B-180610, AUG 12, 1974

B-180610: Aug 12, 1974

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CONTRACTOR WHO FAILED TO ALLEGE ERROR UNTIL AFTER CONTRACT AWARD MAY NEVERTHELESS HAVE QUANTUM MERUIT OR QUANTUM VALEBANT PAYMENT FOR PERFORMANCE WHEN NO VALID CONTRACT WAS CONSUMMATED BECAUSE GOVERNMENT SHOULD HAVE KNOWN OF PROBABILITY OF BID ERROR BUT NEGLECTED TO VERIFY CONTRACTOR'S BID. 2. CONTRACTING OFFICER CHARGED WITH CONSTRUCTIVE NOTICE OF BID ERROR WHERE THE TOTALITY OF THE CIRCUMSTANCES SHOULD HAVE RAISED THE PRESUMPTION OF ERROR WHICH IN TURN REQUIRED BID VERIFICATION. IN SITUATION WHERE GOVERNMENT ESTIMATE WAS 24 PERCENT HIGHER THAN THE LOW BID. THE SECOND LOW BID WAS 44 PERCENT HIGHER THAN LOW BID. PREVIOUS PROCUREMENT WAS 140 PERCENT HIGHER THAN LOW BID. NO VALID CONTRACT WAS CONSUMMATED WHEN GOVERNMENT FAILED TO VERIFY THE LOW BID.

B-180610, AUG 12, 1974

1. CONTRACTOR WHO FAILED TO ALLEGE ERROR UNTIL AFTER CONTRACT AWARD MAY NEVERTHELESS HAVE QUANTUM MERUIT OR QUANTUM VALEBANT PAYMENT FOR PERFORMANCE WHEN NO VALID CONTRACT WAS CONSUMMATED BECAUSE GOVERNMENT SHOULD HAVE KNOWN OF PROBABILITY OF BID ERROR BUT NEGLECTED TO VERIFY CONTRACTOR'S BID. 2. CONTRACTING OFFICER CHARGED WITH CONSTRUCTIVE NOTICE OF BID ERROR WHERE THE TOTALITY OF THE CIRCUMSTANCES SHOULD HAVE RAISED THE PRESUMPTION OF ERROR WHICH IN TURN REQUIRED BID VERIFICATION. IN SITUATION WHERE GOVERNMENT ESTIMATE WAS 24 PERCENT HIGHER THAN THE LOW BID, THE SECOND LOW BID WAS 44 PERCENT HIGHER THAN LOW BID, AND PREVIOUS PROCUREMENT WAS 140 PERCENT HIGHER THAN LOW BID, NO VALID CONTRACT WAS CONSUMMATED WHEN GOVERNMENT FAILED TO VERIFY THE LOW BID.

UBIQUE LTD.:

THIS DECISION INVOLVES A MISTAKE IN BID ALLEGED BY UBIQUE LTD. AFTER AWARD OF A CONTRACT TO IT UNDER IFB NO. N00024-71-B-7543. THE SOLICITATION, ISSUED BY THE NAVAL SHIP SYSTEMS COMMAND, REQUESTED BIDS FOR TWO ITEMS. ITEM 1 CALLED FOR A PER UNIT BID FOR TEN VLF CONVERSION KITS FOR ACOUSTIC DEVICES. ITEM 2 CALLED FOR A SIMILAR NUMBER AND PER UNIT BID FOR REPAIR PARTS FOR THE ITEM 1 CONVERSION KITS.

BIDS WERE OPENED ON JUNE 15, 1971, AND THREE BIDS WERE RECEIVED AS FOLLOWS:

(PER (PER

BIDDER ITEM 1 UNIT ITEM 2 UNIT) TOTAL PRICE

UBIQUE LTD. $5,790 $1,902 $ 76,920

OCEAN & ATOMOSPHERIC $8,004 $3,039 $110,430

SCIENCES, INC.

WIL-JO MFG. CO. $8,780 $2,485 $112,650

THE GOVERNMENT'S TOTAL PRICE ESTIMATE WAS $95,000.

ON AUGUST 11, 1971, THE NAVY AWARDED UBIQUE CONTRACT N00024-72-C-5110 FOR A TOTAL PRICE OF $76,920. IN A LETTER DATED SEPTEMBER 10, 1971, UBIQUE ADVISED THE NAVY THAT ITS BID WAS ABOUT $28,000 LOWER THAN IT SHOULD HAVE BEEN. THE LETTER ALLEGED THAT A MISTAKE WAS CAUSED BY A FAULTY ESTIMATE OR SUBCONTRACTOR QUOTATION FOR A REGULATING VALVE ASSEMBLY. LATER CORRESPONDENCE FROM UBIQUE INDICATED THAT THE DEATH OF ITS ESTIMATOR MADE IMPOSSIBLE THE TASK OF FINDING THE SOURCE OF THE FAULTY SUBCONTRACTOR QUOTATION.

UBIQUE HAS ASSERTED IN EFFECT THAT ITS BID WAS SO FAR OUT OF LINE WITH OTHER BIDS THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF A MISTAKE AND THEREFORE WAS REQUIRED TO REQUEST VERIFICATION OF THE BID. THE NAVY FEELS THAT THE CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE OR ACTUAL NOTICE OF A MISTAKE AT THE TIME OF AWARD AND THAT BID VERIFICATION WAS NOT NECESSARY. WE CANNOT AGREE WITH THE NAVY.

AS A GENERAL RULE, WHEN A BID HAS BEEN ACCEPTED THE BIDDER IS BOUND TO PERFORM AND MUST BEAR THE CONSEQUENCES OF ITS UNILATERAL MISTAKE. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505 (D.C.E.D. PA. 1944). HOWEVER, OUR OFFICE HAS HELD THAT NO VALID AND BINDING CONTRACT IS CONSUMMATED WHERE THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE PROBABILITY OF ERROR, BUT NEGLECTED TO TAKE PROPER STEPS TO VERIFY THE BID. 37 COMP. GEN. 685 (1958) AND 17 COMP. GEN. 575 (1938). IN DETERMINING WHETHER A CONTRACTING OFFICER HAS A DUTY TO VERIFY BID PRICES WE HAVE STATED:

"*** THE TEST IS WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF 'THE PARTICULAR CASE THERE WERE ANY FACTORS WHICH REASONABLY SHOULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER' (WELCH, MISTAKES IN BID 18 FED. B. J. 75, 83) WITHOUT MAKING IT NECESSARY FOR THE CONTRACTING OFFICER TO ASSUME THE BURDEN OF EXAMINING EVERY BID FOR POSSIBLE ERROR BY THE BIDDER. ***" 49 COMP. GEN. 272, 274 (1969), QUOTING B-164845, JANUARY 27, 1969.

IN THE PRESENT CASE, THE GOVERNMENT ESTIMATE AND THE SECOND LOW BID WERE 24 PERCENT AND 44 PERCENT HIGHER, RESPECTIVELY, THAN UBIQUE'S BID. ADDITIONALLY, THE NAVY WAS AWARE THAT THE LAST CONTRACT FOR TWO IDENTICAL CONVERSION KITS WAS AT A 140 PERCENT HIGHER PRICE THAN UBIQUE'S BID IN THE PRESENT CASE. ALTHOUGH THE NAVY MAKES A STRONG POINT OUT OF THE LESSER QUANTITY IN THE EARLIER PROCUREMENT, WE BELIEVE THIS POINT IS DIMINISHED BY THE TOTALITY OF THE CIRCUMSTANCES, INCLUDING THE WELL GROUPED OTHER BIDS, AND THE DIVERGENT PERCENTAGES BETWEEN UBIQUE'S BID, THE GOVERNMENT ESTIMATE AND THE HIGHER BIDS.

UBIQUE'S EVIDENCE OF ERROR INCLUDES A BASIC PARTS LIST WHICH SHOWS $90 AS THE ESTIMATE FOR A REGULATING VALVE ASSEMBLY WITH 20 SUCH ASSEMBLIES REQUIRED FOR CONTRACT PERFORMANCE. THE CONTRACTOR HAS ALSO FURNISHED EVIDENCE THAT QUOTATIONS WERE RECEIVED FOR THE ASSEMBLIES RANGING FROM $1,375 TO $875, PLUS TOOLING, PER ASSEMBLY, IN ADDITION, UBIQUE HAD FURNISHED THE FINAL PURCHASE ORDER WITH ITS SUBCONTRACTOR FOR THE ASSEMBLIES AT A COST OF $875 PER UNIT PLUS $5,000 IN TOOLING COSTS. BELIEVE THAT THE CONTRACTOR HAS SUBMITTED SUFFICIENT EVIDENCE IN THIS CASE TO ESTABLISH THE FACT THAT THE BID INTENDED COULD NOT HAVE BEEN THE BID SUBMITTED. ALTHOUGH EVIDENCE OF A MISTAKE HAS BEEN SHOWN, WE AGREE THAT THE DEATH OF UBIQUE'S ESTIMATOR HAS CLOSED ALL POSSIBILITIES OF DETERMINING THE EXACT INTENDED BID PRICE. ALTHOUGH THE CONTRACTOR HAS SUBMITTED HIS AFTER AWARD COSTS FOR THE MISTAKE, SUCH EVIDENCE MAY NOT BE USED TO DETERMINE THE INTENDED BID. 17 COMP. GEN. 575 (1938).

THEREFORE, WE THINK UBIQUE HAS PRESENTED EVIDENCE TO ESTABLISH THE EXISTENCE OF A MISTAKE BUT NOT THE INTENDED BID PRICE. ADDITIONALLY, WE BELIEVE THE CONTRACTING OFFICER WAS CONSTRUCTIVELY AWARE OF THE MISTAKE BUT FAILED TO VERIFY UBIQUE'S BID. ACCORDINGLY, WE BELIEVE IT IS EVIDENT THAT NO CONTRACT WAS EVER EFFECTED AT THE AWARD PRICE. CHRIS BERG INC. V. UNITED STATES, 426 F.2D 314 (CT. CL. 1970) AND 37 COMP. GEN. 706, 707 (1958). BECAUSE THE CONTRACT WORK HAS BEEN COMPLETED AND RESCISSION IS NOT FEASIBLE WE BELIEVE UBIQUE SHOULD RECEIVE PAYMENT ON A QUANTUM VALEBANT OR QUANTUM MERUIT BASIS, THAT IS, THE REASONABLE VALUE OF THE SERVICES AND MATERIALS ACTUALLY FURNISHED, 53 COMP. GEN. 368 (1973) AND C.N. MONROE MFG. CO. V. UNITED STATES, 143 F.SUPP. 449 (E.D. MICH 1956), NOT TO EXCEED THE CLAIMED AMOUNT.