFORM ITS CONTRACTUAL OBLIGATIONS--- THE SUM OF $143.86 (20 PERCENT OF $719.28) HAS BEEN RETAINED FROM THE BID DEPOSIT AND THE BALANCE OF $6.14 REFUNDED TO THE COMPANY.

THE BASIC QUESTION HERE FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BID BUT, RATHER, WHETHER ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT.

THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY THE COMPANY TO INDICATE THAT THE UNIT PRICE QUOTED THEREIN WAS NOT AS INTENDED.

BOTH THE EXTENSION OF THE UNIT PRICE IN COMPUTING THE TOTAL PRICE AND THE AMOUNT OF THE BID DEPOSIT WERE CONSISTENT WITH THE UNIT PRICE SUBMITTED. THE ABSTRACT OF BIDS SHOWS THAT THE TWO OTHER BIDDERS ON ITEM 31 QUOTED UNIT PRICES OF $0.013 AND $0.0507. WHILE THERE WAS CONSIDERABLE DIFFERENCE BETWEEN THE PRICES QUOTED, IN VIEW OF THE UNIT COST TO THE GOVERNMENT OF $1.80 AND OF THE FACT THAT A WIDE RANGE OF BIDS--- BASED ON INDIVIDUAL NEEDS OR OPPORTUNITIES FOR USE OR RESALE THEREOF--- WOULD NATURALLY BE EXPECTED IN THE SALE OF SURPLUS MATERIAL, IT CANNOT BE SAID THAT THE CONTRACTING OFFICER SHOULD HAVE NOTICED THE PROBABILITY OF ERROR IN THE BID OF THE ARTHUR CHEMICAL COMPANY. THUS, THE RECORD APPEARS TO ESTABLISH THAT THE ACCEPTANCE OF THE COMPANY'S BID WAS IN GOOD FAITH WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ANY ERROR.

IN VIEW OF THE FOREGOING AND AS NO ERROR WAS ALLEGED UNTIL AFTER AWARD, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. ANY ERROR THAT MAY HAVE BEEN MADE IN THE COMPANY'S BID WAS THE RESULT OF ITS OWN NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SUCH ERROR BEING UNILATERAL AFFORDS NO BASIS FOR RELIEVING THE COMPANY FROM ITS OBLIGATIONS UNDER THE CONTRACT. UNITED STATES V. SABIN METALS CORPORATION, 158 F.SUPP. 683, AFFIRMED 253 F.2D 956.