B-124549, JUL. 21, 1955

B-124549: Jul 21, 1955

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TO THE HONORABLE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED JULY 5. THE BID WAS ACCEPTED AND BECAME THE BASIS OF CONTRACT NO. OUR DECISION IS REQUESTED AS TO WHETHER THE CONTRACT MAY BE CANCELED IN VIEW OF THE FACTS REPORTED. OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $180 (OFFERING YELLOW OAK IN LIEU OF WHITE OAK). BIDS WERE OPENED ON MAY 10 AND ON MAY 13. AWARD WAS MADE TO BELCHER AND SON. STATING THAT IT WAS IMPOSSIBLE TO OBTAIN LOGS OF THE SIZE INVOLVED WITHOUT HEART WOOD. THE FILE SHOWS THAT THE SECOND LOW BID ($180) WAS BASED ON YELLOW OAK. THAT UPON INQUIRY AFTER THE CONTRACTOR'S REJECTION OF THE ORDER IT WAS DISCOVERED THAT THE BID OF $201.75. WAS BASED ON BOXED HEART.

B-124549, JUL. 21, 1955

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED JULY 5, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS AND R AND D), RELATIVE TO AN ERROR ALLEGED BY J. B. BELCHER AND SON, INC. IN ITS BID ON WHITE OAK LOGS SUBMITTED PURSUANT TO INVITATION FOR BIDS NO. ENG-23-065-55-285, ISSUED APRIL 25, 1955, BY THE CORPS OF ENGINEERS, ST. LOUIS DISTRICT. THE BID WAS ACCEPTED AND BECAME THE BASIS OF CONTRACT NO. DA-23-065-ENG 6667, DATED MAY 13, 1955. OUR DECISION IS REQUESTED AS TO WHETHER THE CONTRACT MAY BE CANCELED IN VIEW OF THE FACTS REPORTED.

THE INVITATION REQUESTED BIDS ON 21,000 FBM OF "TIMBER, WHITE OAK, CLASS B (SHAFT LOGS), ROUGH, ANY STAGE OF SEASONING; IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-O-2037A, DATED 21 MAY 1952.' TO BE DELIVERED F.O.B. NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA. BELCHER AND SON OFFERED TO FURNISH THE LUMBER FOR $150 PER MBF, A TOTAL PRICE OF $3,150. OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $180 (OFFERING YELLOW OAK IN LIEU OF WHITE OAK), $201.75, $450, $749.37, $780 AND $800 PER MBF. BIDS WERE OPENED ON MAY 10 AND ON MAY 13, 1955, AWARD WAS MADE TO BELCHER AND SON, THE LOW BIDDER, WITHOUT INEQUITY OR VERIFICATION. BY LETTER DATED MAY 16, 1955--- AFTER AWARD HAD BEEN MADE--- THE CONTRACTOR ADVISED THAT THE LOGS PROPOSED TO BE FURNISHED WOULD BE "TIGHT BOXED HEARTS LUMBER.' UPON BEING ADVISED THAT SUCH LOGS WOULD NOT MEET THE REQUIREMENT OF MILITARY SPECIFICATION MIL-O 2037A, DATED MAY 21, 1952, THAT WHITE OAK SHAFT LOGS SHALL BE FREE FROM MEDIUM CROSS GRAIN, PITH AND SPLIT, THE CONTRACTOR RETURNED THE PURCHASE ORDER, STATING THAT IT WAS IMPOSSIBLE TO OBTAIN LOGS OF THE SIZE INVOLVED WITHOUT HEART WOOD.

THE FILE SHOWS THAT THE SECOND LOW BID ($180) WAS BASED ON YELLOW OAK; THAT UPON INQUIRY AFTER THE CONTRACTOR'S REJECTION OF THE ORDER IT WAS DISCOVERED THAT THE BID OF $201.75, LIKE THAT OF BELCHER AND SON, WAS BASED ON BOXED HEART; AND THAT THE LOWEST BID BASED ON WHITE OAK MEETING THE SPECIFICATION REQUIREMENTS WAS THAT OF NEFF LUMBER MILLS, BROADWAY, VIRGINIA, IN THE AMOUNT OF $450 PER MBF. IT IS STATED BY THE DISTRICT ENGINEER IN HIS LETTER OF JUNE 13, 1955, THAT INFORMATION RECEIVED FROM SEVERAL LUMBER SUPPLIERS AFTER AWARD OF THE CONTRACT WAS TO THE EFFECT THAT A FAIR PRICE FOR THE MATERIAL IN QUESTION DELIVERED TO WORFOLK, VIRGINIA, WOULD BE BETWEEN $400 TO $600 PER MBF, DEPENDING ON THE SOURCE OF SUPPLY.

IN VIEW OF THE FACTS OF THIS MATTER AS REPORTED AND AS SHOWN BY THE FILE, IT MAY BE REGARDED AS SATISFACTORILY ESTABLISHED THAT J. B. BELCHER AND SON, INC. DID NOT INTEND TO OFFER LOGS FREE OF PITH, AND THAT THE REASONABLE CURRENT MARKET VALUE OF SUCH LOGS WAS APPROXIMATELY THREE TIMES THE PRICE QUOTED BY THE LOW BIDDER. SINCE THE LATTER FACT WAS APPARENTLY READILY ASCERTAINABLE, IT IS BELIEVED THAT THE CONTRACTING OFFICER IS PROPERLY CHARGEABLE WITH NOTICE THEREOF, AND SHOULD THEREFORE HAVE REQUESTED VERIFICATION OF THE BID BEFORE MAKING THE AWARD. IN THESE CIRCUMSTANCES, THE CONTRACT INVOLVED MAY BE CANCELED, WITHOUT LIABILITY TO THE CONTRACTOR.