B-163792, APR. 4, 1968

B-163792, APR. 4, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MARCH 11, 1968, WITH ENCLOSURES, FROM THE DIRECTOR, DIVISION OF PROCUREMENT AND SUPPLY MANAGEMENT, SUBMITTING FOR OUR DECISION A REQUEST BY THE KELLER TICKET COMPANY, INC. (KELLER), FOR RELIEF FROM A MISTAKE IN BID UNDER CONTRACT NO. SSA 68-2225, AWARDED BY THE SOCIAL SECURITY ADMINISTRATION, PROPERTY MANAGEMENT BRANCH, BALTIMORE, MARYLAND.

INVITATION NO. SSP 68-23 SOLICITED BIDS FOR 1,740,000 OF IMPRINTED PRESSURE SENSITIVE LABELS ON A UNIT PRICE BASIS PER M. WHEN BIDS WERE OPENED ON FEBRUARY 8, 1968, BIDS PER THOUSAND WERE RECEIVED AS FOLLOWS:

AVERY GEORGE

ALLEN HOLLANDER EVERREADY LABEL MISSEL TABKELLER CO., INC. LABEL CORP. COMPANY AND CO. PRODUCTS ------ ---------- ---- ----------- ------- ------

$1.70 $2.59 $2.74 $3.46 $3.57 $3.74 AWARD WAS MADE TO KELLER ON FEBRUARY 13, 1968, AS THE LOWEST BIDDER.

ON FEBRUARY 19, 1968, MR. ALFRED KWIATEK, KELLER'S PLANT MANAGER, NOTIFIED THE PROCUREMENT AGENCY OF A MISTAKE IN THE KELLER BID. IT WAS ALLEGED THAT A TYPOGRAPHIC ERROR RESULTED IN A UNIT PRICE PER M OF $1.70 RATHER THAN THE CORRECT UNIT PRICE OF $2.70. IN SUPPORT OF THE ALLEGATION OF A MISTAKE IN BID, MR. KWIATEK FURNISHED HIS ORIGINAL WORKSHEET WHICH SHOWS A MANUFACTURING COST TO THE BIDDER OF $2.20 PERM TO WHICH WAS ADDED A 23 PERCENT MARKUP FOR A SELLING PRICE OF $2.70 PER M.

IT IS REPORTED THAT THE DEPUTY CHIEF, PROPERTY MANAGEMENT BRANCH, EXAMINED THE MOST RECENT PROCUREMENT FOR THE SAME ITEM. AN ABSTRACT OF THESE BIDS, OPENED ON OCTOBER 8, 1967, SHOWS THE FOLLOWING PRICE SPREAD:

AVERY GEORGE M. L. ALLEN HOLLANDER EVERREADY LABEL MISSEL COUNCELL

CO; INC. KELLER LABEL CORP. COMPANY AND CO. ASSOC., INC.

$2.84 $3.00 $3.18 $3.40 $3.53 $3.67

AFTER REVIEWING THE PRESENT BIDS ON THIS PROCUREMENT, THE CONTRACTING OFFICER REPORTED THAT HE SHOULD HAVE BEEN ALERTED TO THE POSSIBILITY OF A MISTAKE AND THAT HE SHOULD HAVE ASKED KELLER TO VERIFY ITS BID BEFORE AWARD WAS MADE.

WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS PRESUMED IN LAW TO EXPRESS THE UNDERSTANDING OF THE PARTIES. HOWEVER, WHEN THE PARTY NOT IN ERROR SHOULD HAVE SUSPECTED OR HAD REASON TO KNOW OF THE EXISTENCE OF THE ERROR, SUCH GENERAL RULE IS NOT FOR APPLICATION. IN SUCH CASES, WHERE THE CONTRACTING OFFICER HAS ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD, ACCEPTANCE BY THE GOVERNMENT DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. SEE 17 COMP. GEN. 575; 37 ID. 685. OF COURSE, ANY SUCH ADJUSTMENT MAY NOT RESULT IN THE TOTAL CORRECTED PRICE EXCEEDING THE PRICE QUOTED IN THE NEXT LOW ACCEPTABLE OFFER. 37 COMP. GEN. 398; ID 685. IN THE PRESENT CASE, WE BELIEVE THE RECORD CLEARLY SHOWS NOT ONLY THE EXISTENCE OF THE ALLEGED ERROR, BUT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE POSSIBILITY OF ERROR. IN VIEW OF THE FACT THAT KELLER'S BID WAS LESS THAN TWO-THIRDS OF THE SECOND LOWEST BID, AND ALMOST ONE HALF OF THE LOW BID ON THE PRIOR INVITATION FOR THE ITEM, WE THINK THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION BEFORE ACCEPTING THE BID.

ACCORDINGLY, SINCE THE CORRECTION OF KELLER'S PRICE WOULD EXCEED THE PRICE QUOTED IN THE NEXT LOW OFFER, AND SINCE THE ITEM IS BEING HELD IN ABEYANCE PENDING A DECISION BY OUR OFFICE, THE CONTRACT SHOULD BE CANCELED WITHOUT LIABILITY TO THE BIDDER AS ADMINISTRATIVELY RECOMMENDED.