B-165288, NOV. 15, 1968

B-165288, NOV. 15, 1968

TO ALLIED ENGINEERING AND PRODUCTION CORP.:

WE REFER TO YOUR LETTER OF AUGUST 29, 1968, REQUESTING AN INCREASE IN PRICE UNDER CONTRACT NO. S-362453-68, WHICH WAS AWARDED TO YOU ON JUNE 14, 1968, BY THE NATIONAL BUREAU OF STANDARDS (THE BUREAU), UNITED STATES DEPARTMENT OF COMMERCE. THE BASIS OF YOUR REQUEST IS THAT YOU MADE A MISTAKE IN PREPARING YOUR BID, WHICH YOU DID NOT DETECT UNTIL AFTER AWARD, WITH THE RESULT THAT YOUR TOTAL BID WAS $1,680 LOWER IN PRICE THAN IT WAS INTENDED TO BE.

ON APRIL 30, 1968, THE BUREAU ISSUED ADVERTISED SOLICITATION NO. B 3043- 68 REQUESTING BIDS ON A TOTAL SMALL BUSINESS SET-ASIDE BASIS, TO FURNISH 20 SETS OF 500-POUND MASS STANDARDS. EACH SET WAS TO CONSIST OF ONE 500- POUND WEIGHT, ONE LIFTER ROD, AND ONE EXTENDER ROD, TO BE MANUFACTURED IN ACCORDANCE WITH SPECIFICATIONS AND A DRAWING FURNISHED WITH THE SOLICITATION. PRICES WERE TO BE QUOTED ON UNIT AND TOTAL BASES, NO BREAKDOWN BEING REQUESTED FOR THE VARIOUS COMPONENTS OF THE SETS.

OF THE FOUR BIDS WHICH WERE RECEIVED BY THE BUREAU AND OPENED ON MAY 20, AS SCHEDULED, YOUR BID OF $684.70 PER UNIT, TOTAL $13,694, WAS LOWEST. THE SECOND BID TOTALLED $16,480, THE THIRD $22,965, AND THE FOURTH $43,600. IN VIEW OF THE WIDE VARIANCE BETWEEN YOUR BID PRICE AND THE HIGH BID PRICE, THE BUREAU'S TECHNICAL REPRESENTATIVE COMMUNICATED WITH YOU BY TELEPHONE IN AN EFFORT TO DETERMINE WHETHER YOU UNDERSTOOD THE HIGH DEGREE OF PRECISION WORK REQUIRED IN THE MANUFACTURE OF THE MASS STANDARDS. YOUR SALES MANAGER REPLIED IN THE AFFIRMATIVE AND FURTHER STATED THAT THE SPECIFICATIONS WERE WELL WITHIN YOUR CAPABILITIES. THERE WAS NO DISCUSSION AT THAT TIME OF EITHER PRICES OR OTHER POSSIBLE MISTAKES IN YOUR BID.

ON JUNE 13, AFTER THE BUREAU HAD DETERMINED THAT YOU WERE BOTH RESPONSIVE AND RESPONSIBLE, AWARD WAS MADE TO YOU AT YOUR BID PRICE OF$13,694.

ON JUNE 17, YOUR SALES MANAGER TELEPHONED THE CONTRACTING OFFICE AND STATED THAT YOU HAD MADE A MISTAKE IN YOUR BID. WITH SUBSEQUENT CORRESPONDENCE YOU FURNISHED YOUR ORIGINAL WORKSHEETS AND THE EXPLANATION THAT YOUR ESTIMATOR HAD ESTIMATED 7 HOURS TO PERFORM THE FINISH FACING, BORING, DRILLING, AND COUNTER BORING FOR EACH SET OF STANDARDS BUT HAD FAILED TO CARRY THE TOTAL NUMBER OF HOURS FOR THE 20 SETS (140 HOURS) INTO THE LABOR COLUMN WITH THE RESULT THAT NO AMOUNT HAD BEEN INCLUDED IN YOUR BID PRICE FOR THIS ITEM. YOU FURTHER EXPLAINED THAT A RATE OF $12 PER HOUR APPLIED TO THE 140 HOURS INVOLVED, AND YOU THEREFORE REQUESTED A PRICE INCREASE OF $84 PER UNIT (FROM $684.70 TO $768.70), TOTAL $1,680.

YOUR WORKSHEETS SHOW FOUR COLUMNS FOR LABOR, HEADED LABOR 10, LABOR 20, LABOR 30, AND LABOR 40. NO ENTRIES APPEAR IN THE LABOR 40 COLUMN. THE HOURLY WAGE RATES ARE $9 FOR LABOR 10, $10 FOR LABOR 20, AND $12 FOR LABOR 30. HOWEVER, THERE IS NO INDICATION AS TO HOW SUCH RATES WERE COMPUTED OR HOW THE APPLICABLE RATE WAS SELECTED FOR EACH ITEM.

BY LETTER DATED AUGUST 13, AS SUPPLEMENTED BY A TELEPHONE CONVERSATION OF AUGUST 16, THE CONTRACTING OFFICER INFORMED YOU THAT SINCE THE SECOND BID WAS ONLY $2,786 MORE THAN YOUR BID AND THE THIRD BID ONLY $6,215 HIGHER THAN THE SECOND, YOUR PRICE APPEARED TO BE REASONABLE, NOT SUSPICIOUSLY LOW, AND THEREFORE WAS NOT QUESTIONED BY THE BUREAU. ACCORDINGLY, THE BUREAU CONSIDERED THAT THE AWARD WAS MADE IN GOOD FAITH AND DENIED YOUR REQUEST FOR A PRICE INCREASE.

IN YOUR LETTER TO OUR OFFICE, YOU FURNISH A BREAKDOWN OF THE $12 HOURLY RATE WHICH YOU CLAIM IS APPLICABLE TO THE 140 HOURS IN QUESTION. YOU STATE THAT YOU MADE A LEGITIMATE ERROR, OF WHICH YOU NOTIFIED THE BUREAU IMMEDIATELY AFTER ITS DISCOVERY AND THAT THE EVIDENCE WHICH YOU HAVE SUBMITTED IS CONCLUSIVE. YOU FURTHER STATE THAT IT IS YOUR UNDERSTANDING THAT THE GOVERNMENT DOES NOT WISH TO HAVE ITS VENDORS PERFORM ANY CONTRACTS AT A LOSS, AND THAT IF YOUR REQUEST IS DENIED, YOU WILL BE MANUFACTURING THE PROCUREMENT ITEM AT FAR BELOW YOUR MANUFACTURING COSTS. THEREFORE, YOU REQUEST THAT WE ALLOW A CONTRACT MODIFICATION IN THE AMOUNT OF $1,680.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID RESTS UPON THE BIDDER. 31 COMP. GEN. 323; FRAZIER-DAVIS CONSTRUCTION CO. V UNITED STATES, 100 CT. CL. 120, 123, FURTHER, WHEN A BIDDER CLAIMS THAT A MISTAKE HAS BEEN MADE IN A BID WHICH THE GOVERNMENT HAS ALREADY ACCEPTED, THE CONSEQUENCES OF THE MISTAKE ARE ON THE BIDDER UNLESS THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER PRIOR TO THE AWARD HAD EITHER ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE. 45 COMP. GEN. 700, 706, AND DECISIONS THERE CITED.

THE RECORD ESTABLISHES THAT THERE WAS NO ERROR APPARENT ON THE FACE OF YOUR BID. FURTHER, THERE IS NO EVIDENCE THAT THE ERROR WHICH YOU CLAIM WAS IN ANY WAY ATTRIBUTABLE TO ANY ACTION ON THE PART OF THE GOVERNMENT. CLEARLY, THEREFORE, THE ERROR WAS UNILATERAL, NOT MUTUAL. ACCORDINGLY, WHETHER YOU MAY NOW BE GRANTED RELIEF IS DEPENDENT NOT ALONE ON WHETHER A MISTAKE WAS MADE IN YOUR BID, BUT PRIMARILY ON WHETHER THE CONTRACTING OFFICE, WHO DID NOT HAVE ACTUAL NOTICE OF SUCH MISTAKE, MAY BE CHARGED WITH CONSTRUCTIVE NOTICE THEREOF AT THE TIME HE ACCEPTED YOUR BID. FEDERAL PROCUREMENT REGULATION (FPR) 1-2.406-4.

WHILE THE HIGHEST BID WAS THREE TIMES AS HIGH AS YOUR BID, IT WAS TWICE AS HIGH AS THE NEXT HIGHEST, WHEREAS YOUR BID WAS ONLY 15 PERCENT LOWER THAN THE SECOND LOW BID, WHICH IN TURN WAS APPROXIMATELY 28 PERCENT LOWER THAN THE THIRD LOW BID. CONSIDERING THIS NOT UNUSUAL RANGE OF THE THREE LOWEST BIDS, WE BELIEVE THAT THE CONTRACTING OFFICER'S CONCLUSION THAT YOUR BID WAS REASONABLE AND NOT SUSPICIOUSLY LOW WAS NOT WITHOUT A REASONABLE BASIS. ACCORDINGLY, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH CONSTRUCTIVE NOTICE OF A MISTAKE IN YOUR BID AT THE TIME OF HIS ACCEPTANCE THEREOF.

WHILE IT IS REGRETTABLE THAT THE MISTAKE DID NOT COME TO LIGHT UNTIL AFTER THE AWARD, WE MUST NEVERTHELESS CONCLUDE THAT THE ACCEPTANCE OF YOUR BID BY THE CONTRACTING OFFICER WAS IN GOOD FAITH AND RESULTED IN A VALID AND BINDING CONTRACT WHICH OBLIGATED YOU TO FURNISH THE PROCUREMENT ITEM TO THE GOVERNMENT AT THE PRICE STATED IN YOUR BID. WE THEREFORE ARE WITHOUT AUTHORITY TO AUTHORIZE AN ADJUSTMENT OF YOUR CONTRACT PRICE.