B-161200, APR. 20, 1967

B-161200: Apr 20, 1967

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO LETTER OF APRIL 3. THE FOLLOWING QUOTATIONS WERE RECEIVED: CHART STEEL ANGLES BLACK WIRE TOTAL EATON METAL PRODUCTS $ 652.00 $360.00 $1. 833.00 THE EATON QUOTATION WAS RECEIVED WITHOUT SIGNATURE. WAS RETURNED TO EATON FOR COMPLETION. NOTHING WAS DONE TO DRAW ATTENTION TO EATON'S UNUSUALLY LOW PRICE FOR THE STEEL ANGLES. NEITHER WAS EATON REQUESTED TO VERIFY ITS QUOTED FIGURES. THE COGNIZABLE OFFICIAL REPORTED THAT HE BELIEVED EATON'S QUOTATION WAS TOO LOW IN RELATION TO THE OTHER OFFERS RECEIVED. AFTER IT WAS AWARDED THE CONTRACT. WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD. THE CONTRACT IS PRESUMED IN LAW TO EXPRESS THE UNDERSTANDING OF THE PARTIES.

B-161200, APR. 20, 1967

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF APRIL 3, 1967, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY, SUBMITTING FOR OUR CONSIDERATION AND DECISION A REQUEST BY THE EATON METAL PRODUCTS COMPANY FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF PURCHASE ORDER NO. 701-30,194.

THE DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, ISSUED REQUEST FOR QUOTATIONS NO. 30,194 FOR 300 STEEL ANGLES OF SPECIFIED DIMENSIONS AND 25,000 FEET OF NO. 6 MALLEABLE BLACK WIRE TO BE DELIVERED AT MCCOOK, NEBRASKA. THE FOLLOWING QUOTATIONS WERE RECEIVED:

CHART

STEEL ANGLES BLACK WIRE TOTAL EATON METAL PRODUCTS $ 652.00 $360.00 $1,012.00 GATE CITY STEEL, INC. $1,500.00 $342.00

$1,842.00 LINCOLN STEEL WORKS $1,476.00 $357.00 $1,833.00

THE EATON QUOTATION WAS RECEIVED WITHOUT SIGNATURE, AND WAS RETURNED TO EATON FOR COMPLETION. HOWEVER, NOTHING WAS DONE TO DRAW ATTENTION TO EATON'S UNUSUALLY LOW PRICE FOR THE STEEL ANGLES. NEITHER WAS EATON REQUESTED TO VERIFY ITS QUOTED FIGURES. THE COGNIZABLE OFFICIAL REPORTED THAT HE BELIEVED EATON'S QUOTATION WAS TOO LOW IN RELATION TO THE OTHER OFFERS RECEIVED, AND THAT HIS LETTER WOULD ENCOURAGE EATON TO VERIFY ITS QUOTATION. HOWEVER, EATON DID NOT VERIFY ITS QUOTATION BUT RETURNED ITS SIGNED OFFER.

AFTER IT WAS AWARDED THE CONTRACT, EATON DISCOVERED A MISTAKE IN ITS PRICE. THE STEEL ANGLES OF THE SPECIFIED DIMENSIONS ACTUALLY WEIGHED 11,130 POUNDS, BUT EATON HAD COMPUTED ITS PRICE FOR THE STEEL ANGLES ON A WEIGHT OF 1,113 POUNDS. EATON NOW WISHES TO CORRECT THE CONTRACT PRICE OF STEEL ANGLES FROM $652.00 TO $1,975.00, OR TO A TOTAL CONTRACT PRICE OF $2,335. SUFFICIENT EVIDENCE HAS BEEN PRESENTED AS TO THE EXISTENCE OF THE ERROR, HOW IT OCCURRED AND THE AMOUNT OF THE INTENDED OFFER.

WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS PRESUMED IN LAW TO EXPRESS THE UNDERSTANDING OF THE PARTIES. HOWEVER, WHEN THE PARTY NOT IN ERROR SHOULD HAVE SUSPECTED OR HAD REASON TO KNOW OF THE EXISTENCE OF THE ERROR, SUCH GENERAL RULE IS NOT FOR APPLICATION. IN SUCH CASES, WHERE THE CONTRACTING OFFICER HAS ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD, ACCEPTANCE BY THE GOVERNMENT DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. SEE 17 COMP. GEN. 575; 37 ID. 685. OF COURSE, ANY SUCH ADJUSTMENT MAY NOT RESULT IN THE TOTAL CORRECTED PRICE EXCEEDING THE PRICE QUOTED IN THE NEXT LOW ACCEPTABLE OFFER. 37 COMP. GEN. 398; ID. 685. FURTHER, IN REGARD TO CORRECTION AFTER AWARD, THE CONTRACTOR MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAD BEEN MADE, THE MANNER IN WHICH IT OCCURRED AND THE INTENDED PRICE. 35 COMP. GEN. 279; 31 ID. 183; 23 ID. 596. FPR SEC. 1-2.406-4.

SINCE EATON'S OFFER ON THE STEEL ANGLES WAS LESS THAN ONE-HALF OF THE AMOUNT QUOTED BY THE NEXT LOW OFFEROR, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF PROBABILITY OF ERROR. THEREFORE, EATON SHOULD HAVE BEEN REQUESTED TO VERIFY ITS OFFER PRIOR TO AWARD.

ON THESE FACTS, IF EATON IS WILLING TO ACCEPT PAYMENT AT THE PRICE OFFERED BY THE NEXT LOW OFFEROR, WE WOULD HAVE NO OBJECTION IN THIS CASE TO A REFORMATION OF THE CONTRACT BY INCREASING THE PRICE OF THE STEEL ANGLES TO THE NEXT LOW OFFERED PRICE. CF. 44 COMP. GEN. 383.

THE ENCLOSURES TO THE LETTER OF APRIL 3, 1967, ARE RETURNED AS REQUESTED.