B-175298, MAR 28, 1972

B-175298: Mar 28, 1972

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IT IS WELL-SETTLED THAT UNLESS A CONTRACTING OFFICER HAS ACTUAL OR CONSTRUCTIVE NOTICE OF AN ALLEGED ERROR IN BID PRIOR TO AWARD. THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN PRICE AND THE CONTRACT MUST BE CONSIDERED BINDING. 49 COMP. FROM THE ASSISTANT ADMINISTRATOR FOR PLANNING AND MANAGEMENT REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR THE PERMUTIT COMPANY ALLEGES IT MADE IN ITS OFFER UPON WHICH CONTRACT NO. 14-12-718 IS BASED. THE FOLLOWING OFFERS WERE RECEIVED AND OPENED ON JUNE 25. WAS RECOMMENDED. AWARD WAS MADE TO PERMUTIT ON JUNE 30. THE CONTRACTOR WAS REQUIRED TO PERFORM THE CONTRACT AND INSTRUCTED TO SUBMIT EVIDENCE OF THE ALLEGED MISTAKE. THE CONTRACTOR ADVISED THAT IN COMPUTING THE PRICE IT USED A NON-PUBLISHED SELLING PRICE SHEET FOR REPLACEMENT TANKS ON THE INCORRECT ASSUMPTION THAT THESE PRICES WERE ALSO APPLICABLE TO THE TANKS REQUIRED BY THE RFQ.

B-175298, MAR 28, 1972

CONTRACTS - ALLEGED ERROR IN BID - REQUEST FOR PRICE ADJUSTMENT DENIED DECISION DENYING A REQUEST OF THE PERMUTIT COMPANY FOR AN UPWARD PRICE REVISION ON A CONTRACT AWARD UNDER AN RFP ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY FOR A PROCUREMENT OF THREE ION EXCHANGE COLUMNS. IT IS WELL-SETTLED THAT UNLESS A CONTRACTING OFFICER HAS ACTUAL OR CONSTRUCTIVE NOTICE OF AN ALLEGED ERROR IN BID PRIOR TO AWARD, THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN PRICE AND THE CONTRACT MUST BE CONSIDERED BINDING. 49 COMP. GEN. 272 (1969).

TO MR. WILLIAM D. RUCKELSHAUS:

WE REFER TO THE LETTER OF FEBRUARY 23, 1972, FROM THE ASSISTANT ADMINISTRATOR FOR PLANNING AND MANAGEMENT REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR THE PERMUTIT COMPANY ALLEGES IT MADE IN ITS OFFER UPON WHICH CONTRACT NO. 14-12-718 IS BASED.

THE REQUEST FOR PROPOSALS SOLICITED OFFERS FROM SIX FIRMS FOR THE PROCUREMENT OF THREE ION EXCHANGE COLUMNS. THE FOLLOWING OFFERS WERE RECEIVED AND OPENED ON JUNE 25, 1970:

INDUSTRIAL FILTER AND

PUMP MANUFACTURING COMPANY $ 6,480

THE PERMUTIT COMPANY 8,226

GRAVER WATER 16,140

SINCE A TECHNICAL EVALUATION OF THE PROPOSALS RESULTED IN THE REJECTION OF THE INDUSTRIAL FILTER PROPOSAL AS UNACCEPTABLE, AWARD TO PERMUTIT, THE SECOND LOW OFFEROR, WAS RECOMMENDED. THAT PROPOSAL HAD BEEN DETERMINED TECHNICALLY ACCEPTABLE, AND THE PRICE HAD BEEN CONSIDERED REASONABLE IN VIEW OF THE GOVERNMENT'S $7,500 ESTIMATE FOR THE PROCUREMENT. AWARD WAS MADE TO PERMUTIT ON JUNE 30, 1970.

BY LETTER OF JULY 31, 1970, THE PERMUTIT DISTRICT REPRESENTATIVE ADVISED THE PROCUREMENT ACTIVITY THAT THE CONTRACT PRICE HAD BEEN INCORRECTLY ESTIMATED. FOR THIS REASON HE REQUESTED THAT THE COMPANY BE RELEASED FROM THE CONTRACT. HOWEVER, THE CONTRACTOR WAS REQUIRED TO PERFORM THE CONTRACT AND INSTRUCTED TO SUBMIT EVIDENCE OF THE ALLEGED MISTAKE. RESPONSE THERETO, THE CONTRACTOR ADVISED THAT IN COMPUTING THE PRICE IT USED A NON-PUBLISHED SELLING PRICE SHEET FOR REPLACEMENT TANKS ON THE INCORRECT ASSUMPTION THAT THESE PRICES WERE ALSO APPLICABLE TO THE TANKS REQUIRED BY THE RFQ. FURTHER, THE CONTRACTOR STATED IT APPLIED AN INCORRECT QUOTE IN DETERMINING THE COST OF THE RUBBER LINING REQUIRED BY THE RFQ. FINALLY, THE CONTRACTOR HAS STATED THAT THE PRICE QUOTE OF $400 FOR FLANGES RECEIVED BY PERMUTIT FROM ITS HOME OFFICE HAD INCORRECTLY BEEN ASSUMED TO MEAN $400 PER SET OF 2 INSTEAD OF $400 PER FLANGE, OF WHICH THERE WERE 12, THUS LEADING TO AN UNDERESTIMATE OF $2,400. AS A RESULT OF THE ERRORS, PERMUTIT HAS REQUESTED THAT THE CONTRACT PRICE BE INCREASED TO $11,126.

HOWEVER, THE THRESHOLD QUESTION IN CASES WHERE A CONTRACTOR SEEKS TO OBTAIN CORRECTION OF THE CONTRACT PRICE IS WHETHER A BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE OFFER TENDERED UNDER THE REQUEST FOR PROPOSALS. WHERE THE CONTRACTING OFFICER HAS NO ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF AN ERROR IN A BID OR PROPOSAL, THE CONTRACT IS CONSIDERED TO BE VALID AND BINDING. 45 COMP. GEN. 700 (1966). IN THIS CASE, WE NOTE THAT THE CONTRACTING OFFICER HAD NO ACTUAL KNOWLEDGE OF ERROR BEFORE AN AWARD WAS MADE. NEITHER DO WE CONSIDER THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE KNOWLEDGE OF ERROR IN VIEW OF THE FACT THAT THE GOVERNMENT ESTIMATE FOR THE PROCUREMENT WAS $7,500. IN THE ABSENCE OF THESE FACTORS, THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN THE CONTRACT PRICE. COMP. GEN 272 (1969).