B-177532, MAR 26, 1973

CONTRACT - MISTAKE ALLEGED AFTER AWARD - CONSTRUCTIVE NOTICE OF ERROR - AMBIGUOUS SPECIFICATIONS DECISION REGARDING A MISTAKE IN BID ALLEGED BY HANGAR ONE, A DIVISION OF SOUTHERN AIRWAYS CO., AFTER THE AWARD OF A CONTRACT TO IT UNDER A "BRAND NAME OR EQUAL" SOLICITATION ISSUED BY THE BUREAU OF SPORT FISHERIES AND WILDLIFE, PORTLAND, ORE., FOR CERTAIN RADIO EQUIPMENT. WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF A CONTRACT, RELIEF WILL BE GRANTED ONLY IF THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. B-167745, SEPTEMBER 2, 1969. THE COMP. GEN. IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF POSSIBLE ERROR BECAUSE OF THE INCONSISTENCY BETWEEN HANGAR ONE'S BID PRICE ON SCHEDULES I, III, AND IV, AND ITS BID PRICE FOR SCHEDULE II. WHILE THE OPTIONS WERE NOT CONSIDERED IN THE EVALUATION OF THE BIDS, THEY WERE ENTERED ON THE ABSTRACT OF BIDS USED BY THE CONTRACTING OFFICER, AND THE DUTY IMPOSED BY FPR 1-2.406-1 TO EXAMINE BIDS FOR MISTAKES IS NOT NECESSARILY LIMITED TO THOSE FACTORS CONSIDERED IN BID EVALUATION. COMP. GEN. 151, 152-53 (1970). THEREFORE, THE CONTRACT SHOULD BE CANCELLED WITHOUT LIABILITY TO HANGAR ONE. MOREOVER, FROM A REVIEW OF THE RECORD, IT APPEARS THAT THE BIDDERS WERE MISLEAD BY AMBIQUITIES IN THE SPECIFICATIONS. ACCORDINGLY, THE SOLICITATION SHOULD BE CANCELLED AND RESOLICITED UNDER REVISED SPECIFICATIONS. 51 COMP. GEN. 518, 521-22 (1972).

TO MR. SECRETARY:

THIS IS IN REPLY TO THE LETTER DATED NOVEMBER 22, 1972, FROM THE ACTING DIRECTOR OF SURVEY AND REVIEW, REQUESTING OUR DECISION CONCERNING A MISTAKE IN BID ALLEGED BY HANGAR ONE, A DIVISION OF SOUTHERN AIRWAYS CO., AFTER THE AWARD OF CONTRACT NO. 14-16-0001-4894 ASA.

ON APRIL 11, 1972, THE BUREAU OF SPORT FISHERIES AND WILDLIFE IN PORTLAND, OREGON, ISSUED "BRAND NAME OR EQUAL" SOLICITATION NO. SFW1 1140, WHICH REQUESTED BIDS FOR FURNISHING CERTAIN RADIO EQUIPMENT.

THE SOLICITATION PROVIDED IN PERTINENT PART AS FOLLOWS:

ITEM I

7. BECAUSE OF THE TYPE OF AIRCRAFT IN WHICH THESE UNITS ARE TO BE INSTALLED, THE ENTIRE SYSTEM EXCLUDING CABLING, IS NOT TO WEIGH MORE THAN 19 POUNDS AND BE FURNISHED WITH A TRAILING WIRE ANTENNA KIT INCLUDING REEL, WIRE, FAIRLEADS, AND SOCK.

SCHEDULE I 1 EACH $

SCHEDULE II 2 EACH WITHOUT ANTENNA

COUPLER $ $

(EACH) (TOTAL)

6 EACH WITH ANTENNA

COUPLER $ $

(EACH) (TOTAL)

ITEM 2

SAME AS ITEM 1 EXCEPT FOR OPERATION FROM A 14 VOLT DIRECT CURRENT POWER SOURCE, NOT TO WEIGH MORE THAN 19 POUNDS, AND HAVE A MINIATURIZED CONTROL UNIT.

SCHEDULE III 2 EACH $ $

(EACH) (TOTAL)

SCHEDULE IV 6 EACH $ $

(EACH)(TOTAL)

ORIGINAL AWARD WILL BE FOR SCHEDULES I AND III. THE GOVERNMENT RESERVES THE RIGHT TO AWARD ALL OR PART OF SCHEDULES II AND IV AT THE UNIT PRICES QUOTED FOR A PERIOD OF NINETY (90) CALENDAR DAYS AFTER ORIGINAL AWARD.

NINE BIDS WERE RECEIVED BY MAY 11, 1972, THE BID OPENING DATE. HANGAR ONE WAS THE LOW BIDDER AND ON JUNE 16, 1972, AWARD WAS MADE TO IT FOR SCHEDULES I AND III. ON JUNE 19, 1972, A SALES REPRESENTATIVE OF HANGAR ONE TELEPHONED THE BUREAU AND STATED THAT HIS FIRM HAD NEGLECTED TO INCLUDE THE PRICE OF A CU 110 ANTENNA COUPLER AND AN ANTENNA REEL KIT IN ITS BID. THE NEXT DAY HE CONFIRMED THIS BY LETTER. FOLLOWING A REQUEST BY THE BUREAU TO SUPPORT THE ALLEGED ERROR, HANGAR ONE SENT A NOTARIZED WORKSHEET, QUOTATION FROM SUPPLIER, AND AN ADDING MACHINE TAPE TO SHOW THAT ITS BIDS OF $1,957 FOR SCHEDULES I AND III DID NOT INCLUDE THESE TWO ITEMS. HANGAR ONE ASKS THAT EITHER THE PRICE OF THE CONTRACT BE ADJUSTED TO INCLUDE THESE ITEMS OR THAT IT BE RELIEVED OF PERFORMING ITS OBLIGATIONS UNDER THE CONTRACT.

THE CONTRACTING OFFICER STATES IN HIS REPORT THAT THE EVIDENCE SUBMITTED BY HANGAR ONE SHOWED THAT IT FAILED TO INCLUDE THE TWO ITEMS IN QUESTION IN ITS BID AND THAT "THERE WAS NO WAY OF KNOWING THIS FROM THE BID AS SUBMITTED AS THE SPREAD IN BID PRICES WERE NOT VERY GREAT." HE RECOMMENDS THAT BECAUSE HANGAR ONE HAS NOT PERFORMED, THE CONTRACT BE CANCELED AND THE AWARD MADE TO BAYAIRE AVIONICS, INC., THE SECOND LOW BIDDER. HOWEVER, THE ACTING DIRECTOR RECOMMENDS THAT HANGAR ONE'S REQUEST FOR AN INCREASE IN PRICE BE DENIED AND THAT IT BE INFORMED THAT THE CONTRACT IS BINDING. IT IS HIS VIEW THAT THE MISTAKE IN HANGAR ONE'S BID WAS UNILATERAL AND THAT AWARD WAS MADE IN GOOD FAITH "ABSENT ANY ELEMENT OF KNOWLEDGE BY OR NOTICE TO THE CONTRACTING OFFICER OF THE POSSIBILITY OF A MISTAKE ***."

WHERE A MISTAKE HAS BEEN ALLEGED AFTER AWARD OF THE CONTRACT, OUR OFFICE WILL GRANT RELIEF IF THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. B-167745, SEPTEMBER 2, 1969, CITING 30 COMP. GEN. 509 (1951) AND B-167031, JUNE 16, 1969. FROM OUR REVIEW OF THE RECORD, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER SHOULD HAVE KNOWN OF THE POSSIBILITY OF AN ERROR IN HANGAR ONE'S BID AND SHOULD HAVE SOUGHT VERIFICATION. IN REACHING THIS CONCLUSION, WE DO NOT TAKE EXCEPTION TO THE CONTRACTING OFFICER'S VIEW THAT THE RANGE OF BID PRICES SUBMITTED WAS NOT IN ITSELF SUFFICIENT TO PLACE HIM ON NOTICE. WE NOTE IN THIS RESPECT THAT THE SECOND LOW BIDDER, BAYAIRE AVIONICS, INC., SUBMITTED BIDS OF $1,942 FOR SCHEDULE I AND $1,995 FOR SCHEDULE III. THE THIRD LOW BIDDER, SUNAIR ELECTRONICS, INC., SUBMITTED BIDS OF $2,068 FOR SCHEDULE I AND $2,128 FOR SCHEDULE III. SUNAIR'S MODEL ASB 100A WAS THE BRAND NAME IDENTIFIED IN THE SOLICITATION AND HANGAR ONE, BAYAIRE AND SUNAIR OFFERED THE DESIGNATED MODEL. THE FACT THAT THE HANGAR ONE AND BAYAIRE SCHEDULES II AND III BIDS WERE LOWER THAN SUNAIR'S BIDS FOR THE EQUIPMENT IS A CONSIDERATION THAT MUST BE KEPT IN MIND IN RESOLVING THE QUESTION WHETHER THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE. SEE, FOR EXAMPLE, B 171704, FEBRUARY 3, 1971. WE THINK THE FACT THAT HANGAR ONE SUBMITTED A LOWER PRICE FOR SCHEDULES I AND III THAN DID SUNAIR COUPLED WITH WHAT IS IN OUR VIEW AN OBVIOUS DISCREPANCY IN HANGAR ONE'S SCHEDULES I THROUGH IV PRICING RESPONSES SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR. SPECIFICALLY, WE REFER TO THE INCONSISTENCY BETWEEN ITS BID PRICES FOR SCHEDULES I, III AND IV ($1,957) AND ITS BID PRICE FOR SCHEDULE II. SCHEDULE II REQUESTED PRICES FOR OPTION QUANTITIES OF ITEM 1 ON TWO BASES: FIRST, "2 EACH WITHOUT ANTENNA COUPLER"; SECOND, "6 EACH WITH ANTENNA COUPLER." IN EACH CASE, HANGAR ONE SUBMITTED A UNIT PRICE OF $2,219. MOREOVER, THE DISCREPANCY BETWEEN HANGAR ONE'S SCHEDULES I AND II PRICES CANNOT, IN OUR VIEW, BE IGNORED ON THE GROUND THAT HANGAR ONE WAS MERELY EXERCISING ITS RIGHT TO CHARGE MORE FOR ANY OPTION QUANTITIES OF ITEM 1. IN THIS CONNECTION, SUCH AN INFERENCE WOULD BE INCONSISTENT WITH ITS PRICING RESPONSE TO SCHEDULE IV (THE OPTION QUANTITIES OF ITEM 2); THIS RESPONSE, AS PREVIOUSLY INDICATED, WAS THE SAME AS HANGAR ONE'S RESPONSE TO SCHEDULES I AND III, $1,957.

WHILE SCHEDULE II REPRESENTS OPTION QUANTITIES OF ITEM 1 AND WHILE THE OPTIONS WERE NOT CONSIDERED IN THE EVALUATION OF BIDS FOR AWARD, THE DUTY IMPOSED BY FPR SEC. 1-2.406-1 TO EXAMINE BIDS FOR MISTAKES IS NOT NECESSARILY LIMITED ONLY TO THOSE FACTORS WHICH ARE CONSIDERED IN BID EVALUATION. 50 COMP. GEN. 151, 152-153 (1970). HERE, WE NOTE THAT THE PRICING RESPONSES OF ALL BIDDERS TO SCHEDULES I THROUGH IV WERE RECORDED ON THE BID ABSTRACT WHICH WAS EXAMINED BY THE CONTRACTING OFFICER.

SINCE WE CONCLUDE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR, ACCEPTANCE OF HANGAR ONE'S BID DID NOT RESULT IN A VALID AND BINDING CONTRACT. CONSEQUENTLY, HANGAR ONE'S REQUEST THAT THE CONTRACT BE CANCELED WITHOUT LIABILITY SHOULD BE GRANTED. IN THESE CIRCUMSTANCES, AN UPWARD ADJUSTMENT IN THE CONTRACT PRICE IN THE AMOUNT REQUESTED WOULD NOT BE PROPER BECAUSE IT WOULD EXCEED THE BID PRICES OF BOTH THE SECOND AND THIRD LOW BIDDERS.

APART FROM THE QUESTION OF AFFORDING HANGAR ONE RELIEF, THERE IS A FURTHER MATTER FOR CONSIDERATION - NAMELY, THE ADEQUACY OF THE SOLICITATION. SCHEDULE II REQUESTED PRICES FOR ITEM 1 BOTH WITH AND WITHOUT ANTENNA COUPLERS. APART FROM THE INFERENCE TO BE DRAWN FROM SCHEDULE II, THERE IS NO EXPRESS STATEMENT IN THE SOLICITATION THAT ANTENNA COUPLERS ARE REQUIRED FOR ITEMS 1 AND 2. ON DECEMBER 7, 1972, THE CHIEF, DIVISION OF CONTRACTING AND GENERAL SERVICES, INFORMALLY CONCURRED IN OUR READING OF THE SOLICITATION. WE FURTHER UNDERSTAND THAT IT WAS THE INTENTION OF THE BUREAU TO OBTAIN ANTENNA COUPLERS WITH BOTH ITEMS 1 AND 2 WITH, OF COURSE, THE EXCEPTION OF THE TWO OPTION ITEMS LISTED IN SCHEDULE II. WE ALSO REQUESTED AN ENGINEER IN OUR OFFICE TO EXAMINE THE SOLICITATION. HE ALSO CONCLUDED THAT THE SOLICITATION LEAVES SUFFICIENT DOUBT AS TO WHETHER AN ANTENNA COUPLER IS REQUIRED TO BE FURNISHED UNDER SCHEDULES I, III AND IV. IT SEEMS TO US THAT THIS AMBIGUITY MAY HAVE CONTRIBUTED TO HANGAR ONE'S ERROR. MOREOVER, FROM OUR REVIEW OF BAYAIRE'S BID, IT APPEARS THAT IT WAS ALSO MISLED BY THE FAILURE OF THE SOLICITATION TO CLEARLY REQUIRE ANTENNA COUPLERS UNDER SCHEDULES I, III AND IV. IN THIS CONNECTION, BAYAIRE'S QUOTE FOR SCHEDULE I WAS THE SAME AS ITS QUOTE IN SCHEDULE II FOR "2 EACH WITHOUT ANTENNA COUPLER" AND $255 LESS THAN ITS QUOTE FOR THE "6 EACH WITH ANTENNA COUPLER."

IN VIEW OF THE MISLEADING CHARACTER OF THE SPECIFICATIONS, WE BELIEVE THE SOLICITATION SHOULD BE CANCELED AND THE REQUIREMENT READVERTISED UNDER REVISED SPECIFICATIONS. B-159658, AUGUST 18, 1966; FPR SEC. 1 2.404- 1(B)(1). IN REVISING THE SOLICITATION, THE OPTION REQUIREMENTS AMOUNTING TO 14 UNITS SHOULD BE REASSESSED IN LIGHT OF 41 COMP. GEN. 682 (1962); THE OPEN-ENDED DELIVERY PROVISION CONTAINED IN THE PRESENT SOLICITATION SHOULD BE DELETED AND A REQUIRED DELIVERY SCHEDULE ESTABLISHED IN ACCORDANCE WITH THE PROVISIONS OF FPR SEC. 1-1.316; AND THE PORTION OF THE SOLICITATION ENTITLED "EXCEPTIONS TO SPECIFICATIONS AND CONDITIONS" SHOULD BE DELETED. WITH RESPECT TO THE LAST TWO RECOMMENDATIONS, SEE 51 COMP. GEN. 518, 521- 522 (1972).

PLEASE ADVISE US OF THE ACTIONS TAKEN WITH RESPECT TO THESE MATTERS. THE ENCLOSURES TO THE ACTING DIRECTOR'S LETTER ARE RETURNED AS REQUESTED.