B-177980, MAR 1, 1973

B-177980: Mar 1, 1973

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WHEN A CONTRACT IS TO BE AWARDED IN THE AGGREGATE. THE CONTRACTING OFFICER MAY BE PLACED ON CONSTRUCTIVE NOTICE OF A MISTAKE IF THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE LOW AGGREGATE BID AND OTHER AGGREGATE BIDS. 47 COMP. IN THIS CASE THE SECOND LOW AGGREGATE EVALUATED BID WAS APPROXIMATELY 51 PERCENT HIGHER THAN THAT OF SEMCO. WHICH DISPARITY IS SUFFICIENTLY GREAT TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF A MISTAKE. SINCE THE PROPOSED CORRECTION OF SEMCO'S PRICES FOR ITEM X WILL RESULT IN A LESSER AGGREGATE COST THAN THE PRICES OFFERED BY THE NEXT LOW BIDDER IN THE SEQUENCE. MCCORMICK: THIS IS IN REPLY TO THE LETTER DATED FEBRUARY 7. THE REFERENCED PROGRAM IS A MULTIPLE AWARD.

B-177980, MAR 1, 1973

CONTRACT - REFORMATION - MISTAKE IN BID - NOTICE OF ERROR DECISION ALLOWING REFORMATION OF A CONTRACT AWARDED TO SEMCO PRINTING CENTER, INC., BY THE U.S. GOVERNMENT PRINTING OFFICE PURSUANT TO FORMAL ADVERTISING PROCEDURES. WHEN A CONTRACT IS TO BE AWARDED IN THE AGGREGATE, THE CONTRACTING OFFICER MAY BE PLACED ON CONSTRUCTIVE NOTICE OF A MISTAKE IF THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE LOW AGGREGATE BID AND OTHER AGGREGATE BIDS. 47 COMP. GEN. 365 (1968). IN THIS CASE THE SECOND LOW AGGREGATE EVALUATED BID WAS APPROXIMATELY 51 PERCENT HIGHER THAN THAT OF SEMCO, WHICH DISPARITY IS SUFFICIENTLY GREAT TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF A MISTAKE. SINCE THE PROPOSED CORRECTION OF SEMCO'S PRICES FOR ITEM X WILL RESULT IN A LESSER AGGREGATE COST THAN THE PRICES OFFERED BY THE NEXT LOW BIDDER IN THE SEQUENCE, THE CONTRACT SHOULD BE SO REFORMED, AND PAYMENTS SHOULD BE ADJUSTED IN ACCORDANCE THEREWITH.

TO MR. THOMAS F. MCCORMICK:

THIS IS IN REPLY TO THE LETTER DATED FEBRUARY 7, 1973, AND ENCLOSURES, FROM THE ACTING DEPUTY PUBLIC PRINTER, RELATIVE TO THE MISTAKE DISCOVERED AFTER AWARD IN THE CONTRACT, PROGRAM 1231-M, AWARDED TO SEMCO PRINTING CENTER, INC., PURSUANT TO FORMAL ADVERTISING PROCEDURES.

THE REFERENCED PROGRAM IS A MULTIPLE AWARD, TERM-TYPE, CONTRACT FOR THE PRODUCTION OF BOOKS AND PAMPHLETS FOR THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FOR THE ONE-YEAR PERIOD ENDING JANUARY 31, 1973. THE SEQUENCE OF BIDDERS WAS ESTABLISHED BY EVALUATING THE AGGREGATE BID PRICES OF EACH CATEGORY OF ITEMS AGAINST AN ESTIMATED ONE MONTH'S PRODUCTION FOR ALL ITEMS IN THAT CATEGORY. AWARDS WERE MADE IN THE AGGREGATE FOR ALL ITEMS IN A CATEGORY. THE BIDS WERE EVALUATED, AND THE SEQUENCE WAS ESTABLISHED FOR AWARDS UNDER CATEGORY II, AS FOLLOWS:

COMPANY EVALUATED BID

1. SEMCO PRINTING CENTER $ 7,840.30

2. GRAPHIC DATA 11,832.35

3. BRACELAND BROTHERS 13,883.05

4. CHERRY PRESS 14,231.31

BIDS WERE REQUESTED ON ITEM X OF CATEGORY II IN THE FOLLOWING MANNER:

BINDING BOOKS AND PAMPHLETS: THE PRICES QUOTED ARE FOR GATHERING AND BINDING, IN THE MANNER INDICATED, THE FIRST 100 COPIES OF A SINGLE LEAF AND ADDITIONAL 100 COPIES OF THE SAME LEAF, WHETHER TEXT OR COVER, PRINTED ONE OR BOTH SIDES, OR BLANK. PRICES APPLY TO ALL REQUIRED TRIM SIZES.

PRICE PER LEAF

FIRST 100 EACH ADD'L

COPIES 100 COPIES

(1) (2)

(A) SADDLE STITCHED, 2 WIRE

STITCHES ............... $

(B) SIDE STITCHED, 2 WIRE

STITCHES ...............

(C) LOOSELEAF, TRIMMED 4 SIDES,

1 WIRE STITCH ULC ......

SEMCO INSERTED A BID OF $.01 IN EACH OF THE ABOVE BLANKS.

AS EXPLAINED IN THE LETTER OF FEBRUARY 7, A LEAF IS A SINGLE SHEET OF PAPER (TWO PAGES IF PRINTED ON BOTH SIDES). IT IS ALSO STATED THAT THE PROVISION HAS BEEN IN USE FOR A NUMBER OF YEARS AND IT HAS BEEN CONSISTENTLY INTERPRETED BY BOTH THE GOVERNMENT AND CONTRACTORS TO MEAN THAT THE PRICE OFFERED WILL BE THE COST OF PROVIDING 100 BOUND COPIES OF A SINGLE LEAF. THIS CONTRACTOR, HOWEVER, INTERPRETED THE LANGUAGE TO MEAN THAT THE PRICE OFFERED WOULD BE THE CHARGE FOR BINDING ONE COPY OF A SINGLE LEAF, AND THE COMPANY PROCEEDED TO BILL THE GOVERNMENT CONSISTENT WITH THIS INTERPRETATION ($1.00 FOR THE FIRST 100 COPIES AND $1.00 FOR EACH ADDITIONAL 100 COPIES OF A SINGLE LEAF).

YOUR OFFICE DID NOT DISCOVER THE ERROR UNTIL AFTER IT HAD MADE PAYMENT FOR A NUMBER OF MONTHS IN ACCORDANCE WITH THE BILLING SUBMITTED BY SEMCO, AND SUCH PAYMENTS REPRESENTED AMOUNTS EQUAL TO 100 TIMES THE PRICE USED BY THE GOVERNMENT IN EVALUATING THE BID. IT IS STATED THAT SUCH AN INTERPRETATION HAS RESULTED IN SUBSTANTIAL OVERPAYMENT BY THE GOVERNMENT IN EXCESS OF THE PRICES OFFERED BY THE OTHER BIDDERS. MOREOVER, HAD SEMCO'S BID BEEN EVALUATED IN THIS MATTER IT WOULD HAVE BEEN $17,838.36, AND THE COMPANY WOULD HAVE BEEN PLACED HIGH IN THE SEQUENCE OF CONTRACTORS, RATHER THAN LOW.

IT IS THE POSITION OF YOUR OFFICE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE ERROR BECAUSE OF THE DISPARITY BETWEEN THE AGGREGATE EVALUATED BID OF SEMCO AND THAT OF THE NEXT LOW BIDDER. IS PROPOSED, THEREFORE, TO REFORM THE CONTRACT PRICES FOR THE PARTICULAR ITEM TO REFLECT THE CONTRACTOR'S INTENT TO THE EXTENT SUCH CORRECTED PRICES DO NOT EXCEED THE PRICES FOR THOSE SAME ITEMS OFFERED BY THE NEXT LOW BIDDER IN THE SEQUENCE. HAD SUCH PRICES BEEN BID, THEY WOULD HAVE RESULTED IN AN EVALUATED LOW BID OF $10,098.38, AND WE HAVE BEEN INFORMALLY ADVISED THAT SUCH REFORMATION IS AGREEABLE WITH THE CONTRACTOR.

WHEN A CONTRACT IS TO BE AWARDED IN THE AGGREGATE, THE CONTRACTING OFFICER MAY BE PLACED ON CONSTRUCTIVE NOTICE OF A MISTAKE IF THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE LOW AGGREGATE BID AND OTHER AGGREGATE BIDS. 47 COMP. GEN. 365 (1968). IN THIS CASE THE SECOND LOW AGGREGATE EVALUATED BID WAS APPROXIMATELY 51 PERCENT HIGHER THAN THAT OF SEMCO, WHICH DISPARITY WE FEEL IS SUFFICIENTLY GREAT TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF A MISTAKE. IN SUCH CIRCUMSTANCES, SEMCO SHOULD NOT BE REQUIRED TO PERFORM AT THE ERRONEOUSLY EVALUATED BID PRICE. 37 COMP. GEN. 685 (1958).

THIS OFFICE HAS, ON OCCASION, ALLOWED A CHANGE IN A CONTRACT PRICE WHERE THE MISTAKE IS ESTABLISHED AND THE CONTRACTING OFFICER CAN BE CHARGED WITH NOTICE OF THE PROBABILITY OF THE ERROR, TO THE EXTENT THAT THE INCREASED PRICE DOES NOT EXCEED THE PRICE OF THE NEXT ACCEPTABLE BID. B-176144, JULY 26, 1972; B-167997, OCTOBER 17, 1969; B-165703, JANUARY 8, 1969; B- 165097, SEPTEMBER 5, 1968; AND B-160381, DECEMBER 2, 1966; 37 COMP. GEN. 398 (1957). SINCE THE PROPOSED CORRECTION OF SEMCO'S PRICES FOR ITEM X WILL RESULT IN A LESSER AGGREGATE COST THAN THE PRICES OFFERED BY THE NEXT LOW BIDDER IN THE SEQUENCE, THE CONTRACT SHOULD BE SO REFORMED, AND PAYMENTS SHOULD BE ADJUSTED IN ACCORDANCE THEREWITH.

A COPY OF THIS DECISION SHOULD BE FILED WITH THE CONTRACT.