B-124308, JUN. 30, 1955

B-124308: Jun 30, 1955

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NATIONAL INSTITUTES OF HEALTH: REFERENCE IS MADE TO YOUR LETTERS OF JUNE 9 AND 20. BIDS WERE REQUESTED FOR FURNISHING. THE INVITATION DOES NOT CONTAIN ANY PROVISION THAT THE CONTRACT PRICE IS TO INCLUDE ALL FEDERAL TAXES IN EFFECT ON THE CONTRACT DATE. YOU STATE THAT EIGHT BIDS WERE RECEIVED ON THE SECONDARY CLOCKS REQUIRED UNDER ITEMS 22 AND 23. THAT IN REVIEWING THE BIDS IT WAS NOTED THAT FOUR BIDDERS. YOU CONTACTED THE TAX RULING DIVISION OF THE INTERNAL REVENUE SERVICE BY TELEPHONE AND WERE ADVISED THAT THE 10 PERCENT FEDERAL EXCISE TAX WAS APPLICABLE TO THE SECONDARY CLOCKS. IT IS UNDERSTOOD INFORMALLY THAT YOU THEN BY TELEPHONE REQUESTED THE FOUR OTHER BIDDERS TO VERIFY WHETHER THEIR BID PRICES INCLUDED THE APPLICABLE FEDERAL EXCISE TAX.

B-124308, JUN. 30, 1955

TO MR. DONALD R. WATSON, CONTRACTING OFFICER, NATIONAL INSTITUTES OF HEALTH:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 9 AND 20, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR THE GAFFNEY-KROESE ELECTRICAL SUPPLY CORP. ALLEGES IT MADE IN ITS BID OPENED ON MAY 12, 1955.

BY INVITATION NO. X581-5-12-55, BIDS WERE REQUESTED FOR FURNISHING, AMONG OTHER ITEMS, 526 EDWARDS TELECHRON MOVEMENT CLOCKS, ITEMS 22 AND 23, FOR USE WITH THE EXISTING MASTER CONTROL SYSTEM IN BUILDING 10, NATIONAL INSTITUTES OF HEALTH, BETHESDA, MARYLAND. THE INVITATION DOES NOT CONTAIN ANY PROVISION THAT THE CONTRACT PRICE IS TO INCLUDE ALL FEDERAL TAXES IN EFFECT ON THE CONTRACT DATE, OR ANY OTHER REFERENCE TO TAXES.

YOU STATE THAT EIGHT BIDS WERE RECEIVED ON THE SECONDARY CLOCKS REQUIRED UNDER ITEMS 22 AND 23, THE LOWEST BEING THAT OF THE GAFFNEY KROESE ELECTRICAL SUPPLY CORP.; THAT IN REVIEWING THE BIDS IT WAS NOTED THAT FOUR BIDDERS, WHO QUOTED TOTAL PRICES RANGING FROM $11,684.50 TO $11,944.24, STATED IN THEIR BIDS THAT A 10 PERCENT FEDERAL EXCISE TAX SHOULD BE ADDED TO THEIR BID PRICES; AND THAT FOUR OTHER BIDDERS--- INCLUDING THE GAFFNEY- KROESE ELECTRICAL SUPPLY CORP.- - WHO QUOTED PRICES RANGING FROM $11,845.75 TO $12,560, DID NOT MENTION THE EXCISE TAX IN THEIR BIDS. AN EFFORT TO CLARIFY THE MATTER, YOU CONTACTED THE TAX RULING DIVISION OF THE INTERNAL REVENUE SERVICE BY TELEPHONE AND WERE ADVISED THAT THE 10 PERCENT FEDERAL EXCISE TAX WAS APPLICABLE TO THE SECONDARY CLOCKS. IT IS UNDERSTOOD INFORMALLY THAT YOU THEN BY TELEPHONE REQUESTED THE FOUR OTHER BIDDERS TO VERIFY WHETHER THEIR BID PRICES INCLUDED THE APPLICABLE FEDERAL EXCISE TAX. BY LETTER DATED MAY 19, 1955, THE GAFFNEY-KROESE ELECTRICAL SUPPLY CORP. ADVISED THAT ITS BID PRICES FOR THE CLOCKS REQUIRED UNDER ITEMS 22 AND 23 DID NOT INCLUDE THE APPLICABLE 10 PERCENT FEDERAL EXCISE TAX. TWO OF THE THREE OTHER BIDDERS ADVISED IN WRITING THAT THEIR BID PRICES DID NOT INCLUDE THE APPLICABLE FEDERAL EXCISE TAX, AND THE THIRD ADVISED THAT ITS PRICES FOR THE CLOCKS DID INCLUDE THE TAX.

WHILE ALL BIDDERS ARE CHARGEABLE WITH KNOWLEDGE OF THE TAX LAWS, AND IN THE ABSENCE OF ANY INDICATION TO THE CONTRARY IT WOULD BE PRESUMED THAT THE AMOUNTS BID INCLUDED ANY APPLICABLE TAXES, IN THE PRESENT CIRCUMSTANCES, THE MISTAKE HAVING BEEN ALLEGED PRIOR TO AWARD, THE BIDS OF THOSE BIDDERS WHO FAILED TO INCLUDE THE AMOUNT OF THE FEDERAL EXCISE TAX IN THEIR PRICES FOR THE CLOCKS, INCLUDING THE GAFFNEY-KROESE ELECTRICAL SUPPLY CORP., MAY BE DISREGARDED IN MAKING THE AWARD.