B-167631, AUG. 18, 1969

B-167631, AUG. 18, 1969

CONTRACTS - MISTAKES - FREIGHT CHARGES - MODIFICATION DECISION TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, THAT NO OBJECTION WILL BE HAD TO MODIFICATION OF CONTRACT WITH F-AND'S ABRASIVE CO., INC. TO PROVIDE FOR FREIGHT CHARGES, INASMUCH AS THE RECORD DOES NOT INDICATE THAT FINAL PAYMENT HAS BEEN MADE. WHERE DISPARITY BETWEEN THE PRICES QUOTED BY F-AND'S AND THE PRICES QUOTED BY ONLY OTHER BIDDER FURNISHING CONSTRUCTION AND BUILDING MATERIALS FOR DELIVERY TO JOHN F. KENNEDY SPACE CENTER, WAS SUFFICIENT TO PUT CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR SO THAT VERIFICATION SHOULD HAVE BEEN REQUESTED BEFORE AWARDING CONTRACT, MODIFICATION IS JUSTIFIED.

TO MR. KUNZIG:

REFERENCE IS MADE TO LETTER DATED AUGUST 4, 1969, FROM THE GENERAL COUNSEL, REQUESTING A DECISION AS TO WHETHER, UNDER THE CIRCUMSTANCES REPORTED THEREIN, CONTRACT NO. GS-04S-16399 WITH F-AND'S ABRASIVE COMPANY, INC. (F-AND-S), MAY BE REFORMED TO PERMIT PAYMENT OF FREIGHT CHARGES TO THE CONTRACTOR.

SOLICITATION NO. AT/TS-17285 WAS ISSUED ON APRIL 10, 1968, REQUESTING BIDS FOR FURNISHING CONSTRUCTION AND BUILDING MATERIALS FOR DELIVERY TO THE JOHN F. KENNEDY SPACE CENTER, FOR THE PERIOD JULY 1, 1968, OR DATE OF AWARD, WHICHEVER IS LATER, THROUGH JUNE 30, 1969. F AND'S WAS THE LOW BIDDER ON ITEMS 73 AND 76A AND WAS AWARDED THE CITED CONTRACT ON JUNE 28, 1968.

BY LETTER DATED NOVEMBER 19, 1968, F-AND'S ALLEGED THAT IT HAD MADE A MISTAKE IN BIDDING IN THAT IT HAD FAILED TO INCLUDE THE FREIGHT COSTS IN ITS BID. IT REQUESTED THAT THE CONTRACT BE AMENDED TO PROVIDE FOR THE ADDITIONAL PAYMENT OF $5.44 PER TON TO COVER FREIGHT CHARGES ON ITEM 76A. NO RELIEF WAS REQUESTED ON ITEM 73. THE GENERAL COUNSEL STATES IN HIS LETTER OF AUGUST 4, 1969, THAT THERE IS A DIFFERENCE OF 37.8 PERCENT BETWEEN THE BID SUBMITTED BY F-AND'S ON ITEM 76A AND THE ONLY OTHER BID RECEIVED ON THAT ITEM. IN THE FINDINGS AND DETERMINATION OF THE CONTRACTING OFFICER IT IS STATED THAT THE BIDS OF F-AND'S ON BOTH ITEMS 73 AND 76A WERE SUBSTANTIALLY LOWER THAN COMPETITION OR PREVIOUS PRICES RECEIVED AND THAT HE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE AS TO A PROBABLE MISTAKE IN THE BID OF F-AND-S. CONSEQUENTLY, HE STATES THAT HE SHOULD HAVE REQUESTED VERIFICATION OF THE BID BEFORE AWARDING THE CONTRACT. IN VIEW OF THE FOREGOING FACTS, THE GENERAL COUNSEL RECOMMENDS REFORMATION OF THE CONTRACT TO ADD $5.44 PER TON FOR ITEM 76A TO COVER THE COST OF FREIGHT. THE GENERAL COUNSEL STATES THAT THIS RATE IS REASONABLE AND THAT TOTAL COST PER TON IF CORRECTION IS PERMITTED WILL STILL BE $4.06 LOWER THAN THE PRICE BID BY THE OTHER BIDDER.

WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL GRANT RELIEF IF THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. WE AGREE WITH THE CONTRACTING OFFICER IN THIS CASE THAT THE DISPARITY BETWEEN THE PRICES QUOTED BY F-AND'S AND THE PRICES QUOTED BY THE ONLY OTHER BIDDER WAS SUFFICIENT TO PUT HIM ON NOTICE OF THE PROBABILITY OF ERROR AND THAT THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION.

INASMUCH AS THE RECORD DOES NOT INDICATE THAT FINAL PAYMENT HAS BEEN MADE, WE SEE NO LEGAL OBJECTION TO ITS MODIFICATION TO PROVIDE FOR THE ADDITIONAL PAYMENT OF $5.44 PER TON FOR ITEM 76A TO COVER COST OF FREIGHT AS RECOMMENDED BY YOUR GENERAL COUNSEL. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING THE ADDITIONAL PAYMENT TO THE CONTRACTOR.