B-181230, JAN 27, 1975

B-181230: Jan 27, 1975

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CONTRACTOR'S CLAIM FOR INCREASE IN CONTRACT PRICE TO INCLUDE BAR FEED MECHANISM REQUIRED BY SPECIFICATIONS IS GRANTED SINCE 24 PERCENT PRICE DISPARITY BETWEEN THE TWO OFFERS RECEIVED AFFORDS SUFFICIENT BASIS FOR CONCLUDING THAT CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF ERROR. HAS REQUESTED AN INCREASE IN THAT FIRM'S CONTRACT PRICE IN CONNECTION WITH AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF WARNER ROBINS AIR MATERIEL AREA (WRAMA). THE FOLLOWING TWO PROPOSALS WERE SUBMITTED IN RESPONSE TO THE SOLICITATION: D.G. $27. 105 TOTAL AWARD WAS MADE TO D.G. STATED THAT THE PRICE OF THE FEED MECHANISM WAS $6. WAS ADVISED BY THE PROCURING ACTIVITY THAT THE MISTAKE ALLEGED COULD NOT BE CORRECTED PURSUANT TO SECTION 2-406 OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) BECAUSE THE REQUIREMENTS OF THAT SECTION HAD NOT BEEN MET.

B-181230, JAN 27, 1975

CONTRACTOR'S CLAIM FOR INCREASE IN CONTRACT PRICE TO INCLUDE BAR FEED MECHANISM REQUIRED BY SPECIFICATIONS IS GRANTED SINCE 24 PERCENT PRICE DISPARITY BETWEEN THE TWO OFFERS RECEIVED AFFORDS SUFFICIENT BASIS FOR CONCLUDING THAT CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF ERROR.

D.G. MACHINERY & GAGE CO.:

COUNSEL FOR D.G. MACHINERY & GAGE CO. (D.G.) HAS REQUESTED AN INCREASE IN THAT FIRM'S CONTRACT PRICE IN CONNECTION WITH AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF WARNER ROBINS AIR MATERIEL AREA (WRAMA), ROBINS AIR FORCE BASE, GEORGIA, DEPARTMENT OF THE ARMY FORCE CONTRACT NO. F09603-72-C-3929.

ON OCTOBER 28, 1971, REQUEST FOR PROPOSALS (RFP) F09603-72-R-3624 SOLICITED PROPOSALS FOR EIGHT HORIZONTAL UNIVERSAL RAM TYPE TURRET LATHES, FEDERAL STOCK NUMBER (FSN) 3416-761-5332. THE FOLLOWING TWO PROPOSALS WERE SUBMITTED IN RESPONSE TO THE SOLICITATION:

D.G. $27,995 PER UNIT WITH DATA NOT SEPARATELY PRICED

$223,960 TOTAL

WARNER SWASEY CO. $36,623.75 PER UNIT PLUS $5.00 PER SET OF DATA (23

SETS) $293,105 TOTAL

AWARD WAS MADE TO D.G. AT THE PROPOSED PRICE ON DECEMBER 23, 1971. THE CONTRACT HAS BEEN FULLY PERFORMED. BY LETTER DATED JANUARY 19, 1972, D.G. NOTIFIED THE CONTRACTING OFFICER THAT IT HAD OMITTED FROM ITS OFFER THE POWER OPERATED BAR FEED MECHANISM REQUIRED BY THE SPECIFICATIONS. D.G. STATED THAT THE PRICE OF THE FEED MECHANISM WAS $6,853 PER MACHINE AND REQUESTED THAT IT BE ALLOWED TO INCREASE ITS CONTRACT PRICE IN THE TOTAL AMOUNT OF $54,824. IN SUPPORT OF THE ALLEGATION, D.G. SUBMITTED COPIES OF ITS PRICE LIST AND ITS ORIGINAL WORKSHEETS.

BY LETTER DATED JANUARY 28, 1972, D.G. WAS ADVISED BY THE PROCURING ACTIVITY THAT THE MISTAKE ALLEGED COULD NOT BE CORRECTED PURSUANT TO SECTION 2-406 OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) BECAUSE THE REQUIREMENTS OF THAT SECTION HAD NOT BEEN MET. ON FEBRUARY 2, 1972, D.G. SUBMITTED A CLAIM TO THE AIR FORCE FOR RELIEF PURSUANT TO PUBLIC LAW 85- 804, 50 U.S.C. 1431-1435 (1970), AS IMPLEMENTED BY SECTION XVII OF ASPR (1973 ED.), WHICH AUTHORIZES AMENDING OR MODIFYING CONTRACT TO FACILITATE THE NATIONAL DEFENSE. BY MEMORANDUM DATED AUGUST 28, 1972, HEADQUARTERS AIR FORCE LOGISTICS COMMAND CONCLUDED THAT THE MISTAKE WAS UNILATERAL AND THEREFORE NOT CORRECTABLE UNDER THE PROVISION OF PUB. L. 85-804.

BY LETTER DATED MAY 8, 1974, COUNSEL FOR D.G. SUBMITTED ITS REQUEST FOR CONTRACT REFORMATION TO OUR OFFICE. IN THIS REGARD, IT SHOULD BE NOTED THAT THE AIR FORCE DENIAL OF THE CLAIM UNDER THE PROVISIONS OF PUB. L. 85- 804 DOES NOT PRECLUDE THIS OFFICE FROM CONSIDERING THE CLAIM AS WE WOULD ANY OTHER CLAIM BASED UPON ALLEGED MISTAKE IN BID OR OFFER. SEE 52 COMP. GEN. 534 (1973) CITING 48 COMP. GEN. 672 (1969).

WHERE A BIDDER OR OFFEROR HAS MADE A MISTAKE IN ITS BID OR OFFER THAT WAS NOT INDUCED OR SHARED BY THE GOVERNMENT, THE BIDDER OR OFFEROR MUST BEAR THE CONSEQUENCES OF ITS MISTAKE, UNLESS THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. SALIGMAN V. UNITED STATES, 56 F. SUPP. 505 (E.D. PA. 1944); CHERNICK V. UNITED STATES, 372 F.2D 492 (CT. CL. 1967); 48 COMP. GEN. 672 (1969).

THE TEST IS ONE OF REASONABLENESS, WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE THERE WERE ANY FACTORS WHICH REASONABLY COULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER. WENDER PRESSES, INC. V. UNITED STATES, 343 F.2D 961, (CT. CL. 1965); B-176772, MAY 23, 1973.

IT IS THE POSITION OF THE AIR FORCE THAT THE FACT THAT D.G.'S BID WAS APPROXIMATELY 24 PERCENT LESS THAN THAT OF THE OTHER OFFEROR DID NOT PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR BECAUSE THE SPECIFICATIONS FOR INDUSTRIAL PRODUCTION EQUIPMENT, SUCH AS THE TURRET LATHES IN QUESTION, ARE AS LOOSELY WRITTEN AS POSSIBLE TO OBTAIN THE MAXIMUM POSSIBLE COMPETITION AND THAT PROCUREMENTS UTILIZING SUCH SPECIFICATIONS OFTEN RESULT IN A DISPARITY OF PRICES OFFERED.

D.G. CONTENDS THAT THE DIFFERENCE OF $69,145 IN THE OFFERS, WHICH CONSTITUTES A 24-PERCENT PRICE DISPARITY BETWEEN THE TWO OFFERS, SHOULD HAVE CAUSED THE CONTRACTING OFFICER TO SUSPECT THAT A MISTAKE HAD BEEN MADE. IN ADDITION, D.G. CONTENDS THAT IF ADEQUATE PRICE ANALYSIS OF THIS PROCUREMENT HAD BEEN PERFORMED, THE ERROR IN ITS OFFER WOULD HAVE BEEN REVEALED.

IT SHOULD BE NOTED THAT D.G. AND ITS SUPPLIER PREPARED D.G.'S BID TOGETHER. DURING THIS PREPARATION, THE REQUIREMENT FOR A POWER OPERATED BAR FEED MECHANISM WAS OVERLOOKED. SINCE THE BID PRICE OF $27,995 PER MACHINE APPEARED TO BE A REASONABLE PRICE FOR A MACHINE WITHOUT A BAR FEED MECHANISM, THERE IS NO BASIS FOR CONCLUDING THAT EITHER D.G. OR ITS SUPPLIER SHOULD HAVE KNOWN OF THE ERROR AT THE TIME OF SUBMISSION OF THE BID.

WE ARE IN AGREEMENT WITH THE AIR FORCE'S DETERMINATION THAT THE SPECIFICATIONS WERE LOOSELY DRAWN SO AS TO PERMIT A VARIETY OF MACHINES TO MEET THE REQUIREMENTS SET FORTH THEREIN. HOWEVER, WE BELIEVE THAT AN EXAMINATION OF THE TURRET LATHE INDUSTRY WOULD INDICATE THAT AT THE TIME OF CONTRACT AWARD, THE STATE OF THE INDUSTRY WAS SUCH THAT IT WAS HIGHLY UNLIKELY THAT TWO TURRET LATHES MEETING THE SPECIFICATIONS WOULD BE OFFERED AT A 24-PERCENT DISPARITY IN PRICE. CONSEQUENTLY, THE 24 PERCENT DISPARITY IN OFFERS AFFORDS A SUFFICIENT BASIS FOR CONCLUDING THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR IN D.G.'S OFFER.

IN VIEW OF THE CONCLUSION REACHED ABOVE, WE SHALL NOT DISCUSS THE REMAINING CONTENTION RAISED BY D.G.

WE MUST CONSIDER THE EXTENT OF RELIEF TO WHICH D.G. IS ENTITLED IN LIGHT OF THE FACT THAT THE CONTRACT HAS BEEN FULLY PERFORMED. WHILE THE WORKSHEETS OF D.G. REFLECT THAT THE BAR FEED MECHANISM WAS OMITTED FROM ITS OFFER, THEY DO NOT INDICATE WHAT THE OFFER WOULD HAVE BEEN HAD THEY BEEN INCLUDED. THE D.G. PRICE LIST IN EFFECT AT THE TIME OF THE OFFER LISTS THE COSTS OF THE COMPONENTS OF THE MECHANISM AT $6,853 PER UNIT. D.G.'S CLAIM OF $54,824 CONSTITUTES THIS PER UNIT PRICE FOR THE EIGHT MACHINES DELIVERED. WE RECOMMEND THAT NEGOTIATIONS BE UNDERTAKEN WITH D.G. TO DETERMINE THE REASONABLENESS OF THE COST OF THE BAR FEED MECHANISM SO THAT A MUTUALLY ACCEPTABLE QUANTUM OF RELIEF MAY BE ACHIEVED.