B-170808, MAY 14, 1971

B-170808, MAY 14, 1971

CONTRACTS - MODIFICATION - REDUCED REQUIREMENTS DECISION AUTHORIZING AN INCREASE NOT TO EXCEED $1,000 IN THE CONTRACT PRICE BID BY ALTON IRON WORKS, INC., INCIDENT TO AN IFB ISSUED BY THE DEFENSE SUPPLY AGENCY FOR 73 HEADLIGHT MOUNTING ADAPTERS. ALTHOUGH SUCCESSFUL LOW BIDDER, ALTON, DID NOT QUALIFY ITS BID WITH "ALL OR NONE" LANGUAGE, THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN, PRIOR TO BID OPENING THAT THE REQUIREMENT HAD BEEN REDUCED BY 38 PERCENT AND SHOULD HAVE ADVISED ALTON OF THE REDUCED QUANTITY WHEN SEEKING VERIFICATION OF ITS BID PRICE. THE REQUEST BY ALTON TO MODIFY THE CONTRACT WAS NOT DENIED UNTIL SIX MONTHS AFTER AWARD AND AFTER THE CONTRACT WAS COMPLETED. ACCORDINGLY, THE AGGREGATE TOTAL PRICE MAY BE INCREASED BY AN AMOUNT NOT TO EXCEED $1,000.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 30, 1970, DSAH-G, WITH ENCLOSURES, FURNISHING A REPORT ON THE REQUEST OF ALTON IRON WORKS, INCORPORATED (ALTON), FOR AN ADJUSTMENT IN THE PRICE OF CONTRACT DSA 400- 70-C-2100, ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA.

THE CONTRACT WAS AWARDED PURSUANT TO INVITATION FOR BIDS NO. DSA 400-70 B -1437, DATED SEPTEMBER 2, 1969. BIDS WERE REQUESTED ON THE BASIS OF F.O.B. DESTINATION PRICES ON THREE ITEMS, COVERING AN AGGREGATE QUANTITY OF 73 HEADLIGHT MOUNTING ADAPTERS.

THE RECORD SHOWS THAT SUBSEQUENT TO THE ISSUANCE OF THE INVITATION AND PRIOR TO BID OPENING, AMENDMENT NO. 2 OF THE BASIC MIPR WAS PREPARED BY THE AIR FORCE AND RECEIVED BY THE MIPR COORDINATOR AT THE RICHMOND DEFENSE GENERAL SUPPLY CENTER ON SEPTEMBER 24, 1969, DECREASING THE NUMBER OF UNITS REQUIRED FROM 73 TO 45. HOWEVER, BIDDERS WERE NOT ADVISED OF THE REDUCED REQUIREMENT BY AMENDMENT OR OTHERWISE.

THREE BIDS WERE RECEIVED AS OF OCTOBER 2, 1969, THE SCHEDULED BID OPENING DATE. ALTON'S BID PRICE OF $88 PER UNIT, WITH NO QUANTITY RESTRICTIONS, WAS THE LOWEST RECEIVED. THE OTHER TWO BIDS IN THE AMOUNTS OF $126.37 AND $232.50 PER UNIT, RESPECTIVELY, WERE ON AN "ALL OR NONE" BASIS FOR 73 UNITS.

BY LETTER DATED OCTOBER 3, 1969, THE CONTRACTING OFFICER ADVISED ALTON THAT ITS BID WAS SUBSTANTIALLY LOWER THAN THE OTHER BIDS RECEIVED AND REQUESTED CONFIRMATION OF ITS BID PRICE. BY LETTER DATED OCTOBER 6, 1969, ALTON CONFIRMED ITS BID PRICE, STATING THE FOLLOWING:

" *** WE CONFIRM OUR BID PRICE OF $88.00 EACH FOR 73 UNITS ON ABOVE REFERENCED PROCUREMENT." ON NOVEMBER 4, 1969, AWARD WAS MADE TO ALTON FOR 45 UNITS.

BY LETTER DATED NOVEMBER 13, 1969, ALTON ADVISED THE PROCURING ACTIVITY THAT THERE WAS A MISTAKE IN THE BID AS IT HAD ERRONEOUSLY COMPUTED ITS BID PRICE ON A QUANTITY OF 73 UNITS AS CALLED FOR IN THE INVITATION. ALTON INCLUDED COMPUTATIONS IN THE LETTER TO ESTABLISH A UNIT PRICE OF $119.03 FOR 45 UNITS, OR A TOTAL PRICE INCREASE OF $1,440. HOWEVER, IT AGREED TO ACCEPT AN INCREASE OF $1,000. ALTON CONTENDS THAT IT IS UNCONSCIONABLE TO HOLD IT TO ITS LOWER PRICE FOR 73 UNITS WHEN THE CONTRACTING OFFICER FAILED TO AMEND THE INVITATION OR ADVISE IT OF THE REDUCED QUANTITY WHEN SEEKING VERIFICATION OF ITS BID PRICE.

ALTON WAS REQUESTED BY LETTER DATED DECEMBER 8, 1969, TO ADVISE IF IT WISHED THE CONTRACT RESCINDED IF MODIFICATION COULD NOT BE GRANTED. RESPONSE THERETO ALTON ADVISED THAT IT WAS PROCEEDING WITH THE CONTRACT AND HAD COMPLETED THE ENGINEERING DRAWINGS; THAT IT HAD ISSUED PURCHASE ORDERS FOR THE COMMERCIAL PARTS, CASTINGS, PATTERNS AND STAMPINGS, AND THAT IT WISHED TO RESERVE THE RIGHT TO REQUEST RESCISSION OF THE CONTRACT IF MODIFICATION COULD NOT BE GRANTED.

THE CONTRACTING OFFICER DETERMINED THAT THERE WAS NO CLEAR AND CONVINCING EVIDENCE THAT ALTON MADE A MISTAKE IN THE PREPARATION AND SUBMISSION OF ITS BID TO WARRANT AN INCREASE IN BID PRICE AS CONTEMPLATED BY ASPR 2- 406.4, AND SO ADVISED ALTON ON JUNE 10, 1970.

THE BASIS FOR DENIAL OF ALTON'S REQUEST FOR A CONTRACT PRICE ADJUSTMENT IS CONTAINED IN A DETERMINATION AND FINDINGS DATED JUNE 10, 1970, WHICH STATES IN PART AS FOLLOWS:

" *** THE CONTRACTING OFFICER DOES NOT BELIEVE THAT A MISTAKE IN BID WAS MADE. BOTH CONFIRMATION OF THE UNIT PRICE AND A PRE-AWARD SURVEY WERE OBTAINED. THE PRICE IS HIGHER THAN THE MOST RECENT PRICE SHOWN FOR A SMALLER QUANTITY. ALTON IS FAMILIAR WITH THE BIDDING FORMS AND PROCEDURES OF THE CENTER. CONSEQUENTLY, IT IS AWARE THAT PARAGRAPH 10(C) OF STANDARD FORM 33A USED IN THIS PROCUREMENT AND MOST OF THE PROCUREMENT OF THIS CENTER PERMITS THE GOVERNMENT TO MAKE AN AWARD FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN ITS BID. FURTHERMORE, WHEN AN INVITATION REQUESTS BIDS ON DELIVERING VARYING QUANTITIES OF SUPPLIES F.O.B. VARIOUS DELIVERY POINTS, IT IS NOT UNUSUAL FOR MORE THAN ONE AWARD TO BE MADE. IN THIS INSTANCE WITHOUT ANY OVERALL QUANTITY REDUCTION A BIDDER COULD NEVERTHELESS EXPECT THAT IT MIGHT BE LOW ON ONLY 6 UNITS (SUBITEM 1) OR 7 UNITS (SUBITEM 2). NONE OF THE INFORMATION ON THE WORK SHEET CLEARLY ESTABLISHES THAT A MISTAKE WAS MADE. IT DOES ESTABLISH THAT CERTAIN TOOLING AND SET UP COSTS WERE CALCULATED AND AMORTIZED OVER 73 UNITS. ACCORDINGLY, IF A MISTAKE WERE MADE IN THAT COSTS WERE VALID ONLY IF 73 UNITS WERE INVOLVED, THEN THE MISTAKE, IF ANY, MUST LIE IN NOT SUBMITTING AN 'ALL OR NONE' BID."

WE AGREE WITH THE CONTRACTING OFFICER'S DETERMINATION THAT ALTON IS NOT ENTITLED TO AN INCREASE IN THE CONTRACT PRICE BASED ON A MISTAKE IN ITS BID PRICE. HOWEVER, WE AGREE WITH ALTON'S CONTENTION THAT IT WOULD BE UNCONSCIONABLE TO HOLD IT TO THE CONTRACT PRICE IN THE CIRCUMSTANCES SURROUNDING THE AWARD OF THE CONTRACT. ALTHOUGH THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN, PRIOR TO BID OPENING THAT THE REQUIREMENT HAD BEEN REDUCED BY SOME 38 PERCENT, HE FAILED TO COMPLY WITH THE REQUIREMENT OF ASPR 2-208 THAT SUCH CHANGE SHALL BE ACCOMPLISHED BY AMENDMENT OF THE INVITATION. MORE THAN A MONTH AFTER THE CONTRACT WAS AWARDED, ALTON WAS ASKED TO ADVISE WHETHER IT WISHED TO RESCIND THE CONTRACT IF IT COULD NOT BE MODIFIED. ALTHOUGH ALTON ADVISED THAT IT WAS PROCEEDING WITH PERFORMANCE, ITS REQUEST WAS NOT DENIED UNTIL SIX MONTHS LATER AND APPARENTLY AFTER THE CONTRACT WAS COMPLETED.

WE RECOGNIZE THAT UNDER PARAGRAPH 10 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS OF SF 33 THE GOVERNMENT HAS THE RIGHT TO MAKE AN AWARD FOR A QUANTITY LESS THAN THE OFFERED QUANTITY AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID. HOWEVER, WE DO NOT BELIEVE RELIANCE ON THIS PROVISION TO JUSTIFY ACCEPTANCE OF ALTON'S BID IN THE CIRCUMSTANCES PRESENT HERE IS A PROPER APPLICATION OF SUCH RIGHT.

THE RECORD INDICATES THAT DELIVERIES UNDER THE CONTRACT HAVE BEEN COMPLETED BY ALTON. ACCORDINGLY, YOU ARE ADVISED THAT A SUPPLEMENTAL AGREEMENT SHOULD BE EXECUTED INCREASING THE AGGREGATE TOTAL CONTRACT PRICE BY AN APPROPRIATE AMOUNT NOT TO EXCEED $1,000.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE SUPPLEMENTAL AGREEMENT.