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