B-171385, DEC. 14, 1970

B-171385: Dec 14, 1970

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WHERE OMISSION OF TRANSPORTATION COSTS AND INCORRECT PACKING SPECIFICATIONS RESULTED IN A LOW BID THAT WAS HALF THE NEXT LOW BID. THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED AN ERROR. RECISSION IS ALLOWED. KUNZIG: REFERENCE IS MADE TO THE LETTER OF NOVEMBER 23. NY-2LBH-N-671540-A WAS ISSUED JULY 10. TWO WERE DECLARED NONRESPONSIVE. THE REMAINING FOUR BEING: BIDDER UNIT PRICE KOTLER PICTURE FRAME AND MOULDING COMPANY $ 2.08 PLYMOUTH FURNITURE COMPANY 4.45 NATIONAL PICTURE FRAME AND MOULDING COMPANY 4.95 INTERNATIONAL TRADE COMPANY 14.50 KOLTER WAS AWARDED THE CONTRACT AS OF AUGUST 14. WHICH IS DATED APRIL 1. WAS NOT INCLUDED IN THE CONTRACT. WAS APPLICABLE. THE ONLY OTHER RECENT PROCUREMENT OF SUCH PICTURE FRAMES WAS MADE BY THE FORT WORTH.

B-171385, DEC. 14, 1970

CONTRACTS - MISTAKE IN BID - RECISSION DECISION ALLOWING THE CONTRACT FOR 2,988 WOOD PICUTRE FRAMES AWARDED TO KOTLER PICTURE FRAME & MOULDING COMPANY TO BE RECINDED. WHERE OMISSION OF TRANSPORTATION COSTS AND INCORRECT PACKING SPECIFICATIONS RESULTED IN A LOW BID THAT WAS HALF THE NEXT LOW BID, THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED AN ERROR; THEREFORE, RECISSION IS ALLOWED.

TO MR. KUNZIG:

REFERENCE IS MADE TO THE LETTER OF NOVEMBER 23, 1970, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, REQUESTING A REVIEW AND DECISION AS TO WHETHER CONTRACT NO. GS-02S-7036 WITH KOTLER PICTURE FRAME AND MOULDING COMPANY (KOLTER), FOR WOOD PICTURE FRAMES MAY BE RESCINDED ON THE BASIS OF AN ALLEGED MISTAKE IN BID SUBSEQUENT TO AWARD.

INVITATION FOR BIDS NO. NY-2LBH-N-671540-A WAS ISSUED JULY 10, 1970, FOR 2,988 WOOD PICTURE FRAMES FOB DESTINATION, BELLE MEAD, NEW JERSEY, TO BE OPENED JULY 30, 1970. OF THE SIX OFFERS RECEIVED, TWO WERE DECLARED NONRESPONSIVE, THE REMAINING FOUR BEING:

BIDDER UNIT PRICE

KOTLER PICTURE FRAME AND MOULDING COMPANY $ 2.08

PLYMOUTH FURNITURE COMPANY 4.45

NATIONAL PICTURE FRAME AND MOULDING COMPANY 4.95

INTERNATIONAL TRADE COMPANY 14.50 KOLTER WAS AWARDED THE CONTRACT AS OF AUGUST 14, 1970, WITHOUT A REQUEST FOR BID VERIFICATION AT ITS UNIT PRICE OF $2.08, AND A TOTAL PRICE OF $6,215.04. THE CONTRACT PROVIDED FOR COMPLIANCE WITH INTERIM FEDERAL SPECIFICATIONS AA-F-00680 DATED JANUARY 11, 1965, AND AMENDMENT 1, DATED JUNE 3, 1968, PACKAGING LEVEL B, WHICH REQUIRED THAT EACH FRAME BE PACKED IN AN INDIVIDUAL CARTON.

BY LETTER DATED SEPTEMBER 9, 1970, KOTLER INQUIRED WHETHER AMENDMENT 2 TO THE SPECIFICATIONS, WHICH IS DATED APRIL 1, 1970, AND WAS NOT INCLUDED IN THE CONTRACT, WAS APPLICABLE, AND SIMULTANEOUSLY INQUIRED AS TO THE POSSIBILITY OF EMPLOYING A DIFFERENT METHOD OF PACKING AND PACKAGING. LETTER OF SEPTEMBER 22, 1970, THE CONTRACTOR ALLEGED A MISTAKE IN BID DUE TO COMPUTATION OF PACKING AND PACKAGING BASED ON LEVEL C SPECIFICATIONS, UNDER WHICH 12 FRAMES COULD BE PACKED IN EACH CARTON, AND OMISSION OF TRANSPORTATION COSTS. IN ACCORDANCE WITH THE REQUEST OF THE CONTRACTING OFFICER, KOTLER, BY LETTER DATED SEPTEMBER 28, 1970, SUBMITTED A COST BREAKDOWN OF ITS BID SHOWING AN ALLOCATION OF $.08 PER CARTON AND $.04 FOR THE COST OF PACKING AND HANDLING TO PACK 12 FRAMES INTO EACH CARTON. SUPPLEMENTAL LETTER OF OCTOBER 14, 1970, KOTLER EXPLAINED THE MISCALCULATED $.08 AND $.04 BIDS AS NOT INCLUDING THE COST OF SEPARATE CARTONS FOR EACH FRAME, AS PER LEVEL B SPECIFICATIONS.

THE CONTRACTING OFFICER STATED IN HER FINDINGS AND RECOMMENDATIONS THAT ALTHOUGH SHE HAD NO PREVIOUS EXPERIENCE WITH THIS PARTICULAR ITEM FOR PROCUREMENT, SHE DID NOTICE THE DISPARITY IN BIDS, KOTLER'S BEING LESS THAN ONE-HALF THE NEXT LOW BIDDER. HOWEVER, SHE PROCEEDED TO AWARD THE CONTRACT WITHOUT REQUESTING A BID VERIFICATION AS REQUIRED BY FPR 1-2.406- 1. THE ONLY OTHER RECENT PROCUREMENT OF SUCH PICTURE FRAMES WAS MADE BY THE FORT WORTH, TEXAS, REGIONAL OFFICE FOR 20,000 UNITS AT A UNIT PRICE OF $2.14, BUT TRANSPORTATION COSTS THERE WERE MINIMAL, SINCE THE F.O.B. SHIPPING POINT WAS ALSO FORT WORTH, TEXAS. THAT CONTRACTOR SUBMITTED A BID OF $4.95 IN THE INSTANT PROCUREMENT.

AS A GENERAL RULE, WHEN A UNILATERAL MISTAKE IS ALLEGED AFTER AWARD THE CONTRACT IS PRESUMED IN LAW TO EXPRESS THE UNDERSTANDING OF THE PARTIES. HOWEVER, WHEN THE PARTY NOT IN ERROR SHOULD HAVE SUSPECTED, OR HAD REASON TO KNOW OF, THE EXISTENCE OF THE ERROR RECISSION OF THE CONTRACT IS ALLOWED. 37 COMP. GEN. 685 (1958). THUS A VALID AND BINDING CONTRACT IS NOT CONSUMMATED WHERE THE ACCEPTANCE OF A BID IS MADE WITH ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF ERROR THEREIN. 37 COMP. GEN. 706 (1958), B- 169780, MAY 26, 1970.

WE ARE IN AGREEMENT WITH THE CONCLUSION OF YOUR GENERAL COUNSEL THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY THAT THE LOW BIDDER'S PRICE WAS IN ERROR, AND VERIFICATION THEREOF SHOULD HAVE BEEN REQUESTED PRIOR TO AWARD. WE MUST THEREFORE CONCLUDE THAT ACCEPTANCE OF THE BID DID NOT GIVE RISE TO A VALID CONTRACT, AND THE CONTRACT IN QUESTION MAY BE RESCINDED AS ADMINISTRATIVELY RECOMMENDED WITHOUT LIABILITY TO THE CONTRACTOR.

THE ENCLOSURES ARE RETURNED AS REQUESTED.