Court Opinion

ID: 9459944
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:36:03.8787+00
Date Added: 2024-06-11T17:36:24.294966
License: Public Domain

ALFRED T. GOODWIN, Circuit Judge
(dissenting):
Because the case is not one likely to occur again (Congress has closed the gate) I have been reluctant to record my dissent. But I believe the district court correctly perceived the problem and reached the right result. I would affirm.
Here there was no competitive bidding between Lockheed’s suppliers, so the usual safeguards of the market place do not even in theory protect Lockheed’s ultimate purchaser against overcharges. Systron-Donner’s argument is that its bid to Lockheed became a contract, and that when Lockheed agreed to pay the *253contract price, that price, with all its faults, became the “cost” item to be calculated in the cost-plus statement Lockheed rendered to the United States.
The majority accepts too easily the argument that Lockheed could not recover the overcharge from Systron-Donner, and that therefore the cost item is immutable when passed along to the government. I might be willing to accept this argument if Systron-Donner had been the winner of a bidding competition with other subcontractors. There would then be some reason to say that Lockheed was not injured by the overcharge because the next lowest bidder would have charged even more. But here, Lockheed would have been injured by the overcharge but for the willingness of the government to buy hardware on a cost-plus basis. The majority’s decision not only provides no incentive to contractors and subcontractors to audit their bids carefully, but it tends to reward the careless with unanticipated profits as the result of a want of attention to detail. If, as a result of a misunderstanding on the part of Lockheed, Lockheed had overcharged the Government because of Lockheed’s error in computing the amount due Systron-Donner rather than Lockheed’s actual cost, the Government could recover this overpayment, presumably even following it into the hands of Systron-Donner if the payment had been erroneously passed on. See, United States v. Mead, 426 F.2d 118 (9th Cir. 1970).
Unless the interest, which would be protected by enforcing contracts outweigh society’s interests in the public treasure, the burial of a cost item erroneously in a contract should not be permitted to displace the equitable remedy of restitution for payment made by mistake. Here, I believe the equities lie with the government.
Systron-Donner asserts that its expectation interests, i.e., that it receive the full contract price, including the $39,000 which the district court found to be attributable to double counting, are protected by and should prevail under the rule of law which holds that a unilateral mistake in the formation of a contract bid does not affect the enforceability of an otherwise valid contract. But few rules of law are so well-established that they may not be called upon to justify their existence when the reason for the rule may no longer exist.
Where the ultimate victim of the mistake has agreed to pay cost, equity should require that the costs be genuine and that the party who made the mistake not be allowed to profit from it.