B-173467, SEP 21, 1971

B-173467: Sep 21, 1971

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IT IS CLEAR THAT KIMBERLY MADE A BONA FIDE MISTAKE IN PREPARING ITS BID IN THAT IT FAILED TO TAKE INTO ACCOUNT THE REVISED SPECIFICATION. THE LOW BID WAS 220 AND 276 PERCENT HIGHER THAN THE SECOND AND THIRD LOW BIDS RESPECTIVELY AND THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO THE AWARD. KUNZIG: REFERENCE IS MADE TO LETTER DATED JUNE 30. BIDS WERE OPENED SEPTEMBER 1. KIMBERLY'S BID PRICE FOR ITEM 15 IN THE AMOUNT OF $6.15 PER UNIT WAS THE LOWEST RECEIVED. THE SECOND AND THIRD LOWEST BIDS FOR ITEM 15 WERE IN THE AMOUNTS OF $13.50 PER UNIT AND $17. AWARD WAS MADE TO KIMBERLY ON SEPTEMBER 9. TO THE EFFECT THAT THE POLYURETHANE FOAM TO BE USED IN ITEM 15 WAS TO BE NONFLAMMABLE.

B-173467, SEP 21, 1971

CONTRACTS - MISTAKE IN BID - NEW SPECIFICATIONS DECISION GRANTING RELIEF TO KIMBERLY-CLARK CORPORATION FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF A CONTRACT COVERING PACKAGING MATERIALS, PLASTIC SHEETS AND CUSHIONING INSERTS UNDER AN IFB ISSUED BY REGION 7, FORT WORTH, TEXAS. THE DOCUMENTARY EVIDENCE FURNISHED BY KIMBERLY INDICATES THAT THE COMPANY REQUESTED PRICES ON POLYURETHANE FOAM AS "LISTED IN THE GSA CATALOG" WHICH LISTING DID NOT CONTAIN THE NONFLAMMABILITY REQUIREMENT SPECIFIED IN THE INSTANT IFB. IT IS CLEAR THAT KIMBERLY MADE A BONA FIDE MISTAKE IN PREPARING ITS BID IN THAT IT FAILED TO TAKE INTO ACCOUNT THE REVISED SPECIFICATION. FURTHER, THE LOW BID WAS 220 AND 276 PERCENT HIGHER THAN THE SECOND AND THIRD LOW BIDS RESPECTIVELY AND THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO THE AWARD. THEREFORE, NO VALID CONTRACT CAME INTO BEING UPON ACCEPTANCE OF THE ERROR-TAINTED BID AND THE CONTRACT MAY BE REFORMED TO REFLECT A PRICE PER UNIT AS ADMINISTRATIVELY RECOMMENDED.

TO MR. ROBERT L. KUNZIG:

REFERENCE IS MADE TO LETTER DATED JUNE 30, 1971, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, SUBMITTING FOR OUR DECISION A REQUEST BY THE KIMBERLY-CLARK CORPORATION (KIMBERLY) FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF CONTRACT BY REGION 7, FORT WORTH, TEXAS.

REGION 7 ISSUED INVITATION FOR BIDS (IFB) 7PR-W-40040/3Y (7FB) AUGUST 13, 1970, FOR BIDS ON A REQUIREMENTS CONTRACT COVERING PACKAGING MATERIALS, PLASTIC SHEETS AND CUSHIONING INSERTS. BIDS WERE OPENED SEPTEMBER 1, 1970, AND KIMBERLY'S BID PRICE FOR ITEM 15 IN THE AMOUNT OF $6.15 PER UNIT WAS THE LOWEST RECEIVED. THE SECOND AND THIRD LOWEST BIDS FOR ITEM 15 WERE IN THE AMOUNTS OF $13.50 PER UNIT AND $17, RESPECTIVELY, THEREAFTER, AWARD WAS MADE TO KIMBERLY ON SEPTEMBER 9, 1970, AT ITS BID PRICE FOR ITEM 15.

BY LETTER OF NOVEMBER 10, 1970, KIMBERLY ADVISED THE CONTRACTING OFFICER THAT IT HAD OVERLOOKED A NEW REQUIREMENT INCORPORATED INTO THE INVITATION OF REVISED MILITARY SPECIFICATION MIL-P-26514BASG), DATED JUNE 30, 1969, TO THE EFFECT THAT THE POLYURETHANE FOAM TO BE USED IN ITEM 15 WAS TO BE NONFLAMMABLE. KIMBERLY REQUESTED A WAIVER OF THIS REQUIREMENT AND BY LETTER DATED NOVEMBER 25, 1970, THE CONTRACTING OFFICER ADVISED KIMBERLY THAT THE REQUIREMENT COULD NOT BE WAIVED. THE CONTRACTING OFFICER FURTHER ADVISED KIMBERLY THAT IF COMPLIANCE WITH THE SPECIFICATIONS SHOULD AFFECT THE COST OF PRODUCTION, IT COULD CLAIM A MISTAKE IN BID UPON SUBMISSION OF NOTARIZED COST DATA SHOWING HOW IT ARRIVED AT ITS BID PRICE AND THE PRICE ALLEGED TO BE NECESSARY TO COMPLY WITH THE SPECIFICATIONS.

BY LETTER OF JANUARY 8, 1971, KIMBERLY FURNISHED DOCUMENTARY EVIDENCE OF ITS ALLEGED MISTAKE, INCLUDING THE ORIGINAL WORKSHEETS SHOWING ITS SUPPLIER'S TELEPHONE QUOTATION AND THE ORIGINAL COMPUTATION OF ITS UNIT PRICE BID. THE INFORMATION SUBMITTED BY KIMBERLY WITH REGARD TO ITS REQUEST OF ITS SUPPLIES FOR A PRICE QUOTE INDICATES THAT PRICES WERE REQUESTED FOR POLYURETHANE FOAM AS "LISTED IN THE GSA CATALOG." IT IS REPORTED THAT THE (SA CATALOG REQUIRES THE SUBJECT FOAM TO CONFORM TO THE PRIOR MILITARY SPECIFICATION WHICH DID NOT CONTAIN THE NONFLAMMABILITY REQUIREMENT, AND IT IS THUS CONCLUDED THAT KIMBERLY MADE A BONA FIDE MISTAKE IN PREPARING ITS BID IN THAT IT FAILED TO TAKE INTO ACCOUNT THE REVISED SPECIFICATION. IT IS FURTHER CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED THE POSSIBILITY OF ERROR AND SHOULD HAVE REQUESTED VERIFICATION OF KIMBERLY'S BID PRICE BEFORE AWARD. ALSO, IT IS STATED THAT THERE WAS A 220 AND 276 PERCENT DIFFERENCE BETWEEN ITS BID AND THOSE OF THE SECOND AND THIRD LOWEST BIDDERS, RESPECTIVELY, AND THAT THIS DISPARITY IN BID PRICES CONSTITUTED CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF THE ERROR.

IN VIEW OF THE FOREGOING, WE AGREE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE ERROR IN THE KIMBERLY BID AND THAT THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT PRIOR VERIFICATION.

WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL ALLOW REFORMATION IF THE CONTRACTING OFFICER, WITHOUT BID VERIFICATION, WAS ON CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO THE AWARD ON THE BASIS THAT NO VALID CONTRACT CAME INTO BEING UPON ACCEPTANCE OF THE ERROR TAINTED BID. B-167031, JUNE 16, 1969; B 167816, SEPTEMBER 19, 1969; B-167745, SEPTEMBER 2, 1969. WHERE THE INTENDED BID PRICE CANNOT BE ASCERTAINED WITH CERTAINTY, PAYMENT MAY BE MADE ON THE BASIS OF THE REASONABLE VALUE OF THE ITEMS TO BE DELIVERED, LIMITED TO THE AMOUNT OF THE NEXT LOWEST BID. 37 COMP. GEN. 685 (1958).

KIMBERLY HAS SUBMITTED WORKSHEETS INDICATING A REVISED QUOTE FROM ITS SUPPLIER BASED ON FOAM MEETING THE REVISED SPECIFICATION OF $9.60 PER UNIT AS OPPOSED TO THE ORIGINAL QUOTE OF $3.90 PER UNIT. THE APPLICATION OF IDENTICAL PERCENTAGES FOR GENERAL AND ADMINISTRATIVE EXPENSE, FREIGHT, AND PROFIT AS WERE APPLIED TO THE BID AS ORIGINALLY SUBMITTED RESULTS IN A REVISED UNIT PRICE OF $13.30, OR $1.20 LESS THAN THE NEXT LOW BID. THIS FIGURE IS CONSIDERED TO BE REASONABLE BY THE CONTRACTING OFFICER.

ACCORDINGLY, THE CONTRACT MAY BE REFORMED TO REFLECT A PRICE PER UNIT OF $13.30, AS ADMINISTRATIVELY RECOMMENDED.

THE FILE TRANSMITTED WITH THE LETTER OF JUNE 30, 1971, IS RETURNED AS REQUESTED.