B-170081, SEP 1, 1970, 50 COMP GEN 151

B-170081: Sep 1, 1970

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IN VIEW OF THE POSSIBILITY THAT THE UNIT PRICE WOULD HAVE A SUBSTANTIAL IMPACT ON THE PRICE ULTIMATELY TO BE PAID SHOULD THE RIGHT RESERVED TO INCREASE OR DECREASE THE LENGTH OF CABLE PURCHASED BE EXERCISED. THE CONTRACTING OFFICER SHOULD HAVE COMPARED UNIT PRICES. 1970: REFERENCE IS MADE TO A LETTER DATED JUNE 15. BICC WAS AWARDED THE CONTRACT UNDER THAT INVITATION ON AUGUST 4. THE PROCUREMENT WAS FOR THE FURNISHING. ON PAGE "B" BIDDERS WERE REQUIRED TO INSERT A LUMP-SUM PRICE FOR THE THREE SYSTEMS. ALSO APPEARING ON PAGE "B" WAS THE FOLLOWING: THE GOVERNMENT. THE INCREASE OR DECREASE IN THE TOTAL QUANTITY OF SINGLE-CONDUCTOR REQUIRED WILL NOT EXCEED 10 PERCENT. AT THE BOTTOM OF THE PAGE APPEARED THIS NOTATION: ON PAGE "C" BIDDERS WERE REQUIRED TO INSERT A PRICE FOR "TOTAL FOR APPLICABLE SPARE PARTS FOR THE SCHEDULE (AS SPECIFIED AND AS LISTED HEREINAFTER UNDER 'SPARE PARTS').

B-170081, SEP 1, 1970, 50 COMP GEN 151

CONTRACTS - MISTAKES - ITEM NOT FOR EVALUATION A MISTAKE IN THE PER LINEAR FOOT UNIT PRICE OF CABLE, A PRICE THAT WOULD NOT BE USED FOR BID EVALUATION PURPOSES BUT WOULD BE APPLICABLE SHOULD THE QUANTITY OF THE LUMP-SUM PURCHASE OF CABLE BE INCREASED OR DECREASED, AND WHICH RELATING TO BID RESPONSIVENESS WOULD REQUIRE BID REJECTION IF NOT FURNISHED, MAY BE CORRECTED AND THE CONTRACT REFORMED TO REFLECT THE INTENDED BID PRICE. SECTION 1-2.406-1 OF THE FEDERAL PROCUREMENT REGULATIONS DOES NOT LIMIT BID EXAMINATION TO THOSE FACTORS TO BE CONSIDERED IN THE BID EVALUATION, AND IN VIEW OF THE POSSIBILITY THAT THE UNIT PRICE WOULD HAVE A SUBSTANTIAL IMPACT ON THE PRICE ULTIMATELY TO BE PAID SHOULD THE RIGHT RESERVED TO INCREASE OR DECREASE THE LENGTH OF CABLE PURCHASED BE EXERCISED, THE CONTRACTING OFFICER SHOULD HAVE COMPARED UNIT PRICES, AND WHEN AWARE OF THE WIDE RANGE OF PRICES OFFERED, VERIFIED THE ERRONEOUS UNIT PRICE.

TO THE SECRETARY OF THE INTERIOR, SEPTEMBER 1, 1970:

REFERENCE IS MADE TO A LETTER DATED JUNE 15, 1970, FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION FORWARDING PERTINENT PAPERS RELATIVE TO THE CLAIM FOR RELIEF BY BRITISH INSULATED CALLENDER'S CABLES LIMITED (BICC) ON ACCOUNT OF A MISTAKE IN ITS BID SUBMITTED PURSUANT TO INVITATION FOR BIDS NO. DS-6662R, ISSUED BY THE BUREAU OF RECLAMATION, DENVER, COLORADO. BICC WAS AWARDED THE CONTRACT UNDER THAT INVITATION ON AUGUST 4, 1969.

THE PROCUREMENT WAS FOR THE FURNISHING, INSTALLING, AND TESTING OF THREE 3-PHASE, 525-KILOVOLT, HIGH-OR MEDIUM-PRESSURE OIL CABLE SYSTEMS, IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS, AT THE GRAND COULEE THIRD POWERPLANT, COULEE DAM, WASHINGTON. THE BIDDING SCHEDULE APPEARED AT PAGES "B" THROUGH "D" OF THE INVITATION. ON PAGE "B" BIDDERS WERE REQUIRED TO INSERT A LUMP-SUM PRICE FOR THE THREE SYSTEMS, WHICH INCLUDED 57,860 LINEAR FEET OF SINGLE-CONDUCTOR CABLE, BASED ON THE LENGTH BETWEEN TERMINATIONS OF THE SINGLE-CONDUCTOR CABLES IN THE POTHEADS WITHOUT "SNAKING." ALSO APPEARING ON PAGE "B" WAS THE FOLLOWING:

THE GOVERNMENT, IN ORDER TO ADJUST TO ACTUAL FIELD CONDITIONS, RESERVES THE RIGHT TO INCREASE OR DECREASE THE SINGLE-CONDUCTOR LENGTHS OF THE CABLE SYSTEMS FROM THE QUANTITIES SO SPECIFIED, FOR AN INCREASE OR DECREASE IN THE LUMP-SUM PRICE OFFERED AT THE RATE OF $----* PER LINEAR FOOT OF SINGLE-CONDUCTOR CABLE SO INCREASED OR DECREASED. THE INCREASE OR DECREASE IN THE TOTAL QUANTITY OF SINGLE-CONDUCTOR REQUIRED WILL NOT EXCEED 10 PERCENT.

AT THE BOTTOM OF THE PAGE APPEARED THIS NOTATION:

ON PAGE "C" BIDDERS WERE REQUIRED TO INSERT A PRICE FOR "TOTAL FOR APPLICABLE SPARE PARTS FOR THE SCHEDULE (AS SPECIFIED AND AS LISTED HEREINAFTER UNDER 'SPARE PARTS')," AND IMMEDIATELY BENEATH THAT A PRICE FOR "TOTAL FOR THE SCHEDULE (INCLUDING APPLICABLE SPARE PARTS)."

ON PAGE "D" THERE WERE REQUIRED TO BE INSERTED PRICES FOR EACH OF 11 ITEMS OF SPARE PARTS, PLUS A TOTAL FOR ALL 11 ITEMS. ON THE LIST OF SPARES, ITEM 3 WAS "150 FEET OF SINGLE-CONDUCTOR CABLE ON A REEL AND PROTECTED TO PERMIT USE OF THE CABLE AFTER EXTENDED STORAGE."

BICC'S BID INCLUDED A PRICE OF $2,940 FOR ITEM 3 ON THE LIST OF SPARE PARTS, OR $19.60 PER LINEAR FOOT. HOWEVER, IN THE ABOVE-QUOTED PARAGRAPH CONCERNING VARIATION IN THE LENGTH OF THE SINGLE-CONDUCTOR CABLE, BICC INSERTED A FIGURE OF $1.96 PER LINEAR FOOT. THE SUBSTANCE OF BICC'S CLAIM IS THAT THE LATTER PRICE IS IN ERROR AND THAT IT SHOULD HAVE READ $19.60 PER LINEAR FOOT. THE OTHER BIDDERS INSERTED PRICES OF $18.50, $24.65, $30.11, $40, $40.70, AND $45 PER LINEAR FOOT FOR THIS ITEM. BICC NOTIFIED THE BUREAU OF RECLAMATION BY LETTER DATED SEPTEMBER 30, 1969, APPROXIMATELY 8 WEEKS AFTER AWARD, OF THE TYPOGRAPHICAL ERROR IN THE PLACEMENT OF THE DECIMAL POINT. IT APPEARS THAT THE BUREAU HAD BEEN VERBALLY ADVISED OF THIS ERROR IN LATE AUGUST 1969.

THE RECORD DEMONSTRATES TO OUR SATISFACTION THAT A MISTAKE WAS MADE BY BICC IN ITS BID AS SUBMITTED; WE ARE ALSO CONVINCED THAT $19.60 PER LINEAR FOOT IS THE PRICE BICC INTENDED TO INSERT IN THE INDICATED PARAGRAPH. THE ONLY DOUBT CONCERNING THE PROPRIETY OF REFORMATION IN THIS CASE APPEARS TO CENTER ON THE FACT THAT THE ERROR CONCERNED AN ITEM WHICH WAS NOT TO BE CONSIDERED IN BID EVALUATION. CONSEQUENTLY, THE QUESTION ARISES WHETHER THIS IS A MATTER AS TO WHICH THE CONTRACTING OFFICER SHOULD BE CHARGED WITH CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF A MISTAKE, WITH THE RESULT THAT APPROPRIATE PRICE VERIFICATION SHOULD HAVE BEEN REQUESTED OF BICC PRIOR TO MAKING AWARD TO THAT COMPANY. SEE SECTION 1-2.406-1 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR).

IN THIS CONNECTION, IT SHOULD BE OBSERVED THAT THE ABSTRACT PREPARED AT THE TIME BIDS WERE OPENED DOES NOT REFLECT THE PRICES INSERTED BY THE VARIOUS BIDDERS FOR PURPOSES OF EVENTUAL INCREASE OR DECREASE IN THE LENGTH OF CABLE REQUIRED. FURTHERMORE, THE CONTRACTING OFFICER HAS REPORTED THAT BECAUSE THESE PRICES WERE NOT USED IN COMPARING OFFERS, "THE REASONABLENESS OF THE UNIT PRICE STATED WAS NOT CONSIDERED AT THE TIME OF AWARD." ON THE OTHER HAND, THE WORDING OF THE FOOTNOTE ON PAGE "B" OF THE SCHEDULE INDICATES TO US THAT THE BUREAU CONSIDERED THE MATTER OF INSERTION OF A PRICE PER LINEAR FOOT TO RELATE TO RESPONSIVENESS, SO THAT A FAILURE TO STATE A PRICE PER LINEAR FOOT WOULD HAVE RESULTED IN REJECTION OF THE BID. IN ADDITION, IT IS QUITE CLEAR THAT THE GOVERNMENT WOULD VERY POSSIBLY EXERCISE THE RESERVED RIGHT TO INCREASE OR DECREASE THE LENGTH OF CABLE. THEREFORE, WHILE THE PRICE INSERTED IN THE SPACE PROVIDED WOULD HAVE NO IMMEDIATE IMPACT ON PRICE AT THE TIME OF BID EVALUATION, IT WAS QUITE POSSIBLE THAT THE FIGURE BID WOULD HAVE A SUBSTANTIAL IMPACT ON THE PRICE ULTIMATELY PAID BY THE GOVERNMENT.

FPR SEC 1-2.406-1, CITED ABOVE, STATES THAT "AFTER THE OPENING OF BIDS, CONTRACTING OFFICERS SHALL EXAMINE ALL BIDS FOR MISTAKES." WHILE IN THE VAST MAJORITY OF CASES THIS OBLIGATION IS FULLY DISCHARGED BY A CONSIDERATION OF THE PRICES OFFERED FOR THE PRODUCTS OR SERVICES TO BE PROCURED, THE REGULATORY DUTY OF EXAMINATION DOES NOT APPEAR TO BE LIMITED ONLY TO THOSE FACTORS WHICH ARE CONSIDERED IN BID EVALUATION.

IN THE CIRCUMSTANCES PRESENTED BY THIS CASE, WE BELIEVE THAT THE CONTRACTING OFFICER DID HAVE AN ERROR DETECTION DUTY WITH RESPECT TO THE PRICES QUOTED BY THE VARIOUS BIDDERS IN THE PARAGRAPH CONCERNING INCREASE OR DECREASE IN THE LENGTH OF CABLE. OUR CONCLUSION IS GROUNDED ON THE FACT THAT INCLUSION OF SUCH A PRICE WAS SEEMINGLY TREATED AS A MATTER OF RESPONSIVENESS, THUS REQUIRING SOME ATTENTION BY THE CONTRACTING OFFICER TO DETERMINE THE RESPONSIVENESS OF EACH INDIVIDUAL BID. THIS CONSIDERATION IS SUPPORTED BY THE SUBSTANTIAL POSSIBILITY THAT THE INITIAL CONTRACT PRICE WILL BE VARIED UPWARD OR DOWNWARD BASED UPON THE PRICE INSERTED BY THE CONTRACTOR IN THE QUOTED PARAGRAPH.

THERE IS NEXT FOR CONSIDERATION THE QUESTION WHETHER BICC'S PRICE OF $1.96 PER LINEAR FOOT SHOULD REASONABLY HAVE RAISED A SUSPICION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER. IN OUR OPINION, EVEN UPON THE MOST CURSORY EXAMINATION OF THE BIDS OF BICC AND THE OTHER BIDDERS, THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED THAT BICC MADE A MISTAKE. THE BICC PRICE PER LINEAR FOOT SHOULD HAVE STOOD OUT IN BOLD CONTRAST TO THE PRICES QUOTED BY THE OTHER BIDDERS. ONCE HAVING OBSERVED THIS GROSS DISPARITY, THE CONTRACTING OFFICER COULD HAVE READILY CONFIRMED HIS SUSPICION BY REFERRING TO BICC'S OFFERED PRICE FOR 150 FEET OF CABLE IN THE SPARE PARTS SECTION OF THE BIDDING SCHEDULE ON PAGE "D." AT THIS JUNCTURE HE COULD, AND SHOULD, HAVE MADE A REQUEST FOR PRICE VERIFICATION FROM BICC, STATING THE REASONS FOR HIS REQUEST. SEE FPR SEC 1-2.406-1.

SINCE NO VERIFICATION WAS SOUGHT FROM BICC, WE BELIEVE THAT THERE IS A PROPER BASIS FOR REFORMATION OF THE CONTRACT. THEREFORE, THE BICC CONTRACT MAY BE AMENDED APPROPRIATELY.

IN VIEW OF THE POTENTIAL IMPACT OF THE PRICE PER LINEAR FOOT ON THE PRICE ULTIMATELY TO BE PAID BY THE GOVERNMENT UNDER THIS CONTRACT, WE THINK THAT THE INVITATION IN THIS CASE SHOULD HAVE BEEN DRAFTED IN SUCH A WAY AS TO PROVIDE MAXIMUM ASSURANCE THAT AWARD TO THE LOWEST EVALUATED BIDDER WOULD RESULT IN THE LOWEST COST OF ACTUAL PERFORMANCE. FOR EXAMPLE, THE UNIT PRICE OF CABLE (PER LINEAR FOOT) COULD HAVE BEEN INCLUDED IN THE BIDDING SCHEDULE ITSELF, AND IT COULD HAVE BEEN EXPRESSLY STATED THAT 57,860 FEET WAS ONLY AN ESTIMATE TO BE UTILIZED FOR BID EVALUATION PURPOSES. IT COULD HAVE BEEN FURTHER STATED THAT, AS LONG AS THE ACTUAL LENGTH OF CABLE PROVIDED TO THE GOVERNMENT UNDER THE CONTRACT DID NOT VARY FROM THE ESTIMATE BY MORE THAN 10 PERCENT, THE CONTRACT PRICE WOULD BE ADJUSTED IN ACCORDANCE WITH THE BIDDER'S STATED UNIT PRICE.

THE ORIGINAL BID AND PERTINENT PAPERS ARE RETURNED AS REQUESTED.

*ALTHOUGH THIS UNIT PRICE WILL NOT BE USED IN COMPARISON OF OFFERS, IT MUST BE STATED BY THE OFFEROR.