B-100057, JUN 6, 1951

B-100057: Jun 6, 1951

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PRECIS-UNAVAILABLE THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER DATED MARCH 8. BY WHICH THERE WAS FORWARDED WITH A REQUEST FOR A REPORT IN THE MATTER. WAS AWARDED TO THE CORPORATION ON NOVEMBER 3. FOR .093" THICK SHEET STEEL IS OBVIOUSLY AND FLAGRANTLY IN ERROR. THE PRICE WILL HARDLY COVER THE FREIGHT CHARGES TO TEXAS. FOR THE SAME MATERIAL IS $.60 PER SQ. PRICES ARE ON THE UPWARD TREND.". IN SUPPORT OF ITS CONTENTION THAT THE ERROR IN ITS BID ON SAID ITEM WAS OBVIOUS. WHICH IS LESS THAN THE PUBLISHED MILL PRICE AND INCLUDES NOTHING FOR TRANSPORTATION TO SAN ANTONIO. BY WHICH THE WEIGHT AND THE BASE PRICE OF SHEET STEEL OF THE KIND HERE CALLED FOR ARE INDICATED AS OF SAID DATES.

B-100057, JUN 6, 1951

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED MARCH 8, 1951, WITH ENCLOSURES, FROM THE DIRECTOR OF FINANCE, REPLYING TO OFFICE LETTER OF DECEMBER 26, 1950, BY WHICH THERE WAS FORWARDED WITH A REQUEST FOR A REPORT IN THE MATTER, A LETTER DATED DECEMBER 4, 1950, FROM ALTON IRON WORKS, INC., 145 WEST 40 STREET, NEW YORK 18, NEW YORK, ALLEGING THAT AN ERROR HAD BEEN MADE IN ITS BID DATED OCTOBER 23, 1950, AND REQUESTING THAT PURCHASE ORDER NO. (41- 142)51-7618, DATED NOVEMBER 3, 1950, BASED THEREON, BE VACATED.

THE KELLY AIR FORCE BASE, BY INVITATION NO. IFB-41-142-51-366, REQUESTED BIDS - TO BE OPENED OCTOBER 27, 1950 - FOR FURNISHING FOUR ITEMS OF STEEL SUPPLIES. IN RESPONSE THERETO, ALTON IRON WORKS, INC., SUBMITTED A BID IN WHICH IT QUOTED PRICES F.O.B. DESTINATION FOR ALL FOUR ITEMS, THEREBY OFFERING TO FURNISH, AMONG OTHER THINGS, 2,800 SQUARE FEET OF ANNEALED LOW CARBON HOT ROLLED SHEET STEEL, .093" X 36" X 120" AT $0.15 PER SQUARE FOOT, OR A TOTAL BID PRICE OF $420.

ITEM NO. 3, ONLY, WAS AWARDED TO THE CORPORATION ON NOVEMBER 3, 1950. LETTER DATED NOVEMBER 17, 1950, THE CORPORATION RETURNED THE PURCHASE ORDER - ALLEGEDLY RECEIVED ON THAT DATE - FOR CANCELLATION, STATING THAT IT COULD NOT ACCEPT IT FOR THE FOLLOWING REASONS:

"THE PRICE OF $.15 PER SQ. FT. FOR .093" THICK SHEET STEEL IS OBVIOUSLY AND FLAGRANTLY IN ERROR. THIS MATERIAL WEIGHS ABOUT 4 LBS. PER SQ. FT. THE PRICE WILL HARDLY COVER THE FREIGHT CHARGES TO TEXAS.

"ORDER NO. (41-142)50-14860-E, ITEM 3, FOR THE SAME MATERIAL IS $.60 PER SQ. FT. AND PRICES ARE ON THE UPWARD TREND."

REPLYING TO THE CORPORATION'S LETTER, THE CONTRACTING OFFICER, BY LETTER DATED NOVEMBER 27, 1950, REFUSED TO CANCEL THE ORDER, ASSERTING HIS LACK OF AUTHORITY TO DO SO, AND ADVISED FURTHER AS FOLLOWS:

"IN THE EVENT YOU ALLEGE A MISTAKE IN BID, YOU MAY SUBMIT THE PERTINENT FACTS TO THE GENERAL ACCOUNTING OFFICE, WASHINGTON, D.C."

THE CORPORATION, BY ITS REFERRED-TO LETTER OF DECEMBER 4, 1950, TO THIS OFFICE, QUOTED THE DESCRIPTION OF THE SHEET STEEL CALLED FOR UNDER ITEM NO. 3 AND, IN SUPPORT OF ITS CONTENTION THAT THE ERROR IN ITS BID ON SAID ITEM WAS OBVIOUS, STATED AS FOLLOWS:

"THE ITEM INVOLVES OVER 5 TONS (10,650 LBS.) SHEET STEEL AND THE PRICE FIGURES UNDER $.04 PER LB., WHICH IS LESS THAN THE PUBLISHED MILL PRICE AND INCLUDES NOTHING FOR TRANSPORTATION TO SAN ANTONIO, TEXAS."

ALSO, THE CORPORATION FORWARDED BY LETTER OF JANUARY 2, 1951, ITS VERIFIED ORIGINAL WORK SHEET, A PRINTED PRICE LIST DATED JANUARY 3, 1950, ISSUED BY THE RUSHMORE STEEL CORPORATION, AND A PRINTED PRICE LIST FROM THE IRON AGE ISSUE OF DECEMBER 4, 1950, BY WHICH THE WEIGHT AND THE BASE PRICE OF SHEET STEEL OF THE KIND HERE CALLED FOR ARE INDICATED AS OF SAID DATES. THESE DOCUMENTS ARE CITED AND THE APPLICABLE PRICES ARE STATED IN THE FORWARDING LETTER AS FOLLOWS:

"(A) CERTIFIED ORIGINAL WORK SHEET; ITEM (3) IS SHOWN AS 3.8 LBS. PER SQ. FT. WITH A TOTAL OF 10,650 LBS.

"(B) PRICE LIST OF RUSHMORE STEEL CORP; THE COMMODITY BEING SHEETS, HOT ROLLED, THE BASE PRICE (FOR QUANTITY OF 10,000 LBS. TO 19,999 LBS.) IS $5.55 PER 100 LBS.

"(C) STEEL PRICES - IRON AGE ISSUE OF DECEMBER 14, 1950; MILL PRICES FOR SHEETS, HOT ROLLED ARE SHOWN $3.60/3/75 PER 100 LBS., F.O.B. PITTSBURGH, PA.

"TO THE ABOVE BASE PRICES THERE MUST BE ADDED 'EXTRAS' FOR GAGE, WIDTH, LENGTH, QUANTITY AND QUALITY (TO MEET SPECIFICATION).

"THE APPLICABLE FREIGHT RATE FROM NEW YORK TO KELLY AIR FORCE BASE (SAN ANTONIO) TEXAS IS $3.39 PER 100 LBS., PLUS 3% TAX.

"FROM THE ABOVE EVIDENCE IT SHOULD BE APPARENT THAT THE QUOTED PRICE OF $.15 PER SQ. FT. FOR THE SUBJECT MATERIAL IS IN ERROR."

THE WORK SHEET SHOWS A UNIT PRICE FOR ITEM NO. 3 OF $0.75 AND A TOTAL BID PRICE OF $420. THUS, ON THE BASIS OF THE WORKSHEET FURNISHED AND THE ABOVE-QUOTED REFERENCE IN LETTER OF NOVEMBER 17, 1950, TO A PRIOR 1950 ORDER FOR THE SAME MATERIAL AT $0.60 PER SQUARE FOOT, WITH THE ACCOMPANYING STATEMENT THAT "THE PRICES ARE ON THE UPWARD TREND, THE CORPORATION PURPORTS TO SHOW THAT IT INTENDED TO QUOTE A UNIT PRICE OF $0.75 PER SQUARE FOOT ON ITEM NO. 3. IN THIS CONNECTION, BY FOLLOW UP LETTER OF DECEMBER 19, 1950, IT STATED AS FOLLOWS:

"IN FURTHERANCE OF OUR LETTER DATED DECEMBER 4, 1950, WE HAVE RECEIVED ORDER (41-142)51-9256 FOR THE IDENTICAL MATERIAL AT $.75 PER SQ. FT.

"AS A MATTER OF FACT, THE DEFECT IN OUR BID IFB-41-142-51-366 WAS A CLERICAL ERROR IN TYPING .15 INSTEAD OF .75 APPEARING ON OUR ESTIMATE SHEET."

WHERE ONLY ONE BID IS RECEIVED ON AN ITEM - AS IN THE PRESENT CASE - THERE IS OF COURSE NO BASIS FOR A COMPARISON OF BIDS AND WHERE THERE IS NO INDICATION OF ERROR ON THE FACE OF THE BID THERE IS NOTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. SEE 17 COMP. GEN. 560; AND 26 ID. 415. HOWEVER, IN THE PRESENT CASE, IT APPEARS THAT THE CONTRACTOR QUOTED ONLY ONE-FIFTH OF ITS INTENDED BID PRICE. THE CONCLUSION IS WARRANTED THEREFORE THAT THE ALTON IRON WORKS, INC., SHOULD NOT BE REQUIRED TO FURNISH THE MATERIAL UNDER ITEM NO. 3 AT THE PRICE STIPULATED IN ITS BID. IN VIEW THEREOF AND SINCE IN SUPPLEMENTAL REPORT DATED MAY 23, 1951, FROM THE DIRECTOR OF FINANCE, IT IS STATED THAT $0.75 PER SQUARE FOOT IS A FAIR AND REASONABLE PRICE FOR SAID ITEM NO. 3, PAYMENT THEREFOR MAY BE MADE AT THAT PRICE.

REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING THE PAYMENT.