B-181439, JUL 16, 1974

B-181439, JUL 16, 1974

BIDDER ALLEGING UNILATERAL MISTAKE IN BID 9 MONTHS AFTER AWARD IS NOT ENTITLED TO CORRECTION OF ITS BID SINCE CONTRACTING OFFICER (1) REQUESTED VERIFICATION CALLING TO BIDDER'S ATTENTION SUSPECTED MISTAKE, (2) RECEIVED VERIFICATION 5 DAYS LATER, AND (3) RECEIVED A FURTHER UNSOLICITED REAFFIRMATION BEFORE AWARD, EXPLAINING IN SOME DETAIL HOW BIDDER EXPECTED TO PERFORM CONTRACT AT ITS BID PRICE.

INVITATION FOR BIDS (IFB) NO. DACW87-73-B-9036, ISSUED ON APRIL 6, 1973, BY THE ARMY CORPS OF ENGINEERS, HUNTSVILLE, ALABAMA, SOUGHT BIDS ON A NUMBER OF MAIL CHUTES FOR BULK MAIL CENTERS. THE PROCUREMENT WAS DIVIDED INTO FIVE SCHEDULES, EACH RELATING TO THE ULTIMATE DELIVERY POINT OF THE ITEMS, AND BIDDERS WERE ADVISED THAT THEY COULD BID ON ANY ONE OR MORE OF THE BID SCHEDULES.

UPON BID OPENING, MAY 30, 1973, THE FOLLOWING BIDS WERE RECEIVED:

(TABLE OMITTED)

THE ARMY, ON JUNE 1, 1973, SOUGHT VERIFICATION OF AEROSPACE'S BID AND INDICATED TO THE BIDDER THAT:

"YOUR FIRM'S BID PRICES ARE CONSIDERABLY LOWER THAN THE GOVERNMENT ESTIMATE. ALSO, THERE IS CONSIDERABLE DISPARITY BETWEEN THE PRICES SUBMITTED BY YOUR FIRM AND THOSE OF THE OTHER BIDDERS ON THIS SOLICITATION.

"IT IS RECOMMENDED THAT THE FOLLOWING COST ELEMENTS OF YOUR BID BE CAREFULLY REVIEWED:

A. THE F.O.B. DESTINATION REQUIREMENT.

B. THE REQUIREMENT FOR INCREMENTAL DELIVERIES.

C. THE TOTAL REQUIREMENT OF SHEET METAL REQUIRED."

THE ARMY REQUESTED THAT INFORMATION IN THIS REGARD BE FURNISHED IT BY THE CLOSE OF BUSINESS OF JUNE 5, 1973.

BY TELEGRAM OF JUNE 68 1973, AEROSPACE ADVISED THAT IT WAS UNABLE TO CONFIRM ITS PRICES FOR SCHEDULE 1 AND SCHEDULE V BUT THAT IT DID CONFIRM ITS PRICES FOR SCHEDULES II, III AND IV. AEROSPACE SUBSEQUENTLY REQUESTED AND WAS ALLOWED TO WITHDRAW ITS BID ON SCHEDULES I AND V.

WHILE AEROSPACE RELATED THAT IT HAD MADE AN ERROR IN COMPUTING FRIEGHT RATES FOR ALL SCHEDULES, BY LETTER OF JUNE 20, 1973, AEROSPACE RELATED HOW IT COULD COMBINE SHIPMENTS TO THE DELIVERY POINTS IN SCHEDULES II (SPRINGFIELD, MASSACHUSETTS), III (PHILADELPHIA, PENNSYLVANIA), AND IV (PITTSBURG, PENNSYLVANIA) FROM ITS PLANT IN MICHIGAN TO TAKE ADVANTAGE OF THE QUANTITY FREIGHT RATE USED IN COMPUTING ITS BID. AEROSPACE THEREFORE RECONFIRMED ITS ORIGINAL BID PRICES FOR THE THREE SCHEDULES.

AFTER A POSITIVE PREAWARD SURVEY, A CONTRACT FOR SCHEDULES II, III AND IV WAS AWARDED TO AEROSPACE ON JUNE 28, 1973.

ON JANUARY 22, 1974, NEARLY 7 MONTHS LATER AEROSPACE REQUESTED THAT "*** SERIOUS CONSIDERATION BE GIVEN BY THE ARMY TO ALLOW FOR AN OVERALL INCREASE IN THE TOTAL DOLLAR AMOUNT OF THE CONTRACT." THE FOLLOWING BASES WERE SET OUT IN SUPPORT OF THIS POSITION: (1) AEROSPACE'S FIRM ORDERS FOR RAW MATERIAL WERE NOT BEING HONORED BY SUPPLIERS AND INCREASES WERE BEING ASKED WHICH FAR EXCEEDED THE COST ESTIMATES MADE AT THE TIME OF BIDDING; (2) DUE TO THESE INCREASED PRICES AEROSPACE WOULD IN ALL PROBABILITY SUFFER A MONETARY LOSS ON THE CONTRACT; AND (3) AEROSPACE'S LABOR CONTRACT WOULD EXPIRE IN SEPTEMBER 1974, AT WHICH TIME A NEW WAGE RATE WOULD BE NEGOTIATED WHICH WILL PROBABLY BE FAR IN EXCESS OF ANYTHING THAT COULD HAVE BEEN REALIZED AT THE TIME OF ESTIMATING THE BID. IN SUM, AEROSPACE IMPLIED THAT AN UNEXPECTED ESCALATION IN COSTS THREATENED THE PERFORMANCE OF THE CONTRACT.

MORE SPECIFICALLY, ON MARCH 6, 1974, AEROSPACE ADVISED THE ARMY THAT "*** WE WILL NOT PERFORM ON CERTAIN CONTRACT LINE ITEMS (RELATING TO SPIRAL CHUTES) AS CALLED OUT IN THE *** CONTRACT." ON MARCH 12, 1974, THE ARMY, CONSIDERING THAT AEROSPACE'S STATEMENT CONSTITUTED A PARTIAL ABANDONMENT OF THE CONTRACT, PARTIALLY TERMINATED AEROSPACE FOR DEFAULT. (THIS ACTION HAS BEEN APPEALED TO THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS AND HAS BEEN ASSIGNED DOCKET NUMBER ENG BCA 3515.)

ON MARCH 20, 1974, ALMOST 9 MONTHS AFTER AWARD, AEROSPACE SENT THE FOLLOWING TELEGRAM TO THE ARMY:

"REFERENCE: * * * * *

CONTRACT DACW87-C-9049

AEROSPACE AMERICA LETTER DATED 22 JANUARY 1974

"GENTLEMEN:

URGENT

PLEASE BE ADVISED THAT WE HAVE DISCOVERED AN ERROR IN OUR CALCULATIONS ON ABOVE CAPTIONED CONTRACT. BECAUSE OF THE ERROR IN CALCULATIONS, WE ARE ASKING FOR ADDITIONAL $839,629 (LATER AMENDED TO $917,798.39), THIS BEING THE AMOUNT OF SAID ERROR. WE REQUEST IMMEDIATE MEETING TO RESOLVE THIS MATTER AND PREVENT A WORK STOPPAGE ON THIS PROJECT."

THE ARMY THEREAFTER REQUESTED MORE SPECIFIC DOCUMENTATION WHICH AEROSPACE PROVIDED ON MARCH 28, 1974.

AEROSPACE STATED THAT:

"WHEN IT WAS DETERMINED THAT OUR COMPANY COULD NOT PERFROM ON THE 'SPIRAL CHUTE' PORTION OF THE CONTRACT, WE BECAME CONCERNED AT THAT POINT THAT OUR PRICING STRUCTURES MAY HAVE CONTAINED ERRORS OF OMISSION WHICH PRECLUDED COMPLETION OF THE CONTRACT ECONOMICALLY FOR OUR COMPANY. ***"

AEROSPACE WENT ON TO STATE THAT A SUBSEQUENT ANALYSIS REVEALED THAT (1) THERE WAS NO ALLOWANCE IN ITS PRICE FOR COSTS INVOLVED IN STRUCTURING THE WORK IN THE PLANT (E.G., DETAIL DRAWINGS SHOP INSTRUCTION); (2) THERE WAS NO ALLOWANCE FOR THE COST OF TOOLING TO PRODUCE THE ITEMS; (3) THE OVERHEAD RATE USED WAS TOTALLY INADEQUATE TO COVER THE COSTS - INDEED, THE OVERHEAD RATE USED WAS BELOW ANY HISTORICAL RATE AT AEROSPACE; AND (4) THE PERCENTAGE USED FOR G&A IS ALSO HISTORICALLY INCONSISTENT WITH AEROSPACE'S PREVIOUS EXPERIENCE.

SUBSEQUENT TO THIS ALLEGATION, ON MAY 1, 1974, AEROSPACE WAS TERMINATED FOR DEFAULT ON THE BALANCE OF ITS CONTRACT.

THE DEPARTMENT OF THE ARMY HAS REQUESTED OUR OPINION ON THE VALIDITY OF AEROSPACE'S REQUEST FOR CORRECTION OF ITS BID PRICE BASED ON ITS ALLEGED MISTAKE AFTER AWARD.

WITH REGARD TO MISTAKES ALLEGED AFTER AWARD, THE GENERAL RULE IS THAT IF THE BIDDER HAS MADE A MISTAKE OF A UNILATERAL CHARACTER IN THE SUBMISSION OF A BID, AS ALLEGED HERE, THE BIDDER MUST BEAR THE CONSEQUENCES UNLESS THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE AT THE TIME THE BID WAS ACCEPTED. SEE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-406 AND 52 COMP. GEN. 837 (1973). IN SITUATIONS WHERE THE CONTRACTING OFFICER IS ACTUALLY OR CONSTRUCTIVELY ON NOTICE OF THE POSSIBILITY THAT A MISTAKE MAY HAVE BEEN MADE, ASPR 2 406.1 REQUIRES THAT THE CONTRACTING OFFICER "*** REQUEST FROM THE BIDDER A VERIFICATION OF THE BID, CALLING ATTENTION TO THE SUSPECTED MISTAKE."

ASPR 2-406.3(E)(1) FURTHER STATES THAT:

"*** THE ACTION TAKEN TO VERIFY BIDS MUST BE SUFFICIENT TO EITHER REASONABLY ASSURE THE CONTRACTING OFFICER THAT THE BID AS CONFIRMED IS WITHOUT ERROR OR ELICIT THE ANTICIPATED ALLEGATION OF A MISTAKE BY THE BIDDER. TO INSURE THAT THE BIDDER CONCERNED WILL BE PUT ON NOTICE OF A MISTAKE SUSPECTED BY THE CONTRACTING OFFICER, THE BIDDER SHOULD BE ADVISED, AS IS APPROPRIATE, OF (I) THE FACT THAT HIS BID IS SO MUCH LOWER THAN THE OTHER BID OR BIDS AS TO INDICATE A POSSIBILITY OF ERROR, *** (IV) SUCH OTHER DATA PROPER FOR DISCLOSURE TO THE BIDDER AS WILL GIVE HIM NOTICE OF THE SUSPECTED MISTAKE. IF THE BID IS VERIFIED, THE CONTRACTING OFFICER WILL CONSIDER THE BID AS ORIGINALLY SUBMITTED. ***"

IN THE PRESENT SITUATION, THE CONTRACTING OFFICER ADVISED AEROSPACE THAT ITS BID WAS CONSIDERABLY LESS THAN BOTH THE GOVERNMENT ESTIMATE AND THE OTHER BIDS SUBMITTED. HE FURTHER RECOMMENDED THREE COST ELEMENTS, WHICH HE FELT MIGHT HAVE LED TO A MISTAKE IN AEROSPACE'S BID PRICE.

IN A SIMILAR SITUATION, 47 COMP. GEN. 732 (1968), WHERE THE BIDDER ALLEGED THAT IT HAD ERRONEOUSLY ESTIMATED SOME COSTS AND OMITTED OTHERS IN COMPUTING ITS BID PRICE WHILE ITS COSTS OF PERFORMING THE CONTRACT HAD INCREASED BY VIRTUE OF DIFFICULTIES EXPERIENCED WITH ITS SUPPLIERS, WE HELD THAT A CONTRACTING OFFICER NEED NOT DETERMINE BEFORE CONTRACT AWARD WHETHER EVERY PRODUCTION COST ELEMENT HAD BEEN CONSIDERED IN CONNECTION WITH THE BIDDER'S PRICE IN ORDER TO DISCHARGE HIS DUTY TO VERIFY UNDER ASPR 2-406.

IN B-177405, NOVEMBER 29, 1972, WE STATED THAT EVEN AFTER A VERIFICATION, WHERE THE FACTS CLEARLY AND CONVINCINGLY ESTALBISH THAT THE CONTRACTING OFFICER WAS OR SHOULD HAVE BEEN ON NOTICE THAT THE BIDDER COULD NOT HAVE RECOGNIZED THE SIGNIFICANCE OF THE REQUEST FOR VERIFICATION OF THE BID, THE CONTRACTING OFFICER SHOULD REQUEST A REAFFIRMATION OF THE BID. MOREOVER, IN MATTER OF YANKEEE ENGINEERING CO., INC., B-180573, JUNE 19, 1974, WE HELD THAT NOTWITHSTANDING THE VERIFICATION OF A BID APPROXIMATELY ONE-THIRD BELOW BOTH THE GOVERNMENT'S ESTIMATE AND THE NEXT LOW BID, IT WOULD BE UNCONSCIONABLE TO REQUIRE CONTRACT PERFORMANCE AT THE MISTAKEN BID PRICE. SEE, ALSO, 53 COMP. GEN. 187 (1973).

WE FIND THE FACTS PRESENTED HERE TO BE DISTINGUISHABLE FROM THE CITED CASE SINCE, HERE, NOT ONLY DID THE CONTRACTING OFFICER RECEIVE VERIFICATION FROM AEROSPACE ON JUNE 6 BUT ALSO RECEIVED AN UNSOLICITED REAFFIRMATION 2 WEEKS LATER, EXPLAINING IN SOME DETAIL HOW AEROSPACE EXPECTED TO BE ABLE TO PERFORM AT ITS BID PRICE. CONSEQUENTLY, SINCE THE CONTRACTING OFFICER AT LEAST INITIALLY MADE EVERY EFFORT TO PLACE THE BIDDER ON NOTICE AS TO THE BASIS UPON WHICH THE GOVERNMENT SUSPECTED THAT A MISTAKE MIGHT HAVE BEEN MADE, AND SINCE THE BIDDER VERIFIED AND LATER REAFFIRMED ITS BID PRICE, A VALID AND BINDING CONTRACT RESULTED. 47 COMP. GEN., SUPRA.

ACCORDINGLY, THERE IS NO LEGAL BASIS TO GRANT AEROSPACE'S REQUEST FOR CORRECTION OF ITS BID.