B-158214, JAN. 13, 1966

B-158214, JAN. 13, 1966

TO THE HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR OF VETERANS AFFAIRS, VETERANS ADMINISTRATION:

RECEIPT IS HEREBY ACKNOWLEDGED OF A LETTER DATED DECEMBER 20, 1965, SIGNED BY THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, REQUESTING THE ADVICE OF OUR OFFICE AS TO THE PROPER DISPOSITION TO BE MADE OF A CLAIM OF MISTAKE IN BID ALLEGED BY THE AMERICAN STERILIZER COMPANY AFTER AWARD OF PURCHASE ORDER NO. 1283 AND AFTER DELIVERY OF THE EQUIPMENT INVOLVED. THE TRANSACTION ORIGINATED IN A REQUIREMENT BY THE VETERANS ADMINISTRATION HOSPITAL, MARION, ILLINOIS, FOR AN AUTOMATIC FLASK WASHER WHICH WAS PROCURED FROM THE AFOREMENTIONED COMPANY PURSUANT TO ITEM 2 OF INVITATION FOR BIDS NO. 65-39.

DETAILED SPECIFICATIONS FOR THE ITEM WERE SET FORTH IN THE SOLICITATION. THE SPECIFICATIONS WERE PATTERNED CLOSELY AFTER THE PRODUCT OF THE ONLY OTHER BIDDER ON THE ITEM, MACBICK COMPANY. ON MAY 20, 1965, WHEN BIDS WERE OPENED THE MACBICK QUOTATION IN THE NET AMOUNT OF $2,670 WAS DISREGARDED BECAUSE EXCEPTION WAS TAKEN TO SUPPLYING 100 FEET OF TUBING AND FITTINGS AS REQUIRED BY PARAGRAPH D, PAGE 7. SINCE THE BID OF AMERICAN STERILIZER COMPANY IN THE AMOUNT OF $2,840 WAS UNQUALIFIED, AND ERROR WAS NOT SUSPECTED, THE AWARD TO AMERICAN STERILIZER COMPANY WAS CONSUMMATED THE SAME DAY.

THE DELIVERY DATE SCHEDULED IN THE CONTRACT WAS PASSED OVER BUT THE UNIT FINALLY ARRIVED ON OCTOBER 5. SEVERAL MATERIAL DEVIATIONS FROM THE SPECIFICATIONS WERE NOTED BY GOVERNMENT PERSONNEL PERFORMING THE INSPECTION AND THE CONTRACTING OFFICER, BY TELEPHONE ON OCTOBER 6 AND LETTER OF THE FOLLOWING DAY, OFFICIALLY REJECTED THE UNIT AS NONCONFORMING. WE ARE ADVISED THAT THE WASHER HAS NOT YET BEEN ACCEPTED NOR HAS PAYMENT BEEN MADE.

IT APPEARS FROM THE RECORD, HOWEVER, THAT AFTER DISCUSSING THE SITUATION WITH COMPANY REPRESENTATIVES, HOSPITAL OFFICIALS HAVE CONCLUDED THAT THE NONCONFORMING UNIT WILL PERFORM AS WELL AS THE UNIT SPELLED OUT IN THE ADVERTISED SPECIFICATIONS. IT IS REPORTED THAT THE WASHER CAN INDEED BE PROPERLY INSTALLED AND OPERATED IN HOSPITAL FACILITIES AND WILL ADEQUATELY PROCESS THE REQUIRED 360 FLASKS PER HOUR.

A CLAIM OF MISTAKE IN BID ALLEGED AFTER AWARD IS GENERALLY TREATED AS A REQUEST FOR REFORMATION OR RESCISSION OF THE CONTRACT ERRONEOUSLY ENTERED INTO. RELIEF IS GRANTED ONLY UPON A SHOWING THAT THE PARTIES ENTERED INTO THE CONTRACT UNDER THE INFLUENCE OF A MUTUAL MISTAKE OR, IN THE CASE OF UNILATERAL ERROR, UPON A DEMONSTRATION THAT THE OTHER PARTY KNEW OR SHOULD HAVE KNOWN OF THE MISUNDERSTANDING AND THEREFORE MAY BE SAID TO HAVE TAKEN UNCONSCIONABLE ADVANTAGE OF THE SITUATION. RESTATEMENT OF CONTRACTS, SECTIONS 502, 505, 508, 511; 41 COMP. GEN. 34. COMPARE C. N. MONROE MANUFACTURING COMPANY V. UNITED STATES, 143 F.SUPP. 449 (1956), WHERE THE RULE WAS APPLIED. THERE IS NO EVIDENCE PRESENTED THAT THE MISTAKE OF AMERICAN STERILIZER COMPANY IN FAILING TO STATE THAT ITS BID WAS PREDICATED UPON FURNISHING ITS MODEL FW-360 WAS DUE TO OTHER THAN ITS OWN NEGLIGENCE. NOR, ON THE BASIS OF THE EVIDENCE NOW BEFORE US, CAN ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF THE ERROR AT THE TIME OF AWARD BE IMPUTED TO THE CONTRACTING OFFICER. IT IS WELL SETTLED THAT NO OFFICER OF THE GOVERNMENT IS AUTHORIZED TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. CHRISTIE V. UNITED STATES, 237 U.S. 234 (1915); SIMPSON V. UNITED STATES, 172 U.S. 372 (1899); WALTER C. REEDIGER, INC. V. UNITED STATES, 94 CT.CL. 120 (1941). ASSUMING THE FACTS TO BE AS STATED HEREIN, WE SEE NO ALTERNATIVE AVAILABLE TO YOUR AGENCY BUT TO EXERCISE THE GOVERNMENT'S RIGHT TO HOLD THE COMPANY IN DEFAULT UNDER THE CONTRACT.

WE AGREE WITH THE SUGGESTION IN THE LAST PARAGRAPH OF YOUR LETTER DATED DECEMBER 20 THAT THE AWARD SHOULD BE CANCELLED AND THAT ANY READVERTISEMENT FOR THE EQUIPMENT CONTAIN SPECIFICATIONS ACCURATELY REFLECTING ONLY THE ACTUAL NEEDS OF THE HOSPITAL.