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(f) Each agency shall maintain records of all administrative determinations made in accordance with this § 12.406-3, the facts involved, and the action taken in each case. Copies of all such administrative determinations shall be included in the case file. Where a contract is awarded, the General Accounting Office copy of the contract, wherever filed, shall be accompanied by a signed copy of any related determination.

[29 FR 10141, July 24, 1964, as amended at 41 FR 27725, July 6, 1976]

§ 1-2.406-4 Disclosure of mistakes after award.

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

(b) In addition to the cases contemplated in (a) of this § 1-2.406-4, heads of executive agencies are authorized, under the circumstances set forth in (c) of this § 1-2.406-4, to make the administrative determinations described below in connection with mistakes in bids alleged or disclosed after award. This authority is in addition to that provided by Pub. L. 85-804 (50 U.S.C. 1431-1435) (see Part 1-17), or that which may be otherwise available.

(1) A determination may be made to rescind a contract where the original contract price does not exceed $10,000.

(2) A determination may be made to reform a contract, irrespective of amount, (i) to delete the item or items involved in the mistake where such deletion does not reduce the contract price by more than $10,000, or (ii) to increase the price where such increase does not exceed $10,000 and if the contract price, as corrected, does not exceed that of the next lowest acceptable bid under the original invitation for bids.

(c) Determinations under (b) of this § 1-2.406-4 may be made only on the basis of clear and convincing evidence that a mistake in bid was made, and either that the mistake was mutual or

that the unilateral mistake made by the contractor was so apparent as to have charged the contracting officer with notice of the probability of the mistake. If the evidence does not warrant a determination under paragraph (b)(1) or (b)(2) of this section, a determination may be made that no change shall be made in the contract as awarded.

(d) Heads of executive agencies may delegate to one central authority only in their agencies, without power of redelegation, authority to make the determinations under this § 1-2.406-4.

(e) Each proposed determination shall be approved by the agency's General Counsel, Associate General Counsel, and Assistant General Counsel, or other comparable legal officer. (f) Mistakes disclosed after award shall be processed as follows:

(1) Whenever a mistake in bid is alledged 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 evidence 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 referred to the appropriate authority together with the following data:

(i) All evidence furnished by the contractor.

(ii) A copy of the contract, including a copy of the bid and any specifications or drawings relevant to the alleged mistake, and any change orders or supplemental agreements thereto.

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

(iv) A written statement by the contracting officer setting forth

(A) Specific information as to how and when the mistake was alleged or disclosed;

(B) A summary of the evidence submitted by the contractor;

(C) His opinion whether a bona fide mistake was made in the bid and whether he was, or should have been, on constructive notice of the mistake before the award, together with the reasons or data upon which his opinion is based;

(D) In the event only one bid was received, a quotation of a recent contract price for the supplies or services involved or, in the absence of a recent comparable contract, the contracting officer's estimate of a fair price for the supplies or services, and the basis for such estimate;

(E) Any additional evidence considered pertinent, including copies of all relevant correspondence between the contracting officer and the contractor concerning the alleged mistake;

(F) The course of action with respect to the alleged mistake that the contracting officer considers proper on the basis of the evidence, and, if other than a change in contract price is recommended, the manner by which the item will otherwise be procured; and

(G) The status of performance and payments under the contract, including contemplated performance and payments.

(g) Nothing contained in this § 12.406-4 shall deprive the Comptroller General of his statutory right to question the correctness of any administrative determination made hereunder nor deprive any contractor of his right to have the matter determined by the Comptroller General should he so request.

(h) Each agency shall maintain records of all administrative determinations made in accordance with this § 12.406-4, the facts involved, and the action taken in each case. A copy of the determination shall be attached to each copy of any contract rescission or reformation resulting therefrom.

(i) Where administrative determination is precluded by the limitations set forth in this section, the matter will be submitted to the Comptroller General for decision in accordance with agency procedures.

(j) Nothing contained in this § 12.406-4 prevents an agency from submitting doubtful cases to the Comptroller General.

[29 FR 10141, July 24, 1964, as amended at 41 FR 27726, July 6, 1976]

§ 1-2.407 Award.

§ 1-2.407-1 General.

(a) Unless all bids are rejected, award shall be made by the contracting officer by written notice, 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. (For discussion of other factors to be considered, see § 1-2.407-5.) Award shall not be made until all required approvals have been obtained.

(b) If less than three bids have been received, the contracting officer shall examine, to the extent deemed appropriate in accordance with agency procedures, the reasons for the small number of bids received. The purpose of this examination is to ascertain whether the small number of responses is attributable to an absence of any of the prerequisites of formal advertising. (For discussion of the prerequisites of formal advertising, see § 1-2.101.) Award shall be made; however, the record of the invitation for bids (see § 1-2.204) shall include a recommendation by the contracting officer for corrective action which should be taken to increase competition in future procurements of the same or similar items.

(c) Award shall be made by mailing or otherwise furnishing to the successful bidder a properly executed award document or notice of award. When an advance 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 of 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 those additional items within the bidder's bid acceptance period. All provisions of the invi

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(a) Prior to issuing an invitation for bids (except one for construction), a determination shall be made as to what minimum period for prompt payment discounts will be considered in the evaluation of bids and such minimum period shall be stated in the invitation for bids. In determining the minimum period for a particular procurement, consideration shall be given to:

(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.

(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 the discount offered is for a lesser period than the minimum number of days specified in the invitation for bids. (See § 1-2.407-3(a).) 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 payment made with reasonable prompt

ness.

(c) If a bid offers a prompt payment discount for a period less than that specified in the invitation for bids, 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) if used (see § 1-2.407-7).

(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 its bid, and such discount shall be taken if payment is made within the discount period.

§ 1-2.407-4 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 re

jected 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 its 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.

§ 1-2.407-5 Other factors to be considered. The factors set forth in paragraphs (a) through (f), of this section, among others, may be for consideration in evaluating bids for award.

(a) Foreseeable costs or delays to the Government resulting from differences in inspection, location of supplies, transportation, etc.

(b) Changes made or requested by the bidder in any of the provisions of the invitation for bids to the extent that any such change does not constitute ground for rejection of the bid under the provisions of § 1-2.404.

(c) Advantages or disadvantages to the Government that might result from making more than one award.

(d) Qualified products (see Subpart 1-1.11).

(e) Local, State, and Federal taxes (see Part 1-11).

(f) Origin of supplies, whether domestic or foreign, and, if foreign, the application of the Buy American Act or any other prohibition on foreign purchases (see Part 1-6).

§ 1-2.407-6 Equal low bids.

(a) In furtherance of the small business and labor surplus area policies set forth in Subparts 1-1.7 and 1-1.8, award shall be made in accordance with the following order of priority when two or more low bids are equal in all respects (taking into consideration cost of transportation, cash discounts, and any other factors properly to be considered):

(1) Small business concerns which are also labor surplus area concerns.

(2) Other small business concerns. (3) Other concerns which are also labor surplus area concerns.

(4) Other concerns.

(b) If the application of (a) of this § 1-2.407-6 results in two or more bidders being eligible for award and such bidders are not small business concerns, the award shall be made to the bidder who will make the most extensive use of small business subcontractors. If two or more bidders still remain equally eligible for award, award shall be made by a drawing by lot limited to such bidders. If time permits, the bidders involved shall be given an opportunity to be present at the drawing by lot. Such drawing shall be witnessed by at least three persons, and the contract file shall contain the names and addresses of those witnesses.

(c) In each award where preference is to be given under this section, the contracting officer shall, prior to award, obtain from such concern a written statement that it will perform, or cause to be performed, the contract in accordance with the circumstances justifying the priority.

[29 FR 10141, July 24, 1964, as amended at 35 FR 8485, June 2, 1970; 43 FR 26011, June 16, 1978]

§ 1-2.407-7 Statement and certificate of award.

(a) In connection with each contract made by formal advertising, the contracting officer shall include in the contract file evidence of compliance with § 1-2.103. Where required by agency procedures, Standard Form 1036 (Statement and Certificate of Award) may be used for this purpose. Where the preparation of Standard

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Form 1036 is not required, information of a similar nature shall be filed with the General Accounting Office copy of the contract.

(b) The certificate shall either state that the accepted bid was the lowest bid received, or list all lower bids and set forth reasons for their rejection. These reasons shall be set forth in such detail as is necessary to justify the award. For the purpose of this certificate, the lowest bid received is considered to be that bid which is lowest after a consideration of price factors only. The cost of transportation to the destination indicated in the invitation for bids, any acceptable discount offered by a bidder, and if the invitation so specifies any other Government cost factor, shall be considered price factors in determining the lowest bidder for purposes of this certificate. In each case where an award is made after receipt of equal low bids, the certificate shall set forth the manner in which the tie was broken. Where an award involves a mistake in bid and the matter has been resolved by administrative action, a copy of the bidder's verification in the case of an apparent mistake, or the written administrative determination concerned,

shall be attached to the certificate. Where an award involves a mistake in bid on which the Comptroller General has rendered a decision, the certificate shall contain a citation by number and date of the decision and a copy thereof shall be attached to the certificate.

[29 FR 10141, July 24, 1964, as amended at 40 FR 2812, Jan. 16, 1975]

§ 1-2.407-8 Protects against award.

(a) General. (1) Contracting officers shall consider all protests or objections regarding the award of a contract, whether submitted before or after award. If the protest is oral and the matter cannot otherwise be resolved, written confirmation of the protest shall be requested. The protester shall be notified in writing of the final decision on the written protest (see § 1-1.703-2 for protests regarding small business status). An interested party wishing to protest to the Comptroller General of the United States against an award of a

contract should do so in accordance with General Accounting Office Regulations (4 CFR Part 20).

(2) Where a protest, before or after award, has been lodged with the General Accounting Office (GAO) and the contracting agency is requested to submit a report, such report should include:

(i) A copy of the protest;

(ii) A copy of the bid submitted by the protesting bidder and a copy of the bid of the bidder who is being considered for award, or whose bid is being protested;

(iii) A copy of the invitation for bids, including the specifications or portions thereof, relevant to the protest;

(iv) A copy of the abstract of bids or relevant portions thereof;

(v) Any other documents which are relevant to the protest; and

(vi) A statement setting forth findings, actions, and recommendations in the matter together with any additional evidence or information deemed necessary in determining the validity of the protest. The statement shall be fully responsive to the allegations of the protest. If the award was made after receipt of the protest, the report will include the determination quired in § 1-2.407-8(b)(4).

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(3) In appropriate cases, other persons, including bidders, involved in or affected by the protest shall be given notice of the protest and the basis therefor. They shall also be advised that, if they wish, they may submit their views and relevant information on the protest to the contracting officer within a specified period of time, normally within 1 week. In addition, if the protest has been lodged with GAO, they should be further advised that copies of such submissions should be furnished directly to GAO.

(4) Timely action on protests is essential to avoid undue delay in procurements and to ensure fair treatment to protesting firms and individuals. Accordingly, protests should be handled on a priority basis. Upon receipt of informal advice that a protest has been lodged with GAO, the contracting agency shall immediately begin compiling the information necessary for a report to GAO. This will

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