Sulzer Bingham Pumps, Inc., a Delaware Corporation v. Lockheed Missiles & Space Company, Inc., a California Corporation

This appeal arises out of an unusual dispute between a major government contractor and a subcontractor providing components for the United States Navy’s Trident II nuclear submarines. The contractor, Lockheed Missiles & Space Company, awarded a subcontract to the low bidder for the subcontract, the appellee Sulzer Bingham Pumps, Inc. Sulzer Bingham’s bid, however, was in fact millions of dollars lower than it would have been if Sulzer Bingham had not committed a series of errors in preparing the bid. According to the findings of the respected district judge who heard the evidence, Lockheed doubted that Sulzer Bingham could perform the contract at that price, but nevertheless awarded the contract for the bid price, resulting in an unconscionably low price. The district court concluded that Lockheed’s conduct amounted to overreaching in violation of basic contractual principles, and that its failure to ask the subcontractor to verify its bid violated the terms of the subcontract. The district court declined to rescind the contract. The district court did, however, award Sulzer Bingham some equitable relief in the form of the actual costs it incurred above the contract price, in a…