B-126423, FEB. 20, 1956

B-126423: Feb 20, 1956

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TO HONORABLE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED JANUARY 23. N140S 55425B BE RESCINDED ON THE GROUND THAT A MISTAKE HAD BEEN MADE IN THE BID ON WHICH THE CONTRACT WAS AWARDED. PROSPECTIVE BIDDERS WERE ADVISED THAT THE PRICE FOR ITEM 6 WAS TO BE INCLUDED IN THE PRICE FOR ITEM 1. THE BID OF THE BART-MESSING CORPORATION WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE CORPORATION OFFERED TO FURNISH THE RECTIFIER TYPE POWER SUPPLY UNITS UNDER ITEM 1 AT A UNIT PRICE OF $1. A COPY OF A BUREAU OF SHIPS CONTRACT COVERING THE IDENTICAL MATERIAL WAS OBTAINED. SINCE THE PRICE QUOTED BY THE CORPORATION WAS SUBSTANTIALLY LOW. IT WAS REQUESTED VERBALLY TO CONFIRM ITS BID PRICE ON THE EQUIPMENT.

B-126423, FEB. 20, 1956

TO HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 23, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL), FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO THE REQUEST OF THE BART MESSING CORPORATION, BELLEVILLE, NEW JERSEY, THAT CONTRACT NO. N140S 55425B BE RESCINDED ON THE GROUND THAT A MISTAKE HAD BEEN MADE IN THE BID ON WHICH THE CONTRACT WAS AWARDED.

BY INVITATION NO. N140-505-55, AS AMENDED, THE NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, REQUESTED BIDS FOR FURNISHING 33 SPECIAL RECTIFIER TYPE POWER SUPPLY UNITS DESCRIBED UNDER ITEM 1, WITH CERTAIN ANCILLARY ITEMS DESCRIBED UNDER ITEMS 2 TO 6, INCLUSIVE. PROSPECTIVE BIDDERS WERE ADVISED THAT THE PRICE FOR ITEM 6 WAS TO BE INCLUDED IN THE PRICE FOR ITEM 1. THE BID OF THE BART-MESSING CORPORATION WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE CORPORATION OFFERED TO FURNISH THE RECTIFIER TYPE POWER SUPPLY UNITS UNDER ITEM 1 AT A UNIT PRICE OF $1,993 AND TO FURNISH THE ANCILLARY ITEMS AT THE PRICES SET FORTH OPPOSITE SUCH ITEM, OR ALL ITEMS FOR THE AGGREGATE TOTAL PRICE OF $72,569. THE FIVE OTHER BIDDERS ON ITEMS 1 TO 6, INCLUSIVE, SPECIFIED AGGREGATE TOTAL PRICES RANGING FROM $102,175 TO $163,959.02.

IN A REPORT DATED JANUARY 11, 1956, THE OFFICER IN CHARGE, NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, STATED THAT THE RECTIFIER TYPE POWER SUPPLY UNITS REQUIRED UNDER ITEM 1 OF THE SUBJECT INVITATION HAD NEVER BEEN PREVIOUSLY PURCHASED BY HIS OFFICE; THAT TO ASSIST IN EVALUATING THE BIDS, A COPY OF A BUREAU OF SHIPS CONTRACT COVERING THE IDENTICAL MATERIAL WAS OBTAINED, WHICH SHOWED A PRICE OF ABOUT $5,500 FOR THE BASIC UNIT AS AGAINST $1,993 BID BY THE BART-MESSING CORPORATION; THAT, SINCE THE PRICE QUOTED BY THE CORPORATION WAS SUBSTANTIALLY LOW, IT WAS REQUESTED VERBALLY TO CONFIRM ITS BID PRICE ON THE EQUIPMENT; AND THAT SUBSEQUENTLY A SALES REPRESENTATIVE OF THE CORPORATION ADVISED VERBALLY THAT THE CORPORATION'S BID PRICE FOR THE EQUIPMENT WAS CORRECT. BY NOTICE OF AWARD DATED AUGUST 9, 1955, THE CORPORATION WAS ADVISED OF THE ACCEPTANCE OF ITS BID.

IN A LETTER DATED DECEMBER 19, 1955, TO OUR OFFICE, THE BART-MESSING CORPORATION REQUESTED THAT CONTRACT NO. N140S-55425B BE RESCINDED ON THE FOLLOWING GROUNDS:

"/1) AN INORDINATE VARIATION IN PRICE BETWEEN THE CONTRACT PRICE AND THE COST; (2) THE EXISTENCE OF FACTS AT THE TIME OF THE BIDDING WHICH, IF DISCLOSED TO THE CONTRACTOR, WOULD HAVE RESULTED IN A RE APPRAISAL OR WITHDRAWAL OF THE BID; (3) THE BID WAS PREPARED BY EMPLOYEES OF THE COMPANY AND THERE WAS NO VERIFICATION BY COMPETENT CORPORATE OFFICIALS AS TO THE PRICE; (4) THE LOSS WHICH WILL BE SUFFERED BY BART-MESSING CORPORATION WOULD AMOUNT TO AN UNCONSCIONABLE PENALTY; (5) THE ABSENCE OF ANY REQUEST FOR CONFIRMATION OF THE PRICE BY THE CONTRACTING AGENCY, NOTWITHSTANDING THE PRECEDING EXPERIENCE WITH GENERAL ELECTRIC AND WESTINGHOUSE; (6) CONSTRUCTIVE NOTICE OF THE MISTAKE ON THE PART OF THE CONTRACTING AGENCY AND MUTUAL MISTAKE.'

THE CORPORATION STATED FURTHER THAT IF IT IS COMPELLED TO FURNISH THE EQUIPMENT AT ITS AGGREGATE TOTAL BID PRICE OF $72,569, IT WOULD SUFFER A MINIMUM LOSS OF $77,000. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED COPIES OF QUOTATIONS DATED SEPTEMBER 13 AND DECEMBER 9, 1955, RECEIVED FROM ITS SUPPLIER, WESTINGHOUSE ELECTRIC CORPORATION, IN WHICH THE SUPPLIER QUOTED TO THE CORPORATION A PRICE OF $719 EACH LESS A DISCOUNT OF 27 PERCENT FOR 37 ELECTRICALLY OPERATED CONTRACTORS AND A NET PRICE OF $1,408 PER SET FOR 37 SETS OF SELENIUM STACKS. IT APPEARS FROM THE NOTICE OF AWARD THAT, FOR THE CONTACTORS, THE BART-MESSING CORPORATION QUOTED A PRICE OF $40 EACH, WHICH IS APPROXIMATELY ONE-THIRTEENTH OF THE PRICE QUOTED TO IT BY ITS SUPPLIER AND THAT FOR THE RECTIFIER SELENIUM STACKS, IT QUOTED A PRICE OF $480 PER SET, WHICH IS APPROXIMATELY ONE- THIRD OF THE PRICE QUOTED TO IT BY ITS SUPPLIER.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS NO ROOM FOR DOUBT THAT THE CORPORATION MADE AN ERROR IN ITS BID, AS ALLEGED. GENERALLY, WHEN A BIDDER IS REQUESTED TO, AND DOES VERIFY HIS BID, THE SUBSEQUENT ACCEPTANCE OF THE BID CONSUMMATES A VALID AND BINDING CONTRACT. SEE 18 COMP. GEN. 942, 947; AND 27 ID. 17. HOWEVER, IN A SUPPLEMENTAL REPORT DATED FEBRUARY 9, 1956, THE OFFICER IN CHARGE OF THE NAVY PURCHASING OFFICE STATED AS FOLLOWS:

"2. IT IS THE CONSIDERED OPINION OF THE CONTRACTING OFFICER THAT THE PRICES QUOTED BY SUBJECT CONTRACTOR SHOULD HAVE BEEN TESTED IN GREATER DETAIL IN LIGHT OF THE SUBSTANTIAL DIFFERENCE BETWEEN THE QUOTATION AND THE PRICE PAID FOR THE SAME EQUIPMENT PURCHASED BY THE BUREAU OF SHIPS. THIS OFFICE WAS REMISS IN NOT OBTAINING WRITTEN CONFIRMATION OF THE QUOTATION AS REQUIRED BY BUSANDA MANUAL PARAGRAPH 64057-2.

"3. IT IS BELIEVED THAT THE EQUITIES OF THE SITUATION WOULD JUSTIFY GRANTING RELIEF TO THE CONTRACTOR AND THAT NEITHER THE INTEGRITY OF THE BID SYSTEM NOR THE GOVERNMENT WOULD SUSTAIN IRREPARABLE DAMAGE.'

IN VIEW OF THIS STATEMENT, SERIOUS DOUBT APPEARS TO EXIST AS TO WHETHER THE VERBAL REQUEST FOR VERIFICATION MADE IN THIS INSTANCE WAS SUFFICIENT TO MEET THE TEST APPLIED IN THE CASE OF UNITED STATES V. METRO NOVELTY MFG. CO., INC., 125 F.SUPP. 713. THERE IT WAS HELD, IN EFFECT, THAT REAFFIRMATION OF A BID WHERE THE CONTRACTING OFFICER DID NOT APPRISE THE BIDDER OF THE FACTS WITHIN HIS KNOWLEDGE REGARDING THE PROBABLE ERROR WHICH HE SURMISED DID NOT BAR THE DEFENSE OF RESCISSION.

IN THESE CIRCUMSTANCES, WE WOULD NOT FEEL WARRANTED IN HOLDING THAT THE PURPORTED ACCEPTANCE OF BART-MESSING'S BID RESULTED IN A VALID AND BINDING CONTRACT.

ACCORDINGLY, SINCE THE ARTICLES HAVE NOT BEEN DELIVERED, CONTRACT NO. N140S-55425B MAY BE CANCELLED WITHOUT OBLIGATION TO THE CORPORATION, AS RECOMMENDED BY THE OFFICER IN CHARGE OF THE NAVY PURCHASING OFFICE.