B-141115, DEC. 30, 1959

B-141115, DEC. 30, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 26, 1959, WITH ENCLOSURES, FROM THE CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, DEPARTMENT OF THE ARMY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE QUAKER STORAGE COMPANY, INC., ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-36-030-QN-10076 WAS AWARDED.

THE MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, BY INVITATION NO. QM-36-030-59-/LF/-63 REQUESTED BIDS--- TO BE OPENED JUNE 2, 1959--- FOR THE PACKING AND CRATING OF HOUSEHOLD GOODS IN ACCORDANCE WITH THE TERMS AND CONDITIONS AND APPLICABLE SPECIFICATIONS OF THE INVITATION AS REQUIRED BY THE GOVERNMENT, DURING THE PERIOD BEGINNING JULY 1, 1959, AND ENDING JUNE 30, 1960. THE SERVICES CALLED FOR CONSISTED OF NINE ITEMS TO BE PERFORMED IN TWO AREAS. AREA I COVERED FIVE COUNTIES OF PENNSYLVANIA AND AREA II COVERED ONE COUNTY IN DELAWARE. PROSPECTIVE BIDDERS WERE ADVISED THAT AWARD WOULD BE MADE TO THE BIDDER SUBMITTING THE LOWEST AGGREGATE BID ON ALL ITEMS. PROSPECTIVE BIDDERS WERE ALSO ADVISED THAT THE GOVERNMENT REQUIRED A MINIMUM OPTION TIME OF 20 DAYS FOR ACCEPTANCE OF BIDS AND THAT IF THE BIDDER FAILED TO SPECIFY A MINIMUM OPTION PERIOD FOR ACCEPTANCE OF ITS BID, THE GOVERNMENT WOULD BE ALLOWED 60 DAYS FOR THE ACCEPTANCE THEREOF.

IN RESPONSE TO THE INVITATION THE QUAKER STORAGE COMPANY, INC., SUBMITTED A BID DATED JUNE 1, 1959, OFFERING TO PERFORM THE SERVICES AT THE PRICES SET FORTH OPPOSITE EACH ITEM FOR A REPORTED AGGREGATE PRICE OF $45,851.60 FOR AREA I, AND FOR AREA II, AN AGGREGATE PRICE OF $9,196.60. EXAMINATION OF THE CORPORATIONS BID INDICATES THAT THE SPACE FOR SHOWING THE PERIOD OF TIME WITHIN WHICH ITS BID WAS TO BE ACCEPTED WAS LEFT BLANK.

THE RECORD INDICATES THAT FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THAT THE QUAKER STORAGE COMPANY, INC., SUBMITTED THE LOWEST AGGREGATE BID. IN A MEMORANDUM DATED JUNE 24, 1959, THE CONTRACTING OFFICER STATED THAT A CONFERENCE WAS HELD ON THAT DATE BETWEEN REPRESENTATIVES OF THE QUAKER STORAGE COMPANY, INC., AND OFFICIALS OF THE CONTRACTING OFFICE; THAT THE CONFERENCE WAS OPENED BY HIM WITH THE STATEMENT,"MR. BERNSTEIN, I AM HAPPY TO PRESENT TO YOU YOUR COPY OF THE CONTRACT FOR PACKING AND CRATING OF HOUSEHOLD GOODS; " AND THAT HE THEN TENDERED A SIGNED COPY OF THE CONTRACT TO HIM. THE CONTRACTING OFFICER FURTHER STATED THAT MR. BERNSTEIN REFUSED TO ACCEPT THE CONTRACT ON THE BASIS THAT THE GOVERNMENT'S ACCEPTANCE HAD NOT BEEN MADE WITHIN THE 20-DAY ACCEPTANCE PERIOD. MR. BERNSTEIN WAS ADVISED THAT THE 20-DAY PERIOD REFERRED TO BY HIM WAS THE GOVERNMENT'S MINIMUM OPTION TIME FOR ACCEPTANCE OF BIDS AND THAT SINCE THE CORPORATION DID NOT SPECIFY IN ITS BID A PERIOD FOR ACCEPTANCE OF ITS BID, THE GOVERNMENT HAD, UNDER THE TERMS OF THE INVITATION, 60 DAYS WITHIN WHICH TO MAKE AN AWARD TO THE CORPORATION. THE CONTRACTING OFFICER ALSO STATED THAT MR. BERNSTEIN THEN DECLARED THAT HE WOULD HAVE TO TALK TO HIS ATTORNEY ABOUT THE MATTER AND THAT HE THEN ADVISED MR. BERNSTEIN THAT IN HIS OPINION A VALID AND BINDING CONTRACT EXISTED BETWEEN THE GOVERNMENT AND THE QUAKER STORAGE COMPANY, INC. THE RECORD INDICATES FURTHER THAT DETAILS OF THE CONTRACT WORK WERE DISCUSSED AND THAT NEAR THE CLOSE OF SUCH DISCUSSION THE CONTRACTING OFFICER AGAIN EXTENDED A COPY OF THE CONTRACT TO MR. BERNSTEIN, WHO REFUSED TO ACCEPT IT ON THE GROUND THAT THE CORPORATION HAD MADE A MISTAKE OF APPROXIMATELY $20,000 IN ITS BID.

BY LETTER DATED JUNE 25, 1959, WITH WHICH WAS ENCLOSED A COPY OF THE CONTRACT, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT HE HAD DETERMINED THAT ITS BID HAD BEEN ACCEPTED WITHIN THE 60-DAY OPTION PERIOD AND THAT A VALID AND BINDING CONTRACT EXISTED BETWEEN THE CORPORATION AND THE GOVERNMENT AND THAT IF IT WAS THE CORPORATION'S DESIRE TO ALLEGE A MISTAKE IN BID, THE MISTAKE WOULD HAVE TO BE PROCESSED TO THE GENERAL ACCOUNTING OFFICE AS A MISTAKE IN BID ALLEGED AFTER AWARD.

IN A LETTER DATED JUNE 29, 1959, THE CORPORATION STATED THAT IT DISAGREED WITH THE CONTRACTING OFFICER'S OPINION THAT A VALID AND BINDING CONTRACT CAME INTO EFFECT AT THE TIME OF THE CONFERENCE HELD ON JUNE 24, 1959, AND THAT THE CORPORATION WOULD PERFORM THE ALLEGED CONTRACT UNDER PROTEST. THE CORPORATION CONTENDED THAT NO VALID AND BINDING CONTRACT HAD COME INTO BEING BECAUSE ITS REPRESENTATIVE HAD REVOKED THE CORPORATION'S BID AT THE TIME OF THE CONFERENCE, AND THAT IN THE EVENT IT WAS LEGALLY DETERMINED THAT A CONTRACT DID COME INTO BEING, IT WISHED RELIEF ON THE BASIS OF A MISTAKE MADE ON ITEM 1 OF ITS BID. IN REGARD TO THE MISTAKE IN ITS BID, THE CORPORATION ALLEGED IT ERRONEOUSLY COMPUTED THE PRICES OF $3.00 TO $3.30 PERHUNDREDWEIGHT FOR ITEM 1 ON THE BASIS OF THE SERVICES OF ONLY ONE MAN AT A $4 PER HOUR RATE; THAT THE REAL RATE OF ITEM 1 SHOULD HAVE BEEN CALCULATED ON THE BASIS OF ONE TRUCK DRIVER, PLUS ONE HELPER, PLUS ONE TRUCK, AND THAT THIS WOULD MEAN AN EFFECTIVE RATE OF $5.45 PER HUNDREDWEIGHT INSTEAD OF $3 PER HUNDREDWEIGHT AS QUOTED FOR THE CITY AND COUNTY OF PHILADELPHIA; THAT THE SAME ERROR WAS CARRIED THROUGH FOR EACH OF THE OTHER COUNTIES AND THAT THE PRICES FOR EACH OF THE OTHER COUNTIES SHOULD BE INCREASED BY $2.45. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED ITS ESTIMATE SHEET, WHICH APPEARS TO COVER A TEST CASE OF 50 SHIPMENTS. THE ESTIMATE SHEET IS COMPOSED OF THREE PARTS AND UNDER THE PART COVERING LABOR, THERE APPEARS THE NOTATION "50 JOBS TOTAL 194 1/2 HOURS 2 MEN AND TRUCK AVERAGE--- 3.9 HOURS 194 1/2 HOURS AT $4.00 $778.' THE CORPORATION ALLEGES THAT THE HOURLY RATE FOR ONE TRUCK, ONE TRUCK DRIVER AND ONE HELPER SHOULD HAVE BEEN SHOWN ON THE ESTIMATE SHEET AS $13 RATHER THAN $4. TO SHOW THE SOURCE OF THE $4 AND $13 RATES THE CORPORATION BY LETTER DATED SEPTEMBER 9, 1959, SUBMITTED A PUBLISHED TARIFF NO. 17-T ISSUED APRIL 1, 1958, BY TRI-STATE HOUSEHOLD GOODS TARIFF CONFERENCE, INC. COLUMN 3, TABLE B OF SECTION IV OF THE TARIFF INDICATES THAT FOR A VEHICLE AND DRIVER THE RATE IS $9 PER HOUR AND THAT FOR ADDITIONAL MEN, THE MAN-HOUR RATE IS $4 PER HOUR.

THE FIRST QUESTION FOR CONSIDERATION IS WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED AT THE TIME OF THE CONFERENCE HELD ON JUNE 24, 1959. PARAGRAPH 8 (D) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS PROVIDED THAT A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY. SINCE THE AWARD IN THE PRESENT CASE WAS NOT MAILED, WE MUST CONSIDER WHETHER IT WAS "OTHERWISE FURNISHED" AS THAT TERM IS USED IN THE INVITATION. INASMUCH AS THE RECORD INDICATES THAT AT THE START OF THE CONFERENCE HELD ON JUNE 24, 1959, THE CONTRACTING OFFICER TENDERED A SIGNED COPY OF THE CONTRACT TO MR. BERNSTEIN OF THE QUAKER STORAGE COMPANY, INC., WE ARE OF THE OPINION THAT THE CORPORATION WAS FURNISHED A NOTICE OF AWARD AS REQUIRED BY PARAGRAPH 8 (D) OF THE INVITATION. THE CORPORATION CONTENDS THAT IT REVOKED ITS BID AT THE TIME OF THE CONFERENCE AND, THEREFORE, NO VALID AND BINDING CONTRACT CAME INTO BEING. THE LAW IS WELL SETTLED THAT A REVOCATION OR WITHDRAWAL TO BE EFFECTIVE MUST REACH THE PARTY TO WHOM ADDRESSED BEFORE HIS ACCEPTANCE OF THE ORIGINAL OFFER TAKES EFFECT. SEE TAYLOR V. MERCHANTS FIRE INSURANCE COMPANY, 9 HOW. 390; PATRICK V. BOWMAN, 149 U.S. 411; AND BURTON V. UNITED STATES, 202 ID. 344. THE RECORD CLEARLY ESTABLISHES THAT ACCEPTANCE OF THE CORPORATION'S BID WAS MADE PRIOR TO ANY NOTICE OF ATTEMPTED WITHDRAWAL OR REVOCATION OF THE BID. SINCE THE RECORD ALSO ESTABLISHES THAT THE ACCEPTANCE OF THE BID WAS MADE IN ENTIRE GOOD FAITH AND WITHOUT NOTICE, CONSTRUCTIVE OR ACTUAL, OF THE ALLEGED ERROR, SUCH ACCEPTANCE CONSTITUTED A VALID AND BINDING CONTRACT ESTABLISHING THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 ID. 75. IN THE CIRCUMSTANCES, THE ATTEMPTED REVOCATION BY MR. BERNSTEIN OF HIS CORPORATION'S PROPOSAL WAS INEFFECTUAL.

CONCERNING THE CORPORATION'S ATTEMPT TO AWARD ITS CONTRACT SO AS TO REFLECT A CORRECTION OF THE ERRORS ALLEGED, THE RECORD CONCLUSIVELY SHOWS THAT THE CONTRACTING OFFICER HAD NO KNOWLEDGE OF SUCH ERRORS EITHER AT THE TIME OF THE OPENING OF THE BIDS OR WHEN THE AWARD WAS MADE ON JUNE 24, 1959. FURTHERMORE, THE RECORD CLEARLY INDICATES THAT SUCH ERRORS AS WERE MADE WERE ATTRIBUTABLE SOLELY TO THE BIDDER'S OWN "NEGLIGENCE AND OVERSIGHT.' THE COURTS HAVE HELD THAT THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 160. IT IS EQUALLY WELL SETTLED THAT A MUTUAL ERROR--- NOT UNILATERAL, AS HERE--- AFFORDS THE ONLY LEGAL JUSTIFICATION FOR THE MODIFICATION OF A CONTRACT. SEE OGDEN AND DOGHERTY V. UNITED STATES, 102 C.CLS. 249; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

SINCE THE FACTS AS REPORTED IN THIS CASE CLEARLY SHOW THAT THE ERRORS ALLEGED BY THE CORPORATION WERE UNILATERAL IN CHARACTER--- NOT MUTUAL AND THUS SUBJECT TO CORRECTION--- YOU ARE ADVISED THAT THERE EXISTS NO LEGAL BASIS UPON WHICH CONTRACT NO. DA-36-030-QH-10076 MAY BE AMENDED.

A DUPLICATE SET OF THE PAPERS IN THE CASE IS BEING RETAINED. THE OTHER SET OF PAPERS IS RETURNED.