Kennedy How on Friday,
May 12, 2000 - 01:06 pm:
Your citation of the Cromartie case situation is a near
duplicate of a situation my activity had in the early '80s.
Sealed Bid, under the DAR. Low bidder was "out of line" with the
others. Bidder provided verification numerous times in writing
that his bid was correct. (Since it wasn't my buy action, I
don't recall if he also submitted paperwork to back it up.)
Contract was awarded to low bidder. Yup, you guessed it. Down
the road, he alleges mistake in bid, wants out. PCO says no, you
confirmed your bid in writing numerous times, and proceeded to
T4D. Contractor appealed the PCO Final Decision to ASBCA, citing
"PCO SHOULD HAVE KNOWN my bid was a mistake, no matter what I
said in writing, or how many times I said it."
Unfortunately, I was not able to follow the case very closely,
but my guess was that it turned into a T4C. This kind of
conversion was common for us back then, we lost a lot of T4D
decisions. The reason why I remember this was because we
discussed this amongst ourselves, and that the PCO was in a "no
win" situation, it would have been either protested if we threw
out the low, or we'd have to Terminate because our feeling was
that the bidder wasn't totally correct in his price.
Finally, if the PCO does pursue a responsibility determination,
and SBA does grant a CoC, and the bidder then refuses to
perform, things get even stickier.
on Thursday, May 11, 2000 - 08:19 pm:
Eric, et al.:
Historically, bid verification literally meant asking the low
bidder to confirm that the bid it submitted was the bid it had
intended to submit. I started out in procurement doing sealed
bidding (then called "formal advertising"). We used to call the
low bidder and ask it to confirm or "verify" its bid. The bidder
either did confirm or verify, in which case we made an award
without further inquiry or checked its finances, or it asserted
a mistake, in which case we went through the mistake procedure.
I'll be honest--that's what I meant. I never contemplated a
request for documentation in support of the bid actually
intended when the bidder confirmed (verified) its bid. In the
old days, if the bidder confirmed (verified) a low bid it was
fine with us, as long as he had enough money to do the job. If
he was willing to live with a mistake it was no skin off our
nose as long as he could absorb the loss.
In Cromartie and Breakfield the GAO cited FAR 14.407-3(g)(5) as
authority to reject a bid when, despite the bidder's
confirmation (verification), the CO thinks the bid was submitted
in error. The rule seems to apply only when (1) the bidder
refuses to provide proof that the bid was not in error and (2)
the evidence of error is "so clear" as to make acceptance of the
bid "unfair" to the bidder or other bidders. It appears that
this requires the CO to require proof, not mere confirmation
(verification), when a bid appears to be seriously in error. I
admit that I had not contemplated this.
I cannot recall whether the rule now in FAR 14.407-3(g)(5) was
part of the old ASPR/DAR or FPR or not, or whether it was in the
first edition of the FAR or added later. (You cannot tell by
looking at the archived on-line FAR.)
In any event, the GAO's long-standing position has been that a
CO cannot reject a sealed bid or fixed-price proposal just
because he or she thinks it's too low. The GAO has long held
that a below-cost fixed-price bid or proposal is a matter of
financial responsibility, which means that if the bidder is a
small business a COC-referral will be required if the CO
determines the bidder or offeror to be nonresponsible. That is
the basis for my criticism of the answer provided by Ask A
Professor. The rule in FAR 14.407-3(g)(5) appears to be a
limited exception to the GAO's long-standing rule. It allows a
CO under certain conditions to reject a suspected mistakenly
low bid, as opposed to an intentionally below-cost bid,
without making a determination of nonresponsibility.
Eric Ottinger on
Thursday, May 11, 2000 - 07:01 pm:
It should be noted that there are two different Cromartie cases
with different outcomes. It is suggestive and interesting that
the Navy refused to return Cromartie’s phone calls.
For a moment it looked like Vern might be a fallible Professor,
one of those who sometimes gives misleading answers, like some
I hauled out my handy-dandy dictionary and discovered that the
word “verify” has two related but distinctly different meanings.
Verify can mean attest (i.e. “to confirm or substantiate in law
by oath”) or verify can mean validate (i.e. “to establish the
truth, accuracy, or reality of”).
Now I know that Vern always prefers the most exacting, legal use
of a term, but in this case, I assume that he correctly opted
for the vulgar and common usage. In any case, it is clear from
the case law that the verification should be supported by some
credible details and analysis. It won’t do for the offeror to
merely reply, “Yes, I really did intend to bid that ridiculous
The discussion in Cibinic and Nash is in many ways excellent,
but it doesn’t really indicate what kind of verification is
expected. I fear some of our 1102 colleagues will merely ask the
offeror to attest that he really meant to bid the extremely low
price. After the offeror “verifies” that he really did intend to
bid low, my 1102 colleague may think there is nothing to do but
pursue a responsibility determination.
Actually, if the bid is extremely low and the offeror is clearly
clueless, the correct thing to do is to award to another offeror.
Do not pass Go. Do not waste time on a responsibility
determination. (Read the cases. No responsibility determination
was mentioned or expected for the truly clueless.) That is only
for the offeror who has a clue and chooses to bid at a loss.
on Tuesday, April 25, 2000 - 06:57 pm:
Thank you for pointing out Cromartie and Breakfield, which is a
simplified acquisition case in which the CO followed sealed
bidding guidance about mistakes in bids. My answer addressed
intendedly below-cost bids, but I should also have mentioned the
mistake rule in FAR 14.407-3(g)(5).
In the Cromartie and Breakfield case the low quote, which was
from the protester, was $7,673; the next low quote was $23,500,
and the government estimate was $23,973.50. The CO notified the
protester of the possibility of a mistake and asked for
verification of the quote, a price breakdown, and some other
information. The protester verified the quote, but refused to
provide the breakdown.
The CO thought that the quote was obviously in error and
rejected it based on FAR 14.407-3(g)(5), which allows a CO to
reject a bid as too low when: (1) the bidder "fails or refuses
to furnish evidence in support of a suspected or alleged
mistake," and (2) it is "far out of line" with the other bids or
the government estimate, or (3) there are other "clear"
indications of error.
The holding in Cromartie and Breakfield is that a CO cannot
accept an obviously erroneous bid, even when the bidder
denies a mistake or waives the mistake: "Where it is clear
that a mistake has been made, the bid cannot be accepted,
even if the bidder verifies the bid, denies the existence of a
mistake, or seeks to waive an admitted mistake, unless it is
clear that the bid as submitted and intended would remain low."
If the bidder says, "Yeah, that's my bid and I know its low.
Here are my workpapers to show that I considered all the
elements of the work and then decided to bid below-cost in order
to win a new customer," then the CO cannot use the mistake rule
in FAR 14.407-3(g)(5) to reject the bid just because he or she
thinks the bid is too low. The rule in FAR 14.407-3(g)(5)
applies only "Where the bidder fails or refuses to furnish
evidence in support of a suspected or alleged mistake... ."
Note, too, that FAR 14.407-3(g)(5) requires the CO to document
attempts to get information from the bidder to support the bid.
FAR 14.407-3(g)(5) does not allow a CO to reject a bid merely
because it is too low or below-cost. Cromartie and Breakfield
does does not nullify the long-standing rule reiterated in
Bollinger, that a CO cannot reject an intendedly below-cost bid
merely because he or she thinks it is too low. If the CO does
not suspect a mistake, then rejection of a below-cost bid must
be based on a determination of nonresponsibility, and if the low
bidder is a small business, then the COC procedure applies.
By joel hoffman on Tuesday,
April 25, 2000 - 05:32 pm:
Well, part of my answer didn't
stink. The part referring to clearly determined mistakes in bid
being proper grounds for rejection of the bid, without respect
to question of "responsibility" of the bidder. Thanks, Eric.
Eric Ottinger on
Tuesday, April 25, 2000 - 05:25 pm:
Bollinger is an unbalance bid case.
For an unreasonable low price case see Cromartie.
Cromartie and Breakfield, Comptroller General Decision No.
B-279859., July 27, 1998
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 (i) 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 (ii) there are other
indications of error so clear, as to reasonably justify the
conclusion that acceptance of the bid would be unfair to the
bidder or to other bona fide bidders.
A contracting officer’s decision to reject an apparently
mistaken bid under the authority of the above-quoted FAR
provision is subject to question only where it is unreasonable.
Pamfilis Painting, Inc., B-237968, Apr. 3, 1990, 90-1 CPD 355 at
3. Whether a bidder admits that it has made a mistake is not
dispositive as to whether a bid may be rejected as mistaken. TLC
Fin. Group, B-237384, Jan. 26, 1990, 90-1 CPD 116 at 3. WHERE IT
IS CLEAR THAT A MISTAKE HAS BEEN MADE, THE BID CANNOT BE
ACCEPTED, EVEN IF THE BIDDER VERIFIES THE BID, denies the
existence of a mistake, or seeks to waive an admitted mistake,
unless it is clear that the bid as submitted and intended would
remain low. Trataros Constr., Inc., B-254600, Jan. 4, 1994, 94-1
CPD 1 at 3; Atlantic Servs., Inc., B-245763, Jan. 30, 1992, 92-1
CPD 125 at 3.
Here, the contracting officer appropriately exercised his
discretion in applying the procedures outlined under FAR
§14.407-3(g)(5), and reasonably determined to reject Cromartie’s
quote as mistaken.
THE REJECTION OF A LOW BID AS OBVIOUSLY ERRONEOUS IS NOT A
MATTER OF BIDDER RESPONSIBILITY AS CONTENDED BY CROMARTIE.
REJECTION OF A BID BECAUSE IT IS TOO LOW OR BELOW COST CONCERNS
BIDDER RESPONSIBILITY ONLY WHERE THERE IS NO EVIDENCE OF A
MISTAKE. Omni Elevator Co., B-241678, Feb. 25, 1991, 91-1 CPD
207 at 4-5; Zimmerman Plumbing and Heating Co., B-211879, June
24, 1983, 83-2 CPD 16 at 2. However, where, as here, a quote is
obviously erroneous, FAR §14.407-3(g)(5) authorizes the agency
to reject it without any consideration as to whether the quoter
is responsible. Accordingly, Cromartie’s quote was properly
rejected as mistaken without any requirement that the matter be
referred to the SBA for COC consideration.
I know even less about Part 14 than I do about construction, but
I think the Comp. Gen. has made itself clear.
By joel on Tuesday, April 25,
2000 - 05:21 pm:
I Agree with you and admit my
answer stinks, too.
on Tuesday, April 25, 2000 - 05:08 pm:
Just to be clear: My answer is not based on Cromartie,
but on sealed bidding cases that precede it by many years.
However, I do think that the holding quoted by Linda from
Cromartie is applicable to sealed bid procurements, since it
applies to "an offered price for a fixed-price contract," and
since that is a perfect description of a sealed bid. Moreover,
the holding in Cromartie is, in fact, consistent with GAO
holdings in sealed bid decisions that go back to at least the
We don't have to agree on that, however. What should be clear is
that the "professors" are often dishing out very bad advice.
By joel hoffman on Tuesday,
April 25, 2000 - 04:51 pm:
Well, of course you are right,
Vern. I had assumed that the KO had determined there was a
verified mistaken bid or other verified problem or
misunderstanding of the requirements by the low bidder. In that
case, again overgeneralizing, there is a good liklihood that
14.404-2 is the correct approach.
Obviously, if his bid was too high, the next higher bid must
also be unreasonable.
I should have discussed all the steps to get there, I suppose.
I will disagree with both of you that "Cromartie" is applicable
to an IFB. I believe there was a case of misunderstanding of the
requirements in that case or at least it was one the bases of
the GAO opinion. A bid based on a misunderstanding of the scope
of work doesn't reflect a meeting of the minds concerning the
correct scope of work and should be rejected. There is no
provision for adjusting such a bid after public bid opening to
accomodate an enlightened understanding of the scope - without
rejecting all bids and converting to an RFP. Happy Sails!
on Tuesday, April 25, 2000 - 04:33 pm:
Bingo! The "professor" should have asked the questioner what she
meant by "their price is unreasonable." There are two
possibilities--unreasonably high or unreasonably low.
The questioner spoke of "a bid under an IFB," so she was asking
about a problem in sealed bidding; the price must have been a
fixed-price, and she must have been talking about the low
bidder. (In sealed bidding, why talk about anybody else?)
In sealed bidding, if a CO decides that the low bidder's price
is unreasonably high, then the CO should reject all bids, cancel
the IFB, and look into resoliciting. See FAR 14.404-1(c)(6).
When the low bidder's price is too high, it doesn't make
sense to "proceed with an award to the next low bidder," which
is what the "professor" advised.
A CO cannot reject a bid merely because he or she thinks that
the price is too low, i.e., "below cost." See: Bollinger
Machine Shop & Shipyard, B-261135.2, September 1, 1995, in
which the GAO said, "[T]he submission of a below-cost bid is not
illegal, and the mere fact that a bid includes understated
prices does not justify rejection of the bid."
If the CO thinks that the low bidder's price is unreasonably
low, then the CO should ask that bidder to verify that it has
not made a mistake. FAR 14.407-1. If the bidder claims to have
made a mistake, then the CO should investigate in accordance
with FAR 14.407-3.
If the low bidder verifies that it has not made a mistake, then
the question is whether or not the bidder can complete the job
satisfactorily at the bid price. That is a question of the
If the CO decides that the low bidder is nonresponsible and if
the low bidder is a large business, then the CO may proceed to
consideration of the next low bidder.
But if the CO decides that the low bidder is nonresponsible and
if the low bidder is a small business, then the CO must refer
the matter to the SBA for COC consideration. In that event the
CO cannot proceed to award to the next low bidder unless and
until the SBA denies the bidder a COC or fails to decide the
matter within 15 days or the time otherwise agreed to by the SBA
and the contracting officer in accordance with FAR 19.602-1(e).
These rules are long-standing. See Cibinic and Nash, Formation
of Government Contracts, 3rd ed., pp. 634-636.
The "professor" gave the questioner recklessly bad advice.
By joel on Tuesday, April 25,
2000 - 04:21 pm:
Hold on a doggone minute -
Cromartie was not an IFB acquisition under Part 14. It was an
RFQ under simplified procedures. I started wondering - how could
they award a bid contract just because GAO says the offeror
might not have understood the requirements? Something has to
give! Big difference between an "offer" or "quote" and a "bid"
price where no opportunity to adjust a bid price due to
misunderstanding of the requirements. Happy Sails!
By joel on Tuesday, April 25,
2000 - 04:12 pm:
I learn something new here, every day. Back to being a student,
I guess! Happy Sails!
on Tuesday, April 25, 2000 - 03:39 pm:
I agree that the answer is incomplete and depending on the
circumstance, may be incorrect based on previous Comp Gen
Look at Cromartie Construction Company, B-271788, July 30, 1996:
'A determination that an offered price for a fixed-price
contract is too low generally concerns the offeror's
responsibility, that is, the
offeror's ability and capacity to successfully perform the
contract at its offered price. See Envirosol, Inc., B-254223,
Dec. 2, 1993, 93-2
CPD para. 295; Monopole S.A., Inc., B-254137, Nov. 4, 1993, 93-2
CPD para. 268; Ball Tech. Prods. Group, B-224394, Oct . 17,
1986, 86-2 CPD para. 465. Where the solicitation for a
negotiated procurement includes evaluation criteria which
pertain to an offeror's understanding of the work required, an
offeror's unrealistically low price may be evaluated
as indicating a lack of technical understanding. However, here,
the RFQ did not identify any technical evaluation criteria.
the agency's concern regarding the reasonableness of CCC's price
could only be considered as a matter of responsibility. See
Inc., supra; Ball Tech. Prods. Group, supra.'
on Tuesday, April 25, 2000 - 03:14 pm:
The Prof's answer is incomplete.
I would refer the reader to FAR 14.404-2 "Rejection of
FAR 14.404-2(f) seems to apply to the scenario presented in the
question. "Any bid may be rejected if the contracting officer
determines in writing that is unreasonable as to price.
Unreasonableness of price includes not only the total price of
the bid, but the prices for individual line items as well."
Although not specifically mentioned as the problem, any bid
which is is materially unbalanced
may also be rejected (see FAR 14.404-2 (g)).
How did I do, Prof?
on Tuesday, April 25, 2000 - 02:32 pm:
The following Q&A appears at
Ask A Professor:
"Certificate of Competency and Price Reasonableness
Posted to Pre-Award Procurement and Contracting on 3/16/00 by
FAR Part 14
FAR Part 19
FAR Part 15
When you have a contractor that submits a bid under an IFB and
the contracting officer finds that their price is unreasonable
after performing a price analysis. Does the Contracting Officer
have to request a COC or can they award to the next low bidder?
The contracting officer does not have to request a Certificate
of Competency (COC), since the issue here isn't a responsibility
determination of the prospective contractor. A Certificate of
Competency would only be considered if you were dealing with an
apparently successful small business offeror, and the
contracting officer has concerns about certain elements of their
responsibility. A responsible prospective contractor as defined
in FAR 9.101, is a contractor that meets the standards listed in
Rationale: FAR 19.601 (a) states that 'a Certificate of
Competency (COC) is the certificate issued by the Small Business
Administration (SBA) stating that a holder is responsible for
the purposes of receiving and performing a specific Government
contract.' FAR 19.601 (b) states that 'the COC program empowers
the SBA to certify to Government contracting officers as to all
elements of responsibility of any small business concern to
receive and perform a specific Government contract.' FAR 19.601
(c) states 'a contracting officer shall, upon determining an
apparent successful small business offeror to be
non-responsible, refer that small business to the SBA for a
Since the scenario does not deal with the issue of a prospective
small business contractor’s responsibility, then a review of the
limitations to sealed bidding is in order. FAR 14.103-2 (d)
states that no awards shall be made as result of sealed bidding
unless "an award is made to the responsible bidder whose bid is
responsive to the terms of the invitation to bid and is most
advantageous to the Government considering only price and the
price related factors included in the invitation." The
contracting officer can proceed with an award to the next lowest
What do you think? Did the "professor" provide a good answer?