GRANTED: July 6, 2012 
CBCA 2639 
RED GOLD, INC., 
Appellant, 
v. 
DEPARTMENT OF AGRICULTURE, 
Respondent. 
Anson M. Keller and Gary H. Baise of Olsson Frank Weeda Terman Matz PC, 
Washington, DC, counsel for Appellant. 
Michael Gurwitz, Office of the General Counsel, Department of Agriculture, 
Washington, DC, counsel for Respondent. 
Before Judges DANIELS (Chairman), GOODMAN , and SHERIDAN . 
SHERIDAN , Board Judge. 
Red Gold, Inc. (Red Gold or appellant) has appealed a contracting officer’s (CO’s) 
final decision which was issued by the Department of Agriculture (USDA or respondent). 
Red Gold asserts that it made a mistake when bidding on a contract to provide salsa to the 
USDA and that it is entitled to recover $253,608.96, which is the difference between its bid 
prices and the bid prices of the next low bidders. The USDA asserts that while a mistake 
may have been made by Red Gold, it was a unilateral mistake that was not sufficiently 
apparent to require the CO to verify the bids. Respondent posits that, because appellant 
made a unilateral mistake in bid, contract reformation is not merited. The appeal has been 
submitted for decision on the written record pursuant to Board Rule 19 (48 CFR 6101.19 
(2011)). The record consists of the complaint and accompanying exhibits, the answer, the 

 
    
        
 
       
         
     
    
        
  
         
    
    
      
                
              
                
                   
                  
                
              
             
       
                 
               
               
                 
              
              
            
        
      
   
2 CBCA 2639 
appeal file, affidavits, and the briefs of the parties. For the reasons stated below, we grant 
the appeal. 
Findings of Fact 
On March 3, 2010, the USDA issued an invitation for bids (IFB) to supply canned 
goods to be used for federal school lunches and other food assistance programs.  The IFB 
sought bids on a variety of tomato products, including tomato sauces, tomato pastes, and 
salsa. Six companies responded to the IFB for salsa: 1) Red Gold, located in Indiana; 2) 
Olam Tomato Processors, Inc., located in California; 3) Del Monte Corporation, located in 
California; 4) Neil Jones Food Co., located in California; 5) Giovanni Food Company, Inc., 
located in New York; and 6) Hirzel Canning Company, located in Ohio. The first four 
companies listed, Red Gold, Olam, Del Monte, and Neil Jones, are all large businesses that 
grow their own tomatoes and process, pack, and ship tomato products directly from their 
facilities. The last two companies listed, Giovanni Foods and Hirzel Canning, are small 
businesses that do not grow tomatoes, but instead must purchase tomatoes to make their 
products. A company’s cost of obtaining its ingredients is a factor in its overall bid price. 
Line items 114 through 224 in the IFB were designated for salsa. The line items were 
organized by delivery date, starting with the earliest. Each line item represented a different 
delivery location and listed the quantity of salsa cases to be delivered to that location. The 
bidder was to submit its price per case for each line item on which it chose to bid, and to 
include its delivery costs as part of its bid price. The CO only saw one price that represented 
both the product and delivery costs. As the six companies that responded to the IFB were 
located in different places, the shipping costs varied with the company’s location. 
1 The bids 
for salsa had an overall price range of $11.02 to $18.05 per case. 
The CO compared the submitted bids for salsa and determined that Red Gold’s bids 
were lowest on all line items except 119, 131, 141, 181, 183, 191, 214, and 215. She 
awarded Red Gold 92% of the salsa orders, which was approximately 95,760 cases of salsa.
2 
She did not hold a post-award conference or request verification of any bid pricing, and she 
affirmed that she had “no reason to believe that the prices offered by Red Gold were not their 
intended bid price.” She stated that she reviewed the bids for responsiveness and to 
determine if they were “fair and reasonable.” Her review process “typically includes, but is 
1 Typically, the further a bidder’s plant was from the location where the product 
was needed, the greater the shipping cost. 
2 The same CO evaluated the bids, awarded the line items, and issued the final 
decisions in this matter. 

 
             
  
      
     
     
      
    
   
     
     
     
     
       
    
       
      
     
 
        
   
         
    
     
       
           
             
      
3 CBCA 2639 
not limited to, looking at the destinations for the product, relative to the production 
facilities.” 
The CO explained that “the information gleaned from bid histories does not impact 
my determination on what is a fair and reasonable price for the current invitation,” so she 
did not analyze individual bidders’ historical bid submissions. She did not compare Red 
Gold’s bids for the solicitation against its past years’ bids for salsa.  She said, however: 
I do look at the overall historical awarded price 
[3] for the product being 
procured because it plays a role, but not the only role in helping me determine 
what is a fair and reasonable price. In the case of salsa, the historical record 
indicated that Red Gold’s bid price was fair and reasonable. 
The CO noted that in all bids there are several cost factors that make up a bid price, 
but she also realized that gaining the highest profit is not necessarily always a motive. She 
stated that vendors sometimes have their own motives for bidding low, including getting the 
contract so that their business keeps operating. The CO opined that “[i]t is not my 
responsibility to second-guess an offeror’s motives as relates to its bid.”  
In my 25 years of contracting experience, I have found mistakes in bids 
submitted by offerors. The mistakes I found were always apparent and 
obvious, such as when the bid price received was at $1.15 when the vendor 
obviously meant to bid $11.50, or $0.90 as opposed to $9.00.  On each such 
occasion, I immediately contacted the offeror to verify their bid submission. 
In the case of Red Gold’s bid . . . I saw no apparent and obvious mistakes in 
its bid.  Neither was there any clear and convincing evidence to suggest that 
Red Gold had bid anything other than what it intended to bid; there certainly 
were no obvious or gross mistakes present. Instead, I considered their offered 
prices to be fair and reasonable. [Red Gold’s] prices offered on many of the 
line items were consistent with other bidders and at no time seemed obviously 
out of line. 
The CO noted that she has analyzed past bid submissions with significant price 
differentials and learned during post-award conversations about a variety of decision points 
3 For purposes of this decision the overall historical awarded price range is 
composed of the highest and lowest prices that were bid on salsa solicitations from 
September 2008 to the solicitation in issue. 

 
  
      
     
   
               
                
                 
                
                
                 
              
4 CBCA 2639 
that resulted in the bid price.  “[T]his situation was not unusual to me, and did not require 
any post-award conversations. It remains my professional opinion that all thing considered, 
Red Gold’s offered prices were fair and reasonable.” 
The historical prices of salsa for 2008, 2009, and 2010, referred to by the CO, 
showed: 
Date of Solicitation Price Range 
06/27/08 $12.84 - $18.26 
08/21/08 $15.15 - $20.97 
09/23/08 $16.38 - $21.05 
11/19/08 $16.85 - $20.68 
06/23/09 $15.51 - $20.89 
08/12/09 $15.46 - $21.54 
04/14/10 $11.02 - $18.05 
The CO was also able to compare Red Gold’s prices to the prices of other bidders 
through a report that was processed on April 12, 2010, just two days before she awarded the 
contract. The report, referred to as the “Destination Price Bid Array,” was a listing of all of 
the line items in the IFB and their respective locations, along with the bid prices for each 
item. The report showed, for each line item, the names and bids of the respective offerors, 
from the lowest to the highest price. Samples of the report showing the bid arrays for line 
items 114 through 121 (East Coast) and 199 through 202 (West Coast) is as follows: 

 
     
    
   
   
  
  
  
   
   
                  
   
   
   
   
             
   
5 CBCA 2639 
Line Item 
No. 
Destination 
State 
Price Per 
Case 
(awarded) 
Price Per 
Case 
Price Per 
Case 
Price Per 
Case 
114 NY Red Gold 
12.39 
Olam 
17.69 
Neil Jones 
18.12 
Del Monte 
18.89 
115 VT Red Gold 
13.38 
Olam 
17.42 
Del Monte 
18.87 
Neil Jones 
19.08 
116 MD Red Gold 
12.16 
Del Monte 
18.24 
Neil Jones 
18.41 
Olam 
18.43 
117 NJ Red Gold 
13.15 
Olam 
17.62 
Neil Jones 
19.02 
SML 
19.88 
118 VA Red Gold 
12.59 
Olam 
13.50 
Neil Jones 
18.93 
SML 
20.24 
119 VA Olam 
17.75 
Neil Jones 
18.60 
Del Monte 
19.32 
SML 
20.16 
120 WV Red Gold 
11.69 
Olam 
17.50 
Del Monte 
18.19 
Neil Jones 
18.25 
121 FL Red Gold 
13.09 
Olam 
17.56 
Neil Jones 
18.72 
Del Monte 
19.26 
. . . . . . . . . . . . . . . . . . . . . . . . 
199 AZ Red Gold 
13.34 
Olam 
14.87 
Neil Jones 
15.82 
Del Monte 
15.83 
200 CA Red Gold 
12.22 
Olam 
14.20 
Neil Jones 
14.77 
Del Monte 
15.07 
201 CA Red Gold 
12.35 
Olam 
14.19 
Neil Jones 
14.79 
Del Monte 
15.03 
202 CA Red Gold 
12.72 
Olam 
13.83 
Neil Jones 
14.62 
Del Monte 
14.94 
(SML is the designation for either of the two smaller businesses, Giovanni Food Company 
or Hirzel Canning Company.) 

 
              
               
              
         
              
               
               
   
  
               
               
           
               
         
                  
                
               
                
                
    
                
      
             
             
             
          
            
                 
   
                 
              
       
          
                 
   
6 CBCA 2639 
During her evaluation of the bids, the CO also considered the destinations of the salsa 
relative to the locations from which the cases were shipped. For example, the CO noted in 
her affidavit that, because Red Gold is located in Indiana, it has lower transportation costs 
for goods sent to the East Coast than do its three competitors that are located in California. 
The CO used this difference in transportation costs to explain why Red Gold’s price (with 
shipment from Indiana) was $12.39 per case of salsa for contract line item 114 to be 
delivered to New York, while the second lowest bid was priced at $17.69 per case with 
shipment from California. 
Red Gold began shipping some of the 95,760 cases of salsa by August 16, 2010, the 
first delivery date listed in the contract. USDA provided receipts for the salsa it received, 
and Red Gold used these receipts to prepare invoices to the USDA for payment. On 
September 14, 2010, a Red Gold accountant, conducting a monthly profitability analysis, 
noticed that Red Gold had sustained business losses instead of gains on the USDA account. 
Further investigation by the financing and auditing department showed that the losses were 
the result of an error made by Red Gold in pricing the USDA salsa bids. Red Gold had 
inadvertently used the price for low sodium tomato sauce in some of its USDA salsa bids. 
According to Red Gold, its base price per case was $16.90 for salsa and $10.80 for 
low sodium tomato sauce. 
4 Red Gold had mistakenly used the $10.80 per case price for low 
sodium tomato sauce instead of the $16.90 per case price for salsa for line items 114 through 
224 of the IFB.  The correct shipping charges were used in the bids, but they were added to 
the wrong base prices. This error, Red Gold says, resulted in it bidding $6.10 less per case 
of salsa than it intended. 
Red Gold notified the USDA about its pricing error on September 24, 2010, and 
requested to speak with the CO concerning possible remedies. The USDA responded the 
same day and stated that it would need documentation of the error before determining 
whether a remedy, if any, would be available.  Red Gold subsequently provided the USDA 
with additional information concerning its error and stated that it “certainly [doesn’t] expect 
to recover the full amount, but requests some relief to invoice at a higher price that would at 
least cover our variable costs.” Red Gold identified these variable costs as being $3.63 per 
case of salsa. 
5 On October 4, 2010, the CO sent an email message to Red Gold requesting 
additional documentation, which Red Gold provided on October 6. The CO sent back an 
4 The base prices do not include shipping charges. 
5 Red Gold initially requested compensation for 64,752 cases of salsa, but 
subsequently modified this number to 58,368 cases.  This change in the number of cases of 
salsa was undisputed by the USDA, and the use of the number 58,368 served as the basis of 
this appeal. 

 
 
              
                 
                  
                 
               
                
                   
                 
                
    
    
              
           
              
              
                
               
              
               
              
              
  
            
               
               
              
               
                
                 
               
                 
              
              
               
         
7 CBCA 2639 
email message on October 8 acknowledging that a mistake in salsa bids had been made but 
stating that “USDA cannot accept the intended or corrected price for line items 114 through 
224 [as the] prices were higher [than those of the next low bidder] and would not have been 
awarded to Red Gold, Inc.” 
6 The CO told Red Gold that the USDA would not pay Red Gold 
more than the contract prices for the cases of salsa that were already shipped, but that it was 
willing to cancel the orders for the remaining cases. Red Gold responded the same day, 
explaining that it was not asking to recover its “intended price,” and stating that “it is our 
hope to settle at a price that at least covers our material costs, if not our total variable costs.” 
While Red Gold did not state precisely the amount it sought, it asked to meet with the CO 
to discuss a possible remedy. On October 13, 2010, the CO responded to the email message 
by issuing a final decision. 
The final decision stated that: 
USDA is not authorized by law to adjust the bid price upward to a “remedy 
price,” or otherwise to cover Red Gold’s “variables” and other costs; USDA 
is only authorized by law to adjust the price if your intended or corrected price 
is lower than that of the second bidder. That is not the case here. 
The CO also requested Red Gold to provide the “notice to deliver numbers” for the cases that 
had not yet been shipped so that the unshipped salsa orders could be canceled. 
Red Gold appealed the CO’s final decision not to reform the contract price to this 
Board, which docketed the matter as CBCA 2259. The appeal was dismissed for lack of 
jurisdiction because a properly certified claim had not been submitted to the CO for final 
decision. Red Gold, Inc. v. Department of Agriculture , CBCA 2259, 12-1 BCA ¶ 34,921 
(2011). 
Red Gold subsequently submitted a properly certified claim on July 15, 2011, seeking 
damages in the amount of $253,608.96. To calculate its damages, Red Gold looked at each 
contract line item it had been awarded and subtracted the next lowest bidder’s price from Red 
Gold’s award price, reaching the dollar difference between the two. It then multiplied that 
dollar difference by the number of cases Red Gold shipped under that particular line item. 
This product is the dollar difference between what Red Gold was paid and what the next low 
bidder would have been paid for a single line item. After it calculated subtotals for each line 
item, it added all the subtotals together to reach the total amount of $235,608.96. For 
example, for line item 114, Red Gold’s award price was $12.39 per case of salsa. Red Gold 
subtracted the $12.39 price from $17.69, which was the next lowest bidder’s price, to reach 
6 The CO notes that while Red Gold received 92% of the salsa awards at its 
mistaken base price of $10.80 per case, Red Gold would not have been awarded any salsa 
contracts had its intended base price been $16.90 per case. 

 
               
              
             
                
              
                
     
               
               
                   
        
             
               
             
              
               
             
                
              
              
              
            
             
     
                   
                
                  
             
               
                
             
           
               
      
8 CBCA 2639 
$5.30, which was the difference between the two amounts. It then multiplied the $5.30 price 
difference by the 912 cases that were shipped to reach a subtotal of $4633.60, which 
represents what USDA would have paid additionally, had the next low bidder been awarded 
the line item. Adding the subtotals, Red Gold calculated a sum of $253,608.96. This, it 
proffers, represents the total difference between what it was paid for the salsa it delivered 
versus the total of the additional amount that the USDA would have paid using the prices of 
the next low bidders. 
The CO’s final decision was issued on September 15, 2011, denying the claim in total. 
As reasons for her denial, the CO found that the mistake was not sufficiently apparent to 
charge her with notice of the mistake at the time of the bid. She again noted her opinion that 
she could only adjust the price if Red Gold’s “intended or corrected price is lower than that 
of the second low bidder.” Red Gold appealed the CO’s final decision. 
The parties agreed to submit the case for a decision on the record pursuant to Board 
Rule 19. Exhibits, affidavits, a joint stipulation of facts (with supplements and corrections), 
and briefs were submitted by the parties in support of their respective positions. 
Discussion 
A contractor may obtain a remedy for a unilateral mistake after the award of a contract 
after establishing five elements by clear and convincing evidence. The contractor must show 
(1) a mistake in fact occurred prior to the contract award; (2) the mistake was a clear-cut 
clerical or mathematical error or a misreading of the specifications; (3) prior to the award, 
the Government knew or should have known that a mistake had been made; (4) the 
Government did not request bid verification; and (5) proof of the intended bid. Singleton 
Enterprises v. Department of Agriculture , CBCA 1981, 12-1 BCA ¶ 34,924, at 171,734 
(citing McClure Electrical Constructors, Inc. v. Dalton , 132 F.3d 709, 711 (Fed. Cir. 1997)); 
see also 48 CFR 14.407-4. 
There is no dispute as to elements 1, 2, 4, and 5. The parties agree that a mistake in 
bid occurred when Red Gold used the $10.80 base price for a case of low sodium tomato 
sauce instead of the higher, $16.90 base price for a case of salsa. They also agree that the 
mistake was made prior to contract award and was the result of a clerical error.  The CO did 
not request bid verification. Red Gold supplied adequate documentation, and the CO accepted 
that documentation as sufficient proof of its intended bids. The issue that remains to be 
resolved is element 3 - whether the CO knew or should have known of Red Gold’s possible 
mistake, and, therefore, should have requested verification of the bid. The Board must 
determine “the degree of the contracting officer’s knowledge, whether actual or imputed, 
based on all the evidence presented on that issue.” Bromley Contracting Co. v. United States , 
794 F.2d 669, 672 (Fed. Cir. 1986). 

 
                
                  
             
             
  
               
                
                 
          
      
             
                
      
                
  
        
              
             
              
                
             
                
               
                
            
                
             
   
           
                
               
             
              
             
             
              
              
              
9 CBCA 2639 
In the instant case, the CO stated in her affidavit that there was nothing that alerted her 
to a bid mistake by the contractor. “The test of what an official in charge of accepting bids 
‘should’ have known must be that of reasonableness, i.e., whether under the facts and 
circumstances of the case there were any factors which reasonably should have raised the 
presumption of error in the mind of the contracting officer.” Chernick v. United States , 372 
F.2d 492, 496 (Ct. Cl. 1967). Such factors include, among other things, an obviously wide 
range of bids or gross disparity between the price bid and the value of the article which was 
the subject of the bid. Id. However, price disparity alone does not necessarily mean that there 
has been constructive notice of a mistake where other factors tend to negate the inference of 
error. Uniflite, Inc. , ASBCA 27818, 85-1 BCA ¶ 17,813, at 89,034.  Where “circumstances 
exist at the time of bid evaluation which offer reasonable explanations for disparity between 
bids,” the Government will not be charged with a mistake. Aydin Corp. v. United States , 669 
F.2d 681, 687 (Ct. Cl. 1982). 
In the instant case, we find that the CO should have been alerted to a possible mistake 
in the bid when she reviewed the historical pricing data and the Destination Price Bid Array 
report. The historical pricing data indicated a sharp drop in price from most of the previous 
salsa procurements. The solicitations for 2009 yielded price ranges of $15.46 to $21.54, while 
the disputed 2010 solicitation only yielded price ranges from $11.02 to $18.05. This 
represents an approximately forty percent difference between Red Gold’s bid prices and the 
lowest bid prices in the prior year’s solicitations. That difference should have caused a 
reasonable CO to question Red Gold’s bid prices. The CO is correct in her conclusion that 
there may be various reasons why an offeror might intentionally submit a low bid. 
Nevertheless, that does not obviate the duty of a CO to consider the possibility of a mistake 
when he or she encounters facts that raise the question of mistake, and to take appropriate 
steps to resolve that question. In this case, the CO did not note any specific circumstances 
that would explain the pricing disparities, and her reference to general circumstances that 
might cause a contractor to intentionally submit a low bid are not compelling. If we accept 
the CO’s logic, bid verification would never be required except for instances of obviously 
misplaced decimals or numbers. 
Similarly, the Destination Price Bid Array report indicated that Red Gold consistently 
bid significantly less than its competitors on most of the contract line items in the solicitation. 
The CO attested that she attributed the large differences in product prices to differences in 
shipping costs to the various destinations. For example, Red Gold’s location in Indiana 
allowed it to have significantly lower delivery costs to New York than did its major 
competitors in California. The difference in shipping costs, the CO posited, might have 
enabled Red Gold to maintain a thirty percent price advantage over its more distant 
competitors. However, this reasoning does not explain why Red Gold’s prices for goods to 
be shipped to California were approximately fifteen to twenty percent lower than the bids of 
its three major competitors who had plants in California and therefore should have had lower 

 
              
               
      
             
                  
                
               
             
                 
  
         
          
 
             
                
             
                
                
             
            
               
          
               
                 
              
              
  
               
    
            
                
  
               
  
10 CBCA 2639 
bid prices because of lower shipping costs. See Connelly Containers, Inc. v. United States , 
7 Cl. Ct. 423, 426 (1985) (where a CO was charged with noticing discrepancies in shipping 
costs based on proximity to contractor location). 
Either the historical prices for salsa or the Destination Price Bid Array report should 
have put a CO on notice of a possible mistake in bid. With the information she had before 
her, the CO clearly should have requested verification of Red Gold’s bids prior to award. We 
have found that the CO should have been alerted to a possible mistake and requested bid 
verification, so appellant has proved the last of the elements necessary for remedying a 
unilateral mistake. We now turn to whether Red Gold has proved that it is entitled to the 
$253,608.96 it seeks. 
A contractor may receive compensation for its unilateral mistake in bid, but recovery 
may not exceed that of the next lowest acceptable bid under the original invitation for bids. 
48 CFR 14.407-4(b)(2).  A contractor is not precluded from recovery if its intended bid was 
higher than other acceptable bids and would not have received a contract award. Shepard v. 
United States , 95 Ct. Cl. 407, 411 (1942). In Shepard , the contractor intended to bid $3.75 
per ton of coal, but mistakenly bid $2.75 per ton. The next low bidder’s price was $3.50 per 
ton. The contractor was not barred from recovery because its intended bid was $0.25 per ton 
greater than the second lowest bid. The court found that the contractor was entitled to recover 
$0.75 per ton more, the difference between the contractor’s bid and the next lowest bid. Id. 
Similarly, in Walter Straga , ASBCA 26134, 83-2 BCA ¶ 16,611, although the intended 
bid was $46,222 higher than the awarded contract price, recovery was limited to the $23,680 
difference between the mistaken bid and the next low bid. 
The CO was not correct in her supposition that a contractor can only recover on a 
mistake in bid if its “intended or corrected price is lower than that of the second low bidder.” 
The principles associated with mistake in bid are not intended to bar recovery when a 
contractor’s intended price is higher than the next lowest bidder’s price. Rather, they are 
designed to place the Government in “essentially the same position as it would have been in 
had it recognized the error in appellant’s bid and allowed withdrawal of the bid.” Walter 
Straga , 83-2 BCA at 82,618. 
Red Gold seeks $253,608.96, the difference between its contract price and the next 
lowest bidders’ prices for the 58,368 cases of salsa that were shipped. We find that Red 
Gold’s methodology for calculating this amount is reasonable.  The USDA has not disputed 
the bid prices that Red Gold used or its methodology, nor has it offered any alternative 
calculations. 

 
             
              
       
                                                             
   
 
                                                                                                                         
 
11 CBCA 2639 
Decision 
The appeal is GRANTED . We award Red Gold, Inc. $253,608.96, plus interest, at 
rates prescribed pursuant to the Contract Disputes Act, 41 U.S.C.A. § 7109 (West 2011), from 
July 15, 2011, until the date of payment. 
PATRICIA J. SHERIDAN 
Board Judge 
We concur: 
STEPHEN M. DANIELS ALLAN H. GOODMAN 
Board Judge Board Judge