B-175920, FEB 21, 1973, 52 COMP GEN 534

B-175920: Feb 21, 1973

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IS NOT SUBJECT TO REVIEW BY THE UNITED STATES GENERAL ACCOUNTING OFFICE DOES NOT PRECLUDE CONSIDERATION OF THE CLAIM ON THE BASIS OF BID MISTAKE. THE CONTRACTOR IS NOT ENTITLED TO A PRICE ADJUSTMENT BASED ON THE FACT A SECOND ERROR - THE FIRST HAVING BEEN CORRECTED BEFORE AWARD - WAS DUE TO THE MISINTERPRETATION OF THE BID PACKAGE BECAUSE OF A MISSING GOVERNMENT DRAWING SINCE THE CONTRACTOR WAS COGNIZANT OF THE OMISSION BUT FAILED TO RECOGNIZE ITS SIGNIFICANCE. 1973: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 4. THIS MATTER WAS THE SUBJECT OF A CLAIM FILED BY EIDAL WITH MECOM UNDER THE PROVISIONS OF PUBLIC LAW 85-804. EIDAL'S CLAIM WAS HEARD AND DENIED BY THE MECOM CONTRACT ADJUSTMENT BOARD.

B-175920, FEB 21, 1973, 52 COMP GEN 534

CONTRACTS - MISTAKES - PRICE ADJUSTMENT - SPECIFICATION MISINTERPRETATION THE FACT THAT THE DENIAL OF A CLAIM UNDER 50 U.S.C. 1431-1435, WHICH AUTHORIZES AMENDING AND MODIFYING CONTRACTS TO FACILITATE THE NATIONAL DEFENSE, IS NOT SUBJECT TO REVIEW BY THE UNITED STATES GENERAL ACCOUNTING OFFICE DOES NOT PRECLUDE CONSIDERATION OF THE CLAIM ON THE BASIS OF BID MISTAKE. HOWEVER, THE CONTRACTOR IS NOT ENTITLED TO A PRICE ADJUSTMENT BASED ON THE FACT A SECOND ERROR - THE FIRST HAVING BEEN CORRECTED BEFORE AWARD - WAS DUE TO THE MISINTERPRETATION OF THE BID PACKAGE BECAUSE OF A MISSING GOVERNMENT DRAWING SINCE THE CONTRACTOR WAS COGNIZANT OF THE OMISSION BUT FAILED TO RECOGNIZE ITS SIGNIFICANCE, A SITUATION SIMILAR TO SPACE CORPORATION V. UNITED STATES, CT. CL. NO. 328-70, DECEMBER 12, 1972. NEITHER THE FACE OF THE BID NOR THE VARIANCE IN PRICE BETWEEN LOW AND SECOND LOW BIDS PUTS THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR, PARTICULARLY SINCE THE CONTRACTOR HAD REEXAMINED ITS BID INCIDENT TO THE FIRST ERROR AND, THEREFORE, ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT.

TO OLDAKER & OLDAKER, FEBRUARY 21, 1973:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 4, 1972, AND SUBSEQUENT CORRESPONDENCE, ON BEHALF OF EIDAL INTERNATIONAL CORPORATION, REQUESTING RELIEF DUE TO A CLAIMED MISTAKE IN BID UNDER IFB DAAK01-69-B- 8394, ISSUED BY THE ARMY MOBILITY EQUIPMENT COMMAND (MECOM), ST. LOUIS, MISSOURI.

THIS MATTER WAS THE SUBJECT OF A CLAIM FILED BY EIDAL WITH MECOM UNDER THE PROVISIONS OF PUBLIC LAW 85-804, APPROVED AUGUST 28, 1958, 72 STAT. 972, 50 U.S.C. CODE 1431-1435, AS IMPLEMENTED BY SECTION XVII OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH AUTHORIZES AMENDING OR MODIFYING CONTRACTS TO FACILITATE THE NATIONAL DEFENSE. PURSUANT TO SUCH AUTHORITY, EIDAL'S CLAIM WAS HEARD AND DENIED BY THE MECOM CONTRACT ADJUSTMENT BOARD. YOU NOW REQUEST THAT WE "REVIEW THE ATTACHED DOCUMENTS, IN ORDER TO CORRECT THE ADVERSE DECISION OF THE ARMY IN THIS MATTER."

DENIALS OF CLAIMS UNDER PUBLIC LAW 85-804 ARE NOT SUBJECT TO REVIEW BY THIS OFFICE, SO FAR AS ENTITLEMENT TO THE RELIEF AUTHORIZED BY THAT STATUTE IS CONCERNED. B-156784, JUNE 10, 1965. HOWEVER:

*** FACTUAL FINDINGS MADE IN THE COURSE OF CONSIDERING SUCH CLAIMS ARE NOT ENDOWED BY ANY CONTRACTUAL OR STATUTORY PROVISION WITH ANY ATTRIBUTE OF FINALITY WHICH WOULD REQUIRE THEM TO BE CONSIDERED AS BINDING IN CONNECTION WITH THE CONSIDERATION OF ANY OTHER FORM OF REMEDY, AND WE THEREFORE MAY CONSIDER THE CLAIM AS WE WOULD ANY OTHER CLAIM BASED UPON ALLEGED MISTAKE IN BID. 48 COMP. GEN. 672(1969).

ATTACHED TO YOUR LETTER OF MAY 4, 1972, WAS A FILE OF CORRESPONDENCE AND THE DECISION OF THE MECOM CONTRACT ADJUSTMENT BOARD, WHICH YOU STATE CONTAIN THE "ESSENTIAL FACTS" CONCERNING EIDAL'S CLAIM. IT APPEARS THEREFROM THAT AS A RESULT OF SUBMITTING THE LOWEST OF EIGHT BIDS UNDER IFB DAAK01-69-B8394(IFB-8394), EIDAL WAS AWARDED CONTRACT DAAK01-69-C- A851(CONTRACT-A851) FOR 81 MOBILE POWER UNITS.

AN HOUR AFTER BID OPENING, EIDAL ADVISED MECOM THAT IT HAD DISCOVERED A MISTAKE IN ITS BID IN THAT IT HAD INADVERTENTLY OMITTED THE COST OF THE DISTRIBUTION BOX. ON JUNE 26, 1969, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR 2-406.3, THE GENERAL COUNSEL, ARMY MATERIEL COMMAND, AUTHORIZED CORRECTION OF THE MISTAKE THUS INCREASING THE UNIT PRICE BY $279.72. AWARD WAS MADE TO EIDAL ON THE FOLLOWING DAY IN THE CORRECTED AMOUNT OF $107,467.56. THE SECOND LOW BID OF $127,191 WAS APPROXIMATELY 15 PERCENT HIGHER.

CONTRACT -A851 REQUIRED THE CONTRACTOR TO MOUNT CERTAIN GOVERNMENT AND CONTRACTOR-FURNISHED EQUIPMENT UPON GOVERNMENT-FURNISHED FLATBED TRAILERS. SLIGHTLY MORE THAN A MONTH AFTER AWARD, EIDAL WAS ADVISED BY A MECOM REPRESENTATIVE THAT A DRAWING HAD BEEN OMITTED FROM A SOLICITATION IN A SIMILAR PROCUREMENT. EIDAL ALLEGES THAT IT THEN REEXAMINED ITS COPY OF IFB -8394, WHEREUPON IT DISCOVERED THE SAME DRAWING WAS MISSING. THE DRAWING SHOWS THAT THE GOVERNMENT-FURNISHED TRAILERS WOULD LACK A STEEL DECK OR FLATBED, THE FABRICATION AND INSTALLATION OF WHICH WAS THE CONTRACTOR'S RESPONSIBILITY.

EIDAL ASSERTS THAT BECAUSE THE DRAWING WAS OMITTED FROM ITS COPY OF THE IFB, ITS BID WAS COMPUTED UPON THE ASSUMPTION THAT THE GOVERNMENT FURNISHED TRAILERS WOULD INCLUDE A FLATBED. EIDAL REQUESTED AN INCREASE OF $19,826.37 IT ITS CONTRACT PRICE TO COMPENSATE IT FOR FURNISHING THE FLATBEDS. THE REQUEST WAS INITIALLY MADE PURSUANT TO ASPR 17-204.3(II) WHICH, IN IMPLEMENTATION OF PUBLIC LAW 85-804, PERMITS MODIFICATION OF A CONTRACT TO CORRECT THE EFFECT OF A MISTAKE "ON THE PART OF THE CONTRACTOR WHICH IS SO OBVIOUS THAT IT WAS OR SHOULD HAVE BEEN APPARENT TO THE CONTRACTING OFFICER." IN ITS DECISION NO. 3-71, DATED OCTOBER 14, 1970, THE MECOM CONTRACT ADJUSTMENT BOARD DENIED EIDAL'S REQUEST FOR ADJUSTMENT ON THE BASIS THAT THE CIRCUMSTANCES WERE NOT SUCH AS TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR.

EIDAL DESCRIBED ITS BID PREPARATION PROCEDURE IN A LETTER TO MECOM DATED SEPTEMBER 2, 1969, WHICH STATED IN PART:

THE FIRST STEP WITH THE DRAWINGS WAS TO FIND THE MAJOR LISTS THAT REFERRED TO "POWER UNIT, PU-629/G" WHICH IS SPECIFIED AS THE END PRODUCT BY THE IFB. WE FOUND TWO LISTS. ONE IS TITLED "DL 13205E4945." THE ITEM NOMENCLATURE IS THE SAME AS THE IFB. THE SECOND LIST CALLED "PL," BEARS THE SAME NUMBER AND HAS AS ITS FIRST ENTRY "POWER UNIT, PU-629/G" WITH THE IDENTIFYING DRAWING NUMBER BEING IDENTICAL TO THE IDENTIFYING NUMBER OF THE TWO LISTS, 13205E4945.

THE REMAINDER OF THE PRINTS WERE SORTED OUT AND CHECKED AGAINST THE LISTS. WE FOUND ALL OF THE DRAWINGS, EXCEPT ONE, WERE ON BOTH LISTS. THIS DRAWING WAS FOUND ON THE DL, SHOWN AS A "DATA LIST" AND WAS NUMBER 13216E7430 AND GIVEN THE TITLE "TRAILER ASSEMBLY, 1 1/2 TON."

ALTHOUGH ALL OF THE OTHER NUMBERS WERE FOUND TO APPEAR ON BOTH THE DL AND THE PL, TOGETHER WITH SEPARATE PL SHEETS OF OTHER NUMBERS AND ON THE DRAWINGS THEMSELVES, WE COULD FIND NO OTHER REFERENCE TO 13216E7430, NEITHER COULD WE FIND A DRAWING WITH THIS NUMBER OR A SEPARATE PARTS LIST.

THE ONLY OTHER REFERENCE TO THE TRAILER, ASIDE FROM IN THE IFB, WAS FOUND AS THE SECOND ITEM OF SHEET TWO OF PL 13205E4945. HERE WE FIND NUMBER "1", DRAWING SIZE "D", PART NO. 13205E5157, QUANTITY "1", NOMENCLATURE "TRAILER, FLATBED."

THIS DRAWING WAS IN THE IFB PACKAGE. THIS DRAWING HAD NO BILL OF MATERIAL, EITHER ON THE DRAWING OR AS A SEPARATE LIST. THIS DRAWING INDICATED DIMENSIONS FOR LOCATING HOLES AND THE HOLE TYPES AND SIZES IN THE "TRAILER, FLATBED." THIS WAS THEN OUR DRAWING.

AS THERE WERE NO OTHER DRAWINGS OF THE TRAILER; NO OTHER PARTS LISTS; NO COMPONENT PART DRAWINGS OR PARTS LISTS AND AS THE ONLY REFERENCE TO 13216E7430 WAS AS A "DATA LIST" WE VERY NATURALLY FELT THAT WE HAD THE COMPLETE SET. WE FELT THAT AS A "DATA LIST" THIS NUMBER REFERRED TO THE "GOVERNMENT FURNISHED CHASSIS TRAILER, M103A3, FSN2330-141-8052" REFERRED TO IN THE IFB.

WE WERE CERTAIN THAT THIS TRAILER WOULD COME TO US AS A FLATBED TRAILER WITH THE BED IN PLACE.

HOWEVER, MECOM ADVISED EIDAL THAT:

*** THE INVITATION FOR BIDS REQUIRED THE POWER UNIT TO BE IN ACCORDANCE WITH DRAWING LIST 13205E4945(WHICH (YOU HAVE) CONFIRMED THAT YOU RECEIVED AS PART OF THE BID PACKAGE).

ON SHEET 2 OF THE FOREGOING DRAWING LIST, DRAWING NUMBER 13216E7430 WAS REFERENCED. THE LATTER DRAWING COVERED THE TRAILER ASSEMBLY AND CLEARLY REQUIRES FURNISHING OF THE DECK ON THE TRAILER.

NOTWITHSTANDING THE FOREGOING, IT HAS NOT BEEN CONCLUSIVELY ESTABLISHED THAT THE DRAWING WAS MISSING FROM THE COPY OF IFB -8394 FURNISHED EIDAL. APPARENTLY ALL COPIES OF THE IFB WHICH REMAINED IN MECOM'S POSSESSION WERE COMPLETE. HOWEVER, ASSUMING THAT THE OMISSION OCCURRED, WE BELIEVE A FAIR READING OF THE RECORD SHOWS THAT DURING THE FORMULATION OF ITS BID EIDAL REALIZED THE DRAWING WAS OMITTED, FAILED TO RECOGNIZE THE SIGNIFICANCE OF THE OMISSION, AND PRICED ITS BID UPON THE ERRONEOUS ASSUMPTION THAT THE TRAILER WOULD BE FURNISHED WITH THE DECK IN PLACE.

THE INSTANT CASE THEREFORE IS SIMILAR TO THAT OF SPACE CORPORATION V. UNITED STATES, CT. CL. NO. 328-70, DECEMBER 12, 1972. UPON RECEIPT OF A SOLICITATION FOR MISSILE CONTAINERS, SPACE CORPORATION'S CHIEF ESTIMATOR OBSERVED THAT DRAWING NO. 202, RELATING TO A MONITORING SYSTEM, WAS MISSING. SPACE CORPORATION MADE NO INQUIRY OF THE GOVERNMENT CONCERNING THE MISSING DRAWING. INSTEAD, BASED UPON PRIOR EXPERIENCE IN MANUFACTURING SIMILAR CONTAINERS, THE COMPANY ESTIMATED THAT THE UNIT COST OF THE MONITORING SYSTEM WOULD BE ABOUT $35 AND USED THAT FIGURE IN COMPUTING ITS OFFER. AFTER IT WAS AWARDED THE CONTRACT, SPACE CORPORATION OBTAINED A COPY OF DRAWING NO. 202, WHICH INDICATED THAT A CERTAIN MANUFACTURER WAS THE SOURCE OF THE MONITORING SYSTEMS. THE UNIT PRICE OF THE MONITORING SYSTEMS, WHICH WERE AVAILABLE ONLY FROM THAT MANUFACTURER, WAS $410 RATHER THAN THE $35 ESTIMATE INCLUDED IN SPACE CORPORATION'S OFFER.

ONE OF THE THEORIES UPON WHICH SPACE CORPORATION SOUGHT REIMBURSEMENT FROM THE GOVERNMENT WAS THAT THERE HAD BEEN A MISTAKE IN THE CONTRACT WHICH MERITED REFORMATION. IN REGARD TO THIS THEORY, THE COURT OF CLAIMS STATED:

PLAINTIFF'S SECOND GROUND FOR RECOVERY IN THE ALTERNATIVE IS BASED UPON THE THEORY OF REFORMATION. PLAINTIFF ARGUES THAT IT MISINTERPRETED THE BID PACKAGE DUE TO THE ABSENCE OF DRAWING NO. 202 AND IS THUS ENTITLED TO A REFORMATION OF THE CONTRACT TO REFLECT THE ORIGINAL INTENTIONS OF THE PARTIES. WE FIND THAT THE CIRCUMSTANCES OF THIS CASE DO NOT WARRANT APPLICATION OF THIS EQUITABLE DOCTRINE. AS A GENERAL RULE, THE COURT OF CLAIMS HAS JURISDICTION TO REFORM A GOVERNMENT CONTRACT AS AN INCIDENT TO THE RENDITION OF A MONEY JUDGMENT. CALIFORNIA-PACIFIC UTILITIES CO. V. UNITED STATES, 194 CT. CL. 703, 715(1971); HOWEVER, THE PURPOSE OF THE REMEDY IS TO MAKE A MISTAKEN WRITING CONFORM TO ANTECEDENT EXPRESSIONS ON WHICH THE PARTIES AGREED. BROMION, INC. V. UNITED STATES, 188 CT. CL. 31, 35, 411 F.2D 1020, 1022(1969). MOST FREQUENTLY REFORMATION IS WARRANTED WHEN THERE IS A CLEAR-CUT CLERICAL OR ARITHMETICAL ERROR. THIS COURT IS CONCERNED TO PROTECT THE CONTRACTOR FROM A CONTRACTING OFFICER WHO KNOWS OR SHOULD KNOW THAT THE CONTACTOR HAS MADE A MISTAKE IN HIS BID. RUGGIERO V. UNITED STATES, 190 CT. CL. 327, 335, 420 F.2D 709, 713(1970). THE RECORD IN THIS CASE DOES NOT SUPPORT A FINDING THAT WOULD MERIT EQUITABLE RELIEF IN THE FORM OF REFORMATION OF THE CONTRACT.

THE RUGGIERO LINE OF CASES IS PRIMARILY CONCERNED WITH MISTAKES MADE BY THE BIDDER WHICH SUBSEQUENTLY WORK TO HIS DISADVANTAGE. THE MISTAKE IN THIS CASE WAS BY THE DEFENDANT AND THE PLAINTIFF WAS WELL AWARE OF IT PRIOR TO THE SUBMISSION OF ITS BID. PLAINTIFF MAY RECOVER ON THE THEORY OF REFORMATION UNDER SUCH CIRCUMSTANCES ONLY IF THE DEFENDANT'S REPRESENTATIVES KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE AT THE TIME THE BID WAS ACCEPTED. WENDER PRESSES, INC. V. UNITED STATES, 170 CT. CL. 483, 485, 343 F.2D 961, 962(1965).

THE PLAINTIFF HERE DOES NOT ARGUE THAT THE DEFENDANT ACTUALLY KNEW OF THIS MISTAKE, BUT RATHER CONTENDS THAT THE DEFENDANT SHOULD HAVE KNOWN THAT THE DRAWING WAS MISSING. THE TEST FOR SUCH IMPUTED KNOWLEDGE OF MISTAKES IN BIDS IS WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE WERE ANY FACTORS WHICH REASONABLY SHOULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER. CHERNICK V. UNITED STATES, 178 CT. CL. 498, 504, 372 F.2D 492, 496(1967).

(THE COURT THEN OBSERVED THAT PLAINTIFF FAILED TO INFORM THE GOVERNMENT THAT ITS BID PACKAGE WAS MISSING DRAWING NO. 202.) THUS IT WAS A REASONABLE ASSUMPTION ON THE PART OF THE GOVERNMENT TO ASSUME THAT THE DRAWINGS WERE IN PROPER ORDER. DESPITE THIS, PLAINTIFF WOULD HAVE US IMPOSE UPON THE GOVERNMENT THE DUTY OF SEARCHING THROUGH EACH BID OF EACH CONTRACT TO ASSURE THAT ALL PARTS WERE PROPERLY ACCOUNTED FOR. THIS IS CERTAINLY TOO GREAT A BURDEN. THE DUTY, AS DISCUSSED EARLIER IN THIS OPINION, IS UPON THE CONTRACTOR TO CALL THE GOVERNMENT'S ATTENTION TO OBVIOUS OMISSIONS. IT WAS THE CONTRACTOR, NOT THE GOVERNMENT, WHO WAS AWARE OF THE PROBLEM HERE AND THUS SHOULD BE HELD TO THE GREATER DUTY.

THUS, ALTHOUGH IN PROPER CIRCUMSTANCES THIS COURT WILL REFORM A CONTRACT, THE INSTANT SITUATION DOES NOT MERIT SUCH EQUITABLE RELIEF.

IN THE INSTANT CASE, IT IS NOT CONTENDED THAT THE CONTRACTING OFFICER ACCEPTED EIDAL'S BID WITH ACTUAL NOTICE OF THE ALLEGED MISTAKE, NOR DOES IT APPEAR THAT THERE WAS ANY DISCREPANCY UPON THE FACE OF THE BID WHICH SHOULD HAVE PUT THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR. THE SOLE FACTOR WHICH EIDAL MAINTAINS PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR IS THAT EIDAL'S BID WAS APPROXIMATELY 15 PERCENT LESS THAN THAT OF THE SECOND LOW BIDDER.

WE ARE OF THE OPINION THAT THE DISPARITY IN BIDS, STANDING ALONE, IS AN INSUFFICIENT BASIS FOR CONCLUDING THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF ERROR BEFORE AWARD. IN EVALUATING THE REASONABLENESS OF THE CONTRACTING OFFICER'S ACCEPTANCE OF EIDAL'S BID WITHOUT FIRST REQUESTING VERIFICATION THEREOF, WE BELIEVE IT IS PROPER TO CONSIDER THAT THE AWARD TO EIDAL DID REFLECT THE CORRECTION OF ONE MISTAKE. THEREFORE, AT THE TIME OF AWARD, THE CONTRACTING OFFICER WAS AWARE THAT EIDAL HAD REEXAMINED ITS BID, AND COULD ASSUME THAT EIDAL HAD IDENTIFIED ALL ERRORS THEREIN.

UNDER THE PRESENT RECORD, THE ACCEPTANCE OF EIDAL'S BID WAS IN GOOD FAITH. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE OGDEN & DOUGHERTY V. UNITED STATES, 102 CT. CL. 249(1944); SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505(E.D. PA. 1944). ACCORDINGLY, ON THE PRESENT RECORD THERE APPEARS TO BE NO LEGAL BASIS FOR INCREASING THE PRICE OF THE CONTRACT AWARDED TO EIDAL.