B-182362, DEC 3, 1974

B-182362, DEC 3, 1974

REQUEST FOR RESCISSION OF CONTRACT FOR SUPPLY OF MILLING MACHINE AND ACCESSORIES ON BASIS OF MISTAKE IN BID ALLEGED AFTER AWARD CANNOT BE GRANTED, SINCE CONTRACTING OFFICER HAD NO ACTUAL OR CONSTRUCTIVE NOTICE OF PROBABILITY OF ERROR SINCE LOW BID WAS IN LINE WITH BOTH GOVERNMENT ESTIMATE AND ONLY OTHER BID RECEIVED.

OLIVER H. VAN HORN COMPANY, INC.:

BY LETTER DATED OCTOBER 3, 1974, WITH ENCLOSURES, THE ACTING DIRECTOR, OFFICE OF THE SECRETARY, DEPARTMENT OF AGRICULTURE, REQUESTED A DECISION AS TO WHETHER RESCISSION OF A CONTRACT MAY BE ALLOWED ON THE BASIS OF AN ERROR ALLEGED BY THE OLIVER H. VAN HORN COMPANY, INC. (VAN HORN), TO HAVE BEEN MADE IN ITS BID ON SOLICITATION NO. S-6954-ARS-74.

THE CONTRACT RESULTED FROM INVITATION FOR BIDS (IFB) ISSUED MAY 16, 1974, FOR A MILLING MACHINE WITH SPECIFIED ACCESSORIES. TWO BIDS WERE RECEIVED AND OPENED ON JUNE 6, 1974. VAN HORN'S BID WAS $3,525 AND THE OTHER BID WAS $3,990. SINCE THE GOVERNMENT'S ESTIMATE WAS $3,477.40, THE CONTRACT WAS AWARDED TO VAN HORN ON JUNE 13, 1974. ON JUNE 17, 1974, A REPRESENTATIVE OF VAN HORN ADVISED THE CONTRACTING OFFICER THAT THE FIRM HAD MADE AN ERROR IN ITS BID IN THAT THE PRICE WAS COMPUTED ON THE BASIS OF THE WRONG PRICES FOR THE MACHINE AND ONE ACCESSORY. VAN HORN EXPLAINED THAT IT USED "OLD" PRICE SHEETS FROM THE SUPPLIER TO COMPUTE ITS BID; THAT IS, LIST PRICES OF $2,333 FOR THE MILLING MACHINE AND $153 FOR THE ROTARY TABLE; WHEREAS, THE "NEW" PRICE SHEETS SHOW SUGGESTED LIST PRICES OF $2,745 AND $651, RESPECTIVELY. VAN HORN HAS REQUESTED THAT THE CONTRACT BE RESCINDED BECAUSE OF ERROR IN LIEU OF ITS EARLIER REQUEST FOR CORRECTION TO THE AMOUNT OF THE NEXT BID ($3990).

IN THE MATTER OF ROGER C. MORTENSEN, B-179956, FEBRUARY 21, 1974, WE STATED THAT:

"IT IS WELL ESTABLISHED THAT RESPONSIBILITY FOR THE PREPARATION OF A BID RESTS WITH THE BIDDER AND THAT RELIEF FROM A CONTRACT WILL NOT BE GRANTED FOR A UNILATERAL MISTAKE IN SUBMITTING A BID UNLESS THE CONTRACTING OFFICER KNEW OR HAD REASON TO KNOW OF THE MISTAKE PRIOR TO ACCEPTANCE OF THE BID. CHERNECK V. UNITED STATES, 178 CT. CL. 498 (1967); 44 COMP. GEN. 383 (1965); B-176517, SEPTEMBER 6, 1972; B 174899, MAY 31, 1972. CONTRACTING OFFICER WILL GENERALLY BE CHARGED WITH CONSTRUCTIVE KNOWLEDGE OF A MISTAKE WHEN THE BID PRICE SIGNIFICANTLY DEVIATES FROM OTHER BIDS RECEIVED OR FROM THE GOVERNMENT ESTIMATE, SEE 50 COMP. GEN. 39 (1970); DOKE, MISTAKES IN GOVERNMENT CONTRACTS - ERROR DETECTION DUTY OF CONTRACTING OFFICERS, 18 S.W.L.J. 1, 16-28 (1964); B-176517, SEPTEMBER 6, 1972.

"THE TEST IS ONE OF REASONABLENESS; WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE THERE WERE ANY FACTORS WHICH REASONABLY COULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER. WENDER PRESSES, INC. V. THE UNITED STATES, 170 CT. CL. 483, 486 (1965); B-176772, MAY 23, 19739"

IN THIS REGARD, IT IS GENERALLY NOTED THAT A CONTRACTING OFFICER HAS NO REASON TO SUSPECT ERROR WHERE A LOW BID IS IN LINE WITH OTHER BIDS RECEIVED AND THE GOVERNMENT ESTIMATE. B-179725, OCTOBER 30, 1973. IN B- 180090, JUNE 10, 1974, WE ACKNOWLEDGED THIS PRINCIPLE IN DISALLOWING BOTH RESCISSION AND REFORMATION OF A CONTRACT WHERE A MISTAKE WAS ALLEGED AFTER AWARD OF THE CONTRACT ON WHICH ONLY YWO VARIANT BIDS WERE RECEIVED.

WE FIND NO BASIS TO RELIEVE VAN HORN FROM ITS OBLIGATION UNDER THE CONTRACT SINCE THE CONTRACTING OFFICER MADE AWARD WITHOUT NOTICE OF POSSIBLE ERROR. NEITHER DID THE CONTRACTING OFFICER HAVE REASON TO SUSPECT ERROR SINCE THE OTHER BID WAS ONLY ABOUT 12 PERCENT HIGHER THAN THE LOW BID AND THE GOVERNMENT'S ESTIMATE WAS ONLY SLIGHTLY LOWER THAN THE LOW BID. SEE B-178731, AUGUST 3, 1973. THEREFORE, THE ACCEPTANCE OF THE VAN HORN BID CONSTITUTED A VALID AND BINDING CONTRACT FROM WHICH RELIEF MAY NOT BE GRANTED.