U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
GREAT LAKES LITHOGRAPH COMPANY
GPO BCA 18-84
May 22, 1985
MICHAEL F. DiMARIO, Administrative Law Judge
OPINION
This appeal arises under the disputes clause of the U.S.
Government Printing Office ("GPO") Contract Terms No. 1, GPO
Publication 310.2, dated October 1, 1980, which by reference
was incorporated in and made a part of the contract between
Great Lakes Lithograph Company ("GLL"), Cleveland, Ohio,
appellant, and the U.S. Government Printing Office, Purchase
Order 31515, Jacket Nos. 416-825, 416-826, 416-827, and
416-828. GLL timely appealed the final decision of Jack G.
Marken, Contracting Officer, GPO, denying GLL's claim for
$32,840 in additional compensation for work actually
performed; the claim being based upon a post-award claim of
error in bid. Initially, the appellant requested an informal
hearing of the matter in dispute. However, at a prehearing
conference held February 19, 1985, appellant's President and
Chief Executive Officer, Mr. George Schultz, advised that he
did not intend to offer any evidence in addition to the
administrative record already before this Board. Therefore,
with the concurrence of Mr. Schultz and Government counsel
that the appeal should be decided on the record, a single
witness was called at the prehearing conference. That
testimony, the record of the prehearing conference itself, and
the administrative record previously submitted, form the basis
for this opinion.
Background
1. On October 20, 1983, the respondent issued certain "display
specifications" as an Invitation to Bid ("IFB") on a contract for
the printing of a certain highly complex lithographic product
entitled, "U.S. Marine Corps Uniforms 1983 Plates," requiring
lithographic conformance of the final product with Level I of the
GPO Quality Assurance Through Attributes Program (GPO Publication
110.1) pursuant to the requisition of the Department of the Navy.
2. The specifications described the product as "12 lithographs,
one 28-page pamphlet (saddle-wire stitched); one folded and
embossed form (portfolio); 2 envelopes; and 1 mailing board;
printing gathered, and packaged into 2 kit configurations
identified as category A and category B" (Exhibit 2, page 1).
The specifications in pertinent part required that the
lithographs be printed "one side only in 4-color process"
(Exhibit 2, page 5), on two different paper stocks; one for
"category A and additional quantities of lithos 7 & 8" and one
for Category B (Exhibit 2, page 5). The Category A stock was
described as "white dull coated cover, basis size 20 x 26", 80
lbs per 500 sheets, equal to JCP Code L-60." The successful
bidder had the option of producing the Category B requirements on
any of the following stocks: "Monadnock Dulcet cover, smooth
white finish, basis 80 lb; Curtis Colophon Cover, white, basis 80
lb; Mohawk Superfine Cover, Bright White Plate Finish, basis 80
lb" (Exhibit 2, page 5). The specifications called for "the
contractor to make all films required" from Government furnished
"artist's originals" having "a priceless historical value"
(Exhibit 2, page 2) and to submit "three sets of full color
proofs and three progressive proof books of each lithograph"
(Exhibit 2, page 3) to the GPO for approval prior to printing
(Exhibit 2, page 4). The specifications "cautioned" that "these
proofs must be made from the final films (used for this printing)
that are to be delivered to the Government." Moreover, the
specifications required that the lithographs "must be printed on
a press capable of printing four colors in a single pass through
the press (minimum four printing units)" (Exhibit 2, page 5).
The bidders were also advised by the specifications that they
were not limited to four colors but could "use additional
color(s) as required to match the original art" (Exhibit 2, page
5). The specifications provided other cautions with respect to
the submission and approval of paper samples "prior to the
commencement of production" (Exhibit 2, page 4).
The specifications listed specific quantities to be produced
of the lithographs, pamphlets, folded form (portfolio),
mailing board, envelope (Category A), and envelope (Category
B) (Exhibit 2, page 1). The lithograph quantity was stated
as: "22,904 copies of each of lithos 1-6 and 9-12; 26,904
copies of litho 7; and 24,904 copies of litho 8 (280,848 total
lithos)."
The specifications advised bidders that:
Offers must include the cost of all materials and operations for
each item listed in accordance with these specifications. Award
will be based on the lowest total price for the jackets listed.
Prices for additional quantities must be based on a continuing
run, exclusive of all basic or preliminary charges and will not
be a factor for determination of award.
J.416-825 5,000 Category A and 4,804 Category B kits $____.
J.416-826 10,100 Category B kits $____.
J.416-827 3,000 Category A kits $____.
J.416-828 Lithos only: 4,000 Litho 7 and 2,000 Litho 8
$____.
TOTAL price per specifications $____.
Additional 100 Category A sets $____.
Additional 100 Category B kits $____.
Additional copies either litho $____.
Indicate stock to be used on Category B Lithos _____.
Contractor is required, when billing, to itemize the shipping
cost." (Exhibit 2, page 9.)
The specifications, original artwork, and other elements of
the job were on public display for prospective bidders in
respondent's central office, Washington, DC, from October 19,
1983 until the date of bid opening on October 26, 1983.
Nine contractors known to respondent to have the technical
capability of producing the required product were sent
Invitations to Bid. However, other bids were encouraged by
bid posting and formal advertising. Appellant, although not
among the original invitees, did avail itself of the
opportunity to bid and had its representative, Mr. Richard
Findlay, view the display during this period, although there
is some dispute as to the facts of that occurrence which I
will discuss more fully herein below. On October 26, 1983,
appellant, through Mr. Findlay, filed its bid with the
respondent as follows:
J. 416-825 5,000 Category A and 4,804 Category B $69,775.00
J. 426-826 10,100 Category B kits $75,164.20
J. 416-827 3,000 Category A kits. $29,414.40
J. 416-828 Lithos Only: 4,000 Litho 7 and 2,000 Litho 8
$2,005.80
Total price as per specifications $167,359.40
Additional 100 Category A kits $665.00
Additional 100 Category B kits $ 730.00
Additional copies of either litho $ .32
Indicate stock to be used on Category B Lithos Mohawk Superfine
Cover (Exhibit 7).
That same day, bids were opened and it was determined that six
responsive bids had been received ranging in price from
$115,845 to $268,814. Subsequently, the two lowest bidders at
$115,845 and $126,700, respectively, were declared to be
nonresponsible. The third lowest bidder, Gateway Press, Inc.,
at $140,250, by telephone call of November 8, 1983, prior to
award, advised respondent that it had made an error in its bid
which it substantiated to the satisfaction of respondent's
Contracting Officer and Contract Review Board by affidavit of
its representative, Mr. Kit Georgehead dated November 11,
1983. Gateway claimed error because it had not examined the
displayed materials and had based its estimate on printing the
lithographs 2-up, using the same color separations and plates
resulting in a bid error of some $26,970 for a corrected bid
of $167,215. The contracting officer's analysis of the
affidavit and Gateway's worksheets and statement from
respondent's Quality Assurance Section that the lithographs
must be printed l-up in order to get the required quality were
deemed to be clear and convincing evidence of the error
claimed but not of the bid actually intended. Thus, Gateway's
bid was withdrawn from consideration (Exhibit 5).
GLL was the fourth lowest bidder and next in line for the
award. Because of the substantial difference between GLL's
bid and the next higher bid, however, the Contracting Officer
suspected that GLL might also have made an error in its bid.
Accordingly, Mr. Findlay was requested to review and confirm
the GLL bid (Exhibit 4 & 6). The price discrepancy between
GLL's bid and the next lowest bid was pointed out to GLL at
this time. (The next lowest bid was by Peake Printers,
Cheverly, Maryland, at $259,416 followed by French/Bray
Printers, Glen Burnie, Maryland, at $268,814, Exhibit 25).
Mr. Richard Findlay conveyed his review and confirmation of
the prices as being correct as submitted to "SMC" on November
9, 1983 (Exhibit 6). In addition, respondent, by standard
letter of November 9, 1983, advised GLL that it "may be in
line for contract award on Jacket 416-825 thru 828" and that
it (should) carefully read certain conditions set forth in the
letter, signify acceptance in writing, and return the
acceptance to respondent. Among the conditions was the
statement "1. I have reviewed the specifications and confirm
my bid." The acceptance was signed "Wm. A. Meyer, Senior Vice-
Pres., Great Lakes Lithograph 11/10/83" (Exhibit 3).
On November 18, 1983, a preaward survey of Great Lakes was
conducted by respondent (Exhibit 7) with a determination being
made on November 22, 1983, that the firm was "capable of
producing printing and binding products that meet the quality
level I requirements of GPO's Quality Assurance Through
Attributes Program (GPO Pub. 310.1 rev. 6/1/81) (Exhibit 6).
Subsequent to the review and confirmation (R&C) of bid and the
favorable preaward survey the contracting officer on November
21, 1983, recommended to the respondent's Contract Review
Board that the award be made to Great Lakes finding that the
bid prices were "fair and reasonable based upon the corrected
bid from Gateway Press, and R&C from Great Lakes Litho
(Exhibit 6). The Board unanimously concurred in the award on
November 22, 1983.
The award was made on November 29, 1983. Great Lakes executed
a performance bond in accordance with the contract and began
work on or about December 2, 1983. By December 7 the
contractor had sent in paper samples for approval and on
December 12 was telephoned by respondent that the samples were
OK (Exhibit 11). This was followed by a confirming letter on
December 14, 1983, which stated that the samples were equal to
specifications. On December 14, 1983, GPO received dylux and
envelope proofs from the appellant. The full color proofs and
progressive proofs for the lithographs were not, however,
supplied to respondent with either of these submissions and
when respondent made inquiry with appellant on December 15,
1983 (Exhibit 13), it was told that GLL had sent the paper
samples, dylux, and envelope proofs first so that GLL could
prepare for the manufacture of the required envelopes, and
that the full color proofs and progressive proofs would be
shipped by January 13, 1984.
The 4-color and progressive proofs were received in fact by
the respondent on January 9, 1984 but were not acceptable and
apparently generated discussion by telephone on January 10,
11, and 12, 1984, between appellants Mr. Meyer and Mr.
Nakonek; and respondents Mr. Richard Lee, Superintendent,
Purchase Division; Mr. Jack Marken; and Mr. Walter Burroughs,
Chief, Technical Review Section, Printing Procurement
Department (Exhibit 30). The extent of each conversation or
exact participants is not clear from the record. What is
clear, however, is that it is at this point that appellant
apparently discovered its claimed mistake in bid since there
was discussion of the need for a second set of separations for
uncoated stock. This was followed by some additional
telephone conversations between January 16 and 20 "concerning
interpretation of the bid and contract and possible errors in
bid" (Exhibit 30). The contractor in a letter dated January
20, 1984, asserts that on one of these days (January 17) "we
heard from Messers. Dick Lee and Walt Burroughs of GPO that
they desire separate color separations, etching, proofs and
make ready and final printing for the original lithographs to
be printed on Category B." The contractor then asserts that
"this is an addition to the specifications and the contract
stating that the cost to do 12 additional 5 color sets,
etching, press proofing, and separate make readies will run an
additional $32,840." Moreover, the contractor claims that "due
to absorption and dot spread on an uncoated sheet of Mohawk
Superfine cover stock, we will never achieve the degree of
brilliance and sheen that is in our proofs on the white dull
coated cover" (Exhibit 15).
On January 26, 1984, respondents Mr. J. G. Marken and Mr.
Walter Burroughs met with appellants Messers. George Schultz,
Michael Nakonek, and Richard Findlay to go over proofs
(Exhibit 16). At the meeting the appellant indicated it would
proceed with the contract but wished to claim a post-award
error in bid (Exhibit 16).
On January 27, 1984, in response to a letter dated January 20,
1984, Mr. J. G. Marken, the contracting officer, wrote to Mr.
William Meyer of GLL and advised him that "We don't require 12
additional color separations, if you can match the art with
one set of films you may do so. However, we do believe it
will be necessary to make separate color separations for each
type of paper, to meet the quality standards required. Our
specifications do not advise contractors how to achieve our
requirements. They merely set standards to be maintained."
The appellant completed the job and by letter of February 9,
1984, made formal claim for the $32,840 supported by affidavit
of Mr. George E. Schultz dated February 9, 1984, indicating
that "the error occurred because the specifications did not
indicate separate separations were required and although it is
a Level I job with high quality required, we felt ink on
press, pressures and press manipulation would suffice on the
uncoated sheet, since the Mohawk sheet will never show the
finish or brilliance of the dull coat paper part of the
contract." The affidavit, Attachment X, and estimate sheets
attached thereto supported appellant's contention that it had
not included the additional 12 separations in its bid
preparation and that had it done so its bid would have been
$200,199.40 rather than $167,359.40 (Exhibit 21).
The record also contains the administrative findings and
determination of the contracting officer pursuant to Printing
Procurement Regulation Chapter IV, Section 6-4 and GPO
Instruction 910.1 that the evidence provided by GLL was "in
support of their claim. Not what bid they intended." He
concluded that "No change should be made in the contract as
awarded." (Exhibit 23)
Mr. J. A. Markley, Contract Specialist, submitted the Findings
and Determination to the GPO Contract Review Board by memo of
March 6, 1984, asking concurrence that no change should be
made in the contract price. The memorandum stated that the
contracting officer believed that "The specifications clearly
indicated that the 12 lithos are to be produced on two
different stocks and it is up to the contractor to bid
accordingly;" that Mr. Schultz's affidavit of February 9,
1984, supra, indicated that "the error claimed is in the way
the contractor was going to produce the job and not in the bid
submitted." That the award was made to appellant "only after
having the contractor (Mr. Findlay) and Mr. Meyer review and
confirm their bid," that "the alleged error was unilateral"
and [the contracting officer's] obligation was fulfilled when
Great Lakes Litho was asked (sic) to review and confirm the
bid price and the price was confirmed as correct." (Exhibit
23)
Mr. James Smith, Chairman of the Contract Review Board,
concurred with the determination on March 8, 1984 (Exhibit
23).
By final decision letter dated March 12, 1984, the Contracting
Officer summarized the findings hereinabove recited advising
the appellant that "There is no evidence to suggest the
Government contributed in any way to the asserted error . . .
" and that "Under the circumstances, the award consummated a
valid and binding contract which fixed the rights and
liabilities of the parties. There is consequently no legal
basis for increasing the price as requested." (Exhibit 25)
By letter of June 4, 1984, the appellant appealed the final
decision to the Public Printer (Exhibit 37) stating in
pertinent part that:
As the bid was understood by our firm, we felt our bid price was
correct and so stated in our acceptance letter. It was later
after proofs were submitted and rejected, we found that the U.S.
Government Printing Office expected us to make separate
separations of the same 12 originals to print the second sheet of
paper specified. In our fifty three years in business, we never
had to do this and since it was not mentioned in the bid (sic),
and this being our first Level One job, we could not anticipate
this requirement . . . . [When] we were questioned to review our
figures, . . . we were still only working with the information on
the bid (sic) . . . due to lack of definitive information in the
bid (sic), an error in bid was made. (Exhibit 37)
Mr. Walter Burroughs, by memorandum of June 14, 1984, to Mr.
James Markley, Contract Specialist, Printing Procurement
Department, Purchase Division, in response to the appeal
letter of June 4, 1984, supra, states:
We cannot ascertain then or now whether Great Lakes
understood the specifications or not, but after they had
reviewed and confirmed their bid price and our
specifications, we have to assume that it was a competent
bid. The fact that most of the bid prices were considerably
higher, does not mean that the other contractors read more
into the specifications then (sic) Great Lakes. However,
you do have to consider it. . . .
I don't believe we have bought any job with such a wide
difference in printing surfaces and characteristics. The
information in the specifications was the same to all
contractors and I don't know of any inquiries about this
subject while out on bid.
. . . when any color separator inquires . . . about the type
of stock . . . the job will print on, he will adjust his
methods of color separation . . . for the stock. . . .
proofs were rejected by GPO . . . . It was at this time that
I informed Great Lakes that in my judgment the same color
separated films for the dull coated stock could not be used
for the uncoated stock, and I pointed out the problems.
Cameramen have been adjusting negatives for the difference
between stocks and printing equipment for years. Any
technical camera operation book or training program will
teach this fact. At this time, Great Lakes knew that they
had not understood the requirements of the specifications or
what Quality Level I involved. . . .
I have made some inquiries concerning this camera operation
for different stock with some disinterested parties, and
they have confirmed my judgment that two different sets of
color separated films would have been necessary and that the
specifications clearly stated this situation. This is not
to state that the original art would be easy to color
separate, but that many tests would be necessary to find the
correct techniques and screen range for each and every piece
of art.
Mr. R. E. Lee, Jr., by memo to File dated June 12, 1984,
asserted that:
Great Lakes representative Mr. Findlay was in to review the
copy and specifications before bid opening. I covered the
entire specification with him, pointing out each phase in
detail, especially the fact that the lithos each were to be
printed on two different kinds of stock, which would require
two sets of separations because of stock change, obvious dot
gain, and the quality level requirement. I again went over
these same facts twice with Mr. Findlay after Great Lakes
Litho was the apparent low bidder. (Exhibit 38)
By letter dated June 29, 1984, a list of exhibits presented by
the Contracting Officer in support of respondent's position,
was furnished to the appellant by R. J. Garvey, Chief, Support
Services Division, GPO, then the administrator responsible for
Board of Contract Appeals support services, with advice that
the exhibits were available for examination by appellant.
Appellant apparently availed itself of this opportunity, for
by letter of July 26, 1984 it was furnished copies of certain
exhibits it had requested from Mr. Garvey including a copy of
Mr. Lee's memorandum to File, supra. This exhibit was
reviewed by Mr. Findlay at the request of Mr. Schultz and by
letter of August 1, 1984, Mr. Findlay advised Mr. Schultz in
pertinent part that:
Perhaps Mr. Lee spoke to a number of potential bidders and
thought he met with me. As I recall, Mr. Emerson Suneuga
(sic), the spec writer, first reviewed the material for
display in Mr. Lee's office. This was before the awarding
of the contract and at this time neither verbally nor in any
written form was there mention made or even a suggestion
that the contractor would be required to make an additional
set of separations for a different stock, in order to meet
any requirements set forth by the contract.
Prior to the bid award and after we appeared to be low
bidder Mr. Lee did speak to me in regard to quality and
performance of the contract. However, no mention was made
regarding two sets of seprations (sic) . . . .
. . . The first time I heard this requirement was after Mr.
Burroughs rejected the first set of proofs and Mr. Lee made
mention that in order to meet specs Great Lakes Litho would
be required to produce a double set of seprations (sic) to
be done (sic). This was my interpretation and all of my
professional associates involved with the preparation of the
bid. (Unnumbered Exhibit submitted by Mr. Schultz.)
On February 19, 1985, a prehearing conference was held between
the parties and the undersigned. At that conference Mr. James
Markley, in response to the question of whether the
Government, after receiving GLL's bid, had been alerted that
GLL's bid was based upon doing only 12 separations, responded
"that if the solicitation had called for a line item bid
quotation as opposed to a single bid quotation for the entire
contract, the Government might have been able to detect that
there was a problem in specification interpretation by GLL,
but such was not the case in this matter (Prehearing
Conference Report, pages 3 and 4).
Mr. Markley was asked to look at Government's Exhibit 5 (from
Mr. Marken) and asked whether Gateway withdrew because of the
two sets of color separations. Mr. Markley answered
affirmatively. The date of withdrawal by Gateway was pointed
out to Mr. Markley to be November 8, 1983. Mr. Markley was
then asked to state the date GLL was contacted by GPO with
respect to their bid. He stated the date as November 9, 1983.
He then confirmed that the error in bid from Gateway was
because they misread the specification as to the number of
separations they would be required to make but that this
specific information was not conveyed to GLL at the time of
its review and confirmation of bid (Prehearing Conference
Report, pages 4 and 5).
With the concurrence of both parties the discrepancy between
Mr. Findlay's version and Mr. Lee's memo as to the specific
information conveyed to Mr. Findlay prior to bid opening was
explored by calling Mr. Richard Lee as a witness, after his
first being cautioned concerning the penalties under Federal
law for the giving of any false official statement. Mr. Lee
was asked a series of questions relating to his conversation
with Mr. Findlay. The essence of his response was that he
definitely spoke to Mr. Findlay before bid opening and that it
was in his office where the original artwork was on display.
He "told Mr. Findlay that the job was Level I, the highest
level in the GPO system" and "went over the requirements of
the job with Mr. Findlay, as I do with each bidder. Because
Mr. Findlay was new to me and GLL new to GPO, I felt the need
to go into more detail about the job; specifically, the two
different papers and the type of equipment at GLL." When
asked if he had told Mr. Findlay that there was a need for
double color separations because of the need for two papers he
first said "yes" but after questioning by Mr. Schultz as to
whether he specifically told Mr. Findlay double color
separations he responded: "Not in so many words. We cannot
tell the contractor how to do the job. I told Mr. Findlay of
dot gain before award and before bid opening." Mr. Lee was
not certain as to whether there was anyone else present during
the conversation (Prehearing Conference, pages 6 and 7).
The appeal comes to the Board for decision in this form.
Discussion.
The question presented by this appeal is whether or not the
facts substantiate a claim of mistake in bid such as in equity
should cause the contract to be reformed in order to
compensate appellant for work in excess of that contemplated
in its bid. Appellant claims that its mistake in bid was
based upon misleading specifications drawn by respondent which
caused it to misread the requirements of the contract as to
the number of lithographic separations which it would have to
make in order to produce the required printed product. The
respondent does not contest the fact that appellant made a
mistake but claims that it was one of judgment as to the
method by which it could meet the requirements of the
specifications which it believes were clear and unambiguous.
The significance of these two differing positions is that
under one set of facts the appellant may be lawfully
compensated for its work while under the other it may not
since "it is well established that an erroneous bid based upon
a mistake in judgment does not entitle the contractor to
reformation of its contract." 7/ United States v. Hamilton
Enterprises Inc., 711 F.2d 1038(1983) at 1048, citing Aydin
Corp. v. United States, supra; American Ship Building Co. v.
United States, 654 F.2d 75 (Ct. Cl. 1981); National Line Co.
v. United States, 607 F.2d 978 (Ct.Cl. 1979); Tony Downs Foods
Co. v. United States, 530 F.2d 367 (Ct.Cl. 1976). While on
the other hand "a clear cut clerical or arithmetical error, or
misreading of specifications" may be compensated in certain
circumstances. Ruggiero, 190 Ct.Cl. 335, 420 F.2d 713. "The
question depends not alone on whether the bidder made a
mistake but on the application of certain legal principles to
the established facts in the particular case ...." 17 Comp.
Gen. 817 (1938), at 818.
The authority to decide cases of mistake in bid were at one
time closely controlled by the Comptroller General but since
that time have been delegated to the heads of purchasing
agencies. 38 Comp. Gen. 177 (1958). The authority and
procedure for such correction in the GPO is set forth on page
46 of its Printing Procurement Regulations (GPO Publication
305.3, 1980 as revised).
Those regulations in pertinent part provide that:
SECTION 6 MISTAKES IN BID
1. GENERAL. After the opening of bids, the Contracting Officer
shall examine all bids for mistakes. In cases of apparent
mistake and in cases where the Contracting Officer has reason to
believe that a mistake may have been made, the bidder shall be
advised of the suspected mistake and requested to verify the bid.
. . .
2. APPARENT CLERICAL MISTAKES. Any clerical mistake, apparent
on the face of a bid, may be corrected by the Contracting Officer
prior to award, if the Contracting Officer has first obtained
verification, in writing, of the bid actually intended from the
bidder. . . .
3. OTHER MISTAKES DISCLOSED BEFORE AWARD.
a. The Chairperson, Contract Review Board, is authorized . . . to
make the administrative determinations described below. . . . The
authority is limited to bids . . . responsive to the IFB. . . .
(1) A determination . . . to withdraw the bid where . . . clear
and convincing evidence established the existence of a mistake.
(2) . . . if . . . clear and convincing as to . . . mistake and
as to the bid actually intended and if the bid, . . . uncorrected
and corrected, is the lowest . . . correct the bid and not permit
. . . withdrawal.
(3) A determination may be made permitting . . . bidder to
correct where . . . clear and convincing evidence establishes
both the existence of a mistake and the bid actually intended.
However, if . . . correction . . . result in displacing . . .
lower acceptable bids, the determination shall not be made unless
the existence of the mistake and the bid actually intended are
ascertainable substantially from the invitation and bid itself. .
. .
4. DISCLOSURES OF MISTAKE AFTER AWARD.
a. . . . the mistake may be corrected . . . if correcting . . .
would make the contract more favorable to the government . . ..
b. In addition . . . Contracting Officers, with the approval of
the Chairperson, Contract Review Board are authorized to . . ..
(1) . . . delet[e] the item . . . involved in the mistake
or
(2) increas[e] the price if . . . , as corrected, [it] does not
exceed that of the next lowest acceptable bid under the original
invitation for bids.
c. [if] clear and convincing evidence that a mistake . . . was
made, and . . . was mutual or that the unilateral mistake . . .
by the contractor was so apparent as to have charged the
Contracting Officer with notice of the probability of mistake.
These regulations comport with the general rule in [g]
overnment contract law
. . . that if a bidder has made a mistake in submission of a bid
that was neither induced nor shared by the Government and the bid
has been accepted, the bidder must bear the consequences of the
mistake unless the contracting officer knew or should have known
of the existence of the mistake at the time the bid was accepted.
Doke, Mistakes in Government Contracts - Error Detection Duty of
Contracting Officers, 18 S.W.L.J. 1, 10 (1964).
The principles of law to be applied in "mistake in bid" cases
have been judicially fashioned (Aydin Corp. v. United States,
669 F.2d 681, 685 (Ct.Cl. 1982)) based upon the view that:
Although an award normally results in a binding contract fixing
the parties' rights and obligations (United States v. Purcell
Envelope Co., 249 U.S. 313, 39 S.Ct. 300, 63 L.Ed. 620 (1919)),
so that ordinarily no relief will be granted to a party to an
executory contract in the case of a unilateral mistake, Saligman
v. United States, 56 F.Supp. 505, 507 (E.D. Pa., 1944),
nevertheless an acceptance of a bid containing a palpable,
inadvertent, error cannot result in an enforceable contract.
Moffett, Hodgkins & Clarke Co. v. City of Rochester, 178 U.S.
373, 20 S.Ct. 957, 44 L.Ed. 1108 (1940); United States v.
Metro Novelty Manufacturing Co., 125 F.Supp. 713 (S.D. N.Y.
1954); Kemp v. United States, 38 F.Supp. 568 (D.Md., 1941).
[1] . . . [However,] plaintiff may recover only if
defendant's responsible officials knew or should have known
of the mistake at the time the bid was accepted.
Allied Contractors, Inc. v. United States, 310 F.2d 945, 159
Ct.Cl. 548 (1962); Alabama Shirt & Trouser Co. v. United
States, 121 Ct.Cl 313 (1952); Hyde Park Clothes, Inc. v.
United States, 84 F.Supp. 589, 114 Ct.Cl. 424 (1949); Massman
Construction Co. v. United States, 60 F.Supp. 635, 102 Ct.Cl.
699, cert. denied, 325 U.S. 866, 65 S.Ct. 1403, 89 L.Ed. 1985
(1945); Dougherty & Ogden v. United States, 102 Ct.Cl. 249
(1944); Rappoli Co., Inc. v. United States, 98 Ct.Cl. 499
(1943); Alta Electric & Mechanical Co. v. United States, 90
Ct.Cl. 466 (1940). Wender, supra at 962.
[Moreover, where] . . . there is no showing of any actual
knowledge, the only question is whether defendant's officials
should have known of the mistake. Included in this problem is
the question of whether, even though they could not have known
with certainty from the bid data that a mistake had been made,
there nevertheless was enough to have reasonably cast upon
defendant's officials the duty to make inquiry, which inquiry
would have led to the requisite knowledge.
See Doke, Mistakes in Government Contracts - Error Detection
Duty of Contracting Officers, 18 S.W.L.J. 1 (1964). Wender,
supra at 962.
[5] The task of ascertaining what an official in charge of
accepting bids "should" have known or suspected is, of course,
not always an easy one. . . . the test here, as in so many
areas, must be that of reasonableness, i.e., whether under the
facts and circumstances of 'the particular case there were any
factors which reasonably should have raised the presumption of
error in the mind of the contracting officer', Welch, Mistakes in
Bids, 18 Fed.B.J. 75, 83 (1958), Wender, supra at 963. . . .
where it is obvious from the range of bids itself that a mistake
must have been made, or that there is a real possibility of such
error, and the Government has done nothing by way of making
appropriate inquiry, relief will be afforded.
Universal Transistor Products Corp. v. United States, 214
F.Supp. 486 (E.D.N.Y. 1963); Alta Electric & Mechanical Co. v.
United States, supra; Kemp v. United States, supra; Saligman
v. United States, supra; C. N. Monroe Manufacturing Co. v.
United States, 143 F.Supp. 449 (E.D.Mich. 1956). Wender,
supra at 963.
Where, as in the case at hand, the Government surmises that
there may be a mistake in bid, "[t]here is authority that a
mere general request for verification would not suffice; it
should invite attention to the reason for surmising error."
United States v. Metro Novelty Mfg. Co., 125 F. Supp. 713
(S.D.N.Y. 1954) at p. 714. (See also Doke, Mistakes in
Government Contracts - Error Detection Duty of Contracting
Officers, 18 S.W. L.J. 1, 30 (1964) and United States v.
Hamilton Enterprises, Inc., 711 F.2d 1038 (Ct.Cl. 1983)).
The U.S. Court of Appeals for the Federal Circuit in reviewing
the law affecting the adequacy of the Government's
Verification of Contractor's Bid in Hamilton, supra, states:
The landmark case on the adequacy of the Government's
verification of bids in which mistakes are or should have
been suspected is United States v. Metro Novelty Mfg. Co.,
124 F.Supp. 713 (S.D.N.Y. 1954). There the court held that
the request for verification was inadequate because it
failed to put the bidder on notice of the mistake which the
contracting officer surmised. In applying the rule in
Metro, the Comptroller General has issued several decisions
in which he has held that where a disparity, . . . is
brought to the notice of the contracting officer, the bidder
must be placed on notice of the nature and extent of the
mistake which is suspected. See, e.g., 44 Comp. Gen. 383
(1965).
In unpub. Comp.Gen. B-177405, Nov. 29, 1972, . . . the
Comptroller General stated that in order for a request for
verification to conform with the good faith dealings
expected of the Government's contracting officials, the
request should be as fully informative as possible
concerning the pertinent factors indicating to the
contracting officer that an error might have been made in
the bid. 5/ . . ..
In addition . . . In applying the Metro principle, Doke
states that . . . a request for verification is insufficient
if the contracting officer fails to put the bidder on notice
of the reasons why a mistake is surmised [18 S.W.L.J. at
34].
The contracting officer must consider all of the
circumstances involved in the acquisition, not just the
prices offered by the low and next low bidder. The full
range of bids, as well as the Government estimate, should be
considered in deciding whether or not a verification request
is necessary . . . citing Hagberg, Mistake in Bid, Including
New Procedures Under Contract Disputes Act of 1978, 13
Pub.Contract L.J. 257 (1983).
[Moreover,] . . . when a bidder has made an error in its bid
price and the contracting officer has reason to know of the
error, but took advantage of it, and the bidder performed in
accordance with the award, the price will be corrected upon
presentation of evidence clearly and convincingly
establishing what the price would have been but for the
error. (37 Comp. Gen. 706, 707 (1958); Hamilton, supra,
1046, citing Bromley Contracting Co. v. United States, 596
F.2d 448 (Ct.Cl. 1979); and Chernick, supra.
In Ruggiero v. United States, 190 Ct.Cl. 327, 420 F.2d 709
(1970), the Court at 715 and 716 said:
. . . As we pointed out in Chernick v. United States, 372 F.2d
492, 178 Ct.Cl. 498 (1967), what we are really concerned with is
the overreaching of a contractor by a contracting officer when
the latter has the knowledge, actual or imputed as something he
ought to know, that the bid is based on or embodies a disastrous
mistake and accepts the bid in face of that knowledge. The
correction of the mistake, perhaps in the teeth of general
conditions or specifications, by recision or reformation,
represents an application of equitable principles in a legal
action. The mistake, to invoke such principles, must be, as in
the cases cited, a clear cut clerical or arithmetical error, or
misreading of specifications, and the authorities cited do not
extend to mistakes of judgment. . . . an agreement cannot be
revised to reflect a plaintiff's subjective understanding the
defendant does not and should not know of. Benjamin v. United
States, 348 F.2d 502, 172 Ct.Cl. 118 (1965).
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.
Decision.
While we are in general agreement with the respondent that the
specifications merely spell out the Government's requirements
and not the method by which they are to be achieved, we
believe the specifications are drafted in such a way as to be
susceptible to the reading given them by appellant and thus to
result in substantial underbidding by those in error of the
true technical requirements of the contract. We believe that
appellant's statement in Exhibit 21 (Mr. Schultz's affidavit
of February 9, 1984), that "we felt ink on press, pressures
and press manipulation would suffice on the uncoated sheet"
was an explanation of its reading of the specifications to
require only one set of separations rather than an admission
of a mistake in judgment as to the method to be used in
producing the product. Moreover, we believe the very fact of
having the job displayed and Mr. Lee's testimony as to his
conversation with Mr. Findlay, establishes the Government's
own concern that potential bidders might not realize the
necessity for double the number of color separations. In
addition, while comprehending the Government's reluctance to
tell a contractor how to perform, we nevertheless hold that
when the Government itself believes that suitable performance
can only be achieved by doing double separations as the
Government does in this case, there is an affirmative duty
upon the Government to so notify bidders. Even if the
Government were to claim it was unaware of this limitation in
method of performance at the time of the initial bid, it
certainly became aware of this limitation during the claim of
mistake by Gateway. Indeed, the Contracting Officer relied
upon the judgment of respondent's Quality Control Section
(Exhibit 5) "that the lithos must be printed l-up in order to
get the required quality"; i.e., the job could be produced
satisfactorily only by doubling the number of separations to
find that Gateway had substantiated its mistake. We believe
that at the time the Contracting Officer asked the appellant
to review and confirm its bid, it was aware of the problem
with the specification encountered by Gateway. We also
believe that although Gateway's corrected bid was close to the
appellant's, that the Contracting Officer still had a duty to
disclose to appellant as much information as he had in his
possession at that time when he asked him to review and
confirm his bid. The Contracting Officer believed there was a
possible mistake in bid because appellant's bid was some 55
percent or $92,056.60 below Peake's bid and apparently
disclosed that discrepancy, but gave no other indication of
why the bid might be in error. The Government's witness says
he could not discern the nature of the error from the way the
bid was required to be made. That may well be the case.
However, where one contractor has misread the intentions of
the specifications to permit production by using only one set
of lithographs and the Government has itself determined that
two sets are necessary, and the specifications are ambiguous
in such regard we believe the Government has an affirmative
duty to spell out the limitation or method of production in
unequivocal terms; i.e., by saying in plain English, 24 color
separations rather than by merely pointing out problems in dot
gain and two types of stock.
Thus, we believe the facts prove the existence of mistake;
that the mistake was not one of judgment but of misreading the
specifications; that the Government shared in the mistake; and
that the appellant has shown by clear and convincing evidence
what its price would have been but for the mistake. In this
regard, we believe the case comports with the holding in
Hamilton, supra, as to the lack of adequacy of the
Government's verification of appellant's bid while at the same
time being distinguishable on its facts from Hamilton, supra,
with respect to the question of whether the mistake was an
error in bid or one of judgment. Accordingly, we find in
favor of appellant with respect to its claim of mistake in
bid, but in so doing remand the case to the Contracting
Officer for determination by audit and negotiation of a
reasonable settlement of the claim based on costs actually
incurred and a fair margin of profit. If the parties are
unable to agree on the proper quantum, the matter may be
petitioned back to this Board for final determination.