B-130659, MAR. 26, 1957

B-130659, MAR. 26, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 7, 1957, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED CLEMENTS FOOD PRODUCTS COMPANY, OKLAHOMA CITY, OKLAHOMA, UNDER CONTRACT NO. DA-41-189-QM-4995 (PURCHASE ORDER O.I. FTW 2673-57) DATED SEPTEMBER 21, 1956, AND UNNUMBERED CONTRACT PURCHASE ORDER NO. O.I. FTW 2723-57 DATED SEPTEMBER 26, 1956, ON ACCOUNT OF ERRORS ALLEGED BY THE COMPANY TO HAVE BEEN MADE IN THE BIDS UPON WHICH THE CONTRACTS ARE BASED.

IN RESPONSE TO TWO NOTICES OF INTENT TO PURCHASE ISSUED BY THE CHICAGO QUARTERMASTER MARKET CENTER, THE CLEMENTS FOOD PRODUCTS COMPANY SUBMITTED WRITTEN QUOTATIONS, F.O.B. ORIGIN, FOR SEVERAL ITEMS INCLUDING THE FOLLOWING IN NO. 10 CANS (SIX PER CASE):

TABLE

NIP CHI-291-57, DATED 28 AUG. 56, FOR JAMS (PRESERVES)

ITEM 20, APRICOT 69 DOZ. CANS $14.48 PER DOZEN

ITEM 22, GRAPE 88 DOZ. CANS $11.42 PER DOZEN

ITEM 24, PLUM 284 DOZ. CANS $11.42 PER DOZEN

ITEM 24, STRAWBERRY 216 DOZ. CANS $18.56 PER DOZEN

NIP CHI-331-57, DATED 30 AUG. 56, FOR JELLIES

ITEM 26, GRAPE 30 DOZ. CANS $11.42 PER DOZEN

OTHER QUOTATIONS RECEIVED ON THESE ITEMS WERE IN THE FOLLOWING PRICE RANGE:

TABLE

NIP CHI-291-57

ITEM 20 FROM $15.00 TO $19.30 PER DOZEN

ITEM 22 FROM $12.19 TO $13.42 PER DOZEN

ITEM 24 FROM $12.48 TO $16.74 PER DOZEN

ITEM 25 FROM $18.80 TO $23.00 PER DOZEN

NIP CHI-331-57

ITEM 26 FROM $12.33 TO $14.06 PER DOZEN

AFTER EVALUATION OF THE QUOTATIONS, CLEMENTS FOOD PRODUCTS COMPANY WAS DETERMINED TO BE THE LOW BIDDER ON THE FIVE ITEMS LISTED ABOVE, AND THE COMPANY WAS NOTIFIED BY THE FORT WORTH QUARTERMASTER MARKET CENTER THAT IT WAS AWARDED THESE ITEMS BY LETTERS DATED SEPTEMBER 24 AND SEPTEMBER 26, 1956. CONTRACT NO. DA-41-189-QM-4995 (O.I. FTW 2673 57) COVERING AWARD ON NIP CHI-291-57, AND PURCHASE ORDER NO. O.I. FTW 2723-57 COVERING AWARD ON NIP CHI-331-57, WERE FORWARDED TO THE COMPANY AND WERE EXECUTED AND RETURNED ON OCTOBER 10, 1956. BOTH CONTRACTS CONTAINED A PROVISION FOR A DISCOUNT OF ONE-HALF OF ONE PERCENT OF THE TOTAL CONTRACT PRICE IN LIEU OF RECOVERY FOR NORMAL LOSSES, ALTHOUGH THE NOTICES OF INTENT TO PURCHASE HAD NOT LISTED THE CLAUSE AS BEING APPLICABLE TO THE SUPPLIES IN QUESTION NOR HAD THE CONTRACTOR SPECIFICALLY OFFERED SUCH A DISCOUNT.

ON OCTOBER 9, 1956, APPARENTLY AFTER RECEIPT OF THE CONTRACT DOCUMENTS BUT PRIOR TO THEIR EXECUTION AND RETURN, A REPRESENTATIVE OF THE CONTRACTOR TELEPHONED THE FORT WORTH MARKET CENTER AND REQUESTED PERMISSION TO WITHDRAW THE QUOTATIONS, STATING THAT ERRORS HAD BEEN MADE IN ESTIMATING THE NUMBER OF TIN CANS PER CASE. HE WAS ADVISED THAT THE QUOTATIONS COULD NOT THEN BE WITHDRAWN; THAT THE AWARD HAD BEEN MADE WITHOUT KNOWLEDGE OF ERROR; AND THAT IF HE DESIRED TO SUBMIT A CLAIM TOGETHER WITH AN EXPLANATION OF THE ERROR IT WOULD BE CONSIDERED, BUT THAT IT WAS RECOMMENDED THAT HE PERFORM THE CONTRACTS.

THEREAFTER, THE CONTRACTOR ADVISED THAT ITS QUOTATIONS WERE COMPUTED BY USING A FIGURE OF $0.83 PER DOZEN FOR THE CANS WHICH REPRESENTED ONLY SIX NO. 10 CANS AND ONE CORRUGATED CASE, WHEREAS THE COST PER DOZEN FOR THE CANS AND TWO CORRUGATED CASES SHOULD HAVE BEEN $1.66, AND THAT IT HAD ALSO FAILED TO INCLUDE THE ONE-HALF OF ONE PERCENT ALLOWANCE IN LIEU OF RECOVERY FOR NORMAL LOSSES. THE TOTAL AMOUNT OF THE CLAIM IS IN THE AMOUNT OF $621.04 UNDER BOTH CONTRACTS.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER ERRORS WERE MADE IN THE QUOTATIONS, BUT WHETHER VALID AND BINDING CONTRACTS WERE CONSUMMATED BY THE LETTERS OF ACCEPTANCE DATED SEPTEMBER 24 AND 26, 1956. THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON NOTICE OF THE PROBABILITY OF ERROR IN THE PROPOSALS AT THE TIME OF THE ACCEPTANCE THEREOF. THE DIFFERENCE BETWEEN THE QUOTATIONS BY THE CONTRACTOR AND THE OTHER QUOTATIONS RECEIVED WAS NOT SO GREAT AS TO INDICATE THAT THE CONTRACTOR HAD MADE A MISTAKE. IN FACT, HAD THE ADDITIONAL AMOUNTS NOW CLAIMED BEEN INCLUDED IN THE CONTRACTOR'S OFFERS THEY WOULD NOT HAVE BEEN LOW ON ANY OF THE ITEMS, FREIGHT COSTS AND DISCOUNTS CONSIDERED. THUS, THERE APPEARS TO HAVE BEEN NOTHING ON THE FACE OF THE PROPOSALS, OR IN THE ATTENDANT CIRCUMSTANCES, OF A SUFFICIENT NATURE TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR. THE RECORD INDICATES THAT THE ACCEPTANCE OF THE PROPOSALS WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER THE ACCEPTANCE OF THE PROPOSALS WHICH WAS ACCOMPLISHED BY THE LETTERS OF SEPTEMBER 24 AND 26, 1956. THE ACCEPTANCE OF THE PROPOSALS UNDER THE CIRCUMSTANCES INVOLVED CONSUMMATED VALID AND BINDING CONTRACTS WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. ANY ERROR THAT MAY HAVE BEEN MADE IN THE PROPOSALS WAS UNILATERAL--- NOT MUTUAL--- AND THEREFORE AFFORDS NO BASIS FOR GRANTING RELIEF TO THE CONTRACTOR WITH RESPECT TO THE ERROR AS TO CANS AND CARTONS. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259 AND SALIGMAN ET AL., V. UNITED STATES, 56 F.SUPP. 505, 507.

WITH RESPECT TO THAT PART OF THE CONTRACTOR'S CLAIM FOR $50.63, REPRESENTING ONE-HALF OF ONE PERCENT DISCOUNT IN LIEU OF RECOVERY FOR NORMAL LOSSES, WHILE THE FORMAL CONTRACTS MADE PROVISION THEREFOR, WHEREAS NO MENTION THEREOF WAS MADE IN THE PROPOSALS OR IN THE LETTERS OF ACCEPTANCE, IT APPEARS THAT THE CONTRACTOR WAS FULLY AWARE, APPARENTLY FROM PAST EXPERIENCE, THAT SUCH CLAUSE WAS TO BE INCLUDED IN THE FORMAL CONTRACTS. OTHERWISE THE CONTRACTOR WOULD NOT NOW BE CONTENDING THAT IT FAILED TO TAKE INTO CONSIDERATION SUCH ITEM IN COMPUTING ITS BIDS SUBMITTED IN RESPONSE TO THE NOTICES OF INTENT TO PURCHASE.

ACCORDINGLY, YOU ARE ADVISED THAT THERE IS NO LEGAL BASIS FOR THE PAYMENT OF ANY AMOUNT TO CLEMENTS FOOD PRODUCTS COMPANY IN EXCESS OF THAT PROVIDED FOR IN THE CONTRACTS INVOLVED.