B-148147, APR. 17, 1962

B-148147, APR. 17, 1962

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MARCH 14, 1962, WITH ENCLOSURE, FILE REFERENCE R11.2, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO THE REQUEST OF SWIFT AND COMPANY FOR RELIEF UNDER CONTRACT NO. N228-53640.

IT APPEARS THAT IN RESPONSE TO AN ORAL SOLICITATION MADE ON MAY 19, 1961, BY THE PURCHASE DIVISION, GENERAL SUPPLY DEPOT, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, SWIFT AND COMPANY QUOTED A UNIT PRICE OF $0.937 PER POUND ON 384 POUNDS OF PEPPERONI. PURSUANT THERETO, THERE WAS ISSUED CONFIRMING CONTRACT NO. N228-53640, DATED MAY 25, 1961, CALLING FOR DELIVERY OF THE PEPPERONI AT A PRICE OF $0.437 PER POUND.

THE RECORD INDICATES THAT AFTER DELIVERY OF THE PEPPERONI, SWIFT AND COMPANY BILLED THE GOVERNMENT AT A PRICE OF $0.937 PER POUND AND THAT BEFORE MAKING PAYMENT ON THE INVOICE, THE ADMINISTRATIVE OFFICE REDUCED SUCH PRICE TO $0.437 PER POUND SO THAT IT WOULD CONFORM WITH THE PRICE SHOWN IN THE CONTRACT.

BY LETTER DATED JUNE 15, 1961, SWIFT AND COMPANY ADVISED THE PURCHASE DIVISION THAT A REPRESENTATIVE OF ITS FIRM IN ERROR SIGNED THE CONTRACT WITHOUT NOTICING THAT THE PRICE OF THE PEPPERONI WAS ERRONEOUSLY STATED THEREIN AS $0.437 PER POUND. THE COMPANY REQUESTED THAT THE CONTRACT BE AMENDED TO PROVIDE FOR PRICE OF $0.937 PER POUND, THE PRICE ORALLY QUOTED BY ITS REPRESENTATIVE TO THE PURCHASE DIVISION ON MAY 19, 1961. A COPY OF A PRINTED PRICE LIST WHICH ACCOMPANIED THE COMPANY'S LETTER OF JUNE 15 SHOWS THAT THE COMPANY'S REGULAR ESTABLISHED PRICE FOR THE PEPPERONI IS $0.937 PER POUND.

BY LETTER DATED JULY 7, 1961, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT HE DID NOT HAVE THE AUTHORITY TO INCREASE THE PRICE OF THE PEPPERONI TO $0.937 PER POUND FOR THE REASON THAT AN AGREEMENT BINDING ON BOTH PARTIES BECAME EFFECTIVE WHEN THE CONTRACT WAS EXECUTED BY THE COMPANY AND THE GOVERNMENT. IN A LETTER DATED NOVEMBER 17, 1961, THE COMPANY STATED THAT THE PRICE OF $0.937 PER POUND SHOWN IN THE CONTRACT FOR THE PEPPERONI WAS NOT THE PRICE ORALLY QUOTED BY ITS REPRESENTATIVE ON MAY 19 AND THAT THE MISTAKE WAS TWOFOLD IN THAT THE INITIAL MISTAKE WAS MADE BY THE CONTRACTING OFFICER IN LISTING THE PRICE OF THE PEPPERONI IN THE CONTRACT AND THAT THE SECOND MISTAKE WAS MADE BY THE COMPANY'S REPRESENTATIVE IN FAILING TO NOTE THE ERRONEOUS PRICE IN THE CONTRACT.

IN A LETTER DATED DECEMBER 6, 1961, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT IT WAS CORRECT IN STATING THAT THE CONTRACTING OFFICER ERRED IN SHOWING THE CONTRACT PRICE OF THE PEPPERONI AS $0.437 INSTEAD OF $0.937 PER POUND AS QUOTED BY TELEPHONE TO THE GOVERNMENT BUYER AND THAT DESPITE THE MUTUALITY OF THE MISTAKE, NO AVENUE OF POSSIBLE RELIEF WAS NOW AVAILABLE FOR THE REASON THAT THE ERROR WAS NOT DISCLOSED UNTIL AFTER PERFORMANCE OF THE CONTRACT HAD BEEN COMPLETED.

THE RULE OF LAW IS THAT, WHEN BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. 30 COMP. GEN. 220, AND CASES CITED THEREIN. THE TIME THE INSTANT AWARD WAS MADE, NEITHER PARTY TO THE CONTRACT INTENDED THAT THE PEPPERONI WOULD BE FURNISHED TO THE GOVERNMENT AT THE PRICE SHOWN IN THE CONTRACT. HOWEVER, DUE TO A MISTAKE BY THE GOVERNMENT IN DRAWING UP THE AWARD AND AN OVERSIGHT BY THE COMPANY IN EXECUTING THE CONTRACT, THE CONTRACT REFLECTS AN AGREEMENT WHICH NEITHER PARTY INTENDED. THE RECORD IS SUFFICIENT TO AUTHORIZE REFORMATION OF THE CONTRACT BUT SINCE THE DELIVERY THEREUNDER HAS BEEN COMPLETED, REFORMATION OF THE CONTRACT DOES NOT NOW APPEAR TO BE REQUIRED. ACCORDINGLY, AN ADDITIONAL PAYMENT OF $192- - THE AMOUNT DEDUCTED FROM THE COMPANY'S INVOICE--- IS AUTHORIZED TO BE MADE TO THE COMPANY.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING THE ADDITIONAL PAYMENT TO THE COMPANY.