B-176537, DEC 21, 1972

B-176537, DEC 21, 1972

CONTRACT - PRICE INCREASE - UNILATERAL ERROR - PAYMENT TO REFLECT BID PRICE INTENT DECISION CONCERNING A REQUEST BY A.C. BALL CO. FOR AN INCREASE IN THE PRICE OF A CONTRACT BECAUSE OF AN ALLEGED MISTAKE IN THE BID UPON WHICH THE CONTRACT IS BASED. SINCE BALL'S UNILATERAL MISTAKE, THE SUBMISSION OF $747.50 AS A UNIT PRICE INSTEAD OF ITS INTENDED PRICE OF $1,747.50, IS A BONA FIDE ERROR WHICH IS NOW RECOGNIZED BY THE CONTRACTING AGENCY AS WELL AS BY THE U.S. ARMY MATERIEL COMMAND, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR IN THE SUBMITTED BID PRICE AND THUS SHOULD HAVE VERIFIED THE BID. SEE 45 COMP. GEN. 305 (1965). ALSO, SINCE BALL'S BID WAS MORE THAN 50 PERCENT BELOW THE GOVERNMENT'S ESTIMATE AS WELL AS FAR BELOW THE OTHER BIDDER'S PRICES, THE BID PRICE WILL BE INCREASED TO AN AMOUNT NOT TO EXCEED THE DIFFERENCE BETWEEN BALL'S INTENDED BID PRICE AND THE AMOUNT ALREADY PAID TO BALL FOR ITS PAST PERFORMANCE.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 1, 1972, WITH ENCLOSURES, FROM THE ASSISTANT GENERAL COUNSEL, HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, FURNISHING OUR OFFICE A REPORT RELATIVE TO THE REQUEST OF THE A. C. BALL COMPANY (BALL) FOR AN INCREASE IN THE PRICE OF CONTRACT NO. DAAA15-68-C-0773, DATED JUNE 26, 1968, BASED ON A MISTAKE IN BID ALLEGED AFTER AWARD.

THE CONTRACT INVOLVED WAS AWARDED ON A BID SUBMITTED BY BALL IN RESPONSE TO INVITATION FOR BIDS (IFB) NO. DAAA15-68-B-0907, ISSUED BY THE EDGEWOOD ARSENAL ON JUNE 4, 1968, WHICH INVITED PRICES FOR 10 EACH MAINTENANCE KITS, CBR EQUIPMENT, M14, FOR DELIVERY AT THREE DESTINATIONS.

AS THE RECORD DISCLOSES (AND THESE FACTS ARE NOT IN DISPUTE) ON JUNE 19, 1968, THE DATE SET FOR RECEIPT OF BIDS, THREE FIRMS SUBMITTED THE FOLLOWING PRICES:

SUFFOLK ENVIRONMENTAL MAGNETICS, INC. $2,200.00 EACH

METAL CRAFT, INC. 1,770.00 EACH

BALL 747.50 EACH

BALL'S BID ALSO OFFERED A 2 PERCENT DISCOUNT IF AWARDED ALL ITEMS. THE GOVERNMENT'S INDEPENDENT ESTIMATE OF THE COST FOR THE ITEMS IN QUESTION WAS $1,500 PER ITEM.

ON JUNE 20, 1968, A NEW CONTRACT SPECIALIST, HEREINAFTER REFERRED TO AS THE CONTRACTING OFFICER, WAS ASSIGNED THE RESPONSIBILITY FOR COMPLETION OF THE PROCESSING OF BIDS TO AWARD. ON THE SAME DATE "MEMORANDUM FOR RECORD" WAS PREPARED BY THE NEW CONTRACTING OFFICER WHICH STATED:

"20 JUNE 68

CALLED 'A. C. BALL' AND ASKED MR. BALL TO CONFIRM HIS PRICE USING THE DISCOUNTED PRICE WHICH WOULD BE $732.55 EACH. HE WAS ALSO ASKED TO STATE THAT HE HAS OPEN CAPACITY. HE WILL SEND THIS INFORMATION THIS DATE."

THERE IS NO RECORD IN THE CONTRACT FILE OF A WRITTEN CONFIRMATION OF THE BID PRICE QUOTED BY BALL. IN FACT, BALL HAS CONSISTENTLY MAINTAINED THAT IT HAS NO RECORD OF EVER HAVING BEEN ASKED TO CONFIRM ITS BID PRICE, OR ANY RECORD OF BEING INFORMED BY THE CONTRACTING OFFICER THAT HE SUSPECTED A POSSIBLE MISTAKE IN BALL'S BID DUE TO THE WIDE VARIANCE IN THE BID PRICES RECEIVED. SOME FOUR YEARS LATER (JANUARY 26, 1972), THE CONTRACTING OFFICER'S "MEMORANDUM FOR RECORD" ATTEMPTS TO RECALL THE EARLIER EVENTS IN QUESTION BY STATING IN PART:

"20 JUNE 68 I CALLED THE CONTRACTOR AND SPOKE TO MR. BALL HIMSELF. WAS ASKED TO VERIFY HIS PRICE DUE TO ITS APPARENT LOWNESS AND HE WAS ASKED WHETHER OR NOT HE HAD ADEQUATE OPEN CAPACITY. HE VERIFIED HIS PRICE AND STATED THAT HE WOULD HAVE ADEQUATE CAPACITY. HE WAS TOLD TO CONFIRM THIS WITH A LETTER."

FOLLOWING A DESK PRE-AWARD SURVEY OF JUNE 21, 1968, AND A DETERMINATION OF "REASONABLENESS OF PRICE" ON THE SAME DATE, AWARD WAS MADE TO BALL ON JUNE 26 IN THE SUM OF $7,325.50. FINAL MONETARY PAYMENT WAS MADE TO BALL ON MAY 27, 1969.

BY LETTER DATED JUNE 3, 1969, BALL MADE ITS FIRST REQUEST FOR AN INCREASE IN PRICE BASED UPON ITS ALLEGED MISTAKE IN BID. THE MISTAKE WAS STATED TO HAVE OCCURRED BECAUSE A SECRETARY ENTERED A UNIT PRICE OF $747.50, RATHER THAN THE UNIT PRICE OF $1,747.50 INTENDED.

ON JUNE 20, 1969, THE CONTRACTING OFFICER ADVISED BALL THAT NO ACTION COULD BE TAKEN ON ITS CLAIM UNDER SECTION 17 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AND IF IT WISHED THE CLAIM COULD BE SUBMITTED DIRECTLY TO OUR OFFICE. HOWEVER, RATHER THAN INITIALLY FOLLOWING THAT COURSE OF ACTION, ON DECEMBER 20, 1971, THE CONTRACTOR SUBMITTED A REQUEST FOR CONTRACT ADJUSTMENT UNDER PUBLIC LAW 85-804, APPROVED AUGUST 28, 1958, 50 U.S.C. 1431-1435, AS IMPLEMENTED BY ASPR 17- 204.3(II), WHICH AUTHORIZES AMENDMENT OR MODIFICATION OF CONTRACTS TO FACILITATE THE NATIONAL DEFENSE. AFTER AN EXCHANGE OF CORRESPONDENCE BETWEEN BALL AND HEADQUARTERS, ARMY MUNITIONS COMMAND, BALL ADVISED THAT IT WAS WITHDRAWING ITS CLAIM AND WOULD FILE A CLAIM WITH THE GENERAL ACCOUNTING OFFICE. THE MATTER WAS FORMALLY SUBMITTED TO OUR OFFICE BY BALL ON JULY 12, 1972.

AN AFFIDAVIT OF ALFRED C. BALL, PRESIDENT OF BALL, ATTESTS THAT THE UNIT PRICE HE BID WAS $1,747.50, AND THAT HE HAD PENCILLED IN THAT FIGURE ON PAGE 10 OF THE IFB PRIOR TO THE TIME THE BID WAS SUBMITTED, BUT THAT ONE OF BALL'S OFFICE GIRLS INCORRECTLY COPIED THAT INTENDED UNIT PRICE AND INCORRECTLY INSERTED IN INK A PRICE OF $747.50. IN HIS BRIEF BEFORE THE CONTRACT ADJUSTMENT BOARD, HE EXPLAINS THAT THIS MISTAKE WAS APPARENTLY MADE BECAUSE THE OFFICE GIRL DID NOT SEE THE FIGURE "1" ON HIS BID BECAUSE IT WAS PARTIALLY HIDDEN BY THE LINE BETWEEN THE "UNIT" AND "UNIT PRICE" COLUMNS ON THE BIDDING SCHEDULE.

THE COPY RETAINED BY BALL OF ITS BID SCHEDULE DOES REVEAL THAT THE FIGURE $1,747.50 IS IN PENCIL AND THE FIGURES $747.50 ARE IN INK. WE ALSO HAVE BEEN FURNISHED A COPY OF BALL'S ORIGINAL WORKSHEET WHICH DISCLOSES AN INTENDED BID PRICE OF $1,745.50. WHILE THERE IS NO EXPLANATION OF THE $2 DIFFERENCE BETWEEN THE FIGURES $1,747.50 AND $1,745.50, WE THINK THIS IS IMMATERIAL IN VIEW OF THE RATIONALE OF THE HOLDING IN CHRIS BERG, INC. V. UNITED STATES, 192 CT. CL. 176 (1970).

SECTION 17 OF ASPR CITED IN THE CONTRACTING OFFICER'S LETTER OF JUNE 20, 1969, ALLUDES TO ASPR 17-205.1(C)(I), WHICH PRECLUDES CONTRACT AMENDMENT OR EQUITABLE ADJUSTMENT UNLESS THE REQUEST IS FILED BEFORE FINAL PAYMENT. WHILE NO SIMILAR RESTRICTION IS IMPOSED UPON THE JURISDICTION OF OUR OFFICE TO CONSIDER CLAIMS BASED UPON ALLEGED MISTAKES IN BIDS, OUR CONSIDERATION OF SUCH CASES IS BASED UPON JUDICIAL PRECEDENT AND, AS A GENERAL RULE, NO RELIEF WILL BE GRANTED IN THE CASE OF A UNILATERAL MISTAKE AFTER THE BID HAS BEEN ACCEPTED IN GOOD FAITH BY THE GOVERNMENT UNLESS THE CIRCUMSTANCES ARE SUCH TO DICTATE THAT THE GOVERNMENT KNEW OR SHOULD HAVE KNOWN OF THE PROBABILITY OF THE MISTAKE, THUS NECESSITATING VERIFICATION OF THE BID BEFORE IT IS ACCEPTED. 45 COMP. GEN. 305 (1965).

WE ARE SATISFIED FROM THE FACTS OF RECORD THAT BALL MADE A BONA FIDE ERROR IN ITS BID, AS ALLEGED, WHICH IT DID NOT DISCOVER UNTIL AFTER DELIVERY AND PAYMENT. IT IS NOW RECOGNIZED BY HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, THAT THERE IS MERIT TO BALL'S CLAIM AND THE ONLY ISSUE IS WHETHER IT WAS FILED IN A TIMELY MANNER. THUS, THE ONLY REMAINING ISSUE, AS WE VIEW IT, IS WHETHER THE CONTRACTING OFFICIALS KNEW OR SHOULD HAVE KNOWN OF THE ERROR IN QUESTION AND TOOK THE NECESSARY STEPS TO VERIFY THE BID PRICES PRIOR TO AWARD.

FROM THE REPORTED FACTS, INCLUDING THE FACT THAT BALL'S BID WAS MORE THAN 50 PERCENT BELOW THE GOVERNMENT'S ESTIMATE, AND THE CONSIDERABLE DISPARITY THAT EXISTED BETWEEN ITS BID AND THE TWO OTHER BIDS RECEIVED, THE CONTRACTING OFFICER WAS PLACED ON NOTICE OF THE PROBABILITY OF A MISTAKE. IT ALSO APPEARS THAT THE TELEPHONIC REQUEST FOR BID VERIFICATION, TAKING INTO ACCOUNT EITHER VERSION AS REPORTED FOR THE RECORD BY THE CONTRACTING OFFICER, WAS INADEQUATE TO PLACE THE BIDDER ON NOTICE OF THE NATURE AND THE EXTENT OF THE SUSPECTED MISTAKE, AS REQUIRED BY ASPR 2-406.1. THE AWARD TO BALL THEREFORE DID NOT RESULT IN AN ENFORCEABLE OBLIGATION TO PERFORM AT ITS ERRONEOUS BID PRICE. SEE 44 COMP. GEN. 383 (1965) AND 48 COMP. GEN. 672 (1969).

ACCORDINGLY, WE APPROVE PAYMENT OF THE AMOUNT OF $9,800.00, REPRESENTING THE DIFFERENCE BETWEEN THE CORRECT UNIT PRICE OF $1,747.50, LESS A 2 PERCENT REDUCTION FOR AWARD OF ALL ITEMS AS OFFERED IN THE BID, AND THE SUM OF $7,325.50 PREVIOUSLY PAID UNDER THE CONTRACT OF JUNE 26, 1968. REFERENCE SHOULD BE MADE TO THIS DECISION ON THE VOUCHER BY WHICH SUCH PAYMENT IS AUTHORIZED.

THE ENCLOSURES RECEIVED WITH THE LETTER OF NOVEMBER 1 ARE RETURNED.