B-147707, DEC. 27, 1961

B-147707, DEC. 27, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER (R11.4) DATED NOVEMBER 29, 1961, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF OF PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, CONCERNING A MISTAKE ALLEGED BY SURPLUS AND SALVAGE OF ERIE, ERIE, PENNSYLVANIA, TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. N63066S-2553 (ITEM NO. 30 OF SALES INVITATION NO. B-15-62 63066) WAS AWARDED TO IT. A DECISION IS REQUESTED AS TO WHETHER RELIEF PROPERLY MAY BE DENIED.

CONSOLIDATED SURPLUS SALES OFFICE, NEWPORT, RHODE ISLAND, SOLICITED BIDS- -- OPENING DATE AUGUST 9, 1961--- FOR THE PURCHASE FROM THE GOVERNMENT OF 32 ITEMS OF SURPLUS PROPERTY AS LISTED AND DESCRIBED THEREIN. ITEMS NOS. 29 AND 30, HERE INVOLVED, WERE DESCRIBED (PAGE 22) AS AN ARC WELDER AND SHEARING MACHINE, RESPECTIVELY.

IN RESPONSE TO THE INVITATION, SURPLUS AND SALVAGE OF ERIE SUBMITTED A BID DATED AUGUST 9, 1961, WITH A PRICE QUOTATION OF $311.11 ON ITEM NO. 30. TEN OTHER BIDS, RANGING FROM $284 TO $12.50, WERE ALSO RECEIVED ON ITEM NO. 30. THE BID OF SURPLUS AND SALVAGE OF ERIE, BEING THE HIGHEST RECEIVED ON THAT ITEM, WAS ACCEPTED ON AUGUST 11, 1961, AND THE SHEARING MACHINE IN ITEM NO. 30 WAS AWARDED TO IT ON SALES CONTRACT NO. N63066S- 2553. SUBSEQUENTLY, UPON RECEIPT OF THE PURCHASER'S CHECK FOR $248.88, THE BALANCE OF THE PURCHASE PRICE DUE THE GOVERNMENT, RELEASE OF THE MATERIAL IN ITEM NO. 30 WAS AUTHORIZED ON AUGUST 21, AND ON AUGUST 25 THE SHEARING MACHINE SOLD UNDER THE CONTRACT WAS DELIVERED BY THE NAVAL SUBMARINE BASE AT NEW LONDON, CONNECTICUT, THE HOLDING ACTIVITY, TO ASSOCIATED TRANSPORT, INC., OF ERIE, PENNSYLVANIA, UNDER AUTHORIZATION OF THE PURCHASER BY LETTER DATED AUGUST 15 TO THE CONTRACTING OFFICER SENT IN CARE OF THAT BASE.

THEREAFTER, MR. M. R. MERRICK, OWNER OF THE PURCHASING FIRM, CLAIMED THAT THE WRONG MATERIAL HAD BEEN DELIVERED TO HIS FIRM'S AUTHORIZED CARRIER. HOWEVER, HE ADMITTED THAT HE HAD MADE AN ERROR IN THE PREPARATION OF THE FIRM'S BID IN THAT HE INTENDED TO BID ON ITEM NO. 29 COVERING AN ARC WELDER BUT INADVERTENTLY PLACED THE BID QUOTATION ON ITEM NO. 30 COVERING THE SHEARING MACHINE. MR. MERRICK CONTENDED, NEVERTHELESS, THAT WHILE THERE MAY HAVE BEEN A MISTAKE IN THE BID THERE WOULD BE NO REASON FOR DELIVERING A "SHEAR" IN PLACE OF A "WELDER" WHICH HIS FIRM'S INSTRUCTIONS OF AUGUST 15 CALLED FOR. MR. MERRICK FIRST REQUESTED THAT, BECAUSE OF THE ALLEGED ERROR, HIS FIRM'S BID BE CHANGED TO SHOW ITS BID PRICE OPPOSITE ITEM NO. 29 INSTEAD OF ITEM NO. 30 AND THAT THE CONTRACT BE WITHDRAWN OR CANCELED, BUT HE LATER REQUESTED THAT THE CONTRACT BE EITHER CORRECTED OR WITHDRAWN AND MONEY REFUNDED OR A NEGOTIATED SALE BE MADE WITH HIM FOR $249 ($1 OVER THE SECOND HIGH BID FOR ITEM NO. 30), PROVIDED THE ASSOCIATED TRANSPORT, INC., OF ERIE, PENNSYLVANIA, THE CONTRACTOR'S CARRIER, WOULD RETURN THE SHEAR WITHOUT COST TO HIM OR DROP EXISTING STORAGE CHARGES.

THE ESTABLISHED RULE IS THAT, WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED AND AWARD OF A CONTRACT MADE, THE CONTRACTOR MUST BEAR THE CONSEQUENCES OF THE ERROR UNLESS THE MISTAKE WAS MUTUAL OR THE OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. 39 COMP. GEN. 36.

WHILE IT MAY BE THAT SURPLUS AND SALVAGE OF ERIE MAY HAVE MADE AN ERROR IN ITS BID, AS ALLEGED, IT IS CLEAR THAT THE ERROR WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT, BUT WAS DUE SOLELY TO THE NEGLIGENCE OF THE BIDDER IN THE PREPARATION OF ITS BID. CONSEQUENTLY, SUCH ERROR WAS UNILATERAL--- NOT MUTUAL. THERE WAS NOTHING ON THE FACE OF THE CONTRACTOR'S BID TO INDICATE THAT THE $311.11 PRICE QUOTATION ON ITEM NO. 30 WAS NOT INTENDED FOR THAT ITEM, OR TO PUT THE CONTRACTING OFFICER OTHERWISE ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. SURPLUS AND SALVAGE OF ERIE DID NOT ALLEGE ERROR IN ITS BID UNTIL AFTER ACCEPTANCE OF ITS BID AND AWARD OF THE CONTRACT TO IT. THUS, SO FAR AS THE RECORD SHOWS, THE ACCEPTANCE OF THE BID, WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ANY ERROR, WAS IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. THE CONTRACT VESTED IN THE GOVERNMENT THE RIGHT TO HAVE PERFORMANCE IN STRICT ACCORDANCE WITH THE TERMS OF THE ACCEPTED BID AND NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT OR ACQUIRED BY IT UNDER A CONTRACT. UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, CERTIORARI DENIED 280 U.S. 574; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584, 607, CERTIORARI DENIED 292 U.S. 645; AND PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 CT.CL. 327, 335.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR GRANTING ANY RELIEF TO SURPLUS AND SALVAGE OF ERIE UNDER SALES CONTRACT NO. N63066S 2553.