B-176941, NOV 28, 1972

B-176941, NOV 28, 1972

RELIEF FROM MISTAKE - CONSUMMATION OF CONTRACT - WRITTEN ACCEPTANCE BY MAIL CONCERNING A REQUEST ON BEHALF OF ARNOLD, INC AND STANFIELD CORPORATION, A JOINT VENTURE, FOR AN UPWARD ADJUSTMENT OF THE PRICE OF A CONTRACT DUE TO A MISTAKE IN BID, AWARDED BY THE NAVAL FACILITIES ENGINEERING COMMAND FOR THE CONSTRUCTION OF A MESS HALL AT THE NAVAL AIR STATION, NORTH ISLAND, SAN DIEGO, CAL. THE CONTRACTING OFFICER'S REFUSAL TO CORRECT THE MISTAKE, UNDER ASPR 2- 406.4, WAS PROPER SINCE THE MISTAKE WAS NOT MUTUAL AND SINCE THE CONTRACTING OFFICER WAS NOT ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF A MISTAKE PRIOR TO AWARD. SINCE SUPPORTIVE DOCUMENTS, WHICH ACCOMPANIED THE BID, SPECIFIED THAT UPON WRITTEN ACCEPTANCE, THE CONTRACT WOULD COME INTO EXISTENCE THE COMP. GEN. CONCLUDES THAT UPON MAILING OF THE ACCEPTANCE, THE CONTRACT IS CONSUMMATED AND THAT NOTICE OF MISTAKE OCCURRED AFTER AWARD. SEE, D & L CONSTRUCTION CO V. UNITED STATES, 378 F.2D 686 (CT. CL., 1967). ACCORDINGLY, THE REQUESTED RELIEF MUST BE DENIED.

TO MR. H. RANDALL BIXLER:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 5, 1972, ON BEHALF OF FRED A. ARNOLD, INCORPORATED, AND H. W. STANFIELD CONSTRUCTION CORPORATION, A JOINT VENTURE (HEREINAFTER ARNOLD AND STANFIELD) APPEALING A DECISION OF THE NAVAL FACILITIES ENGINEERING COMMAND (NFEC) WHICH DENIED YOUR CLIENT'S REQUEST FOR AN UPWARD ADJUSTMENT OF THE PRICE OF CONTRACT N62474-71-C- 4434, DUE TO A MISTAKE IN BID.

THE REPORT TO THIS OFFICE FROM THE DEPARTMENT OF THE NAVY INDICATES THAT THE SOLICITATION, ISSUED MARCH 6, 1972, INVITED BIDS FOR THE CONSTRUCTION OF A MESS HALL AT THE NAVAL AIR STATION, NORTH ISLAND, SAN DIEGO, CALIFORNIA. THE BIDS RECEIVED ON APRIL 18, 1972, AND THE GOVERNMENT ESTIMATE WERE AS FOLLOWS:

ADDITIVE ADDITIVE ADDITIVE

BASE BID 1A 1B 1C TOTAL

C. E. WYLIE

CONST. CO. $1,699,900 $36,154 $14,325 $27,490 $1,777,869

FRED A. ARNOLD

INC. & H. W.

STANFIELD

CONSTR. CORP. 1,632,700 72,500 32,150 12,200 1,749,550

L. HAEHN, INC. 1,678,361 43,663 61,681 27,373 1,811,078

CONEEN CONSTR.

CORP. 1,669,571 54,245 20,186 30,260 1,774,262

GOVERNMENT

ESTIMATE 1,706,000 56,000 13,000 34,000 1,809,000

BY LETTER DATED MAY 11, 1972, NFEC INFORMED ARNOLD AND STANFIELD THAT THE GOVERNMENT ACCEPTED THEIR PROPOSAL IN ACCORDANCE WITH THEIR BID. THIS LETTER ALSO STATES THAT THE FORMAL CONTRACT WOULD BE PREPARED ON THE STANDARD CONTRACT FORM, AND THAT, SUBJECT TO THE RECEIPT OF PERFORMANCE AND PAYMENTS BONDS AND THE CONTRACTOR QUALITY CONTROL PLAN, ARNOLD AND STANFIELD IS DIRECTED TO PROCEED WITH THE WORK PENDING EXECUTION OF THE FORMAL CONTRACT. THE RECORD SHOWS THAT THE FORMAL CONTRACT WAS NOT EXECUTED UNTIL JULY 1972.

ARNOLD AND STANFIELD'S LETTER OF MAY 19, 1972, ALLEGED A MISTAKE IN THEIR BID DUE TO AN INADVERTENT CLERICAL ERROR, AND REQUESTED AN UPWARD REVISION OF THE CONTRACT PRICE IN THE AMOUNT OF $22,487. SUBSEQUENT CORRESPONDENCE DETAILED THE NATURE OF THE MISTAKE, WHICH ESSENTIALLY CONSISTED IN THE OMISSION OF CERTAIN ADDITIONAL COSTS OF MECHANICAL CONCRETE WORK. IT WAS ALLEGED THAT IF THE ERROR HAD NOT BEEN MADE, ARNOLD AND STANFIELD'S CORRECT BASE BID WOULD HAVE BEEN $1,655,187 INSTEAD OF $1,632,700.

ON JUNE 28, 1972, THE CONTRACTING OFFICER REFUSED CORRECTION OF THE MISTAKE, STATING THAT THE REQUIREMENTS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-406.4, FOR CORRECTION OF A MISTAKE AFTER AWARD, WERE NOT MET, IN THAT THERE WAS NO SHOWING THAT THE MISTAKE WAS MUTUAL OR THAT THE CONTRACTING OFFICER WAS OR SHOULD HAVE BEEN ON NOTICE OF THE MISTAKE PRIOR TO AWARD.

YOUR LETTER TO THIS OFFICE PROVIDES A DETAILED EXPLANATION OF HOW THE ADDITIONAL COSTS WERE OMITTED FROM THE BID, AND ALLEGES THAT YOUR APPEAL SHOULD BE CONSIDERED AS A REQUEST FOR CORRECTING A MISTAKE IN BID PRIOR TO AWARD, SINCE NOTICE OF MISTAKE WAS GIVEN WELL BEFORE THE CONTRACT WAS EXECUTED BY EITHER PARTY OR ANY WORK WAS PERFORMED.

THE INITIAL QUESTION FOR CONSIDERATION IS WHETHER THE ALLEGATION OF MISTAKE OCCURRED AFTER AWARD, THAT IS, WHETHER NFEC'S LETTER OF MAY 11, 1972, CREATED A BINDING CONTRACT ALTHOUGH THE FORMAL CONTRACT WAS NOT EXECUTED UNTIL JULY 1972. A SOMEWHAT SIMILAR SITUATION WAS INVOLVED IN 45 COMP. GEN. 700 (1966), WHERE THE AWARD WAS MAILED TO THE CONTRACTOR BUT APPARENTLY NEVER RECEIVED, AND SUBSEQUENTLY A MISTAKE WAS ALLEGED. LIGHT OF THE LANGUAGE IN STANDARD FORM 33-A, "BIDDING INSTRUCTIONS, TERMS, AND CONDITIONS (SUPPLY CONTRACT)," THAT A WRITTEN AWARD MAILED OR OTHERWISE FURNISHED TO THE SUCCESSFUL BIDDER WOULD BE DEEMED TO RESULT IN A BINDING CONTRACT, AND THE FACT THAT THE BIDDER DID NOT TAKE EXCEPTION THERETO, IT WAS CONCLUDED THAT THE GENERAL RULE OF THIS OFFICE WAS APPLICABLE, NAMELY, THAT WHEN AN ACCEPTANCE BY MAIL IS AUTHORIZED THE ACCEPTANCE, UNLESS OTHERWISE SPECIFIED, IS EFFECTIVE FROM THE TIME IT IS MAILED. 45 ID. 700, 708. IN THE PRESENT CASE, THE TERMS OF THE CONTRACT DO NOT EXPRESSLY STATE THAT UPON WRITTEN ACCEPTANCE MAILED OR OTHERWISE FURNISHED, A BINDING CONTRACT WOULD RESULT. HOWEVER, WE NOTE THE FOLLOWING LANGUAGE IN STANDARD FORM 21, "BID FORM," SUBMITTED BY ARNOLD AND STANFIELD:

"THE UNDERSIGNED AGREES THAT, UPON WRITTEN ACCEPTANCE OF THIS BID, MAILED OR OTHERWISE FURNISHED WITHIN SIXTY CALENDAR DAYS (60 CALENDAR DAYS) AFTER THE DATE OF OPENING OF BIDS, HE WILL WITHIN 10 CALENDAR DAYS (UNLESS A LONGER PERIOD IS ALLOWED) AFTER RECEIPT OF THE PRESCRIBED FORMS, EXECUTE STANDARD FORM 23, CONSTRUCTION CONTRACT, AND GIVE PERFORMANCE AND PAYMENTS BONDS ON GOVERNMENT STANDARD FORMS WITH GOOD AND SUFFICIENT SURETY.

"THE UNDERSIGNED AGREES, IF AWARDED THE CONTRACT, TO COMMENCE THE WORK AND TO COMPLETE THE WORK AS SET FORTH IN SECTION 1A OF THE SPECIFICATION."

ALSO, PARAGRAPH 4 OF STANDARD FORM 22, "INSTRUCTIONS TO BIDDERS (CONSTRUCTION CONTRACT)" READS IN PERTINENT PART AS FOLLOWS:

"IF THE SUCCESSFUL BIDDER, UPON ACCEPTANCE OF HIS BID BY THE GOVERNMENT WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE (SIXTY DAYS IF NO PERIOD IS SPECIFIED) FAILS TO EXECUTE SUCH FURTHER CONTRACTUAL DOCUMENTS, IF ANY, AND GIVE SUCH BONDS) AS MAY BE REQUIRED BY THE TERMS OF THE BID AS ACCEPTED WITHIN THE TIME SPECIFIED (TEN DAYS IF NO PERIOD IS SPECIFIED) AFTER RECEIPT OF THE FORMS BY HIM, HIS CONTRACT MAY BE TERMINATED FOR DEFAULT. IN SUCH EVENT HE SHALL BE LIABLE FOR ANY COST OF PROCURING THE WORK WHICH EXCEEDS THE AMOUNT OF HIS BID, AND THE BID GUARANTEE SHALL BE AVAILABLE TOWARD OFFSETTING SUCH DIFFERENCE."

IT IS CLEAR FROM THESE TERMS THAT THE PARTIES AGREED THAT UPON WRITTEN ACCEPTANCE, MAILED OR OTHERWISE FURNISHED TO ARNOLD AND STANFIELD, THE CONTRACT WOULD COME INTO EXISTENCE. IN THE EVENT OF THE CONTRACTOR'S FAILURE TO EXECUTE THE "FURTHER CONTRACTUAL DOCUMENTS" AS REQUIRED, THEN "HIS CONTRACT MAY BE TERMINATED FOR DEFAULT." AS IN 45 COMP. GEN. 700, SUPRA, THE PARTIES AGREED THAT ACCEPTANCE BY MAIL WAS AUTHORIZED. NFEC'S LETTER OF MAY 11, 1972, ACCEPTED THE CONTRACTOR'S OFFER ACCORDING TO THE TERMS OF HIS BID OF APRIL 18, 1972. IN THIS CONNECTION, YOU HAVE NOT ALLEGED THAT THE MAY 11 LETTER WAS ACTUALLY RECEIVED BY ARNOLD AND STANFIELD AFTER ITS MAY 19 LETTER WAS MAILED. IN ANY EVENT, WE CONCLUDE THAT UPON MAILING OF THE ACCEPTANCE, THE CONTRACT WAS CONSUMMATED AND THAT ARNOLD AND STANFIELD'S NOTICE OF MISTAKE DATED MAY 19, 1972, OCCURRED AFTER AWARD. D & L CONSTRUCTION CO. V. UNITED STATES, 378 F.2D 680, 686 AND THE CASES CITED (CT. CL., 1967).

IN CASES WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL GRANT RELIEF ONLY IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. 45 COMP. GEN. 700, 706, SUPRA, AND CASES CITED THEREIN. THE CONTRACTING OFFICER HAS STATED THAT HE COULD NOT HAVE BEEN ON NOTICE OF THE MISTAKE BY EXAMINING THE BID ITSELF. THERE WAS NO SEPARATE BID ITEM FOR MECHANICAL CONCRETE WORK, AND THE DIFFERENCE BETWEEN ARNOLD AND STANFIELD'S BID AND THE OTHERS RECEIVED WAS NOT SO GREAT AS TO WARRANT THE CONCLUSION THAT HE SHOULD HAVE BEEN ON NOTICE. SEE B-166606, MAY 15, 1969, COPY ENCLOSED. THEREFORE, WE MUST CONCLUDE THAT THE BID WAS ACCEPTED BY THE GOVERNMENT IN GOOD FAITH AND WITHOUT NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF A MISTAKE, AND THAT A VALID AND BINDING CONTRACT RESULTED.

ACCORDINGLY, ON THE RECORD BEFORE US WE FIND NO LEGAL BASIS TO GRANT THE REQUESTED RELIEF.

THE DOCUMENTATION WHICH ACCOMPANIED YOUR LETTER IS BEING RETURNED, AS REQUESTED.