BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
In the matter of )
)
the Appeal of )
)
COMMERCIAL DATA CENTER, INC. ) Docket No. GPOBCA 12-99
)
Program C237-S )
Purchase Order 94925 )
For the Appellant: Frederic G. Antoun, Jr., Esq., Chambersburg,
Pennsylvania.
For the Respondent: Drew Spalding, Esq., Deputy General Counsel,
U.S. Government Printing Office, Washington, DC.
Before KERRY L. MILLER, Administrative Judge.
DECISION
Commercial Data Center, Inc., (CDC) appeals a Contracting
Officer's decision denying CDC's post-award request for relief
from an alleged error in its bid. For the reasons that follow,
Respondent's motion for summary judgment is granted; Appellant's
motion for summary judgment is denied, and the appeal is denied.
FINDINGS OF FACT
1. In August 1998 the U.S. Government Printing Office (GPO)
Term Contracts Division, issued an Invitation for Bids (IFB) for
Program C237-S, a requirements contract for the printing and
mailing of six different types of personalized notices for the
Social Security Administration. Rule 4 File, Tab A at 1.
According to the IFB, the awardee would be required to receive
electronically transmitted Government data, print personalized
notices, combine the notices with pre-printed pamphlets and mail
the materials to Social Security applicants and recipients. Id.
at 12.
2. The IFB was mailed to 39 potential vendors. Rule 4 File,
Tab B. The GPO received three sealed bids that were opened on
August 17, 1998. The bid results were as follows:
Commercial Data Center, Inc. $1,378,337.06
Digital Ink $2,777,913.24
KPT, Inc. $5,355,544.29
Rule 4 File, Tab D.
3. On August 19, 1998, the low bidder, CDC, was contacted by
a GPO Printing Specialist working for the Contracting Officer.
She informed CDC's Executive Vice President, the person who
signed the bid on the company's behalf, that CDC's bid was
substantially lower than the next low bidder. She requested CDC
to review and confirm its bid. ¶ 4, Appellant's Statement of
Undisputed Facts. CDC's Executive Vice President responded by
letter dated August 19, 1998. He wrote: "I have reviewed our bid
and find it to be accurate as stated. We recognize that it is
considerably lower than the next bidder." Rule 4 File, Tab E.
4. Following the GPO's on-site pre-award survey and a
Government review of CDC's Production and Quality Plan, GPO
awarded the contract to CDC on September 18, 1998. Rule 4 File,
Tabs F, G, H.
5. The IFB called for the bidders to provide prices for 27
different contract line items (CLIN). CLIN II (a) read as
follows:
II. PRINTING/IMAGING and BINDING: Prices offered must be all-
inclusive and include the cost of all proofs, materials and
operations necessary for the complete production of the product
listed in accordance with these specifications. Cost of all
required paper must be charged under Item III. "PAPER".
(a) *Daily makeready/setup charge
.......................................$ ________
* Contractor will be allowed only one (1) makeready/setup charge
per day. This combined charge shall include all materials and
operation necessary to makeready and/or setup the contractor's
equipment for the 6 mailers run each day . . . . Invoices
submitted with more than one makeready/setup charge per day will
be disallowed.
Rule 4 File, Tab A at 29.
6. Despite this contract provision, CDC's initial vouchers
to the GPO contained six Daily makeready/setup charges. On March
31, 1999, after CDC's initial vouchers were reduced by GPO, CDC
submitted a claim alleging a post-award error in bid. According
to CDC:
The error in bid was in section II.(a) Daily makeready/setup
charge. The price for one (1) setup was entered in this section
when the amount for six (6) setups was the intended price. The
amount that was entered in the schedule of prices was $414.50.
CDCI entered the unit price of $414.50 instead of the setup price
for all six (6) mailer which is $2487.00. The intended bid price
was $2487.00. This amount was based on six (6) mailers that are
setup per day at $414.50 for each mailer. The actual amount that
should have been entered in section II.(a) is $2487.00.
Rule 4 File, Tab I. Respondent estimates that the requested
price reformation would increase the contract price by $518,125 a
year. Respondent's Response to Appellant's Motion for Summary
Judgment and Cross Motion for Summary Judgment at 1.
7. The Contracting Officer considered Appellant's error in
bid claim and concluded that reformation was not appropriate.
The Contracting Officer wrote:
Award was based on prices being considered fair and reasonable in
comparison with like items on Programs 259-S and 627-S. In
addition, on August 19, 1998, the bidder reviewed and confirmed
that his bid prices were accurate as bid and he further stated
that he realized that his bid was considerably lower than the
next bidder. By notarized letter dated March 31, 1999, Mr. Frank
Klan, President, CDCI, claimed a post award error in bid. He
stated that the price of $414.50 submitted for line item II. (a)
Daily make ready/setup charge was for 1 mailer and that the price
he intended for that line item was $2487.00 for all 6 mailers.
In claims of mistakes in bid discovered after award,
determinations favorable to the contractor, can be made only on
the basis of clear and convincing evidence of the error claimed
and of the bid actually intended, and that either the mistake was
mutual or the unilateral mistake made by the contractor was so
apparent as to have charged the Contracting Officer with
constructive notice of the probability of mistake. In this case
the bid price submitted for this item was approximately 107%
higher than the next bidder and the prices had been reviewed and
confirmed. Therefore, the Contracting Officer was not on notice
of an error.
The evidence submitted does not warrant a determination favorable
to the contractor and no change in the contract price, as
awarded, shall be made.
Rule 4 File, Tab K. The Contracting Officer informed Appellant
of his determination in a Final Decision dated April 9, 1999.
Rule 4 File, Tab L.
8. Thereafter, on May 10, 1999, Appellant filed a timely
notice of appeal with the GPO Board of Contract Appeals.
DISCUSSION
This case is before the Board on Appellant's Motion for Summary
Judgment and Respondent's Cross Motion for Summary Judgment.
Appellant argues it is entitled to reformation of its contract as
a matter of law because the undisputed facts demonstrate that
Appellant made a unilateral mistake in bid that was so apparent
as to have charged the Contracting Officer with notice of the
probability of mistake. Respondent argues that it is entitled to
judgment in its favor because the agency requested CDC to review
and confirm its bid prices before award, and had no reason to
believe, after receiving Appellant's bid confirmation, that an
error existed in Appellant's bid. Given the undisputed facts in
this case, Respondent is entitled to summary judgment in its
favor.
Summary Judgment Standard
In deciding summary judgment1 motions, the Board is guided by
Rule 56 of the Federal Rules of Civil Procedure. See The George
Marr Co., GPOBCA No. 31-94, (April 23, 1996), 1996 GPOBCA LEXIS 43,
1996 WL 273662, slip op. at 35. Accord, Christie-Willamette,
NASA BCA No. 283-4, 87-3 BCA ¶ 19,981 (citing Astro Dynamics,
Inc., NASA BCA No. 476-1, 77-1 BCA ¶ 12,230); Automated Services,
Inc., EBCA Nos. 386-3-87, 391-5-87, 87-3 BCA ¶ 20,157. Under
Rule 56, courts are instructed to grant a motion for summary
judgment if the pleadings and supporting affidavits and other
submissions "show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law." FED. R. CIV. P. 56(c).
Thus, the principal judicial inquiry required by Rule 56 is
whether a genuine issue of material fact exists. See The George
Marr Co., supra, slip op. at 35-36; RBP Chemical Corp., GPOBCA
No. 4-91 (Jan. 23, 1992), 1992 GPOBCA LEXIS 16, 1992 WL 487876,
slip op. at 22. Accord, John's Janitorial Services, Inc., ASBCA
No. 34234, 90-3 BCA ¶ 22,973 (citing, General Dynamics
Corporation, ASBCA Nos. 32660, 32661, 89-2 BCA ¶ 21,851); Ite,
Inc., NASA BCA No. 1086-6, 88-1 BCA ¶ 20,269. A material fact is
one that will make a difference in the outcome of the case.
McDonnell Douglas Services, Inc., ASBCA No. 45556, 95-1 BCA ¶
27,333 at 136,229 (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242 (1986)). Stated otherwise, on a motion for summary
judgment, a court cannot try issues of fact; it can only
determine whether there are issues to be tried. See IBM
Poughkeepsie Employees Federal Credit Union v. Cumis Insurance
Society, Inc., 590 F. Supp. 769, 771 (S.D.N.Y. 1984) (citing
Schering Corp. v. Home Insurance Co., 712 F.2d 4, 9 (2d Cir.
1983)). If no triable issues exist, the rule permits the
immediate entry of summary judgment. See, e.g., Reingold v.
Deloitte, Haskins and Sells, 599 F. Supp. 1241, 1261 (S.D.N.Y.
1984); United States v. ACB Sales and Service, Inc., 590 F. Supp.
561 (D. Ariz. 1984). Indeed, the United States Supreme Court has
stated that summary judgment is mandatory in the absence of a
genuine issue of any material fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986).
The burden is on the party moving for summary judgment to
demonstrate that there is no genuine issue as to any material
fact, and that it is entitled to judgment as a matter of law.
See Celotex Corp. v. Catrett, supra, 477 U.S. at 322-23; Adickes
v. S. H. Kress & Co., 398 U.S. 144, 157 (1970). That burden is
an affirmative one, and is not met merely by disproving the
unsupported claims of its opponent. See Celotex Corp. v.
Catrett, supra, 477 U.S. at 323. On the other hand, while the
nonmoving party also has an evidentiary burden, it is not a heavy
one; it is simply required to go beyond allegations in the
pleadings and designate specific facts in the record or by
affidavits to show there is a genuine issue to be heard. See,
e.g., McDonnell v. Flaharty, 636 F.2d 184 (7th Cir. 1980); United
States v. Kates, 419 F. Supp. 846 (D. Pa. 1976); Upper West Fork
River Watershed Association v. Corps of Engineers, 414 F. Supp.
908 (D. W.Va. 1976), aff'd 556 F.2d 576 (4th Cir. 1977), cert.
denied 434 U.S. 1010 (1978). See generally, Vanier Graphics,
Inc., GPOBCA No. 12-92 (May 17, 1994), 1994 GPOBCA LEXIS 39, 1994
WL 275102, slip op. at 32-38; RBP Chemical Corp., supra, slip op.
at 17-26. The Federal summary judgment rule provides: "[A]n
adverse party may not rest upon the mere allegations or denials
of his pleadings, but his response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial. If he does not so respond,
summary judgment, if appropriate, shall be entered against him."
FED. R. CIV. P. 56(e). See Celotex Corp. v. Catrett, supra, 477
U.S. at 324; First National Bank of Arizona v. Cities Service
Co., 391 U.S. 253, 289 (1968); Mingus Constructors, Inc. v.
United States, 812 F.2d 1387, 1390-91 (Fed. Cir. 1987). See
also, Do-Well Machine Shop, Inc., ASBCA No. 34898, 89-1 BCA ¶
21,491, at 108,281; Ite Inc., supra, 88-1 BCA at 102,595.
Decision on Summary Judgment
In McClure Elec. Constructors, Inc. v. Dalton, 132 F.3d 709 (Fed.
Cir. 1997) the Court of Appeals for the Federal Circuit applied a
five part analysis to a claim seeking reformation as a result of
a contractor's unilateral mistake in bid. According to McClure,
to recover on a post-award claim of mistake in bid, a contractor
must show by clear and convincing evidence that: (1) a mistake
in fact occurred prior to contract award; (2) the mistake was a
clear-cut, clerical or mathematical error or a misreading of the
specifications and not a judgmental error; (3) prior to award the
Government knew, or should have known, that a mistake had been
made, and therefore should have requested bid verification; (4)
the Government did not request bid verification or its request
for bid verification was inadequate; and (5) proof of the
intended bid is established. Id. at 711. See also, Bromley
Contracting Co., Inc. v. United States, 794 F.2d 669 (Fed. Cir.
1986); Dakota Tribal Indus. v. United States, 34 Fed. Cl. 593,
595 (1995); Comspace Corp., DOTBCA No. 4034, 99-2 BCA ¶ 30,473;
Solar Foam Insulation, ASBCA No. 46921, 94-2 BCA ¶ 26,901 (1994).
In applying these elements to the instant appeal, the Board
concludes that Appellant is not entitled to relief. Assuming,
without finding, that Appellant actually made a mistake2 when
filling out its bid papers, and that the mistake was not one of
judgment, Appellant has failed to establish that the Contracting
Officer knew or should have known of the mistake.
The third McClure element deals with the Government's duty to
examine bids for mistakes and to seek bid verification where
appropriate. The fourth McClure element concerns the adequacy of
the Government's bid verification. These elements arise from the
principle that one party to a contract who knows or should know
that the other party has made a mistake in its bid may not sit
quietly by and take advantage of the other party's error; to do
so is considered to be improper "overreaching." Ruggiero v.
United States, 190 Ct. Cl. 327, 420 F.2d 709 (1970). To prevent
this overreaching, federal procurement regulations have imposed
on Contracting Officers a bid verification duty, so that whenever
a Contracting Officer suspects that a bidder has made a bid
mistake, the Contracting Officer must point out that suspicion
and the basis for it. See, e.g., Federal Acquisition Regulation
(FAR) §§ 14.407-1, 14.407-3(g)(1).
Respondent's regulation covering mistakes in bids requires a
Contracting Officer who suspects a mistake to request that the
bidder verify the accuracy of its bid. Printing Procurement
Regulation, GPO Publication 305.3 (Rev. 10-90) (PPR), Chap. XI,
Sec. 6.1; Sec. 6.3(g). If the bidder alleges a mistake, the
Contracting Officer will process the claim in accordance with the
agency's regulatory scheme and may allow the bid to be withdrawn
or corrected, or may reject the bid. See, PPR, Chap. XI, Sec.
6.3. If the bid's accuracy is verified by the bidder, the
Contracting Officer will consider the bid as submitted. PPR,
Chap. XI, Sec. 6.3(g)(2).
In the instant appeal, the Contracting Officer's agent, a
Printing Specialist, examined the bid for potential errors. Her
contemporaneous notes indicate she contacted Appellant at 9:55
A.M. on August 19, 1998. She pointed out the difference in
Appellant's price and the next lowest bidder and asked
Appellant's Executive Vice President Frank Klan to review and
confirm Appellant's bid prices. ¶ 4, Appellant's Statement of
Undisputed Facts; Declaration of Marjorie E. Bell. In a letter
faxed to GPO at 2:27 P.M. that same day, Mr. Klan stated he had
reviewed the bid, concluded that the bid was accurate and further
acknowledged that the bid was "considerably lower" than the next
lowest bidder. Rule 4 File, Tab E.
The inquiry now turns to the adequacy of the price verification,
for if a Contracting Officer has not adequately verified a bid, a
contract award to the bidder submitting the erroneous bid will
not give rise to a binding contract notwithstanding that the
bidder, in response to a verification request, verified the bid
as correct. BDF Tesa Corp., GSBCA No. 8307, 89-3 BCA ¶ 21,925.
In such circumstances, the contractor generally will be entitled
to rescission or reformation, as appropriate, of the contract.
It is the contractor's burden however, to establish this
entitlement to relief by clear and convincing evidence. PPR
Chap. XII, Sec. 6, ¶ 4.c.; St. Ives, Inc., GPOBCA No. 12-93 (Jan.
5, 1998), 1998 GPOBCA LEXIS 31, 1998 WL 148984; Olympic Graphic
Sys., GPOBCA No. 01-92 (Sept. 13, 1996), 1996 GPOBCA LEXIS 32,
1996 WL 812957.
The Contracting Officer's duty is to place bidders on notice of a
suspected mistake and, when a particular mistake is suspected, of
that particular mistake. Structural Finishing, Inc., ASBCA No.
26647, 84-2 BCA ¶ 17303; Ames Color-File Corp., B-185873, Mar.
26, 1976, 76-1 CPD ¶ 199 (denying post-award relief in a GPO
procurement to a bidder whose bid was approximately 33 percent
lower than the next lowest bid but who confirmed the bid after
being informed of the discrepancy and requested to review the
specifications); Andy Elec. Co., B-194610.2, Aug. 10, 1981, 81-2
CPD ¶ 111; Atlas Builders, Inc., B-186959, Aug. 30, 1976, 76-2
CPD ¶ 204; Porta-Kamp Mfg. Co., Inc., 54 Comp. Gen. 545 (1974),
74-2 CPD ¶ 393. Where the only reason why the Contracting
Officer suspects error is the disparity in price between the bids
received, a simple request for verification is enough. Jansen,
ASBCA No. 5412, 59-2 BCA ¶ 2384; 37 Comp. Gen. 786 (1958).
The Board concludes that Respondent's verification request was
appropriate under the circumstances. There is no factual basis
in the record for a conclusion that the Contracting Officer knew
or should have known of any particular reason for the alleged
error in Appellant's bid. Indeed, a comparison of Appellant's
bid with the other two bidders shows that Appellant's CLIN II(a),
the CLIN with the alleged error, was actually two to three times
higher than that of the other bidders. Thus, there was nothing
on the face of the bids to suggest that Appellant had severely
under-priced the CLIN, as it now alleges. See, Rule 4 File, Tab
D. Even if Appellant's CLIN had been significantly lower than
the other bidders, it would not have triggered any particular
concern on the part of Respondent, since this was a new contract
with no prior bidding history for comparison. In addition, there
was no consistent pattern in the way the three bidders
distributed their costs throughout the solicitation's 27 CLINs.
See, Rule 4 File, Tab D. Had there been such a pattern, a
deviation by Appellant on a particular CLIN would have triggered
a heightened responsibility on the part of the Contracting
Officer to point out the deviation as part of the review and
confirm process. Given the facts in this appeal, the most the
Contracting Officer could do was to point out the total bid price
was significantly lower than the next lowest bidder and request
Appellant to review and confirm its price.
The record does not establish that the Contracting Officer had
any reason to believe, upon receipt of the verification from
Appellant, that Appellant's bid was based on a transcription
error. While Appellant's undiscounted bid price was $1.3 million
lower than the next lowest bidder, this procurement produced a
wide swing in prices, with a difference between the second and
third lowest bids exceeding $2.6 million. Rule 4 File, Tab D.
Under the circumstances, the Board does not view the Appellant's
bid as so out of line with the other bids or the difference
between the Appellant's bid and the next lowest bid as so clearly
indicative of error that the Contracting Officer should have
ignored Appellant's bid verification.
Finally, the parties disagree about whether Respondent pressured
Appellant for a quick bid confirmation and thus contributed to
the alleged error. The Board does not find this to be a material
issue. While the request for confirmation and the resulting
confirmation took place within hours on August 19, 1998,
Respondent did not make award until September 18, 1998, 29 days
later. Accordingly, if Appellant believed it had not been given
sufficient time to review its bid, it had almost one additional
month to review the bid papers and to take advantage of the PPR's
more lenient standard for relief from errors in bid claimed prior
to award. See, PPR Ch. XI, Sec. 6.3.
CONCLUSION
Having considered all of Appellant's arguments, whether or not
expressly mentioned, the Board concludes that the Respondent is
entitled to summary judgment as a matter of law. Accordingly,
Respondent's Cross-Motion for Summary Judgment is granted and
Appellant's Motion for Summary Judgment is denied. The appeal is
denied.
July 26, 2001
KERRY L. MILLER
Administrative Judge
___________
1 Although the Board's rules that were in effect at the time this
appeal was filed did not provide explicitly for a summary relief
procedure, the Board has routinely entertained summary judgment
motions. See WBC, Inc., GPOBCA No. 17-98 (Sept. 22, 1999), 1999
GPOBCA LEXIS 12, 1999 WL 33176277; Wickersham Printing Co.,
GPOBCA No. 23-96 (Dec. 18, 1998), 1998 GPOBCA LEXIS 24, 1998 WL
993636; Artisan Printing, Inc., GPOBCA No. 15-93 (Feb. 6, 1998),
1998 GPOBCA LEXIS 30, 1998 WL 149001; Graphicdata, Inc., GPOBCA
No. 35-94 (June 14, 1996), slip op. at 47, 1996 GPOBCA LEXIS 28,
1996 WL 812875, and cases cited therein.
2 Appellant's position on this issue is weakened by the fact that
it has not submitted the work papers used in formulating its bid.
The one-page handwritten document submitted by Appellant and
described as its "bid papers" is dated March 31, 1999, over 7
months after the bid was submitted. See Rule 4 File, Tab I.