B-180402, FEB 4, 1974

B-180402: Feb 4, 1974

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MAY HAVE CONTRACT RESCINDED WITHOUT LIABILITY BECAUSE BID WAS MORE THAN 50 PERCENT LESS THAN GOVERNMENT ESTIMATE AVAILABLE AT TIME OF BID OPENING AND CONTRACTING OFFICER IS DEEMED TO HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. R8-12-74-4 WAS ISSUED ON SEPTEMBER 5. BIDS WERE TO BE SUBMITTED ON A PER THOUSAND BASIS WITH ITEM 1 CONSISTING OF 112. THE SOLE BID RECEIVED WAS THAT OF JAMES R. CONTRACT NO. 12-640 WAS AWARDED ON OCTOBER 23. AMONG THESE PAPERS WERE BIDS HE HAD SUBMITTED FOR OTHER SIMILAR PLANTING CONTRACTS IN OTHER FORESTS IN REGION 8 OF THE UNITED STATES FOREST SERVICE. ALL OF THESE BIDS WERE ON A PER ACRE BASIS RATHER THAN ON A PER THOUSAND BASIS. SLOSS STATED THAT HIS ERROR WAS IN ASSUMING THAT THIS CONTRACT WAS BEING LET ON THE SAME BASIS AS OTHERS IN THE REGION.

B-180402, FEB 4, 1974

AWARD TO SOLE BIDDER, WHO ALLEGED MISTAKE IN BID AFTER AWARD OF CONTRACT FOR PLANTING TREE SEEDLINGS BY COMPUTING BID ON PER ACRE RATHER THAN PER THOUSAND SEEDLINGS BASIS AS REQUIRED BY SOLICITATION, MAY HAVE CONTRACT RESCINDED WITHOUT LIABILITY BECAUSE BID WAS MORE THAN 50 PERCENT LESS THAN GOVERNMENT ESTIMATE AVAILABLE AT TIME OF BID OPENING AND CONTRACTING OFFICER IS DEEMED TO HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. SEE CASES CITED.

TO MR. JAMES R. SLOSS:

INVITATION NO. R8-12-74-4 WAS ISSUED ON SEPTEMBER 5, 1973, BY THE UNITED STATES FOREST SERVICE FOR THE PLANTING OF TREE SEEDLINGS. THE SOLICITATION INVITED BIDS FOR TWO ITEMS. ITEM 1 REQUIRED PLANTING SEEDLINGS BY HAND ON APPROXIMATELY 247 ACRES AND ITEM 2 REQUIRED THE PLANTING OF 507 ACRES BY HAND. THE SPECIFICATION REQUIRED 454 SEEDLINGS PER ACRE. BIDS WERE TO BE SUBMITTED ON A PER THOUSAND BASIS WITH ITEM 1 CONSISTING OF 112,000 SEEDLINGS AND ITEM 2 OF 230,000 SEEDLINGS.

THE SOLE BID RECEIVED WAS THAT OF JAMES R. SLOSS IN THE AMOUNT OF $28.99 PER THOUSAND FOR ITEM 1 AND $24.88 PER THOUSAND FOR ITEM 2. CONTRACT NO. 12-640 WAS AWARDED ON OCTOBER 23, 1973, TO MR. SLOSS.

ON NOVEMBER 5, 1973, THE BIDDER NOTIFIED THE CONTRACTING OFFICER THAT HE HAD MADE AN ERROR IN HIS BID BY COMPUTING HIS BID ON A PER ACRE RATHER THAN A PER THOUSAND BASIS AND REQUESTED EITHER AN INCREASE IN THE CONTRACT PRICE OR CANCELLATION OF THE CONTRACT.

TO SUPPORT HIS ALLEGATION OF ERROR, THE BIDDER FORWARDED TO THE CONTRACTING OFFICER COPIES OF HIS WORKSHEETS AND OTHER DOCUMENTS. AMONG THESE PAPERS WERE BIDS HE HAD SUBMITTED FOR OTHER SIMILAR PLANTING CONTRACTS IN OTHER FORESTS IN REGION 8 OF THE UNITED STATES FOREST SERVICE. ALL OF THESE BIDS WERE ON A PER ACRE BASIS RATHER THAN ON A PER THOUSAND BASIS. MR. SLOSS STATED THAT HIS ERROR WAS IN ASSUMING THAT THIS CONTRACT WAS BEING LET ON THE SAME BASIS AS OTHERS IN THE REGION.

THE GOVERNMENT ESTIMATE FOR THE CONTRACT WAS $60 PER THOUSAND. AT THE REQUIRED PLANTING RATE OF 454 SEEDLINGS PER ACRE, 1000 SEEDLINGS WOULD PLANT 2.2 ACRES. THEREFORE, CONVERTING MR. SLOSS' BID FROM AN ACREAGE TO A PER THOUSAND BASIS WOULD RESULT IN BIDS OF $63.78 AND $54.74 FOR ITEMS 1 AND 2 RESPECTIVELY.

THE CONTRACTING OFFICER STATES IN HIS REPORT TO OUR OFFICE THAT A REVIEW OF THE GOVERNMENT ESTIMATE SHOWS THAT IT MAY HAVE BEEN EXCESSIVE. SURVEY OF PRIOR COSTS FOR SIMILIAR SERVICES TWO YEARS AGO REVEALED A COST OF $34.20 PER THOUSAND. INCREASING THIS PRICE BY A 20 PERCENT INCREASE IN COSTS RESULTS IN A NEW ESTIMATE OF $42.16 PER THOUSAND. THE CONTRACTING OFFICER STATES THAT THIS IS A MORE REALISTIC CONTRACT PRICE.

HOWEVER, AT THE TIME OF CONTRACT AWARD THE CONTRACTING OFFICER ONLY HAD BEFORE HIM THE GOVERNMENT ESTIMATE OF $60 PER THOUSAND AND MR. SLOSS' BID OF $28.99 AND $24.88.

WHILE THE EVIDENCE SUBMITTED BY MR. SLOSS APPEARS TO SUPPORT THE FACT THAT HE MADE AN ERROR IN COMPUTING HIS BID, THE QUESTION FOR CONSIDERATION IN THIS TYPE OF CASE, WHERE A MISTAKE IS ALLEGED AFTER AWARD, IS WHETHER THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE ERROR.

WHERE A MISTAKE IN BID IS ALLEGED AFTER AWARD OF A CONTRACT, OUR OFFICE WILL GRANT RELIEF ONLY IF THE MISTAKE IS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. COMP. GEN. 672 (1969) AND B-178706, JUNE 15, 1973. CONSTRUCTIVE NOTICE IS SAID TO EXIST WHEN THE CONTRACTING OFFICER, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF A CASE, SHOULD HAVE KNOWN OF THE POSSIBILITY OF AN ERROR IN BID. 44 COMP. GEN. 383, 386 (1965). ORDINARILY, WHERE, AS HERE, ONLY ONE BID IS RECEIVED ON AN ITEM, THERE IS NO BASIS FOR COMPARISON OF BIDS AND THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. 26 COMP. GEN. 415 (1946) AND B-174049, NOVEMBER 4, 1971.

HOWEVER, BASED ON THE RECORD BEFORE OUR OFFICE, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF AN ERROR IN THE BID AND REQUESTED VERIFICATION OF THE BID. THE BID WAS MORE THAN 50 PERCENT LESS THAN THE GOVERNMENT ESTIMATE WHICH WAS THE ONLY STANDARD OF COMPARISON AVAILABLE AT THE TIME OF AWARD. WHILE IT HAS SUBSEQUENTLY BEEN SHOWN THAT THIS ESTIMATE MAY HAVE BEEN EXCESSIVE, IT STILL SHOULD HAVE BEEN USED IN EVALUATION BY THE CONTRACTING OFFICER. TO RULE OTHERWISE WOULD PERMIT GOVERNMENT ESTIMATES TO BE RATIONALIZED AWAY AT ANY TIME A CONTRACTOR MADE A SUBSTANTIAL ERROR, ESPECIALLY IN A SOLE BIDDER SITUATION, MERELY BY EVOLVING A POSSIBLE HYPOTHESIS WHICH MIGHT EXPLAIN A LOWER BID. 48 COMP. GEN. 672, 676 (1969).

THEREFORE, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO THE CONTRACTOR.