B-126274, JAN. 6, 1956

B-126274, JAN. 6, 1956

TO KING HARDWARE COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 14, 1955, REQUESTING REVIEW OF SETTLEMENT DATED AUGUST 1, 1955, WHEREIN THERE WAS DISALLOWED $383.96 OF YOUR CLAIM FOR $626.40 UNDER PURCHASE ORDER NO. AT-26463-3, DATED APRIL 15, 1955.

IT APPEARS THAT IN RESPONSE TO INFORMAL REQUESTS BY THE GENERAL SERVICES ADMINISTRATION FOR BIDS ON SHORT-LENGTH THICKNESS GAGES YOU QUOTED A PRICE OF $0.54 EACH FOR THE 116 GAGES TO BE FURNISHED, OR A TOTAL PRICE OF $62.64. PURCHASE ORDER NO. AT-26463-3 WAS ISSUED TO YOU ON THE BASIS OF YOUR BID WHICH WAS THE LOWEST OF THE FIVE BIDS RECEIVED. SUBSEQUENTLY, UPON RECEIPT BY YOU OF AN INVOICE FROM THE LUFKIN RULE COMPANY, WHICH APPARENTLY WAS YOUR SUPPLIER, YOU DISCOVERED THAT AN ERROR HAD BEEN MADE IN THE QUOTATION IN THAT YOU HAD INTENDED A PRICE OF $5.40 EACH INSTEAD OF THE $0.54 EACH QUOTED BY YOU FOR THE GAGES. YOU FILED A CLAIM FOR A PRICE ADJUSTMENT IN THE PURCHASE ORDER TO $626.40 REPRESENTING THE TOTAL INTENDED PRICE FOR THE 116 GAGES REQUIRED. THE AMOUNT OF $383.96 OF THE TOTAL AMOUNT OF $626.40 CLAIMED WAS DISALLOWED FOR THE REASON SET FORTH IN THE SETTLEMENT.

YOUR REQUEST OF NOVEMBER 14, 1955, FOR REVIEW OF THIS MATTER APPEARS TO BE BASED ON YOUR CONTENTION THAT YOU EXPERIENCED A NET LOSS OF $279.56 UNDER THE PURCHASE ORDER; THAT SUCH LOSS RESULTED FROM A SIMPLE DECIMAL POINT MISTAKE; AND THAT A COMPARISON OF THE LUFKIN NO. 126 GAGE TO ANY OTHER GAGE WOULD JUSTIFY THE ALLOWANCE OF THE CLAIM FROM THE STANDPOINT OF QUALITY AND PRICE.

THE RECORD SHOWS CLEARLY THAT THE ERROR INVOLVING A MISPLACED DECIMAL POINT WAS DUE SOLELY TO YOUR OVERSIGHT AND WAS NOT CONTRIBUTED TO IN ANY MANNER BY THE GOVERNMENT. WHAT IS EVEN MORE IMPORTANT IS THE FACT THAT THERE WAS NOTHING IN THE BID, OR IN THE ATTENDANT CIRCUMSTANCES THERETO, THAT WOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF AN ERROR IN THE BID AT THE TIME IT WAS ACCEPTED. ALTHOUGH YOUR BID WAS CONSIDERABLY LESS THAN THREE OTHER BIDS RECEIVED WHICH RANGED FROM $2.09 TO $2.55 EACH, THE CONTRACTING OFFICER HAS REPORTED THAT IN A PREVIOUS CASE INVOLVING DRILL AND WIRE GAGES THE LOW BID OF $0.89 EACH WAS QUESTIONED BECAUSE THE GENERAL SERVICES ADMINISTRATION HAD A CONTRACT FOR THE ITEM FOR $2.21 EACH; HOWEVER IT WAS DETERMINED THAT THE $0.89 ITEM DID MEET SPECIFICATIONS. FURTHERMORE, YOUR BID DID NOT SHOW THAT YOU WERE QUOTING ON A LUFKIN GAGE. THE BID THEREFORE WAS ACCEPTED IN GOOD FAITH AND IF THE ERROR HAD NOT OCCURRED THE GENERAL SERVICES ADMINISTRATION APPARENTLY COULD HAVE PROCURED A GAGE MEETING ALL OF THE REQUIREMENTS OF THE SPECIFICATIONS AT $2.09 EACH, THE PRICE OF THE NEXT LOWEST BID. UNDER SUCH CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR THE EXPENDITURE OF APPROPRIATED FUNDS IN EXCESS OF THE AMOUNT THAT THE GOVERNMENT OTHERWISE WOULD HAVE HAD TO PAY FOR THE GAGES. TO CONCLUDE OTHERWISE WOULD BE TO SUBJECT THE GOVERNMENT TO A MONETARY PENALTY IN A TRANSACTION WHERE IT WAS ENTIRELY FREE OF FAULT AND THE FACT, UNFORTUNATE AS IT MAY BE, THAT YOU SUFFERED A LOSS OR FURNISHED A GAGE OF HIGHER QUALITY MAY NOT BE ACCEPTED AS ALTERING THE CONCLUSION OTHERWISE FOUND PROPER IN THE MATTER.