B-169907, JUN. 22, 1970

B-169907: Jun 22, 1970

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SHOWS SALE OF SAME ITEM ON PREVIOUS OCCASION APPROXIMATED INTENDED BID PRICE MAY HAVE CONTRACT REFORMED TO REFLECT INTENDED OFFER SINCE INCREASED PRICE DOES NOT EXCEED NEXT LOWEST ACCEPTABLE OFFER. CONTRACTING OFFICER SHOULD HAVE BEEN PLACED ON CONSTRUCTIVE NOTICE OF ERROR BY DISPARITY BETWEEN LOWEST PRICE AND NEXT LOWEST OFFER. KUNZIG: REFERENCE IS MADE TO LETTER DATED MAY 22. NO DELIVERIES OR PAYMENTS HAVE BEEN MADE UNDER THE CONTRACT. TELEPHONIC QUOTATIONS WERE REQUESTED FROM PROSPECTIVE OFFERORS ON MARCH 4. CONTRACT GS 06S-4594 WAS AWARDED TO ESC ON MARCH 27. ITS UNIT PRICE INITIALLY QUOTED AND CONFIRMED IN WRITING IS $0.94 (21.8 PERCENT) LESS THAN THE SECOND LOW OFFER OF $4.33 NET.

B-169907, JUN. 22, 1970

CONTRACTS--MISTAKES--CONTRACTING OFFICER'S ERROR DETECTION DUTY LOW BIDDER ON SEALING COMPOUNDS WHO ALLEGES UNILATERAL MISTAKE IN OFFER 21.8 PERCENT LOWER THAN NEXT LOW BID AND WHO FURNISHES ORIGINAL WORKSHEET IN PROOF OF ERROR, AND SHOWS SALE OF SAME ITEM ON PREVIOUS OCCASION APPROXIMATED INTENDED BID PRICE MAY HAVE CONTRACT REFORMED TO REFLECT INTENDED OFFER SINCE INCREASED PRICE DOES NOT EXCEED NEXT LOWEST ACCEPTABLE OFFER, AND CONTRACTING OFFICER SHOULD HAVE BEEN PLACED ON CONSTRUCTIVE NOTICE OF ERROR BY DISPARITY BETWEEN LOWEST PRICE AND NEXT LOWEST OFFER, AND BY 20 PERCENT DIFFERENCE BETWEEN OFFERED PRICE AND PRICE FOR LAST PREVIOUS PROCUREMENT OF SAME ITEM.

TO MR. KUNZIG:

REFERENCE IS MADE TO LETTER DATED MAY 22, 1970, FROM THE GENERAL COUNSEL, REQUESTING OUR DECISION AS TO WHETHER NEGOTIATED CONTRACT NO. GS-06S-4594 WITH ELECTRICAL SPECIALTY CO. (ESC) MAY BE REFORMED TO PROVIDE FOR AN INCREASE IN THE CONTRACT PRICE. NO DELIVERIES OR PAYMENTS HAVE BEEN MADE UNDER THE CONTRACT.

TELEPHONIC QUOTATIONS WERE REQUESTED FROM PROSPECTIVE OFFERORS ON MARCH 4, 1970, AND THREE OFFERORS CONFIRMED THEIR PRICES THEREAFTER FOR 1,296 PINT CANS OF SEALING COMPOUND, FSN 8030-702-9367. CONTRACT GS 06S-4594 WAS AWARDED TO ESC ON MARCH 27, 1970, AT ITS OFFERED UNIT PRICE OF $3.39. ITS UNIT PRICE INITIALLY QUOTED AND CONFIRMED IN WRITING IS $0.94 (21.8 PERCENT) LESS THAN THE SECOND LOW OFFER OF $4.33 NET. THE PRICES QUOTED RANGED FROM A LOW OF $3.39 TO A HIGH OF $4.40. SEVEN HUNDRED AND TWENTY PINTS OF THE SAME ITEM WERE BOUGHT ON FEBRUARY 4, 1970, FOR $4.37 PER PINT, F.O.B; KANSAS CITY, MISSOURI.

ON APRIL 6, 1970, THE ESC SALES REPRESENTATIVE ADVISED THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE IN THE OFFER SUBMITTED BY ESC. LETTER OF APRIL 8, 1970, ESC WAS REQUESTED TO FURNISH EVIDENCE IN SUPPORT OF ITS ALLEGATION CONCERNING THE MISTAKE PURSUANT TO SECTION 1-2.406- 4(F)(1) OF THE FEDERAL PROCUREMENT REGULATIONS. THE COMPANY HAS FURNISHED ITS ORIGINAL WORKSHEET THAT REFLECTS AN INTENDED UNIT PRICE OF $4.39, LESS A 2-PERCENT, 20-DAY TIME DISCOUNT ($4.3022 NET); ITS DISTRIBUTOR'S PRICE SCHEDULE; THE MANUFACTURER'S SUGGESTED PRICE SCHEDULES; AND A STATEMENT CONCERNING THE MISTAKE.

IN HIS STATEMENT CONCERNING DETAILS OF HOW THE MISTAKE WAS MADE, THE SALES REPRESENTATIVE OF ESC STATED THAT THE $3.39 UNIT PRICE OFFER WAS AN INADVERTENT MISQUOTATION OF THE INTENDED PRICE OF $4.39 PER PINT. THE SALES REPRESENTATIVE ALSO STATED THAT HE HAD SOLD THE ITEM TO THE GENERAL SERVICES ADMINISTRATION AT $4.40 PER PINT ON ORDER NO. K/W/49730. THEREFORE, REFORMATION OF THE CONTRACT IS REQUESTED TO REFLECT THE INTENDED BID PRICE OF $4.39 PER PINT.

BASED ON THE ABOVE RECORD, THE CONTRACTING OFFICER, WITH THE CONCURRENCE OF YOUR GENERAL COUNSEL, HAS DETERMINED THAT THE CONTRACTOR HAS SUBMITTED CLEAR AND CONVINCING EVIDENCE TO SUPPORT ITS ALLEGED MISTAKE IN BID. HAS BEEN DETERMINED THAT THE UNILATERAL MISTAKE MADE BY THE CONTRACTOR WAS SO APPARENT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO THE POSSIBILITY OF A MISTAKE IN VIEW OF THE WIDE DISPARITY (21.8 PERCENT) BETWEEN THE LOWEST AND NEXT LOWEST OFFER. THE GENERAL COUNSEL RECOMMENDS THAT CONTRACT GS-06S-4594 WITH ESC BE REFORMED TO PROVIDE FOR AN INCREASE IN THE CONTRACT PRICE OF $1,296 (THE DIFFERENCE BETWEEN $4.39 AND $3.39 TIMES 1,296 UNITS). THE AMOUNT OF THE CONTRACT AFTER REFORMATION WOULD BE $5,689.44, LESS THE TIME DISCOUNT OF 2 PERCENT, 20 DAYS ($5,575.65 NET). THIS PRICE DOES NOT EXCEED THAT OF THE NEXT LOWEST ACCEPTABLE OFFER. THE GENERAL COUNSEL STATES THAT, IN REVIEWING THE OFFERS, A MISTAKE SHOULD HAVE BEEN SUSPECTED BECAUSE OF THE DIFFERENCE OF ALMOST 22 PERCENT ON A GENERALLY STABLE PRICED ITEM AND A DIFFERENCE OF MORE THAN 20 PERCENT BETWEEN ESC'S PRICE AND THE PRICE PAID FOR THE LAST PREVIOUS PROCUREMENT OF THE ITEM.

WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL GRANT RELIEF IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. WE AGREE WITH THE CONTRACTING OFFICER AND YOUR GENERAL COUNSEL THAT THE DISPARITY BETWEEN THE PRICE QUOTED BY ESC AND THE NEXT LOWEST OFFER WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR AND THAT IN SUCH CASE THE OFFER SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION.

ACCORDINGLY, ON THE RECORD BEFORE US, THE CONTRACT MAY BE MODIFIED IN THE MANNER ABOVE STATED, AS ADMINISTRATIVELY RECOMMENDED. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING PAYMENTS TO THE CONTRACTOR.