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ing officer has reason to believe that a mistake may have been made, he shall request from the bidder a verification of the bid, calling attention to the suspected mistake. If the bidder alleges a mistake, the matter shall be processed in accordance with this g 1-2.406. Such actions shall be taken prior to award.

$ 1-2.406-2 Apparent clerical mistakes.

Any clerical mistake, apparent on the face of a bid, may be corrected by the contracting officer prior to award, if the contracting officer has first obtained from the bidder verification of the bid actually intended. Examples of such apparent mistakes are: obvious misplacement of a decimal point; obvi. ously incorrect discounts (for example, 1 percent 10 days, 2 percent 20 days, 5 percent 30 days); obvious reversal of the price f.o.b. destination and the price f.o.b. origin; and obvious mistake in designation of unit. Correction shall be reflected in the award document.

(3) A determination may be made permitting the bidder to correct his bid where the bidder requests permission to do so and clear and convincing evidence establishes both the existence of a mistake and the bid actually intended. However, if such correction would result in displacing one or more lower acceptable 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 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) If the evidence does not warrant a determination under paragraphs (a) (1), (2), or (3) of this section, a determination may be made that a bidder may neither withdraw nor correct his bid.

(b) Heads of executive agencies may delegate to a central authority in their agencies, without power of redelegation, authority to make the determinations under paragraphs (a) (2), (3), and (4) this section. The authority to my determinations to permit withdrawal of bids as provided in paragraphs (a) (1) and (3) of this section may be delegated, without power of redelegation, to any purchasing activity having legal counsel available.

(c) Each proposed determination shall be approved by the agency's General Counsel, Associate General Counsel, an Assistant General Counsel, or other comparable legal officer. However, authority to approve determinations to allow withdrawal of bids pursuant to paragraphs (a) (1) and (3) of this section may be delegated to the legal counsel of purchasing activities.

(d) Suspected or alleged mistakes shall be processed as follows:

(1) Whenever the contracting officer suspects that a mistake may have been made in a bid, he shall immediately request the bidder to verify the bid. Such request shall inform the bidder why the request for verification is made-that a mistake is suspected and the basis for such suspicion; e.g., that the bid is significantly out of line with the next low or other bids or with the

$ 1-2.406-3 Other mistakes disclosed

before award. (a) Heads of executive agencies are authorized, in order to minimize delay in contract awards, to make the ad. ministrative determinations described below in connection with mistakes in bids alleged after opening of bids and before award. The authority contained herein to permit correction of bids is limited to bids which, as submitted, are responsive to the invitation for bids, and may not be used to permit correction of bids to make them responsive. This authority is in addition to that in § 1-2.406-2 or that which may be otherwise available.

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

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

ake

Government's estimate. If the time for officer's estimate of a fair price for the acceptance of bids is likely to expire supplies or services and the basis for before a decision can be made, the such estimate; contracting officer shall request all (E) Any additional evidence considbidders whose bids may become eligi- ered pertinent including copies of all ble for award to extend the time for correspondence between the contractacceptance of their bids. If the bidder ing officer and the bidder concerning whose bid is believed erroneous does the alleged mistake; and not grant such extension of time and a

(F) The course of action with respect decision cannot be reached before ex

to the bid that the contracting officer piration of the time for acceptance,

considers proper on the basis of the even if handled by telegraph or tele.

evidence. phone as provided in subparagraph (4)

(4) When time is of the essence, beof this paragraph, the bid shall be con

cause of the expiration of bids or othsidered as originally submitted.

erwise, the contracting officer may (2) If the bidder verifies his bid, the

refer the case by telegraph or telecontracting officer shall consider it as

phone to the designated authority. Or. originally submitted. If the bidder al.

dinarily, however, contracting officers leges a mistake, the contracting officer

will not refer mistake in bid cases to shall advise him to support his allegation by statements concerning the al.

the designated authority by telegraph leged mistake and by all pertinent evi.

or telephone, particularly when the dence, such as the bidder's file copy of

determinations set forth in paragraph the bid. his original worksheets and (a) (2) and (3) of this section are appliother data used in preparing the bid. cable, since actual examination of the subcontractors' and suppliers' quota evidence is generally necessary to detions, if any, published price lists, and termine the proper action to be taken. any other evidence which will serve to (5) Where the bidder fails or refuses establish the mistake, the manner in to furnish evidence in support of a suswhich it occurred, and the bid actually pected or alleged mistake, the conintended.

tracting officer shall consider the bid (3) Where the bidder furnishes evi. as submitted unless the amount of the dence in support of an alleged mis bid is so far out of line with the take, the case shall be referred to the amounts of other bids received or with appropriate authority together with the amount estimated by the agency the following data:

or determined by the contracting offi. (i) All evidence furnished by the cer to be reasonable, or there are bidder.

other indications of error so clear, as (ii) A copy of the bid, of the invita reasonably to justify the conclusion tion for bids, and any specifications or that acceptance of the bid would be drawings relevant to the alleged mis- unfair to the bidder or to other bona take.

fide bidders, in which case it may be (iii) An abstract or record of the bids rejected. The attempts made to obtain received.

the information required and the (iv) A written statement by the con action taken with respect to the bid tracting officer setting forth

shall be fully documented. (A) The expiration date of the bid in (e) Nothing contained in this § 1question and of the other bids submit- 2.406-3 shall deprive the Comptroller ted;

General of his statutory right to ques(B) Specific information as to how tion the correctness of any administraand when the mistake was alleged; tive determination made hereunder

(C) A summary of the evidence sub nor deprive any bidder of his right to mitted by the bidder;

have the matter determined by the (D) In the event only one bid was re- Comptroller General should he so received, a quotation of a recent con quest. All doubtful cases shall be subtract price for the supplies or services mitted to the Comptroller General for involved, or, in the absence of a recent advance decision in accordance with comparable contract, the contracting agency procedures.

(f) Each agency shall maintain rec- that the unilateral mistake made by ords of all administrative determina- the contractor was so apparent as to tions made in accordance with this g1- have charged the contracting officer 2.406-3, the facts involved, and the with notice of the probability of the action taken in each case. Copies of all mistake. If the evidence does not warsuch administrative determinations rant a determination under paragraph shall be included in the case file. (b)(1) or (b)(2) of this section, a deterWhere a contract is awarded, the Gen mination may be made that no change eral Accounting Office copy of the

shall be made in the contract as contract, wherever filed, shall be ac

awarded. companied by a signed copy of any re (d) Heads of executive agencies may lated determination.

delegate to one central authority only (29 FR 10141, July 24, 1964, as amended at in their agencies, without power of re41 FR 27725, July 6, 1976)

delegation, authority to make the de

terminations under this § 1-2.406-4. $ 1-2.406-4 Disclosure of mistakes after

(e) Each proposed determination award.

shall be approved by the agency's (a) When a mistake in a contractor's General Counsel, Associate General bid is not discovered until after the Counsel, and Assistant General Counaward, the mistake may be corrected sel, or other comparable legal officer. by contract amendment or supplemen (f) Mistakes disclosed after award tal agreement if correcting the mis- shall be processed as follows: take would make the contract more fa (1) Whenever a mistake in bid is alvorable to the Government without ledged or disclosed after award, the changing the essential requirements of contracting officer shall advise the the contract.

contractor to support the alleged error (b) In addition to the cases contem. by written statements and by all perti. plated in (a) of this g 1-2.406-4, heads nent evidence, such as the contractor's of executive agencies are authorized, file copy of the bid, his original workunder the circumstances set forth in sheets and other data used in prepar(c) of this § 1-2.406-4, to make the ad

ing the bid, subcontractors' and suppliministrative determinations described ers' quotations (if any), published below in connection with mistakes in

price lists, and any other evidence bids alleged or disclosed after award.

which will serve to establish the misThis authority is in addition to that

take, the manner in which it occurred, provided by Pub. L. 85-804 (50 U.S.C.

and the bid actually intended. 1431-1435) (see Part 1-17), or that

(2) Where the contractor furnishes which may be otherwise available.

evidence in support of an alleged mis(1) A determination may be made to

take, the case shall be referred to the rescind a contract where the original

appropriate authority together with contract price does not exceed $10,000.

the following data: (2) A determination may be made to

(i) All evidence furnished by the conreform a contract, irrespective of

tractor. amount, (i) to delete the item or items involved in the mistake where such de

(ii) A copy of the contract, including letion does not reduce the contract

a copy of the bid and any specifica

tions or drawings relevant to the alprice by more than $10,000, or (ii) to increase the price where such increase

leged mistake, and any change orders

or supplemental agreements thereto. does not exceed $10,000 and if the contract price, as corrected, does not

(iii) An abstract or record of the bids exceed that of the next lowest accept

received. able bid under the original invitation

(iv) A written statement by the confor bids.

tracting officer setting forth(c) Determinations under (b) of this (A) Specific information as to how § 1-2.406-4 may be made only on the and when the mistake was alleged or basis of clear and convincing evidence disclosed; that a mistake in bid was made, and (B) A summary of the evidence subeither that the mistake was mutual or mitted by the contractor;

(C) His opinion whether a bona fide (29 FR 10141, July 24, 1964, as amended at mistake was made in the bid and 41 FR 27726, July 6, 1976) whether he was, or should have been, on constructive notice of the mistake

§ 1-2.407 Award. before the award, together with the

8 1-2.407-1 General. reasons or data upon which his opinion is based;

(a) Unless all bids are rejected, (D) In the event only one bid was re

award shall be made by the contractceived, a quotation of a recent con

ing officer by written notice, within tract price for the supplies or services

the time for acceptance specified in involved or, in the absence of a recent

the bid or extension thereof, to that comparable contract, the contracting

responsible bidder whose bid, conformofficer's estimate of a fair price for the

ing to the invitation for bids, will be supplies or services, and the basis for

most advantageous to the Govern

ment, price and other factors considsuch estimate; (E) Any additional evidence consid

ered. (For discussion of other factors

to be considered, see § 1-2.407-5.) ered pertinent, including copies of all relevant correspondence between the

Award shall not be made until all recontracting officer and the contractor

quired approvals have been obtained.

(b) If less than three bids have been concerning the alleged mistake;

received, the contracting officer shall (F) The course of action with respect

examine, to the extent deemed approto the alleged mistake that the con

priate in accordance with agency protracting officer considers proper on

cedures, the reasons for the small the basis of the evidence, and, if other

number of bids received. The purpose than a change in contract price is rec

of this examination is to ascertain ommended, the manner by which the

whether the small number of reitem will otherwise be procured; and

sponses is attributable to an absence (G) The status of performance and

of any of the prerequisites of formal payments under the contract, includ

advertising. (For discussion of the preing contemplated performance and

requisites of formal advertising, see payments.

§ 1-2.101.) Award shall be made; how(g) Nothing contained in this 81

ever, the record of the invitation for 2.406-4 shall deprive the Comptroller bids (see § 1-2.204) shall include a recGeneral of his statutory right to ques

ommendation by the contracting offition the correctness of any administra- cer for corrective action which should tive determination made hereunder be taken to increase competition in nor deprive any contractor of his right future procurements of the same or to have the matter determined by the similar items. Comptroller General should he so re

(c) Award shall be made by mailing quest.

or otherwise furnishing to the success(h) Each agency shall maintain rec- ful bidder a properly executed award ords of all administrative determina

document or notice of award. When an tions made in accordance with this § 1

advance notice of award is issued, it 2.406-4, the facts involved, and the shall be followed as soon as possible by action taken in each case. A copy of

the formal award. When more than the determination shall be attached to one award results from any single invi. each copy of any contract rescission or tation for bids, separate award docureformation resulting therefrom.

ments shall be executed, each suitably (i) Where administrative determina numbered. When an award is made to tion is precluded by the limitations set a bidder for less than all of the items forth in this section, the matter will which may be awarded to that bidder be submitted to the Comptroller Gen and additional items are being witheral for decision in accordance with held for subsequent award, the first agency procedures.

award to that bidder shall state that (j) Nothing contained in this $1- the Government may make subse2.406-4 prevents an agency from sub- quent awards on those additional mitting doubtful cases to the Comp items within the bidder's bid accepttroller General.

ance period. All provisions of the invi

tation for bids, including any accept- (b) In determining which of several able additions or changes made by a bids received is the lowest, any disbidder in the bid, shall be clearly and count offered shall be deducted from accurately set forth (either expressly the bid price on the assumption that or by reference) in the award docu the discount will be taken, unless the ment, since the award is an acceptance discount offered is for a lesser period of the bid, and the bid and the award than the minimum number of days constitute the contract.

specified in the invitation for bids. (40 FR 2811, Jan. 16, 1975)

(See § 1-2.407-3(a).) In evaluating

equal bids offering discounts meeting $ 1-2.407-2 Responsible bidder-reason the minimum discount period required ableness of price.

by the invitation, a bid offering a Before awarding the contract, the

longer discount period shall not be contracting officer shall determine

considered as being more advantathat a prospective contractor is re geous to the Government. If a bid sponsible (see Subpart 1-1.12) and offers a prompt payment discount, but that the prices offered are reasonable. fails to specify the period in which the The price analysis techniques set discount may be taken, the discount forth in g 1-3.807-2(b)(1) may be used may be considered since award to the as guidelines, where appropriate, but bidder gives the Government the right determination in each case shall be to deduct the discount from any pay. made in the light of all prevailing cir. ment made with reasonable promptcumstances. Particular care must be ness. taken in cases where only a single bid (c) If a bid offers a prompt payment is received.

discount for a period less than that (36 FR 17421, Aug. 31, 1971)

specified in the invitation for bids, the

discount shall not be considered in the 8 1-2.407-3 Discounts.

evaluation of bids. If a bid would have (a) Prior to issuing an invitation for

been the lowest bid received if the disbids (except one for construction), a

count offered were considered, but determination shall be made as to

award is not made thereon because the what minimum period for prompt pay

offered discount cannot be considered, ment discounts will be considered in

a notation to that effect shall be made the evaluation of bids and such mini upon the abstract or record of bids mum period shall be stated in the invi and on Standard Form 1036 (Statetation for bids. In determining the ment and Certificate of Award) if used minimum period for a particular pro (see § 1-2.407-7), curement, consideration shall be given (d) In any case, the offered discount

of the successful bidder shall form a (1) The place of delivery, inspection, part of the award, whether or not and acceptance in relation to the place such discount was considered in the of payment of invoices or vouchers. evaluation of its bid, and such dis

(2) The number of days required to count shall be taken if payment is process invoices or vouchers from re made within the discount period. ceipt through payment in the normal course of business.

§ 1-2.407-4 Price escalation. (3) The need for prolonged accept (a) Where an invitation for bids does ance testing or other unusual circum

not contain a price escalation clause, stances tending to retard the normal

bids received which quote a price and processing of invoices or vouchers. contain a price escalation provision, Generally, the minimum period will be with a ceiling (usually expressed in expressed in multiples of ten days; terms of a maximum percentage ine.g., "ten calendar days," "twenty cal crease) above which the price will not endar days," or "thirty calendar days," escalate, will be evaluated on the since these time intervals coincide maximum possible escalation of the with the discount terms generally of quoted base price. Bids which contain fered by industry.

escalation with no ceiling shall be re

to:

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