McClure Electrical Constructors, Inc. v. John H. Dalton, Secretary of the Navy

132 F.3d 709, 42 Cont. Cas. Fed. 77,246, 1997 U.S. App. LEXIS 35994, 1997 WL 783352
CourtCourt of Appeals for the Federal Circuit
DecidedDecember 17, 1997
Docket97-1209
StatusPublished
Cited by20 cases

This text of 132 F.3d 709 (McClure Electrical Constructors, Inc. v. John H. Dalton, Secretary of the Navy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McClure Electrical Constructors, Inc. v. John H. Dalton, Secretary of the Navy, 132 F.3d 709, 42 Cont. Cas. Fed. 77,246, 1997 U.S. App. LEXIS 35994, 1997 WL 783352 (Fed. Cir. 1997).

Opinion

RADER, Circuit Judge.

McClure Electrical Constructors, Inc. (McClure Electrical) challenges denial of its claim for contract reformation. McClure Electrical sought contract reformation to correct its unilateral bid mistake. On September 26, 1996, the Armed Services Board of Contract Appeals (Board) affirmed the contracting officer’s final decision not to reform the contract. See McClure Elec. Constructors, Inc., ASBCA No. 49,711, 96-2 BCA ¶ 28,593 (1996). Because the Board did not err in so deciding, this court affirms the Board’s decision.

I.

McClure Electrical entered into a contract to build an electrical substation at a naval center in Louisville, Kentucky. Mr. McClure, the company’s president, prepared three bid worksheets to determine the bid amount for this project. However, in preparing a recapitulation sheet, Mr. McClure did not transfer the amount from the third bid worksheet and instead twice transferred the amount from the first bid worksheet. Due to this error, McClure Electrical’s bid was $16,530 lower than intended.

Due to this error, McClure Electrical’s bid was the lowest of the eight entered bids by $28,000. When the contracting officer at the Department of the Navy reviewed the bids, she noticed the disparity between McClure Electrical’s $145,000 bid and the Government estimate of $282,869. Suspecting a possible error and wishing to confirm the apparent low bid, the contracting officer sent a bid verification request to McClure Electrical. The letter did not state explicitly the contracting officer’s suspicion of a possible error. In the relevant portion of that letter, the contracting officer wrote: “[a]s evidenced by the enclosed Abstract of Offers, you are the apparent low bidder. Please review your bid worksheets for possible errors or omissions.” The contracting officer enclosed abstracts showing the amount of each bid and the amount of the Government estimate for the project. These amounts were appreciably higher than McClure Electrical’s bid.

With the contracting officer’s bid verification request and the amounts of each bid in his possession, Mr. McClure reviewed his company’s bid and confirmed its accuracy in a letter to the contracting officer. After completion of the project, Mr. McClure’s son, vice-president of McClure Electrical, reviewed the project to determine why McClure Electrical had lost money on the contract and discovered the error. McClure Electrical then sought reformation of the contract to increase its price by $19,000 — the mistakenly omitted materials costs of $16,-530, plus sales tax, overhead, profit, and bond costs. McClure Electrical argued that the Navy’s bid verification request was inadequate because the contracting officer did not expressly state her suspicion that McClure Electrical had submitted an erroneous bid. The contracting officer denied relief, and the Board affirmed. McClure Electrical now appeals to this court.

II.

By statute, this court may not disturb the Board’s factual determinations unless they are arbitrary, capricious, fraudulent, or so grossly erroneous as necessarily to imply bad faith. 41 U.S.C. § 609(b) (1994). The Board’s interpretation of the controlling Federal Acquisition Regulations (FAR) is a question of law subject to independent review. See Ingalls Shipbuilding, Inc. v. O’Keefe, 986 F.2d 486, 488 (Fed.Cir.1993).

The FAR set forth a process for handling suspected mistakes in bids. 48 C.F.R. §§ 14.406-1, 14.406-3(g) (1992). To determine adequacy of a bid verification request, this court examines de novo the Board’s interpretation of the controlling FAR. “Not *711 withstanding this lack of deference on questions of law, [this court] accord[s] respect to the board’s interpretation of regulations that are within its field of expertise: federal procurement law.” Ingalls Shipbuilding, Inc. v. Dalton, 119 F.3d 972, 975 (Fed.Cir.1997); see also Erickson Air Crane Co. v. United States, 731 F.2d 810, 814 (Fed.Cir.1984) (“[L]egal interpretations by tribunals having expertise are helpful to us, even if not compelling.”).

III.

In Solar Foam Insulation, ASBCA No. 46,921, 94-2 BCA ¶ 26,901 (1994), the Board set out its rules for allowing reformation of a contract due to a contractor’s unilateral bid mistake. The contractor must show by clear and convincing evidence that:

(1) a mistake in fact occurred prior to contract award; (2) the mistake was a clear-cut, clerical or mathematical error or a misreading of the specifications and not a judgmental error; (3) prior to award the Government knew, or should have known, that a mistake had been made and, therefore, should have requested bid verification; (4) the Government did not request bid verification or its request for bid verification was inadequate; and (5) proof of the intended bid is established.

Id.

In this appeal, the parties do not dispute that the contractor has shown sufficient evidence to satisfy elements (1) — (3) and (5). Only element (4), the adequacy of the Government’s request for bid verification, is at issue. In reviewing this appeal, this court examines the request for verification of a bid for adequacy.

The controlling regulations, 48 C.F.R. §§ 14.406-1 and 14.406-3(g) (1992), set forth a process for handling suspected bid mistakes:

After the opening of bids, contracting officers shall examine all bids for mistakes. In cases of apparent mistakes and in cases where the contracting officer has reason to believe that a mistake may have been made, the contracting officer shall request from the bidder a verification of the bid, calling attention to the suspected mistake.

48 C.F.R. § 14.406-1 (1992). The regulations further provide that:

[s]uspected or alleged mistakes in bids shall be processed as follows.... (1) The contracting officer shall immediately request the bidder to verify the bid. Action taken to verify bids must be sufficient to reasonably assure the contracting officer that the bid as confirmed is without error, or to elicit the allegation of a mistake by the bidder. To assure that the bidder will be put on notice of a mistake suspected by the contracting officer, the bidder should be advised as appropriate — (i) That its bid is so much lower than the other bids or the Government’s estimate as to indicate a possibility of error ...

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132 F.3d 709, 42 Cont. Cas. Fed. 77,246, 1997 U.S. App. LEXIS 35994, 1997 WL 783352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcclure-electrical-constructors-inc-v-john-h-dalton-secretary-of-the-cafc-1997.