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B-178402, APR 18, 1974

B-178402 Apr 18, 1974
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CONTRACTING OFFICER WAS NOT ON ACTUAL OR CONSTRUCTIVE NOTICE OF MISTAKE IN BID OF LOW BIDDER MERELY BECAUSE FORMER SUPPLIERS BID HIGHER PRICES AND GOVERNMENT ESTIMATE WAS HIGHER THAN LOW BID. SINCE 3 BIDS LOWER THAN ESTIMATE WERE RECEIVED. NOTWITHSTANDING BALL'S CLAIM ASSERTED AFTER AWARD THAT A VALID CONTRACT DID NOT EXIST BECAUSE THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF A MISTAKE IN BALL'S BID. DAAF03-72-B-1595 WAS ISSUED ON JUNE 2. WAS SUBSEQUENTLY AWARDED A CONTRACT. CLAIMING THAT ITS BID SHOULD HAVE BEEN $310.50. WAS SUBSEQUENTLY TERMINATED FOR DEFAULT. THE RING GEARS WERE REPROCURED AT A UNIT PRICE OF $286. THE RANGE OF BID PRICES RECEIVED (THE SECOND AND THIRD LOW BIDS WERE $225 AND $239.

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B-178402, APR 18, 1974

CONTRACTING OFFICER WAS NOT ON ACTUAL OR CONSTRUCTIVE NOTICE OF MISTAKE IN BID OF LOW BIDDER MERELY BECAUSE FORMER SUPPLIERS BID HIGHER PRICES AND GOVERNMENT ESTIMATE WAS HIGHER THAN LOW BID, SINCE 3 BIDS LOWER THAN ESTIMATE WERE RECEIVED, AND ALL 11 BIDS FOLLOWED A NORMAL UPWARD PROGRESSION WHICH DID NOT SUGGEST ERROR IN LOW BID OR ANY OTHER BID.

TO A.C. BALL CO.:

THE A. C. BALL COMPANY (BALL) HAS REQUESTED RECONSIDERATION OF OUR DECISION B-178402, OCTOBER 1, 1973, IN WHICH WE HELD THAT THE ACCEPTANCE BY THE U.S. ARMY WEAPONS COMMAND OF A BID SUBMITTED BY BALL RESULTED IN A VALID AND BINDING CONTRACT, NOTWITHSTANDING BALL'S CLAIM ASSERTED AFTER AWARD THAT A VALID CONTRACT DID NOT EXIST BECAUSE THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF A MISTAKE IN BALL'S BID.

INVITATION FOR BIDS (IFB) NO. DAAF03-72-B-1595 WAS ISSUED ON JUNE 2, 1972, FOR 124 RING GEARS. BALL SUBMITTED A BID OF $212.50 PER RING GEAR, THE LOWEST OF 11 BIDS RECEIVED, AND WAS SUBSEQUENTLY AWARDED A CONTRACT. BALL REFUSED TO PERFORM, CLAIMING THAT ITS BID SHOULD HAVE BEEN $310.50, AND WAS SUBSEQUENTLY TERMINATED FOR DEFAULT. THE RING GEARS WERE REPROCURED AT A UNIT PRICE OF $286.

IN OUR EARLIER DECISION, WE REJECTED BALL'S CLAIM THAT THE GOVERNMENT COST ESTIMATE OF $249, THE RANGE OF BID PRICES RECEIVED (THE SECOND AND THIRD LOW BIDS WERE $225 AND $239, RESPECTIVELY, WHILE THE HIGH BID WAS $400), AND THE HIGHER PRICE BID BY A PREVIOUS SUPPLIER WERE SUFFICIENT TO LEAD THE CONTRACTING OFFICER TO SUSPECT A MISTAKE IN BALL'S BID. BALL NOW CLAIMS THAT THE PRICE RANGE OF THE BIDS DID INDICATE AN ERROR NOT ONLY IN BALL'S BID, BUT ALSO IN THE 4 NEXT LOWEST BIDS. BALL ASSERTS THAT THERE WAS "MORE THAN SUFFICIENT REASON" FOR THE CONTRACTING OFFICER TO SUSPECT SUCH MISTAKES BECAUSE THE "PREVIOUS PRICE HISTORY FOR THIS ITEM WAS $269.36 AND $249.00," BECAUSE THE GOVERNMENT KNEW THAT A PRIOR CONTRACTOR HAD DIFFICULTY IN SUPPLYING THE ITEM AT $249, AND BECAUSE OF THE "SUBSEQUENT ACTIONS OF THE PREVIOUS MANUFACTURERS" IN BIDDING HIGHER ON IFB DAAF03-72-B-1595 THAN THEY HAD ON PREVIOUS SOLICITATIONS. BALL FURTHER POINTS TO SUBSTANTIALLY HIGHER BIDS SUBMITTED IN RESPONSE TO LATER INVITATIONS BY THE FOURTH AND FIFTH LOW BIDDERS AS INDICATIVE OF THE MISTAKES BALL ALLEGES THEY MADE IN RESPONDING TO THIS SOLICITATION. BALL ALSO REFERS TO SUBSEQUENT PROCUREMENTS (INCLUDING ONE INVOLVING THE SAME CONTRACTING OFFICER) IN WHICH THE GOVERNMENT REQUESTED BID VERIFICATION AS INDICATING THE ACTION THAT WOULD HAVE BEEN PROPER IN THIS PROCUREMENT.

THE REFERENCES TO SOLICITATIONS ISSUED SUBSEQUENT TO THE PROCUREMENT IN QUESTION AND TO CONTRACTING OFFICER ACTIONS TAKEN WITH RESPECT TO THOSE SOLICITATIONS HAVE NO BEARING ON THE PROPRIETY OF THE CONTRACTING OFFICER'S ACTIONS IN THIS CASE. IN DETERMINING WHETHER A CONTRACTING OFFICER HAS A DUTY TO VERIFY BID PRICES:

"*** THE TEST IS WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF 'THE PARTICULAR CASE THERE WERE ANY FACTORS WHICH REASONABLY SHOULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER' (WELCH, MISTAKES IN BID 18 FED. B. J. 75, 83) WITHOUT MAKING IT NECESSARY FOR THE CONTRACTING OFFICER TO ASSUME THE BURDEN OF EXAMINING EVERY BID FOR POSSIBLE ERROR BY THE BIDDER. ***" 49 COMP. GEN. 272, 274 (1969), QUOTING B-164845, JANUARY 27, 1969.

IN THIS CASE, 3 BIDS WERE BELOW THE GOVERNMENT ESTIMATE, WHICH WAS BASED ON A PRIOR PURCHASE PRICE, AND ANOTHER BID WAS SLIGHTLY BELOW ANOTHER PRIOR PURCHASE PRICE. EACH OF THESE BIDS, AS WELL AS THE OTHERS RECEIVED, FOLLOWED A NORMAL UPWARD PROGRESSION. FURTHERMORE, IT IS REPORTED THAT THE PRIOR UNIT PURCHASE PRICES OF $249 AND $269.36 WERE FOR QUANTITIES OF ONLY 41 AND 17 UNITS, RESPECTIVELY. WE HAVE HELD THAT A DISPARITY BETWEEN A BID PRICE AND BOTH PRIOR PURCHASE PRICES AND THE CURRENT COST ESTIMATE MAY PUT A CONTRACTING OFFICER ON NOTICE OF A POSSIBLE MISTAKE, BUT THAT "SUCH A DISPARITY WILL NOT CHARGE THE GOVERNMENT WITH NOTICE IF UNDER ALL THE ATTENDANT CIRCUMSTANCES, IT WAS REASONABLE FOR THE CONTRACTING OFFICER TO BELIEVE" THAT THERE WAS NO ERROR APPARENT IN THE BID. B-174899, JUNE 1, 1972. SINCE 3 BIDS BELOW THE GOVERNMENT ESTIMATE WERE RECEIVED AND SINCE THE PRIOR PURCHASE PRICES WERE FOR SUBSTANTIALLY LESSER QUANTITIES, WE DO NOT BELIEVE THAT THE HIGHER PRICES BID BY TWO FORMER SUPPLIERS OR THE DIFFICULTY ALLEGEDLY ENCOUNTERED BY ONE OF THEM IN FULFILLING CONTRACT OBLIGATIONS NECESSARILY SHOULD HAVE LED THE CONTRACTING OFFICER TO SUSPECT A POSSIBLE ERROR IN BALL'S BID OR IN ALL OF THE 5 LOW BIDS. SEE 50 COMP. GEN. 39 (1970). AS WE RECOGNIZED IN THE CITED CASE, WHILE IT IS POSSIBLE FOR MORE THAN ONE BIDDER ON A PARTICULAR PROCUREMENT TO MAKE A MISTAKE IN SUBMITTING A BID, THE GOVERNMENT CAN BE CHARGED WITH NOTICE OF THE MISTAKES ONLY IF THE CIRCUMSTANCES SUGGEST THE POSSIBILITY OF THE ERRORS, SUCH AS WHERE TWO BIDS ARE SIGNIFICANTLY OUT OF LINE WITH OTHER BID SUBMITTED. SEE E.G., C. N. MONROE MANUFACTURING CO. V. UNITED STATES, 143 F. SUPP 449 (1956). HERE, AS NOTED ABOVE, NONE OF THE BIDS WAS OUT OF LINE WITH EACH OTHER; RATHER, THE BIDS WERE IN A REASONABLE PROGRESSION WHICH DID NOT INDICATE ERROR IN ANY OF THE BIDS. SEE 39 COMP. GEN. 405 (1959).

WE THINK BALL'S ASSERTIONS HERE OVERLOOK THE FACT THAT BALL WAS REQUIRED TO EXERCISE REASONABLE DILIGENCE IN THE PREPARATION OF ITS BID AND THAT THE CONTRACTING OFFICER WAS UNDER NO OBLIGATION TO ASSURE THAT BALL'S BID INCLUDED ALL NORMAL ITEMS OF COST, INCLUDING PROFIT. ALTHOUGH A CONTRACTING OFFICER MUST ADVISE A BIDDER WHEN A MISTAKE IN BID IS SUSPECTED, UNITED STATES V. METRO NOVELTY MANUFACTURING CO., INC., 125 F. SUPP 713 (1954), IT "WOULD BE DETRIMENTAL TO THE INTERESTS OF THE GOVERNMENT IN FOSTERING AND PRESERVING" THE COMPETITIVE BIDDING SYSTEM "*** TO IMPOSE A DUTY UPON A CONTRACTING OFFICER TO ASSURE FOR HIMSELF THAT A LOW BID REGULAR ON ITS FACE WAS COMPUTED CORRECTLY WITH DUE REGARD TO ECONOMIC CONDITIONS, PAST PROCUREMENTS, REASONABLE DEGREES OF PRICE PROGRESSION OF OTHER BIDS, OR OTHER MATTERS PURELY INCIDENTAL TO THE WRITTEN BID." 39 COMP. GEN. 405, 408, SUPRA. HERE THE RECORD SHOWS THAT BALL MAY WELL HAVE MADE A MISTAKE IN ARRIVING AT ITS BID PRICE, BUT THAT THERE WAS NO REASON FOR THE CONTRACTING OFFICER TO BELIEVE THAT BALL'S LOW BID, REGULAR ON ITS FACE, REFLECTED THAT MISTAKE.

ACCORDINGLY, WE AGAIN CONCLUDE THAT THE CONTRACTING OFFICER WAS UNDER NO DUTY TO SEEK VERIFICATION FROM BALL WITH RESPECT TO ITS LOW BID, AND THAT BY ACCEPTANCE OF ITS BID BY THE GOVERNMENT A VALID AND BINDING CONTRACT WAS CREATED.

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