B-169188, JUN. 11, 1970

B-169188, JUN. 11, 1970

CONTRACTS--MISTAKES--VERIFICATION PRIOR TO ALLEGATION OF ERROR--ADEQUACY OF INFORMATION CONTRACTOR'S REQUEST FOR RELIEF FROM CONTRACT DUE TO MISTAKE IN PREPARATION OF BID IS DENIED SINCE BID PRICE HAD BEEN VERIFIED PRIOR TO AWARD UPON TWO VERIFICATION REQUESTS, BIDDER HAD KNOWLEDGE THAT BID SUBMITTED WAS SUBSTANTIALLY LOWER THAN OTHER BIDS RECEIVED AND WAS POSSESSED OF ABSTRACT OF BIDS, ALL CONSTITUTING SUFFICIENT WARNING OF POSSIBILITY OF MISTAKE IN BID PREPARATION AND COMPLYING WITH VERIFICATION STANDARDS SET FORTH IN ARMED SERVICES PROCUREMENT REGULATION. SINCE ERROR WAS DUE SOLELY TO BIDDER'S OVERSIGHT OR NEGLIGENCE, MISTAKE WAS UNILATERAL --NOT MUTUAL--AND DOES NOT ENTITLE CONTRACTOR TO RELIEF. SEE COMP. GEN. DECS. AND CT. CASES CITED.

TO VEDDER, PRICE, KAUFMAN & KAMNHOLZ:

WE REFER TO A TELEGRAM OF FEBRUARY 27, 1970, FROM THE APPALACHIAN INDUSTRIES CORPORATION AND TO YOUR LETTER AND BRIEF OF MARCH 20, 1970, PROTESTING THE AWARD OF CONTRACT NO. DAAE07-70-C-1925 TO APPALACHIAN INDUSTRIES BY THE UNITED STATES ARMY TANK-AUTOMOTIVE COMMAND (ATAC) BECAUSE OF MISTAKE MADE BY APPALACHIAN IN ITS BID SUBMITTED UNDER INVITATION FOR BIDS NO. DAAE07-70-B-1069. THE INVITATION CALLED FOR THE DESIGN AND CONSTRUCTION OF 46 SINGLE AXLE, 5-TON PAYLOAD CAPACITY BOLSTER TRAILERS WITH CABLE REEL HOLDERS.

SIX BIDS WERE RECEIVED AND OPENED ON NOVEMBER 18, 1969, AS FOLLOWS:

APPALACHIAN INDUSTRIES $2,258

EATON METAL PRODUCTS CO. 2,900

ALMONT WELDING WORKS, INC. 2,924

AJAX TRAILERS, INC. 2,945

WEST COAST METAL FAB. INC. 4,366

TECSTAR INC. 9,900

THE BIDS WERE ABSTRACTED AND THE $642 (23-PERCENT) DIFFERENCE BETWEEN APPALACHIAN'S BID AND THE NEXT LOWEST BID ALERTED THE CONTRACTING OFFICER TO THE POSSIBILITY OF MISTAKE AND A PRICE ANALYSIS REPORT DATED NOVEMBER 20, 1969, CONFIRMED THAT APPALACHIAN'S BID APPEARED TO BE TOO LOW BASED ON COMPARISON WITH PREVIOUS PURCHASES OF SIMILAR TRAILERS.

ON DECEMBER 5, 1969, A PREAWARD SURVEY TEAM VISITED THE APPALACHIAN PLANT. DURING THE SURVEY THE TEAM, UNDER INSTRUCTIONS FROM THE CONTRACTING OFFICER, INFORMED APPALACHIAN'S VICE PRESIDENT THAT APPALACHIAN'S BID APPEARED TOO LOW WHEN COMPARED WITH PREVIOUS PRICES AND ASKED THAT APPALACHIAN REVIEW ITS PRICES AND CONFIRM THEM BY LETTER. THIS TIME, THE VICE PRESIDENT OF APPALACHIAN FURNISHED THE TEAM WITH A COPY OF THE ABSTRACT OF THE BIDS RECEIVED UNDER THE INVITATION WHICH WAS REVIEWED FOR THE PURPOSE OF VERIFYING ITS BID PRICES. ALSO, APPALACHIAN'S VICE PRESIDENT VERIFIED THE BID PRICES TO THE SURVEY TEAM.

IT IS REPORTED THAT ATAC MADE TWO UNSUCCESSFUL ATTEMPTS TO REACH APPALACHIAN TO REQUEST FURTHER VERIFICATION OF ITS BID PRICE. ON DECEMBER 8, 1969, ATAC WROTE APPALACHIAN AND REQUESTED VERIFICATION OF ITS BID PRICE AS IT APPEARED TO BE TOO LOW IN COMPARISON WITH PREVIOUS PURCHASES FOR SIMILAR ITEMS. APPALACHIAN WAS REQUESTED TO CONFIRM ITS PRICES BY LETTER.

BY LETTER DATED DECEMBER 10, 1969, APPALACHIAN ADVISED ATAC IN PERTINENT PART:

"IN ACCORDANCE WITH YOUR REQUEST WE HAVE CONDUCTED A COMPLETE AND COMPREHENSIVE REVIEW OF OUR PROPOSAL WHICH WAS SUBMITTED ON IFB-DAAE07 70- B-1069.

"IT IS OUR JUDGEMENT THAT WE CAN PRODUCE THE EQUIPMENT WITHIN THE SCOPE OF THE SPECIFICATION AND FOR THE QUOTED PRICE OF $2258.00 EACH *** "

AWARD OF THE CONTRACT TO APPALACHIAN AS THE LOW RESPONSIVE, RESPONSIBLE BIDDER WAS MADE ON JANUARY 15, 1970. SHORTLY AFTER AWARD OF THE CONTRACT, APPALACHIAN DISCOVERED THAT THE EMPLOYEE WHO HAD PREPARED ITS DESIGN AND BID HAD MADE A MISTAKE IN THAT THE BASIC DESIGN HE DREW UP WOULD NOT MEET THE PERFORMANCE SPECIFICATION OF THE CONTRACT BECAUSE OF STRUCTURAL DESIGN DEFICIENCIES WHICH MADE IT IMPOSSIBLE FOR THE TRAILER FRAME TO SUPPORT THE WEIGHT REQUIREMENTS OF THE SPECIFICATION. TO MAKE THE FRAME SUFFICIENTLY STRONG TO HANDLE THE TRAILER PAYLOAD WOULD REQUIRE DIFFERENT AND MORE EXPENSIVE MATERIALS AND TO INSTALL THESE MATERIALS PROPERLY WOULD REQUIRE THE EXPENDITURE OF ADDITIONAL LABOR HOURS, THEREBY RAISING THE COST OVER THAT WHICH THE APPALACHIAN'S ESTIMATOR HAD ARRIVED AT IN PREPARING THE BID.

THERE WERE NUMEROUS OTHER MISTAKES IN THE BID ATTRIBUTABLE TO APPALACHIAN'S ESTIMATOR'S FAILURE TO INCORPORATE IN HIS DESIGN CERTAIN FEATURES THAT WERE REQUIRED BY THE SPECIFICATION. UPON DISCOVERY OF THESE MISTAKES, APPALACHIAN IMMEDIATELY INFORMED ATAC OFFICIALS.

IN YOUR BRIEF OF MARCH 20, 1970, TO OUR OFFICE, YOU CONTEND, BASICALLY, THAT THE APPALACHIAN BID WAS SO FAR BELOW ANY OTHER BID AS TO PUT THE CONTRACTING OFFICER ON INQUIRY AS TO POSSIBLE MISTAKE IN THE BID. IN THIS CONNECTION, YOU ALSO CONTEND THAT THE CONTRACTING OFFICER, IN REQUESTING VERIFICATION OF THE BID, FAILED TO DIRECT APPALACHIAN'S ATTENTION TO THE SPECIFIC ERROR SUSPECTED.

FROM THE FACTS THAT HAVE BEEN PRESENTED TO US, IT APPEARS CLEAR THAT APPALACHIAN MADE AN ERROR IN ITS BID. THUS, THE ISSUE BEFORE US IS WHETHER A BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF APPALACHIAN'S BID. IN REGARD TO SITUATIONS OF THIS NATURE, IT IS WELL ESTABLISHED THAT THE RESPONSIBILITY FOR THE PREPARATION OF BIDS IS ON THE BIDDER WHO IS PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE WHICH CAN BE CHARGED IN ORDER FOR THE BIDDER TO MAINTAIN A COMPETITIVE BIDDING POSITION AND YET REALIZE A REASONABLE PROFIT. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT. CL. 120, 163 (1943). IF THERE IS AN APPARENT MISTAKE IN THE BID OR IF THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT A MISTAKE HAS BEEN MADE, PARAGRAPH 2-406.3(E)(1) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PLACES THE DUTY ON THE CONTRACTING OFFICER TO VERIFY THE BID.

THE QUESTION THUS PRESENTED IS WHETHER THE VERIFICATION REQUESTED BY THE CONTRACTING OFFICER IN THE INSTANT CASE WAS IN COMPLIANCE WITH THE STANDARDS ENUNCIATED BY THE COURT IN THE CASE OF UNITED STATES V. METRO NOVELTY MANUFACTURING CO; 125 F. SUPP. 713 (1954). THESE STANDARDS HAVE ALSO BEEN INCORPORATED INTO THE ABOVE-CITED ASPR PROVISION. IN THAT CASE, IT WAS HELD THAT THE ACCEPTANCE OF A BID WHICH THE CONTRACTING OFFICER SUSPECTED TO BE ERRONEOUS DID NOT RESULT IN A VALID AND BINDING CONTRACT, ALTHOUGH THE BID PRICE HAD BEEN VERIFIED BY THE BIDDER, BECAUSE THE CONTRACTING OFFICER SUSPECTED THE MANNER IN WHICH THE ERROR WAS MADE BUT DID NOT CALL IT TO THE ATTENTION OF THE BIDDER WHEN REQUESTING VERIFICATION. THE ABOVE-CITED ASPR PROVISION REQUIRES THAT IN CASE OF MISTAKE CONTRACTING OFFICERS SHOULD IMMEDIATELY ADVISE THE BIDDER NOT ONLY OF THE VARIANCES IN THE BIDS, IMPORTANT CHARACTERISTICS OF THE SPECIFICATIONS AND CHANGE, IF ANY, IN REQUIREMENTS FROM PREVIOUS PURCHASES OF SIMILAR ITEMS, BUT OF SUCH OTHER DATA PROPER FOR DISCLOSURE TO THE BIDDER AS WILL GIVE HIM NOTICE OF THE SUSPECTED MISTAKE.

IN YOUR BRIEF, YOU CONTEND THAT THE CONTRACTING OFFICER, IN MERELY REQUESTING VERIFICATION OF THE BID PRICE, DID NOT FULFILL THE RESPONSIBILITY IMPOSED UPON HIM TO NOTIFY THE BIDDER OF THE ERROR SURMISED AND OF HIS BELIEF THAT A MISTAKE HAD BEEN MADE BECAUSE OF BID PRICE VARIANCES, ETC.

APPALACHIAN WAS REQUESTED TO VERIFY ITS BID BY LETTER FROM ATAC MORE THAN A MONTH BEFORE AWARD WAS MADE. ALSO, THE PREAWARD SURVEY TEAM ASKED APPALACHIAN TO REVIEW ITS PRICES IN THAT IT WAS LOW IN COMPARISON WITH PREVIOUS PROCUREMENTS OF SIMILAR ITEMS. ALSO, AT THAT TIME THE CONTRACTOR HAD IN HIS POSSESSION A COPY OF THE ABSTRACT OF BIDS RECEIVED. ALTHOUGH APPALACHIAN WAS NEVER SPECIFICALLY INFORMED THAT A MISTAKE IN BID WAS SUSPECTED, IT SHOULD HAVE SURMISED FROM THE VERIFICATION REQUESTS AND THE ABSTRACT OF BIDS BEFORE IT THAT THERE WAS A POSSIBLE ERROR IN ITS BID PRICE. IN B-165273, JANUARY 15, 1969, WE STATED THAT "(A) VERIFICATION REQUEST REQUIRES NO SPECIAL LANGUAGE." SEE, ALSO, 47 COMP. GEN. 616 (1968). IN 37 COMP. GEN. 786, 788 (1958), WHICH INVOLVED A VERIFICATION REQUEST SOMEWHAT SIMILAR TO THE PRESENT ONE, WE STATED:

"THE RECORD ESTABLISHES THAT THE GOVERNMENT DID ALL THAT WAS REQUIRED OF IT TO ASCERTAIN THE CORRECTNESS OF FORWAY'S BID; IN FACT, FORWAY WAS SPECIFICALLY ADVISED THAT ITS BID WAS CONSIDERABLY LOWER THAN THE NEXT BID. IT WAS NOT UNTIL AFTER FORWAY UNEQUIVOCALLY CONFIRMED ITS BID THAT THE CONTRACTING OFFICER CONSIDERED IT CORRECT AND PROPER FOR AWARD. HAD THE CONTRACTING OFFICER THEREAFTER NOT AWARDED THE CONTRACT TO FORWAY AS THE LOWEST RESPONSIBLE BIDDER, HE WOULD HAVE BEEN DERELICT OF HIS DUTY TO THE GOVERNMENT. SEE CARNEGIE STEEL COMPANY V. CONNELLY, 97 A. 774; SHRIMPTON MFG. COMPANY V. BRIN, 125 S. W. 942; ALABAMA SHIRT & TROUSER COMPANY V. UNITED STATES, 121 C. CLS. 313. MOREOVER, THE FACTS OF RECORD PRECLUDE ANY ASSUMPTION OF BAD FAITH OR ARBITRARY ACTION ON THE PART OF THE CONTRACTING OFFICER. 27 COMP. GEN. 17."

ALTHOUGH AN ERROR WAS MADE IN THE BID, SUCH ERROR WAS SOLELY DUE TO THE BIDDER'S OWN OVERSIGHT OR NEGLIGENCE. ANY ERROR THAT WAS MADE IN THE BID WAS UNILATERAL--NOT MUTUAL--AND, THEREFORE, DOES NOT ENTITLE APPALACHIAN TO RELIEF. SEE EDWIN DOUGHERTY AND M. H. OGDEN V. UNITED STATES, 102 CT. CL. 249 (1954); SALIGMAN V. UNITED STATES, 56 F. SUPP. 505 (1944); 20 COMP. GEN. 652 (1941); 26 ID. 415 (1946); 47 ID. 732 (1968).

YOU SEEK TO IMPOSE ON THE CONTRACTING OFFICER A DUTY TO REQUIRE A DETAILED TECHNICAL REVIEW OF APPALACHIAN'S PROPOSED DESIGN TO ASSURE THAT IT WILL MEET THE PERFORMANCE SPECIFICATIONS AND THAT NO ERROR WAS MADE THEREIN. THE PREAWARD SURVEY REPORT SHOWS THAT THE TECHNICAL DATA AND SPECIFICATIONS HAD BEEN REVIEWED WITH THE BIDDER, AND MR. WAITE, A VICE PRESIDENT OF APPALACHIAN WHO PREPARED THE BID, INDICATED HIS UNDERSTANDING OF THE INVITATION REQUIREMENTS. ANY HIGHER STANDARD OF INQUIRY ON THE PART OF THE SURVEY TEAM WOULD HAVE UNDULY INVOLVED THE GOVERNMENT IN A BUSINESS JUDGMENT AREA RESERVED TO BIDDERS. ESSENTIALLY, A PREAWARD SURVEY IS FOR THE BENEFIT OF THE GOVERNMENT AND NOT THE BIDDER, AND THE EVALUATION OF THE CAPABILITIES OF A PROSPECTIVE CONTRACTOR DEVELOPED BY THE SURVEY ARE FOR THE USE OF THE CONTRACTING OFFICER TO DETERMINE THE BIDDER'S RESPONSIBILITY. SEE ASPR 1-905.4. A DESIGN ERROR, AS SUCH, WAS NOT DISCOVERED DURING THE COURSE OF THE PREAWARD SURVEY; HENCE, THE POSSIBILITY THAT SUCH ERROR MIGHT EXIST WOULD NOT HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF A DESIGN ERROR.

WE MUST CONCLUDE THAT THE SEVERAL REQUESTS FOR VERIFICATION OF APPALACHIAN'S BID, THE KNOWLEDGE ON ITS PART THAT ITS BID WAS SUBSTANTIALLY LOWER THAN OTHER BIDS RECEIVED FOR THE PROCUREMENT OF SIMILAR ITEMS AND ITS POSSESSION OF A COPY OF THE ABSTRACT OF BIDS ALL CONSTITUTED SUFFICIENT WARNING TO APPALACHIAN THAT THERE EXISTED THE POSSIBILITY THAT IT HAD MADE A MISTAKE IN THE PREPARATION OF ITS BID. THE PROCUREMENT AGENCY DID ALL THAT COULD HAVE BEEN EXPECTED OF IT TO PROTECT APPALACHIAN FROM ITS OWN IMPRUDENCE. MOREOVER, WE FEEL THERE HAS BEEN COMPLIANCE WITH THE VERIFICATION STANDARDS SET FORTH IN THE METRO CASE AND THE CITED PROVISION OF ASPR.