B-121754, NOV 3, 1954

B-121754: Nov 3, 1954

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

SECRETARY: I HAVE YOUR LETTER OF OCTOBER 8. THE COMPANY ALLEGED THAT THE MATERIAL EXHIBITED BY THE GOVERNMENT AS THAT COVERED BY ITEM 3 CONSISTED OF A GENERATOR WITH A GM-271 ENGINE ATTACHED AND THAT ITS BID PRICE WAS BASED ON THE EQUIPMENT AS EXHIBITED. ASSERTING THAT THE LIST PRICE OF A GENERATOR OF THE TYPE INVOLVED IS APPROXIMATELY $900. THE CONTRACTING OFFICER HAS REPORTED THAT THE ACQUISITION COST OF THE GENERATOR COVERED BY ITEM 3 WAS $1. THAT NO ENGINE WAS ATTACHED THERETO. THAT MATERIAL OFFERED UNDER ITEM 3 WAS NOT MISREPRESENTED TO THE CONTRACTOR. AN ABSTRACT OF THE BIDS SHOWS THAT THE OTHER TWO BIDS FOR ITEM 3 WERE IN THE AMOUNTS OF $45 AND $2.10. A MERE DIFFERENCE IN THE PRICES QUOTED BY BIDDERS FOR USED PROPERTY OR MATERIALS OFFERED FOR SALE IS NOT SUFFICIENT TO PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR.

B-121754, NOV 3, 1954

PRECIS-UNAVAILABLE

MR. SECRETARY:

I HAVE YOUR LETTER OF OCTOBER 8, 1954, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO THE REQUEST OF DENNIS ENGINE & EQUIPMENT COMPANY THAT CONTRACT NO. N191S-40962 DATED MARCH 1, 1954, BE CANCELLED OR THAT THE CONTRACT PRICE BE REDUCED.

DENNIS ENGINE & EQUIPMENT COMPANY SUBMITTED A BID IN WHICH IT QUOTED A PRICE OF $1,057.50 FOR ITEM 3 COVERING A GENERATOR DESCRIBED AS "USED - REPAIRS REQUIRED - FAIR CONDITION." UPON ACCEPTANCE OF THE BID, THE COMPANY PAID THE CONTRACT CONSIDERATION AND RECEIVED DELIVERY OF THE GENERATOR. THEREAFTER, BY LETTER OF JUNE 21, 1954, THE COMPANY ALLEGED THAT THE MATERIAL EXHIBITED BY THE GOVERNMENT AS THAT COVERED BY ITEM 3 CONSISTED OF A GENERATOR WITH A GM-271 ENGINE ATTACHED AND THAT ITS BID PRICE WAS BASED ON THE EQUIPMENT AS EXHIBITED. ASSERTING THAT THE LIST PRICE OF A GENERATOR OF THE TYPE INVOLVED IS APPROXIMATELY $900, THE COMPANY REQUESTED THAT THE CONTRACT BE CANCELLED OR THAT THE CONSIDERATION BE REDUCED TO $250.

THE CONTRACTING OFFICER HAS REPORTED THAT THE ACQUISITION COST OF THE GENERATOR COVERED BY ITEM 3 WAS $1,000; THAT NO ENGINE WAS ATTACHED THERETO; AND THAT MATERIAL OFFERED UNDER ITEM 3 WAS NOT MISREPRESENTED TO THE CONTRACTOR. AN ABSTRACT OF THE BIDS SHOWS THAT THE OTHER TWO BIDS FOR ITEM 3 WERE IN THE AMOUNTS OF $45 AND $2.10.

A MERE DIFFERENCE IN THE PRICES QUOTED BY BIDDERS FOR USED PROPERTY OR MATERIALS OFFERED FOR SALE IS NOT SUFFICIENT TO PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. HOWEVER, THE FACT THAT THE BID SUBMITTED BY DENNIS ENGINE & EQUIPMENT COMPANY WAS IN EXCESS OF THE ACQUISITION COST OF THE GENERATOR, COUPLED WITH THE KNOWLEDGE THAT THE GENERATOR WAS ONLY IN FAIR CONDITION AND REQUIRED REPAIRS, SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE COMPANY'S BID. THEREFORE, THE COMPANY'S BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING VERIFICATION OF THE BID PRICE.

ACCORDINGLY, IF THE GENERATOR COVERED BY ITEM 3 IS RETURNED, THE PURCHASE PRICE SHOULD BE REFUNDED TO DENNIS ENGINE & EQUIPMENT COMPANY. HOWEVER, IN VIEW OF THE CIRCUMSTANCES INVOLVED, IF THE OFFER OF $250, WHICH IS FAR IN EXCESS OF THE OTHER BIDS, IS CONSIDERED A REASONABLE PRICE FOR THE GENERATOR, THE COMPANY MAY BE ALLOWED TO RETURN THE SAME AND REFUND OF THE AMOUNT PAID IN EXCESS THEREOF MAY BE MADE TO THE COMPANY.