14.407-4 Mistakes after award
Source: FAR 14.407-4 on acquisition.gov
Mistakes discovered after contract award require clear evidence, legal review, and thorough documentation to determine if correction, rescission, or reformation of the contract is warranted.
Overview
FAR 14.407-4 addresses the procedures for handling mistakes in bids discovered after contract award. If a contractor identifies a mistake post-award, the issue is processed under FAR Subpart 33.2 and specific procedures outlined here. Corrections may be made by contract modification if it benefits the Government and does not alter essential contract requirements. Agencies may also rescind or reform contracts, or decide no change is warranted, but only with clear and convincing evidence of a mistake. The regulation requires coordination with legal counsel and detailed documentation, including evidence from the contractor and a comprehensive case file. Agencies must maintain records of all determinations and actions taken regarding post-award mistakes.
Key Rules
- Correction by Modification
- Mistakes may be corrected by contract modification if it favors the Government and does not change essential requirements.
- Rescission or Reformation
- Agencies can rescind or reform contracts (delete items or increase price within limits) or decide no change is needed, based on clear and convincing evidence.
- Evidence Requirements
- Determinations require clear and convincing evidence of a mutual mistake or a unilateral mistake that should have been apparent to the contracting officer.
- Legal Coordination
- All determinations must be coordinated with legal counsel.
- Documentation and Case File
- Contracting officers must collect and document all relevant evidence, correspondence, and determinations in the case file.
- Agency Recordkeeping
- Agencies must keep a record of all determinations, facts, and actions taken for each case.
Responsibilities
- Contracting Officers: Must request evidence, document findings, coordinate with legal counsel, and maintain comprehensive case files.
- Contractors: Must submit written statements and supporting evidence to substantiate the alleged mistake.
- Agencies: Must ensure proper legal review and maintain records of all determinations and actions taken.
Practical Implications
- This section ensures mistakes discovered after award are handled fairly and transparently, protecting both government and contractor interests.
- It requires thorough documentation and legal oversight, which can delay resolution if not managed proactively.
- Common pitfalls include insufficient evidence, lack of legal coordination, or incomplete documentation, which can jeopardize corrective actions or contract modifications.
If a contractor’s discovery and request for correction of a mistake in bid is not made until after the award, it shall be processed under the procedures of subpart 33.2 and the following:
(a) When a mistake in a contractor’s bid is not discovered until after award, the mistake may be corrected by contract modification if correcting the mistake would be favorable to the Government without changing the essential requirements of the specifications.
(b) In addition to the cases contemplated in paragraph (a) of this section or as otherwise authorized by law, agencies are authorized to make a determination-
(1) To rescind a contract;
(2) To reform a contract-
(i) To delete the items involved in the mistake; or
(ii) To increase the price if the contract price, as corrected, does not exceed that of the next lowest acceptable bid under the original invitation for bids; or
(3) That no change shall be made in the contract as awarded, if the evidence does not warrant a determination under subparagraph (b)(1) or (2) of this section.
(c) Determinations under paragraph (b)(1) and (2) of this section may be made only on the basis of clear and convincing evidence that a mistake in bid was made. In addition, it must be clear that the mistake was-
(1) Mutual; or
(2) If unilaterally made by the contractor, so apparent as to have charged the contracting officer with notice of the probability of the mistake.
(d) Each proposed determination shall be coordinated with legal counsel in accordance with agency procedures.
(e) Mistakes alleged or disclosed after award shall be processed as follows:
(1) The contracting officer shall request the contractor to support the alleged mistake by submission of written statements and pertinent evidence, such as-
(i) The contractor’s file copy of the bid,
(ii) The contractor’s original worksheets and other data used in preparing the bid,
(iii) Subcontractors’ and suppliers’ quotations, if any,
(iv) Published price lists, and
(v) Any other evidence that will serve to establish the mistake, the manner in which the mistake occurred, and the bid actually intended.
(2) The case file concerning an alleged mistake shall contain the following:
(i) All evidence furnished by the contractor in support of the alleged mistake.
(ii) A signed statement by the contracting officer-
(A) Describing the supplies or services involved;
(B) Specifying how and when the mistake was alleged or disclosed;
(C) Summarizing the evidence submitted by the contractor and any additional evidence considered pertinent;
(D) Quoting, in cases where only one bid was received, the most 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 the estimate;
(E) Setting forth the contracting officer’s opinion whether a bona fide mistake was made and whether the contracting officer was, or should have been, on constructive notice of the mistake before the award, together with the reasons for, or data in support of, such opinion;
(F) Setting forth 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 supplies or services will otherwise be acquired; and
(G) Disclosing the status of performance and payments under the contract, including contemplated performance and payments.
(iii) A signed copy of the bid involved.
(iv) A copy of the invitation for bids and any specifications or drawings relevant to the alleged mistake.
(v) An abstract of written record of the bids received.
(vi) A written request by the contractor to reform or rescind the contract, and copies of all other relevant correspondence between the contracting officer and the contractor concerning the alleged mistake.
(vii) A copy of the contract and any related change orders or supplemental agreements.
(f) Each agency shall include in the contract file a record of-
(1) All determinations made in accordance with this 14.407-4;
(2) The facts involved; and
(3) The action taken in each case.