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.