B-182777, JAN 24, 1975

B-182777: Jan 24, 1975

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IN MISTAKE IN BID CASE WHERE SUBSEQUENT TO AWARD OF CONTRACT THE CONTRACTING OFFICER STATES THAT A BONA FIDE MISTAKE WAS ESTABLISHED IN THE OFFER OF THE CONTRACTOR. THAT HE SHOULD HAVE BEEN PLACED ON NOTICE OF THE MISTAKE BEFORE AWARD. THERE IS NO DOUBT AS TO THE INTENDED OFFER. AMONG THE PROVISIONS INCORPORATED BY REFERENCE WAS ONE WHICH REQUIRED THAT ANY FEDERAL EXCISE TAX SHOULD BE INCLUDED IN ALL UNIT PRICES. THE FOLLOWING OFFERS WERE RECEIVED IN RESPONSE TO THE SOLICITATION: OFFEROR UNIT PRICE A.B. 998.16 FOB DESTINATION SCARLETT'S LOW OFFER WAS REJECTED BECAUSE THE GROSS VEHICLE WEIGHT OF THE OFFERED TRUCKS WAS SUBSTANTIALLY LOWER THAN THAT REQUIRED. WAS AWARDED THE SUBJECT CONTRACT AT A TOTAL PRICE OF $99.

B-182777, JAN 24, 1975

IN MISTAKE IN BID CASE WHERE SUBSEQUENT TO AWARD OF CONTRACT THE CONTRACTING OFFICER STATES THAT A BONA FIDE MISTAKE WAS ESTABLISHED IN THE OFFER OF THE CONTRACTOR, THAT HE SHOULD HAVE BEEN PLACED ON NOTICE OF THE MISTAKE BEFORE AWARD, AND THERE IS NO DOUBT AS TO THE INTENDED OFFER, THE CONTRACT MAY BE REFORMED AS ADMINISTRATIVELY RECOMMENDED TO REFLECT THE INTENDED OFFER.

MID-PACIFIC INDUSTRIES, INC.:

THE GENERAL COUNSEL, GENERAL SERVICES ADMINISTRATION (GSA), PURSUANT TO FEDERAL PROCUREMENT REGULATIONS (FPR) SEC 1-2.406-4(I) (1964 ED.), HAS REQUESTED OUR APPROVAL OF A CONTRACTING OFFICER'S FINDINGS AND DETERMINATION THAT A CONTRACT BE REFORMED PURSUANT TO MISTAKE IN BID PROCEDURES.

BY A SPEEDLETTER WHICH INCORPORATED BY REFERENCE THE TERMS AND CONDITIONS OF A PRIOR SIMILAR SOLICITATION, GSA ISSUED REQUEST FOR PROPOSALS (RFP) FPMH-H4-71655-N-5-29-74, FOR THE FURNISHING OF FOUR HEAVY TRUCKS. AMONG THE PROVISIONS INCORPORATED BY REFERENCE WAS ONE WHICH REQUIRED THAT ANY FEDERAL EXCISE TAX SHOULD BE INCLUDED IN ALL UNIT PRICES.

THE FOLLOWING OFFERS WERE RECEIVED IN RESPONSE TO THE SOLICITATION:

OFFEROR UNIT PRICE

A.B. SCARLETT, INC. $24,430.85 FOB DESTINATION

MID-PACIFIC INDUS., INC. $24,799 FOB ORIGIN

$24,987 FOB DESTINATION

BEAVER MOTOR CO. $28,075 FOB ORIGIN

MACK TRUCKS, INC. $29,998.16 FOB DESTINATION

SCARLETT'S LOW OFFER WAS REJECTED BECAUSE THE GROSS VEHICLE WEIGHT OF THE OFFERED TRUCKS WAS SUBSTANTIALLY LOWER THAN THAT REQUIRED. THE SECOND LOW OFFEROR, MID-PACIFIC, WAS AWARDED THE SUBJECT CONTRACT AT A TOTAL PRICE OF $99,548.00.

AFTER AWARD, MID-PACIFIC ADVISED GSA THAT ITS OFFER DID NOT INCLUDE THE APPLICABLE 10 PERCENT FEDERAL EXCISE TAX. MID-PACIFIC STATED THAT THE OMISSION OCCURRED BECAUSE A NUMBER OF ITS PRIOR GOVERNMENTAL SALES HAD BEEN TAX-EXEMPT AND THE "FEDERAL EXCISE TAXES AND DUTIES" PROVISION HAD BEEN OVERLOOKED BECAUSE THE SPEED-LETTER HAD INCORPORATED IT BY REFERENCE.

AS EVIDENCE OF THE MISTAKE, MID-PACIFIC HAS SUBMITTED ITS COST AND PRICING DATA AS WELL AS WORKSHEETS AND ITS ORDER TO THE SUPPLIER. IN VIEW OF THE FACT THAT THERE IS A BLANK SPACE ON THE WORKSHEET ON THE LINE RESERVED FOR ENTRY OF THE FEDERAL EXCISE TAX, AND MID-PACIFIC'S ORDER TO ITS SUPPLIER STATED THE ERRONEOUS CONCLUSION THAT THE "ORDER IS EXCISE TAX EXEMPT," WE BELIEVE MID-PACIFIC HAS CLEARLY ESTABLISHED THE EXISTENCE OF THE MISTAKE.

EVIDENCE OF MID-PACIFIC'S INTENDED OFFER IS SIMILARLY CLEAR AND CONVINCING. THE WORKSHEETS SUBMITTED BY MID-PACIFIC SHOW THAT THE PRICE PER TRUCK WAS ARRIVED AT BY ADDING TO THE MANUFACTURER'S SELLING PRICE OF $24,409 ADDITIONAL COSTS FOR ITEMS SUCH AS AN EXTRA TIRE AND FREIGHT CHARGES. BASED ON THE FACT THAT THE APPLICABLE FEDERAL EXCISE TAX IS 10 PERCENT OF THE MANUFACTURER'S SELLING PRICE, THE OFFER SHOULD HAVE INCLUDED AN ADDITIONAL $2,440 PER VEHICLE OR A TOTAL OF $9,760 FOR THE FOUR TRUCKS.

IT IS THE CONTRACTING OFFICER'S VIEW THAT THE DISCREPANCY IN PRICE BETWEEN MID-PACIFIC'S OFFER AND THOSE FOR SIMILARLY-SIZED VEHICLES SHOULD HAVE PLACED HIM ON NOTICE AS TO THE PROBABILITY OF MISTAKE PRIOR TO AWARD. THE SOLICITATION REQUIRED A MINIMUM GROSS VEHICLE WEIGHT (G.V.W.) RATING OF 54,000 POUNDS. THE CONTRACTING OFFICER OBSERVES THAT MID- PACIFIC OFFERED A 56,000-POUND G.V.W. VEHICLE AT A UNIT PRICE ONLY $450 ABOVE THAT OF SCARLETT'S 43,000-POUND G.V.W. VEHICLE, YET APPROXIMATELY $3,000 TO $5,000 BELOW THAT OF THE OTHER TWO OFFERED VEHICLES IN THE 54,000-POUND G.V.W. CLASS.

THIS OFFICE WILL GRANT APPROPRIATE RELIEF WHERE A MISTAKE HAS BEEN ALLEGED SUBSEQUENT TO THE AWARD OF A CONTRACT IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. SEE MATTER OF CITY IRON AND METAL COMPANY, B 182388, NOVEMBER 25, 1974; FPR SEC. 1-2.406-4(F)(2) (1964 ED.); AND MATTER OF UBIQUE LTD., B-180610, AUGUST 12, 1974.

IN THE PRESENT CASE THE CONTRACTING OFFICER HAS STATED THAT A BONA FIDE MISTAKE WAS ESTABLISHED; THAT HE SHOULD HAVE BEEN PLACED ON NOTICE OF THE MISTAKE BEFORE AWARD OF THE CONTRACT; AND THAT THE INTENDED PRICE SHOULD HAVE INCLUDED THE FEDERAL EXCISE TAX OF $9,760.

ACCORDINGLY, SINCE NO VERIFICATION OF MID-PACIFIC'S OFFER WAS REQUESTED OR MADE, AND REFORMATION WILL NOT DISPLACE THE NEXT LOW OFFEROR, OUR OFFICE WILL NOT OBJECT TO REFORMATION OF THE CONTRACT PRICE TO INCLUDE THE $9,760, AS ADMINISTRATIVELY RECOMMENDED.