B-92699, FEBRUARY 13, 1950, 29 COMP. GEN. 323

B-92699, FEBRUARY 13, 1950, 29 COMP. GEN. 323

BIDS - MISTAKES; CONTRACTS - CANCELLATION THE CONTRACT WHICH RESULTED UPON THE ACCEPTANCE OF A BID TO SUPPLY TURPENTINE OF A PARTICULAR TYPE AT A PRICE NOT SO INCOMMENSURATE WITH OTHER BIDS AS TO RAISE A PRESUMPTION OF ERROR MAY NOT BE CANCELED BECAUSE OF ALLEGATIONS OF MUTUAL MISTAKE BASED UPON A SHOWING BY THE CONTRACTOR THAT THE PROPOSED SUPPLIER NAMED IN HIS BID PRODUCED ONLY ANOTHER TYPE OF TURPENTINE, WHEN THAT FACT WAS NOT KNOWN TO THE GOVERNMENT CONTRACTING OFFICER AT THE TIME THE CONTRACT WAS AWARDED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, FEBRUARY 13, 1950:

I HAVE YOUR LETTER OF FEBRUARY 6, 1950, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO AN ERROR ALLEGED BY OCTAGON PROCESS INC. TO HAVE BEEN MADE IN ITS BID DATED SEPTEMBER 21, 1949, ON WHICH CONTRACT NO. N383-155S-25790 WAS AWARDED.

BY INVITATION NO. 8256, THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, REQUESTED BIDS--- TO BE OPENED SEPTEMBER 22, 1949--- FOR FURNISHING 8,000 GALLONS OF TURPENTINE, GUM SPIRITS OR STEAM-DISTILLED WOOD (BULK, TANK CAR). IN RESPONSE TO THE INVITATION, OCTAGON PROCESS INC. SUBMITTED A BID DATED SEPTEMBER 21, 1949, WHEREIN IT OFFERED TO FURNISH THE TURPENTINE SPECIFIED AT $0.327 PER GALLON. THE BID OF THE CORPORATION, BEING THE LOWEST RECEIVED, WAS ACCEPTED ON OCTOBER 5, 1949, CONSUMMATING CONTRACT NO. N383-155S-25790.

BY LETTER OF OCTOBER 19, 1949, OCTAGON PROCESS INC. ALLEGED THAT AN ERROR HAD BEEN MADE IN ITS BID IN THAT ITS BID PRICE WAS BASED ON A QUOTATION SECURED FROM ITS SUPPLIER WHOSE REPRESENTATIVE, IT IS STATED, SAID THAT THE TURPENTINE WAS STEAM-DISTILLED; THAT AFTER THE BIDS WERE OPENED IT AGAIN ASKED ITS SUPPLIER TO VERIFY THE QUOTATION AND THE GRADE AS STEAM- DISTILLED AND, IT IS STATED, THE SUPPLIER'S REPRESENTATIVE VERIFIED THE QUOTATION; AND THAT SINCE ITS BID WAS ON SULFATE WOOD TYPE TURPENTINE, NOT ACCEPTABLE UNDER THE INVITATION, CANCELLATION OF THE CONTRACT WAS REQUESTED. IN A LETTER OF DECEMBER 6, 1949, THE CORPORATION INDICATED A BELIEF THAT THE CONTRACTING OFFICER KNEW THE SUPPLIER NAMED IN ITS BID PRODUCED ONLY SULFATE WOOD TYPE TURPENTINE AND THAT SUCH KNOWLEDGE AND THE DIFFERENCE BETWEEN ITS BID PRICE AND THE PRICE QUOTED BY THE NEXT LOW BIDDER WERE SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF AN ERROR IN ITS BID. WITH THE SAID LETTER OF DECEMBER 6, 1949, THE CORPORATION FURNISHED A PHOTOSTATIC COPY OF ITS WORK SHEET IN SUPPORT OF THE ALLEGATION OF ERROR AND AGAIN REQUESTED CANCELLATION OF THE CONTRACT, INDICATING THAT PERFORMANCE WOULD BE HELD IN ABEYANCE PENDING A DECISION BY THIS OFFICE IN THE MATTER.

THE QUESTION FOR CONSIDERATION HERE IS NOT WHETHER OCTAGON PROCESS INC. MADE AN ERROR IN ITS BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. THERE WAS NOTHING IN THE BID OF THE CORPORATION TO INDICATE AN ERROR THEREIN AND NO ALLEGATION OF ERROR WAS MADE UNTIL AFTER THE AWARD. THE CONTRACTING OFFICER HAS REPORTED THAT " AT THE TIME OF THE AWARD, THE CONTRACTING OFFICER HAD NO KNOWLEDGE THAT THE CONTRACTOR'S PROPOSED SUPPLIER * * * DID NOT PRODUCE THE TYPE OF TURPENTINE REQUIRED UNDER THE INVITATION.' A TABULATION OF THE BIDS SHOWS THAT THE PRICES QUOTED IN THE 9 OTHER BIDS RECEIVED RANGED FROM $0.40 TO $0.75 PER GALLON. THUS, THE DIFFERENCE BETWEEN THE PRICE QUOTED BY OCTAGON PROCESS INC. AND 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.

THE RECORD INDICATES THAT THE ACCEPTANCE OF THE BID OF OCTAGON PROCESS INC. WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

MOREOVER, THE INVITATION FOR BIDS WAS CLEAR AND UNAMBIGUOUS AS TO THE NEEDS OF THE GOVERNMENT, AND THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE THERETO WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. CONSEQUENTLY, IF OCTAGON PROCESS INC. SUBMITTED A BID BASED UPON A QUOTATION OF ITS SUPPLIER WITHOUT DEFINITE KNOWLEDGE THAT SAID QUOTATION COVERED MATERIAL MEETING THE SPECIFICATIONS, THAT IS A MATTER WITH WHICH THE GOVERNMENT IS NOT CONCERNED AND THE BIDDER MUST ASSUME THE CONSEQUENCES THEREOF OR LOOK TO THE SUPPLIER FOR ADJUSTMENT IN THE MATTER. 6 COMP. GEN. 504, AND 18 ID. 28. SUCH ERROR AS WAS MADE WAS DUE SOLELY TO THE NEGLIGENCE OF THE CORPORATION, OR ITS AGENT, AND WAS NOT INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. HENCE, THE ERROR WAS UNILATERAL--- NOT MUTUAL--- AND DOES NOT ENTITLE THE CORPORATION TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

ACCORDINGLY, I FIND NO LEGAL BASIS FOR CANCELING CONTRACT NO. N383 155S- 25790 AND, THEREFORE, OCTAGON PROCESS INC. SHOULD BE REQUIRED TO FURNISH TURPENTINE MEETING THE SPECIFICATIONS AT THE PRICE STIPULATED IN ITS ACCEPTED BID.

THE PAPERS, WITH THE EXCEPTION OF THE STATEMENT OF FACTS AND RECOMMENDATION OF THE CONTRACTING OFFICER, DATED JANUARY 25, 1950, ARE RETURNED HEREWITH.