B-168507, MAR. 9, 1970

B-168507, MAR. 9, 1970

CONTRACTS--SPECIFICATIONS--AMBIGUOUS--MISDESCRIPTION AS JUSTIFYING PRICE ADJUSTMENT CONTRACTING OFFICER INTENDED THAT BID PRICE INCLUDE COST OF GOVERNMENT- FURNISHED MATERIAL; HOWEVER, SOLICITATION CONTAINED CONFLICTING CLAUSE. LOW BIDDER INDICATED BID DID NOT INCLUDE COST OF GOVT. MATERIAL AND, AS CONTRACTOR, REQUESTED CORRECTION OF "ERROR" IN DEDUCTING $0.83 PER UNIT FOR GOVT-FURNISHED MATERIAL. WITH DELIVERY COMPLETED, CONTRACTOR SHOULD BE PAID ON QUANTUM VALEBAT BASIS, REQUIRING REFUND OF $0.83 PER UNIT. THERE WAS NO MEETING OF MINDS AND NO CONTRACT RESULTED. WHEN INCONSISTENCY BETWEEN 2 CLAUSES IS GREAT, CONTRACT IS INVALID FOR WANT OF CERTAINTY. MISTAKE-IN-BID REGULATIONS ARE INAPPLICABLE.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO LETTER DSAH-G DATED JANUARY 19, 1970, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, FURNISHING A REPORT ON THE CLAIM OF THE MARKHAM COMPANY, INC; WITH RESPECT TO DEFENSE SUPPLY AGENCY CONTRACT NO. DSA100-69-C-2040, AWARDED BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA.

THE SOLICITATION, DSA100-69-B-1540, PURSUANT TO WHICH AWARD WAS MADE, REQUESTED BIDS FOR THE DELIVERY OF 870 CONSTRUCTION WORKER WAIST TYPE APRONS. IT WAS THE INTENTION OF THE CONTRACTING OFFICER TO PROVIDE THAT THE BID PRICE INCLUDE THE COST OF GOVERNMENT-FURNISHED MATERIAL. REPORTEDLY BY ERROR AND UNKNOWN TO THE CONTRACTING OFFICER,THE SOLICITATION ALSO CONTAINED A CLAUSE WHICH ADVISED BIDDERS NOT TO INCLUDE THE VALUE OF THE MATERIAL IN THE BID PRICE. THE MARKHAM COMPANY IN SUBMITTING ITS BID HAD FURNISHED INFORMATION REQUESTED BY THE CLAUSE TO INDICATE THAT ITS BID DID NOT INCLUDE THE COST OF GOVERNMENT MATERIAL. THAT INFORMATION WAS OVERLOOKED IN THE EVALUATION OF BIDS.

MARKHAM BID A PRICE OF $3.98 PER UNIT. THE UNIT PRICES OF THE OTHER BIDDERS WERE $4.26, $5.57, AND $6.25. THE CONTRACT WAS AWARDED TO MARKHAM ON APRIL 11, 1969.

BY LETTER OF JULY 17, 1969, THE CONTRACTOR REPORTED TO THE CONTRACTING OFFICE THAT THE PRICE IT HAD SUBMITTED ON SOLICITATION DSA100-69-B-1540, RESULTING IN CONTRACT DSA100-69-C-2040, DID NOT INCLUDE ANY GOVERNMENT- FURNISHED MATERIAL INASMUCH AS UNDER THE SECOND PARAGRAPH OF CLAUSE 106.1 OF THE INVITATION THE BIDDER WAS INSTRUCTED NOT TO INCLUDE THE VALUE OF THE GOVERNMENT-FURNISHED MATERIAL IN ITS BID PRICE. THEREFORE, THE CONTRACTOR COMPLAINED ABOUT DEDUCTIONS OF $0.83 PER UNIT MADE BY THE CONTRACTING OFFICER FOR GOVERNMENT FURNISHED MATERIAL. IT REQUESTED A CORRECTION OF "THIS ERROR."

THE ADMINISTRATIVE REPORT IN THE MATTER STATES THAT AFTER THE BIDS WERE RECEIVED AND OPENED, THE PRICES WERE EVALUATED ON THE ASSUMPTION THAT THEY ALL INCLUDED THE VALUE OF GOVERNMENT MATERIAL. THE AWARD ISSUED BY THE CONTRACTING OFFICER STATED ON THE FACE:

"TOTAL AMOUNT ALLOTTED TO CMT COST $2,740.50

TOTAL GOVERNMENT MATERIAL VALUE $ 722.10

TOTAL CONTRACT AMOUNT $3,462.60

"GOVERNMENT MATERIAL SUPPLIED ON BAILMENT PROCEDURE" THE SECOND PAGE OF THE AWARD STATED:

"CUT MAKE AND TRIM PRICE ($3.15 EA)

GOV'T MAT'L UNIT VALUE ($ .83 EA)

TOTAL UNIT PRICE ($3.98 EA)*" IT IS REPORTED THAT THE CONTRACTOR STATED NO OBJECTION TO THE AWARD AT THE TIME IT WAS MADE.

HOWEVER, AFTER THE MATTER WAS BROUGHT TO THE CONTRACTING OFFICER'S ATTENTION, IT SEEMED APPARENT THAT A MISTAKE HAD BEEN MADE AND AN ENDEAVOR WAS MADE TO GRANT THE CONTRACTOR RELIEF. IT WAS CONCLUDED ADMINISTRATIVELY THAT UNDER MISTAKE IN BID REGULATIONS THE MAXIMUM RELIEF AUTHORIZED WAS AN INCREASE IN THE CONTRACT PRICE TO THAT OF THE NEXT BIDDER IN LINE FOR AWARD. THE NEXT LOW BIDDER WHO HAD SUBMITTED A UNIT PRICE OF $4.26 ADVISED THE CONTRACTING OFFICER THAT IT HAD NOT BEEN MISLED BY THE ERRONEOUS CLAUSE. A DETERMINATION WAS MADE THEREFORE TO INCREASE THE CONTRACT UNIT PRICE FROM $3.98 TO $4.26 OR $0.28 PER UNIT FOR A TOTAL OF $243.60 BASED ON 870 UNITS. THE CONTRACTOR, ON THE OTHER HAND, REQUESTS AN ALLOWANCE OF THE $0.83 PER UNIT DEDUCTED FROM ITS INVOICES FOR THE GOVERNMENT-FURNISHED MATERIAL. DELIVERY OF 885 UNITS HAS BEEN MADE UNDER THE CONTRACT.

THIS IS NOT A CASE FOR APPLICATION OF MISTAKE IN BID PROCEDURES. IN THIS CASE, THERE WAS NO MEETING OF THE MINDS AND THUS NO CONTRACT TO BE CORRECTED.

CLAUSE 106.1, PAGE 8 OF THE INVITATION BID SCHEDULE, PROVIDES AS FOLLOWS:

"(106.1) BIDDERS' GFP REQUIREMENTS

"1. THE GOVERNMENT CALCULATED ALLOWANCES APPLICABLE TO FABRICS, AS SET FORTH HEREIN, ARE BASED ON TECHNICAL COMPUTATIONS, AND ARE FURNISHED AS A GUIDE ONLY. EACH BIDDER SHALL INSERT IN THE COLUMN PROVIDED THEREFOR THE PERCENTAGE OF GOVERNMENT-FURNISHED PROPERTY ALLOWANCES WHICH WILL BE REQUIRED FOR THE MANUFACTURE OF THE END ITEMS INDICATED. THE COST TO THE GOVERNMENT OF THE GOVERNMENT-FURNISHED PROPERTY, AS DETERMINED BY MULTIPLYING THE BIDDER'S INDICATED REQUIREMENTS BY THE GOVERNMENT'S UNIT COSTS FOR THE GOVERNMENT FURNISHED PROPERTY AS STATED HEREIN, WILL BE A FACTOR IN THE DETERMINATION OF THE SUCCESSFUL BIDDER. IN THE EVENT A BIDDER FAILS TO INDICATE HIS REQUIREMENTS OF GOVERNMENT-FURNISHED FABRICS, IT WILL BE ASSUMED THAT THE GOVERNMENT'S CALCULATED ALLOWANCES WILL BE REQUIRED BY SUCH BIDDER, AND THE BID WILL BE EVALUATED ON THAT BASIS.

"2. BIDDER SHALL NOT INCLUDE THE COST OF THE LISTED GOVERNMENT FURNISHED FABRICS IN ITS BID PRICES. ONLY TYPES OF FABRICS AS LISTED HEREIN, IN THE QUANTITIES INDICATED BY THE BIDDER TO BE HIS REQUIREMENTS (OR IF NOT SO INDICATED BY THE BIDDER, IN THE QUANTITIES SHOWN AS THE GOVERNMENT'S CALCULATED ALLOWANCES), WILL BE FURNISHED BY THE GOVERNMENT AT THE GOVERNMENT'S EXPENSE. IF THE CONTRACTOR REQUIRES ADDITIONAL MATERIAL, HE SHALL BE LIABLE THEREFOR IN ACCORDANCE WITH THE CLAUSE ENTITLED 'LIABILITY FOR ADDITIONAL PROPERTY - CREDIT FOR PROPERTY RETURNED,' PARAGRAPH 6B OF DCTSC FORM 665."

CLAUSES "E," "F," AND "G" OF THE "PROVISIONS RELATING TO MATERIAL TO BE FURNISHED BY THE GOVERNMENT," PAGE 12 OF THE INVITATION BID SCHEDULE, PROVIDE AS FOLLOWS:

"E. PAYMENT. UPON DELIVERY OF END ITEMS, $ .83 PER UNIT WILL BE DEDUCTED FROM THE CONTRACT PRICE AND APPLIED TO COVER THE VALUE OF THE GOVERNMENT MATERIAL * * *

"F. VALUE OF GOVERNMENT MATERIAL FURNISHED CONTRACTOR. TO DETERMINE THE TOTAL VALUE OF GOVERNMENT MATERIAL FURNISHED THE CONTRACTOR, THE CONTRACTOR WILL BE CHARGED FOR THE TOTAL VALUE OF MATERIALS FURNISHED AT UNIT PRICES STATED IN ARTICLE 'A' ABOVE LESS $ .83 * * *

"G. OBLIGATION OF FUNDS. FUNDS WILL BE OBLIGATED ON THE ASSUMPTION THAT THE PRICE OF EACH UNIT INCLUDES $ .83 * * *" THE QUOTED CLAUSES ARE INCONSISTENT. THAT THE CONTRACTOR INTENDED THE FORMER CLAUSES TO APPLY IS APPARENT FROM THE FACT THAT IT FURNISHED THE INFORMATION REQUESTED IN IT. THAT THE CONTRACTING OFFICER INTENDED THE LATTER CLAUSES TO APPLY IS APPARENT FROM THE STATEMENTS IN THE AWARD NOTICE. HOWEVER, THE AWARD NOTICE PROVIDED:

"* * * THIS AWARD CONSUMMATES THE CONTRACT WHICH CONSISTS OF THE FOLLOWING DOCUMENTS: (A) THE GOVERNMENT'S SOLICITATION AND YOUR OFFER, AND (B) THIS AWARD/CONTRACT. * * *" THUS, THE CONFLICTING PROVISIONS WERE CARRIED FORWARD BY THE AWARD NOTICE.

IT IS THEREFORE APPARENT THAT THERE WAS NO MEETING OF THE MINDS BETWEEN THE PARTIES. IN THE CIRCUMSTANCES, NO CONTRACT RESULTED SINCE WHEN AN INCONSISTENCY BETWEEN TWO CLAUSES IS GREAT, THE CONTRACT IS INVALID FOR WANT OF CERTAINTY. 17 AM. JUR. 2D, CONTRACTS, SEC. 267. HOWEVER, SINCE MARKHAM HAS COMPLETED DELIVERY, IT SHOULD BE PAID ON A QUANTUM VALEBAT BASIS, WHICH IN THIS CASE WOULD REQUIRE THE REFUND TO IT OF THE $0.83 PER UNIT DEDUCTED FROM ITS AMOUNT FOR THE MATERIAL FURNISHED.

ALTHOUGH THE SECOND LOW BIDDER HAS STATED THAT IT BASED ITS BID UPON THE BASIS THAT THE COST OF GOVERNMENT-FURNISHED MATERIAL WOULD BE DEDUCTED FROM THE BID PRICE, THIS IS BASED UPON INFORMATION OBTAINED AFTER MARKHAM COMPLAINED ABOUT THE SITUATION. AS THE INVITATION WAS NOT CLEAR AS TO WHAT WAS INTENDED WITH RESPECT TO THE MATERIAL, THE PRICE QUOTED BY THE NEXT LOW BIDDER SHOULD NOT BE CONSIDERED AS LIMITING MARKHAM'S AMOUNT OF RECOVERY.