Request for Contract Reformation

B-195719: Jan 14, 1980

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A firm requested the reformation of a contract with the Defense Logistics Agency (DLA) because it discovered a mistake in its bid after the contract was awarded. The protester mistakingly based its bid on a lower priced item than one required by DLA. Because the price quoted was lower than both the other offerors and the Government's estimate, the contracting officer contacted the firm to confirm its bid. The firm verified the price. When the firm delivered the lower priced item, it was rejected as nonconforming. The firm supplied the higher priced item and requested relief from supplying it at the contract price. Its request was denied by DLA so the firm submitted a request for reformation to GAO. DLA contended that GAO did not have authority to consider the firm's request under the Contract Disputes Act of 1978 which gave contracting officers the authority to grant contract reformations. Secondly, DLA contended that the matter was a factual dispute with respect to whether the firm's performance was defective. Finally, DLA argued that the firm should not have been allowed to attack that agency's denial of the firm's request in another forum. GAO has held that when a bidder is requested and does verify a bid, the Government's acceptance of the bid results in a binding contract which will not be disturbed by a later allegation of error. However, the contracting officer must apprise the bidder of the suspected error and not merely ask for confirmation of the bid. In this case, GAO held that the contracting officer's failure to draw the firm's attention to the suspected mistake resulted in an inadequate verification request. GAO found no legal merit to the DLA contentions. First, it was held that since the contract was awarded before the Act's effective date, it would apply to the claim only if the firm elected to proceed thereunder. The firm did not. Regarding the second contention, GAO held that there were no facts in dispute, rather, it was a question of whether a binding contract existed and thus was appropriate for GAO review. Finally, GAO held that the denial of the firm's request by DLA did not preclude GAO from considering whether the firm was entitled to relief independent of that statute because of the alleged error. Accordingly, GAO held that the award by DLA did not result in a binding contract. Since the product had already been delivered and rescission was not practical, DLA was directed to pay the firm on a quantum valebant basis.