VALLEY FORMS, INC.
GPO BCA 1-84
January 15,1986
MICHAEL F. DiMARIO, Administrative Law Judge
BACKGROUND
This appeal was timely noted by Valley Forms, Inc.
(hereinafter "Appellant"), by letter dated September 21, 1984
(Rule 4 file, hereafter "R4 file," Exhibit 20) pursuant to the
standard "Disputes" provisions of the Government Printing
Office Contract Terms No. 1, which were incorporated and made
a part of the contract between Appellant and the United States
Government Printing Office (hereinafter "GPO" or "Respondent")
identified as Purchase Order 50849, Jacket No. 448-057, dated
August 30, 1984. The appeal is from the final decision of Mr.
J. G. Marken, GPO Contracting Officer of September 11, 1984,
(R4 file, Exhibit 15) completely terminating the contract "for
Default because Valley failed to produce this requirement."
By letter dated November 2, 1984, Mr. John T. Glynn,
Appellant's General Manager; and Mr. James C. Lane, Jr.,
Respondent's General Counsel, were notified by the GPO Board
of Contract Appeals that the appeal had been received and
docketed and that the Respondent must file its appeal file
consisting of all pertinent documents in its possession to the
Board within 30 days of its receipt of the said letter and to
simultaneously furnish duplicate copies of such documents to
the Appellant pursuant to Rule 4 of the Board's Rules of
Practice and Procedure. Thereafter, the letter directed the
Appellant to transmit to the Board and Respondent any
additional documentation it considers relevant within 30 days
of its receipt of the above said documentation from
Respondent. The letter further directed the Appellant to file
"a complaint" pursuant to Rule 6.(a) within 30 days of receipt
of the said letter from the Board and to make appropriate
procedural elections to have the matter heard or decided
instead on the written submissions (Docket entry No. 3). The
letter from the Board was received by Appellant on November 5,
1984 (Docket entry No. 3, tab 3). That same date Respondent
furnished the Board its appeal file and notified Appellant
that it was transmitting a copy of the file to Appellant under
separate cover (Docket entry No. 4). Appellant did not
respond to the Board's letter but did communicate by telephone
indicating a desire to have a hearing in the matter.
Accordingly, a prehearing conference was held in Washington,
DC on December 7, 1984, wherein Appellant was represented by
Mr. Glynn. At the conference, discussion centered around
Appellant's letter of September 21, 1984, supra.
lt was apparent from Appellant's letter and the discussion in
conference that Appellant was, in fact, claiming a post-award
mistake in bid. That it claimed the Government was or should
have been aware of Appellant's mistake in bid and thus asked
it to review its bid prior to award. Moreover, Appellant
claims, in substance, that but for the fact that the
information concerning the modulus 10 numbering in the
specification was not located on the specification sheet in
the place where numbering instructions usually are located it
would not have made the error in bid, and thus would like the
decision changed from a termination for default to a
termination for convenience of the Government.
Because of the ambiguities in Appellant's letter, the
undersigned several times asked whether Appellant would be
filing a more definite complaint as contemplated by Rule
6.(a). The Appellant did not respond whereupon Respondent's
counsel made an oral motion for a more definite statement.
The undersigned explained the nature of such motion to Mr.
Glynn and then directed Respondent's counsel to renew such
motion in writing in order to give Appellant an opportunity to
respond. The prehearing conference was thus ended.
Subsequently, Respondent's counsel on December 11, 1984, filed
with the Board a written motion for a more definite statement
"on the grounds that Appellant's submissions and statements at
the prehearing conference on December 7, 1984, are so
ambiguous that the Contracting Officer cannot reasonably be
required to frame a responsive answer." In support of the
motion, Respondent relied upon the appeal file, its prior
submission, and a brief accompanying the motion. The motion
and brief were properly served upon the Appellant by certified
mail, return receipt requested.
Appellant did not file a response to the said motion. Thus,
on February 6, 1985, the undersigned wrote to Appellant and
advised of the wide discretion given to presiding officers in
setting time limits which will expedite proceedings and
thereupon imposed the date of February 28, 1985, for receipt
of a response. The letter was duly served by certified mail,
return receipt requested on February 8, 1985. On February 27,
1985, Appellant requested a 10-day extension of time to file
its response. Such extension was granted until March 11,
1985. Appellant did not file a response within this extended
period. Accordingly, on April 2, 1985, Respondent filed a
motion to dismiss, or alternatively to decide the case on the
written record, again supporting its motion by reliance upon
the appeal file, its prior submissions, and an accompanying
brief. The pleading was again served upon Appellant by
certified mail, return receipt requested.
No response having been made to this pleading and the various
notices and correspondence from the Board, the undersigned by
certified mail, return receipt requested, wrote to the
Appellant on May 7, 1985, that the matter would be decided
upon the written record. A copy of this letter, as with all
other letters, was also furnished to the Respondent, and by
operation of its language, acted as a denial of the motion to
dismiss and grant of the motion to decide the case on the
written record. The case comes to the Board in this form.
STATEMENT OF FACTS
On August 16, 1984, GPO, pursuant to Requisition No. 4-02346
from the Department of Agriculture, mailed Invitation for Bids
(IFB) (R4 file, Exhibit 2) to 29 prospective bidders. It also
posted the IFB in public space within its offices pursuant to
its solicitation procedures (R4 file, Exhibit 1). The IFB
specifications required the printing of 100,000 four-part
multiforms on size 8 1/2 x 11" chemical transfer paper stock
with "[m]odulus 10 check digit numbering required utilizing
the numbering sequence below plus a final check/terminal
digit." The numbering sequence was shown as follows: "Number
from 23-0000001 through 23-1000000 in black ink on face of all
parts in upper right in an area 2 3/8 x 5/16" parallel to the
8 1/2" dimension with 3/16 - 1/4" high numbers. [X] Crash
numbers acceptable." (R4 file, Exhibit 2) Bids were opened on
August 27, 1984, with five responsive bids and nine no bids
being received. The five responsive bids were as follows:
Valley Forms, Inc. $5,460.00
JTA Business Forms, Inc. $6,063.30
Specialized Printed Forms, Inc. $6,790.00
Arrow Business Forms, Inc. $8,196.00
General Business Forms, Inc. $8,235.00
The contract was awarded to Valley pursuant to its low bid by
GPO Purchase Order No. 50849, Jacket No. 448-057, dated August
30, 1984, "[i]n strict accordance with your telegraphic bid
dated August 21, 1984 and our specifications." (R4 file,
Exhibit 4) The following day, August 31, 1984, GPO Printing
Specialist Ron Cully telephoned Mr. Glynn and gave him a
purchase order number. That same afternoon Mr. Glynn "noticed
on the specification sheet that this job called for special
modulus 10 check digit numbering." Mr. Glynn "immediately
called Mr. Cully that same day" and was told that the job had
already been mailed to Appellant (R4 file, Exhibit 20). Mr.
Cully's notes on the conversation reflect that Mr. Glynn said
that he had an error in bid in that his firm could not do
modulus 10 numbering (R4 file, Exhibit 5). (Mr. Glynn in his
letter of September 21, 1984, (R4 file, Exhibit 20) states
that "[t]his type of numbering requires special computerized
numbering equipment that we don't have." Mr. Cully's notes
also reflect that Mr. Glynn "will call back and inform of
decision to sub-contract [sic], produce, or voluntarily
default." (R4 file, Exhibit 5) That same day, August 31,
1984, Mr. Cully contacted Mr. John Tallman of JTA Business
Forms, the second low bidder, and conducted a telephone
preaward survey. At that time, Mr. Tallman apparently told
Mr. Cully that JTA did not have the equipment to do the
modulus 10 numbering and had overlooked the requirement in
making its bid. Mr. Cully advised Mr. Tallman to send him a
letter confirming that position (R4 file, Exhibit 6) which was
done on September 10, 1984 (R4 file, Exhibit 13).
On September 5, 1984, Mr. Cully telephonically contacted Mr.
Dave Randall of Specialized Printed Forms, the third low
bidder, to review and confirm its bid. Mr. Cully's notes of
that conversation state that Mr. Randall "said he can do Mod
10 numbering and his bid price of $6,790.00 is good." (R4
file, Exhibit 9) That same day Mr. Cully spoke by telephone
with Mr. Glynn. His notes concerning that conversation
reflect, "Mr. Glynn has agreed to a voluntary default
--$1,330.00 difference between his bid & Spec. Prtd. Forms.
Valley to return material with letter requesting vol. default
ASAP." (R4 file, Exhibit 8) There followed a memorandum by Mr.
Glynn of September 5, 1984, requesting "volunteer [sic]
default on this jacket" and stating that "[u]pon further
inspection of job we find that you request Modulus 10 check
digit numbering. We cannot do this type of numbering. We
were not asked to review this job and I understand that the
second bidder is also in default. We feel we should not be
penalized for this matter or at most pay the difference
between our bid and the number two bidder." (R4 file, Exhibit
7)
On September 6, 1984, Mr. Cully, acting on behalf of Mr.
Marken, the Contracting Officer, sent a memorandum to the GPO
Contract Review Board (CRB) for concurrence in the decision
that Valley Forms, Inc. be defaulted based upon the fact that:
Award was made to Valley Forms, Inc. on August 30, 1984.
By telephone on August 31, 1984 Mr. John T. Glynn of Valley
Forms indicated he had discovered an error in bid. He
overlooked the requirement for Modulus 10 numbering, which
he is incapable of doing.
By letter dated September 5, 1984, Valley Forms requested a
voluntary default.
No mention was made in this memorandum of Mr. Cully's contacts
with the second and third low bidders. The CRB unanimously
concurred with the decision that same date. Moreover, the
memorandum also bears Mr. Marken's signature dated September
6, 1984, apparently in concurrence with the action.
On September 10, 1984, Mr. Marken made a formal determination
in accordance with the provisions of GPO Printing Procurement
Regulation, paragraph IV-3, that "JTA Bus. Forms is declared
non-responsible on Jacket 448-057" based upon his findings
that while "JTA Bus. Forms is the second low responsive bidder
on Jacket 448-057, . . . an examination of JTA's equipment
questionnaire did not indicate their ability to do Modulus 10
numbering. John Tallman of JTA acknowledged that they could
not do Modulus 10 numbering by telephone on August 31, 1984.
Modulus 10 numbering is a requirement on Jacket 448-037." (R4
file, Exhibit 11)
That same date Mr. Cully recommended award to Specialized
Printed Forms (R4 file, Exhibit 14). In turn Mr. Marken sent
a memorandum to the CRB outlining the job requirements, bid
results, and award and default actions respecting Valley
Forms, Inc. He further advised that JTA Business Forms had
been declared nonresponsible, attaching his "Findings and
Determinations" regarding such declaration. He also advised
the Board that Specialized Printed Forms' record of compliance
on two orders processed by it in 1984 was satisfactory and
that the jobs shipped on time.
Based upon this information Mr. Marken recommended award of
Jacket 448-057 to Specialized Printed Forms, Inc. The CRB
unanimously concurred with such action (R4 file, Exhibit 12).
By memorandum of September 12, 1984, Mr. Marken advised GPO's
Financial Management Service of the reprocurement from
Specialized Printed Forms, Inc., Purchase Order 50941, at a
cost of $6,790. The memorandum advised that "[a]ny additional
costs should be recovered from Valley Forms, Inc. which has
been notified of the default action." (R4 file, Exhibit 16)
By letter of the same date addressed to Mr. Glynn at Valley
Forms, Inc., Appellant was advised of the reprocurement and
its amount and that the excess costs between its bid of $5,460
and the reprocurement price of $6,790 would be deducted from
its account.
ISSUE
The issue in this case is whether or not a voluntary default
should be changed to a termination for the convenience of the
Government based upon facts showing a post-award, but
preperformance, claim of mistake in bid or in the alternative,
whether the measure of excess costs should be the difference
between the Appellant's bid and the bid of the next low bidder
which upon preaward survey was found to be nonresponsible or
the bid of the third low bidder to whom the reprocurement
award was actually made.
DECISION
The answer to the question presented by the first issue hinges
upon whether or not Respondent was responsible in any way for
the post-award mistake in bid asserted by Appellant pursuant
to Appellant's claim that it overlooked the requirement of the
specification for modulus 10 numbering because it was not
physically located on the specification sheet in a place where
the contractor is accustomed to find numbering instructions.
If Respondent caused or contributed to the error, the
conversion of the voluntary default to a termination for
convenience of the Government or cancellation of the
solicitation might be appropriate since as a general rule
specifications in formally advertised procurements need to be
definite and unambiguous in order to permit full and free
competition. We do not believe the facts of the case support
such a contention and so hold.
The IFB/specifications are on two sheets of paper
approximately 8 1/2 x 11" in size. The majority of the
instructions on the sheet are preprinted in 6- to 9-point type
with bold face section captions in varying sizes. The
instruction which Appellant claims to have overlooked,
however, was handwritten upon the preprinted form as were
numerous other instructions concerning paper, description,
color of ink, margins, packing/marking, schedule,
distribution, and the previously quoted number sequencing. It
is the opinion of this Board that a reasonably prudent bidder
making a bid of several thousand dollars in like circumstances
would have exercised due care to assure compliance with all
the handwritten insertions on the form, since they seem to
convey the essence of the specific job requirements upon which
bids are being solicited. In so doing we find that the GPO
and therefore the Government did not contribute to the mistake
in bid. We form this conclusion with full knowledge that the
second low bidder made the same mistake. We do this because
we do not believe the facts, other than the coincidence of
error, support the opposite conclusion.
Respecting Appellant's assertion that it should have been
asked to review the specifications and confirm its bid prior
to award, suffice it to say that no duty arises on the part of
the Government to undertake such procedure unless the
Contracting Officer from the variation in bids submitted
suspected or should have suspected that a mistake in bid had
been made. The law in this regard is clearly summarized by
the Armed Services Board of
11
Contract Appeals in the recent case of Manistique Tool and
Manufacturing Company, ASBCA No. 29164, Aug. 13, 1984, 84-3 BCA,
¶ 17,599, where at page 87,677 it said:
As a general rule, neither a Board of Contract Appeals or
the Claims Court is authorized to relieve a bidder from its
obligations under a contract unless it is subject to
invalidation on recognized legal grounds, such as mutual
mistake, or a mistake of which the contracting officer was
on notice or should have been on notice. Aydin Corporation
v. United States [29 CCF ¶ 82,129], 229 Ct. Cl. 309, 669
F.2d 681 (1982); Wender Presses, Inc. v. United States [10
CCF ¶ 72,978], 170 Ct. Cl. 483, 343 F.2d 961 (1965); Holway
Oil Company, ASBCA No. 27862, 83-2 BCA ¶ 16,684. Moreover,
before relief by reformation or rescission is available to
relieve a contractor of the effect of its mistake, the
mistake must be a "clear cut clerical or arithmetical error,
or misreading of the specifications" and such relief does
not extend to mistakes of judgment. Aydin Corporation v.
United States, supra; National Line Co. v. United States [26
CCF ¶ 83,394], 221 Ct. Cl. 673, 607 F.2d 978 (1979);
Ruggrero v. United States [14 CCF ¶ 83,352]. 190 Ct. Cl.
327, 420 F.2d 709 (1970); Michael Chernick v. United States
[12 CCF ¶ 80,938]. 178 Ct. Cl. 498, 372 F.2d 492 (1967).
. . . .
However, appellant is entitled to relief in contract
reformation or rescission for a unilateral mistake in bid
claimed after contract award only where the contracting
officer knew or should have known of the mistake at the time
the bid was accepted. Figgie International. lnc. ASBCA No.
27541, 83-1 BCA ¶ 16,421; Paragon Energy Corp. v. United
States [28 CCF ¶ 81,290]. 227 Ct. Cl. 176, 645 F.2d 966
(1981).
This decision comported with the ASBCA decision in Aerospace
Components, Inc., ASBCA No. 28606, June 27, 1984, 84-3 BCA ¶
17,536, which considered the question of allocation of excess
costs in a post-award mistake in bid case wherein at 87,339
the ASBCA said:
. . . [F]or a unilateral mistake in bid (discovered or alleged
after award), to be remediable, the contracting officer must have
had actual knowledge or been on constructive notice of a possible
clerical or careless error in the bid. Wender Presses, Inc. v.
United States [10 CCF ¶ 72,978]. 170 Ct. Cl. 483, 343 F.2d 961
(1965); Walter Straga, ASBCA No. 26134, 83-2 BCA ¶ 16,611. Here,
the only potential indication would have been a substantial price
disparity between the Texas Aerospace bid and the next lowest
offers. Given that this disparity with the next lowest offer was
only 3 percent and the next two offers were 13.4 and 18.8
percent, respectively, higher than Texas Aerospace's bid, we are
unable to conclude that the contracting officer should have been
deemed to have been on constructive notice of an error.
. . . .
. . . [A]ppellant appears to question the Government's
reasonableness in mitigating the excess costs. The Government
has the initial burden of going forward with evidence as to the
reasonableness of its repurchase. Environmental Tectonics Corp.,
ASBCA No. 21204, 78-1 BCA ¶ 12,986 at note 3. It has met this
burden by submitting evidence fully documenting the
resolicitation and the award of the contract to the lowest
offeror, (at a unit price only 13 percent higher than the
defaulted contract price). The second lowest bidder on the
original contract was resolicited, but it submitted a higher bid
on the reprocurement contract. Delivery was completed under the
reprocurement contract on 17 May 1983 and the contractor has been
paid . . . .
The facts in the case at hand do not support a finding that
the Contracting Officer suspected or should have suspected
such mistake, the first and second bids being within a
competitive range (11 percent) of one another as Appellant
itself acknowledges (R4 file, Exhibit 20). Absent a finding
of responsibility for or contribution by the Respondent to the
mistake in bid, we can find no rational basis or valid
interest in the Government upon which the voluntary default
should be converted to a termination for convenience. The
mistake was unilateral on the part of Appellant
notwithstanding that the same mistake was made by JTA.
Moreover, once the Government was aware of the mistake on the
part of Appellant, a duty did arise with respect to the
remainder of the bidders to assure before award that the same
error in bid had not occurred. Thus, while not having a duty
to conduct a preaward equipment survey of the Appellant prior
to its award, it was fully reasonable to have conducted such
survey with the second low bidder and upon discovery that it
did not have the capability to perform, to find it to be
nonresponsible moving on to the third low bidder following the
same preaward procedure. The third low bidder having the
capability to perform was awarded the contract. Ordinarily,
under such circumstances, the proper measure of excess costs
would be the difference between the price the Government would
have paid had the first low bidder been able to perform and
the price actually paid by the Government to the bidder next
receiving the reprocurement award, in this case $1,330 as
determined by the Contracting Officer. However, in a case
such as this, where the Government has suffered no actual loss
and the second low bidder was found to be nonresponsible for
the same deficiency claimed by Appellant and given Appellant's
claim of mistake before any performance on its part, we
believe that equity dictates that a Board such as this
disallow the imposition of excess costs based upon the
philosophy expressed in Ruggiero v. United States, 190 Ct. Cl.
327, 420 F.2d 709 (1970) at 716, which we cited In the Matter
of the Appeal of Great Lakes Lithograph Company, GPO BCA
18-84, May 22, 1985, pages 26 and 27, that:
The law of mistaken bids is made for those mistakes, among
others, which are perfectly inexplicable. Anyone who has ever
turned into a street in face of a sign that clearly said 'one
way, do not enter' and tried to explain his action to a
policeman, will have a fellow feeling for [a mistaken
contractor]. The policeman, of course, thinks it is natural
iniquity, as the contracting officer, and GAO thought here, but
the rest of us know better. Public policy may require that the
erring driver be treated as if he were iniquitous, but its
command here is to the contrary. If persons seeking to do
business with the Government are decently treated by it, there
will be more of them and they will offer more favorable terms,
while experiences such as [plaintiffs] have undergone, will, if
common, cause many to take their business elsewhere.
Accordingly, we hereby affirm the voluntary default but remand
the case back to the Contracting Officer for administrative
adjustment of excess costs in accordance with this opinion.