B-158651, JUNE 14, 1968, 47 COMP. GEN. 732

B-158651, JUNE 14, 1968, 47 COMP. GEN. 732

CONTRACTS - MISTAKES - ALLEGATION AFTER AWARD - RULE A CONTRACTOR WHO SUBSEQUENT TO CONTRACT PERFORMANCE ALLEGED A MISTAKE IN THE BID THAT HAD BEEN CONFIRMED ON SEVERAL OCCASIONS AND DENIED A PRICE ADJUSTMENT UNDER PUBLIC LAW 85-804, WHICH AUTHORIZED CONTRACT MODIFICATION WITHOUT CONSIDERATION TO FACILITATE THE NATIONAL DEFENSE, IS NOT ENTITLED TO CONTRACT MODIFICATION UNDER THE GENERAL RULE THAT A CONTRACT MAY NOT BE AMENDED OR MODIFIED WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. REPEATED ADVICE TO THE CONTRACTOR OF SUSPECTED BID ERROR, FULFILLED THE GOVERNMENT'S RESPONSIBILITY TO OBTAIN BID VERTIFICATION, AND A BIDDER HAVING THE RESPONSIBILITY OF ESTIMATING THE PRICE AT WHICH A CONTRACT COULD BE PERFORMED AT REASONABLE PROFIT, THE GOVERNMENT WAS NOT REQUIRED IN A PREAWARD SURVEY TO REVIEW THE CONTRACTOR'S PRICING ESTIMATES.

TO THE TAR HEEL ENGINEERING AND MANUFACTURING COMPANY, JUNE 14, 1968:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 2, 1966, AND TO SUBSEQUENT CORRESPONDENCE AND CONFERENCES, CONCERNING A CLAIM OF YOUR COMPANY IN THE AMOUNT OF $92,865.64, BASED UPON AN ALLEGED MISTAKE IN BID ON 712 1/4-TON, TWO WHEEL, AMPHIBIOUS CARGO TRAILERS (M100), DELIVERED BY YOUR COMPANY UNDER CONTRACT NO. DA-20-113-AMC-04491 (T) DATED OCTOBER 30, 1964, AS AMENDED.

THE CONTRACT WAS AWARDED BY THE UNITED STATES ARMY TANK AUTOMOTIVE CENTER, PROCUREMENT AND PRODUCTION DIRECTORATE, WARREN, MICHIGAN (ATAC), PURSUANT TO INVITATION FOR BIDS NO. AMC-20-113-65-0216 (T) DATED AUGUST 7, 1964, AS AMENDED. BIDS WERE REQUESTED AT F.O.B. ORIGIN PRICES ON FOUR ITEMS COVERING AN AGGREGATE QUANTITY OF 712 M100 TRAILERS. THREE BIDS WERE RECEIVED AS OF SEPTEMBER 8, 1964, THE SCHEDULED BID OPENING DATE. YOUR BID, WHICH WAS THE LOWEST RECEIVED, OFFERED DELIVERY OF 712 UNITS AT A PRICE OF $278.20 PER TRAILER AND AT A TOTAL PRICE OF 198,078.40. ONE OF THE OTHER BIDDERS QUOTED A PRICE OF $442.09 PER TRAILER ON 712 UNITS. THE REMAINING BIDDER DID NOT BID ON ALL FOUR ITEMS BUT IT QUOTED A PRICE OF $440 PER TRAILER ON 458 UNITS (ITEM NO. 1), AND A PRICE OF $445 PER TRAILER ON 25 ADDITIONAL UNITS (ITEM NO. 2). ON A PREVIOUS PROCUREMENT OF M100 TRAILERS IN A REPORTEDLY LARGER QUANTITY THAN 712 UNITS THE GOVERNMENT HAD PAID A PRICE OF $406.14 PER TRAILER.

THE CONTRACTING OFFICER FOUND IT NECESSARY TO REQUEST A PREAWARD SURVEY OF YOUR COMPANY FOR THE PURPOSE OF DETERMINING YOUR QUALIFICATIONS OR RESPONSIBILITY TO PERFORM THE PROPOSED CONTRACT. THE FORM USED IN REQUESTING THE SURVEY INDICATED THAT EVIDENCE OR VERIFICATION IN WRITING SHOULD BE OBTAINED WITH RESPECT TO A NUMBER OF ELEMENTS, INCLUDING "UNIT PRICE WHICH IS OUT OF LINE WITH OTHER BIDS RECEIVED.' A FAVORABLE PREAWARD SURVEY REPORT WAS TRANSMITTED TO THE CONTRACTING OFFICER BY LETTER DATED OCTOBER 14, 1964, FROM THE BIRMINGHAM PROCUREMENT DISTRICT OFFICE, BIRMINGHAM, ALABAMA, AND THE REPORT WAS ACCOMPANIED BY A LETTER DATED OCTOBER 3, 1964, FROM THE PRESIDENT OF YOUR COMPANY, STATING THAT:

THIS IS TO CONFIRM THE PRICE ON IFB-AMC-20-113-65-0216 (T) BY TAR HEEL ENGINEERING AND MANUFACTURING COMPANY OF SPRING HOPE, N.C. OF $278.20 PER UNIT. THE TOTAL CONTRACT PRICE IS $198,078.40. THIS IS ALSO TO FURTHER ADVISE THAT I AM FAMILIAR WITH THE SPECIFICATIONS AND DELIVERY REQUIREMENTS AND THAT BOTH WILL BE ADHERED TO.

THAT LETTER HAS BEEN REFERRED TO AS MERELY A ROUTINE BID VERIFICATION. HOWEVER, THE EVIDENCE IN THE CASE SHOWS THAT YOUR COMPANY WAS INFORMED THAT A BID VERIFICATION WAS NECESSARY BECAUSE THE BID APPEARED TO BE TOO LOW AND WAS OUT OF LINE WITH OTHER BIDS RECEIVED AND THE PRICE PREVIOUSLY PAID BY THE GOVERNMENT FOR M100 TRAILERS.

NOTWITHSTANDING THE WRITTEN CONFIRMATION OF YOUR BID AND YOUR ALLEGED UNDERSTANDING OF THE SPECIFICATIONS AND DELIVERY REQUIREMENTS OF THE AMENDED INVITATION FOR BIDS, THE CONTRACTING OFFICER STILL BELIEVED THAT THERE WAS A POSSIBILITY THAT A SERIOUS MISTAKE HAD BEEN MADE IN THE BID. A MEETING WAS THEREFORE ARRANGED TO TAKE PLACE AT THE BIRMINGHAM PROCUREMENT DISTRICT OFFICE TO DISCUSS WITH REPRESENTATIVES OF YOUR COMPANY ITS PLAN FOR PRODUCING THE TRAILERS AT THE BID PRICE OF $278.20 PER TRAILER. THE MEETING WAS HELD ON OCTOBER 19, 1964, WITH YOUR COMPANY BEING REPRESENTED BY MR. D. THERMAN EDWARDS, PRESIDENT, MR. DEVON EDWARDS, CHAIRMAN OF THE BOARD OF DIRECTORS, AND DR. JULIUS A. WARREN, DIRECTOR. THE GOVERNMENT WAS REPRESENTED BY FIVE OFFICIALS OF THE BIRMINGHAM PROCUREMENT DISTRICT, INCLUDING MR. DON H. GOODWIN, INDUSTRIAL ENGINEER, WHO ACTED AS THE CHAIRMAN OF THE PRE-AWARD SURVEY GROUP WHICH PERFORMED THE SURVEY OF YOUR COMPANY; AND BY MR. JOSEPH F. MARTIN, AND ATAC CONTRACT PRICE ANALYST.

YOUR PLAN FOR PRODUCING THE TRAILERS AT THE BID PRICE OF $278.20 PER TRAILER WAS DISCUSSED AND YOUR REPRESENTATIVES REPORTEDLY CONVINCED THE GOVERNMENT THAT YOU WERE SATISFIED WITH THE BID AND WANTED THE CONTRACT REGARDLESS OF STATEMENTS MADE BY THE GOVERNMENT REPRESENTATIVES THAT THE QUOTED UNIT PRICE OF $278.20 APPEARED TO BE TOO LOW IN VIEW OF THE FACT THAT TWO OTHER BIDDERS HAD QUOTED UNIT PRICES RANGING FROM $440 TO $445. AS THE RESULT OF THE MEETING, THE BIRMINGHAM PROCUREMENT DISTRICT CONSIDERED THAT THERE HAD BEEN A SUFFICIENT VERIFICATION OF YOUR BID AND THE PROCUREMENT OFFICE WAS ADVISED THAT THE DISTRICT WAS THEREFORE REAFFIRMING ITS FAVORABLE SURVEY REPORT.

THE CONTRACT WAS AWARDED TO YOUR COMPANY ON OCTOBER 30, 1964, AND IT APPEARS THAT BY SUPPLEMENTAL AGREEMENTS, INCLUDING CONTRACT MODIFICATION NO. 20, UNDER WHICH THE SUM OF $2,495.56 WAS ALLOWED FOR CHANGES IN SHIPPING REQUIREMENTS, THE TOTAL CONTRACT PRICE OF $198,078.40 WAS INCREASED TO $202,237.35. PRIOR TO THE COMPLETION OF CONTRACT DELIVERIES, IT WAS ESTIMATED BY AN ACCOUNTING FIRM ENGAGED BY YOUR COMPANY THAT YOU WOULD INCUR A LOSS OF $55,235.05 IN PERFORMING THE CONTRACT. HOWEVER, WHEN THE CONTRACT WAS FULLY COMPLETED, IT WAS DETERMINED BY YOU THAT A LOSS OF $53,593.75 HAD BEEN INCURRED IN CONNECTION WITH THE PERFORMANCE OF THE CONTRACT.

IT WAS INDICATED IN YOUR LETTER OF MARCH 2, 1966, THAT THE UNITED STATES ARMY MOBILITY COMMAND HAD DENIED YOUR REQUEST FOR A CONTRACT PRICE ADJUSTMENT UNDER PUBLIC LAW 85-804, APPROVED AUGUST 28, 1958, 72 STAT. 972, 50 U.S.C. 1431, EXECUTIVE ORDER NO. 10789, DATED NOVEMBER 14, 1958, AND THE IMPLEMENTING SECTION XVII, ARMED SERVICES PROCUREMENT REGULATION (ASPR). YOU HAD REQUESTED A CONTRACT PRICE INCREASE OF $80,776.44, COVERING AN ESTIMATED BOOK LOSS OF $55,235.05, PLUS 10 PERCENT OF TOTAL ESTIMATED PERFORMANCE COSTS ($255,413.85), OR $25,541.39, FOR PROFIT. DURING HEARINGS BEFORE THE MOBILITY COMMAND'S CONTRACT PRICE ADJUSTMENT BOARD THE AMOUNT REQUESTED AS A CONTRACT PRICE INCREASE WAS REDUCED FROM $80,776.44 TO $78,280.88, WITH THE DIFFERENCE OF $2,495.56 REPRESENTING THE ADDITION TO THE CONTRACT PRICE WHICH WAS ALLOWED UNDER CONTRACT MODIFICATION NO. 20.

IT WAS ALLEGED THAT YOUR COST ESTIMATES ON SOME ITEMS WERE TOO LOW, THAT YOU OMITTED CERTAIN COSTS IN THE COMPUTATION OF YOUR BID PRICE AND THAT THE COST OF CONTRACT PERFORMANCE HAD INCREASED AS THE RESULT OF DIFFICULTIES EXPERIENCED WITH ONE OF YOUR SUPPLIERS, THE ANTHONY COMPANY OF STREATOR, ILLINOIS. YOU STATED THAT YOUR COMPANY AS A SMALL BUSINESS CONCERN, THAT THE CONTRACT WAS YOUR FIRST JOB AND THAT YOU HAD HAD NO PREVIOUS EXPERIENCE AS A SUPPLIER TO THE ARMED SERVICES. YOU ALSO STATED THAT YOUR ABILITY TO CONTINUE AS A RELIABLE SUPPLIER OF GOODS AND SERVICES TO THE GOVERNMENT AND TO COMMERCIAL CUSTOMERS WAS DIRECTLY DEPENDENT UPON OBTAINING SOME FINANCIAL RELIEF UNDER CONTRACT NO. DA-20-113-AMC-04491 (T).

THE DENIAL OF YOUR REQUEST FOR A CONTRACT PRICE ADJUSTMENT IS SUPPORTED BY A MEMORANDUM OF DECISION DATED FEBRUARY 14, 1966, DESIGNATED AS THE MOBILITY COMMAND'S CONTRACT ADJUSTMENT BOARD DECISION NO. 34. THE MEMORANDUM OF DECISION, BEGINNING AT SUBPARAGRAPH 3F, STATES IN PART AS FOLLOWS:

F. IN SPITE OF BIRMINGHAM PROCUREMENT DISTRICT'S FAVORABLE RECOMMENDATION AND TAR HEEL'S BID CONFIRMATION, ATAC WAS APPREHENSIVE THAT TAR HEEL'S BID WAS TOO LOW AND THAT IT COULD NOT PERFORM AT ITS BID PRICE. A MEETING WAS CALLED AT BIRMINGHAM PROCUREMENT DISTRICT, ATTENDED BY THREE REPRESENTATIVES FROM TAR HEEL AND AN ATAC PRICE ANALYST.

G. THE MEETING LASTED THE AFTERNOON OF 19 OCTOBER 1964. THE ATAC PRICE ANALYST REPORTED,"THE BRIEFING BEGAN BY THE ATAC REPRESENTATIVE EXPLAINING TO THE CONTRACTOR'S REPRESENTATIVES THAT THEIR QUOTED PRICE OF $278.20 APPEARED TO BE TOO LOW, BASED ON A PREVIOUS CONTRACT PRICE OF $406.14 FOR A LARGER QUANTITY AND OTHER QUOTATIONS RECEIVED UNDER IFB AMC-20-113-65- 0216 (T) WHICH RANGED FROM $440 TO $445 PER TRAILER.' HE WARNED CONTRACTOR THAT IT WAS LIKELY TO INCUR A SUBSTANTIAL LOSS IN PERFORMING THE CONTRACT.

H. AT THIS MEETING, THE CONTRACTOR SUBMITTED HIS PLAN FOR PRODUCING THE ITEMS AT THE BID PRICE AND VIGOROUSLY SOLICITED AN AWARD. AFTER EXTENDED DISCUSSION OF ALL ELEMENTS OF PERFORMANCE, THE CONTRACTOR CONVINCED THE GOVERNMENT REPRESENTATIVES THAT IT WANTED THE CONTRACT, AT THE PRICE IT BID, REGARDLESS OF THE GOVERNMENT'S OPINION OF THE APPARENT LOW BID.

I. AT THE CONTRACT ADJUSTMENT BOARD MEETING ON 26 JANUARY 1966, TAR HEEL'S PRESIDENT STATED CONTRACTOR WOULD PROBABLY HAVE SOUGHT A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION COMPELLING THE CONTRACTING OFFICER TO GIVE IT AN AWARD, HAD HE MADE AN UNFAVORABLE DETERMINATION UPON TAR HEEL'S CAPABILITY.

J. EVIDENCE REFLECTED IN THE CASE FILE AND DISCLOSED AT THE MOCOM CONTRACT ADJUSTMENT BOARD HEARING REFLECT THAT A SIGNIFICANT PART OF THE CONTRACTOR'S LOSS RESULTED WHEN A PRINCIPAL SUPPLIER RENEGED ON HIS PRICE TO TAR HEEL. IN ADDITION, CONTRACTOR ACKNOWLEDGED THAT IT OVERESTIMATED THE EFFICIENCY OF ITS LABOR FORCE AND FAILED TO ANTICIPATE THE EXPENSE WHICH RESULTED FROM ESTENSIVE TIME AND EFFORT ON THE PART OF ITS OFFICERS TO OVERSEE CONTRACT PERFORMANCE.

4. IN SPITE OF THE GOVERNMENT'S WARNINGS BEFORE AWARD THAT ITS PRICE WAS TOO LOW, TAR HEEL INSISTED THAT $278.20 WAS ITS INTENDED PRICE. ONLY AFTER GIVING THE CONTRACTOR FULL NOTICE OF ITS APPREHENSIONS DID THE GOVERNMENT MAKE THE AWARD AT $278.20. THE AWARD TO TAR HEEL WAS MADE IN GOOD FAITH AND RESULTED IN A VALID AND BINDING CONTRACT WHICH SHOULD NOT BE AMENDED. IN FACT, THE CASE FILE FAILS TO INDICATE ANY MISTAKE IN BID. THE LOSS SUFFERED BY CONTRACTOR APPEARS TO HAVE BEEN THE RESULT OF AN OVERESTIMATE OF ITS OWN EFFICIENCY AND ITS SUBCONTRACTOR'S RELIABILITY AND AN UNDERESTIMATE OF THE DIFFICULTIES OF CONTRACT PERFORMANCE.

5. IT IS A MATTER OF REGRET WHEN A CONTRACTOR INCURS A LOSS AS SUBSTANTIAL AS TAR HEEL-S. HOWEVER, THERE CAN BE NO GUARANTY OF FREEDOM FROM RISK OF SUCH A LOSS IN THE PERFORMANCE OF DEFENSE CONTRACTS, AND PUBLIC LAW 85-804 WAS NOT INTENDED TO PROVIDE SUCH A GUARANTY. IT IS NOTED THAT ASPR 17-204.1 STATES,"THE MERE FACT THAT LOSSES OCCUR UNDER A GOVERNMENT CONTRACT IS NOT, BY ITSELF, A SUFFICIENT BASIS FOR THE EXERCISE OF THE AUTHORITY CONFERRED BY THE ACT.'

OUR OFFICE IS GRANTED NO AUTHORITY UNDER THE PROVISIONS OF PUBLIC LAW 85- 804, AND RELATED EXECUTIVE ORDERS, TO AMEND OR MODIFY CONTRACTS WITHOUT CONSIDERATION ON THE BASIS THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE. HOWEVER, WE ARE AUTHORIZED TO CONSIDER CLAIMS BASED UPON ALLEGED MISTAKES IN BIDS AND TO ALLOW ADDITIONAL COMPENSATION IN THOSE CASES WHERE IT IS DETERMINED THAT A MISTAKE WAS ACTUALLY MADE IN A BID AND THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE AND SHOULD HAVE REQUESTED A VERIFICATION OF THE BID BEFORE ISSUING AN AWARD NOTICE. THERE MAY BE CIRCUMSTANCES UNDER WHICH A REQUEST FOR A BID VERIFICATION MIGHT NOT BE CONSIDERED TO BE ADEQUATE, BUT IT MUST BE EMPHASIZED THAT, IN ORDER FOR US TO GRANT ANY RELIEF TO YOUR COMPANY, IT WOULD BE NECESSARY FOR US TO CONCLUDE THAT THE ACCEPTANCE OF YOUR BID WHICH WAS AFFIRMED ON OCTOBER 3, 1964, AND REAFFIRMED DURING THE MEETING ON OCTOBER 19, 1964, AT THE BIRMINGHAM PROCUREMENT DISTRICT OFFICE, DID NOT RESULT IN THE CONSUMMATION OF A VALID AND BINDING CONTRACT. SINCE WE ARE NOT GRANTED THE AUTHORITY TO MODIFY OR AMEND CONTRACTS WITHOUT CONSIDERATION, WE ARE REQUIRED TO APPLY THE GENERAL RULE THAT AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY, WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT, TO MODIFY EXISTING CONTRACTS, OR TO WAIVE CONTRACT RIGHTS WHICH HAVE VESTED IN THE UNITED STATES. SEE 40 COMP. GEN. 684,688.

AFTER WE HAD OBTAINED CERTAIN DOCUMENTS FROM THE DEPARTMENT OF THE ARMY CONCERNING THE ACTION TAKEN BY THE ARMY MOBILITY COMMAND ON YOUR REQUEST FOR A CONTRACT PRICE ADJUSTMENT UNDER THE PROVISIONS OF PUBLIC LAW 85-804, WE REQUESTED ADDITIONAL INFORMATION FROM THE DEPARTMENT OF THE ARMY IN REGARD TO THE QUESTION WHETHER A MISTAKE IN BID HAD ACTUALLY BEEN MADE AND THE EXTENT TO WHICH EITHER THE ATAC CONTRACT PRICE ANALYST OR ANY OF THE MEMBERS OF THE PREAWARD SURVEY TEAM MIGHT HAVE KNOWN OR COULD BE PRESUMED TO HAVE KNOWN THAT MISTAKES WERE MADE IN YOUR BIDDING ESTIMATES. DEPARTMENTAL REPORT WAS SUBMITTED BY LETTER DATED MAY 17, 1966, AND YOUR ATTORNEY, MR. JOHN E. DAVENPORT, WAS FURNISHED COPIES OF PERTINENT MATERIAL IN OUR FILES RELATING TO THE DEPARTMENTAL RECOMMENDATION FOR DISALLOWANCE OF YOUR CLAIM. MR. DAVENPORT THEN REQUESTED THAT WE SUSPEND ACTION ON THE CASE SINCE HE DESIRED TO SUBMIT ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM.

THE REFERENCED REPORT AT SUBPARAGRAPH 3G OF THE ARMY MOBILITY COMMAND'S CONTRACT ADJUSTMENT BOARD DECISION NO. 34 WAS PREPARED ON NOVEMBER 17, 1965, BY MR. JOSEPH F. MARTIN, THE ATAC CONTRACT PRICE ANALYST. MR. MARTIN INDICATED THAT YOUR REPRESENTATIVES WERE ADVISED ON AT LEAST TWO OCCASIONS DURING THE MEETING OF OCTOBER 19, 1964, THAT IT IS NOT THE POLICY OF THE GOVERNMENT TO PUT CONTRACTORS OUT OF BUSINESS BY AWARDING CONTRACTS AT UNREALISTICALLY LOW PRICES. HIS REPORT ALSO REFERRED TO VARIOUS QUESTIONS WHICH WERE DISCUSSED AT THE MEETING, SUCH AS WHETHER THE QUOTATIONS OF YOUR PROPOSED SUPPLIERS HAD BEEN VERIFIED, WHETHER YOUR ESTIMATE FOR DIRECT LABOR COST WAS ADEQUATE, WHETHER YOU HAD MADE A SUFFICIENT ALLOWANCE IN YOUR BID PRICE OF $278.20 PER TRAILER FOR SALARIES TO BE PAID TO YOUR ENGINEERING PERSONNEL AND WHETHER YOUR PROPOSED PRODUCTION FACILITIES WOULD BE READY WITHIN SUFFICIENT TIME FOR YOU TO MEET THE DELIVERY REQUIREMENTS OF THE PROPOSED CONTRACT. THE FILE SUBMITTED WITH THE MAY 17, 1966, REPORT OF THE DEPARTMENT OF THE ARMY INCLUDED AN ADDITIONAL REPORT OF APRIL 28, 1966, FROM MR. MARTIN, WHICH IS AS FOLLOWS:

1. AT THE PREAWARD MEETING OF 26 OCTOBER 1964, AT THE BIRMINGHAM PROCUREMENT DISTRICT WITH THE TAR HEEL ENGINEERING AND MANUFACTURING COMPANY, I RECOLLECT THAT INBOUND FREIGHT COSTS WERE DISCUSSED AND THAT THE CONTRACTOR HAD INDICATED THAT THEY WERE INCLUDED IN THE COST OF MATERIAL. I DO NOT RECOLLECT NOR DO MY NOTES OF THE MEETING INDICATE ANY DISCUSSION RELATIVE TO LOADING AND PACKING COST.

2. OVERHEAD COSTS WERE DISCUSSED AT LENGTH. TAR HEEL ENGINEERING AND MANUFACTURING COMPANY WAS FOR ALL PURPOSES A "PAPER" ORGANIZATION AT THIS TIME. ALL PARTIES RECOGNIZED THAT ESTIMATES FOR PROJECTING OVERHEAD WERE LITTLE MORE THAN CONJECTURE, SINCE TAR HEEL HAD NO PREVIOUS MANUFACTURING EXPERIENCE NOR WAS IT A FULLY EQUIPPED MANUFACTURING FACILITY AT THIS TIME. TAR HEEL REPRESENTATIVES DID STATE THAT ADDITIONAL ANTICIPATED IN- HOUSE BUSINESS SUCH AS REFURBISHING OF OIL TANK PUMPS, MANUFACTURING OF MEDICAL EQUIPMENT, AND METAL FURNITURE PARTS WOULD DRAW A PROPORTIONATE SHARE OF THE OVERHEAD.

3. TAR HEEL ADVISED IT WAS GOING TO LEASE SHOP MACHINES AND TOOLING FOR MANUFACTURING AT APPROXIMATELY $5,000.00 UNDER THIS IFB IN ADDITION TO WHAT THEY HAD ON HAND. MY NOTES AND TAR HEEL'S COST BREAKDOWN REFLECT AN ALLOWANCE OF $10.00 PER UNIT FOR THE PROPOSED TOOLING AND EQUIPMENT COST. MY NOTES AND TAR HEEL'S BILL OF MATERIAL COST INDICATE THAT THE CONTRACTOR DID INCLUDE MATERIAL COST OF $18.74 FOR MISCELLANEOUS HARDWARE.

4. ARMY TANK AUTOMOTIVE CENTER'S PREVIOUS PROCUREMENT OF THESE TRAILERS WAS BY FORMAL ADVERTISING. THEREFORE, ARMY TANK AUTOMOTIVE CENTER HAD NO CONCRETE VISIBILITY OF WHAT COSTS WENT INTO THESE ADVERTISED PRICES. HAD NO WAY OF KNOWING WHETHER THE COST ELEMENTS WHICH TAR HEEL PRESENTED AS HIS ESTIMATES WERE TOO LOW, OTHER THAN A COMPARISON WITH THE PREVIOUS UNIT PRICE OF $406.14 AND OTHER QUOTATIONS UNDER THIS IFB RANGING FROM $440.00 TO $445.00 PER UNIT. ON THE BASIS OF THE PREVIOUS PRICE AND OTHER BIDS RECEIVED, I FELT TAR HEEL'S OVERALL PRICE WAS MUCH TOO LOW AND TOLD THEM THIS REPEATEDLY DURING THE MEETING.

IT APPEARS THAT, WHEN PREPARING THE REPORT OF APRIL 28, 1966, MR. MARTIN FAILED TO REALIZE THAT THE ORIGINAL OF HIS TYPEWRITTEN REPORT OF NOVEMBER 17, 1965, BEARS AN INITIALED CHANGE TO SHOW THAT THE MEETING AT THE BIRMINGHAM PROCUREMENT DISTRICT OFFICE WAS HELD ON OCTOBER 19, 1964, AND NOT ON OCTOBER 26, 1964. IT DOES NOT APPEAR TO BE MATERIAL WHETHER THE MEETING WAS ACTUALLY HELD ON OCTOBER 19, 1964, BUT YOUR ATTORNEY HAS REFERRED TO THE DISCREPANCY IN THE DATES AS SHOWN IN MR. MARTIN'S TWO REPORTS IN REGARD TO WHAT WAS DISCUSSED AT THE MEETING.

THE RECORD BEFORE US ORIGINALLY INDICATED THAT, DURING THE PERFORMANCE OF THE PREAWARD SURVEY UNDER THE SUPERVISION OF MR. DON H. GOODWIN, SUMMARIES OF ASSUMED DIRECT AND INDIRECT COSTS AMOUNTING TO $183,838 WERE FURNISHED TO THE GOVERNMENT REPRESENTATIVES. COPIES OF LETTERS AND TELEGRAMS FROM PROPOSED SUPPLIERS, WHICH PRESUMABLY WERE FURNISHED TO THE GOVERNMENT'S REPRESENTATIVES, SHOW THAT IN SOME CASES THE PRICES QUOTED TO YOUR FIRM WERE F.O.B. ORIGIN PRICES. IT WAS CONTENDED AT CONFERENCES IN OUR OFFICE THAT THE GOVERNMENT'S REPRESENTATIVES SHOULD HAVE KNOWN THAT THE COST ESTIMATE FOR PURCHASED PARTS DID NOT INCLUDE APPLICABLE FREIGHT CHARGES. IT WAS ALSO CONTENDED THAT THE GOVERNMENT'S REPRESENTATIVES SHOULD HAVE KNOWN THAT THERE WAS AN ERROR IN THE ESTIMATE OF $9,000 FOR SALARIES TO BE PAID TO COMPANY OFFICIALS, SINCE THAT AMOUNT WOULD HAVE BEEN SUFFICIENT ONLY FOR THE SALARY PROPOSED TO BE PAID TO THE PRESIDENT OF YOUR COMPANY DURING A 9-MONTH CONTRACT PERFORMANCE PERIOD, AND THE GOVERNMENT REPRESENTATIVES WERE ON NOTICE OF THE FACT THAT YOU INTENDED TO EMPLOY AN ADDITIONAL ENGINEER, MR. CARL H. WOODWARD, IN A SUPERVISORY CAPACITY, IF YOU RECEIVED A CONTRACT AWARD FOR THE PRODUCTION AND DELIVERY OF THE 712 M100 TRAILERS.

BY LETTER DATED AUGUST 21, 1967, YOUR ATTORNEY SUBMITTED DOCUMENTS DESCRIBED AS YOUR PRESENTATION, EXHIBITS, AFFIDAVITS, BRIEF AND ARGUMENT IN THE MATTER. YOUR CLAIM WAS INCREASED TO $92,865.64 AND THE REVISED CLAIM WAS COMPUTED ON A BASIS DIFFERENT FROM THAT SET FORTH IN YOUR PREVIOUS REQUEST FOR A CONTRACT PRICE ADJUSTMENT UNDER PUBLIC LAW 85-804. AN ATTEMPT WAS MADE TO SHOW THAT ERRORS IN YOUR BIDDING ESTIMATES AMOUNTED TO THE SUM OF $92,865.64 AND THAT SUCH ERRORS CONSISTED OF VARIOUS UNDERESTIMATES AND OMISSIONS OF COSTS IN ARRIVING AT YOUR BID PRICE OF $278.20 PER TRAILER, WITH AN ADJUSTMENT HAVING BEEN MADE IN CONNECTION WITH THE COSTS OF OBTAINING CERTAIN PARTS FROM THE ANTHONY COMPANY, THE FIRM PREVIOUSLY REFERRED TO AS HAVING REFUSED TO MAKE DELIVERY AT PRICES WHICH YOU ASSUMED TO HAVE BEEN AGREED UPON PRIOR TO THE DATE ON WHICH YOUR BID WAS SUBMITTED. HOWEVER, WE WERE ADVISED THAT YOU WOULD BE WILLING TO SETTLE THE CASE FOR THE ORIGINALLY CLAIMED AMOUNT OF $80,776.44.

IT WAS CONTENDED THAT YOUR ESTIMATE OF MATERIAL COSTS DID NOT INCLUDE THE COST OF NECESSARY TRAILER TARPAULIN COVERS WHICH AMOUNTED TO $5,589.20 AND THAT THERE WERE A NUMBER OF OTHER OMITTED ITEMS AND UNDERESTIMATES OF COST IN THE COMPUTATION OF THE BID PRICE OF $278.20 PER TRAILER WHICH SHOULD HAVE BEEN APPARENT TO THE MEMBERS OF THE GOVERNMENT'S PREAWARD SURVEY TEAM AND TO THE ATAC CONTRACT PRICE ANALYST WHO ATTENDED THE OCTOBER 19, 1964, MEETING.

EXHIBIT J OF YOUR PRESENTATION PURPORTS TO SHOW THAT FREIGHT COSTS OF $12,423.50 WERE OMITTED FROM THE BIDDING ESTIMATES AND THAT THE COST OF OMITTED PARTS WAS $37,922.98, INCLUDING $10,474.20 AS THE NET ADDITIONAL COST OF PARTS FURNISHED BY THE ANTHONY COMPANY AS A SUBCONTRACTOR, BUT NOT FORMALLY QUOTED ON BY ANTHONY BEFORE THE CONTRACT WAS AWARDED TO YOUR COMPANY. THE EXHIBIT ALSO PURPORTS TO SHOW THAT "OVERHEAD ERROR AND OMISSIONS" AND "LABOR ERROR AND OMISSIONS" RESULTED IN ADDITIONAL COSTS OF PERFORMANCE AGGREGATING THE RESPECTIVE AMOUNTS OF $34,329.75 AND $8,189.41.

IT WAS STATED THAT THE COST OF OMITTED PARTS AMOUNTED TO $38,551 PER TRAILER AND IT WAS SUGGESTED THAT ANY EXPERIENCED PRICE ANALYST SHOULD HAVE BEEN AWARE OF THE FACT THAT THE AMOUNT ESTIMATED FOR PURCHASED PARTS ($180 PER TRAILER), DID NOT INCLUDE EITHER THE SEPARATE COST OF $5,589.20 FOR TRAILER COVERS OR THE COST OF SEVERAL OF THE TRAILER PARTS, NOW ALLEGED TO BE IN THE AGGREGATE OF OVER $38 PER TRAILER.

IN REGARD TO THE ALLEGED FREIGHT COSTS OF $12,423.50, IT WAS INDICATED IN TESTIMONY BEFORE THE ARMY MOBILITY COMMAND'S CONTRACT ADJUSTMENT BOARD THAT A CONSIDERABLE AMOUNT OF FREIGHT COST WAS INCURRED IN THE PROCUREMENT OF STEEL FOR THE ANTHONY COMPANY AND IT DOES NOT THEREFORE APPEAR THAT ALL OF THE ALLEGED FREIGHT COSTS MAY BE SAID TO BE RELATED TO ANY MISTAKE WHICH WAS MADE IN YOUR BID. IT ALSO APPEARS FROM THE TESTIMONY BEFORE THE BOARD THAT, DURING THE MEETING OF OCTOBER 19, 1964, IT WAS INDICATED THAT THE M100 TRAILER IS LIGHTER AND SMALLER THAN THE M416 TRAILER WHICH HAD BEEN PURCHASED BY THE GOVERNMENT AT PRICES OF APPROXIMATELY $245 TO $250 PER TRAILER UNDER CONTRACTS WITH THE ANTHONY COMPANY AND THE JOHNSON FURNACE COMPANY OF BELLEVUE, OHIO. THE PRESIDENT OF YOUR COMPANY CONSIDERED THAT A PRICE OF $278.20 FOR THE M100 TRAILER WOULD BE ADEQUATE IN VIEW OF THOSE PREVIOUS CONTRACT PRICES FOR DELIVERIES OF M416 TRAILERS. HOWEVER, THERE WAS RAISED A QUESTION AT THE MEETING AS TO WHETHER THE M416 TRAILERS WERE PRODUCED WITHOUT CAUSING FINANCIAL LOSSES TO THE CONTRACTORS INVOLVED.

IT WAS CONTENDED IN YOUR ATTORNEY'S BRIEF THAT THE VERIFICATION OF YOUR BID PRICE OF $278.20 PER TRAILER WAS OF LITTLE OR NO IMPORTANCE IN VIEW OF THE CASES OF 35 COMP. GEN. 136, AND UNITED STATES V METRO NOVELTY MANUFACTURING COMPANY, 125 F.SUPP. 713. HE STATED AS HIS BELIEF THAT ALL PARTICIPANTS AT THE BIRMINGHAM MEETING KNEW THAT YOU WERE IN SERIOUS TROUBLE, THAT THIS KNOWLEDGE WAS REAFFIRMED BY MR. DON H. GOODWIN, SURVEYOR, WHEN HE QUESTIONED YOUR COMPANY ABOUT THE COMPONENT PARTS OF THE M100 TRAILER DURING A PREPRODUCTION CONFERENCE, AND THAT MR. GOODWIN STATED AT SUCH TIME THAT HE KNEW AND HAD KNOWN THAT YOU COULD NOT PERFORM WITHIN THE BID WITHOUT LOSING A SUBSTANTIAL AMOUNT OF MONEY. IN THE CIRCUMSTANCES, WE REQUESTED AND RECEIVED AN ADDITIONAL REPORT FROM THE DEPARTMENT OF THE ARMY. YOUR COMMENTS AND THOSE OF YOUR ATTORNEY ON THE SUBSTANCE OF THAT SUPPLEMENTAL REPORT AND AN ACCOMPANYING STATEMENT FROM MR. GOODWIN HAVE BEEN RECEIVED AND CONSIDERED.

THE FACTS OF THE CASE INDICATE THAT NEITHER MR. GOODWIN NOR MR. MARTIN MADE A COMPLETE ANALYSIS OF THE COST DATA SUBMITTED BY YOU TO THE PREAWARD SURVEY PERSONNEL OR MADE AVAILABLE AT THE MEETING OF OCTOBER 19, 1964. DURING THE PREAWARD SURVEY, SOME OF THE ITEMS OF YOUR PROPOSAL PACKAGE AND MATERIAL REQUIREMENTS WERE COMPARED WITH THE RELATED REQUIREMENTS OF THE INVITATION FOR BIDS AND YOUR PROPOSED SUPPLIERS' QUOTATIONS WERE LISTED IN THE PREAWARD SURVEY REPORT. THE PREAWARD SURVEY PERSONNEL WERE CONCERNED PRIMARILY WITH THE QUESTION AS TO YOUR ABILITY OR CAPABILITY TO OBTAIN THE NECESSARY SUPPLIES AND TO MEET THE TECHNICAL REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS, AND IT APPEARS THAT THEY DID NOT BELIEVE THAT THEY WERE REQUIRED TO MAKE A COMPLETE REVIEW OF YOUR PRICING ESTIMATES SINCE THE CONTRACT WAS TO BE AWARDED ON THE BASIS OF FORMAL ADVERTISING FOR BIDS AND THERE HAD BEEN ADEQUATE COMPETITION IN CONNECTION WITH THE PROPOSED PROCUREMENT.

IT WAS NEVERTHELESS NECESSARY, IN ACCORDANCE WITH THE CONTRACTING OFFICER'S REQUEST, TO OBTAIN FROM YOU A VERIFICATION OF YOUR PRICE OF $278.20 PER TRAILER. YOU CONFIRMED THE BID PRICE AND YOUR COMPLETE UNDERSTANDING OF THE REQUIREMENTS OF THE PROPOSED CONTRACT. THE GOVERNMENT STILL BELIEVED THAT THERE WAS A POSSIBILITY OF A SERIOUS MISTAKE IN YOUR BID AND YOU WERE FURNISHED A FURTHER OPPORTUNITY TO CHECK THE BID AND EITHER TO CONFIRM THE BID OR TO ALLEGE THAT ERRORS HAD BEEN MADE IN YOUR PRICING ESTIMATES, IF ANY SUCH ERRORS HAD BEEN DISCOVERED. AT SUCH POINT, ACCORDING TO THE RECORD BEFORE US, WHENEVER ANY QUESTION WAS RAISED AS TO WHETHER A COST ESTIMATE WAS ACCURATE OR COMPLETE, YOUR REPRESENTATIVES INDICATED THAT THE ACTUAL OR APPARENT UNDER-ESTIMATE ON THE PARTICULAR COST ELEMENT WOULD NOT HAVE SERIOUSLY AFFECTED YOUR BID PRICE, AND THEY INSISTED THAT SUCH PRICE SHOULD STILL BE CONSIDERED AS YOUR INTENDED BID PRICE.

YOU DO NOT QUESTION THIS BASIC UNDERSTANDING OF THE CIRCUMSTANCES ATTENDING THE REQUEST MADE BY THE GOVERNMENT FOR VERIFICATION OF YOUR BID, AND THE AFFIRMATION AND REAFFIRMATION OF YOUR BID BY LETTER DATED OCTOBER 3, 1964, AND DURING THE MEETING OF OCTOBER 19, 1964. HOWEVER, YOU HAVE TAKEN EXCEPTION TO MR. GOODWIN'S STATEMENT THAT YOU INDICATED THAT YOU WOULD BE WILLING TO ABSORB A NOMINAL LOSS IF IT MEANT THE SUCCESSFUL COMMENCEMENT OF A LOCAL BUSINESS. WE HAVE NO BASIS FOR DETERMINING WHICH PARTY HAS CORRECTLY SHOWN WHAT WAS ACTUALLY SAID AT THE MEETING ON OCTOBER 19, 1964, REGARDING THAT QUESTION, AND IT WILL BE ASSUMED FOR THE PURPOSE OF THIS DECISION THAT YOU EXPECTED TO COMPLETE THE PROPOSED CONTRACT WITHOUT SUFFERING A LOSS ON THE TRANSACTION.

MR. GOODWIN REFERS TO THE ESTIMATE OF $9,000 FOR SALARIES TO BE PAID TO COMPANY OFFICIALS AS ONE OF THE ESTIMATES WHICH WERE DISCUSSED WITH YOUR REPRESENTATIVES. EVIDENTLY ALL PARTIES CONCERNED KNEW THAT THE ESTIMATE COVERED ONLY THE SALARY TO BE PAID TO MR. D. THERMAN EDWARDS, THE PRESIDENT OF YOUR COMPANY, OVER A 9-MONTH PERIOD, AND THEY ALSO KNEW THAT SUCH AN AMOUNT WOULD BE INSUFFICIENT TO COVER THE SALARIES OF COMPANY OFFICIALS DIRECTLY INVOLVED IN THE PERFORMANCE OF THE PROPOSED CONTRACT, PARTICULARLY IF MR. CARL H. WOODARD WAS TO BE EMPLOYED AS A COMPANY ENGINEER TO ASSIST MR. EDWARDS. YOU APPEAR TO HAVE BEEN GIVEN A SUFFICIENT WARNING TO THE EFFECT THAT THE $9,000 ESTIMATE WAS TOO LOW IF ADDITIONAL MANAGEMENT PERSONNEL WERE TO BE EMPLOYED, AND IT IS ALSO APPARENT THAT IT WOULD MAKE NO DIFFERENCE SO FAR AS CONCERNS YOUR MISTAKE IN BID CLAIM WHETHER THE GOVERNMENT REQUESTED YOU TO OBTAIN AN AGREEMENT FROM MR. WOODARD TO ACCEPT A POSITION WITH YOUR COMPANY IF YOU RECEIVED THE CONTRACT AWARD. THE GOVERNMENT'S SUGGESTION THAT MR. WOODARD BE EMPLOYED, OR ITS VERIFICATION OF SUCH AN EMPLOYMENT ARRANGEMENT, WOULD NOT APPEAR TO HAVE BEEN AN UNUSUAL CIRCUMSTANCE, SINCE THE QUESTION WHETHER A PROSPECTIVE GOVERNMENT CONTRACTOR HAS THE NECESSARY MANAGEMENT PERSONNEL, OR THE ABILITY TO OBTAIN SUCH EMPLOYEES, IS ONE OF THE ELEMENTS NORMALLY TO BE CONSIDERED IN DETERMINING THE PROSPECTIVE CONTRACTOR'S QUALIFICATIONS OR RESPONSIBILITY TO PERFORM A SPECIFIC CONTRACT.

AS ANOTHER EXAMPLE OF QUESTIONED COST ESTIMATES, MR. GOODWIN HAS INDICATED THAT YOUR ATTENTION WAS INVITED TO THE FACT THAT YOUR ESTIMATES FOR PARTS DID NOT COVER ALL PARTS OF THE M100 TRAILER. YOUR PURPORTED RESPONSE WAS THAT THIS WAS AN OVERSIGHT AND THAT SOME OF THE ITEMS WERE TO BE PROCURED UNDER PROPOSED SUBCONTRACTS WHICH WOULD BE BASED UPON THE FURNISHING OF SUBASSEMBLIES WHICH WOULD LATER BE INSTALLED AS AN ASSEMBLY TO THE END ITEM. IN SUCH CIRCUMSTANCES, AS IN THE CASE OF THE $9,000 OVERHEAD COST ESTIMATE, ABOVE REFERRED TO, IT WOULD NOT APPEAR TO BE REASONABLE TO ASSUME THAT EITHER MR. GOODWIN OR ANY OTHER COGNIZANT GOVERNMENT OFFICIAL KNEW OR SHOULD HAVE KNOWN OF ANY MISTAKE IN YOUR BID AND SOUGHT TO TAKE ADVANTAGE OF THE MISTAKE. YOUR ATTORNEY HAS EMPHASIZED THAT PART OF MR. GOODWIN'S REPORT WHICH DISCUSSES THE FACT THAT YOU HAD USED DRAWINGS FOR THE M416 TRAILER. HOWEVER, YOUR ATTORNEY HAS NOT REFERRED TO THE FACT THAT MR. GOODWIN ALSO STATED THAT, WHEN THIS WAS BROUGHT TO YOUR ATTENTION, YOU INDICATED THAT YOU WERE FULLY AWARE OF THE DIFFERENCES BETWEEN THE M416 TRAILER AND THE M100 TRAILER. APPARENTLY THE TWO TRAILERS ARE IN MANY RESPECTS SIMILAR IN DESIGN AND IT IS ALSO APPARENT THAT MR. GOODWIN WAS WARRANTED IN ACCEPTING THE EXPLANATION GIVEN IN THE MATTER.

ADMITTEDLY THERE WAS NOT PERFORMED IN THIS CASE THE TYPE OF BID VERIFICATION WHICH YOUR ATTORNEY CONSIDERS TO HAVE BEEN REQUIRED IN VIEW OF THE SUSPICION THAT AN ERROR WAS MADE IN YOUR BID. HE SUGGESTS THAT IT WAS THE DUTY OF THE PREAWARD SURVEY PERSONNEL AND THE ATAC CONTRACT PRICE ANALYST TO MAKE A COMPLETE EXAMINATION OF YOUR BIDDING ESTIMATES AND, APPARENTLY, TO FIND ANY OMITTED ELEMENTS OF COST IN YOUR ESTIMATES, BECAUSE THE GOVERNMENT SUSPECTED THAT A MISTAKE WAS MADE IN YOUR BID. THE UNITED STATES ARMY TANK AUTOMOTIVE COMMAND HAD TAKEN A CONTRARY POSITION IN REGARD TO THAT MATTER, AND STATED THAT THE GOVERNMENT LACKS THE PERSONNEL CAPABILITY, BOTH FROM THE ASPECTS OF THE TIME REQUIRED AND THE SKILLS INVOLVED, TO GO THOROUGHLY INTO PRODUCTION PLANS AND TO ASSURE ITSELF AND A BIDDER THAT EVERY PRODUCTION COST ELEMENT WHICH SHOULD GO INTO A BID HAS BEEN PROVIDED FOR.

SOMETIMES IN CASES OF NEGOTIATED CONTRACTS, AS DISTINGUISHED FROM CONTRACTS AWARDED PURSUANT TO FORMAL ADVERTISING, THE GOVERNMENT WILL MAKE A COMPLETE ANALYSIS OF PROPOSED PRICES. ALSO, IN SOME CASES INVOLVING FORMAL ADVERTISING, A CONTRACTOR WILL BE REQUESTED TO CHECK AND VERIFY BID PRICES ON ONE OR MORE OF SEVERAL ITEMS OF A BID IF THE TOTAL BID IS OUT OF LINE WITH OTHER BIDS RECEIVED. HOWEVER, IN THIS CASE THERE WAS INVOLVED ONLY ONE BASIC ITEM OF EQUIPMENT AND YOU WERE REQUESTED TO CONFIRM YOUR BID PRICE AFTER FULL DISCLOSURE OF THE GOVERNMENT'S REASONS FOR SUSPECTING THAT A MISTAKE MIGHT HAVE BEEN MADE IN YOUR BID. IN SALIGMAN, ET AL. V UNITED STATES, 56 F.SUPP. 505, THE COURT CONSIDERED THAT THE EMPLOYMENT OF EXPERTS TO ASSIST A CONTRACTING OFFICER OF THE GOVERNMENT IS FOR THE BENEFIT OF THE GOVERNMENT AND NOT FOR THE BENEFIT OF A BIDDER. WE AGREE WITH THE POSITION TAKEN BY THE UNITED STATES ARMY TANK AUTOMOTIVE COMMAND IN THIS CASE THAT IT WAS NOT THE RESPONSIBILITY OF EITHER THE PREAWARD SURVEY PERSONNEL OR THE ATAC CONTRACT PRICE ANALYST TO DETERMINE BEFORE CONTRACT AWARD WHETHER EVERY PRODUCTION COST ELEMENT HAD BEEN CONSIDERED IN CONNECTION WITH YOUR QUOTED PRICE OF $278.20 PER TRAILER.

IF A CONTRACTING OFFICER HAS ANY REASON TO SUSPECT THAT AN ERROR OF A SERIOUS NATURE HAS BEEN MADE IN A BID, THE AWARD OF A CONTRACT FOLLOWING VERIFICATION OF THE BID UPON REQUEST OF THE CONTRACTING OFFICER, OR UPON RECEIPT BY THE BIDDER OF A WARNING FROM ANY RESPONSIBLE PROCUREMENT OFFICIAL THAT A MISTAKE MIGHT HAVE BEEN MADE, RESULTS IN A VALID AND BINDING CONTRACT. SEE ALABAMA SHIRT & TROUSER COMPANY V UNITED STATES, 121 CT.CL. 313. HOWEVER, IN UNITED STATES V METRO NOVELTY MANUFACTURING COMPANY, SUPRA, IT WAS HELD IN EFFECT THAT THE REQUEST FOR BID VERIFICATION SHOULD PLACE THE BIDDER ON NOTICE AS TO THE BASIS UPON WHICH THE GOVERNMENT SUSPECTS THAT A MISTAKE MIGHT HAVE BEEN MADE. WE HAVE TAKEN A SIMILAR POSITION IN DECISIONS, INCLUDING 35 COMP. GEN. 136, WHICH IS CITED BY YOUR ATTORNEY. ALSO, ASPR 2-406.3/A) (1) ESTABLISHES A PROCEDURE FOR BID VERIFICATION WHICH IS CONSISTENT WITH THE RULING IN THE METRO NOVELTY CASE. IN OUR OPINION, THE ACTION TAKEN BY THE PROCUREMENT OFFICE IN THIS CASE MET ALL OF THE ESSENTIAL REQUIREMENTS FOR OBTAINING BID VERIFICATION WHERE THE GOVERNMENT SUSPECTS THAT AN ERROR HAS BEEN MADE IN THE BIDDER'S QUOTED PRICE OR PRICES.

ERRORS OF OMISSIONS AND INACCURACIES IN YOUR BIDDING ESTIMATES MAY HAVE OCCURRED BUT IT WAS YOUR RESPONSIBILITY TO ESTIMATE THE PRICE AT WHICH YOU COULD PERFORM THE PROPOSED CONTRACT AT A REASONABLE PROFIT. IF YOU MADE A MISTAKE IN YOUR BID, BUT FAILED TO DISCOVER A MISTAKE AND ALLEGE SUCH MISTAKE PRIOR TO CONTRACT AWARD, NOTWITHSTANDING THE FACT THAT YOU WERE AFFORDED EVERY REASONABLE OPPORTUNITY TO CHECK THE BID BEFORE ACCEPTANCE THEREOF, THE GOVERNMENT CANNOT BE HELD RESPONSIBLE FOR THE RESULTING LOSS. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V UNITED STATES, 100 CT.CL. 120, 163; EDWIN DOUGHERTY AND M. H. ODGEN V UNITED STATES, 102 CT.CL. 249; SALIGMAN, ETAL V UNITED STATES, SUPRA.

THE RECORD IN THIS CASE REASONABLY INDICATES THAT THE ACCEPTANCE OF YOUR BID, AS AFFIRMED ON OCTOBER 3, 1964, AND AGAIN ON OCTOBER 19, 1964, WAS MADE IN ENTIRE GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD OF THE CONTRACT; AND THAT THE GOVERNMENT FULFILLED ITS RESPONSIBILITY FOR OBTAINING A BID VERIFICATION WHEN IT WAS SUSPECTED THAT A MISTAKE MIGHT HAVE BEEN MADE BECAUSE YOUR QUOTED PRICE WAS MUCH LOWER THAN THOSE QUOTED BY OTHER BIDDERS AND THE PRICE PAID BY THE GOVERNMENT ON A PREVIOUS PROCUREMENT OF M100 TRAILERS. CONSEQUENTLY IT MUST BE HELD THAT THE ACCEPTANCE OF YOUR BID CONSUMMATED A VALID AND BINDING CONTRACT. SEE UNITED STATES V PURSELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V UNITED STATES, 259 U.S. 75.