B-169676, JUL. 28, 1970

B-169676: Jul 28, 1970

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ALLEGED THAT ITEM QUOTED AT $0.05 SHOULD HAVE BEEN $70 MAY NOT HAVE CONTRACT REFORMED SINCE CONTRACT CONTAINED 178 ITEMS MANY PRICED BELOW 0.25 AND SEVERAL AT 0.05 SO THAT NO DUTY WAS IMPOSED UPON CONTRACTING OFFICER TO CHECK INDIVIDUAL ITEMS. SINCE COST ON PRICING DATA WAS NOT AVAILABLE CONTRACTING OFFICER CANNOT BE CHARGED WITH CONSTRUCTIVE NOTICE. SECRETARY: REFERENCE IS MADE TO A LETTER (REFERENCE ENGGC-C) DATED APRIL 28. THIS PROCUREMENT WAS A NEGOTIATED SOLE SOURCE PROCUREMENT OF NORDBERG DIESEL ENGINE PARTS IN A TOTAL AMOUNT OF $10. A SUBSTANTIAL PORTION OF THE PARTS WAS SHIPPED BY NORDBERG ON DECEMBER 30. HAD BEEN MISPRICED AT $0.05 EACH WHEN THE ACTUAL PRICE WAS $70 EACH. THE CONTRACTING OFFICER STATES THAT THERE WAS NO WAY FOR HIM TO HAVE HAD NOTICE OF THE ALLEGED MISTAKE.

B-169676, JUL. 28, 1970

CONTRACTS -- MISTAKES -- REFORMATION DECISION TO SECRETARY OF ARMY HOLDING THAT NEGOTIATED SOLE SOURCE WITH NORDBERG MANUFACTURING CO. FOR FURNISHING NORDBERG DIESEL ENGINE PARTS FOR ARMY ENGINEERS MAY NOT BE REFORMED TO CORRECT PRICE MISTAKE. A SOLE SOURCE CONTRACTOR, WHO AFTER AWARD OF MULTI ITEM CONTRACT ON AGGREGATE PRICE BASIS, ALLEGED THAT ITEM QUOTED AT $0.05 SHOULD HAVE BEEN $70 MAY NOT HAVE CONTRACT REFORMED SINCE CONTRACT CONTAINED 178 ITEMS MANY PRICED BELOW 0.25 AND SEVERAL AT 0.05 SO THAT NO DUTY WAS IMPOSED UPON CONTRACTING OFFICER TO CHECK INDIVIDUAL ITEMS. SINCE COST ON PRICING DATA WAS NOT AVAILABLE CONTRACTING OFFICER CANNOT BE CHARGED WITH CONSTRUCTIVE NOTICE. A MISTAKE AMOUNTING TO $139 UNDER A TOTAL CONTRACT OF $10,908.76 MAY NOT BE CONSIDERED UNCONSCIONABLE TO REQUIRE CONTRACT TO PERFORM AT THE ERRONEOUS PRICE.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER (REFERENCE ENGGC-C) DATED APRIL 28, 1970, WITH ENCLOSURES, FROM THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, SUBMITTING A REPORT CONCERNING THE REQUEST OF THE NORDBERG MANUFACTURING COMPANY (NORDBERG), FOR REFORMATION OF CONTRACT NO. DACW66- 70-C-0032 IN THE AMOUNT OF $139.90 BECAUSE OF A MISTAKE ALLEGED AFTER AWARD OF THE CONTRACT BY THE MEMPHIS DISTRICT, CORPS OF ENGINEERS, MEMPHIS, TENNESSEE.

THIS PROCUREMENT WAS A NEGOTIATED SOLE SOURCE PROCUREMENT OF NORDBERG DIESEL ENGINE PARTS IN A TOTAL AMOUNT OF $10,908.76. A SUBSTANTIAL PORTION OF THE PARTS WAS SHIPPED BY NORDBERG ON DECEMBER 30, 1969, AND ON JANUARY 14, 1970, NORDBERG ALLEGED A PRICING ERROR ON ONE OF THE ITEMS. SPECIFICALLY, NORDBERG ASSERTED THAT ITEM CV, COVERING TWO DELIVERY VALVE HOLDERS, HAD BEEN MISPRICED AT $0.05 EACH WHEN THE ACTUAL PRICE WAS $70 EACH.

THE CONTRACTING OFFICER STATES THAT THERE WAS NO WAY FOR HIM TO HAVE HAD NOTICE OF THE ALLEGED MISTAKE, SINCE NO PRICE COMPARISON WAS AVAILABLE INASMUCH AS THIS WAS A FIRST TIME PURCHASE AND THERE IS NO PUBLISHED PRICE LIST FOR THE ITEM. NORDBERG SUBMITTED EVIDENCE SHOWING THAT $70 WAS THE PRICE WHICH HAD BEEN CHARGED OTHER CUSTOMERS FOR THE PART, AND AN EXAMINATION OF THE ITEM AND ITS FUNCTIONS BY CORPS OF ENGINEERS PERSONNEL INDICATED THAT A $70 UNIT PRICE IS REALISTIC. THE CONTRACTING OFFICER EXPRESSES THE OPINION, AND THE EVIDENCE SUPPORTS HIS VIEW, THAT A BONA FIDE MISTAKE WAS MADE, AND THAT HAD HE KNOWN THE NATURE, SIZE, AND CHARACTERISTICS OF THE PART, THE PRICE OF $0.05 WOULD HAVE ALERTED HIM TO THE POSSIBILITY OF ERROR IN PRICE. THE CONTRACTING OFFICER ALSO STATES THAT HE FEELS THE PRICE DIFFERENTIAL OF $0.05 AND $70 IS SO GREAT AS TO MAKE IT UNCONSCIONABLE TO ENFORCE THE ERRONEOUSLY QUOTED PRICE.

ON THE OTHER HAND, THE DIVISION ENGINEER STATES THAT ALTHOUGH THE EVIDENCE INDICATES THE CONTRACTOR DID MAKE A MISTAKE IN THE PRICE FOR THE VALVE HOLDER, THE FILE DOES NOT INDICATE HOW THE ERROR WAS MADE OR PROVE WHAT THE INTENDED PRICE FOR THE ITEM WOULD HAVE BEEN IF THE ERROR HAD NOT BEEN MADE. FURTHERMORE, THE ALLEGED MISTAKE IS WHOLLY UNILATERAL AND SINCE THE ITEM HAD NOT PREVIOUSLY BEEN PURCHASED, THERE WAS NO OPPORTUNITY FOR THE CONTRACTING OFFICER TO COMPARE PRICES. THE DIVISION ENGINEER DOES NOT FEEL THAT IT WOULD BE UNCONSCIONABLE FOR NORDBERG TO DELIVER THE ITEM AT HIS QUOTED PRICE OF $0.05 SINCE THE ALLEGED MISTAKE AMOUNTS TO ONLY $139.90 ON A TOTAL CONTRACT AMOUNT OF $10,908.76.

THIS CONTRACT CONTAINED 178 PRICED ITEMS, AND WE HAVE HELD THAT WHERE A CONTRACT IS TO BE AWARDED IN THE AGGREGATE, THE CONTRACTING OFFICER IS NOT UNDER A DUTY TO CHECK PRICES ON INDIVIDUAL ITEMS. B-150316, DECEMBER 11, 1962; B-165329, OCTOBER 22, 1968. SEE ALSO ALLIED CONTRACTORS, INC. V UNITED STATES, 159 CT. CL. 549. WE FEEL THAT THIS IS PARTICULARLY TRUE IN CASES SUCH AS THE INSTANT ONE WHERE THERE WERE MANY ITEMS IN THE CONTRACT PRICED BELOW $0.25 AND SEVERAL AT $0.05. WE MUST THEREFORE AGREE WITH THE DIVISION ENGINEER THAT IN THIS TYPE OF SITUATION, THE CONTRACTING OFFICER DID NOT VIOLATE ASPR 3-807.2 BY NOT INVESTIGATING EACH ITEM.

IT IS OF COURSE THE GENERAL RULE THAT AN ERROR IN A BID PRICE CANNOT BE CORRECTED AFTER AWARD UNLESS THE CONTRACTING OFFICER IS CHARGEABLE WITH EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR. WHERE, AS IN THIS CASE, COST OR PRICING DATA IS NOT AVAILABLE, WE SEE NO BASIS UPON WHICH THE CONTRACTING OFFICER CAN BE CHARGED WITH NOTICE. THUS, IT MUST BE CONCLUDED THAT ACCEPTANCE OF NORDBERG'S OFFER WAS ACCOMPLISHED IN GOOD FAITH AND WITHOUT NOTICE, ACTUAL OR CONSTRUCTIVE, OF ANY ERROR, AND WE FEEL THAT THE RESULTING CONTRACT WAS VALID AND BINDING. AS TO WHETHER IT WOULD BE UNCONSCIONABLE TO HOLD NORDBERG TO ITS BID PRICE, WE BELIEVE THAT DETERMINATION MUST BE BASED UPON THE EFFECT OF THE ERROR ON THE TOTAL CONTRACT PRICE. SINCE THE ERROR REPRESENTS LESS THAN 1.3 PERCENT OF THE TOTAL CONTRACT PRICE, WE ARE UNABLE TO CONCLUDE THAT REQUIRING NORDBERG TO PERFORM AT ITS TOTAL CONTRACT PRICE WOULD BE UNCONSCIONABLE.

ACCORDINGLY, WE MUST CONCLUDE THAT REFORMATION OF THE CONTRACT WOULD BE IMPROPER.

THE FILE FORWARDED WITH THE LETTER OF APRIL 28 IS RETURNED.