B-161983, JUL. 21, 1967

B-161983: Jul 21, 1967

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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION: REFERENCE IS MADE TO A LETTER OF JULY 6. A REQUEST FOR PROPOSALS WAS ISSUED ON OCTOBER 1. REQUEST FOR PROPOSALS WAS ISSUED TO LEAR ALONE BECAUSE NO SUBSTITUTE PARTS WOULD MEET THE PARTICULAR REQUIREMENTS OF THE AIRCRAFT. THE RECOMMENDATION WAS APPROVED AND A SPARE PARTS LIST WAS RECEIVED FROM LEAR WHICH WAS SUBSEQUENTLY PRICED CUT BY LEAR. 136.57 WAS QUOTED BY LEAR TO NASA BASED ON PARTS PRICES OBTAINED TELEPHONICALLY FROM LEAR. A PURCHASE REQUEST WAS PREPARED BASED ON THOSE QUOTED PRICES TOTALING $7. A JUSTIFICATION FOR THE NONCOMPETITIVE PROCUREMENT OF THE PARTS WAS APPROVED AUTHORIZING THE PURCHASE FROM LEAR BECAUSE "NO SUBSTITUTE PARTS WILL MEET THE PECULIAR REQUIREMENTS OF THIS AIRCRAFT.

B-161983, JUL. 21, 1967

CONTRACTS - REFORMATION - JUSTIFICATION DECISION TO NASA AUTHORIZING REFORMATION OF CONTRACT FOR MISTAKE ON BASIS OF EVIDENCE WHICH INDICATED EXISTENCE OF ERROR, HOW IT OCCURRED AND AMOUNT OF INTENDED PRICE.

TO THE HONORABLE JAMES E. WEBB, ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

REFERENCE IS MADE TO A LETTER OF JULY 6, 1967, WITH ENCLOSURES, FROM THE DIRECTOR OF PROCUREMENT, SUBMITTING FOR OUR CONSIDERATION AND DECISION A REQUEST BY THE LEAR JET CORPORATION (LEAR) FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF PURCHASE ORDER NO. NAS23351.

A REQUEST FOR PROPOSALS WAS ISSUED ON OCTOBER 1, 1965, FOR 48 SPARE PARTS REQUIRED FOR THE MAINTENANCE OF A LEAR JET AIRCRAFT MODEL 23, NASA NO. 701. REQUEST FOR PROPOSALS WAS ISSUED TO LEAR ALONE BECAUSE NO SUBSTITUTE PARTS WOULD MEET THE PARTICULAR REQUIREMENTS OF THE AIRCRAFT.

DURING THE MONTHS OF AUGUST AND SEPTEMBER 1965, NASA SENT AN EMPLOYEE TO THE MAINTENANCE SCHOOL AT THE LEAR JET FACTORY. DURING THIS TIME, THE EMPLOYEE RECOMMENDED TO HIS SUPERVISOR THAT NASA PURCHASE 48 ITEMS OF SPARE PARTS FOR THE AIRCRAFT. THE RECOMMENDATION WAS APPROVED AND A SPARE PARTS LIST WAS RECEIVED FROM LEAR WHICH WAS SUBSEQUENTLY PRICED CUT BY LEAR. A TOTAL PRICE OF $7,136.57 WAS QUOTED BY LEAR TO NASA BASED ON PARTS PRICES OBTAINED TELEPHONICALLY FROM LEAR. THEREAFTER, A PURCHASE REQUEST WAS PREPARED BASED ON THOSE QUOTED PRICES TOTALING $7,136.57. SEPTEMBER 17, 1965, A JUSTIFICATION FOR THE NONCOMPETITIVE PROCUREMENT OF THE PARTS WAS APPROVED AUTHORIZING THE PURCHASE FROM LEAR BECAUSE "NO SUBSTITUTE PARTS WILL MEET THE PECULIAR REQUIREMENTS OF THIS AIRCRAFT;, THE REQUEST FOR PROPOSALS WAS ISSUED ON OCTOBER 1, 1965, TO LEAR. THE GOVERNMENT ESTIMATE THEREFOR WAS THE PREVIOUSLY QUOTED PRICE OF $7,136.57. LEAR'S RESPONSE TO THE REQUEST DATED OCTOBER 12, 1965, QUOTED A PRICE OF $3,534.39. THIS PROPOSAL WAS ACCEPTED BY THE CONTRACTING OFFICER ON NOVEMBER 2, 1965. LEAR NOTIFIED NASA OF A MISTAKE IN ITS PRICES BY TELEPHONE ON NOVEMBER 19, 1965, AND BY LETTER OF NOVEMBER 22, 1965. LEAR ALLEGED THAT THE MISTAKE WAS DUE TO THE INEXPERIENCE OF THE STAFF IN ITS SPARE PARTS SALES DIVISION. ADDITIONALLY, LEAR CLAIMED THAT THE SALES STAFF HAD NO OFFICIAL PRINTED PRICE LIST AT THAT TIME TO REFER TO AND VERIFY THE QUOTED PRICES. LEAR ALLEGED ALSO THAT THE PRICES QUOTED WERE BARE RAW MATERIALS AND PRODUCTION COSTS OF THE SPARE PARTS. NOTWITHSTANDING THE CLAIM OF ERROR, THE ITEMS WERE DELIVERED AND ACCEPTED BY NASA ON JANUARY 19, 1966.

LEAR HAS REQUESTED THAT THE CONTRACT PRICE BE CORRECTED FROM $3,534.39 TO $7,202.85. SUFFICIENT EVIDENCE HAS BEEN PRESENTED AS TO THE EXISTENCE OF THE ERROR, HOW IT OCCURRED AND THE AMOUNT OF ITS INTENDED PRICE.

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. 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. 37 COMP. GEN. 279; 31 ID. 183; 23 ID. 596.

LEAR'S ACCEPTED OFFER WAS ALMOST ONE HALF OF ITS PREVIOUSLY QUOTED PRICE. FURTHER, AT THE TIME THE REQUEST FOR PROPOSALS WAS ISSUED, NASA HAD KNOWLEDGE OF THIS TOTAL PRICE AS EVIDENCED BY ITS PURCHASE REQUEST OF AUGUST 31, 1965. ON THE BASIS OF THOSE FACTS, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF PROBABILITY OF ERROR. THUS, LEAR SHOULD HAVE BEEN REQUESTED TO VERIFY ITS OFFER PRIOR TO AWARD.

ON THESE FACTS, WE WOULD HAVE NO OBJECTION TO A REFORMATION OF THE PURCHASE ORDER TO INCREASE THE PRICE OF THE SPARE PARTS BY $3,668.46 AS ADMINISTRATIVELY RECOMMENDED. THE ENCLOSURES TO THE LETTER OF JULY 6, 1967, ARE RETURNED AS REQUESTED.