B-125874, DEC. 1, 1955

B-125874: Dec 1, 1955

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 24. WAS $0.044 EACH. ERROR WAS APPARENT ON THE FACE OF THE BID SINCE THE UNIT PRICE OF $0.044 MULTIPLIED BY 14. ALTHOUGH THE RECORD NOW INDICATES THAT BOTH THE UNIT PRICE AND THE TOTAL PRICE BID ON LOT NO. 26 WERE ERRONEOUS. THE ABSTRACT OF THE BIDS RECEIVED ON THE LOT SHOWS THAT THERE WAS MORE REASON FOR THE CONTRACTING OFFICER TO SUSPECT AN ERROR IN THE UNIT PRICE OF $0.044 THAN IN THE TOTAL BID PRICE OF $57.51 FOR THE LOT BECAUSE THE TOTAL PRICE BID WAS DIRECTLY IN LINE WITH THE FOUR OTHER BIDS RECEIVED. WHEREAS THE UNIT PRICE WAS SUBSTANTIALLY HIGHER THAN ANY OF THE OTHER UNIT PRICES BID FOR THE LOT. IT IS NOTED THAT ON THE BASIS OF $0.044 EACH.

B-125874, DEC. 1, 1955

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 24, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO THE ALLEGED ERROR ON ONE ITEM (LOT NO. 26) OF A BID SUBMITTED BY THE STERLING BOLT COMPANY WHICH RESULTED IN CONTRACT NO. N251S-7672-A DATED MAY 23, 1955, FOR THE SALE OF LOTS NOS. 10, 11, 14 AND 26 OF GOVERNMENT-OWNED PROPERTY LOCATED AT PUGET SOUND NAVAL SHIPYARD.

THE COMPANY'S BID ON ITEM 26, A QUANTITY OF 14,377 BOX NUTS, WAS $0.044 EACH, TOTAL $57.51. ERROR WAS APPARENT ON THE FACE OF THE BID SINCE THE UNIT PRICE OF $0.044 MULTIPLIED BY 14,377, THE QUANTITY INVOLVED, EQUALS $632.59 AND NOT $57.51, THE TOTAL PRICE BID FOR THE LOT. ALTHOUGH THE RECORD NOW INDICATES THAT BOTH THE UNIT PRICE AND THE TOTAL PRICE BID ON LOT NO. 26 WERE ERRONEOUS, THE ABSTRACT OF THE BIDS RECEIVED ON THE LOT SHOWS THAT THERE WAS MORE REASON FOR THE CONTRACTING OFFICER TO SUSPECT AN ERROR IN THE UNIT PRICE OF $0.044 THAN IN THE TOTAL BID PRICE OF $57.51 FOR THE LOT BECAUSE THE TOTAL PRICE BID WAS DIRECTLY IN LINE WITH THE FOUR OTHER BIDS RECEIVED, WHEREAS THE UNIT PRICE WAS SUBSTANTIALLY HIGHER THAN ANY OF THE OTHER UNIT PRICES BID FOR THE LOT. ALSO, IT IS NOTED THAT ON THE BASIS OF $0.044 EACH, THE CORRECT TOTAL FOR LOT NO. 26 IS $632.59, AN AMOUNT ONLY SLIGHTLY LESS THAN THE PUBLISHED ACQUISITION COST OF $641.18. IN A SALE OF GOVERNMENT-OWNED SURPLUS PROPERTY, ON AN "AS IS" BASIS, A BIDDER'S OFFER ORDINARILY IS SUBSTANTIALLY LESS THAN THE ADVERTISED ACQUISITION COST OF THE PROPERTY. FURTHERMORE, IT SHOULD HAVE BEEN APPARENT TO THE CONTRACTING OFFICER THAT A CORRECTION OF THE COMPANY'S TOTAL PRICE BID ON LOT NO. 26 TO MAKE IT CONSISTENT WITH THE COMPANY'S UNIT BID PRICE HAD THE EFFECT OF THROWING THE TOTAL PRICE OUT OF LINE WITH THE OTHER TOTAL BID PRICES RECEIVED FOR THE LOT AS FOLLOWS:

CHART

BIDDER NO. UNIT PRICE TOTAL PRICE BID

18 $0.012 $172.52

20 (0.008) 116.74 (LOT ONLY)

24 (CONTRACTOR) 0.044 57.51 (632.59 REVISED

AWARD)

31 0.00275 39.54

26 0.00186 26.74

MOREOVER, IT IS OBVIOUS THAT THE COMPANY'S BID DEPOSIT OF $299.60 WAS COMPUTED ON THE BASIS OF $1,497.96, THE AMOUNT OF THE TOTAL BID, COVERING ALL LOTS BID UPON, INCLUDING ITS TOTAL BID PRICE OF ONLY $57.51 FOR LTO NO. 26. ALTHOUGH AWARE OF AN OBVIOUS ERROR IN THE COMPANY'S BID ON LOT NO. 26, THE CONTRACTING OFFICER AWARDED THE FOUR LOTS INCLUDING LOT NO. 26 TO THE COMPANY. HOWEVER, AS ADMINISTRATIVELY REPORTED, IT APPEARS THAT ALTHOUGH THE TOTAL CONTRACT PRICE WAS INTENDED TO INCLUDE $632.59 FOR LOT NO. 26, ACTUALLY ONLY $63.26 WAS INCLUDED FOR THAT LOT. UPON DISCOVERY OF HIS OWN MISTAKE DUE TO MISPLACEMENT OF THE DECIMAL POINT IN UNDERTAKING TO CORRECT THE COMPANY'S TOTAL PRICE BID, THE CONTRACTING OFFICER ISSUED AND MAILED A REVISED AWARD AND REQUESTED THE CONTRACTOR TO DISREGARD THE ORIGINAL AWARD ALLEGEDLY MAILED EARLIER ON THE SAME DATE, INVITING ATTENTION TO LOT NO. 26 IN WHICH THE EXTENSION WAS ERRONEOUS. THE CONTRACTOR THEN ALLEGED AN ERROR IN ITS BID ON LOT NO. 26 AND EXPLAINED IN DETAIL THE MANNER IN WHICH ITS INTENDED TOTAL PRICE OF $63.26 AND UNIT PRICE OF $0.0044 WERE ORIGINALLY COMPUTED. ALSO, IT FURNISHED COPIES OF SUPPLIER'S PRICE LISTS WHICH REASONABLY ESTABLISHED THAT A UNIT PRICE OF $0.044 OBVIOUSLY WAS GREATLY IN EXCESS OF THE MARKET VALUE OF NEW MATERIAL OF THE KIND OFFERED FOR SALE UNDER LOT NO. 26 AND REPEATED ITS REQUEST FOR A REVISED AWARD IN CONFORMITY WITH ITS INTENDED BID. APPARENTLY BY A COINCIDENCE, THE PRICE ALLOWED FOR LOT NO. 26 IN THE ERRONEOUS AWARD FIRST ISSUED BY THE CONTRACTING OFFICER WAS PRECISELY THE SAME AS THE CONTRACTOR'S INTENDED BID FOR THE LOT AS SUBSEQUENTLY ALLEGED AND SATISFACTORILY EXPLAINED BY IT.

WITHOUT RECITING ANY OF THE ADDITIONAL FACTS WHICH ARE DISCLOSED IN COPIES OF THE PERTINENT CORRESPONDENCE TO BE RETAINED IN OUR OFFICE FILES, THE CONCLUSION IS WARRANTED THAT SINCE THE COMPANY WAS NOT AFFORDED AN OPPORTUNITY TO VERIFY ITS BID ON LOT NO. 26 THE ISSUANCE OF NEITHER THE ORIGINAL NOR THE REVISED AWARD, UNDER THE CIRCUMSTANCES HERE INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT FOR THE SALE OF LOT NO. 26. CONSEQUENTLY, THE ACCEPTANCE OF THE BID, AS TO LOT NO. 26--- NOTWITHSTANDING A PROVISION IN THE TERMS OF THE SALE THAT IN CASE OF ERROR IN THE EXTENSION OF PRICES IN THE BID, THE UNIT PRICES WILL GOVERN--- DID NOT LEGALLY OBLIGATE THE COMPANY TO PAY $632.59, THE AMOUNT DEMANDED AND COLLECTED FROM THE COMPANY FOR LOT NO. 26. SEE 15 COMP. GEN. 746. FOLLOWS THAT THE GOVERNMENT MAY NOT RETAIN ANY AMOUNT RECEIVED FROM THE COMPANY FOR LOT NO. 26 IN EXCESS OF $172.52, THE AMOUNT IT WOULD HAVE BEEN ENTITLED TO RECEIVE FOR THAT LOT UNDER A CONTRACT WITH S. NOVAK, THE NEXT HIGHEST BIDDER, TO WHOM THE LOT WOULD HAVE BEEN AWARDED IF THE STERLING BELT COMPANY HAD NOT MADE A BONA FIDE ERROR IN THE PREPARATION OF ITS BID AND HAD SUBMITTED THE BID AS ALLEGEDLY INTENDED.

ACCORDINGLY, SINCE DELIVERY OF ALL FOUR LOTS WAS ACCEPTED AND A PRICE OF $632.59 INSTEAD OF $63.26 WAS PAID FOR LOT NO. 26 AT THE REQUEST OF THE CONTRACTING OFFICER AND WITH THE PRIOR UNDERSTANDING THAT THE CONTRACTOR'S CLAIM FOR A REFUND WOULD NOT BE PREJUDICED BY REASON THEREOF, PAYMENT IS AUTHORIZED TO BE MADE TO STERLING BOLT COMPANY OF A REFUND IN THE AMOUNT OF $460.07, AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE PRICE PAID BY THE COMPANY AND THE NEXT HIGHEST CORRECT BID RECEIVED FOR THE LOT.

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