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B-161863, NOV. 19, 1968

B-161863 Nov 19, 1968
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GUBIN: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15. PROPOSALS WERE REQUESTED FROM SEVEN FIRMS AND OF THE FOUR PROPOSALS RECEIVED ONE WAS CONSIDERED NONRESPONSIVE. THE OTHER THREE PROPOSALS WERE SUBMITTED BY LEAR SIEGLER. THE PROPOSAL OF LEAR SIEGLER WAS CONSIDERABLY LOWER THAN THE OTHER TWO APPARENTLY ACCEPTABLE PROPOSALS. A NOTICE OF CONTRACT AWARD WAS ISSUED TO LEAR SIEGLER ON MARCH 18. WAS FULLY EXECUTED BY THE PARTIES AS OF JULY 22. THERE WAS NO CONTENTION OF ANY PRICING ERRORS IN THE ACCEPTED PROPOSAL BEFORE THE EARLY PART OF THE YEAR 1967 WHEN LEAR SIEGLER ADVISED THE PROCURING AGENCY THAT IT PROBABLY WOULD SUFFER A SERIOUS LOSS IN PERFORMING THE CONTRACT. ARE TO THE EFFECT THAT LEAR SIEGLER WAS REQUESTED TO VERIFY ITS PROPOSAL BOTH AS TO PRICE AND AS TO ITS UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT.

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B-161863, NOV. 19, 1968

TO MR. E. K. GUBIN:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15, 1968, AND TO SUBSEQUENT CORRESPONDENCE AND CONFERENCES, RELATIVE TO YOUR REQUEST FOR RECONSIDERATION OF OUR DECISION, B-161863, MARCH 18, 1968, WHICH DENIED A REQUEST MADE ON BEHALF OF LEAR SIEGLER, INCORPORATED, ELECTRONIC INSTRUMENTATION DIVISION, ANAHEIM, CALIFORNIA, THAT WE AUTHORIZE THE NEGOTIATION OF A PRICE ADJUSTMENT UNDER A CONTRACT AWARDED TO THAT COMPANY PURSUANT TO A REQUEST FOR PROPOSALS ISSUED BY THE FORT MEADE PROCUREMENT DIVISION, PROCUREMENT AND PRODUCTION DIRECTORATE, UNITED STATES ARMY ELECTRONICS COMMAND.

PROPOSALS WERE REQUESTED FROM SEVEN FIRMS AND OF THE FOUR PROPOSALS RECEIVED ONE WAS CONSIDERED NONRESPONSIVE. THE OTHER THREE PROPOSALS WERE SUBMITTED BY LEAR SIEGLER, TEXAS INSTRUMENTS, INCORPORATED, AND THE GENERAL ELECTRIC COMPANY. THE PROPOSAL OF LEAR SIEGLER WAS CONSIDERABLY LOWER THAN THE OTHER TWO APPARENTLY ACCEPTABLE PROPOSALS, THE GOVERNMENT'S ESTIMATE OF A REASONABLE PRICE FOR THE EQUIPMENT WHICH IT PROPOSED TO PURCHASE, AND THE PRICES WHICH THE GOVERNMENT HAD BEEN PAYING UNDER A 1963 CONTRACT WITH THE GENERAL ELECTRIC COMPANY FOR SIMILAR EQUIPMENT. THE CONTRACTING OFFICER SUSPECTED THE POSSIBILITY OF MISTAKE IN THE LEAR SIEGLER PROPOSAL, BASED IN PART UPON THE POSSIBILITY THAT LEAR SIEGLER DID NOT FULLY UNDERSTAND THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT.

FOLLOWING DISCUSSIONS WITH LEAR SIEGLER PERSONNEL ON JANUARY 12, 1966, LEAR SIEGLER FURNISHED BY LETTER DATED JANUARY 19, 1966, A REAFFIRMATION OF ITS FIXED-PRICE PROPOSAL. AFTER FURTHER CONSIDERATION OF THAT PROPOSAL PRIMARILY FOR THE PURPOSE OF DETERMINING LEAR SIEGLER'S CAPABILITY TO PERFORM STRICTLY IN ACCORDANCE WITH THE TECHNICAL REQUIREMENTS, A NOTICE OF CONTRACT AWARD WAS ISSUED TO LEAR SIEGLER ON MARCH 18, 1966. THE DEFINITIVE CONTRACT, BASED UPON THE PROPOSAL AS ACCEPTED BY THE GOVERNMENT, WAS FULLY EXECUTED BY THE PARTIES AS OF JULY 22, 1966. THERE WAS NO CONTENTION OF ANY PRICING ERRORS IN THE ACCEPTED PROPOSAL BEFORE THE EARLY PART OF THE YEAR 1967 WHEN LEAR SIEGLER ADVISED THE PROCURING AGENCY THAT IT PROBABLY WOULD SUFFER A SERIOUS LOSS IN PERFORMING THE CONTRACT.

STATEMENTS OF THE CONTRACTING OFFICER CONCERNING A GENERAL MEETING WITH LEAR SIEGLER PERSONNEL ON JANUARY 12, 1966, AND A SEPARATE MEETING ON THAT DATE WITH TWO VICE PRESIDENTS OF LEAR SIEGLER, AS WELL AS A STATEMENT OF ANOTHER GOVERNMENT REPRESENTATIVE WHO ATTENDED THE SEPARATE MEETING, ARE TO THE EFFECT THAT LEAR SIEGLER WAS REQUESTED TO VERIFY ITS PROPOSAL BOTH AS TO PRICE AND AS TO ITS UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT. THOSE STATEMENTS ALSO INDICATE THAT THE LEAR SIEGLER REPRESENTATIVES WERE PLACED ON NOTICE OF THE REASONS FOR THE GOVERNMENT'S SUSPICION THAT A GROSS MISTAKE MIGHT HAVE BEEN MADE IN THE PROPOSAL PRICE, ALTHOUGH THEY WERE NOT ADVISED OF THE PRICES QUOTED BY OTHER OFFERORS OR OF THE GOVERNMENT'S ESTIMATE OF A REASONABLE PRICE FOR THE EQUIPMENT AND SERVICES DESCRIBED IN THE REQUEST FOR PROPOSALS. IT WAS EXPLAINED IN OUR DECISION THAT, SINCE THIS WAS A NEGOTIATED PROCUREMENT, THE CONTRACTING OFFICER APPARENTLY CONSIDERED THAT HE WAS NOT AUTHORIZED TO DISCLOSE EITHER THE GOVERNMENT'S ESTIMATE OR THE PRICES QUOTED BY TEXAS INSTRUMENTS AND THE GENERAL ELECTRIC COMPANY. HOWEVER, IT WAS REPORTED BY THE DEPARTMENT OF THE ARMY THAT ALL PROSPECTIVE OFFERORS HAD BEEN PLACED ON NOTICE WITH RESPECT TO THE PRICES OF THE 1963 GENERAL ELECTRIC COMPANY CONTRACT FOR THE DELIVERY OF SIMILAR OR IDENTICAL ITEMS OF EQUIPMENT.

WE ALSO CONSIDERED THE AFFIDAVITS OF LEAR SIEGLER PERSONNEL, INCLUDING THOSE OF THE TWO VICE PRESIDENTS OF LEAR SIEGLER WHO ATTENDED THE SEPARATE MEETING ON JANUARY 12, 1966. ALTHOUGH THOSE OFFICIALS INDICATED THAT THE DISCUSSIONS ON THAT DATE CONCERNED PRIMARILY THE QUESTION WHETHER THE COMPANY FULLY UNDERSTOOD THE TECHNICAL REQUIREMENTS OF TH PROPOSED CONTRACT AND THAT THE LEAR SIEGLER REPRESENTATIVES WERE NOT SPECIFICALLY REQUESTED TO VERIFY PROPOSAL PRICES, THEIR STATEMENTS WERE BELIEVED TO BE SUCH AS MIGHT REASONABLY WARRANT A CONCLUSION THAT THEY WERE GIVEN A SUFFICIENT WARNING OF THE GOVERNMENT'S SUSPICION THAT A GROSS MISTAKE MIGHT HAVE BEEN MADE IN THE PROPOSAL PRICE, AND THAT A THOROUGH RECHECKING AND RECOMPUTATION OF THE PROPOSAL PRICE WOULD BE NECESSARY UNLESS LEAR SIEGLER DELIBERATELY WISHED TO TAKE THE CHANCE THAT THERE WERE NO SERIOUS PRICING ERRORS IN THE PROPOSAL AS SUBMITTED.

AS STATED IN OUR DECISION OF MARCH 18, 1968, IT IS A GENERAL RULE THAT, IF A CONTRACTING OFFICER HAS ANY REASON TO SUSPECT THAT A SERIOUS MISTAKE HAS BEEN MADE IN A BID, THE AWARD OF A CONTRACT FOLLOWING VERIFICATION OF THE BID EITHER UPON REQUEST OF THE CONTRACTING OFFICER, OR AFTER RECEIPT BY THE BIDDER OF A WARNING FROM ANY RESPONSIBLE PROCUREMENT OFFICIAL THAT A MISTAKE MIGHT HAVE BEEN MADE, RESULTS IN A BINDING CONTRACT. ALABAMA SHIRT AND TROUSER CO. V UNITED STATES, 121 CT. CL. 313. HOWEVER, THERE MUST BE AN ADEQUATE REQUEST FOR VERIFICATION OF A BID WITH RESPECT TO WHICH THE CONTRACTING OFFICER EITHER SUSPECTS OR SURMISES ERROR. UNITED STATES V METRO NOVELTY MANUFACTURING CO., 125 F.SUPP. 713. WE CONSIDERED THAT THE REQUEST IN THIS CASE WAS ADEQUATE IN THE PARTICULAR CIRCUMSTANCES AND THAT, WHEN THE CONTRACTING OFFICER RECEIVED THE WRITTEN REAFFIRMATION OF THE FIXED-PRICE PROPOSAL, HE HAD THE RIGHT TO ASSUME THAT THE PROPOSAL PRICES WERE AS INTENDED, REGARDLESS OF THE POSSIBILITY OF MISTAKES THEREIN. WE STATED IT WOULD APPEAR THAT, REGARDLESS OF THE CONTRACTING OFFICER'S OPINION OF THE PROPOSAL PRICE, NO FURTHER PRICE VERIFICATION WAS NECESSARY FOR THE PURPOSE OF MAKING A VALID CONTRACT AWARD TO LEAR SIEGLER AFTER THAT FIRM WAS DETERMINED TO BE RESPONSIBLE AND CAPABLE OF PERFORMING THE PROPOSED CONTRACT.

BY LETTER DATED MAY 8, 1968, WE FORWARDED TO THE DEPARTMENT OF THE ARMY COPIES OF THE MATERIAL WHICH YOU HAD SUBMITTED IN CONNECTION WITH THE REQUEST FOR RECONSIDERATION OF THE MARCH 18, 1968, DECISION. WE REFERRED IN PARTICULAR TO YOUR CONTENTION THAT WE SHOULD NOT COMPLETELY RELY ON THE STATEMENTS PREPARED BY THE CONTRACTING OFFICER AND ANOTHER GOVERNMENT REPRESENTATIVE ON JULY 27 AND AUGUST 2, 1967, CONCERNING THEIR RECOLLECTION OF WHAT WAS DISCUSSED IN THE PREAWARD MEETINGS ON JANUARY 12, 1966, PARTICULARLY IF THE NEGOTIATION FILE CONTAINS MORE CONCURRENT MEMORANDA SETTING FORTH WHAT WAS DISCUSSED AT SUCH MEETINGS. WE INVITED ATTENTION TO THE FACT THAT THE DOCUMENTS FORWARDED WITH THE ORIGINAL DEPARTMENTAL REPORT DID NOT DISCLOSE ANY ADDITIONAL PERTINENT INFORMATION REGARDING THOSE MEETINGS OTHER THAN AS SET FORTH IN CERTAIN GENERAL STATEMENTS OF THE CONTRACTING OFFICER IN HIS REPORT OF FEBRUARY 16, 1966, WHICH WAS ATTACHED TO THE REQUEST FOR APPROVAL OF AN AWARD TO LEAR SIEGLER.

WE ALSO REFERRED TO YOUR CONTENTION, APPARENTLY ON THE BASIS OF CERTAIN STATEMENTS MADE IN AFFIDAVITS OF LEAR SIEGLER PERSONNEL, THAT THE GOVERNMENT ADMITS THAT ONLY ONE WEEK FROM JANUARY 12, 1966, WAS ALLOWED FOR VERIFICATION OF LEAR SIEGLER'S FIXED-PRICE PROPOSAL.

WE REQUESTED THAT WE BE FURNISHED COPIES OF ANY MEMORANDA INCLUDED IN THE NEGOTIATION FILE BUT NOT SUBMITTED WITH THE ORIGINAL DEPARTMENTAL REPORT, WHICH HAD BEEN PREPARED BEFORE JULY 27, 1967, AND WHICH HAD REFERENCE TO THE FACTS AND CIRCUMSTANCES RELATING TO THE MEETINGS ON JANUARY 12, 1966. WE ALSO REQUESTED THAT WE BE FURNISHED A STATEMENT OF THE CONTRACTING OFFICER WITH RESPECT TO THE STATED TIME LIMITATION FOR VERIFICATION OF THE LEAR SIEGLER PROPOSAL AND WITH RESPECT TO ANY OF THE OTHER STATEMENTS MADE IN SUPPORT OF THE REQUEST FOR RECONSIDERATION OF OUR DECISION WHICH, IN THE OPINION OF THE CONTRACTING OFFICER, COULD NOT BE SUBSTANTIATED.

THE DEPARTMENT OF THE ARMY FURNISHED A COMPREHENSIVE REPORT ON THE MATTER BY LETTER DATED OCTOBER 8, 1968, AND YOU WERE PERMITTED TO EXAMINE THE LETTER AND ITS ENCLOSURES FOR THE PURPOSE OF COMMENTING THEREON.

THE DEPARTMENTAL LETTER STATED THAT THE ADDITIONAL DOCUMENTATION FURNISHED SHOWS THAT THE GOVERNMENT'S NEGOTIATIONS WITH LEAR SIEGLER DURING AND CONTEMPORANEOUSLY WITH THE MEETINGS ON JANUARY 12, 1966, SOUGHT TO VERIFY THE TECHNICAL RESPONSIVENESS OF THE LEAR SIEGLER PROPOSAL AS A BASIS FOR PRICE EVALUATION, AND THAT THE AWARD TO LEAR SIEGLER WAS MADE ONLY AFTER THE GOVERNMENT REQUESTED AND THE COMPANY REPRESENTATIVES FURNISHED REITERATION OF ITS UNDERSTANDING OF THE TECHNICAL SCOPE OF THE PROGRAM AND REAFFIRMATION OF ITS PRICE FOLLOWING A THOROUGH REEXAMINATION. THE CONTRACTING OFFICER'S STATEMENT (ENCLOSURE NO. 2 OF THE LETTER), WAS REFERRED TO AS ESTABLISHING THE REASONABLENESS OF THE TIME LIMITATION FOR THE VERIFICATION OF LEAR SIEGLER'S FIXED-PRICE PROPOSAL; AND THE COMMENTS (ENCLOSURE NO. 3 OF THE LETTER), WERE REFERRED TO AS SERVING TO CONCLUSIVELY DENY TO THE AFFIDAVITS OF THE LEAR SIEGLER PERSONNEL THE "PREPONDERANCE OF THE SHOWING" WHICH THE COMPANY, THROUGH ITS COUNSEL, ATTRIBUTES TO THEM.

THE MATERIAL SUBMITTED AS ENCLOSURE NO. 1 OF THE DEPARTMENTAL LETTER INCLUDES A COPY OF A MEMORANDUM DATED JANUARY 11, 1966, INDICATING THAT A JANUARY 12, 1966, MEETING HAD BEEN ARRANGED FOR DISCUSSIONS WITH LEAR SIEGLER PERSONNEL AND THAT IN THOSE DISCUSSIONS AN ATTEMPT WOULD BE MADE TO DETERMINE IF LEAR SIEGLER'S PROPOSAL MET THE TECHNICAL REQUIREMENTS OF THE REQUEST FOR PROPOSALS AND IF THE LEAR SIEGLER QUOTATIONS REFLECTED SUCH UNDERSTANDING. THIS WOULD APPEAR TO SHOW THAT IT WAS INTENDED TO DISCUSS THE LEAR SIEGLER PROPOSAL PRICE OR PRICES AS WELL AS THE TECHNICAL ASPECTS OF THE LEAR SIEGLER PROPOSAL AT THE SCHEDULED MEETING. THE MATERIAL SUBMITTED AS ENCLOSURE NO. 1 ALSO INCLUDED COPIES OF MEMORANDA DATED FEBRUARY 15, 1966, AND MARCH 18, 1966, FROM THE CONTRACTING OFFICER. THE MEMORANDUM OF FEBRUARY 15, 1966, WAS PREPARED ON A FORM ON WHICH CERTAIN ITEMS WERE CHECKED AS ELEMENTS CONSIDERED IN THE CONTRACTING OFFICER'S DETERMINATION AS TO THE REASONABLENESS OF LEAR SIEGLER'S PROPOSAL PRICE OR PRICES AND, UNDER ITEM F. OF THAT FORM, THE CONTRACTING OFFICER NOTED THAT LEAR SIEGLER WAS REQUESTED DURING A NEGOTIATION CONFERENCE ON JANUARY 12, 1966, TO REAFFIRM ITS PRICES, AND THAT THE PRICES WERE REAFFIRMED BY THE COMPANY ON JANUARY 19, 1966.

THE CONTRACTING OFFICER'S MEMORANDUM OF MARCH 18, 1966, IS IN PART AS FOLLOWS:

"C. A PRICE COMPARISON WAS MADE OF EACH ITEM AS PROPOSED BY THE LOW OFFEROR WITH SIMILAR ITEMS AS PRICED BY THE OTHER THREE COMPETITORS. THIS REVIEW DISCLOSED NO DISPROPORTIONATE PRICES WHICH COULD CONCEIVABLY ACCOUNT FOR THE OVER-ALL DISPARITY BETWEEN THE OTHER OFFERS OR THE INDEPENDENT GOVERNMENT ESTIMATE. THIS STUDY IS DISPLAYED IN DETAIL IN THE FORMAL ABSTRACT OF PROPOSALS.

"D. THE PROPOSALS WERE REFERRED TO THE SPONSORING AGENCY FOR REVIEW BY THE PROGRAM ENGINEERS, TO VERIFY TECHNICAL RESPONSIVENESS AND AS A BASIS FOR PRICE EVALUATION.

"E. PRIOR TO RETURN OF THE TECHNICAL EVALUATION TO THE CONTRACTING OFFICER, THE SPONSORING AGENCY RECOMMENDED THAT A CONFERENCE BE CALLED WITH THE LOW OFFEROR FOR THE PURPOSE OF ASCERTAINING CONCLUSIVELY WHETHER THE TECHNICAL REQUIREMENTS OF THE PROCUREMENT WERE UNDERSTOOD. AS A RESULT OF TWO SEPARATE MEETINGS, IT WAS DETERMINED THAT THE PROPOSED CONTRACTOR COMPLETELY UNDERSTOOD ALL ASPECTS OF THE GOVERNMENT'S REQUIREMENTS.

"F. IN VIEW OF THE EXTREMELY LOW PRICE OFFERED BY LEAR SIEGLER, INC., THE COMPANY WAS REQUESTED, DURING THE AFORE-MENTIONED MEETINGS, TO CAREFULLY RECHECK ANY POSSIBILITY OF ERROR OR OVERSIGHT. THE COMPANY REPRESENTATIVES, AFTER CONSULTATION WITH THEIR TOP MANAGEMENT FOLLOWING THE TWO INTENSIVE MEETINGS WITH THE GOVERNMENT, REITERATED COMPLETE UNDERSTANDING OF THE TECHNICAL SCOPE OF THE PROGRAM AND ALL OTHER CONTRACTUAL REQUIREMENTS. THEY STATED THAT A MOST THOROUGH GOING IN-HOUSE REEXAMINATION OF ALL ELEMENTS OF THEIR PRICE PROPOSAL HAD BEEN RETESTED AMONG ALL COST CENTERS WHICH HAD SUBMITTED COST INPUT. BASED ON THIS PROCEDURE OF CAREFUL REAPPRAISAL, THE COMPANY REPRESENTATIVES REAFFIRMED THAT THE PRICE WAS BOTH SOUND IN ITS ACCOUNTING CONTENT AND PROTECTIVELY ADEQUATE FROM THE STANDPOINT OF ANY POTENTIAL FINANCIAL STRAIN WHICH MIGHT AFFECT ABILITY TO PERFORM THIS PROGRAM IN ITS MAGNITUDE AND DURATION.'

IN HIS STATEMENT OF JULY 8, 1968, WHICH WAS MARKED AS ENCLOSURE NO. 2 OF THE DEPARTMENTAL LETTER DATED OCTOBER 8, 1968, THE CONTRACTING OFFICER REPORTED THAT THE LEAR SIEGLER REPRESENTATIVES WERE REQUESTED TO SUBMIT THE COMPANY'S LETTER OF REAFFIRMATION BY JANUARY 19, 1966, AND THAT THE CONTENT OF THE REQUESTED REAFFIRMATION WAS TO CONCERN PRICE AS WELL AS WRITTEN ANSWERS IN DETAIL TO THE TECHNICAL QUESTIONS WHICH PROVIDED THE FORMAT OF THE JANUARY 12, 1966, DISCUSSIONS.

THE CONTRACTING OFFICER STATES THAT THE PREMISE IT WOULD TAKE LEAR SIEGLER A PERIOD OF SIX WEEKS TO RECHECK ITS PROPOSAL WAS NEVER OFFERED BY ANY LEAR SIEGLER REPRESENTATIVE DURING ANY OF THE DISCUSSIONS ON JANUARY 12, 1966; THAT HE HAD NO KNOWLEDGE OF ANY INFORMATION THAT IT WOULD TAKE A PERIOD OF SIX WEEKS TO RECHECK THE PROPOSAL AND, FURTHERMORE, THAT IT WAS HIS BELIEF THAT, EVEN IF THE SIX-WEEK PERIOD HAD BEEN MENTIONED OR REQUESTED, HE WOULD HAVE CONSIDERED IT UNREASONABLE AND UNACCEPTABLE. PAGE 3 OF HIS STATEMENT IN THE MATTER, THE CONTRACTING OFFICER REFERS TO A SECOND CLARIFICATION AND REAFFIRMATION LETTER DATED JANUARY 28, 1966, ITS TECHNICAL ACCEPTANCE ON FEBRUARY 7, 1966, BY THE COGNIZANT ENGINEERING ACTIVITY, AND TO THE MEMORANDUM DATED FEBRUARY 16, 1966, ENTITLED "COMPLETE DISCUSSION" , IN WHICH THE CONTRACTING OFFICER DETERMINED THAT LEAR SIEGLER "IS RESPONSIBLE WITHIN THE MEANING OF ASPR 1-902" , THAT LEAR SIEGLER MET THE MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS AS SET FORTH IN SECTION 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR); AND THAT LEAR SIEGLER WAS TECHNICALLY COMPETENT TO PERFORM THE PROPOSED CONTRACT.

THE COMMENTS MARKED AS ENCLOSURE NO. 3 OF THE DEPARTMENTAL LETTER DATED OCTOBER 8, 1968, WITH CERTAIN ADDITIONS OR DELETIONS AS APPROPRIATE, MAY BE SUMMARIZED, AS FOLLOWS:

1. THERE IS NO BASIS FOR ANY CONTENTION THAT, WHEN OUR DECISION OF MARCH 18, 1968, WAS RENDERED, THERE WAS NOTHING IN THE RECORD BEFORE US TO SHOW THAT LEAR SIEGLER WAS REQUESTED TO VERIFY ITS PROPOSAL PRICE, AS WELL AS ITS UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT. IN ADDITION TO THE STATEMENTS OF THE CONTRACTING OFFICER, AND OF THE OTHER GOVERNMENT REPRESENTATIVE WHO ATTENDED ONE OF THE MEETINGS ON JANUARY 12, 1966, LEAR SIEGLER'S LETTER OF REAFFIRMATION DATED JANUARY 19, 1966, CLEARLY DEMONSTRATES THAT THE COMPANY HAD BEEN REQUESTED TO VERIFY ITS PROPOSAL PRICE OR PRICES. IN THE FIRST PARAGRAPH OF THAT LETTER, LEAR SIEGLER STATED THAT IT WAS PLEASED TO FURNISH, AS REQUESTED BY THE GOVERNMENT, "A REAFFIRMATION OF ITS FIXED-PRICE PROPOSAL" AND, IN THE FOURTH PARAGRAPH OF THAT LETTER, LEAR SIEGLER STATED:

"LSI/EID HEREBY RE-AFFIRMS ITS REFERENCE PROPOSAL, THOROUGHLY UNDERSTANDS THE SUBJECT REQUEST FOR PROPOSALS (INCLUDING THE GOVERNMENT CORRESPONDENCE AND LETTERS SHOWN IN EXHIBIT C) AND STANDS READY AND WILLING TO COMPLETELY COMPLY AND PERFORM THE TASK REQUIRED BY THE SUBJECT RFP FOR THE LSI-EID PROPOSED PRICE.'

FURTHERMORE, AS INDICATED IN OUR DECISION OF MARCH 18, 1968, CERTAIN OF THE STATEMENTS MADE BY THE TWO VICE PRESIDENTS OF LEAR SIEGLER IN AFFIDAVITS SUBMITTED AFTER YOU HAD EXAMINED THE ORIGINAL DEPARTMENTAL REPORT IN THIS CASE WOULD REASONABLY WARRANT A CONCLUSION THAT, DURING THE SEPARATE MEETING ON JANUARY 12, 1966, THEY HAD BEEN GIVEN SUFFICIENT WARNING THAT A THOROUGH RECHECKING AND RECOMPUTATION OF THE PROPOSAL PRICES WOULD BE NECESSARY UNLESS LEAR SIEGLER DELIBERATELY WISHED TO TAKE THE CHANCE THAT THERE WERE NO SERIOUS PRICING ERRORS IN THE PROPOSAL AS SUBMITTED.

2. THE FACT THAT THE CONTRACTING OFFICER DID NOT STATE IN THE "COMPLETE DISCUSSION" MEMORANDUM OF FEBRUARY 16, 1966, THAT LEAR SIEGLER "HAD VERIFIED ITS PROPOSAL PRICE" DOES NOT JUSTIFY ANY CONTENTION THAT THE CONTRACTING OFFICER NEVE ENGAGED IN PRICE VERIFICATION PROCEDURES SIMILAR TO THOSE REQUIRED UNDER PARAGRAPH ASPR 2-406.3 (A) (1) IN THE CASE OF A FORMALLY ADVERTISED PROCUREMENT. THE CITED PARAGRAPH 6 (C) OF THE FEBRUARY 16, 1966, MEMORANDUM INCLUDED THE STATEMENT THAT, DUE TO LEAR SIEGLER'S LOW PRICE, TWO MEETINGS WERE HELD FOR THE PURPOSE OF ESTABLISHING THE FACT THAT LEAR SIEGLER UNDERSTOOD THE REQUIREMENTS OF THE PROPOSED PROCUREMENT AND FULLY INTENDED TO MEET ALL THE REQUIREMENTS THEREOF "FOR THE PRICE QUOTED" , AND ON JANUARY 19, 1966, LEAR SIEGLER "RE -AFFIRMED THEIR SUBMITTED PRICE AND UNDERSTANDING AND STATED THAT SUCH COMPANY STOOD READY AND WILLING TO COMPLETELY COMPLY AND PERFORM THE TASK REQUIRED BY THIS PROCUREMENT FOR THE PROPOSED PRICE". THE DEPARTMENT OF THE ARMY CONSIDERS, AND WE AGREE, THAT THOSE STATEMENTS CLEARLY EVIDENCE THAT THE MATTER OF PRICE VERIFICATION WAS NOT, AS YOU HAD CONTENDED, AN AFTERTHOUGHT ON THE PART OF THE CONTRACTING OFFICER AS OF THE DATE ON WHICH HE PREPARED A DETAILED STATEMENT CONCERNING THE MEETINGS WHICH WERE HELD ON JANUARY 12, 1966. HIS MEMORANDUM OF FEBRUARY 15, 1966, IS ALSO BELIEVED TO BE SIGNIFICANT ON THAT POINT SINCE, IN THAT MEMORANDUM, THE CONTRACTING OFFICER NOTED THAT LEAR SIEGLER WAS REQUESTED DURING THE NEGOTIATION CONFERENCE ON JANUARY 12, 1966, TO REAFFIRM ITS PRICES.

3. THE DELAY IN THE PREPARATION OF DETAILED STATEMENTS REGARDING THE MEETINGS ON JANUARY 12, 1966, CANNOT BE REGARDED AS A MATTERIAL FACTOR IN DECIDING WHETHER A PRICE VERIFICATION WAS REQUESTED SINCE, IN EVERY RESPECT THE "COMPLETE DISCUSSION" MEMORANDUM OF FEBRUARY 16, 1966, AND THE CONTRACTING OFFICER'S MEMORANDUM DATED FEBRUARY 15, 1966, CONCERNING THE QUESTION AS TO THE REASONABLENESS OF LEAR SIEGLER'S PROPOSAL PRICE OR PRICES, CONSTITUTE A CONTEMPORARY RECORD OF THE APPARENT FACT THAT LEAR SIEGLER WAS REQUESTED TO VERIFY ITS PROPOSAL PRICE OR PRICES, AS WELL AS ITS UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT. FURTHERMORE, IT WOULD APPEAR THAT THE CONTRACTING OFFICER'S MEMORANDUM OF MARCH 18, 1966, IS SUFFICIENTLY CONCURRENT TO SHOW THAT HIS STATEMENT AS OF JULY 27, 1967, SO FAR AS IT CONCERNS THE MATTER OF PRICE VERIFICATION, WAS NOT THE RESULT OF AN AFTERTHOUGHT.

4. OUR OFFICE DID NOT, AS YOU HAD SUGGESTED, ACCEPT INFERENCES INSTEAD OF FACTS AND THERE IS NO BASIS FOR YOUR ARGUMENT THAT THE ABSENCE OF A CONTEMPORARY STATEMENT REGARDING THE JANUARY 12, 1966, MEETINGS COULD BE CONSIDERED AS PROOF THAT PRICE VERIFICATION DID NOT TAKE PLACE. THE ONLY INFERENCES WHICH WERE MADE IN OUR DECISION, IF THEY CAN BE CONSIDERED AS INFERENCES, CONCERNED THE STATEMENTS OF THE TWO VICE PRESIDENTS OF LEAR SIEGLER, IT HAVING BEEN CONCLUDED THAT, EVEN IF WHAT THEY STATED REPRESENTED THE SUBSTANCE OF THE SEPARATE MEETING ON JANUARY 12, 1966, THERE EXISTED A REASONABLE BASIS FOR CONSIDERING THAT THEY WERE FULLY AWARE OF THE FACT THAT A THOROUGH RECHECKING AND RECOMPUTATION OF THE LEAR SIEGLER PRICE OR PRICES WOULD BE NECESSARY UNLESS LEAR SIEGLER DECIDED TO TAKE THE CHANCE THAT THERE WERE NO SERIOUS PRICING ERRORS IN THE PROPOSAL AS SUBMITTED. WE DID NOT QUESTION THEIR REPRESENTATION THAT THE GOVERNMENT OFFICIALS WERE ADVISED THAT IT WOULD TAKE SIX WEEKS TO MAKE A COMPLETE VERIFICATION OF THE LEAR SIEGLER PROPOSAL PRICE OR PRICES, AND THIS WAS THE REASON WHY WE EMPHASIZED THE RISK FACTOR WHICH MIGHT HAVE BEEN INVOLVED IN CONNECTION WITH A REAFFIRMATION WITHIN ONE WEEK AFTER THE JANUARY 12, 1966, MEETINGS.

5. WITH REFERENCE TO YOUR SUGGESTION THAT THE PROCEDURE ADOPTED IN THIS CASE VIOLATED THE INTENT OF ASPR 2-406.3 (E) (1), THE RULING IN UNITED STATES V METRO NOVELTY MANUFACTURING CO., SUPRA, AND PRIOR DECISIONS OF OUR OFFICE, THE GOVERNMENT QUESTIONED THE PRICE OR PRICES OF THE LEAR SIEGLER PROPOSAL TO THE LIMIT OF ITS KNOWLEDGE AND THE GOVERNMENT DID NOT KNOW THAT A MISTAKE HAD BEEN MADE AND COULD ONLY HAVE SURMISED THAT A MISTAKE HAD BEEN MADE. IT COULD NOT HAVE DIRECTED LEAR SIEGLER'S ATTENTION TO ANY PARTICULAR AREA OR AREAS OF THE PROPOSAL PRICING WITH ANY GREATER SPECIFICITY THAN IT DID. THE METRO RULE AND THE HOLDINGS OF THE DECISIONS OF OUR OFFICE IN CASES WHERE WE HAVE ALLOWED OR APPROVED CONTRACT PRICE ADJUSTMENTS ON THE BASIS OF BIDDING MISTAKES HAVE NOT BEEN VIOLATED BUT, IN FACT, WERE FOLLOWED BY THE CONTRACTING OFFICER TO THE FULLEST EXTENT PERMITTED BY THE FACTS OF THIS PARTICULAR PROCUREMENT DURING WHICH THE GOVERNMENT APPARENTLY DID ALL THAT COULD HAVE BEEN EXPECTED TO PROTECT LEAR SIEGLER FROM ITS OWN IMPRUDENCE IN SUBMITTING AN UNPROFITABLY LOW PROPOSAL PRICE.

6. THERE IS NO JUSTIFICATION FOR THE ACCEPTANCE OF AFFIDAVITS OF LEAR SIEGLER PERSONNEL AS REPRESENTING A PREPONDERANCE OF THE EVIDENCE CONCERNING WHAT WAS DISCUSSED AT THE JANUARY 12, 1966, MEETINGS. IN ANY EVENT, SOME OF THE STATEMENTS MADE IN THOSE AFFIDAVITS ARE CONSISTENT WITH THE VIEW THAT LEAR SIEGLER WAS, IN EFFECT, REQUESTED TO VERIFY THE PROPOSAL PRICE OR PRICES.

7. IN REGARD TO THE "BUY-IN" QUESTION WHICH THE LEAR SIEGLER VICE PRESIDENTS REFERRED TO IN THEIR AFFIDAVITS, WE DID NOT HOLD, AS YOU SEEM TO BELIEVE, THAT A QUESTION OF SUCH NATURE WOULD CONSTITUTE AN ADEQUATE REQUEST FOR VERIFICATION OF A BID OR PROPOSAL PRICE. RATHER, THE STATEMENTS MADE IN THE AFFIDAVITS RELATIVE TO THE REPRESENTED BUY IN QUESTION WERE CONSIDERED TO BE INDICATIVE OF A CLEAR UNDERSTANDING BY THE LEAR SIEGLER OFFICIALS THAT THEY KNEW THAT A PRICE VERIFICATION WAS, IN EFFECT, BEING REQUESTED.

8. THE DEPARTMENT OF THE ARMY STATES THAT IT IS A FACT, NOT AN ASSUMPTION, THAT PRICE VERIFICATION WAS REQUESTED. THAT STATEMENT IS BASED NOT ONLY ON THE CONTRACTING OFFICER'S STATEMENT OF JULY 27, 1967, BUT ALSO A RECORD OF HIS UNDERSTANDING OF THE MATTER WHICH IS RELATIVELY CONCURRENT WITH THE DATE ON WHICH LEAR SIEGLER REAFFIRMED ITS FIXED-PRICE PROPOSAL IN WRITING.

9. THERE IS NO BASIS FOR YOUR CONTENTION THAT THE CONTRACTING OFFICER KNEW THAT IT WOULD TAKE SIX WEEKS TO MAKE A COMPLETE VERIFICATION OF THE LEAR SIEGLER PROPOSAL PRICE OR PRICES, OTHER THAN RELIANCE UPON THE AFFIDAVITS OF THE LEAR SIEGLER OFFICIALS WHICH, INCIDENTALLY, WERE NOT PREPARED UNTIL MORE THAN 18 MONTHS AFTER THE MEETINGS ON JANUARY 12, 1966. FURTHERMORE, WE DID NOT DISREGARD THEIR REPRESENTATION IN THE MATTER WHEN WE STATED IN OUR DECISION THAT THE COMPANY SHOULD HAVE TAKEN ADVANTAGE OF THE TIME INTERVAL BETWEEN THE DATE ON WHICH IT REAFFIRMED ITS FIXED-PRICE PROPOSAL AND MARCH 18, 1966, THE DATE OF THE CONTRACT AWARD NOTICE, TO RECHECK AND RECOMPUTE ITS PROPOSAL PRICE, UNLESS IT DELIBERATELY WISHED TO TAKE THE CHANCE THAT THERE WERE NO SERIOUS PRICING ERRORS IN THE PROPOSAL. WE DO NOT CONSIDER OUR STATEMENT AS BEING A SPECIOUS ARGUMENT, SINCE IT WAS NOT PROBABLE THAT AN AWARD WOULD BE PROMPTLY MADE AFTER CONFIRMATION OF THE PROPOSAL PRICE, AND THE REASONABLENESS OF THE STATEMENT IS EVIDENCED BY THE FACT THAT, ON JANUARY 28, 1966, LEAR SIEGLER WAS ACTUALLY ADVISED THAT THE AWARD PROBABLY WOULD BE MADE DURING THE MIDDLE OF THE MONTH OF MARCH 1966, OR APPROXIMATELY EIGHT WEEKS AFTER LEAR SIEGLER HAD REAFFIRMED ITS FIXED-PRICE PROPOSAL IN WRITING. ALSO, WE FIND NO BASIS FOR YOUR CONTENTION THAT IT IS A SPECIOUS ARGUMENT THAT THE LEAR SIEGLER OFFICIALS WHO ATTENDED THE SEPARATE MEETING ON JANUARY 12, 1966, KNEW THAT A THOROUGH RECHECKING AND RECOMPUTATION WOULD BE NECESSARY IF THE COMPANY DID NOT DELIBERATELY WISH TO TAKE A CHANCE IN THE MATTER. THAT ARGUMENT WAS BASED ENTIRELY ON THEIR OWN STATEMENTS REGARDING THE SUBSTANCE OF THE DISCUSSIONS AT THAT MEETING. WAS WITHIN THE DISCRETION OF LEAR SIEGLER WHETHER IT SHOULD HAVE REAFFIRMED THE FIXED-PRICE PROPOSAL WITHIN A TIME LIMIT OF ONE WEEK AND, IF SIX WEEKS FOR RECHECKING AND RECOMPUTING WAS ACTUALLY NECESSARY, A REAFFIRMATION BEFORE THE EXPIRATION OF A SIX-WEEK PERIOD WOULD, OF COURSE, HAVE INVOLVED CERTAIN RISKS.

10. YOU QUESTIONED A STATEMENT IN OUR DECISION TO THE EFFECT THAT NO CLEAR AND CONVINCING EVIDENCE OF ANY MISTAKES MADE BY LEAR SIEGLER IN ITS FIXED-PRICE PROPOSAL HAD BEEN PRESENTED. YOU REFERRED TO ONE STATED MISTAKE IN A CONSIDERABLE AMOUNT WHICH INVOLVED A SUPPLIER'S PRICE. HOWEVER, WE WERE NOT REQUESTED TO GIVE SPECIAL CONSIDERATION TO THE PARTICULAR CLAIM AND THE QUESTIONED STATEMENT IN THE MATTER WAS NOT AN ESSENTIAL PART OF OUR DECISION WHICH WAS BASED ON THE CONCLUSION THAT A BINDING AND VALID CONTRACT WAS CONSUMMATED WITH LEAR SIEGLER UPON ACCEPTANCE OF ITS FIXED-PRICE PROPOSAL FOLLOWING THE REAFFIRMATION OF THE FIXED-PRICE PROPOSAL AND A FAVORABLE DETERMINATION RESPECTING THAT COMPANY'S RESPONSIBILITY.

11. THE COMMENTS OF THE DEPARTMENT OF THE ARMY INCLUDE A DETAILED DISCUSSION OF THE COURT CASES CITED IN OUR DECISION OF MARCH 18, 1968, SOME OF OUR PRIOR DECISIONS, AND YOUR CONTENTION THAT THE RULING IN THE CASE OF UNITED STATES V METRO NOVELTY MANUFACTURING CO., SUPRA, SHOULD HAVE BEEN RECOGNIZED AND FOLLOWED IN THIS CASE AS ONE INVOLVING A CLEAR INDICATION THAT AN ADEQUATE REQUEST FOR VERIFICATION OF THE FIXED-PRICE PROPOSAL OF LEAR SIEGLER HAD NOT BEEN MADE. THE DEPARTMENT'S ANALYSIS SUPPORTS OUR DECISION THAT, IN THE PARTICULAR CIRCUMSTANCES, LEAR SIEGLER SHOULD NOT BE CONSIDERED ENTITLED TO ADDITIONAL COMPENSATION UNDER ITS CONTRACT ON THE GROUND OF PRICING MISTAKES MADE IN ITS PROPOSAL. THE DEPARTMENT REFERRED IN PARTICULAR TO OUR PRIOR DECISION, B-159923, OCTOBER 19, 1966, CITED IN THE MARCH 18, 1968, DECISION, AND WHICH STANDS FOR THE PROPOSITION THAT, WHEN THE GOVERNMENT HAS DONE ALL THAT WAS REQUIRED OF IT TO ASCERTAIN THE CORRECTNESS OF A BID, AND THE BIDDER HAS UNEQUIVOCALLY CONFIRMED ITS BID, THE CONTRACTING OFFICER MAY PROPERLY MAKE AN AWARD. THE DEPARTMENT STATES THAT THE ONLY FACTUAL DIFFERENCE BETWEEN THE DECISIONS OF OCTOBER 19, 1966, AND MARCH 18, 1968, WHICH IS OF ANY IMPORTANCE, IS THAT HERE THERE WAS INVOLVED A NEGOTIATED COMPETITIVE PROCUREMENT, AND THE CONTRACTING OFFICER COULD NOT REVEAL THE COMPETING PROPOSALS, WHEREAS IN B-159923, OCTOBER 19, 1966, THERE WAS AN ADVERTISED PROCUREMENT AND COMPETING BIDS WERE PUBLICLY OPENED. WE MADE A SIMILAR DISTINCTION BETWEEN FORMALLY ADVERTISED PROCUREMENTS AND NEGOTIATED COMPETITIVE PROCUREMENTS IN OUR DECISION OF MARCH 18, 1968.

12. THERE IS NO BASIS FOR YOUR CONTENTION THAT THERE WAS AN OBVIOUS MISTAKE IN THE LEAR SIEGLER FIXED-PRICE PROPOSAL. ALTHOUGH THE CONTRACTING OFFICER SURMISED THAT THERE MIGHT HAVE BEEN A MISTAKE, IT WAS NOT OBVIOUS IN THE USUAL SENSE OF THAT WORD AND NEITHER A REVIEW OF THE PROPOSAL NOR A COMPARISON WITH THE OTHER PROPOSALS SERVED TO INDICATE AN OBVIOUS ERROR. A COMPARISON OF PRICES ONLY SERVED TO ALERT THE CONTRACTING OFFICER TO THE POSSIBILITY OF A MISTAKE IN THE LEAR SIEGLER PROPOSAL, IT DID NOT IDENTIFY A MISTAKE OR EVEN PLACE THE CONTRACTING OFFICER ON NOTICE THAT THERE WAS A MISTAKE. THE CONTRACTING OFFICER READILY ADMITS THAT HE WAS AWARE OF POSSIBILITY OF THE PROPOSAL PRICE BEING TOO LOW, BUT NO COMPARISON OF TOTAL PROPOSAL PRICES NOR THOSE FOR INDIVIDUAL ITEMS COULD INDICATE SPECIFIC ERROR. 13. THE SITUATION IN THIS CASE IS DISTINGUISHABLE FROM THAT OF KEMP V UNITED STATES, 38 F.SUPP. 568, WHEREIN IT WAS INDICATED THAT THE GOVERNMENT DID NOT REQUEST A BID VERIFICATION BEFORE AWARD ALTHOUGH THERE WAS A WIDE DISPARITY BETWEEN THE LOW BID AND THE OTHER TWO BIDS WHICH HAD BEEN RECEIVED.

YOU SUBMITTED YOUR WRITTEN COMMENTS ON THE SUPPLEMENTAL REPORT OF THE DEPARTMENT OF THE ARMY BY LETTER DATED SEPTEMBER 16, 1968, AND THEY HAVE BEEN DISCUSSED IN CONFERENCES SINCE THAT DATE. AT YOUR REQUEST, WE OBTAINED FROM THE DEPARTMENT OF THE ARMY AN ADDITIONAL REPORT CONCERNING THE FACT THAT THERE APPEARED TO BE NOTHING IN THE MATERIAL PREVIOUSLY SUBMITTED WITH REFERENCE TO A CERTAIN TELEPHONE CONVERSATION ON JANUARY 14, 1966, WHICH HAD BEEN REFERRED TO IN A MEMORANDUM OF THAT DATE, PREPARED BY MR. W. M. DEL GRANDE, SENIOR CONTRACTS ADMINISTRATOR, LEAR SIEGLER, INCORPORATED, ELECTRONIC INSTRUMENTATION DIVISION.

YOU CONTENDED THAT NO GOVERNMENT CONTEMPORANEOUSLY PREPARED DOCUMENT EXISTS PROVING WHAT WAS ACTUALLY SAID AT THE JANUARY 12, 1966, MEETING; THAT GOVERNMENT DOCUMENTS PREPARED PRIOR TO AND SUBSEQUENT TO JANUARY 12, 1966, PROVE THAT PRICE VERIFICATION WAS NOT REQUESTED AT THE JANUARY 12, 1966, MEETING; THAT 48 QUESTIONS PREPARED PRIOR TO THE JANUARY 12, 1966, MEETING PROVE THAT TECHNICAL MATTERS ONLY WERE DISCUSSED AT THE MEETING; THAT THE MEMORANDUM DATED JANUARY 11, 1966, PROVES THAT THE MEETING WAS DESIGNED TO BE A TECHNICAL MEETING; THAT THE MEMORANDUM OF FEBRUARY 15, 1966, IS NO PROOF OF PRICE VERIFICATION; THAT THE ONLY TWO PAGES OF THE "COMPLETE DISCUSSION" MEMORANDUM OF FEBRUARY 16, 1966, THAT MENTION THE JANUARY 12, 1966, MEETING, INDICATE CLEARLY THAT TECHNICAL REQUIREMENTS, NOT PRICE VERIFICATION WAS THE SUBJECT OF THAT MEETING; THAT THE CONTRACTING OFFICER'S MEMORANDUM OF MARCH 18, 1966, DOES NOT SUPPORT THE GOVERNMENT'S CONCLUSIONS; THAT MR. DEL GRANDE'S MEMORANDUM OF JANUARY 14, 1966, PROVES THAT PRICE VERIFICATION WAS NOT REQUESTED; THAT A REQUEST FOR REAFFIRMATION SUGGESTS A DIFFERENT ANSWER THAN A REQUEST TO VERIFY A PROPOSAL; THAT LEAR SIEGLERRE AFFIRMED ITS PROPOSAL BUT THE REAFFIRMATION WAS NOT A PRICE VERIFICATION; THAT THE GOVERNMENT OFFICIALS DISAGREE AMONG THEMSELVES AS TO WHAT WAS SAID AT THE SEPARATE MEETING ON JANUARY 12, 1966; THAT THE QUESTION WHETHER LEAR SIEGLER WAS TRYING TO BUY-IN" ON THE PROGRAM IS NOT A REQUEST FOR PRICE VERIFICATION; THAT, IF THE WORDS "YOUR BID IS SUBSTANTIALLY LOW" WERE USED, THIS WAS NOT SUFFICIENT TO ALERT LEAR SIEGLER TO THE EXISTENCE OF MISTAKE IN PRICE; THAT A COMPLETE LIST OF PREVIOUS PROCUREMENT PRICES WAS NEVER PHYSICALLY GIVEN TO LEAR SIEGLER AT THE PROPOSAL CONFERENCE; AND THAT, IN REVIEWING THE LEAR SIEGLER PROPOSAL, THE GOVERNMENT USED THE PROVISIONS OF SECTION III, ASPR, WHICH PROTECT THE GOVERNMENT, AND IGNORED THE PROVISIONS OF SECTION II, ASPR, WHICH PROTECT THE CONTRACTOR.

YOU STATE THAT, ON DUE REFLECTION, YOU DECIDED TO ATTEMPT A FRESH REVIEW OF THE FACTS AND IT OCCURRED TO YOU THAT, RATHER THAN ARGUE ABOUT STATEMENTS MADE IN 1967 AND 1968 BY GOVERNMENT OFFICIALS, IT WOULD BE MORE USEFUL TO LOOK AT THE WRITTEN MATERIAL WHICH WAS PHYSICALLY IN EXISTENCE DURING THE EARLY PART OF 1966.

IN REGARD TO THE FIRST OF THE ABOVE CONTENTIONS, YOU STATE THAT IT IS STRANGE THAT NO GOVERNMENT TRULY CONTEMPORANEOUSLY PREPARED DOCUMENT EXISTS PROVING WHAT WAS ACTUALLY SAID AT THE JANUARY 12, 1966, MEETING, OR EVEN THE MEETING PURPOSE. HOWEVER, IT IS OUR OPINION THAT THE DOCUMENTS WHICH HAVE BEEN REFERRED TO AND DISCUSSED ABOVE ARE SUFFICIENTLY CONCURRENT TO WARRANT A CONCLUSION THAT THE DOCUMENTS SHOULD BE CONSIDERED AS REFLECTING THE CONTRACTING OFFICER'S UNDERSTANDING OF WHAT WAS SAID AT THE MEETING IMMEDIATELY AFTER THE MEETING TOOK PLACE. THE DOCUMENTS DO NOT SET FORTH A DETAILED DISCUSSION OF WHAT WAS SAID AT THE MEETING BUT IT IS CLEAR THAT THE CONTRACTING OFFICER WAS CERTAIN THAT LEAR SIEGLER HAD BEEN REQUESTED TO CAREFULLY RECHECK ANY POSSIBILITY OF ERROR OR OVERSIGHT AND THE COMPANY REPRESENTATIVES ASSURED HIM THAT THE PROPOSAL PRICES WERE AS INTENDED.

IN OUR OPINION, THERE IS NO BASIS WHATEVER FOR YOUR SECOND CONTENTION, INASMUCH AS CERTAIN OF THE DOCUMENTS TO WHICH YOU REFER, INCLUDING THE CONTRACTING OFFICER'S MEMORANDUM OF FEBRUARY 15, 1966, CLEARLY INDICATE THAT PRICE VERIFICATION WAS REQUESTED AND IT IS ALSO CLEAR THAT THE DOCUMENTS CANNOT IN ANY MANNER BE CONSIDERED AS PROVING THAT PRICE VERIFICATION WAS NOT REQUESTED AT THE JANUARY 12, 1966, MEETING.

WITH REFERENCE TO YOUR THIRD CONTENTION, PRICING VERIFICATION OBVIOUSLY WAS INTENDED WITH RESPECT TO QUESTIONS NOS. 1, 2, 27 AND 28E. OF THE ORIGINAL LIST OF 41 QUESTIONS AND WITH RESPECT TO TWO OF THE SEVEN BASIC QUESTIONS (NOS. 6 AND 7), WHICH WERE ADDED TO THE ORIGINAL LIST OF 41 QUESTIONS. FURTHERMORE, IT DOES NOT APPEAR, AS YOU HAVE SUGGESTED, THAT ALL OF THE QUESTIONS WHEREIN THE MATTER OF COST WAS MENTIONED INVOLVED ONLY THE PRICING OF SPARE PARTS.

WITH REFERENCE TO YOUR FOURTH CONTENTION, WE DO NOT AGREE THAT THE MEMORANDUM OF JANUARY 11, 1966, INDICATES THAT PRICING WAS NOT INTENDED TO BE DISCUSSED AT THE SCHEDULED MEETING ON JANUARY 12, 1966, SINCE IT SPECIFICALLY REFERRED TO THE FACT THAT AN ATTEMPT WOULD BE MADE TO DETERMINE IF LEAR SIEGLER FULLY UNDERSTANDS THE TECHNICAL REQUIREMENTS OF THE REQUEST FOR QUOTATIONS AND IF THEIR QUOTATIONS REFLECT SUCH UNDERSTANDING. WE FIND NO REASONABLE BASIS FOR YOUR ARGUMENT THAT AN ATTEMPT TO DETERMINE IF QUOTATIONS REFLECT THE TECHNICAL REQUIREMENTS IS NOT THE SAME AS AN ATTEMPT TO DETERMINE IF PRICING MISTAKES EXISTED IN THE QUOTATIONS. PRESUMABLY, THE WRITER OF THE MEMORANDUM KNEW THAT THERE WAS A WIDE DISPARITY BETWEEN THE LEAR SIEGLER PROPOSAL PRICE AND THE PROPOSAL PRICES OF OTHER OFFERORS, AND HE WAS ALSO COGNIZANT OF THE FACT THAT, IN SUCH CIRCUMSTANCES, THE CONTRACTING OFFICER WOULD BE REQUIRED TO OBTAIN A PRICE VERIFICATION FROM LEAR SIEGLER BEFORE MAKING AN AWARD TO THAT COMPANY.

WITH REFERENCE TO YOUR FIFTH CONTENTION, RELATIVE TO THE CONTRACTING OFFICER'S MEMORANDUM OF FEBRUARY 15, 1966, IT IS OUR OPINION THAT THE MEMORANDUM CONSTITUTES EVIDENCE THAT A PRICE VERIFICATION WAS REQUESTED AT THE NEGOTIATION CONFERENCE OF JANUARY 12, 1966, AND THAT IT SHOULD NOT BE DISREGARDED IN THE CONSIDERATION OF THE QUESTION WHETHER THERE IS SUFFICIENT EVIDENCE TO SUPPORT A CONCLUSION THAT A PRICE VERIFICATION WAS ACTUALLY REQUESTED AT THE JANUARY 12, 1966, NEGOTIATION CONFERENCE. HERE, APPROXIMATELY ONLY ONE MONTH AFTER THE MEETING TOOK PLACE, THE CONTRACTING OFFICER MADE A POSITIVE STATEMENT THAT A REAFFIRMATION OF PRICES WAS REQUESTED AT SUCH CONFERENCE.

WITH REFERENCE TO YOUR SIXTH CONTENTION, WE HAVE NO MEANS OF KNOWING WHY YOU STATE THAT THE ,COMPLETE DISCUSSION" MEMORANDUM OF THE CONTRACTING OFFICER IS UNDATED, SINCE THAT DOCUMENT IS DATED FEBRUARY 16, 1966, AND A COPY THEREOF WAS INCLUDED IN THE FILE WHICH WAS SUBMITTED TO OUR OFFICE WITH THE ORIGINAL DEPARTMENTAL REPORT ON LEAR SIEGLER'S REQUEST FOR AUTHORIZATION OF NEGOTIATIONS FOR THE PURPOSE OF EFFECTING A CONTRACT PRICE ADJUSTMENT. WE FURNISHED TO YOU CERTAIN EXCERPTS FROM THAT DOCUMENT AND, FOR THE REASON STATED TO YOU AT SUCH TIME, WE DID NOT FURNISH A COPY OF THE ENTIRE DOCUMENT.

IT IS ARGUED THAT THE SENTENCE IN THE FEBRUARY 16, 1966, MEMORANDUM, WHICH STATES THAT THE MEETING OF JANUARY 12, 1966, WAS HELD FOR THE PURPOSE OF ESTABLISHING THE FACT THAT LEAR SIEGLER UNDERSTOOD THE REQUIREMENTS OF THE PROPOSED PROCUREMENT AND "FULLY INTENDED TO MEET ALL OF THE REQUIREMENTS THEREOF FOR THE PRICE QUOTED" , MEANS THAT THE GOVERNMENT'S PURPOSE OF THE MEETING WAS TO ASCERTAIN WHETHER THE GOVERNMENT WOULD GET ITS MONEY'S WORTH, NOT TO ASCERTAIN WHETHER LEAR SIEGLER HAD MADE A MISTAKE IN PRICE. IT IS STATED THAT THE ABOVE OBSERVATION IS BUTTRESSED BY THE SENTENCE THAT LEAR SIEGLER REAFFIRMED "THEIR SUBMITTED PRICE" , BUT THE LEAR SIEGLER PROPOSAL REAFFIRMATION LETTER OF JANUARY 19, 1966, STATED THAT LEAR SIEGLER "RE-AFFIRMS ITS REFERENCE PROPOSAL". IT IS ARGUED THAT THERE IS A DIFFERENCE BETWEEN THE WORDS USED BY THE GOVERNMENT (CONTRACTING OFFICER) IN THE "COMPLETE DISCUSSION" AND THE WORDS USED BY LEAR SIEGLER. IT IS ARGUED THAT THE BALANCE OF THE LAST REFERRED-TO SENTENCE, WHICH READS: "AND UNDERSTANDING AND STATED THAT SUCH COMPANY STOOD READY AND WILLING TO COMPLETELY COMPLY AND PERFORM THE TASK REQUIRED BY THIS PROCUREMENT FOR THE PROPOSAL PRICE" , CORRECTLY REFLECTS THE PROPOSAL REAFFIRMATION LETTER BUT, AGAIN, INDICATES THAT THE GOVERNMENT WILL GET ITS MONEY'S WORTH. IT IS FURTHER ARGUED THAT NO STATEMENT IS MADE IN THE TWO SENTENCES OF THE "COMPLETE DISCUSSION" , OR IN LEAR SIEGLER'S LETTER OF JANUARY 19, 1966, THAT EITHER THE GOVERNMENT REQUESTED PRICE VERIFICATION OR THAT LEAR SIEGLER UNDERSTOOD PRICE VERIFICATION WAS REQUESTED BY THE GOVERNMENT.

YOU DO NOT QUOTE THE ENTIRE PARAGRAPH OF THE "COMPLETE DISCUSSION" , WHICH BEGINS WITH THE STATEMENT: "DUE TO THE LOW PRICE SUBMITTED BY LEAR SIEGLER, INC., TWO (2) MEETINGS WERE HELD * * *" , AND IT IS OBVIOUS THAT THE CONTRACTING OFFICER HERE RECOGNIZED THAT, IN ADDITION TO DETERMINING WHETHER THE GOVERNMENT WOULD BE GETTING ITS MONEY'S WORTH THROUGH AN AWARD TO LEAR SIEGLER IF ITS PROPOSAL WAS COMPLETELY RESPONSIVE, IT WAS HIS RESPONSIBILITY TO OBTAIN A PRICE VERIFICATION FROM LEAR SIEGLER. WE FIND NOTHING IN THE PARAGRAPH OF THE "COMPLETE DISCUSSION" TO JUSTIFY A BELIEF THAT THE GOVERNMENT WAS INTERESTED ONLY IN DETERMINING THE RESPONSIVENESS OF THE LEAR SIEGLER PROPOSAL WHEN THE JANUARY 12, 1966, CONFERENCE WAS ARRANGED.

FURTHERMORE, THE CONSIDERATION OF THE ENTIRE CONTENT OF THE FIRST AND FOURTH PARAGRAPHS OF LEAR SIEGLER'S LETTER DATED JANUARY 19, 1966, WOULD APPEAR REASONABLY TO INDICATE THAT THE COMPANY WAS REQUESTED TO VERIFY NOT ONLY ITS UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE PROPOSED CONTRACT, BUT ALSO THE PROPOSED PRICE.

YOU HAVE REFERRED TO PARAGRAPH 11 (B) OF THE "COMPLETE DISCUSSION" MEMORANDUM AS HAVING MADE NO REFERENCE TO PRICE VERIFICATION. HOWEVER, PARAGRAPH 11 IS MARKED AS A SUMMARY OF ALL SENSITIVE OR CONTROVERSIAL ASPECTS OF AWARD, AND IT IS OUR OPINION THAT A FAILURE TO MENTION THE MATTER OF PRICE VERIFICATION IN THE SUMMARY WOULD NOT BE SIGNIFICANT IN A DETERMINATION WHETHER LEAR SIEGLER WAS ACTUALLY REQUESTED TO VERIFY ITS PROPOSAL PRICE.

WITH REFERENCE TO YOUR SEVENTH CONTENTION, IT IS ARGUED THAT THE CONTRACTING OFFICER DID NOT FOLLOW THE REQUIREMENTS OF ASPR 3-811 SO FAR AS CONCERNS THE MAINTENANCE OF A RECORD OF PRICE NEGOTIATIONS. WE DOUBT THAT A DEVIATION FROM SUCH REQUIREMENTS SHOULD BE CONSIDERED AS A MATERIAL FACTOR IN DETERMINING THE BASIC ISSUE OF THIS CASE, WHICH IS, WHETHER OR NOT A PRICE VERIFICATION WAS REQUESTED IN CONJUNCTION WITH AN INVESTIGATION OF LEAR SIEGLER'S QUALIFICATIONS AS A RESPONSIVE AND RESPONSIBLE PROSPECTIVE CONTRACTOR. IT IS ALSO ARGUED THAT, IN VIEW OF THE WIDE DISPARITY BETWEEN THE PROPOSAL PRICES OF THE THREE APPARENTLY RESPONSIVE OFFERORS, THE GOVERNMENT'S PRICING ESTIMATE AND THE PRICES BEING PAID UNDER THE 1963 CONTRACT WITH THE GENERAL ELECTRIC COMPANY, THE CONTRACTING OFFICER SHOULD HAVE KNOWN THAT A MISTAKE IN PRICE, RATHER THAN IGNORANCE OF THE TECHNICAL REQUIREMENTS WAS THE CAUSE OF THE DISPARITY. WE DO NOT AGREE WITH THAT ARGUMENT. WHEN PROPOSALS HAVE BEEN REQUESTED ON THE FURNISHING OF EQUIPMENT WHICH MUST COMPLY WITH DETAILED SPECIFICATIONS OR OFFERORS' TECHNICAL PROPOSALS, THE QUESTION WHETHER, IN THE CASE OF AN EXCEPTIONALLY LOW OFFER, THE OFFEROR UNDERSTANDS THE REQUIREMENTS OF THE REQUEST FOR PROPOSALS NORMALLY WOULD BE THE FIRST AND MOST IMPORTANT MATTER FOR CONSIDERATION IN AN ATTEMPT TO DETERMINE WHETHER AN OFFEROR HAS MADE A GROSS MISTAKE IN HIS PROPOSED PRICE OR PRICES.

ALTHOUGH THE DETAILS OF PRICE COMPARISONS WERE NOT MADE AVAILABLE TO YOU, THE DETAILS APPEAR TO BE FULLY SET FORTH IN THE ABSTRACT OF PROPOSALS WHICH WAS SUBMITTED TO OUR OFFICE WITH THE ORIGINAL DEPARTMENTAL REPORT. YOU STATE THAT IT IS DIFFICULT TO UNDERSTAND HOW A REVIEW OF THE PRICES WOULD DISCLOSE "NO DISPROPORTIONATE PRICES WHICH COULD CONCEIVABLY ACCOUNT FOR THE OVER-ALL DISPARITY BETWEEN THE OTHER OFFERS OR THE INDEPENDENT GOVERNMENT ESTIMATE". IN THAT CONNECTION, THE ABSTRACT SHOWS THAT LEAR SIEGLER SUBMITTED PRICES WHICH WERE CONSIDERABLY AND CONSISTENTLY LOWER THAN THOSE QUOTED BY TEXAS INSTRUMENTS AND THE GENERAL ELECTRIC COMPANY ON MOST OF THE MAJOR ITEMS OF THE PROPOSED PROCUREMENT, AND IT APPEARS THAT THE CONTRACTING OFFICER CORRECTLY ASSUMED THAT NONE OF THE APPARENTLY DISPROPORTIONATE PRICES COULD CONCEIVABLY ACCOUNT FOR THE OVER-ALL DISPARITY BETWEEN THE TOTAL LEAR SIEGLER PRICE AND THE TOTAL PRICES OF THE OTHER TWO PROPOSALS, OR THE GOVERNMENT'S PRICING ESTIMATE.

YOU NOTE THAT THE LEAR SIEGLER PROPOSAL WAS SENT TO THE SPONSORING AGENCY "TO VERIFY TECHNICAL RESPONSIVENESS AND AS A BASIS FOR PRICE EVALUATION" , AND YOU STATE THAT THE EMPHASIS ON ,TECHNICAL" SHOULD AGAIN BE NOTED HERE, WITH NOT THE SLIGHTEST STATEMENT OF PRICE MISTAKE. YOU ALSO NOTE THAT IN PARAGRAPH E. OF THE MEMORANDUM DATED MARCH 18, 1966, THE EMPHASIS IS PLACED ON ,TECHNICAL REQUIREMENTS"; AND YOU REFER TO WHAT YOU CONSIDER TO BE AN IMPORTANT DISTINCTION BETWEEN THE WORDING OF THE "COMPLETE DISCUSSION" AND THE FIRST SENTENCE OF PARAGRAPH F. OF THE MARCH 18, 1966, MEMORANDUM. YOU STATE, IN THAT CONNECTION, THAT THE WORDS "ERROR OR OVERSIGHT" WERE NOT USED IN THE "COMPLETE DISCUSSION" MEMORANDUM AND THAT "IT WOULD APPEAR THAT THE MEMORANDUM FOR FILE SENTENCE DOES NOT INVOLVE PRICE BUT ONLY TECHNICAL ERROR OR OVERSIGHT, BECAUSE THAT IS WHAT WAS STATED IN THE "COMPLETE DISCUSSION" SENTENCE. REGARDLESS OF WHATEVER EMPHASIS WAS PLACED UPON A DETERMINATION WHETHER LEAR SIEGLER'S PROPOSAL WAS FULLY RESPONSIVE, WE DO NOT FIND THE "COMPLETE DISCUSSION" MEMORANDUM OF FEBRUARY 16, 1966, AND THE MEMORANDUM OF MARCH 18, 1966, TO BE IN ANY MANNER INCONSISTENT CONCERNING THE QUESTION OF PRICE VERIFICATION. THE LAST TWO SENTENCES OF THE CITED PARAGRAPH F. OF THE MEMORANDUM DATED MARCH 18, 1966, CLEARLY INDICATE THAT PRICE VERIFICATION WAS ONE OF THE MATTERS INVOLVED IN THE DISCUSSIONS AT THE JANUARY 12, 1966, NEGOTIATION CONFERENCE.

YOU HAVE ATTEMPTED TO MINIMIZE THE IMPORTANCE OF THE LAST TWO SENTENCES OF THE CITED PARAGRAPH F. OF THE CONTRACTING OFFICER'S MEMORANDUM DATED MARCH 18, 1966, AND YOU HAVE COMPARED THEM WITH THE CONTRACTING OFFICER'S STATEMENTS AS MADE IN HIS MEMORANDUM OF JULY 27, 1967. YOU STATE THAT THE MEMORANDUM OF MARCH 18, 1966, LEFT THE STRONG IMPRESSION THAT LEAR SIEGLER WENT THROUGH A COST ANALYSIS AFTER THE JANUARY 12, 1966, MEETING, AND WE AGREE THAT THE MEMORANDUM MAY BE SO INTERPRETED. WHEN HE WAS PREPARING A STATEMENT IN THE MATTER AFTER LEAR SIEGLER CONTENDED THAT PRICING ERRORS WERE MADE, THE CONTRACTING OFFICER THEN APPARENTLY REALIZED THAT HIS MARCH 18, 1966, STATEMENT WAS NOT CLEAR SO FAR AS IT MIGHT HAVE PURPORTED TO SHOW THAT A REAPPRAISAL WAS MADE BY THE COMPANY AFTER JANUARY 12, 1966, AND BEFORE JANUARY 19, 1966, WHEN THE FIXED-PRICE PROPOSAL WAS REAFFIRMED IN WRITING. NEVERTHELESS, IT DOES NOT APPEAR THAT WHAT WAS SAID IN THE MARCH 18, 1966, MEMORANDUM ON THAT POINT SHOULD BE REGARDED AS AFFECTING THE VALIDITY OF THE STATEMENT MADE IN JULY 1967 TO THE EFFECT THAT ONE OF THE LEAR SIEGLER OFFICIALS ADVISED THE CONTRACTING OFFICER ON JANUARY 12, 1966, THAT THE COMPANY HAD MADE A THOROUGH REVIEW OF ITS PRICES AND IT WAS HIS OPINION THAT THE PROPOSAL PRICE WAS SOUND AND PROTECTIVELY ADEQUATE.

WITH REFERENCE TO YOUR EIGHTH CONTENTION, WE FIND NO BASIS FOR ANY BELIEF THAT PRICE VERIFICATION WAS NOT A MATTER DISCUSSED AT THE JANUARY 12, 1966, NEGOTIATION CONFERENCES, BY REASON OF THE FACT THAT MR. DEL GRANDE'S MEMORANDUM OF JANUARY 14, 1966, INDICATES THAT, IN A TELEPHONE CONVERSATION OF THAT DATE, HE DISCUSSED VARIOUS MATTERS WITH THE CONTRACTING OFFICER, WHICH DID NOT INCLUDE A SPECIFIC REFERENCE TO PRICE VERIFICATION, BUT DID REFER TO ADVICE THAT THE LEAR SIEGLER REAFFIRMATION OF ITS FIXED-PRICE PROPOSAL WOULD BE INCLUDED IN THE RESULTING CONTRACT. THE CONTRACTING OFFICER SUBMITTED A STATEMENT DATED SEPTEMBER 30, 1968, INDICATING THAT, WHILE HE RECALLS HAVING HAD TELEPHONE CONVERSATIONS WITH MR. DEL GRANDE CONCERNING GOVERNMENT MULTI-YEAR CONTRACTING PROCEDURES, HE DOES NOT RECALL ANY SPECIFIC TELEPHONE CONVERSATION WHEREIN THE MATTERS OF PRICE AND/OR TECHNICAL REAFFIRMATION WERE DISCUSSED, NOR DOES HE RECALL HAVING BEEN REQUESTED BY MR. DEL GRANDE FOR ANY ADVICE IN THE PREPARATION OF THE LETTER WHICH WOULD REAFFIRM PRICE AND TECHNICAL UNDERSTANDING. THE CONTRACTING OFFICER REPORTED THAT HIS OFFICE DOES NOT MAINTAIN AN OFFICIAL TELEPHONE LOG OF ANY INCOMING TELEPHONE CALLS FROM PROSPECTIVE CONTRACTORS, BUT HE STATED THAT THE TELEPHONE CALL OF JANUARY 14, 1966, REFERRED TO IN MR. DEL GRANDE'S MEMORANDUM OF THE DATE,"MAY HAVE BEEN TO MR. RALPH FARR, CONTRACTING SPECIALIST, WITH MY PARTICIPATION IN A PORTION OF THE CALL". IN THE CIRCUMSTANCES, THERE APPEARS TO BE NO ROOM FOR SPECULATION AS TO WHY MR. DEL GRANDE'S MEMORANDUM DID NOT SHOW THAT HE WAS ADVISED BY THE CONTRACTING OFFICER THAT "THE GOVERNMENT EXPECTED A PRICE VERIFICATION RESPONSE".

WITH REFERENCE TO YOUR NINTH CONTENTION, WE DO NOT AGREE THAT A REQUEST FOR REAFFIRMATION OF A PROPOSAL SUGGESTS A DIFFERENT ANSWER THAN A REQUEST TO VERIFY A PROPOSAL. WE NOTE YOUR STATED DEFINITIONS OF THE WORDS "AFFIRM" AND "VERIFY" BUT IT IS OUR OPINION THAT, REGARDLESS OF WHATEVER DISTINCTIONS CAN BE MADE BETWEEN THOSE WORDS, WHEN A PROSPECTIVE CONTRACTOR IS REQUESTED TO REAFFIRM A FIXED-PRICE PROPOSAL, IT IS A FAIR AND REASONABLE ASSUMPTION THAT THE COMPANY IS BEING AFFORDED A FURTHER OPPORTUNITY TO STATE THAT IT WILL PERFORM STRICTLY IN ACCORDANCE WITH THE GOVERNMENT'S REQUIREMENTS AND AT THE PRICE STATED IN THE PROPOSAL, OR THAT, FOR CERTAIN REASONS, INCLUDING PRICING ERRORS, THE COMPANY DESIRES TO WITHDRAW THE PROPOSAL OR TO PERFORM ONLY IF A CORRECTION IN THE PROPOSAL PRICE WAS MADE. IN ANY EVENT, THE SUBSTANCE OF THE MEETINGS HELD ON JANUARY 12, 1966, WHETHER THE STATEMENTS OF GOVERNMENT OFFICIALS OR THE STATEMENTS OF LEAR SIEGLER OFFICIALS SHOULD BE ACCEPTED AS REPRESENTING THE CORRECT VERSION OF WHAT WAS SAID AT THOSE MEETINGS, APPEARS CLEARLY TO INDICATE THAT THE GOVERNMENT EXPECTED LEAR SIEGLER TO MAKE SUCH VERIFICATIONS OF ITS PRICES AS IT CONSIDERED TO BE NECESSARY BEFORE SUBMITTING A COMPLETE REAFFIRMATION OF THE FIXED-PRICE PROPOSAL. SUCH COMPLETE REAFFIRMATION, WHICH MUST BE REGARDED AS HAVING CONSTITUTED A PRICE VERIFICATION AS WELL AS CONFIRMATION OF THE COMPANY'S UNDERSTANDING OF THE TECHNICAL REQUIREMENTS OF THE REQUEST FOR PROPOSALS, WAS MADE IN LEAR SIEGLER'S LETTER OF JANUARY 19, 1966.

WITH REFERENCE TO YOUR TENTH CONTENTION, IT CLEARLY APPEARS FROM THE EVIDENCE AS TO WHAT WAS SAID AT THE JANUARY 12, 1966, MEETINGS, AND LEAR SIEGLER'S REFERENCE IN ITS LETTER OF JANUARY 19, 1966, TO THE GOVERNMENT'S REQUEST FOR REAFFIRMATION OF ITS FIXED-PRICE PROPOSAL, THAT THERE IS NO ALTERNATIVE TO AN INTERPRETATION OF LEAR SIEGLER'S STATEMENT THAT IT STOOD READY AND WILLING TO PERFORM FOR THE PROPOSED PRICE AS MEANING THAT PRICE VERIFICATION WAS INTENDED SO FAR AS A STATEMENT TO THAT EFFECT WAS NECESSARY IN ORDER TO PERMIT THE GOVERNMENT TO MAKE A VALID CONTRACT AWARD. WHETHER OR NOT LEAR SIEGLER MADE AN ATTEMPT TO VERIFY THE PRICE IS CONSIDERED IMMATERIAL SINCE IT IS ENTIRELY POSSIBLE THAT THE COMPANY ELECTED TO TAKE THE RISK OF PRICING ERRORS INSTEAD OF INITIATING A COMPLETE REVIEW OF THE PROPOSAL PRICES FOLLOWING THE MEETINGS HELD ON JANUARY 12, 1966.

WITH REFERENCE TO YOUR ELEVENTH CONTENTION, THERE ARE SOME DIFFERENCES BETWEEN THE STATEMENTS OF THE CONTRACTING OFFICER AND ANOTHER GOVERNMENT OFFICIAL REGARDING THE SEPARATE MEETING ON JANUARY 12, 1966. HOWEVER, THOSE DIFFERENCES ARE NOT BELIEVED TO BE CONFLICTING, AT LEAST NOT TO SUCH AN EXTENT AS TO WARRANT A CONCLUSION THAT THE CONTRACTING OFFICER DID NOT EXPLAIN TO THE LEAR SIEGLER REPRESENTATIVES THAT THE LEAR SIEGLER PROPOSAL WAS SO MUCH LOWER THAN THE OTHER OFFERS RECEIVED THAT "THERE MUST BE SOME ERROR SOMEWHERE"; OR THAT THE CONTRACTING OFFICER DID NOT MAKE IT CLEAR TO THE LEAR SIEGLER REPRESENTATIVES THT "THERE WAS A DISTINCT POSSIBILITY OF A POTENTIAL LOSS OF SEVERAL MILLIONS OF DOLLARS". ALSO, IT IS OUR OPINION THAT WE WOULD NOT BE WARRANTED IN CONCLUDING THAT THE CONTRACTING OFFICER, IN SETTING FORTH A RANGE OF POTENTIAL LOSS IN THE MATTER, WOULD HAVE KNOWINGLY VIOLATED ANY RULE PROHIBITING THE DISCLOSURE OF INFORMATION IN OTHER PROPOSALS TO A PROSPECTIVE CONTRACTOR ON A NEGOTIATED PROCUREMENT. HE COULD NOT HAVE DISCLOSED THE EXACT AMOUNTS OF THE OTHER OFFERS BUT IT WOULD NOT APPEAR TO HAVE BEEN IMPROPER TO ADVISE THE LEAR SIEGLER'S REPRESENTATIVES OF A GENERAL RANGE OF POSSIBLE POTENTIAL LOSS IN THE MATTER.

WITH REFERENCE TO YOUR TWELFTH CONTENTION, THE REPRESENTED "BUY-IN" STATEMENT OR QUESTION DOES NOT APPEAR TO BE RELEVANT TO A DETERMINATION WHETHER PRICE VERIFICATION WAS REQUESTED DURING THE MEETINGS HELD ON JANUARY 12, 1966. SEE OUR COMMENT IN THE ABOVE-NUMBERED PARAGRAPH 7.

WITH REFERENCE TO YOUR THIRTEENTH CONTENTION, THERE IS A REASONABLE BASIS FOR CONSIDERING THAT A STATEMENT THAT THE LEAR SIEGLER PROPOSAL "WAS SUBSTANTIALLY BELOW THE CURRENT G.E. PRICE" , WOULD NOT BE SUFFICIENT IN ITSELF TO HAVE ALERTED LEAR SIEGLER TO THE POSSIBLE EXISTENCE OF A GROSS MISTAKE IN ITS PROPOSAL PRICE. HOWEVER, THE CONTRACTING OFFICER'S STATEMENT OF JULY 27, 1967, IS EVIDENCE OF THE FACT THAT HE ADVISED THE LEAR SIEGLER OFFICIALS THAT HE CONSIDERED THE COMPANY'S PROPOSAL TO BE MORE THAN "SUBSTANTIALLY LOW" , AND THE STATEMENTS OF THE LEAR SIEGLER OFFICIALS CONCERNING WHAT WAS SAID AT THE SEPARATE MEETING WITH THEM ON JANUARY 12, 1966, SUPPORT A CONCLUSION THAT THEY WERE ADEQUATELY PLACED ON NOTICE THAT A COMPLETE VERIFICATION OF THE PROPOSAL PRICES WOULD BE REQUIRED UNLESS THE COMPANY ELECTED TO TAKE THE CHANCE THAT A GROSS ERROR WAS NOT MADE IN ITS PROPOSAL PRICE. IN SUCH CIRCUMSTANCES, AND SINCE WE FIND NO REASON TO BELIEVE THAT THE CONTRACTING OFFICER KNEW THAT A GROSS MISTAKE HAD BEEN MADE, WE REMAIN OF THE OPINION THAT NO FURTHER REQUEST FOR VERIFICATION OR REAFFIRMATION OF THE PROPOSAL PRICE WAS REQUIRED AFTER THE RECEIPT OF LEAR SIEGLER'S LETTER OF REAFFIRMATION DATED JANUARY 19, 1966. YOU CITED ON THIS POINT ASPR 2-406.3 (E) (1), WHICH IS REFERRED TO IN THE ABOVE-NUMBERED COMMENT NO. 5, INDICATING OUR VIEW THAT THE MATTER OF PRICE VERIFICATION APPEARED TO HAVE BEEN PURSUED TO THE FULLEST EXTENT PERMISSIBLE IN THE CASE OF A NEGOTIATED PROCUREMENT.

WITH REFERENCE TO YOUR FOURTEENTH CONTENTION, REGARDING THE STATEMENT IN A DEPARTMENTAL MEMORANDUM OF JULY 27, 1967, THAT THE PRICES OF THE 1963 CONTRACT WITH THE GENERAL ELECTRIC COMPANY WERE "PRESENTED" TO PROSPECTIVE OFFERORS DURING A PRE-PROPOSAL CONFERENCE HELD ON NOVEMBER 23, 1965, IT WOULD APPEAR TO MAKE NO DIFFERENCE WHETHER THE PRICES WERE "PRESENTED" IN WRITING OR ORALLY AT SUCH MEETING. IN YOUR ORIGINAL BRIEF ON THIS CASE, YOU STATED THAT THE PREVIOUS PRICE ON THE MAJOR ITEM OF EQUIPMENT WAS MENTIONED IN THE PRE PROPOSAL CONFERENCE, AND THAT SUCH PRICE WAS KNOWN TO LEAR SIEGLER. CONSEQUENTLY, AND SINCE THE COMPANY'S TOTAL PROPOSAL PRICE WAS CONSIDERABLY LOWER THAN THE 1963 PRICE ON THE MAJOR ITEM OF EQUIPMENT, MULTIPLIED BY THE QUANTITY USED IN THE EVALUATION OF THE LEAR SIEGLER PROPOSAL, THERE APPEARS TO BE NO BASIS FOR ANY CONTENTION THAT LEAR SIEGLER DID NOT KNOW AS OF JANUARY 12, 1966, THAT ONE OF THE REASONS FOR THE SUSPICION OF A GROSS PRICING MISTAKE IN ITS PROPOSAL WAS THE FACT THAT THE PROPOSAL PRICE WAS OUT OF LINE WITH THE PRICES PAID OR BEING PAID UNDER THE 1963 CONTRACT WITH THE GENERAL ELECTRIC COMPANY.

WITH REFERENCE TO YOUR FIFTEENTH AND LAST CONTENTION, IT DOES NOT APPEAR THAT THE DIFFERENCES BETWEEN THE NEGOTIATION PROCEDURES OF THE BASIC SECTION III, ASPR, AND THE PROCEDURES FOR AWARDING CONTRACTS PURSUANT TO FORMAL ADVERTISING AS SET FORTH IN THE BASIC SECTION II, ASPR, MAY BE REGARDED AS AN INDICATION IN THIS CASE THAT AN ADEQUATE REQUEST FOR VERIFICATION OF THE LEAR SIEGLER PROPOSAL PRICE WAS NOT MADE. THE RECORD IN THIS CASE APPEARS REASONABLY TO INDICATE THAT THE CONTRACTING OFFICER FOLLOWED THE PROVISIONS OF SECTION II, ASPR, WHICH HAVE REFERENCE TO OBTAINING VERIFICATIONS OF BID PRICES, TO THE FULLEST EXTENT POSSIBLE IN CONNECTION WITH AN AWARD WHICH IS TO BE MADE ON A PROPOSED NEGOTIATED PROCUREMENT UNDER THE PROVISIONS OF SECTION III, ASPR. AS INDICATED IN OUR DECISION OF MARCH 18, 1968, IT APPEARS THAT THE CONTRACTING OFFICER DID NOT DISCLOSE THE PRICES OF OTHER OFFERORS OR THE GOVERNMENT'S ESTIMATE OF A REASONABLE CONTRACT PRICE BECAUSE OF RESTRICTIONS APPLICABLE IN NEGOTIATING GOVERNMENT CONTRACTS. HOWEVER, IT IS REASONABLY APPARENT THAT THE LEAR SIEGLER PERSONNEL WHO ATTENDED THE NEGOTIATION MEETINGS ON JANUARY 12, 1966, WERE GIVEN SUFFICIENT INFORMATION CONCERNING THE BASIS UPON WHICH THE CONTRACTING OFFICER SUSPECTED OR SURMISED THAT A GROSS PRICING ERROR MIGHT HAVE BEEN MADE IN THE LEAR SIEGLER PROPOSAL.

IN THE CIRCUMSTANCES, WE REMAIN OF THE OPINION THAT THERE IS A SUBSTANTIAL BASIS FOR CONSIDERING THAT THE GOVERNMENT FULFILLED ITS RESPONSIBILITY FOR VERIFICATION OF THE PRICES QUOTED IN LEAR SIEGLER'S FIXED-PRICE PROPOSAL AND, ACCORDINGLY, OUR DECISION OF MARCH 18, 1968, IS HEREBY AFFIRMED. BECAUSE OF OUR CONCLUSION, IT IS IMMATERIAL WHETHER LEAR SIEGLER DID OR DID NOT IN FACT MAKE ONE OR MORE MISTAKES IN ITS PRICE PROPOSAL. WE, THEREFORE, CAN SEE NO USEFUL PURPOSE IN REQUESTING THE ADMINISTRATIVE OFFICE TO MAKE A DETERMINATION ON THIS POINT.

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