Opinion · United States Court of Claims
Massman Const. Co. v. United States
Massman Const. Co. v. United States, 60 F. Supp. 635 (Ct. Cl. 1945)
- Type
- Opinion
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- United States Court of Claims
- Jurisdiction
- Federal
- Date
- 1945-01-08
- Topic
- bankruptcy
How later courts describe this case
- cited with approval in Prineville Sawmill Co. v. United States, 859 F.2d 905, 912 (Fed.Cir.1988)
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MASSMAN CONST. CO. v. UNITED STATES, (1945)
60 F. Supp. 635
MASSMAN CONST. CO. v. UNITED STATES.
No. 45765.
United States Court of Federal Claims.
January 8, 1945.
Writ of Certiorari Denied May 28, 1945.
See 65 S.Ct. 1403.
Petition dismissed.
Certiorari denied65 S.Ct. 1403.
This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following Special Findings of Fact:
1. Plaintiff is a Missouri corporation with its principal place of business in Kansas City, Missouri. It is and since 1916 has been engaged in the general contracting business which has included both private and Government contracts. During the past fifteen years its work has largely been on contracts with the Corps of Engineers, United States Army, and such contracts have amounted to some $60,000,000. These contracts have been carried out by the plaintiff and accepted by the defendant's representatives without substantial controversy.
During the period involved in this suit, H. J. Massman, Sr., was president of plaintiff, H. J. Massman, Jr., vice president, and George E. Owens, general superintendent and estimator.
2. October 23, 1940, the United States Engineer Office, New Orleans, Louisiana, advertised for bids which were to be opened at 2 p. m. November 7, 1940, for furnishing all labor and performing all work for repairing the existing rubblemound East jetty at Calcasieu Pass, Louisiana. The Invitation for Bids stated that the work was being advertised under three separate invitations as follows (alternate (b) being the one on which the contract here in question was awarded):
(a) For furnishing all labor and materials and performing all work for repairing and extending the jetty;
(b) For furnishing all labor and materials except stone which was to be furnished by the Government, and performing all work for repairing and extending the jetty;
(c) For furnishing f. o. b. cars at producer's quarry approximately 220,000 tons of stone.
The contract was to be awarded to one bidder under Invitation (a) set out above, or to two bidders under Invitations (b) and (c) whichever was founded to be most advantageous to the Government.
3. The bids invited were unit price bids and the Invitation stated —
"The quantities of each item of the bid, as finally ascertained at the close of the contract, in the units given and the unit prices of the several items stated by the bidder in the accepted bid, will determine the total payments to accrue under the contract. The unit price bid for each item must allow for all collateral or indirect cost connected with it."
The estimated quantities of stone required to complete the contract were 48,000 tons of riprap, 102,000 tons of core stone, and 70,000 tons of cover stone. The work involved first the laying of a mat of riprap stone on the bed of and extending into the Gulf of Mexico and the building of a core of stone on the mat upward to the low water level. The cover stone was to be placed over the core stone.
A bid bond was required in an amount not less than ten percent of the total amount of the bid and the successful bidder was required to execute the standard form of construction contract.West Page 636
4. During the latter part of October 1940 the Invitation for Bids referred to above came to the attention of plaintiff. Plaintiff had just completed a project at Greenville, Mississippi, and was nearing the completion of a project at Beaumont, Texas, from which projects equipment of a type suitable for the work covered by the Invitation for Bids was about to become available. At that time Owens was out of Kansas City in connection with work on one of these projects. Upon the return of Owens to Kansas City on or about November 4, 1940, and after consideration of the nature of the project and the equipment which plaintiff would have available, plaintiff decided to submit a bid. Owens had been in the employ of plaintiff for over ten years, first as foreman, then as superintendent of bridge construction, and at this time as general superintendent and estimator. Prior to his coming with plaintiff he had had broad experience in the construction field. During his employment with plaintiff he had been entrusted with estimating the cost of projects, preparing bids for submission with respect thereto, and in the supervision of the projects where bids were accepted. Plaintiff's officers had confidence in Owens' ability and he was often entrusted with the job of making estimates and submitting bids without supervision or check by them.
5. At the time the decision was reached to submit the bid the scope of the work to be accomplished, organization to be used, method to be adopted, and the kind, suitability and availability of equipment were discussed. In the discussion it was concluded that plaintiff would have sufficient equipment available to accomplish the work and rental charges therefor to be used in preparing the bid were discussed but the amount of such rental charges was left to Owens' judgment.
It was decided to have Owens proceed to New Orleans and prepare the bid rather than undertake to prepare it in Kansas City because of several essential factors which could more readily be determined in New Orleans, such as local labor rates, fuel costs, freight rates on stone and quotations from local stevedores.
6. Owens left Kansas City for New Orleans by the most direct route on the morning of November 5, 1940, which afforded him ample time within which to make his estimates and prepare the bid for submission on the afternoon of November 7, 1940. Plaintiff's action in contemplating the submission of the bid immediately prior to the time for the opening followed the general policy in the construction industry where the bidders seek to have the latest information on subcontractors' bids and labor and material costs which are constantly changing.
7. Owens arrived in New Orleans on the morning of November 6, 1940, and began the preparation of plaintiff's estimates for the bid. In addition to the actual computation of the estimates on the alternates set out in the bid, it was necessary to learn about freight rates on stone, unloading costs, and material and labor costs.
Because of the alternates in the invitation and the conditions that existed, there were several methods of figuring the bid. Owens worked steadily throughout November 6, 1940, with only time out for meals, collecting the necessary information, interviewing various individuals, and making his calculations. Since a major factor in the cost of doing the job was the type and amount of equipment to be used, on the morning of November 6, 1940, he first calculated the equipment charge on the customary estimate sheet (herein referred to as first sheet) used by plaintiff as follows:
MASSMAN CONSTRUCTION COMPANY
Kansas City, Mo.
Computation Calcasieu Pass Jetties. Date 11-7-40. Computed By GEO Checked By _______ Contract ________ Equipment
1 Towboat ............... 900.00 per mo. 1 " ............... 600.00 10 Barges ............... 1,800.00 1 Derrick Barge ......... 750.00 1 Whirley ............... 750.00 1 Launch ................ 200.00 --------- 5,000.00X16 mo's=80,000.00
2 Rock Buckets .......... 3,000.00 Misc. Tools Sup ....... 2,500.00 Equip. Repair ........... 2,500.00 -------- 8,000.00 ---------- Total Equip. Cost ..... $88,000.00
While that sheet was prepared on November 6, 1940, it bore the submission date November 7, 1940, as did the other estimate sheets. After having prepared the equipment estimate, Owens then on a similar form prepared his estimate (herein referred to as second sheet) of the labor costs of placing the stone together with his costs of supervision, etc., as follows:West Page 637
MASSMAN CONSTRUCTION COMPANY
Kansas City, Mo.
Computation Calcasieu Pass Jetties. Date 11-7-40. Computed by GEO Checked by ______ Contract _________ Place:
1 Foreman ....................... @1.00 1 Operator ...................... @1.25 1 Fireman ....................... @.50 2 Pilots ........................ @2.50 1 Engineer ...................... @1.00 2 Deck Hands .................... @1.00 12 Laborers ..................... @4.80 ------ 12.05
$12.05X16=$192.80/day $192.80X400=$77,120.00 or .35/ton
Supervision ....................... 10,000 Fuel .............................. 6,000 Ins. .............................. 25,000 Bond .............................. 7,000 Trav. Exp. ........................ 1,000 K. C. Office ...................... 5,000 Misc. Exp. ........................ 2,000 Contingencies ..................... 11,000 Move In Out ..................... 8,000 ------ 75,000
Say .34 Total Cost ..................... .41 .30 .35 .34 ----- 1.40
On a third sheet Owens prepared the labor costs of unloading and towing as follows:
MASSMAN CONSTRUCTION COMPANY
Kansas City, Mo.
Computation Calcasieu Pass Jetties. Date 11-7-40. Computed By G. E. O. Checked By _______ Contract __________ Unload:
Foreman .................. $1.00 per hr. Operator ................. 1.25 Fireman .................. .75 20 Laborers, @ .75 ....... 15.00 ------ 18.00 X 16 hrs. $288.00
700 tons @ 288.00= .41/ton
Tow:
3 Pilots, @ 1.25 ......... 3.75 3 Engineers, @ 1.25 ...... 3.75 3 Cooks, @ 1.00 .......... 3.00 3 Deck Hands, @ .75 ...... 2.25 ---- 12.75/hr.
102.00/day for 500 days $51,000
say ..................... .25 Plus fuel @ .05/ton.......... Total for towing ..... = .30/ton
8. Owens completed the preparation of the three estimate sheets referred to in the preceding finding at approximately 1 a. m. on the morning of November 7, 1940, at which time when he came to retire he gathered together the varied assortment of working papers, including the three completed estimate sheets, which were scattered over the bed in his hotel room and on a small writing table, and placed them in his brief case without any special arrangement. What remained to be done on the following morning was to summarize the results of his calculations contained on the three estimate sheets set out above, transfer the results of that summary to his bid form, and secure and prepare a sample of stone which had been sent to him by express.
9. On the following morning, November 7, 1940, after having procured the requisite sample of stone and prepared it for submission with his bid, Owens, in removing the papers from his brief case, inadvertently failed to remove the sheet upon which he had determined the equipment charge, and prepared the summary for the purpose of his bid on a fourth sheet by using the second and third sheets but without including therein any charge for equipment as shown on the first sheet. The summary sheet read as follows:
MASSMAN CONSTRUCTION COMPANY
Kansas City, Mo.
Computation Calcasieu Pass Jetties. Date 11-7-40. Computed by G. E. O. Checked by _____ Contract ______
Contract #125 — Bid #2
-------------------------------------------------------------------------------------------- Cost Add Unit Bid Total Bid -------------------------------------------------------------------------------------------- 1 Rip Rap Stone — 48,000 T @ 1.40 ... $67,200.00 $16,800.00 $1.75 $84,000.00 2 Core Stone — 102,000 T @ 1.40 ..... 142,800.00 25,500.00 1.65 168,300.00 3 Cover Stone — 70,000 T ............ 98,000.00 17,500.00 1.65 115,500.00 --------------------------------------------------- 308,000.00 59,800.00 ....... 367,800.00 --------------------------------------------------------------------------------------------
West Page 638
Kansas City, Mo.
Computation Calcasieu Pass Jetties. Date 11-7-40. Computed by G. E. O. Checked by _____ Contract ______
Contract #125 — Bid #2
-------------------------------------------------------------------------------------------- Cost Add Unit Bid Total Bid -------------------------------------------------------------------------------------------- 1 Rip Rap Stone — 48,000 T @ 1.40 ... $67,200.00 $16,800.00 $1.75 $84,000.00 2 Core Stone — 102,000 T @ 1.40 ..... 142,800.00 25,500.00 1.65 168,300.00 3 Cover Stone — 70,000 T ............ 98,000.00 17,500.00 1.65 115,500.00 --------------------------------------------------- 308,000.00 59,800.00 ....... 367,800.00 --------------------------------------------------------------------------------------------
The column headed "Cost" and showing a total of $308,000 is made up of salaries, wages, and other expenses as outlined on the second and third sheets prepared by Owens and set out in finding 7. The column headed "Add" in the total amount of $59,800 is the amount of expected profit which Owens included. The column headed "Unit Bid" is the unit cost for stone as used in the "Cost" column plus the unit profit used for the purposes of determining the amount shown in the "Add" column. The fourth column in the total amount of $367,000 represents the amount which Owens submitted as plaintiff's bid for the contract at the unit prices stated.
10. From the summary sheet referred to in the preceding finding, Owens prepared and submitted on the bid form supplied by defendant and previously signed by plaintiff the bid as follows:
------------------------------------------------------------------------------ Item Designation Unit Quantity Unit Price Amount ------------------------------------------------------------------------------ 1 Riprap stone ......... Ton ...... 48,000 $1.75 $84,000.00 2 Core stone ........... " ...... 102,000 1.65 168,300.00 3 Cover stone .......... " ...... 70,000 1.65 115,500.00 ------------------------------------ Total .............. .......... ........ ......... $367,800.00 ------------------------------------------------------------------------------
On the same page Owens listed the plant to be used on the work as one 20-ton whirley, one 15-ton derrick barge, and for the remainder of the equipment stated generally: "Necessary number of steel barges and tow boats and other equipment as required."
11. A charge for equipment to be used on this job was one of the elements of cost which should have been included in the preparation of the estimates for the bid. The equipment set forth in the estimate sheet which was prepared by Owens but was not considered by him in preparing plaintiff's bid was reasonable and necessary for the prosecution of the proposed project and the proposed charges therefor contemplating the use of its own equipment were reasonable and proper. The cost of renting such equipment instead of using its own equipment would have been substantially in excess of the $88,000 computed by Owens on his estimate sheet. The two major items of cost entering into plaintiff's contract were labor and equipment and, as shown from the estimate sheets, labor constituted the larger item.
12. Owens filed the bid in the office of the District Engineer at New Orleans together with bond in the amount of $200,000 at approximately 1:30 or 1:45 p. m. November 7, 1940, and the other bidders filed their bids at or about the same time. Shortly thereafter in Owens' presence and in the presence of other bidders, the bids were opened at 2 p. m. on November 7, 1940, and read aloud by the District Engineer who was also the Contracting Officer. At the same time the Government estimate was also read. The bids and the Government estimate on the alternate here in controversy were as follows:
Massman Construction Co. (plaintiff) .......... $367,800.00 Estimated Government Cost ..................... 453,601.00 Badgett Construction Co ....................... 620,400.00 D. M. Picton Co., Inc ....................... 798,600.00 W. Horace Williams Co ......................... 935,000.00
The Government estimate was an estimate of the cost of the work to the Government if done by the Government with its plant and forces. It included items for supervision, surveys, and inspection in the amount of $53,200 which were not included in the estimates of contractors and which may accordingly be deducted from the Government estimate for the purpose of making a cost comparison of that estimate with the estimates of the contractors. A statute in effect at that time provided that,40 Stat. 1290,33 U.S.C.A. § 624:
"No part of the funds herein or hereafter appropriated for works of river and harbor improvement shall be used to pay for any work done by private contract if the contract price is more than 25 per centum in excess of the estimated cost of doing the work by Government plant."
One purpose of a Government estimate is to enable the Government to determine after the bids are received whether it would be more advantageous to the Government to accept one of the bids or to carry out the work itself and another purpose is to determine whether the acceptance of a given bid is within the statute quoted above. In the case of the bids submitted at this hearing only the bid of plaintiff came within the 25 percent limitation provided by the foregoing statute.
13. On the alternate (a) for both furnishing the stone and performing the work,West Page 639three bids were received, the lowest of which was submitted by plaintiff. These bids were as follows:
$1,129,200 1,489,400 1,540,000
On the alternate (c) contained in the same Invitation for Bids for only furnishing the stone, five bids were received as follows, of which the bid in the amount of $693,000 was submitted by plaintiff:
$603,700 656,600 671,000 693,000 715,000
No contracts were awarded on alternate invitations (a) and (c).
14. Immediately after the opening of bids, Owens had a conference with the District Engineer at the latter's request in regard to the procedure which plaintiff was going to follow in carrying out the work, when plaintiff would start the work, the sufficiency of the equipment which plaintiff proposed to use, and other matters of a similar nature. In view of the amount of the Government estimate and the wide disparity between plaintiff's bid and the other bids, Owens had become concerned over the correctness of his bid but he did not at this conference with the District Engineer make any claim of mistake or ask to withdraw his bid. Owens' feeling at the time was that if an error had been made it had been in his using poor judgment in estimating the job. Neither the District Engineer nor his assistant, both of whom were present at the opening of bids and at the conference with Owens and had had extended experience in matters of this nature, had any thought that a mistake had been made in plaintiff's bid and no claim of mistake was made or called to their attention. The unit prices bid by plaintiff were not substantially different from unit prices which were bid and accepted for similar work in this area some sixteen months prior to the opening of these bids. The bid of the successful bidder on that other contract was, however, $798,600 for the work here in question.
Immediately after the conference with the District Engineer, Owens telephoned plaintiff's president in Kansas City. When he advised the latter of the bid submitted, the Government estimate, and expressed fear that an error had been made, plaintiff's president also expressed concern and instructed Owens to check his figures which Owens said he had already done and which he thereafter did on various occasions as will hereinafter appear.
15. Owens left New Orleans on the afternoon of November 7, 1940, for Beaumont, Texas, where plaintiff had a bridge project under construction and after two or three days at that place where he was busily engaged he returned to Kansas City on Sunday morning, November 10, 1940. Between the time of Owens' arrival in Kansas City and the morning of November 18, 1940, plaintiff's president was out of town the greater part of the time and when at his office did not find an opportunity to go over the bid with him. However, during that period as well as prior thereto Owens made various checks of his estimates on the Calcasieu Pass without finding an error. It did not then occur to him that there could be any mistake about the equipment item and his checks did not include that item.
On the morning of November 18, 1940, Massman, Sr. and Massman, Jr., president and vice president, respectively, and Owens had a conference in Massman, Sr.'s office for the purpose of reviewing the bid in question. In discussing the bid and the work to be done, Massman, Sr., inquired as to the list of equipment which Owens proposed to use. At that time Owens had before him various sheets which he had used in preparing his bid, but when he came to look for the equipment he found that he did not have a list of such equipment. He said he knew that he had computed a charge for equipment and went into his office where after some search he discovered the missing sheet in a separate compartment of his brief case, such sheet being that referred to in finding 7 as the first sheet prepared by Owens and as showing total equipment cost of $88,000. That brief case was the one which he had in New Orleans on November 7, 1940. It was the ordinary zipper type of brief case with separate compartments in one of which the missing sheet was found.
16. Upon discovering that a charge for the use of equipment had not been included in its bid and upon the advice of its attorney, plaintiff sent a letter to the United States Engineer Office, New Orleans, Louisiana, November 20, 1940, which read in part as follows:
"After bids were opened on the above work we checked our estimate sheets with aWest Page 640view of attempting to ascertain the reason, if any, for the great difference between our bid and that of the second bidder. In so checking we found that in making our bid we had unintentionally failed to include in our total cost the value of equipment rentals which should be charged against the job. This oversight occurred due to the fact that our equipment charges were carried on a separate sheet and in the compiling of our total costs the equipment sheet was not included, due to an oversight on our part. The amount of equipment charges on this sheet which should have been added to our bid totaled $88,000, which amount was arrived at as per the attached certified copy of our estimate sheet.
"We regret that such an oversight occurred on our part, and although the fault was entirely ours, we request that the above amount be added to our bid before the contract is awarded. If this procedure cannot be followed we respectfully request that our bid be rejected, and our bid bond be released without penalty to either the surety company or ourselves."
The sheet referred to in that letter and enclosed therewith was the same as the first sheet referred to in finding 7.
17. After acknowledgment on November 25, 1940, of the receipt of plaintiff's letter of November 20, the District Engineer on December 18, 1940, advised plaintiff that its bid in the sum of $367,800 was accepted and in that letter made the following reply to plaintiff's claim of error in the bid:
"Reference is made to your letter of November 20, 1940, in which you alleged error in your bid under Invitation No. 614-41-125. You are informed that after due consideration your request for permission to change your bid is denied. You are advised that you have the right to file a claim with the District Engineer for submission through channels to the Comptroller General tor further consideration. If you desire to exercise your rights further in this regard, it is suggested that you submit your claim promptly. You are further advised that any action that may be taken on a submitted claim will not in any way affect the requirements for normal procedure under the contract."
The contract and bonds were enclosed with the letter for appropriate execution.
18. On receipt of that letter, plaintiff's officers considered the advisability of declining to enter into the contract. In reaching a decision to sign the contract plaintiff considered the effect of the forfeiture of its bond and also as one of the main factors the effect which a failure to enter into the contract might have upon its relations with the Government. At that time plaintiff had considerable Government business and did not desire to injure its established goodwill with the Government agencies with which it was dealing. In addition plaintiff was hopeful that by signing the contract and following the procedure referred to by the District Engineer in his letter quoted in finding 17, of filing a claim, the Government would recognize the error and make appropriate correction.
19. On or about December 28, 1940, plaintiff executed the contract to "furnish the plant, labor and perform the work" for repairing and extending the jetty in question as described in the specifications for the consideration of the unit prices set out in its bid as shown in finding 10. December 28, 1940, plaintiff forwarded to the District Engineer the executed contract together with the requisite bond, a written protest, and a letter to the Comptroller General. The written protest read as follows:
"This contract and the bond securing its performance are signed by the contractor, The Massman Construction Company, under protest, said contractor hereby reserving all of its rights in the matter and asking for relief on account of error and mistake in its bid due to the inadvertent omission of charge for use and rental of equipment; due notice of which error and omission was given on November 20, 1940, by the contractor to the District Engineer, United States Engineer Office, New Orleans, Louisiana, before acceptance thereof was made."
The contract was dated December 18, 1940, and, after having been signed by the Contracting Officer, it was approved by the Division Engineer, Corps of Engineers, January 8, 1941.
20. The letter to the Comptroller General enclosed with the signed contract recited the circumstances under which the rental charge for equipment of $88,000 had not been taken into account in preparing the bid and what had occurred as a result of protests. It had attached thereto various documents in support of the contentions advanced in the letter. Relief was requested as follows:
"Wherefore, The Massman Construction Company prays that relief be given it in this matter by allowing it the reasonableWest Page 641rental value of said equipment so inadvertently overlooked in this bid, for the reason that it would be unfair and unjust for the Government to avail itself of the use of same without compensating the contractor therefor."
The District Engineer at New Orleans forwarded plaintiff's claim to the Chief of Engineers on February 11, 1941, for submission to the General Accounting Office. After conferences by plaintiff's representatives with representatives of the Corps of Engineers at which times various affidavits and supporting information were submitted, the Corps of Engineers on June 13, 1941, forwarded plaintiff's claim to the Comptroller General with certain factual statements with respect to the situation involved, and concluded that letter as follows:
"8. In conclusion, it is the opinion of this office that there is doubt whether the contractor did in fact make the mistake, and that the estimate was prepared in an extremely careless manner. It is thought that it would not be unconscionable to require the contractor to perform the work at its bid price. The present record does not establish that the contractor would incur a loss in performing at the contract price. It is recommended that the claim be disallowed.
"9. In the event the claim is allowed, it is recommended that payment be authorized on the basis of the increased unit price of $2.15 per ton for the riprap stone and $2.05 for the core stone and cover stone. The claimant has agreed to this modification."
21. September 9, 1941, the Comptroller General denied plaintiff's claim. His letter to the Secretary of War on that date with respect to his action on the claim concluded as follows:
"In view of the facts of record and the law applicable thereto, there appears no legal basis for modifying contract No. W-1096-eng-7350, dated December 18, 1940. Accordingly, payment for the work performed at prices in excess of those specified in the contract is not authorized."
22. Plaintiff commenced work under the contract in March 1941 and the work was accepted as complete in May 1942. The contract price of $367,800 was reduced in the course of the work due to the issuance of a change order, reduction in quantity of stone found to be necessary, and demurrage charges. The tonnage of rock ultimately placed by plaintiff under the contract was 10,000 tons less than that estimated in the Invitation for Bids and amounted to 210,000 tons. Plaintiff has received all of its reduced contract price except the sum of $100 which has not been paid due to plaintiff's refusal to sign the final voucher.
Grover C. Sherrod, of Washington, D.C. and Francis M. Shea, Asst. Atty. Gen., for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
On October 23, 1940, the United States Engineer Office, New Orleans, Louisiana, advertised for bids for repairing the rubble-mound East jetty at Calcasieu Pass, Louisiana. Bids were to be opened November 7, at 2 P. M. Alternate (b) of the invitation was the one on which the contract here in question was awarded and it provided, as shown in finding 2, for furnishing all labor and materials except stone, which was to be furnished by the Government, for repairing and extending the jetty.
The plaintiff's home office was in Kansas City, Missouri. It had been in the contracting business for 25 years, and for 15 years its work had been principally on contracts with the Army Engineers, the contracts having amounted to some $60,000,000. When the plaintiff learned of the advertisement for the jetty project, it was about to complete other work where it had equipment suitable for the jetty job. George E. Owens, its general superintendent and chief estimator was away from Kansas City and returned there about November 4. It was decided that a bid would be made on the jetty job, and that Owens should go to New Orleans and there, after inquiry about local wage rates, fuel costs, freight rates, etc., prepare the bid.
Owens arrived in New Orleans on the morning of November 6, the day before the opening of bids. Since he needed no additional information about the value of the use of the plaintiff's own equipment on the job, he first listed on an estimate sheet the items of equipment, the value of the use ofWest Page 642each piece per month, and the number of months it would be used. From these figures he computed and recorded on the sheet the value of the use of the machinery and equipment for the job as $88,000. This sheet is copied in finding 7. Owens spent the rest of November 6 gathering local information, and he then on a second sheet estimated the costs of labor in placing stone, supervision, fuel, insurance, and other miscellaneous matters. On a third sheet he estimated the labor costs of towing and unloading. He finished these sheets after midnight on November 6 and gathered up his scattered papers and put them in a brief case, intending to make up his final estimate and the plaintiff's formal bid on the next morning.
On the morning of November 7, Owens, in taking the papers out of his brief case to complete his work, failed to take out the first sheet prepared by him the day before, on which sheet he had set down the items of value of the use of equipment amounting to $88,000. He therefore, in his final computation, as shown in finding 9, omitted that amount from consideration, and the bid which he submitted was lower by that amount than it would have been but for that omission. He filed the bid shortly before 2 P. M. on November 7, and it and three other bids were opened and read at that hour, as was the Government's own estimate of the cost of the work.
The bids and the Government's estimate are shown in finding 12. As explained in that finding, the Government's estimate included items which would not have been included in a contractor's bid, so its estimate, on a basis comparable to that of the bidders, would have been about $400,000, as against the plaintiff's bid of $367,000. The three bids by other contractors were much higher, being $620,400, $798,600, and $935,000. The District Engineer and his assistant, who were in charge of the opening of bids, had no thought that plaintiff's bid involved a mistake. They talked to Owens about when the work would be started, whether plaintiff's equipment was adequate and other relevant matters. Owens felt that for some reason his bid was too low, but thought he had used poor judgment in his estimates. He said nothing to the Governmental officials, however, about his feeling that there might have been a mistake.
The way in which the mistake in the bid had been made was not discovered by the plaintiff until November 18. The manner of its discovery is recited in finding 15. Upon its discovery the plaintiff wrote the Engineer Office at New Orleans. See finding 16. It requested that its bid be increased by $88,000, or be rejected without any liability on the bid bond. The District Engineer merely acknowledged this letter, on November 25, and on December 18 wrote the plaintiff accepting its bid as made, denying its request to change its bid and saying:
"You are advised that you have the right to file a claim with the District Engineer for submission through channels to the Comptroller General for further consideration."
The contract and bonds were enclosed for signature by the plaintiff.
The plaintiff considered the advisability of refusing to sign the contract. One of the principal reasons why it did not refuse was that refusal might affect its future relations with the Government agencies with which, as we have seen, most of its business had been done for some years past. Another reason was the fact that it had put up a bond guaranteeing its bid. It was also hopeful that if it filed a claim, as the District Engineer had written that it might, the claim would be allowed.
About December 28, 1940, the plaintiff signed the contract, furnished the requisite bond, and forwarded these to the District Engineer, together with a protest, the text of which is quoted in finding 19, and a letter to the Comptroller General. The contract was approved by the Division Engineer January 8, 1941. The plaintiff's letter to the Comptroller General recited the facts concerning the mistake substantially as we have found them, and asked that it be compensated for the use of its equipment, the value of which use it had not included in its bid.
The plaintiff's officials had conferences with officials of the Corps of Engineers, and submitted affidavits and information to them. The Corps of Engineers forwarded the plaintiff's letter to the Comptroller General on June 13, 1941 with a letter, a part of which is quoted in finding 20, saying there was doubt whether a mistake had been made, and that the estimate was prepared "in an extremely careless manner." It further said:
"It is thought that it would not be unconscionable to require the contractor to perform the work at its bid price. The present record does not establish that the contractor would incur a loss in performingWest Page 643at the contract price. It is recommended that the claim be disallowed."
The Comptroller General disallowed the claim. The plaintiff performed the contract and was paid the contract price, except $100 which has not been paid because of the plaintiff's refusal to sign the final voucher.
The plaintiff urges here that its contract with the Government should be reformed and enforced as reformed because of either (1) mistake of fact on its part and unconscionable conduct on the part of the Government, or (2) mutual mistake of fact.
At the time the contract was awarded to the plaintiff, pursuant to its bid, and at the time it signed the contract, the plaintiff was not mistaken. It had become aware of the mistake in its bid, and faced the problem of whether it was willing to sign a contract for the figure which it had, by mistake since discovered, bid. The Government was also aware of the plaintiff's claim that it had made a mistake in its bid. There was not, then, at the time of signing the contract, any lack of knowledge, either mutual or unilateral, which caused either of them to make the contract which they did make, when in fact they intended to make a different contract. That being so, if we should reform the contract as the plaintiff requests, we would be making for the parties the very contract which one of them, the Government, expressly refused to make at that time, though requested to do so by the plaintiff.
The plaintiff's contention, to have any merit at all, must relate to the events preceding the signing of the contract. It must relate to the situation after the plaintiff had made its mistaken bid, and had later discovered the mistake and asked, without avail, that its bid be either modified or rejected. If the plaintiff's bid had been an ordinary revocable offer, it would, upon the discovery of its mistake before acceptance of its offer, have been completely free to revoke its offer and escape a burdensome contract. If, instead of revoking, it had advised the offeree of the mistake and asked him to give it a contract for a higher price than the one offered, and the offeree had refused to do so, the plaintiff might have been in about the same dilemma it was in here. If the offeree was its best customer, the plaintiff might have concluded to stand by the mistaken offer and kept the customer's good will, even though it was free to revoke. If it did let the mistaken offer stand, and made a contract in accordance with it, it could not later claim that that contract should be reformed. It could not be said that it was unconscionable for the offeree to refuse to contract to pay more than he was willing to pay, just because that refusal put the plaintiff in the embarrassing situation of having to choose whether it would go back on its offer, or stand by its word, even to its immediate harm, in order to keep the good opinion of a customer.
The plaintiff's situation here differs from the one discussed above only in the respect that the plaintiff's offer, or bid, was, in terms, irrevocable, and was accompanied by a bond so that the revocation of the bid would have subjected the plaintiff to a liability, unless the mistake which was involved in the bid would have constituted a defense to enforcement of the bond. There was at least a serious possibility of liability on the bond. Was this potential liability, which was one of the factors which the plaintiff considered in deciding to sign the contract, coercive in the sense that it can be said that the contract was signed under duress? It should be said that this factor was not, apparently, the dominant one in arriving at the decision to sign. The dominant factor, it may be inferred from the testimony of the plaintiff's official, was the desire of the plaintiff to keep the good will of its best customer. But to whatever extent the liability on the bid bond was coercive, was it unfairly or unconscionably so?
The Government is required by law to award certain of its contracts on the basis of competitive bids, after advertisement. To make the system work without undue delays and without the opening of the bids being used unfairly to obtain a disclosure of what competitors are offering, it is necessary that the bids be firm bids, backed by a guaranteed willingness to sign a contract at the bid price. To have a set of bids discarded after they are opened and each bidder has learned his competitor's price is a serious matter, and it should not be permitted except for cogent reasons. We seriously doubt whether the plaintiff's estimator, Owens, exercised the care in preparing and presenting the plaintiff's bid which was called for by the important problem with which he was dealing. If not, the plaintiff would not and should not have been released from liability upon its bid bond, since one of the purposes of the bond was to cause bidders to exercise due care. But if the plaintiff, in the circumstances, did not have the right, or if the District Engineer reasonably thought theWest Page 644plaintiff did not have the right to be released without penalty from its bid bond, it was not improperly coercive, or unconscionable, conduct on his part to refuse to voluntarily release the plaintiff. He had the right, and probably the duty, to insist upon what he, reasonably, thought were the Government's rights. That this insistence put the plaintiff in the position where it had to make up its mind whether it would be wiser to refuse to sign the contract and contest by litigation its liability on the bond, or to sign the contract, keep its reputation clear with the Government and seek relief through the discretionary action of higher officials, did not make the insistence unconscionable.
This case differs from the case of Edmund J. Rappoli Co. v. United States, 98 Ct.Cl. 499, in the respect that in that case the court found that, concurrently with the signing of the contract, the Government's agents promised the contractor that, upon the fulfillment of certain conditions that were found by the court to have been fulfilled, the mistake would be corrected. Here no such promise was made.
The plaintiff's contract was not made by mistake, nor because of duress or coercion. The petition will be dismissed. It is so ordered.
WHALEY, Chief Justice, and WHITAKER, Judge, concur.
LITTLETON, Judge, dissents.
JONES, Judge, took no part in the decision of this case.West Page 649