Request for Contract Rescission

The Defense Logistics Agency recommended rescission of an item in a sales contract awarded to Levin Metals, Inc. for 129,000 pounds of copper base alloy scrap. After being awarded the contract, the company alleged that its bid on the item of $0.4917 had been in error and requested that its unit bid be reduced to $0.2917 per pound or, in the alternative, that the award be rescinded. The next high bid for the item was $0.28599 per pound; the only other bid was $0.2799 per pound and the current market appraisal was $0.36 per pound. Since wide price variations normally are not encountered in the sale of scrap metals, GAO concluded that the contracting officer was on constructive notice of the possibility of a mistake by Levin and should have requested Levin to verify its bid. However, to permit reformation, clear and convincing evidence of the bid actually intended must be submitted. In this instance, the agency asserted that the evidence submitted in support of the mistake was not clear and convincing as to the bid intended, although it was sufficient to establish the existence of a mistake. Thus, rescission rather than reformation would be appropriate. GAO, agreeing with the agency, held that the award of the item in the contract may be rescinded.