B-177405, NOV 29, 1972

B-177405, NOV 29, 1972

BID PROTEST - MISTAKE IN BID - BIDDER VERIFICATION - PROPER NOTICE OF NATURE OF MISTAKE DECISION ALLOWING CANCELLATION WITHOUT LIABILITY OF A CONTRACT AWARDED TO BRACELAND BROTHERS, INC. BY THE COAST GUARD UNDER AN IFB FOR LITHOGRAPHIC SERVICES TO PREPARE COMPLETE SETS OF DAMAGE CONTROL DIAGRAMS FOR SIX VESSELS. A CONTRACTING OFFICER MUST VERIFY A BID PRICE IF HE IS ON ACTUAL OR CONSTRUCTIVE NOTICE OF A MISTAKE AND PUT THE BIDDER ON NOTICE OF THE NATURE AND EXTENT OF THE SUSPECTED MISTAKE. IF THE BIDDER IS NOT PUT CLEARLY ON SUCH NOTICE THEN A VERIFICATION OF THE BID PRICE BY THE BIDDER STILL DOES NOT BAR THE DEFENSE OF RESCISSION. B-170691, JAN. 28, 1971.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 3, 1972, FROM THE ACTING COMPTROLLER OF THE UNITED STATES COAST GUARD, SUBMITTING FOR OUR CONSIDERATION A REQUEST FOR RESCISSION OF CONTRACT NO. DOT-CG-31,047-A, AWARDED TO BRACELAND BROTHERS, INC., UNDER INVITATION FOR BIDS (IFB) NO. CG-31,047-A, BASED ON MISTAKES IN ITS BID PRICES ALLEGED BY THE CORPORATION AFTER AWARD.

THE IFB WAS ISSUED AUGUST 29, 1972, BY THE COAST GUARD FOR BIDS ON ALL LABOR AND MATERIAL NECESSARY FOR LITHOGRAPHIC SERVICES TO PREPARE COMPLETE SETS OF DAMAGE CONTROL DIAGRAMS FOR SIX 327 FT. WHEC CLASS VESSELS. SOLICITATIONS WERE MAILED TO 27 FIRMS AND THE PROPOSED PROCUREMENT WAS ADVERTISED IN THE COMMERCE BUSINESS DAILY ON AUGUST 29, 1972. THE NAVAL ENGINEERING DIVISION, FOR WHICH THE SUBJECT IFB WAS SOLICITED, HAD ESTIMATED THAT THE COST OF THE PROCUREMENT WOULD BE APPROXIMATELY $11,000, INCLUDING COSTS OF $3,150 FOR MATERIALS AND $7,350 FOR PRESSING PLATES AND LITHOGRAPHING.

BIDS WERE OPENED ON SEPTEMBER 28, 1972, AND ONLY TWO COMPANIES SUBMITTED BID PRICES. THE TWO BIDS RECEIVED WERE AS FOLLOWS:

BIDDER PRICE PER SET TOTAL PRICE (6 SETS)

BRACELAND BROTHERS,

INC. $ 441.68 $ 2,650.08

WILLIAMS & HEINTZ

MAP CORP. 1,775.40 10,652.40

DUE TO THE DISPARITY IN AMOUNTS BETWEEN THE LOW BID AND BOTH THE SECOND LOW BID AND THE COAST GUARD ESTIMATE, THE CONTRACTING OFFICER SUSPECTED THAT BRACELAND BROTHERS, INC., HAD INCORRECTLY ESTIMATED ITS BID SO AS TO ARRIVE AT SUCH UNREASONABLY LOW FIGURES. ON SEPTEMBER 29, 1972, THE COAST GUARD REQUESTED THAT, DUE TO THE DISPARITY IN PRICES RECEIVED, THE LOW BIDDER CONFIRM ITS BID. BY LETTER DATED SEPTEMBER 29, 1972, BRACELAND BROTHERS VERIFIED ITS BID PRICES, AND BY A SECOND LETTER SIMILARLY DATED REQUESTED A COPY OF THE BID ABSTRACT. THIS ABSTRACT WAS MAILED TO BRACELAND BROTHERS ON OCTOBER 4, 1972.

ON OCTOBER 18, 1972, THE SUBJECT CONTRACT WAS AWARDED TO BRACELAND BROTHERS, INC., FOR THE CORPORATION'S TOTAL BID PRICE OF $2,650.08. BRACELAND BROTHERS, BY WILLIAM WARING, GOVERNMENT CONTRACTS ADMINISTRATOR, CONFIRMED THIS AWARD ON OCTOBER 20, 1972.

ON OCTOBER 24, 1972, MR. ERNEST MOYER, VICE PRESIDENT OF FINANCE FOR BRACELAND BROTHERS, INC., TELEPHONED MR. ROBERT N. VANDIVER, THE CONTRACT NEGOTIATOR FOR THE COAST GUARD, AND INDICATED THAT BRACELAND BROTHERS HAD MADE A $13,000 MISTAKE IN THEIR BID. MR. MOYER STATED THAT THE SUBMITTED TOTAL BID PRICE OF $2,650.08 ACTUALLY REPRESENTED THE UNIT PRICE FOR A COMPLETE SET FOR ONLY ONE SHIP, INSTEAD OF THE PRICE FOR COMPLETE SETS FOR ALL OF THE SIX SHIPS CONCERNED. ALTHOUGH MR. MOYER ACKNOWLEDGED THAT BRACELAND BROTHERS HAD CONFIRMED ITS TOTAL BID PRICE OF $2,650.08, HE STATED THAT THE COMPANY'S VERIFICATION WAS AN ERROR, AS IT WAS IN ESSENCE THE SAME MISTAKE AGAIN BEING COMMITTED. MR. MOYER CONFIRMED THIS CONVERSATION BY A TELEGRAM OF THE SAME DATE.

ON OCTOBER 25, 1972, THE COAST GUARD ACKNOWLEDGED BRACELAND BROTHERS' TELEGRAM, CLAIMING MISTAKE IN ITS BID, AND INFORMED THE BIDDER THAT THE ALLEGED MISTAKE MUST BE SUPPORTED BY SWORN WRITTEN STATEMENTS AND BY ALL PERTINENT EVIDENCE SUCH AS THE FILE COPY OF THE BID, ORIGINAL WORKSHEETS, AND THE INTENDED BID PRICE. THEREAFTER, MR. MOYER SUBMITTED ORIGINAL WORKSHEETS WHICH INDICATED THAT A UNIT PRICE OF $2,650.08 HAD BEEN COMPUTED, BUT SUCH PRICE HAD ERRONEOUSLY BEEN DIVIDED BY 6 TO OBTAIN THE UNIT PRICE OF $441.68 SUBMITTED IN BRACELAND'S BID. ACCORDINGLY, BRACELAND BROTHERS REQUESTED THAT IT BE "RELIEVED" OF THE AWARD.

BOTH THE CONTRACTING OFFICER, IN HIS ADMINISTRATIVE REPORT ON THE MATTER, AND THE ACTING COMPTROLLER, IN HIS LETTER DATED NOVEMBER 3, 1972, WHICH ACCOMPANIED THE CONTRACTING OFFICER'S REPORT, ACCEPT THE CONTRACTOR'S ALLEGATIONS AND RECOMMEND THAT THE CONTRACT TO BRACELAND BROTHERS, INC., BE RESCINDED. FROM OUR EXAMINATION OF THE WORKSHEETS AND THE BID, WE AGREE THAT THE MISTAKE AND THE INTENDED BID PRICE HAVE BEEN SATISFACTORILY ESTABLISHED.

GENERALLY, UPON VERIFICATION OF A BID PRICE IN WHICH MISTAKE IS SUSPECTED, THE CONTRACTING OFFICER HAS A DUTY TO MAKE AN AWARD TO THE LOW BIDDER, AND AN AWARD MADE ON SUCH A BASIS RESULTS IN AN ENFORCEABLE CONTRACT. B-170815, JANUARY 7, 1971. THIS GENERAL RULE, HOWEVER, IS SUBJECT TO AN EXCEPTION WHEN THE VERIFICATION BY THE LOW BIDDER IS MADE WITHOUT NOTICE TO HIM OF THE NATURE AND EXTENT OF HIS SUSPECTED MISTAKE. WHEN THE BIDDER HAS NOT, IN FACT, BEEN PLACED ON NOTICE OF THE NATURE AND EXTENT OF THE MISTAKE WHICH IS SUSPECTED, OUR OFFICE HAS HELD THAT VERIFICATION OF THE BID BY THE BIDDER DOES NOT BAR THE DEFENSE OF RESCISSION. B-170691, JANUARY 28, 1971; 44 COMP. GEN. 383 (1965). ORDER FOR A REQUEST FOR VERIFICATION TO CONFORM TO THE GOOD FAITH DEALINGS EXPECTED OF THE GOVERNMENT'S CONTRACTING OFFICIALS, THE REQUEST SHOULD BE AS FULLY INFORMATIVE AS POSSIBLE CONCERNING THE PERTINENT FACTORS INDICATING TO THE CONTRACTING OFFICER THAT AN ERROR WAS MADE IN THE BID. SEE SECTION 1-2.406-3(D)(1) OF THE FEDERAL PROCUREMENT REGULATIONS WHICH STATES, IN PART, THAT A REQUEST FOR VERIFICATION:

"*** SHALL INFORM THE BIDDER WHY THE REQUEST FOR VERIFICATION IS MADE - THAT A MISTAKE IS SUSPECTED AND THE BASIS FOR SUCH SUSPICION; E.G., THAT THE BID IS SIGNIFICANTLY OUT OF LINE WITH THE NEXT LOW OR OTHER BIDS OR WITH THE GOVERNMENT'S ESTIMATE."

IN THE INSTANT CASE, THE ONLY INDICATION IN THE SEPTEMBER 29, 1972, TELEGRAM AS TO WHY BID VERIFICATION WAS REQUESTED WAS THAT A "DISPARITY IN PRICES" EXISTED. THE ABSTRACT OF BIDS SUBSEQUENTLY FORWARDED TO THE PROTESTANT INDICATED THAT THERE WAS A DISPARITY BETWEEN HIS BID AND THE ONLY OTHER BID SUBMITTED, BUT FAILED TO INDICATE THAT THIS DISPARITY ALSO EXISTED BETWEEN THE PROTESTANT'S BID AND THE GOVERNMENT'S ESTIMATE. UNDER THE CIRCUMSTANCES, WE BELIEVE THE CONTRACTING OFFICER SHOULD ALSO HAVE ADVISED THE PROTESTANT HIS BID WAS OUT OF LINE WITH THE GOVERNMENT'S ESTIMATE, SINCE A DIFFERENCE IN PRICE BETWEEN THE ONLY TWO BIDS SUBMITTED CANNOT REASONABLY BE CONSIDERED SUFFICIENT TO PLACE A BIDDER ON NOTICE THAT THE DISPARITY IS DUE TO A MISTAKE IN HIS BID, RATHER THAN IN THE OTHER BID. CF. 47 COMP. GEN. 616 (1968). ADDITIONALLY, THE GOVERNMENT WAS ON NOTICE THAT THE PROTESTANT'S TOTAL BID WAS, IN FACT, LOWER THAN THE GOVERNMENT'S ESTIMATED COST OF MATERIALS ALONE, YET THE CONTRACTING OFFICER DID NOT SO INFORM THE BIDDER. AS THE CONTRACTING OFFICER FAILED TO GIVE THE PROTESTANT NOTICE OF EITHER THE ITEMIZED OR TOTAL GOVERNMENT ESTIMATE, IT DOES NOT APPEAR THAT THE RESULTING VERIFICATION SHOULD BE CONSIDERED SUFFICIENT TO OVERCOME THE CONTRACTING OFFICER'S DOUBTS CONCERNING THE ACCURACY OF THE LOW BID. THUS, WE BELIEVE THE CONTRACTING OFFICER SHOULD HAVE SOUGHT ADDITIONAL CLARIFICATION. B-170691, JANUARY 28, 1971; B-154955, AUGUST 26, 1964. TO THE SAME EFFECT, SEE BRIEFING PAPERS #63-6 (WELCH, "MISTAKES IN BIDS"), 1 BPC 47, WHEREIN IT IS STATED, UNDER VERIFICATION OF ERROR, THAT A REAFFIRMATION OF THE BID MUST BE REQUESTED WHERE THE FACTS CLEARLY AND CONVINCINGLY SHOW THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN, EVEN AFTER VERIFICATION, THAT THE BIDDER COULD NOT HAVE UNDERSTOOD THE BASIC REQUIREMENTS OF THE SPECIFICATIONS OR THE SIGNIFICANCE OF THE REQUEST FOR VERIFICATION OF THE BID.

IN VIEW OF THE QUESTIONABLE VERIFICATION IN THE PRESENT CASE, AND AS IT WOULD, IN OUR VIEW, BE UNCONSCIONABLE FOR THE GOVERNMENT TO REQUIRE BRACELAND BROTHERS, INC., TO FURNISH THE DAMAGE CONTROL DIAGRAMS AT ITS UNREASONABLY LOW BID PRICE, WE CONCUR WITH THE ADMINISTRATIVE RECOMMENDATION OF RESCISSION. B-174266, FEBRUARY 22, 1972; B-150382, FEBRUARY 20, 1963; B-146413, AUGUST 1, 1961. ACCORDINGLY, CONTRACT NO. DOT-CG-31,047-A MAY BE CANCELLED WITHOUT LIABILITY TO BRACELAND BROTHERS, INC.

THE FILE TRANSMITTED WITH THE LETTER FROM THE ACTING COMPTROLLER OF THE COAST GUARD IS RETURNED.