B-126499, JAN. 16, 1956

B-126499: Jan 16, 1956

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TO THE HONORABLE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER OF JANUARY 3. WAS BASED. THE BIDS WERE OPENED ON NOVEMBER 7. ON ITEM NO. 3 WAS ACCEPTED ON NOVEMBER 9. THE CORPORATION ADVISED IN SUBSTANCE THAT AN ERROR INADVERTENTLY WAS MADE IN ITS BID ON ITEM NO. 3 IN THAT THE PRICE QUOTED ON THAT ITEM ACTUALLY WAS INTENDED FOR ITEM NO. 4. WAS THE ONLY OTHER BID RECEIVED ON ITEM NO. 3. WHEREAS THE SEVEN BIDS RECEIVED ON ITEM NO. 4 WERE $51.80. THE PUBLISHED ESTIMATED ACQUISITION COSTS OF ITEMS NOS. 3 AND 4 WERE $6.1225 AND $31.50 PER DRUM. SINCE THE BID OF $42.33 PER DRUM WAS SO MUCH IN EXCESS OF BOTH THE ADVERTISED ACQUISITION COST AND THE OTHER BID OF ONLY $1. IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE TAKEN NOTICE OF THE PROBABILITY THAT THE CORPORATION HAD MADE A MISTAKE IN THE BID AND REQUESTED VERIFICATION OF ITS BID PRICE FOR ITEM NO. 3 PRIOR TO ACCEPTING THE BID SOLELY AS TO THAT ITEM.

B-126499, JAN. 16, 1956

TO THE HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER OF JANUARY 3, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL), RELATIVE TO AN ALLEGED ERROR IN A BID SUBMITTED BY DELAWARE SOLVENTS AND CHEMICAL CORPORATION IN A SALE OF USABLE GOVERNMENT-OWNED PROPERTY LOCATED AT THE TOOELE ORDNANCE DEPOT, TOOELE, UTAH, ON WHICH CONTRACT NO. N665S-26300, DATED NOVEMBER 9, 1955, WAS BASED.

THE BIDS WERE OPENED ON NOVEMBER 7, 1955, AND THE CORPORATION'S BID OF $42.33 PER DRUM, OR TOTAL OF $169.32, ON ITEM NO. 3 WAS ACCEPTED ON NOVEMBER 9, 1955. THE ITEM COVERED FOUR (4) DRUMS OF MOISTURE, MOLD PROOFING COMPOUND,"55 GALS. MORE OR LESS PER DRUM, COND., UNUSED, FAIR, EST TOTAL WT 2,000 LBS, EST TOTAL COST $24.49 * * *.' BY TELEGRAM OF NOVEMBER 14, 1955, AND CONFIRMING LETTER OF THE SAME DATE, THE CORPORATION ADVISED IN SUBSTANCE THAT AN ERROR INADVERTENTLY WAS MADE IN ITS BID ON ITEM NO. 3 IN THAT THE PRICE QUOTED ON THAT ITEM ACTUALLY WAS INTENDED FOR ITEM NO. 4.

THE ABSTRACT OF THE BIDS ON ITEMS NOS. 3 AND 4 SHOWS THAT A BID OF $1 PER DRUM, FROM A BARREL AND COOPERAGE COMPANY, WAS THE ONLY OTHER BID RECEIVED ON ITEM NO. 3, WHEREAS THE SEVEN BIDS RECEIVED ON ITEM NO. 4 WERE $51.80, $38, $27.76, $15.55, $2.81 AND $1 PER DRUM. THE PUBLISHED ESTIMATED ACQUISITION COSTS OF ITEMS NOS. 3 AND 4 WERE $6.1225 AND $31.50 PER DRUM, RESPECTIVELY. SINCE THE BID OF $42.33 PER DRUM WAS SO MUCH IN EXCESS OF BOTH THE ADVERTISED ACQUISITION COST AND THE OTHER BID OF ONLY $1, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE TAKEN NOTICE OF THE PROBABILITY THAT THE CORPORATION HAD MADE A MISTAKE IN THE BID AND REQUESTED VERIFICATION OF ITS BID PRICE FOR ITEM NO. 3 PRIOR TO ACCEPTING THE BID SOLELY AS TO THAT ITEM.

THE CONTRACTING OFFICER'S STATED OPINION IS THAT THE BID PRICE QUOTED BY THE CORPORATION ON ITEM NO. 3 WAS INTENDED FOR ITEM NO. 4, COVERING TWO 55 -GALLON DRUMS OF GLYCERIN, AS ALLEGED. HE NOW POINTS OUT, AS A BASIS FOR THIS OPINION, THAT VARIOUS LEADING CHEMICAL COMPANIES SUBMITTED SUBSTANTIAL BIDS FOR THE GLYCERIN (ITEM NO. 4), AND PROBABLY WOULD HAVE BID ON ITEM 3 IF THEY HAD CONSIDERED IT TO BE WORTHY OF CONSIDERATION. IS ALSO STATED THAT SPECIFICATIONS ARE NOT AVAILABLE ON ITEM 3, AND ITS MARKET APPLICATIONS CANNOT BE DETERMINED, AND THAT NO PRIOR SALES HAVE BEEN MADE OF SUCH MATERIAL WHICH WOULD FURNISH A BASIS FOR PRICE COMPARISONS.

ACCORDINGLY, SINCE THE ERROR WAS ALLEGED PROMPTLY UPON RECEIPT OF THE NOTICE OF AWARD, SINCE THE CONTRACTING OFFICER NOW STATES FACTS AND OPINIONS WHICH INDICATE QUITE CLEARLY THAT HE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE CORPORATION'S BID ON ITEM NO. 3, AND SINCE THERE APPEARS TO HAVE BEEN NO DELIVERY OF THE MATERIAL, THE CONTRACT MAY BE CANCELED AND THAT PORTION OF THE BID DEPOSIT RETAINED AS THE PURCHASE PRICE OF THE COMPOUND REFUNDED TO THE DELAWARE SOLVENTS AND CHEMICAL CORPORATION.