Skip to Highlights
Highlights

STATING IN PART THAT: " * * * THEIR BID (STRATOS) APPEARS TO NOT EVEN EQUAL THEIR ACTUAL COST AND WAS PROBABLY MADE LOW BECAUSE THEY DESIRE TO OBTAIN CONTRACTS IN THIS RESEARCH AND DEVELOPMENT FIELD.'. YOU INSIST THAT THE BIDDER SHOULD HAVE BEEN ASKED TO CONFIRM ITS BID. DURING NEGOTIATIONS THEY COVERED THE SPECIFICATIONS POINT BY POINT WITH THE CONTRACTOR AND DETERMINED THAT THE QUOTATION WAS BASED ON A THOROUGH AND COMPLETE UNDERSTANDING OF THE TECHNICAL PROBLEMS INVOLVED. THAT THE QUOTATION DID NOT APPEAR TO COVER THE COST TO BE INCURRED AND WAS PROBABLY MADE LOW BECAUSE FAIRCHILD STRATOS DECIDED TO OBTAIN CONTRACTS ON A COST SHARING BASIS IN THIS RESEARCH AND DEVELOPMENT FIELD. "THERE ARE INDICATIONS THAT GOVERNMENT REPRESENTATIVES WERE AWARE THAT STRATOS" BID WAS UNREALISTICALLY LOW AND THAT THEY VERBALLY BROUGHT THIS REALIZATION TO THE ATTENTION OF STRATOS REPRESENTATIVES.

View Decision

B-153279, DEC. 23, 1964

TO FAIRCHILD HILLER:

BY LETTER OF DECEMBER 7, 1964, YOU REQUEST RECONSIDERATION OF OUR DECISIONS B-153279, DATED DECEMBER 2, 1964, AND OCTOBER 21, 1964, WHICH AFFIRMED THE DENIAL OF YOUR CLAIM FOR $230,700 UNDER CONTRACT NO. DA-44- 009-ENG-2799, DATED FEBRUARY 3, 1956, BETWEEN THE DEPARTMENT OF THE ARMY AND STRATOS DIVISION, FAIRCHILD ENGINE AND AIRPLANE CORPORATION (SUBSEQUENTLY KNOWN AS FAIRCHILD STRATOS CORPORATION).

YOU BASE YOUR CLAIM ON AN ARMY ENGINEER'S MEMORANDUM, DATED JANUARY 25, 1956 (BEFORE THE CONTRACT AWARD), STATING IN PART THAT:

" * * * THEIR BID (STRATOS) APPEARS TO NOT EVEN EQUAL THEIR ACTUAL COST AND WAS PROBABLY MADE LOW BECAUSE THEY DESIRE TO OBTAIN CONTRACTS IN THIS RESEARCH AND DEVELOPMENT FIELD.' YOU ASK HOW CAN THE GOVERNMENT JUSTIFY ACCEPTING A BID WHICH IT RECOGNIZES TO BE INORDINATELY LOW WITHOUT VERIFICATION. YOU INSIST THAT THE BIDDER SHOULD HAVE BEEN ASKED TO CONFIRM ITS BID.

THE ACTING CHIEF OF ENGINEERS, IN HIS "MEMORANDUM OF DECISION" DATED APRIL 12, 1963, REGARDING YOUR REQUEST FOR RELIEF UNDER PUBLIC LAW 85-804, REPORTED THE FACTS AS FOLLOWS:

"4. IN CONNECTION WITH THE ALLEGED MISTAKE, REPRESENTATIVES OF THE CONTRACTING OFFICER CONSIDERED THE QUOTATION SUBMITTED TO BE EXTREMELY LOW. THEREFORE, DURING NEGOTIATIONS THEY COVERED THE SPECIFICATIONS POINT BY POINT WITH THE CONTRACTOR AND DETERMINED THAT THE QUOTATION WAS BASED ON A THOROUGH AND COMPLETE UNDERSTANDING OF THE TECHNICAL PROBLEMS INVOLVED, THAT THE TECHNICAL APPROACH SEEMED FEASIBLE, THAT THE QUOTATION DID NOT APPEAR TO COVER THE COST TO BE INCURRED AND WAS PROBABLY MADE LOW BECAUSE FAIRCHILD STRATOS DECIDED TO OBTAIN CONTRACTS ON A COST SHARING BASIS IN THIS RESEARCH AND DEVELOPMENT FIELD. IN LETTER OF 1 SEPTEMBER 1960 THE CONTRACTOR STATES,"THERE ARE INDICATIONS THAT GOVERNMENT REPRESENTATIVES WERE AWARE THAT STRATOS" BID WAS UNREALISTICALLY LOW AND THAT THEY VERBALLY BROUGHT THIS REALIZATION TO THE ATTENTION OF STRATOS REPRESENTATIVES. THE REPRESENTATIVES REFERRED TO HAVE BEEN DISMISSED FOR FAILURE TO ACT IN THE COMPANY'S BEST INTERESTS.' THE OTHER QUOTATIONS RECEIVED WERE NOT COMPARABLE TO THAT OF THE APPLICANT. ALSO, IT APPEARS THAT FAIRCHILD STRATOS, AS ONE OF THE FOREMOST EXPONENTS IN THIS FIELD, WAS OR SHOULD HAVE BEEN BETTER INFORMED THAN GOVERNMENT PERSONNEL OR OTHER CONTRACTORS ON THE WORK REQUIRED TO BE PERFORMED UNDER THE PROPOSAL AND THE PROBABLE COSTS THEREOF. FURTHER, IT APPEARS THAT IN ADDITION TO COST SHARING, THE LOSSES WERE MATERIALLY INCREASED DUE TO THE FACT THAT AFTER 1 1/2 YEARS OF PERFORMANCE IT BECAME APPARENT THAT THE TECHNICAL APPROACH PROPOSED WOULD NOT ACCOMPLISH THE DESIRED RESULT.'

THE RULE IS THAT WHEN A CONTRACTING OFFICER SUSPECTS AN ERROR IN BID, HE SHOULD SPECIFICALLY ADVISE THE BIDDER OF THE EXACT NATURE OF THE ERROR AND REQUEST CERTIFICATION. SEE 39 COMP. GEN. 405, 407, AND THE CASES CITED. YOU CONTEND THAT SINCE YOUR "QUOTATION DID NOT APPEAR TO COVER THE COST TO BE INCURRED," THE CONTRACTING OFFICER COULD NOT IN GOOD FAITH ACCEPT SUCH PROPOSAL ON THE BASIS THAT THE BIDDER WAS WILLING TO SHARE COSTS WITH THE GOVERNMENT, WITHOUT FIRST VERIFYING THE MATTER WITH THE BIDDER. THE CONTRACTING OFFICER REPORTS THAT YOUR REPRESENTATIVES WERE QUESTIONED ABOUT YOUR PRICE BREAKDOWN, AND THAT THEY TWICE VERIFIED YOUR BID VERBALLY, AFTER THE TECHNICAL REQUIREMENTS OF THE CONTRACT HAD BEEN FULLY EXPLAINED AND AGREED TO BY THEM. YOU SAY THAT THE REQUEST FOR CONFIRMATION WAS REGARDED BY YOUR FIRM AS A ROUTINE REQUEST FOR ARITHMETICAL CONFIRMATION OF THE PRICE BREAKDOWN, BUT NOT AS A REQUEST FOR VERIFICATION OF YOUR PROPOSAL. THE RECORD SHOWS, HOWEVER, THAT THE CONTRACTING OFFICER CONCLUDED THAT YOU WERE BETTER INFORMED AS TO THE NATURE OF THE REQUIRED WORK THAN THE GOVERNMENT ITSELF. IT IS REPORTED THAT MOST OF THE EXTRA COSTS WERE INCURRED BECAUSE YOUR ORIGINAL APPROACH TO THE WORK HAD TO BE ABANDONED, AND THAT THE CONTRACT PRICE WOULD HAVE BEEN ADEQUATE IF THE ORIGINAL APPROACH HAD SUCCEEDED. IT SEEMS CLEAR TO US THAT THE CONTRACTING OFFICER WAS IN NO BETTER POSITION TO JUDGE THAN YOU WERE WHETHER YOUR PROPOSAL WAS BELOW THE NECESSARY COSTS OF THE ANTICIPATED WORK. THE STATEMENT YOU QUOTE FROM THE MEMORANDUM OF JANUARY 25, 1956, IS NOT FURTHER DEVELOPED IN THE RECORD. IN THIS CONNECTION, THE UNITED STATES ARMY AUDIT AGENCY REPORTED ON JULY 23, 1962, THAT THAT STATEMENT APPEARS AS AN EXTRACT FROM A LETTER FROM NUCLEAR POWER BRANCH ERDL TO DIRECTOR ERDL SUBJECT ,REQUEST FOR AUTHORITY TO AWARD CONTRACT," AND THAT THE AUDIT AGENCY WAS "UNABLE TO OBTAIN ANY OTHER DATA IN THIS CONNECTION.'

OUR OFFICE MUST RELY ON THE FACTS PRESENTED BY THE ADMINISTRATIVE OFFICE CONCERNED, AND WE CANNOT CONCLUDE FROM SUCH PRESENTATION THAT YOUR PROPOSAL WAS ACCEPTED IN BAD FAITH. WE MAY AUTHORIZE FOR PAYMENT ONLY THOSE CLAIMS WHICH ARE CLEARLY ALLOWABLE IN FACT AND IN LAW ON THE BASIS OF THE WRITTEN RECORD BEFORE US. CHARLES V. UNITED STATES, 19 CT.CL. 316, 319 (1884). CONSEQUENTLY, WE MUST REAFFIRM THE DENIAL OF YOUR CLAIM. YOU MAY ELECT, OF COURSE, TO PURSUE YOUR CLAIM IN A COURT OF COMPETENT JURISDICTION SO LONG AS SUCH ACTION IS INITIATED WITHIN THE ..END :

GAO Contacts