time for acceptance of their bids. If the bidder whose bid is believed erroneous does not grant such extension of time and a decision cannot be reached before expiration of the time for acceptance. even if handled by telegraph or telephone as provided in subparagraph (4) of this paragraph, the bid shall be considered as originally submitted.

(2) If the bidder verifies his bid, the contracting officer shall consider it as originally submitted. If the bidder alleges a mistake, the contracting officer shall advise him to support his allegation by statements concerning the alleged mistake and by all pertinent evidence, such as the bidder'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.

(3) Where the bidder 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 bidder.

(ii) A copy of the bid, 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 statement by the contracting officer setting forth

(A) The expiration date of the bid in question and of the other bids submitted;

(B) Specific information as to how and when the mistake was alleged;

(C) A summary of the evidence submitted by the bidder;

(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 correspondence between the contracting officer and the bidder concerning the alleged mistake; and

(F) The course of action with respect to the bid that the contracting officer considers proper on the basis of the evidence.

(4) When time is of the essence, because of the expiration of bids or otherwise, the contracting officer may refer the case by telegraph or telephone to the designated authority. Ordinarily, however, contracting officers will not refer mistake in bid cases to the designated authority by telegraph or telephone, particularly when the determinations set forth in paragraph (a) (2) and (3) of this section are applicable, since actual examination of the evidence is generally necessary to determine the proper action to be taken.

(5) Where the bidder falls 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 pid would be unfair to the bidder or to other bona fide bidders, in which case it may be rejected. The attempts made to obtain the information required and the action taken with respect to the bid shall be fully documented.

(e) Nothing contained in this § 1-2.406-3 shall deprive the Comptroller General of his statutory right to question the correctness of any administrative determination made hereunder nor deprive any bidder of his right to have the matter determined by the Comptroller General should he so request. All doubtful cases shall be submitted to the Comptroller General for advance decision in accordance with agency procedures.

(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 inIcluded 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.

129 FR 10141, July 24, 1964, as amended at 41 FR 27725, July 6, 1976] § 1-2.406-4 award.

Disclosure of mistakes after

(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. 14311435) (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 contrator 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 pay

tive 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 § 1-2.406-4, 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.

(1) 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 § 1-2.406-4 presents 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]

(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 docu

ment 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 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.

[40 FR 2811, Jan. 16, 1975]

§ 1-2.407-2 Responsible sonableness of price.

bidder-rea

Before awarding the contract, the contracting officer shall determine that a prospective contractor is responsible (see Subpart 1-1.12) and that the prices offered are reasonable. The price analysis techniques set forth in § 1-3.807-2(b) (1) may be used as guidelines, where appropriate, but determination in each case shall be made in the light of all prevailing circumstances. Particular care must be taken in cases where only a single bid is received.

(36 F.R. 17421, Aug. 31, 1971] § 1-2.407-3 Discounts.

(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 promptness.

(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 contai. a price escalation provision, with a celling (usually expressed in terms of 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 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.

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) Certified-eligible concerns with a first preference (as defined in § 1-1.8011(a)) that are also small business concerns (as defined in Subpart 1-1.7).

(2) Other certified-eligible concerns with a first preference.

(3) Certified-eligible concerns with a second preference (as defined in § 1-1.801(b)) that are also small business

concerns.

(4) Other certified-eligible concerns with a second preference.

(5) Persistent or substantial labor surplus area concerns (as defined in § 1-1.801-1(c)) that are also small business concerns.

(6) Other persistent or substantial labor surplus area concerns.

(7) Other small business concerns.
(8) 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 F.R. 10141, July 24, 1964, as amended at 35 F.R. 8485, June 2, 1970]

used for this purpose. Where the preparation of Standard 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 specifices 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 Protests 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