B-172076, APR 16, 1971

B-172076, APR 16, 1971

BID PROTEST - MISTAKE IN BID - RESCISSION DECISION THAT THE CONTRACT WITH SENTINEL CONTAINER CORPORATION RESULTING FROM A SOLICITATION ISSUED BY THE SAN FRANCISCO REGIONAL OFFICE, GSA, FOR A QUANTITY OF CORRUGATED BOXES MAY BE RESCINDED AND THE CONTRACTOR PAID ON A QUANTUM MERUIT BASIS, NOT TO EXCEED THE PRICE QUOTED BY THE SECOND LOW BIDDER. SINCE THE PERCENTAGE DIFFERENCES BETWEEN PROTESTANT'S LOW BID AND THE SECOND LOW BID ON THE FIVE ITEMS IN QUESTION RANGED FROM 19.8% TO 162.1%, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE MISTAKE IN BID UNDER SECTION 1-2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS AND THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. THE CONTRACT MAY BE RESCINDED AND THE PROTESTANT PAID ON A QUANTUM MERUIT BASIS, NOT TO EXCEED THE PRICE QUOTED BY THE SECOND LOW BIDDER.

TO MR. KUNZIG:

WE REFER TO THE LETTER OF YOUR GENERAL COUNSEL DATED MARCH 2, 1971, WITH ENCLOSURES, REQUESTING A DECISION WHETHER CONTRACT NO. GS-09S 27315 AWARDED TO SENTINEL CONTAINER CORP. (SENTINEL) ON THE BASIS OF BIDS SUBMITTED IN RESPONSE TO SOLICITATION NO. 9PRW-12630-0/A4 (IFB), ISSUED JULY 28, 1970, BY THE SAN FRANCISCO REGIONAL OFFICE FOR A DEFINITE QUANTITY OF CORRUGATED BOXES MAY BE RESCINDED AND SENTINEL BE PAID ON A QUANTUM MERUIT BASIS FOR THE VALUE OF THE GOODS DELIVERED, NOT TO EXCEED THE PRICES QUOTED BY THE SECOND LOW BIDDER.

SENTINEL AS LOW BIDDER WAS AWARDED THE CONTRACT TO PRODUCE ITEMS 8, 9, 10, 12, AND 18 ON AUGUST 25, 1970. BY LETTER, SENTINEL NOTIFIED THE CONTRACTING OFFICER ON SEPTEMBER 25, 1970, THAT IT HAD MADE A MISTAKE IN ITS BID PRICES ON THESE ITEMS. WITH THIS LETTER SENTINEL ALSO SENT ITS WORKSHEETS TO SUBSTANTIATE THIS ALLEGATION. IN COMPUTING ITS BID FOR EACH ITEM, SENTINEL HAD MISCALCULATED THE PER UNIT CARTON SELLING PRICE BY DIVIDING THE SELLING PRICE FOR THE TOTAL QUANTITY FOR EACH ITEM BY 1,000 RATHER THAN BY THE TOTAL NUMBER OF CARTON UNITS. THIS ERROR WAS COMPOUNDED FOR ITEMS 9, 10, 12, AND 18 BY MISPLACING THE DECIMAL POINT SO THAT IN EFFECT THE TOTAL PRICE WAS DIVIDED BY 10,000 RATHER THAN 1,000. THE COMPUTATION OF THE BID PRICE FOR ITEM 8 WAS FURTHER MADE DEFECTIVE DUE TO AN ERRONEOUS QUOTE OF $73.80 FOR MATERIALS INSTEAD OF $364.45 GIVEN SENTINEL BY ITS SUPPLIER, HOERNER WALDORF CORPORATION. HOERNER WALDORF ADMITTED ITS ERROR IN ITS LETTER TO SENTINEL OF NOVEMBER 12, 1970, AND TO CLARIFY ITS ERROR ALSO SENT SENTINEL ITS ESTIMATING SHEET AND ITS QUOTATION SHEET. SOME OF THE GOODS HAD ALREADY BEEN ACCEPTED BY YOUR REGIONAL OFFICE WHEN THE MISTAKE WAS DISCOVERED. THE BALANCE OF THE GOODS WAS SHIPPED BY SENTINEL THEREAFTER BECAUSE THEY HAD ALREADY BEEN MANUFACTURED AND WERE NOT GENERALLY MARKETABLE.

THE CONTRACTING OFFICER HAS CONCLUDED THAT BECAUSE OF THE WIDE DISPARITY BETWEEN SENTINEL'S BID PRICES AND THOSE OF THE NEXT LOW BIDDERS, HE SHOULD BE CONSIDERED TO HAVE HAD NOTICE OF THE PROBABILITY OF A MISTAKE IN BID UNDER SECTION 1-2.406-4 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), THAT THE MISTAKE WAS THEREFORE MUTUAL AND NOT UNILATERAL, AND THAT BEFORE MAKING THE AWARD BASED ON THESE BIDS, HE SHOULD HAVE REQUESTED VERIFICATION BY SENTINEL. THIS WIDE DISPARITY CAN BE SEEN FROM THE FOLLOWING FIGURES:

ITEM 8 9 10 12 18

SENTINEL CONTAINER CORP. $ 4.23 $ 5.81 $2.92 $2.88 $2.16

OWENS-ILLINOIS 6.347 8.495 3.931 3.708 5.662

INDUSTRIAL BOX BOARD 6.30 10.95 4.40 3.75 5.68

CONTINETAL PAPER CO. 15.70 7.70 4.95 3.47 6.55

ACME PAPER CO. 15.50 7.65 4.94 3.45 6.52

PERCENTAGE DIFFERENCES

BETWEEN SENTINEL'S BID

AND THE SECOND LOW BID 48.9% 31.7% 34.6% 19.8%162.1% THE CONTRACTING OFFICER ALSO FOUND, AND THIS IS BORNE OUT BY THE WORKSHEETS OF SENTINEL, THAT THE OCCURRENCE OF THE MISTAKE WAS PROVED BY CLEAR AND CONVINCING EVIDENCE.

A CONTRACTING OFFICER HAS A DUTY TO VERIFY A BID IF THERE IS AN APPARENT MISTAKE IN THE BID OR IF HE HAS REASON TO BELIEVE THAT A MISTAKE HAS BEEN MADE IN THE COMPUTATION OF THE BID. SEE FPR SECS. 1 2.406-1 AND 1-2.406- 3(D). THE ACCEPTANCE OF A BID WITH THE KNOWLEDGE OR SUSPICION OF AN ERROR THEREIN WILL NOT CONSUMMATE A VALID AND BINDING CONTRACT. THEREFORE, WHEN A BIDDER HAS MADE AN ERROR IN BID AND THE CONTRACTING OFFICER HAD REASON TO BELIEVE THAT A MISTAKE HAD BEEN MADE AND DID NOT REQUEST VERIFICATION AND THE BIDDER PERFORMED IN ACCORDANCE WITH THE AWARD, THE PRICE WILL BE CORRECTED UPON PRESENTATION OF EVIDENCE CLEARLY AND CONVINCINGLY ESTABLISHING WHAT THE PRICE WOULD HAVE BEEN BUT FOR THE ERROR. 37 COMP. GEN. 706, 707 (1958).

WE AGREE WITH THE CONTRACTING OFFICER THAT BECAUSE OF THE LARGE DIFFERENCES BETWEEN SENTINEL'S BID AND THE BIDS OF THE NEXT LOW BIDDERS HE SHOULD HAVE BEEN ON NOTICE OF AN ERROR IN SENTINEL'S BID AND, CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. SEE B-158765, APRIL 8, 1966; B-167031, JUNE 16, 1969. WE FURTHER FIND ADEQUATE EVIDENCE OF THE MISTAKE HAVING BEEN BONA FIDE AND OF THE BID PRICES WHICH WOULD HAVE BEEN SUBMITTED BUT FOR THE MISTAKE.

ACCORDINGLY, THE CONTRACT MAY BE RESCINDED AND SENTINEL MAY BE PAID ON A QUANTUM MERUIT BASIS, NOT TO EXCEED THE PRICES QUOTED BY THE SECOND LOW BIDDER.