An appeal seeking
reformation of a contract price was
granted by the Civilian Board of
Contract Appeals because the
contracting officer should have been
alerted to a possible mistake in the
contractor's bid. The contractor
contended it inadvertently used the
price for low sodium tomato sauce in
bids to supply salsa for school
lunches and other food assistance
programs. The parties disputed
whether the CO knew or should have
known of the contractor's possible
mistake and therefore requested
verification of its bids.
No
Reasonable Explanation
The board explained
price disparity does not necessarily
provide constructive notice of a
mistake if the circumstances offer
reasonable explanations for the
disparity. Here, however, the CO
should have questioned the
contractor's bid prices. Historical
pricing data showed an approximately
40-percent difference between the
contractor's bid prices and the
lowest bid prices in the prior
year's solicitations. The CO did not
note any specific circumstances that
would explain the disparity, and her
reference to general circumstances
that might cause a contractor to
intentionally submit a low bid was
not compelling. In addition, a
Destination Price Bid Array report
indicated the contractor
consistently bid significantly less
than its competitors on most of the
contract line items. The CO
attributed the price differences to
differences in shipping costs, but
this reasoning did not explain the
price disparity with respect to all
competitors. Either the historical
prices or the report should have put
the CO on notice of a possible
mistake in bid. The fact the
contractor's intended price was
higher than the next lowest bidder's
price did not bar recovery. As
allowed under FAR
14.407-4 (b)(2), the contractor
sought the difference between its
contract price and the next lowest
bidders' prices, and its methodology
for calculating the difference was
reasonable. ( Red
Gold, Inc. v. Dept. of Agriculture,
CBCA, ¶93,532)
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