B-142467, APR. 29, 1960

B-142467, APR. 29, 1960

TO UNITED AIRCRAFT SUPPLY CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 25, 1960, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $523.20 REPRESENTING EXCESS COST INCURRED BY THE UNITED STATES AS A RESULT OF YOUR DEFAULT UNDER PURCHASE ORDER NO. 359-871 ISSUED ON JANUARY 5, 1959, BY THE CIVIL AERONAUTICS ADMINISTRATION (NOW THE FEDERAL AVIATION AGENCY).

BY INVITATION FOR BIDS NO. KC-59-30 DATED NOVEMBER 7, 1958, BIDS--- TO BE OPENED DECEMBER 2, 1958--- WERE REQUESTED ON 39 ITEMS OF TERMINAL LUGS, CABLE CLAMPS, CABLE DUCT AND FITTINGS, AWARDS TO BE MADE ONLY TO SMALL BUSINESS CONCERNS. IN RESPONSE TO THE INVITATION, YOU SUBMITTED A BID ON VARIOUS ITEMS, INCLUDING PRICES OF $32 PER M ON ITEMS NOS. 6 AND 7 COVERING 80,000 TERMINAL LUGS, A TOTAL PRICE OF $2,560 ON THE TWO ITEMS. THE 16 OTHER BIDS RECEIVED FOR FURNISHING ACCEPTABLE LUGS UNDER THOSE ITEMS RANGED FROM $32.85 PER M TO $45 PER M, 10 OF THOSE BIDS BEING LESS THAN $37 PER M. ON DECEMBER 30, 1958, YOUR BID ON ITEMS NOS. 6 AND 7 WAS ACCEPTED AS THE LOWEST RESPONSIVE BID AND PURCHASE ORDER NO. 359-871 WAS ISSUED TO YOU ON OR ABOUT JANUARY 6, 1959.

IN YOUR LETTER DATED JANUARY 23, 1959, YOU ALLEGED A TYPOGRAPHICAL ERROR IN YOUR BID ON ITEMS NOS. 6 AND 7 IN THAT THE INTENDED PRICE WAS $45 PER M INSTEAD OF $32 PER M AND YOU REQUESTED THAT THE CONTRACT PRICE BE CHANGED TO $45 PER M OR THAT THE ORDER BE CANCELED. IN ITS REPLY OF FEBRUARY 3, 1959, THE CONTRACTING OFFICE DECLINED TO RELEASE YOU FROM YOUR BID AND REQUESTED DELIVERY OF THE LUGS. FURTHER REQUESTS FOR DELIVERY WERE SENT TO YOU BY LETTERS DATED APRIL 8 AND MAY 6, 1959, AND BY A TELEGRAM DATED MAY 22, 1959. SINCE NO COMMUNICATION WAS RECEIVED FROM YOU SUBSEQUENTLY TO YOUR LETTER OF JANUARY 23, 1959, A TELEGRAM DATED MAY 27, 1959, WAS SENT TO YOU TERMINATING YOUR RIGHT TO PROCEED UNDER THE CONTRACT AND ADVISING YOU THAT THE LUGS WOULD BE PROCURED ELSEWHERE AND THAT YOU WOULD BE ADVISED OF ANY EXCESS COST INCURRED. ACCORDINGLY, THE LUGS WERE PURCHASED ON AN OPEN-MARKET BASIS FROM GRAYBAR ELECTRIC COMPANY--- WHICH COMPANY HAD SUBMITTED THE SECOND LOW BID OF $32.85 UNDER THE ORIGINAL INVITATION--- AT A PRICE OF $39 PER M, RESULTING IN AN ADDITIONAL COST OF $523.20, AND BY A LETTER DATED JULY 24, 1959, YOU WERE REQUESTED TO MAKE PAYMENT OF THAT AMOUNT IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT.

IN YOUR REPLY DATED JULY 27, 1959--- THE FIRST COMMUNICATION RECEIVED FROM YOU SINCE YOUR LETTER OF JANUARY 23, 1959--- YOU REQUESTED THAT YOU BE RELIEVED OF ALL LIABILITY OR, IN THE ALTERNATIVE, THAT ANY CHARGE AGAINST YOU BE LIMITED TO A MAXIMUM OF $68, THAT BEING THE DIFFERENCE BETWEEN THE AMOUNT OF YOUR BID AND THE NEXT LOW BID AS STATED BY THE CONTRACTING OFFICE IN ITS LETTER TO YOU DATED FEBRUARY 3, 1959. UNDER DATE OF AUGUST 5, 1959, THE CONTRACTING OFFICE EXPLAINED TO YOU, IN SUBSTANCE, THAT THE SMALL DIFFERENCE BETWEEN YOUR BID AND THE NEXT LOW BID WAS MENTIONED TO YOU ONLY TO SHOW THAT THERE WAS NOTHING TO INDICATE ERROR IN YOUR BID AND AGAIN REQUESTED YOU TO MAKE PAYMENT OF THE EXCESS COST. IN VIEW OF YOUR REFUSAL TO PAY MORE THAN $68, THE MATTER WAS REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR DISPOSITION AND BY A LETTER DATED MARCH 11, 1960, YOU WERE REQUESTED TO PAY THE AMOUNT OF THE EXCESS COST, $523.20. IN YOUR LETTERS OF MARCH 17 AND MARCH 25, 1960, YOU REPEATED YOUR OFFER TO PAY $68 IN FULL SETTLEMENT OF THE INDEBTEDNESS.

IN 20 COMP. GEN. 652 IT IS STATED:

"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 THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. 26 COMP. DEC. 286; 6 COMP. GEN. 526; 8 ID. 362.'

IN THE INSTANT MATTER, THE QUESTION FOR CONSIDERATION IS NOT WHETHER YOU MADE AN ERROR IN YOUR BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. THERE WAS NOTHING IN THE BID TO INDICATE AN ERROR THEREIN AND NO ALLEGATION OF ERROR WAS MADE UNTIL AFTER THE AWARD. THE CONTRACTING OFFICER HAS STATED THAT NO ERROR WAS APPARENT TO HIM PRIOR TO AWARD. THE DIFFERENCE BETWEEN THE PRICE QUOTED BY YOU AND THE PRICES QUOTED BY OTHER BIDDERS APPARENTLY WAS NOT SO GREAT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR AND IT DOES NOT APPEAR THAT SUCH DIFFERENCE WAS SO GREAT THAT HE SHOULD HAVE BEEN ON NOTICE OF ERROR. NEITHER WAS THE ERROR INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT.

ACCORDINGLY, THE ESTABLISHED RULE ABOVE QUOTED IS FOR APPLICATION HERE. THE ACCEPTANCE OF YOUR BID UNDER THE CIRCUMSTANCES CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75; 26 COMP. GEN. 415; 29 ID. 323 AND AUTHORITIES CITED IN THOSE DECISIONS.

IN ACCORDANCE WITH THE SPECIFIC PROVISIONS OF THE CONTRACT, THE LUGS WERE PROCURED ELSEWHERE AFTER IT BECAME APPARENT THAT THEY WOULD NOT BE FURNISHED BY YOU AND YOU WERE CHARGED WITH THE EXCESS COST THEREBY INCURRED. THE AMOUNT OF THE EXCESS COST IS THE DIFFERENCE BETWEEN THE AMOUNT OF YOUR BID AND THE ACTUAL COST OF PROCURING THE LUGS ELSEWHERE AND HAS NO RELATIONSHIP TO THE AMOUNT OF THE SECOND LOW BID. MARKET PRICES WELL MIGHT CHANGE GREATLY DURING THE PERIOD FROM DECEMBER 2, 1958 (DATE OF BID OPENING), TO JUNE 4, 1959 (DATE OF PURCHASE ORDER TO GRAYBAR ELECTRIC COMPANY). IN THIS CONNECTION, IT MAY BE OBSERVED THAT, HAVING REGARD FOR THE FACT THAT SEVERAL OTHER BIDS RECEIVED WERE ONLY SLIGHTLY HIGHER THAN YOUR BID, IT APPEARS THAT IF YOU HAD FULFILLED THE CONTRACT PROMPTLY AS YOU WERE LEGALLY BOUND TO DO YOU WOULD HAVE SUFFERED LITTLE, IF ANY, FINANCIAL LOSS. MOREOVER, IF YOU HAD ADVISED THE CONTRACTING OFFICER PROMPTLY OF YOUR INTENTION TO DEFAULT UNDER THE CONTRACT SO THAT PROCUREMENT OF THE LUGS COULD HAVE BEEN PROCURED PROMPTLY FROM ANOTHER SOURCE THE AMOUNT OF EXCESS COST WELL MIGHT HAVE BEEN CONSIDERABLY LESS THAN IT PROVED TO BE.

FOR THE REASONS ABOVE SET OUT, IT IS AGAIN REQUESTED THAT YOU MAKE PROMPT PAYMENT OF THE AMOUNT OF $523.20, ANY CHECK, DRAFT OR MONEY ORDER TO BE MADE PAYABLE TO THE U.S. GENERAL ACCOUNTING OFFICE AND ADDRESSED TO:

U.S. GENERAL ACCOUNTING OFFICE

P.O. BOX 2610

WASHINGTON 13, D.C. IN THE INTEREST OF SIMPLICITY AND SATISFACTORY DISPOSITION OF THIS MATTER, IT IS SUGGESTED THAT THE ENTIRE AMOUNT DUE BE PAID PROMPTLY IN ONE SUM. HOWEVER, IF YOU PREFER TO TAKE MORE TIME TO COMPLETE PAYMENT, OUR OFFICE WILL OFFER NO OBJECTION TO PAYMENT OF THE INDEBTEDNESS IN APPROXIMATELY EQUAL MONTHLY INSTALLMENTS, PAYMENT TO BE COMPLETED WITHIN ONE YEAR FROM THE DATE OF THIS LETTER.

UNLESS, WITHIN 30 DAYS FROM THE DATE OF THIS LETTER, THERE IS RECEIVED FULL PAYMENT OF THE AMOUNT DUE OR DEFINITE ACCEPTANCE OF THE PLAN FOR INSTALLMENT PAYMENTS HEREINABOVE SUGGESTED TOGETHER WITH PAYMENT OF THE FIRST INSTALLMENT, THIS MATTER WILL BE REFERRED TO THE ATTORNEY GENERAL FOR COLLECTION ACTION.