B-199290, JUL 22, 1980

B-199290: Jul 22, 1980

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GENERAL RULE APPLICABLE TO MISTAKE IN BID ALLEGED AFTER AWARD IS THAT SOLE RESPONSIBILITY FOR PREPARATION OF BID RESTS WITH BIDDER. WHERE BIDDER MAKES MISTAKE IN BID IT MUST BEAR CONSEQUENCES OF MISTAKE UNLESS MISTAKE IS MUTUAL OR CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. 2. CONTRACTING OFFICER MUST APPRISE THE BIDDER OF MISTAKE WHICH IS SUSPECTED AND BASIS FOR SUCH SUSPICION. 3. WHERE ONLY BASIS FOR SUSPECTING MISTAKE IS DISCREPANCY BETWEEN LOW AND OTHER BIDS RECEIVED. REQUEST FOR VERIFICATION IS SUFFICIENT IF DISCREPANCY IS BROUGHT TO ATTENTION OF BIDDER. 4. VERIFIES THAT BID IS CORRECT. THE CONTRACT IS FOR CERTAIN ALTERATIONS TO THE EXISTING SUBSONIC WIND TUNNEL AT THE AMES RESEARCH CENTER.

B-199290, JUL 22, 1980

DIGEST: 1. GENERAL RULE APPLICABLE TO MISTAKE IN BID ALLEGED AFTER AWARD IS THAT SOLE RESPONSIBILITY FOR PREPARATION OF BID RESTS WITH BIDDER, AND WHERE BIDDER MAKES MISTAKE IN BID IT MUST BEAR CONSEQUENCES OF MISTAKE UNLESS MISTAKE IS MUTUAL OR CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. 2. PROPER VERIFICATION REQUIRES THAT IN ADDITION TO REQUESTING CONFIRMATION OF BID PRICE, CONTRACTING OFFICER MUST APPRISE THE BIDDER OF MISTAKE WHICH IS SUSPECTED AND BASIS FOR SUCH SUSPICION. 3. WHERE ONLY BASIS FOR SUSPECTING MISTAKE IS DISCREPANCY BETWEEN LOW AND OTHER BIDS RECEIVED, REQUEST FOR VERIFICATION IS SUFFICIENT IF DISCREPANCY IS BROUGHT TO ATTENTION OF BIDDER. 4. WHERE BIDDER ALLEGING MISTAKE HAS BEEN ADEQUATELY ADVISED OF ALL KNOWN FACTS WHICH SUGGEST POSSIBLE OCCURRENCE OF MISTAKE, AND VERIFIES THAT BID IS CORRECT, SUBSEQUENT ACCEPTANCE OF BID BY GOVERNMENT CREATES VALID AND BINDING CONTRACT. 5.DIFFERENCE OF 12.1 PERCENT BETWEEN AWARDEE'S BID AND THE NEXT LOW BID DOES NOT CONSTITUTE GROUNDS FOR FINDING CONTRACT UNCONSCIONABLE.

BOSTROM BERGEN METAL PRODUCTS:

BOSTROM BERGEN METAL PRODUCTS (BOSTROM) REQUESTS REFORMATION OF CONTRACT NO. NAS2-10251 (IFB2-27360) AWARDED TO IT ON MAY 15, 1979 BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) BECAUSE OF A MISTAKE IN BID DISCOVERED AFTER AWARD. THE CONTRACT IS FOR CERTAIN ALTERATIONS TO THE EXISTING SUBSONIC WIND TUNNEL AT THE AMES RESEARCH CENTER, MOFFETT FIELD, CALIFORNIA. WE FIND NO LEGAL BASIS UPON WHICH TO RECOMMEND REFORMATION.

BOSTROM ALLEGES THAT PRIOR TO BID OPENING THE STATE OF CALIFORNIA BOARD OF EQUALIZATION (BOARD) NOTIFIED IT THAT SALES TAX IS NOT REQUIRED BY THE STATE OF CALIFORNIA ON FEDERALLY-OWNED PROJECTS. ON THE BASIS OF THIS ADVICE, BOSTROM ALLEGES THAT IT DID NOT INCLUDE ANY AMOUNT FOR CALIFORNIA SALES TAX IN ITS BID. ON APRIL 23, 1979, THE FOLLOWING BIDS WERE OPENED:

BIDDER PRICE

BOSTROM-BERGEN METAL PRODUCTS $10,692,178 ADAM & SMITH/TOKOLA 12,170,000 STOCKTON STEEL 12,550,000 PITTSBURGH-DES MOINES STEEL CO. 13,313,300 THE GOVERNMENT'S ESTIMATE WAS $12,100,900

DUE TO THE DISPARITY IN THE BIDS, THE CONTRACTING OFFICER SUSPECTED THAT BOSTROM MAY HAVE MADE AN ERROR. BY LETTER OF APRIL 26, 1979, HE ADVISED BOSTROM OF THE VARIANCES AND REQUESTED VERIFICATION IN ACCORDANCE WITH NASA PROCUREMENT REGULATION (PR) SEC. 2.406-1. BOSTROM REPLIED BY LETTER OF MAY 3, 1979, WHICH STATED THAT IT HAD CHECKED ITS BID FOR CORRECTNESS AND FOUND NO ERRORS. THE CONTRACT WAS AWARDED ON MAY 15, 1979.

ON JUNE 12 BOSTROM WAS ADVISED BY THE STATE OF CALIFORNIA THAT THE STATE SALES TAX WOULD BE APPLICABLE IF "THE PRODUCT SUPPLIED IS TO BE CONSIDERED A FIXTURE OR PART OF THE REAL PROPERTY AND IS INSTALLED." BOSTROM APPARENTLY THEN CONCLUDED THE TAX WOULD BE APPLICABLE AND TELEPHONICALLY AND BY SUBSEQUENT LETTER NOTIFIED THE CONTRACTING OFFICER THAT IT HAD MADE AN ERROR IN ITS BID BY FAILING TO INCLUDE THE STATE SALES TAX, AND REQUESTED AN INCREASE OF $300,000 IN THE PRICE OF THE CONTRACT. ON JULY 30, 1979, BOSTROM REDUCED ITS CLAIM OF ERROR, WITHOUT EXPLANATION, TO $107,737 (1 PERCENT OF THE BID PRICE). NASA'S PROCUREMENT DIRECTOR THEN ISSUED A DETERMINATION DATED APRIL 1, 1980 WHICH DENIED BOSTROM'S REFORMATION REQUEST.

NASA PR SEC. 2-406-4(C) WHICH GOVERNS THE RESOLUTION OF THIS CASE PROVIDES, IN RELEVANT PART, AS FOLLOWS:

"(ADMINISTRATIVE DETERMINATIONS) MAY BE MADE ONLY ON THE BASIS OF CLEAR AND CONVINCING EVIDENCE THAT A MISTAKE IN BID WAS MADE, AND EITHER THAT THE MISTAKE WAS MUTUAL OR THAT THE UNILATERAL MISTAKE MADE BY THE CONTRACTOR WAS SO APPARENT AS TO HAVE CHARGED THE CONTRACTING OFFICER WITH NOTICE OF THE PROBABILITY OF THE MISTAKE. RELIEF REQUESTED BY A CONTRACTOR DUE TO AN ALLEGED MISTAKE MAY BE DENIED REGARDLESS OF THE MONETARY AMOUNT INVOLVED WHERE IT IS DETERMINED THE EVIDENCE IS NOT CLEAR AND CONVINCING:

(I) THAT A MISTAKE IN BID OR PROPOSAL WAS MADE BY THE CONTRACTOR, OR

(II) THAT THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS OR SHOULD HAVE BEEN ON NOTICE OF THE ERROR PRIOR TO THE AWARD OF THE CONTRACT."

THE GENERAL RULE APPLICABLE TO A MISTAKE IN BID ALLEGED AFTER AWARD IS THAT THE SOLE RESPONSIBILITY FOR PREPARATION OF A BID RESTS WITH THE BIDDER, AND WHERE A BIDDER MAKES A MISTAKE IN BID IT MUST BEAR THE CONSEQUENCES OF ITS MISTAKE UNLESS THE MISTAKE IS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. OHIOCRAFT PRINTING, INC., B-194056, FEBRUARY 22, 1979, 79-1 CPD 127.

IT IS CLEAR THAT THE MISTAKE WAS NOT A MUTUAL ONE. BOSTROM BID EXACTLY AS IT INTENDED, ALBEIT MISTAKENLY, PERHAPS, BECAUSE OF ITS MISINTERPRETATION OF CALIFORNIA LAW. NONETHELESS, THE CONTRACT REFLECTED THE ACTUAL AGREEMENT OF THE PARTIES. SINCE THERE WAS NO MISREPRESENTATION BY NASA TO INDUCE THE MISTAKE, AND BECAUSE THIS MISTAKE WAS ONE OF LAW, EQUITABLE RELIEF WOULD NOT BE AVAILABLE FROM OUR OFFICE UNLESS IT CAN BE FOUND THAT NO VALID AND BINDING CONTRACT WAS CONSUMMATED AS A RESULT OF THE GOVERNMENT'S ACCEPTANCE OF THE BOSTROM BID. DUNBAR & SULLIVAN DREDGING CO., B-188584, DECEMBER 23, 1977, 77-2 CPD 497.

HERE, THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF A POSSIBLE ERROR IN BOSTROM'S BID. THE CONTRACTING OFFICER THEREFORE SOUGHT VERIFICATION. THERE IS NO ASSERTION HERE THAT THE CONTRACTING OFFICER HAD ACTUAL NOTICE OF THE ALLEGED ERROR. THE TEST FOR CONSTRUCTIVE NOTICE IS WHETHER UNDER THE 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. R.E. LEE ELECTRIC CO., INC., B-184249, NOVEMBER 14, 1975, 75-2 CPD 305. PROPER VERIFICATION REQUIRES THAT THE CONTRACTING OFFICER, IN ADDITION TO REQUESTING CONFIRMATION OF A BID PRICE, MUST APPRISE THE BIDDER OF THE MISTAKE WHICH IS SUSPECTED AND THE BASIS FOR SUCH SUSPICION. SEE LOS ANGELES CHEMICAL CO., 58 COMP.GEN. 293 (1979), 79-1 CPD 114. WHERE THE CONTRACTING OFFICER DOES NOT PLACE THE BIDDER ON NOTICE OF THE NATURE AND EXTENT OF THE MISTAKE WHICH IS SUSPECTED, THE CONTRACTING OFFICER DOES NOT ADEQUATELY DISCHARGE HIS ERROR DETECTION DUTY, AND REAFFIRMATION OF THE BID IS NOT A BAR TO REFORMATION. SEE 44 COMP.GEN. 383 (1965). HOWEVER, WHERE, AS HERE, THE ONLY BASIS FOR SUSPECTING A MISTAKE IS THE DISCREPANCY BETWEEN THE LOW BID AND OTHER BIDS RECEIVED, THE REQUEST FOR VERIFICATION IS SUFFICIENT IF THIS DISCREPANCY IS BROUGHT TO THE ATTENTION OF THE BIDDER. ATLAS BUILDERS, INC., B-186959, AUGUST 30, 1976, 76-2 CPD 204; GENERAL TIME CORPORATION, B-180613, JULY 5, 1974, 74-2 CPD 9. IN OUR VIEW, THE CONTRACTING OFFICER HAD NO REASON TO KNOW OR SUSPECT THAT A MISTAKE EXISTED AFTER BOSTROM VERIFIED THE BID, BECAUSE THE ERROR WAS NOT SO GROSS AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE ERROR DESPITE THE VERIFICATION. SEE GENERALLY, UNITED STATES V. METRO NOVELTY MANUFACTURING CO., 125 F. SUPP. 713 (S.D.N.Y. 1954); KEMP V. UNITED STATES, 38 F. SUPP. 568 (D. MD. 1941).

WE CONCLUDE, THEREFORE, THAT SINCE BOSTROM HAS BEEN ADEQUATELY ADVISED OF ALL THE KNOWN FACTS WHICH SUGGEST THE POSSIBLE OCCURRENCE OF A MISTAKE AND HAS VERIFIED THAT THE ORIGINAL PRICE IS CORRECT, THE SUBSEQUENT ACCEPTANCE OF ITS BID BY THE GOVERNMENT CREATES A VALID AND BINDING CONTRACT WHICH WILL NOT BE DISTURBED BY A LATER ALLEGATION OF ERROR. PETERMAN, WINDHAM & YAUGHN, INC., 56 COMP.GEN. 239 (1977), 77-1 CPD 20; J.D. SHAKE CONSTRUCTION CO., INC., B-190623, APRIL 25, 1978, 78-1 CPD 318.

THE ONLY OTHER BASIS ON WHICH THIS OFFICE COULD RELIEVE BOSTROM WOULD BE IF ENFORCEMENT OF THE CONTRACT WOULD BE UNCONSCIONABLE. THE DIFFERENCE BETWEEN BOSTROM'S BID AND THE NEXT LOW BID WAS ONLY 12.1 PERCENT. WHILE THERE ARE NO RIGID GUIDELINES IN THIS AREA, THIS DIFFERENCE CLEARLY DOES NOT CONSTITUTE GROUNDS FOR FINDING THE RESULTANT CONTRACT TO BE UNCONSCIONABLE. AL'S CARPET CLEAN AND JANITORIAL SERVICE, B-195871, SEPTEMBER 25, 1979, 79-2 CPD 223 (50 PERCENT DIFFERENCE NOT UNCONSCIONABLE); J.D. SHAKE CONSTRUCTION CO., INC., SUPRA (25 PERCENT DIFFERENCE NOT UNCONSCIONABLE).

ACCORDINGLY, BASING OUR DECISION ON THE MATERIALS SUBMITTED, WE PERCEIVE NO BASIS ON WHICH OUR OFFICE CAN RECOMMEND THE REFORMATION SOUGHT.