Overview
FAR 14.407 establishes the procedures and standards for handling errors identified in bids for sealed bidding acquisitions. It mandates that contracting officers proactively identify suspected mistakes and provides a framework for correcting clerical errors, permitting bid withdrawals, or reforming contracts when mistakes are discovered after award.
Key Rules
- Mandatory Examination: Contracting officers (CO) must examine all bids for mistakes after opening and request verification if a mistake is suspected (e.g., if a bid is significantly lower than others or the government estimate).
- Apparent Clerical Mistakes: Obvious errors such as misplaced decimal points, incorrect discounts, or reversed F.O.B. terms may be corrected by the CO before award, provided the bidder verifies the intended bid.
- Evidence Standard for Corrections: To correct a substantive mistake before award, there must be "clear and convincing evidence" of both the mistake and the bid actually intended.
- Displacement Rule: If a correction would displace a lower bidder, the intended bid must be ascertainable substantially from the bid and the invitation themselves, not just from external evidence.
- Responsiveness Limitation: The authority to correct mistakes cannot be used to make a non-responsive bid responsive.
- Withdrawal vs. Correction: If evidence supports the existence of a mistake but not the specifically intended price, the agency may allow the bidder to withdraw the bid rather than correct it.
- Post-Award Threshold: After a contract is awarded, mistakes can only be corrected if the evidence is clear and convincing and the mistake was either mutual or the CO had "constructive notice" (the mistake was so apparent the CO should have caught it).
- Legal and Administrative Oversight: Substantive determinations regarding mistakes require the concurrence of agency legal counsel and must be supported by a detailed administrative record, including the bidder's original worksheets and data.
Practical Implications
- "Buy-in" Protection: These rules prevent bidders from intentionally low-balling a bid and then attempting to "correct" it upward to a higher price after seeing the competition’s numbers, unless the evidence of the original intent is undeniable.
- Documentation Burden: Contractors must maintain meticulous records of their bid preparation (worksheets, subcontractor quotes, etc.), as these are the primary pieces of evidence required by the CO to justify a correction or withdrawal.
- Risk Mitigation: The government’s duty to request verification serves as a safeguard against "unconscionable" contracts where a bidder's obvious error would lead to performance failure or financial ruin.