B-176792, SEP 18, 1972

B-176792: Sep 18, 1972

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THE RECORD INDICATES THAT MID-WESTERN NOTIFIED THE CONTRACTING OFFICER OF THE ALLEGED MISTAKE IN BID BEFORE THE NOTICE OF AWARD WAS MAILED. SECRETARY: REFERENCE IS MADE TO THE LETTER DATED AUGUST 9. THREE BIDS WERE RECEIVED AND OPENED ON JUNE 26. MID-WESTERN WAS THE APPARENT LOW BIDDER. THE CONTRACTING OFFICER WAS ADVISED BY A TELEPHONE CALL FROM MID-WESTERN THAT WESTERN UNION HAD MADE AN ERROR IN TRANSMITTING MID- WESTERN'S BID MODIFICATION. THE OMITTED STATEMENT WOULD NOT HAVE AFFECTED THE RELATIVE STANDING OF THE BIDDERS. BELIEVING THAT THIS WAS AN ALLEGATION OF MISTAKE AFTER AWARD. THE NOTICE OF AWARD WAS DATED JUNE 29. APPARENTLY WAS MAILED ON THAT DATE. THE GENERAL RULE IS THAT WHERE THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR IN THE LOW BID.

B-176792, SEP 18, 1972

CONTRACT - REFORMATION - MISTAKE IN BID - NOTICE - EFFECTIVE TIME OF AWARD DECISION ALLOWING AN INCREASE IN PRICE UNDER A CONTRACT AWARDED BY THE AGRICULTURAL RESEARCH SERVICE TO MINNESOTA MID-WESTERN CONTRACTORS, INC. THE RECORD INDICATES THAT MID-WESTERN NOTIFIED THE CONTRACTING OFFICER OF THE ALLEGED MISTAKE IN BID BEFORE THE NOTICE OF AWARD WAS MAILED. SINCE AWARD DID NOT BECOME EFFECTIVE UNTIL THE NOTICE HAD BEEN MAILED, 45 COMP. GEN. 700 (1966), AND THE CONTRACTING OFFICER HAD NOTICE OF THE POSSIBILITY OF ERROR BEFORE MAILING, THE ACCEPTANCE OF THE BID DID NOT RESULT IN A VALID CONTRACT AND A LEGAL BASIS EXISTS FOR REFORMATION, EVEN THOUGH THE BIDDER SIGNS THE CONTRACT AND PROCEEDS WITH PERFORMANCE PENDING RESOLUTION OF THE CLAIM OF ERROR. 49 COMP. GEN. 446 (1970). ACCORDINGLY, THE CONTRACT PRICE MAY BE INCREASED BY $28,000.

TO MR. SECRETARY:

REFERENCE IS MADE TO THE LETTER DATED AUGUST 9, 1972, WITH ENCLOSURES (YOUR REFERENCE S. DOHERTY), FROM THE ACTING DIRECTOR, RESEARCH AND OPERATIONS DIVISION, OFFICE OF THE GENERAL COUNSEL, REQUESTING A DECISION AS TO WHETHER THE PRICE OF AGRICULTURAL RESEARCH SERVICE (ARS) CONTRACT NO. 12-14-100-11469(34) AWARDED TO MINNESOTA MID-WESTERN CONTRACTORS, INC. (MID-WESTERN) MAY BE INCREASED BECAUSE OF AN ALLEGED MISTAKE IN BID.

INVITATION FOR BIDS ARS-135-B-72 ISSUED BY ARS, ST. PAUL, MINNESOTA, INVITED BIDS FOR THE CONSTRUCTION OF A GREENHOUSE. THREE BIDS WERE RECEIVED AND OPENED ON JUNE 26, 1972. MID-WESTERN WAS THE APPARENT LOW BIDDER. PRIOR TO BID OPENING, THE CONTRACTING OFFICER HAD RECEIVED A TELEGRAPHIC BID MODIFICATION FROM MID-WESTERN REDUCING ITS BID PRICE ON TWO ALTERNATE ITEMS OF THE SOLICITATION.

ON JUNE 28, 1972, AFTER PREPARING THE AWARD TO MID-WESTERN BUT PRIOR TO DISPATCHING IT, THE CONTRACTING OFFICER WAS ADVISED BY A TELEPHONE CALL FROM MID-WESTERN THAT WESTERN UNION HAD MADE AN ERROR IN TRANSMITTING MID- WESTERN'S BID MODIFICATION. MID-WESTERN ALLEGED THAT WESTERN UNION HAD OMITTED THE STATEMENT "BASIC BID ITEM 1, ADD 28 THOUSAND DOLLARS" IN TRANSMITTING THE MESSAGE. THE OMITTED STATEMENT WOULD NOT HAVE AFFECTED THE RELATIVE STANDING OF THE BIDDERS.

THE CONTRACTING OFFICER, BELIEVING THAT THIS WAS AN ALLEGATION OF MISTAKE AFTER AWARD, VERIFIED THE TEXT OF THE TELEGRAM RECEIVED BY THE GOVERNMENT AND PROCEEDED TO DISPATCH THE NOTICE OF AWARD AND CONTRACT FORMS. THE NOTICE OF AWARD WAS DATED JUNE 29, 1972, AND APPARENTLY WAS MAILED ON THAT DATE. THE CONTRACTING OFFICER TOLD MID-WESTERN THAT A CLAIM COULD BE SUBMITTED TO THE GOVERNMENT FOR APPROPRIATE LEGAL REVIEW AND CONSIDERATION. HE FURTHER SUGGESTED THAT MID-WESTERN PROCEED WITH THE CONTRACT.

BY A LETTER DATED JULY 17, 1972, MID-WESTERN RETURNED THE EXECUTED CONTRACT FORMS AND REQUESTED CONSIDERATION OR ADVICE AS TO THE PROPER METHOD OF SETTLING ITS CLAIM. IN SUPPORT OF ITS ALLEGATION OF ERROR, MID- WESTERN FURNISHED A COPY OF A LETTER DATED JULY 12, 1972, FROM THE DISTRICT MANAGER OF THE MINNESOTA-NORTH DAKOTA AREA OF WESTERN UNION STATING THAT THE MESSAGE FROM MID-WESTERN AS RECORDED BY WESTERN UNION INCLUDED THE STATEMENT "BASIC BID, ITEM 1, ADD 28 THOUSAND DOLLARS" BUT THAT THIS STATEMENT HAD BEEN OMITTED BY WESTERN UNION FROM THE TELEGRAM DELIVERED TO THE GOVERNMENT. IN SUPPORT OF THIS STATEMENT, WESTERN UNION PRODUCED FROM ITS RECORDS A COPY OF THE MESSAGE IT HAD RECORDED FROM MID- WESTERN AND OF THE MESSAGE DELIVERED TO THE GOVERNMENT.

THE RECORD DEMONSTRATES THAT MID-WESTERN ALLEGED ERROR BEFORE THE CONTRACTING OFFICER DISPATCHED THE NOTICE OF AWARD. FPR 1-2.407-1 PROVIDES THAT AN AWARD SHALL BE MADE BY WRITTEN NOTICE FURNISHED TO THE SUCCESSFUL BIDDER BY MAILING OR OTHERWISE. IN THIS REGARD OUR OFFICE HAS HELD THAT AN AWARD BECOMES EFFECTIVE UPON THE MAILING OF THE NOTICE OF AWARD. 45 COMP. GEN. 700 (1966). ACCORDINGLY, WE CONCLUDE THAT MID WESTERN ALLEGED MISTAKE PRIOR TO AWARD.

THE GENERAL RULE IS THAT WHERE THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR IN THE LOW BID, THE ACCEPTANCE OF THAT BID DOES NOT RESULT IN A BINDING CONTRACT AND A VALID LEGAL BASIS FOR REFORMATION EXISTS EVEN THOUGH THE BIDDER SIGNS THE CONTRACT AND PROCEEDS WITH PERFORMANCE PENDING RESOLUTION OF THE CLAIM OF ERROR. 49 COMP. GEN. 446 (1970); SEE ALSO CHRIS BERG, INC. V. U.S., 426 F2D 314, 316 (CT. CL. 1970). MID-WESTERN, WITH REASONABLE PROMPTNESS, SUBMITTED DOCUMENTATION DEMONSTRATING THE EXISTENCE OF THE ERROR, HOW IT AROSE AND THE INTENDED BID. MOREOVER, THESE DOCUMENTS WERE PRODUCED BY AND AT ALL RELEVANT TIMES WERE UNDER THE SOLE CONTROL OF WESTERN UNION. SEE 49 COMP. GEN. 417, 421.

ACCORDINGLY, REFORMATION OF ARS CONTRACT NO. 12-14-100-11469(34) BY INCREASING THE PRICE BY $28,000 IS AUTHORIZED.