B-162049, JUL. 28, 1967

B-162049, JUL. 28, 1967

CONTRACTS - MISTAKES - REFORMATION - JUSTIFICATION DECISION TO VETERANS ADMIN. RE CORRECTION OF MISTAKE IN BID ALLEGED AFTER WARD BY FORESMOST DAIRIES OF THE SOUTH, ATLANTA, GA. ALTHOUGH ONLY ONE BID WAS RECEIVED AND CONTRACTING OFFICER WAS NOT UNDER ANY OBLIGATION TO EXAMINE BIDS ON AN ITEM BY ITEM BASIS TO DETERMINE WHETHER AGGREGATE WAS CORRECTLY COMPUTED, WHERE BID OF $0.68 PER FIVE GAL. CONTAINER OF MILK WAS OBVIOUSLY PRICE PER GALLON TOTAL EVIDENCE SUPPORTS CONCLUSION THAT CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF MISTAKE AND CORRECTION TO REFLECT INTENDED BID OF $3.40 PER FIVE GALLON CONTAINER IS AUTHORIZED.

TO THE HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR OF VETERANS AFFAIRS, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO CORRESPONDENCE, 134G, DATED JULY 13, 1967, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, SUBMITTING FOR CONSIDERATION THE REQUEST OF FOREMOST DAIRIES OF THE SOUTH, ATLANTA, GEORGIA, FOR CORRECTION OF A MISTAKE IN BID, ALLEGED AFTER AWARD, SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 68-3.

THE STATEMENT OF FACT BY THE CONTRACTING OFFICER REGARDING THIS CONTRACT NO. V5271P-23 NOTES THAT ONLY ONE BID WAS RECEIVED UNDER THE INVITATION FOR BIDS. THE LETTER DATED JULY 13, 1967, FURTHER POINTS OUT THAT AWARD WAS MADE ON THE BASIS OF AN AGGREGATE BID AND THAT GENERALLY THE CONTRACTING OFFICER HAS NO DUTY TO EXAMINE THE BIDS ON AN ITEM-BY-ITEM BASIS.

GENERALLY, THE CONTRACT, AS EXECUTED, REPRESENTS THE FINAL UNDERSTANDING OF THE PARTIES AND DETERMINES ALL RIGHTS AND LIABILITIES THEREUNDER. THE RIGHT OF THE GOVERNMENT TO RECEIVE PERFORMANCE IN STRICT ACCORDANCE WITH THE CONTRACT TERMS MAY NOT BE WAIVED IN THE ABSENCE OF ADEQUATE CONSIDERATION, AND NO AGENT OF THE GOVERNMENT MAY WAIVE SUCH VESTED RIGHT BECAUSE OF CONSIDERATIONS OF HARDSHIP OR EQUITIES IN FAVOR OF THE CONTRACTOR. SEE 22 COMP. GEN. 260; DAY V. UNITED STATES, 245 U.S. 159. FURTHER, WE HAVE HELD IT WOULD BE DETRIMENTAL TO THE INTERESTS OF THE GOVERNMENT IN THE COMPETITIVE BIDDING SYSTEM TO IMPOSE A DUTY UPON A CONTRACTING OFFICER TO ASSURE HIMSELF THAT A LOW BID, REGULAR ON ITS FACE, WAS COMPUTED CORRECTLY WITH DUE REGARD TO ECONOMIC CONDITIONS, PAST PROCUREMENTS, OR OTHER MATTERS PURELY INCIDENTAL TO THE WRITTEN BID. SEE 39 COMP. GEN. 405.

HOWEVER, WHERE A MISTAKE IS SO APPARENT THAT THE CONTRACTING OFFICER MUST BE ASSUMED TO HAVE KNOWLEDGE OF IT, THE GOVERNMENT CANNOT TAKE ADVANTAGE OF THE CONTRACTOR BY HOLDING IT TO A CONTRACT WHICH IT HAD NO INTENTION OF MAKING. SEE 2 COMP. GEN. 502; 8 ID. 362; 15 ID. 1049; 20 ID. 652. ACCORDINGLY, A DETERMINATION AS TO WHETHER THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED A MISTAKE WAS MADE, MUST BE REACHED ON A CASE-BY-CASE BASIS IN LIGHT OF ALL THE EVIDENCE. A HARD AND FAST RULE CANNOT BE SET FORTH AS TO THE WEIGHT TO BE GIVEN DIFFERENT TYPES OF EVIDENCE OR AS TO WHAT AMOUNT OF EVIDENCE WILL IMPUTE CONSTRUCTIVE KNOWLEDGE OF A MISTAKE TO THE CONTRACTING OFFICER.

ORDINARILY, WHERE, AS HERE, ONLY ONE BID IS RECEIVED, THERE IS NO BASIS FOR COMPARISON OF BIDS; HENCE, THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. SEE 17 COMP. GEN. 560; 26 ID. 415. HOWEVER, IN A STATEMENT OF FACT DATED JULY 6, 1967, IN WHICH SHE RECOMMENDED REFORMATION OF THE CONTRACT, THE CONTRACTING OFFICER STATED THAT THE MISTAKE WAS SO OBVIOUS THAT SHE SHOULD HAVE NOTICED THE MISTAKE BEFORE AWARD. IN SUPPORT OF THIS STATEMENT, IT WAS POINTED OUT THAT THE BID OF $0.68 PER FIVE-GALLON CONTAINER OF MILK WAS OBVIOUSLY THE BID PRICE PER GALLON, WHICH WOULD BE CONSISTENT WITH THE BID PRICE OF $0.1850 PER ONE QUART CONTAINERS.

THE LETTER, DATED JULY 13, 1967, ALSO ENCLOSED THE DAIRY PRODUCTS CONTRACT FOR FISCAL YEAR 1967 WHICH WAS USED BY THE CONTRACTING OFFICER TO DETERMINE THAT PRICES BID IN RESPONSE TO IFB 68-3 WERE REASONABLE. VIEW OF THE FACT THAT THE ESTIMATE OF THE YEARLY HOSPITAL REQUIREMENTS FOR DAIRY PRODUCTS VARIED FROM FISCAL YEAR TO FISCAL YEAR, THE COMPARISON OF THE PRIOR CONTRACT WITH THE BID BY FOREMOST DAIRIES COULD ONLY BE MADE ON AN ITEM-BY-ITEM BASIS TO DETERMINE IF THE BID PRICES WERE REASONABLE. ACCORDINGLY, IN VIEW OF THE TOTAL EVIDENCE WE CONCUR IN THE CONCLUSION THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE MISTAKE IN BID AND THE CASE IS RETURNED HEREWITH FOR ADMINISTRATIVE CORRECTION OF THE BID ON ITEM 9 TO REFLECT THE INTENDED BID OF $3.40 PER FIVE-GALLON CONTAINER.

THE ENCLOSURES TO THE LETTER OF JULY 13, 1967, ARE RETURNED HEREWITH AS REQUESTED.