Request for Reformation of Contract

A firm requested reformation of a contract alleging that it had discovered an error in its bid after the award was made. The procurement was for the removal and replacement of two generators and associated equipment at a Veterans Administration (VA) Medical Center. Item I involved the removal and replacement of a 75 KW generator with a 180/185 KW one and of a 60 KW generator with a 75 KW one. Item II involved the removal and replacement of the 75 KW generator only. The award was to be made for item I unless the low bid exceeded the funds available, in which case the award would be made for item II. Immediately after the award was made for item I, the awardee asserted that it had made a mistake in its bid, contending that its bid on item I was for the removal and replacement of only the 75 KW generator, and its bid on item II was for the removal and replacement of the 60 KW generator. It alleged that its intended bid for item I was the total of the two amounts. To support this claim, the awardee provided its workpapers; a supplier's quotation upon which the awardee based the bid showing the costs of a 180 KW generator and a 75 KW generator without associated equipment or labor; and comparable quotations from other suppliers furnished after the contract was awarded. When an unilateral mistake in bid is alleged after the award of a contract, GAO will grant relief only if the contracting officer was on actual or constructive notice of the error prior to the award, and failed to take proper steps to verify the bid. In this case, the person who assisted in the preparation of the solicitation was not present when the bid was reviewed. Another individual, unfamiliar with the procurement, conducted the review, and failed to recognize that the Government estimate was for the replacement of only one generator. He noted that the bid was close to the Government estimate and recommended acceptance of the bid on that basis. GAO found that a proper review of the bid would have caused the contracting officer to suspect that a mistake had been made. In its submission to GAO, the VA as much as admitted this. It was held that since the awardee was not required to verify its bid, the Government's acceptance did not result in a binding contract. In view of these facts, and since there were no other bids in response to the solicitation, reformation of the contract was authorized.