U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
In the Matter of )
)
the Appeal of )
)
ST IVES, INC. ) Docket No. GPOBCA 12-93
Jacket No. 331-461 )
Purchase Order 88271 )
For the Appellant: St. Ives, Inc, 2025 McKinley Street,
Hollywood, Florida , by William L. Dickey, Attorney at Law,
Washington, DC.
For the Government: Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION AND ORDER
By Notice of Appeal filed on June 3, 1993, St. Ives, Inc.
(Appellant or Contractor), 2025 McKinley Street, Hollywood,
Florida 33020, timely appealed the April 6, 1993, final
decision of Contracting Officer John W. Adams of the U.S.
Government Printing Office (GPO or Respondent) denying the
Contractor's post-award request for relief based on an
assertion of a mistake in its bid under a contract identified
as Jacket 331-461, Purchase Order 88271. See Rule 4 File, Tab
M.1 For
the reasons which follow, the Contracting Officer's decision is
AFFIRMED and the appeal is DENIED.2
I. BACKGROUND
On October 9, 1992, GPO issued an invitation for bid (Jacket
331-461) for 250,000 copies and a set of film negatives for a
28-page publication entitled "Air National Guard Planning
Guide 1993" (Planning Guide). In response, it received 14
responsive bids on the extended bid opening date of October
22, 1992, ranging from the Appellant's low bid of $163,865 to
a high bid of $290,000. Rule 4 File, Tab B. On October 27,
upon noticing that the Appellant's bid was $30,000 lower than
the next lowest bid, the Respondent contacted the Appellant,
pointed out the $30,000 difference, and requested the
Appellant to review its bid. Specifically, the Appellant was
told to review its worksheets to ensure that the bid was "all
inclusive" and to check the stock and inks to make sure that
nothing was left out. Rule 4 File, Tabs C and M. The
Appellant responded by facsimile transmission on that same
date, confirming its bid. The contract was awarded to the
Appellant on October 28, 1992.
On October 29, 1992, the Appellant claimed a mistake in its
bid, asserting that the bid was based on the wrong paper
stock, JCP (Joint Committee on Printing) L60 instead of JCP
L61 (hereinafter L60 or L61), the stock required by the
specifications. The Appellant, in a November 2, 1992, letter
to the Respondent, explained that it first requested a price
quote on L61 stock, but that its paper supplier was not
familiar with L61, which led both parties to believe that L61
was a typographical error and that L60 was the intended paper
stock. The Contracting Officer concluded that Appellant's
claimed error did not entitle it to a remedy and denied the
claim for relief. The Appellant, by this time aware that it
could not perform the contract using either paper because of a
compatibility problem between the paper and the Appellant's
presses, subcontracted the job, with the Respondent's
approval, to Gateway Press, Inc., the third lowest bidder, at
that company's bid price of $193,284. Rule 4 File, Tab H;
Harris Affidavit; Adams Declaration; SMRCR. The Appellant
seeks rescission or reformation of its contract with
reimbursement for the difference between its contract price of
$163,865 and the higher subcontract price.
II. POSITIONS OF THE PARTIES
A. The Appellant
The Appellant argues that it made a unilateral mistake in its
bid, that mistake being the assumption that the IFB's
requirement for L61 paper was a typographical error and that
L60 paper was the actual requirement. The Appellant asserts
that this was a reasonable mistake for it to make because L60
stock was the paper stock previously used for the Planning
Guide and because the IFB did not highlight the fact that L61
paper had been substituted for L60 paper. Appellant argues
that the Government had "actual notice" that Appellant had
misread the IFB because the Contracting Officer knew or should
have known that Appellant's sophisticated web presses could
not use L61 paper stock. The Appellant further argues that
the Respondent's request that it review its bid was
insufficient to alert it to its misreading of the IFB's paper
requirement.
The Appellant further asserts that a mutual mistake was made
in this case, that mistake being the belief of both parties,
the Appellant and GPO, that paper stock L61 could run on
Appellant's presses to meet the requirements of this contract
when in fact it could not. (At oral argument Counsel for the
Appellant stated that the mutual mistake involved the
assumption that either paper stock, L60 or L61, could run on
Appellant's presses but, as was subsequently discovered,
neither could.) The Appellant believes this mutual mistake
entitles it to relief.
The Appellant further asserts that GPO erred in finding
Appellant to be a responsible bidder because Appellant did not
possess the equipment necessary to perform the contract using
L61 paper.
Based on the foregoing arguments, Appellant, as stated above,
requests contract rescission or reformation or other
appropriate relief including reimbursement of the difference
between its contract price and the price of its subcontract
with Gateway Press.
B. The Respondent
The Respondent asserts that Appellant is not entitled to
relief because the errors it made were errors of judgment
rather than the type of errors, e.g., arithmetical error,
misreading specifications, for which mistake-in-bid relief is
available. Respondent further asserts that the Contracting
Officer properly discharged his bid verification duty, and
that once Appellant verified its bid the Contracting Officer
had no choice but to accept the bid, thereby giving rise to a
binding contract. The Respondent further argues that the
incompatibility of Appellant's web presses with L61 paper is
not a legitimate basis for a claim of mutual mistake.
III. ISSUES PRESENTED
1. Did the Appellant make a unilateral mistake in its bid for
which relief is available? If so, did the Contracting Officer
know or should he have known of the mistake prior to accepting
the bid? If so, did the Contracting Officer adequately discharge
his bid verification duty?
2. Did the parties make a mutual mistake that requires the
rescission or reformation of the contract?
3. Did the Respondent improperly determine Appellant to be a
responsible bidder?
IV. DISCUSSION
A. Unilateral Mistake
The rules governing unilateral mistakes are straightforward.
One party to a contract who knows or should know that the
other party has made a mistake in its offer 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 mistake in its bid, 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). The Respondent's mistake in bid rules, which are nearly
identical to the FAR provisions, require a contracting officer
who suspects a mistake to advise the bidder of that fact and
point out, "as appropriate," that the bid is considerably
lower than other bids received or the Government's estimate,
that there are "important or unusual characteristics of the
specifications," that there are "changes in requirements from
previous purchases of a similar item," or "other data proper
for disclosure that will put the bidder on notice of the
suspected mistake." Printing Procurement Regulations, GPO Pub.
305.3 (Rev. 10-90)(hereinafter PPR), Chap. XI, Sec. 6, ¶ 3.(g)
. If the bidder responds by alleging a mistake, the bidder is
given an opportunity to establish by appropriate evidence that
a mistake was made and to either withdraw or correct the bid.
PPR Chap. XI, Sec. 6, ¶ 3. On the other hand, if the bidder
verifies that the bid is correct as submitted, in most cases
the bid may be accepted for award and the award will result
in a binding contract. PPR Chap. XI, Sec. 6, ¶ 3.(g)(2) ("[i]
f the bid is verified, the Contracting Officer shall consider
the bid as originally submitted"); Peterman, Windham & Yaughn,
Inc., 56 Comp. Gen. 239 (1977), 77-1 CPD ¶ 20.
When a contractor first asserts a mistake-in-bid claim after
award of the contract, what must be determined is whether the
contracting officer, before award, knew or should have known
of the possibility of an error in the bid. PPR Chap. XI, Sec.
6, ¶ 4.c. (relief is available if ". . . the . . . mistake
made by the contractor was so apparent as to have charged the
Contracting Officer with notice of probability of mistake");
Chernick v. United States, 178 Ct. Cl. 498, 372 F.2d 492
(1967); The Kato Corp., ASBCA 47601, 97-2 BCA ¶ 29,130. If
the circumstances were such so as to put the contracting
officer on notice of a possible mistake in a bid, the
question becomes whether the contracting officer adequately
discharged the required bid verification duty. United States
v. Hamilton Enters., Inc., 711 F.2d 1038 (Fed. Cir. 1983). If
he/she did not, 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
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. XI, Sec.
6, ¶ 4.c.; Olympic Graphic Sys., GPOBCA 01-92 (September 13,
1996), slip op., 1996 WL 812957.
At the outset, it is important to note that relief is not
available for every mistake that a bidder might make.
Arithmetical and mathematical errors and misunderstanding or
misinterpreting the specifications typically provide a basis
for relief under the mistake rules; relief is not available,
however, for mistakes in judgment. Ruggiero v. United States,
supra; Aydin Corp. v. United States, 229 Ct. Cl. 309, 669 F.2d
681 (1982); Handy Tool & Mfg. Co., Inc., 60 Comp. Gen. 189
(1981), 81-1 CPD ¶ 27; R.P. Richards Constr. Co.; PW Constr.,
Inc., B-274859.2; B-274859.3, Jan. 22, 1997, 97-1 CPD ¶ 39;
Olympic Graphic Sys., supra. Thus, a contractor will not be
entitled to mistake-in-bid relief in all cases involving an
inadequate verification request; the mistake made must be one
cognizable under the mistake rules. Therefore, the Board
first must consider the Respondent's argument that the only
error the Appellant made was essentially an error in business
judgment, the type of error for which mistake-in-bid relief is
not available.
According to the Respondent, the Appellant's error was three-
fold: (1) Appellant assumed, without seeking clarification
from the Contracting Officer, that because L60 paper had been
used in the past, L61 paper specified in the IFB was a
typographical error; (2) Appellant did not subscribe to the
relevant publication that describes all JCP paper stocks,
including L61, even though the information provided by the
publication is essential to Appellant's business; and (3)
Appellant submitted its bid without first determining if the
specified paper would run on its presses. The
Respondent considers these matters as involving business judgment
rather than misunderstanding specifications.
The Board does not agree with the Respondent on this issue.
While Appellant clearly exercised some judgment based on its
experience and knowledge as to what the paper stock
specification provision actually meant, that does not make the
error one of business judgment rather than one of
specification misinterpretation. Experienced Government
contractors do not read specifications in a vacuum, but can
be expected to bring to that exercise their knowledge and
general understanding of Government requirements and make
judgments about what the specifications require in light of
that knowledge and understanding. See generally Centre Mfg.
Co., Inc., ASBCA 10854, 66-1 BCA ¶ 5613; Grand Central
Aircraft Co., ASBCA 5128, 59-2 BCA ¶ 2352. The exercise of
that judgment in the interpretation of a specification cannot,
when the judgment is erroneous, simply be labeled as business
judgment when a contractor seeks mistake-in-bid relief. To
hold otherwise obviously would eliminate the
misunderstanding/misinterpretation of specifications basis for
mistake-in-bid relief. Moreover, Appellant's failure to seek
clarification from the Contracting Officer and to obtain an
available publication describing the different paper stocks
available does not, in the Board's view, establish the nature
of the mistake as either one of business judgment or one of
misreading a specification-it simply bears on the avoidability
of the mistake.
A useful distinction suggested by the cases in this area is
whether the mistake involves: (1) the quantity or nature of
the work; or (2) the effort required to perform the work. See
John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of
Government Contracts 3d ed. 332 (The George Washington
University, 1995) (hereinafter Nash & Cibinic,
Administration). A mistake involving the former is regarded
as a misinterpretation of specifications, while a mistake
concerning the latter is viewed as a matter of business
judgment. Thus, an experienced contractor's failure to read
more than four of the 98 pages of specifications before
submitting a bid, leading to a misjudgment of what would be
required to meet the specifications (Liebherr Crane Corp. v.
United States, 810 F.2d 1153 (Fed. Cir. 1987)), a company's
error in determining the nature and cost of materials
necessary to perform (Aydin Corp. v. United States, supra),
and a company's failure to obtain supplier quotes before
computing its bid price (Handy Tool & Mfg. Co., Inc., supra)
were held to involve business judgment, while interpretations
of specifications as calling for less work than they actually
did (Walter Straga, ASBCA 26134, 83-2 BCA ¶ 16,611; BCM Corp.
v. United States, 2 Cl. Ct. 602 (1983)) were held to involve
the kind of mistake for which relief could be granted.
In light of this distinction, it seems clear that the
Appellant's asserted error involves the nature of the work,
not the effort to perform it. What is at issue is not, for
example, the Contractor's judgment as to the amount or type of
labor or equipment needed to properly perform the job, but the
nature of the final product, that is, the particular kind of
paper stock on which the publication was to be printed.
Errors in understanding or interpreting what the contract
specifications require as a deliverable end product are
exactly what is encompassed by the mistake-in-bid rules. BCM
Corp. v. United States, supra; Wico, Inc., EBCA 125-6-80, 80-2
BCA ¶ 14,790. The Board concludes that the Appellant's error
is not one of business judgment, but one that is cognizable
under the mistake-in-bid rules.
Resolution of Appellant's unilateral mistake in bid claim
depends, therefore, on whether the Contracting Officer
adequately discharged his bid verification duty. It is not
disputed that the Contracting Officer was on notice of a
possible mistake in Appellant's bid. That notice resulted
from the $30,000 price disparity between Appellant's bid and
the next lowest bid, and led to the Respondent's request to
the Contractor that it review its bid. In making that
request, the Respondent pointed out to the Appellant the
precise basis-the $30,000 bid price differential-for its
suspicion of error in the bid. Rule 4 File, Tabs C and M.
The Appellant reviewed its bid and verified it, and the
contract award followed.
The Appellant asserts that the verification process was
fatally flawed because the Respondent did not place Appellant
on notice of Appellant's actual error-misunderstanding what
paper was required in performing the contract. There is no
requirement, however, that the Respondent have done so. As
set forth above, a contracting officer's duty is to alert a
bidder to a possible bid mistake when one is suspected and to
the basis for the contracting officer's belief that a mistake
might have been made; there is no duty to divine exactly what
error a bidder might have made and to point out that precise
error in the verification request. Thus, the verification
request cannot be considered faulty because it did not
highlight for Appellant the actual basis for Appellant's
error; it is faulty only if the contracting officer knew or
should have known of that basis or any other particular basis
for the possible error in Appellant's bid apart from what was
brought to the Appellant's attention-the dollar differential
between Appellant's bid and the next lowest bid, along with
the request to check stock and inks, etc., to ensure that
nothing was left out.
The Board finds no flaw in the verification request. First,
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 possible error in Appellant's bid.
While Appellant asserts that the Contracting Officer knew or
should have known that the specified paper stock could not be
run on Appellant's presses, the Contracting Officer denies
this, R.R. Brf., Adams Declaration (see infra p. 16), and in
any event it is not apparent why such knowledge, if it did
exist, should have led to further knowledge or suspicion that
the Appellant had decided to ignore the specifications and
base its bid on using paper other than that called for by the
specifications. In fact, Appellant itself concedes that the
Contracting Officer was not aware of the actual error made.
Complaint, ¶ 23 ("The true nature of the mistake . . . was
not readily apparent to . . . the Contracting Officer . . .");
Rule 4 File, Tab H (". . . the Contracting Officer was no more
aware than the Contractor that this particular mistake had
been made").
Second, the Board does not agree that the verification request
should have included specific reference to the paper stock
requirement. Appellant, relying on Chap. XI, Sec. 6, ¶ 3.(g)
of the PPR (quoted above), asserts that the specifications had
an "unusual characteristic" and represented a "change from
previous similar purchases," Complaint, ¶ 14, because L61 was
a new paper stock with specifications not widely circulated to
the public and because L60 stock had been previously specified
for similar jobs, thereby requiring Respondent to direct
Appellant to the L61 specification requirement when requesting
verification. The regulations require information about
unusual or changed specifications to be provided to "assure
that the bidder will be put on notice of a mistake suspected
by the Contracting Officer. . . ." PPR, Chap. XI, Sec. 6, ¶
3.(g)(1). Since 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 26647, 84-2 BCA ¶ 17303;
Ames Color-File Corp., B-185873, Mar. 26, 1976, 76-1 CPD ¶ 199
(denying relief in another GPO procurement to a bidder whose
bid was some 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 and who then after
award asserted a mistake based on using less expensive paper
than required by 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, in the
Board's view the regulatory language does not require unusual
or changed specification information to be provided as part of
every verification request when such a specification exists,
but means simply that the information should be provided when
the contracting officer suspects or should suspect that the
possible mistake arose from a failure to understand or
appreciate the requirements of the unusual or changed
specification provision.
The Appellant has not explained exactly what the "unusual
characteristic" of the L61 paper stock is that should have led
the Contracting Officer to suspect a mistake in connection
with the L61 requirement. The record also establishes that
while the L61 specification was relatively new, it was not
scarce or unavailable. It was included in Amendment No. 2 to
No. 9 of the Government Paper Specification Standards issued
by the JCP (R. R. Brf., Atch. 1); the Amendment was issued on
June 1, 1992, and was distributed by the Respondent to
subscribers by August 14, 1992, and was available to the
public by subscription until April 29, 1993. R. R.Brf.,
Cameron Declaration. It is also apparent from the record that
the Appellant is an experienced GPO contractor with a
satisfactory performance record, R.R. Brf., Adams Declaration
(St. Ives . . . has been successfully performing large GPO
contracts for many years"), and therefore one about whom the
Contracting Officer had no reason to suspect would not be
familiar with, or at least aware of, the most recent
specifications. Thus, although there is no dispute in the
record concerning the actual unfamiliarity of the Appellant
and its paper buyer with the specification, the record does
not establish that the Contracting Officer knew or should have
known of this unfamiliarity such that he should have tied the
suspected error in the
Appellant's bid to the paper specification even if, as the
Appellant asserts, this was the first time the Respondent
specified L61 paper3 for the type of publication involved in this
procurement.4
Accordingly, the Board concludes that the Contracting Officer
did not suspect and should not have suspected that the
Appellant's bid was based on the use of an incorrect paper
stock, and that the verification request was legally adequate.
This conclusion does not quite end our inquiry into the
unilateral mistake issue. Although Respondent asserts that
once bid verification is received the Contracting Officer need
make no further inquiries and that generally the only
appropriate course of action is to make award, R.Brf. at. 9,
that is not precisely the rule. The Comptroller General has
held that a contracting officer who suspects that a mistake
has been made notwithstanding receipt of verification from the
bidder has a duty to pursue the matter further with the bidder
before accepting the bid5, William M. Young & Co., B- 188374,
Apr. 18, 1977, 77-1 CPD ¶ 271, and ultimately should reject
the bid if it is clear that a mistake has been made. See,
e.g., American Independent Corp., B-258126; B-258126.2, Jan.
18, 1995 (unpub.); Tratoros Constr., Inc., B-254600, Jan. 4,
1994, 94-1 CPD ¶ 1; TLC Financial Group, B-237384, Jan. 26,
1990, 90-1 CPD ¶ 116 (a contracting officer may not accept an
obviously erroneous bid). In this regard, both the FAR
(§14.407-3(g)(5)) and the PPR (Chapt. XI, Sec. 6, ¶ 3(g)(4))
provide that where a bidder fails to furnish evidence in
support of a suspected mistake, the contracting officer shall
reject, rather than accept, the bid where the amount of the
bid is so far out of line with other bids or there are other
clear indications of error such that acceptance of the bid
would be unfair to the bidder or to other bona fide bidders.
See, e.g., R.P. Richards Constr. Co., B- 260543, June 21,
1995, 95-1 CPD ¶ 280, recon. denied, B-260543.2, Aug. 23,
1995, 95-2 CPD ¶ 80. Clearly erroneous bids subject to
rejection under these provisions include those based on
misinterpretations of solicitation requirements. Orbas &
Assocs., B-255276, Feb. 23, 1994, 94-1 CPD ¶ 139; Martin
Contracting, B-241229.2, Feb. 6, 1991, 91-1 CPD ¶ 121.
Appellant cannot prevail here, however, because the record
does not establish that the Contracting Officer had any reason
to believe, upon receipt of the Appellant's verification, that
there was a mistake in the Appellant's bid. While the
Appellant's bid was $30,000 lower than the next lowest bid and
no other bid was that much below the next lowest responsive
bid, this procurement produced a wide swing in bid prices with
a difference between the eighth and ninth lowest bid exceeding
$26,000. Rule 4 File, Tab B. Moreover, while the Appellant's
price ($655.58/m) was below the 1991 contract price
($770/m), Rule 4 File, Tab D, the 1992 contract called for a
25 percent greater quantity and the Appellant itself notes
that it has "price advantages inherent in use of [its]
sophisticated web-fed versus competitors sheet feed presses."
Rule 4 File, Tab H. In addition, the Contracting Officer knew
St. Ives to be an experienced, well-established GPO printing
contractor. R.R. Brf., Adams Declaration. Under the
circumstances, the Board does not view the Appellant's bid as
so out of line with the other bids or the $30,000 difference
between the Appellant's bid and the next lowest bid as so
clearly indicative of error despite the verification such that
the Contracting Officer should not have accepted the
Appellant's bid.
B. Mutual Mistake
The rules governing mutual mistake are also simple. As
relevant here, a contractor will be entitled to relief if both
the contractor and the government, at the time of the contract
award, made a mistake as to a basic assumption upon which the
contract is based, the assumption had a material effect upon
contract performance, and the contractor did not assume the
risk of the mistake. Dairyland Power Co-op. v. United States,
16 F.3d 1197 (Fed. Cir. 1994); National Presto Ind., Inc. v.
United States, 338 F.2d 99 (Ct. Cl. 1964), cert. denied, 380
U.S. 962 (1965); Morris v. United States, 33 Fed. Cl. 733
(1995); Bath Iron Works Corp., ASBCA 44617, 45232, 97-2 BCA ¶
29,073. It is not enough that both parties make a mistake;
both parties must make the same mistake. Natus Corp. v.
United States, 371 F.2d 450 (Ct. Cl. 1967). If there is clear
and convincing evidence that a mutual mistake was made, the
contract may be rescinded or reformed. PPR, Chap. XI, Sec. 6,
¶ 4.c. Appellant argues that a mutual mistake was made
here in that both it and the Respondent incorrectly believed
that the specified paper stock, L61, could run on Appellant's
presses. According to the Appellant, the L61 paper is
manufactured for sheet-fed presses and cannot be used on its
web-fed presses. Appellant "submits that neither the
Contracting Officer nor St Ives at the time of award . . .
knew in fact that JCP L61 paper would not run on St Ives' web
fed presses. This was a mutual mistake of fact . . . ." App.
Brf. at 7. The Respondent's position is that the Contracting
Officer had no knowledge that St. Ives lacked sheet-fed
presses or that the L61 paper was not available for web
presses.
The Board is not persuaded that there was a mutual mistake
here. Preliminarily, the Board notes that the Appellant's
factual assertions in support of its mutual mistake theory-to
the effect that the Contracting Officer did not know that L61
(or even L60) paper would not work on Appellant's web-fed
presses-are inconsistent with its other factual assertions
that the Contracting Officer knew or should have known that
Appellant had web-fed pressses and that L61 paper would not
work on those presses. Complaint at 2-3; App. Brf. at 6;
Report of Oral Argument at 3. More importantly, the record
does not establish that the Respondent made a mistake that is
encompassed by the mutual mistake concept.
First, there is no persuasive evidence that the Contracting
Officer made the mistake alleged by the Appellant. The
Contracting Officer states that he did not know that L61 paper
was a sheet-fed paper and did not know that the Appellant did
not have sheet-fed presses. He explains:
It is not a standard practice for Contracting Officers to inquire
of large, well-established printing contractors whether they have
web or sheet-fed presses. If a Contracting Officer receives a
bid from a contractor, like St. Ives, that has been successfully
performing large GPO contracts for many years, there is no need
to conduct an inquiry to determine whether they have a certain
type of press. It is the contractor's obligation to ascertain
their equipment needs and to decide whether their equipment can
produce the product. . . . I did not know at the time of
contract award that St. Ives lacked sheet-fed presses. . . .
Similarly, at the time of award, I did not have any knowledge
that L61 paper was only available in sheet-fed form. Since all
paper is manufactured on rolls at the factory, and the paper is
then cut down into sheets, there is no such thing as a paper
which cannot be manufactured in a form usable by web presses.
The paper specifications do not limit the use of L61 to sheet-fed
presses.
R.R.Brf., Adams Declaration. The Board ascertains from this
statement that the Contracting Officer did not make it his
business to know about the particular types of presses used by
GPO contractors, including St. Ives, and did not know or have any
reason to know whether there would be a compatibility problem
between St. Ives' equipment and any particular paper stock. There
is no evidence in the record that rebuts this declaration.
Although Appellant asserts that GPO's "on-file information on St
Ives reflected it only had web presses that would not run the
sheet fed only L61 paper," no evidence that this information
exists, or that if it exists the Contracting Officer knew about
it, has been introduced. Moreover, even if the Contracting
Officer knew from such on-file information that St. Ives had only
web-fed presses, that would not establish, in light of the
Contracting Officer's declaration, that the Contracting Officer
had assumed anything with respect to the compatibility of those
presses with the specified paper stock. In addition, while a
preaward survey on Appellant found satisfactory such things as
Appellant's plant facilities and equipment and ability to meet
the schedule, Rule 4 File, Tab E, it appears that this was a
limited survey rather than the more detailed "full" survey
utilized when a bidder's responsibility cannot be readily
determined from available information. PPR, Chap. 1, Sec. 5, ¶
5. Nothing in the record establishes that this limited preaward
survey led the Contracting Officer to make any assumptions about
what equipment the Appellant had, how the equipment operated, or
whether any particular paper would or would not work with the
equipment. In short, the Board finds nothing in the record that
establishes the validity of the Appellant's assertion that the
Contracting Officer knew of the Appellant's particular presses
and assumed that the specified L61 paper could be run on those
presses.
Second, even if Appellant's factual assertions were borne out
by the record, as a legal matter the Board could not find that
a mutual mistake was made that would provide a basis for
relief.
As set forth above, for a contractor to get relief there must
be a mutual mistake of a basic assumption. As explained in
Nash & Cibinic, Administration at 323, that basic assumption
must be "a significant part of the bargaining process." For
example, in the leading case in this area, a mutual mistake
was found to exist when it was discovered that a certain
production method which was the subject of preaward discussion
and which the contractor had agreed to use would not work.
The court held that the parties had "reasonably labored . . .
under a mutual mistake as to a most material set of facts."
National Presto Indus., Inc., v. United States, supra, at 108.
The basic assumption about which the parties were mistaken was
that the agreed upon production method was feasible. See also
Air Compressor Prods., Inc., ASBCA 40015, 91-2 BCA ¶ 23,957
(where both parties mistakenly believed a particular
compressor model would satisfy requirements) and Management &
Training Corp. v. General Servs. Admin., GSBCA 11182, 93-2 BCA
¶ 25,814 (where the parties were unaware of the true cost of
utilities in government buildings). As the Federal Circuit
stated in reviewing cases in this area:
. . . where courts have reformed a contract, the parties
recognize the existence of a fact about which they could
negotiate, they mutually form a belief concerning that fact, but
their belief is erroneous. In those cases the court may reform
the contract to bring the parties' agreement in accord with the
true state of the facts.
. . . . .
Other cases in which courts have permitted reformation . . .
similarly show that the parties had an erroneous belief
concerning a fact whose existence the parties recognized and
about which they could reach agreement. See, e.g., Southwest
Welding & Mfg. Co. v. United States, 373 F.2d 982, 179 Ct. Cl.
39 (1967) (the parties mistakenly believed the price of steel
was lower than it actually was); Walsh v. United States, 102 F.
Supp. 589, 121 Ct. Cl. 546 (1952) (the parties erroneously
believed the minimum wage rate was a certain amount, even though
it had increased earlier); Aluminum Co. of America v. Essex
Group, Inc., 499 F. Supp. 53 (W.D.Pa. 1980) (the parties
erroneously believed that the Wholesale Price Index would
accurately represent on labor production costs for the purpose of
a contractual escalation clause).
. . . . .
Atlas Corp. v. United States, 895 F.2d 745, 750-1 (Fed. Cir.
1990), cert. denied, 498 U.S. 811 (1990).
Here, there was no mutual error concerning anything that was
part of the bargaining process or about which the parties
could reach agreement. Stated another way, the alleged
mistake, unlike in the cases cited above, does not directly
involve a specific performance requirement or another
contract term or condition. There is no mistake here about
what is to be produced or the terms and conditions under
which production, delivery, and contractor compensation are to
occur. Rather, the mistake involves Appellant's initial
misunderstanding of the specifications and its ultimate
judgment about its ability to meet the specifications with its
own equipment. Clearly, the Respondent did not know of the
misinterpretation and, as set forth above, had no common
understanding with Appellant that Appellant could meet
specification requirements by using any specific type of
equipment. These circumstances do not permit the conclusion
that a mutual mistake was made here that would entitle the
Appellant to relief. See Natus Corp. v. United States, supra,
where the court held that a contractor, who sought mutual
mistake relief when the production method it chose did not
work, was not entitled to such relief because there was
nothing "mutual" about the mistake-the contractor had
unilaterally chosen the production approach, with the
Government "at no time expressing any views as to how
production should proceed." 371 F.2d at 14.
C. Responsibility
The Appellant's assertion that the Respondent erroneously
found it to be a responsible bidder is not a matter for
resolution by this Board. Bidder responsibility is a preaward
matter and as such is not within the Board's jurisdiction.
Rose Printing, Inc., GPO BCA 32-95 (December 16, 1996), slip
op., 1996 WL 812880; Big Red Enters., GPO BCA 07-93 (August
30, 1996), slip op., 1996 WL 812960.
ORDER
Considering the record as a whole, the Board finds and
concludes that: (1) Appellant has not established by clear and
convincing evidence that it is entitled to unilateral mistake-
in-bid relief; (2) Appellant and the Respondent did not make
a mutual mistake entitling the Appellant to any relief; and
(3) the Board is without jurisdiction to consider the
Appellant's challenge to the Respondent's determination that
Appellant was a responsible bidder. Therefore, the
Contracting Officer's final decision denying relief is
AFFIRMED and the appeal is DENIED.
It is so Ordered.
January 5, 1998 RONALD BERGER
Ad Hoc Chairman
GPO Board of Contract Appeals
_______________
1 The Contracting Officer's appeal file, assembled
pursuant to Rule 4 of the Board's Rules of Practice and
Procedure, dated September 17, 1984, was delivered to the
Board on July 2, 1993. It will be referred to hereafter as
the Rule 4 File, with an appropriate Tab letter also
indicated. The Rule 4 File consists of 13 documents
identified as Tab A through Tab M.
2 The Board's decision is based on: ( a) the Appellant's
Notice of Appeal dated April 27, 1993; (b) the Rule 4 File;
(c) the Appellant's Complaint dated July 2, 1993; (d) the
Respondent's Answer dated August 5, 1993; (e) Appellant's
Submission of Materials Requested in Order to Close the
Record dated October 8, 1993 (hereinafter SMRCR); ( f) the
Respondent's Notice of Filing dated October 15, 1997; (g) the
Respondent's Brief dated November 8, 1993 (hereinafter R.
Brf.); (h) the Brief of Appellant, St Ives Inc dated November
8, 1993 (hereinafter App. Brf.); (i) Report of Presubmission
Telephone Conference dated November 29, 1993; (j) the
Appellant's Reply Brief and Completion of the Record dated
January 14, 1994 (hereinafter App. R. Brf.), and accompanying
Affidavits of Jeffrey R. Harris and Ernest E. Engle; (k) the
Respondent's Reply Brief dated January 14, 1994 (hereinafter
R. R. Brf.), and accompanying Declarations of Phyllis J.
Kent, James Cameron, John Adams, and Sylvia S. Subt; and (l)
Report of Oral Argument dated July 7, 1994. (Oral argument
was heard on May 24, 1994, and was not transcribed. A
hearing was not held in this case, the appellant having
waived a hearing pursuant to Board Rules 8 and 11.)
3 The prior solicitation for the Planning Guide, Jacket No.
300-761, issued on September 9, 1991, did not identify a
specific JCP code for the required paper, but Appellant
states that "JCP L60 had traditionally be[en] used." App.
Brf. at 5.
4 Indeed, the amount of the disparity between Appellant's
bid and the next lowest bid would suggest that the suspected
error was not tied to the intended use of L60 paper instead
of L61. According to Appellant, the cost of L60 paper
needed for performing this contract was $78,386, while the
cost for L60 paper would have been $124,740, a difference of
$46,354. SMRCR. It seems reasonable that a bid based on L60
instead of L61 paper therefore likely would be understated by
considerably more than the $30,000 that alerted the
Contracting Officer to the mistake possibility here.
5 See L. Washington & Assocs., Inc., B-276556 et al., June
26, 1997, 97-1 CPD ¶ 229, for an example of multiple
verification requests preceding agency decisions as to
whether to accept a bid.