B-153279, OCT. 21, 1964

B-153279, OCT. 21, 1964

TO FAIRCHILD STRATOS CORPORATION:

WE REFER TO YOUR LETTERS DATED DECEMBER 30, 1963 AND MARCH 6, 1964, WITH ENCLOSURES, REQUESTING RECONSIDERATION OF OUR CERTIFICATE OF SETTLEMENT DATED DECEMBER 13, 1963, DENYING YOUR CLAIM FOR ADDITIONAL COMPENSATION OF $230,700 UNDER CONTRACT NO. DA-44-009-ENG-2799, DATED FEBRUARY 3, 1956.

THE ABOVE CONTRACT WAS AWARDED TO YOU BY THE CORPS OF ENGINEERS, UNITED STATES ARMY ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES, FORT BELVOIR, VIRGINIA, FOR THE FOLLOWING PROCUREMENT UNDER ITEM 1:

"ALL DEVELOPMENT, ENGINEERING, DRAFTING, LABOR, TOOLS, EQUIPMENT, AND MATERIALS NECESSARY AND DESIGN, FABRICATE, TEST AND DELIVERY, ONE (1) COMPRESSOR TURBINE SET FOR A 400 KW CLOSED CYCLE GAS TURBINE POWER PLANT, IN ACCORDANCE WITH AND AS REQUIRED BY PURCHASE DESCRIPTION TITLED,"CLOSED CYCLE COMPRESSOR TURBINE SET" DATED 21NOVEMBER 1955, A COPY OF WHICH IS ATTACHED, MARKED "EXHIBIT B," AND MADE A PART HEREOF.'

EXHIBIT B WAS THE PERFORMANCE TYPE SPECIFICATIONS WHICH WERE MADE PART OF YOUR CONTRACT. ITEM 2 PROVIDED FOR THE FURNISHING OF TECHNICAL AND DESIGN REPORTS.

YOUR PROPOSAL FOR THIS PROCUREMENT WHICH QUOTED A FIRM FIXED PRICE OF $77,816 WAS THE LOWEST RECEIVED. THE GOVERNMENT'S ESTIMATE FOR THE PROJECT WAS $150,000. THE PRICES QUOTED IN THE OTHER PROPOSALS FOR THIS PROJECT WERE SUBSTANTIALLY IN EXCESS OF YOURS.

ON JUNE 29, 1960, OVER FOUR YEARS AFTER AWARD, YOU NOTIFIED THE CONTRACTING OFFICER OF A MISTAKE IN YOUR PROPOSAL AND REQUESTED AN ADJUSTMENT OF YOUR CONTRACT PRICE, ALLEGING THAT YOU MADE A MISTAKE IN ESTIMATING THE PRICE IN YOUR PROPOSAL SINCE THE TECHNICAL APPROACH ON WHICH THE PRICE IN YOUR PROPOSAL WAS BASED WOULD NOT SATISFY THE REQUIREMENTS OF THE GOVERNMENT AS SET FORTH IN THE PERFORMANCE TYPE SPECIFICATIONS. YOU CONTEND THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE ERROR IN YOUR PROPOSAL BECAUSE OF THE DIFFERENCE BETWEEN THE PRICE IN YOUR PROPOSAL AND THE GOVERNMENT'S ESTIMATE AND THE DIFFERENCE IN PRICE BETWEEN YOUR PROPOSAL AND THE OTHER PROPOSALS RECEIVED. YOU CONCLUDE THAT IN THESE CIRCUMSTANCES A VERIFICATION OF YOUR PROPOSAL SHOULD HAVE BEEN REQUESTED BEFORE THE AWARD WAS MADE TO YOU.

A MEMORANDUM OF A MEETING WHICH WAS HELD PRIOR TO AWARD AMONG YOUR REPRESENTATIVES AND PERSONNEL OF THE CORPS OF ENGINEERS STATES THAT YOUR REPRESENTATIVES WERE QUESTIONED AS TO THE PRICE BREAKDOWN OF YOUR PROPOSAL AND WERE ASKED IF A MISTAKE IN YOUR PROPOSAL HAD BEEN MADE. IN YOUR LETTER TO OUR OFFICE DATED MARCH 6, 0964, YOU CONTEND THAT YOUR REPRESENTATIVES AT THE ABOVE MEETING CONSIDERED ANY REQUEST FOR VERIFICATION AS A ROUTINE REQUEST FOR ARITHMETICAL CONFIRMATION THAT THE COST BREAKDOWN WAS CORRECT AND THAT YOU DO NOT CONSIDER A CASUAL REQUEST FOR CONFIRMATION OF THE PRICE BREAKDOWN AS A REQUEST FOR VERIFICATION OF YOUR PROPOSAL. YOU THEREFORE REQUEST RECONSIDERATION ON THE BASIS THAT THE FOLLOWING STATEMENT IN OUR CERTIFICATE OF SETTLEMENT WAS FACTUALLY INCORRECT:

"IT IS FURTHER REPORTED THAT YOU WERE QUESTIONED ABOUT THE PRICE BREAKDOWN AND ASKED IF A MISTAKE IN PRICE HAD BEEN MADE; THAT AFTER CONSULTING WITH A COST ANALYST YOU INDICATED THE PRICE BREAKDOWN WAS CORRECT; ...'

WITH RESPECT TO THE GOVERNMENT'S ESTIMATE FOR THIS PROJECT, THE ADMINISTRATIVE REPORT INDICATES THAT THIS ESTIMATE WAS NO MORE THAN AN "EDUCATED GUESS" SINCE THERE HAD BEEN NO PREVIOUS PROCUREMENT EXPERIENCE BY FORT BELVOIR IN THIS FIELD. THE OTHER PROPOSALS FOR THIS PROJECT WERE DETERMINED TO BE TECHNICALLY NONRESPONSIVE AFTER EVALUATION SINCE THESE PROPOSALS INCLUDED COSTS NOT ONLY FOR THE DESIGN AND FABRICATION OF THE HIGH SPEED TURBINE COMPRESSOR BUT ALSO FOR AN EXTENSIVE DEVELOPMENT PROGRAM INCLUDING THE ERECTION OF LARGE TESTING FACILITIES AND FABRICATION OF NUMEROUS SETS PRINCIPALLY ON A COST-PLUS A-FIXED-FEE BASIS. THIS DEVELOPMENT PROGRAM WAS NOT INCLUDED IN THE GOVERNMENT'S REQUEST AND WAS OTHERWISE UNACCEPTABLE.

IN CONNECTION WITH THE EVALUATION OF YOUR PROPOSAL A STATEMENT FROM THE PROJECT ENGINEER FOR THIS PROCUREMENT IN THE NUCLEAR POWER BRANCH AT FORT BELVOIR, STATES AS FOLLOWS:

"THE PROPOSAL OF STRATOS DIVISION, FAIRCHILD ENGINE AND AIRPLANE CORP., APPEARED TECHNICALLY FEASIBLE, BUT BECAUSE THE QUOTED PRICE WAS SO FAR BELOW THE ESTIMATE PREVIOUSLY FURNISHED BY TECHNICAL PERSONNEL, THE CONTRACTING OFFICER REQUESTED THAT IT BE DETERMINED BY TECHNICAL PERSONNEL THAT STRATOS UNDERSTOOD THE TECHNICAL REQUIREMENTS OF THE CONTRACT AND HAD NOT MADE A MISTAKE OF A TECHNICAL NATURE AS TO WHAT THE GOVERNMENT WAS PURCHASING. AS A RESULT OF THIS REQUEST, INTERVIEWS WERE HELD WITH STRATOS PERSONNEL AT WHICH TIME THE TECHNICAL REQUIREMENTS OF THE CONTRACT WERE FULLY DISCUSSED AND THE TECHNICAL APPROACH AND METHODS THAT STRATOS STATED THEY INTENDED TO PURSUE WERE EXAMINED AND CONCLUDED TO BE FEASIBLE, THOUGH NOT PROVEN. OF PARTICULAR INTEREST WAS THEIR GRASP OF THE DESIGN REQUIREMENTS FOR THE CENTRIFUGAL COMPRESSOR. IT WAS OBVIOUS THAT STRATOS HAD ACCOMPLISHED DEVELOPMENT WORK IN THIS SPECIFIED AREA. AS A RESULT OF THESE INTERVIEWS IT WAS CONCLUDED THAT THE TECHNICAL PERSONNEL OF STRATOS ACTUALLY KNEW MORE ABOUT THE STATE-OF-THE-ART AND THE TECHNICAL REQUIREMENTS NECESSARY TO SATISFACTORILY PERFORM THE CONTRACT THAN THE GOVERNMENT IN THIS FIELD. ACTUALLY, STRATOS DIVISION OF FAIRCHILD ENGINE AND AIRPLANE CORP., WAS ONE OF THE FOREMOST MANUFACTURERS AND DEVELOPERS OF CENTRIFUGAL FLOW COMPRESSORS.'

THE ADMINISTRATIVE REPORT FROM THE CONTRACTING OFFICER STATES THAT THE PRICE IN YOUR PROPOSAL BASED ON THE TECHNICAL APPROACH YOU PROPOSED WAS REASONABLE. THE CONTRACTING OFFICER'S REPORT ALSO STATES AS FOLLOWS:

"* * * FURTHER, SINCE IT TOOK THE CONTRACTOR APPROXIMATELY A YEAR AND A HALF TO DISCOVER HIS TECHNICAL APPROACH WOULD NOT ACCOMPLISH THE DESIRED RESULTS, HIS MISTAKE COULD NOT HAVE BEEN SO OBVIOUS THAT IT SHOULD HAVE BEEN APPARENT TO THE CONTRACTING OFFICER, PARTICULARLY SINCE EXTENSIVE TECHNICAL NEGOTIATIONS HAD BEEN ACCOMPLISHED AND THE CONTRACTOR AND GOVERNMENT PERSONNEL AGREED THAT THE TECHNICAL APPROACH PROPOSED BY STRATOS, WHILE UNPROVEN WAS FEASIBLE.'

IT HAS NOT BE ALLEGED OR SHOWN THAT THE CONTRACTING OFFICER WAS ON ACTUAL NOTICE OF A POSSIBLE ERROR IN YOUR PROPOSAL.

WITH RESPECT TO YOUR CONTENTION THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF YOUR PROPOSAL BECAUSE OF THE VARIANCE IN YOUR PRICE AND THE GOVERNMENT'S ESTIMATE AND THE NEXT LOW PROPOSAL, THE RECORD SHOWS THAT THE GOVERNMENT'S ESTIMATE WAS NOTHING MORE THAN AN "EDUCATED GUESS" AND THE RECORD SHOWS THAT THE OTHER PROPOSALS FOR THIS PROJECT WERE DETERMINED TO BE NONRESPONSIVE BECAUSE OF THE DEVELOPMENT PROGRAMS IN THESE PROPOSALS. THE RECORD ALSO SHOWS THAT THIS PROCUREMENT WAS FOR A NEW TYPE OF ITEM AND THAT THE METHOD BY WHICH THE END ITEM WOULD BE MADE TO COMPLY WITH THE SPECIFICATIONS DEPENDED ON THE BIDDER'S TECHNICAL APPROACH. THE PRICE IN YOUR PROPOSAL BASED ON YOUR TECHNICAL APPROACH WAS DEEMED TO BE REASONABLE.

IN THESE CIRCUMSTANCES WE DO NOT CONSIDER THE GOVERNMENT'S ESTIMATE OR THE PRICES QUOTED IN THE OTHER PROPOSALS AS A BASIS TO WHICH THE PRICE IN YOUR PROPOSAL COULD BE COMPARED, FOR THE PURPOSE OF PUTTING THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE ALLEGED ERROR IN YOUR PROPOSAL. THEREFORE, IT HAS NOT BEEN SHOWN THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE ALLEGED ERROR IN YOUR PROPOSAL. MOREOVER, EVEN IF THE VARIANCE BETWEEN YOUR PRICE AND THE GOVERNMENT ESTIMATE AND OTHER PROPOSALS RECEIVED HAD BEEN BROUGHT TO YOUR ATTENTION PRIOR TO AWARD AND VERIFICATION OF YOUR PROPOSAL HAD BEEN REQUESTED, THIS WOULD NOT HAVE GIVEN YOU ANY INDICATION THAT THE TECHNICAL APPROACH WHICH YOU PROPOSED WOULD LATER BE INADEQUATE. CONSEQUENTLY, WE FAIL TO SEE WHAT PURPOSE WOULD HAVE BEEN SERVED IF THE CONTRACTING OFFICER HAD REQUESTED YOU TO VERIFY YOUR PROPOSAL. ALSO, YOUR ALLEGED ERROR IN CHOOSING A TECHNICAL APPROACH WHICH LATER PROVED TO BE INADEQUATE WOULD BE NO MORE THAN A MISTAKE IN JUDGMENT. THERE HAS BEEN NO SHOWING THAT THE PRICE QUOTED IN THE PROPOSAL YOU SUBMITTED WAS OTHER THAN THAT WHICH YOU INTENDED. WE HAVE HELD THAT RELIEF IS NOT GRANTED FOR A MISTAKE IN JUDGMENT WHEN A BID HAS BEEN ACCEPTED IN GOOD FAITH WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR. SEE 11 COMP. GEN. 445; ID. 476; AND B- 128268, JUNE 27, 1956. THIS RULE WOULD BE APPLICABLE TO THE INSTANT CASE. YOUR REQUEST FOR RELIEF IN THIS CASE IS NO MORE THAN AN ATTEMPT TO AVOID THE CONSEQUENCES OF AN ILL-ADVISED PROPOSAL.

FOR THESE REASONS WE FIND THAT THE AWARD TO YOU WAS MADE IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. THE CASES CITED BY YOU IN YOUR BRIEF TO OUR OFFICE DO NOT CONSIDER THE TYPE OF MISTAKE ALLEGED IN THIS CASE AND INVOLVE SITUATIONS WHERE THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR; CONSEQUENTLY, WE DO NOT FIND THE DECISIONS CITED BY YOU APPLICABLE TO THE INSTANT MATTER.

IN VIEW OF THE FINDING THAT THE CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE NOTICE OF ERROR IT IS IMMATERIAL WHETHER OR NOT VERIFICATION FROM YOU WAS REQUESTED; CONSEQUENTLY, WE FIND IT UNNECESSARY TO CONSIDER FURTHER THE MEMORANDUM IN THE RECORD WHICH INDICATES THAT A VERIFICATION FROM YOU WAS REQUESTED AND YOUR ALLEGATION THAT THIS REQUEST SHOULD NOT BE CONSTRUED AS A REQUEST FOR VERIFICATION OF YOUR PROPOSAL.

FOR THESE REASONS, THE CONCLUSION IN OUR CERTIFICATE OF SETTLEMENT DATED DECEMBER 13, 1963, DENYING YOUR CLAIM, IS AFFIRMED.