(a) The Departments are authorized to make the following administrative determinations in connection with mistakes in bids, other than apparent clerical mistakes, alleged after opening of bids and prior to award.

(1) Where the bidder requests permission to withdraw a bid and clear and convincing evidence establishes the existence of a mistake, a determination permitting the bidder to withdraw his bid may be made.

(2) However, if the evidence is clear and convincing both as to the existence of the mistake and as to the bid actually intended, and if the bid, both as uncorrected and as corrected, is the lowest received, a determination may be made to correct the bid and not permit its withdrawal.

(3) Where the bidder requests permission to correct a mistake in his bid and clear and convincing evidence establishes both the existence of a mistake and the bid actually intended, a determination permitting the bidder to correct the mistake may be made; provided that, in the event such correction would result in displacing one or more lower bids, the determination shall not be made unless the existence of the mistake and the bid actually intended are ascertainable substantially from the invitation and the bid itself. If the evidence is clear and convincing only as to the mistake, but not as to the intended bid, a determination permitting the bidder to withdraw his bid may be made.

(4) Where the evidence is not clear and convincing that the bid as submitted was not the bid intended, a determination may be made requiring that the bid be considered for award in the form submitted.

(b) Authority for making the determinations described in paragraph (a) (1) of this section may be delegated, without power of redelegation, to any purchasing activity having legal counsel available. Authority for making the determinations described in paragraph (a)(2), (3) and (4) of this section may be delegated, without power of redelegation as set forth below:

(1) Department of the Army: To the Chief, Contracts Division, Directorate of

Procurement, Office of the Assistant Secretary of the Army (Installations and Logistics); General Counsel of the U.S. Army Material Command; General Counsel of the Office of the Chief of Engineers.

(2) Department of the Navy: To the Director, Contracts Division, Bureau of Yards and Docks; the Assistant Chief for Purchasing, Bureau of Supplies and Accounts.

(3) Department of the Air Force: To the Staff Judge Advocate, Headquarters. Air Force Logistics Command.

(4) Defense Supply Agency: Counsel.

(c) Each

The

proposed determination shall have the concurrence of legal counsel within the Department concerned prior to issuance.

(d) To support correction of an allegedly erroneous bid subsequent to opening, the records submitted by the contracting officer in accordance with Departmental procedures shall contain the best available evidence conclusively establishing not only the existence of the error, but its nature, how it occurred, and what the bidder actually intended to bid. A mere statement that the administrative officials themselves are satisfied that an error was made is insufficient.

(e) In order to assure compliance with paragraph (d) of this section, suspected or alleged mistakes in bids will be processed as follows:

(1) In the case of any suspected mistake in bid, the contracting officer will immediately contact the bidder in question calling attention to the suspected mistake, and request verification of his bid. The action taken to verify bids must be sufficient to either reasonably assure the contracting officer that the bid as confirmed is without error or elicit the anticipated allegation of a mistake by the bidder. To insure that the bidder concerned will be put on notice of a mistake suspected by the contracting officer, the bidder should be advised, as is appropriate, of (i) the fact that his bid is so much lower than the other bid or bids as to indicate a possibility of error, (ii) important or unusual characteristics of the specifications, (iii) changes in requirements from previous purchases of a similar item, or (iv) such other data proper for disclosure to the bidder as will give him notice of the suspected mistake. If the bid is verified, the contracting officer will consider the

bid as originally submitted. If the time for acceptance of bids is likely to expire before a decision can be made, the contracting officer shall request all bidders whose bids may become eligible for award to extend the time for acceptance of their bids. If the bidder whose bid is believed erroneous does not grant such extension of time, the bid shall be considered as originally submitted. If a bidder alleges a mistake, the contracting officer will advise the bidder to make a written request indicating his desire to withdraw or modify the bid. The request must be supported by statements (sworn statements if possible) concerning the alleged mistake and shall include all pertinent evidence such as bidder's file copy of the bid, the original worksheets and other data used in preparing the bid, subcontractors' quotations, if any, published price lists, and any other evidence which conclusively establishes the existence of the error, the manner in which it occurred, and the bid actually intended.

(2) Where the bidder fails or refuses to furnish evidence in support of a suspected or alleged mistake, the contracting officer shall consider the bid as submitted unless the amount of the bid is so far out of line with the amounts of other bids received or with the amount estimated by the agency or determined by the contracting officer to be reasonable, or there are other indications of error so clear, as reasonably to justify the conclusion that acceptance of the bid would be unfair to the bidder or to other bona fide bidders. The attempts made to obtain the information required and the action taken with respect to the bid shall be fully documented.

(3) Where the bidder furnishes evidence in support of an alleged mistake, the contracting officer shall refer the case to the appropriate authority, together with the following data:

(i) A signed copy of the bid involved;

(ii) A copy of the invitation for bids and any specifications or drawings relevant to the alleged mistake;

(iii) An abstract or record of the bids received;

(iv) A written request by the bidder to withdraw, or modify the bid, together with the bidder's written statement and supporting evidence (such as work sheets, or other data used in preparing the bid) of the existence of the mistake and man

ner in which it occurred, and supporting evidence of the bid actually intended;

(v) A written statement by the con tracting officer setting forth (a) a de scription of the supplies or services involved, (b) the expiration date of the bid in question and of the other bid submitted, (c) specific information as t how and when the mistake was alleged (d) a summary of the evidence submitter by the bidder, (e) in the event only one bid was received, a quotation of the mos recent contract price for the supplie involved, or, in the absence of a recen contract for the item, the contracting officer's estimate of a fair price for the item, and (f) any additional evidenc considered pertinent. The statemen shall recommend that either the bid b considered for award in the form submitted, or the bidder be authorized t withdraw the bid, or the bidder be au thorized to modify the bid.

When time is of the essence because o the expiration of bids or otherwise, the contracting officer may refer the case by telegraph or telephone to the designated authority. Ordinarily, contracting of ficers will not refer mistake in bid case: by telegraph or telephone to the desig. nated authority, when the determina tions set forth in paragraph (a) (2) and (3) of this section are applicable, since actual examination is generally neces sary to determine whether the evidence presented is clear and convincing.

(f) Nothing contained in this section prevents a Department from submitting doubtful cases to the Comptroller Gen eral for advance decision.

(g) A signed copy of the administra tive determination authorizing with. drawal or modification of the bid made in accordance with paragraph (a) 0 this section shall accompany the Gen. eral Accounting Office copy of the con tract awarded. Each Department shal maintain records of all administrative determinations made in accordance with paragraph (a) of this section, together with a complete statement of the fact: involved and the action taken in each case. Copies of all administrative de terminations will be included in the con tract file.

[25 F.R. 14118, Dec. 31, 1960, as amended a 27 F.R. 3447, Apr. 11, 1962; 28 F.R. 4882 May 16, 1963; 29 F.R. 6915, May 27, 1964)

§ 2.406-4 Disclosure of mistakes after award.

(a) When a mistake in a contractor's bid is not discovered until after award, the mistake may be corrected by supplemental agreement if correcting the mistake would make the contract more favorable to the Government without changing the essential requirements of the specifications.

(b) In addition to the cases contemplated in paragraph (a) of this section, the persons enumerated in paragraph (c) of this section are authorized, without power of further redelegation, to rescind or reform contracts where the evidence is clear and convincing that:

(1) A mistake in the bid was made by the contractor,

(2) The mistake was mutual or the contracting officer was, or should have been, on notice of the error prior to the award, and

(3) It is determined that the contract price should be increased or that the contract be rescinded or the item of supply or service involved in the error should be deleted, provided that:

(i) (a) In a contract to be rescinded in its entirety, the total contract amount does not exceed $1,000,

(b) In reforming a contract any resultant deletion from the contract requirement does not reduce the contract amount by more than $1,000 or any resultant increase in price does not exceed $1,000 and does not cause the corrected price to be more than the price of the next higher bid for the supplies and services concerned, and

(ii) Notice of the mistake is received by the contracting officer prior to final payment.

(c) The authority granted in paragraph (b) of this section may be exercised by the following:

(1) Department of the Army: The Head of a Procuring Activity and, when designated, his deputy or a principal assistant in the headquarters office responsible for procurement.

(2) Department of the Navy: The Head of a Procuring Activity and, when designated, his deputy or principal assistant responsible for procurement.

(3) Department of the Air Force: The Commander, Air Force Logistics Command, with power of redelegation to Directors and Chiefs of comparable offices,

and their deputies, Headquarters, Air Force Logistics Command.

(4) Defense Supply Agency: the head of a procuring activity and, when designated, his deputy, principal assistant responsible for procurement, or Counsel.

(d) Mistakes disclosed after award shall be processed as follows:

(1) When a mistake in bid alleged or disclosed after award, the contracting officer shall advise the contractor to support the alleged error by written statements and by all pertinent evidence, such as the contractor's file copy of the bid, his original worksheets and other data used in preparing the bid, subcontractors' and suppliers' quotations, if any, published price lists, and any other material which will serve to establish the mistake, the manner in which it occurred, and the bid actually intended. (2) Where the contractor furnishes evidence in support of an alleged mistake, the case shall be forwarded through channels to the appropriate authority enumerated in paragraph (c) of this section, together with the following data:

(i) All evidence furnished by the contractor in support of the alleged error. (ii) A signed statement by the contracting officer

(a) Describing the supplies or services involved,

(b) Specifying how and when the mistake was alleged or disclosed,

(c) Summarizing the evidence submitted by the contractor and any additional evidence considered pertinent,

(d) Quoting, in cases where only one bid was received, the most recent contract price for the supplies or services involved, or in the absence of a recent contract for the item, the contracting officer's estimate of a fair price for the item,

(e) Setting forth his opinion whether a bona fide mistake was made and whether he was, or should have been, on notice of any error in the bid prior to the award, together with the reasons for or data in support of such opinion, (f) Setting forth his recommendation and the basis therefor, and

(g) Disclosing the status of performance and payments under the contract, including contemplated performance and payments, if applicable.

(iii) A signed copy of the bid involved.

(iv) A copy of the invitation for bids and any specifications or drawings relevant to the alleged mistake.

(v) An abstract or written record of the bids received.

(vi) A written request by the contractor to reform or rescind the contract.

(vii) A copy of the contract and any change orders or supplemental agreements thereto.

(e) The authorities enumerated in paragraph (c) of this section, and in the Department of the Navy field contracting officers of the Bureau of Supplies and Accounts at activities having available legal counsel representing the Office of the General Counsel, are authorized, without power of redelegation, to deny relief requested by a contractor, due to an alleged mistake regardless of the amount of relief requested where it is determined the evidence is not clear and convincing:

(1) That a mistake in bid or proposal was made by the contractor or

(2) That the mistake was mutual or the contracting officer was or should have been on notice of the error prior to the award of the contract.

(f) The contracting officer shall:

(1) Cite the administrative determination on copies of the contract modi. fication,

(2) Attach a copy of the administrative determination to the copy of the contract modification for the General Accounting Office, and

(3) Distribute such determination as may be prescribed by Departmental regulations.

(g) In all cases not covered by paragraph (a), (b), or (e) of this section, the case shall be processed in accordance with Part 17 of this chapter or, where that part is inadequate, in accordance with Departmental procedures.

[26 F.R. 9634, Oct. 12, 1961, as amended at 27 F.R. 11649, Nov. 27, 1962; 28 F.R. 4882, May 16, 1963; 29 F.R. 6915, May 27, 1964] § 2.407

Award.

§ 2.407-1 General.

Unless all bids are rejected, award shall be made by the contracting officer, within the time for acceptance specified in the bid or extension thereof, to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, price and other factors considered. If a proposed award requires approval of higher authority, such award shall not be made

been until approval has obtained. Awards shall be made by mailing or otherwise furnishing to the bidder a properly executed award document (see Subpart A, Part 16 of this subchapter) or notice of award on such form as may be prescribed by the procuring activity. When a notice of award is issued, it shall be followed as soon as possible by the formal award. When more than one award results from any single invitation for bids, separate award documents shall be executed, each suitably numbered. When an award is made to a bidder for less than all the items which may be awarded to that bidder and additional items are being withheld for subsequent award, the first award to that bidder shall state that the Government may make subsequent awards on such additional items within the bidder's bid acceptance period. When two or more awards are made to a single bidder on an invitation, the copy of the successful bid marked "original" will be attached to the General Accounting Office copy and a copy marked "duplicate" will be attached to the retained office copy of the first award issued, and succeeding awards will be inscribed to indicate the number of the award to which the original and duplicate bids are attached. This is necessary for legal review and auditing in the General Accounting Office. All provisions of the invitation for bids, including any acceptable additions or changes made by a bidder in the bid, shall be clearly and accurately set forth (either expressly or by reference) in the award document, since the award is an acceptance of the bid, and the bid and the award constitute the contract.

§ 2.407-2 Responsible bidder.

Before awarding the contract, the contracting officer shall determine that a prospective contractor is responsible (see Subpart I, Part 1 of this subchapter).

(1) The place of delivery, inspection, and acceptance in relation to the place of payment of invoices or vouchers;

(2) The number of days required to process invoices or vouchers from receipt through payment in the normal course of business; and

(3) The need for prolonged acceptance testing or other unusual circumstances tending to retard the normal processing of invoices or vouchers.

Generally, the minimum period will be expressed in multiples of ten days; e.g., "ten calendar days," "twenty calendar days," or "thirty calendar days," since these time intervals coincide with the discount terms generally offered by industry.

(b) In determining which of several bids received is the lowest, any discount offered shall be deducted from the bid price on the assumption that the discount will be taken, unless discount offered is for a lesser period than the minimum number of days specified in the invitation for bids (see paragraph (a) of this section). In evaluating equal bids offering discounts meeting the minimum discount period required by the invitation, a bid offering a longer discount period shall not be considered as being more advantageous to the Government. If a bid offers a prompt payment discount, but fails to specify the period in which the discount may be taken, the discount may be considered since award to the bidder gives the Government the right to deduct the discount from any payments made with reasonable prompt

ness.

(c) If a bid offers a prompt discount for a period less than that specified in the schedule, the discount shall not be considered in the evaluation of bids. If a bid would have been the lowest bid received if the discount offered were considered, but award is not made thereon because the offered discount cannot be considered, a notation to that effect shall be made upon the abstract or record of bids and on Standard Form 1036 (Statement and Certificate of Award) (see § 2.407-7).

(d) In any case, the offered discount of the successful bidder shall form a part of the award, whether or not such discount was considered in the evaluation of his bid, and such discount shall be taken

if payment is made within the discount period.

[25 F.R. 14118, Dec. 31, 1960, as amended at 27 F.R. 1694, Feb. 22, 1962]

§ 2.407-4 Price escalation.

(a) Where an invitation for bids does not contain a price escalation clause, bids received which quote a price and contain a price escalation provision, with a ceiling (usually expressed in terms of a maximum percentage increase) above which the price will not escalate, will be evaluated on the maximum possible escalation of the quoted base price. Bids which contain escalation with no ceiling shall be rejected unless a clear basis for evaluation exists.

(b) Where an invitation for bids contains a price escalation clause and no bidder takes exception to the escalation provisions, bids shall be evaluated on the basis of the quoted prices without the allowable escalation being added. Where a bidder increases the maximum percentage of escalation stipulated in the invitation for bids or limits the downward escalation provisions of the invitation, the bid will be rejected as nonresponsive. Where a bidder deletes the escalation clause from his bid, the bid will be rejected as nonresponsive since the downward escalation provisions are thereby limited. Where a bidder decreases the maximum percentage of escalation stipulated in the invitation for bids, the bid shall be evaluated at the base price on an equal basis with bids that do not reduce the stipulated ceiling. However, if after evaluation, the bidder offering the lower ceiling is in a position to receive the award, the award shall reflect the lower ceiling.