B-126536, JAN. 23, 1956

B-126536: Jan 23, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE HONORABLE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED JANUARY 5. ON THAT DAY AN APPARENTLY HIGH BID OF $0.067 PER POUND WAS RECEIVED ON ITEM 46 FROM MR. THAT IS TO SAY. NIELSEN WAS AWARDED CONTRACT NO. THE CONTRACTOR STATED THAT HIS BID WAS INTENDED TO BE ".067 MILLS" WITH A TOTAL OF $36.10 BID ON THIS ITEM. NIELSEN'S BID IS FAR IN EXCESS OF THE APPROXIMATE CURRENT MARKET VALUE OF $0.0175 PER POUND FOR SCRAP STEEL. NO CONFIRMATION OF THIS BID WAS REQUESTED PRIOR TO THE AWARD. IT IS APPARENT THAT MR. WHILE IT IS TRUE. THAT UNDER PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS THE UNIT PRICE WILL GOVERN IN CASE OF ERROR IN THE EXTENSION OF PRICES IN THE BID. IT SEEMS CLEAR THAT THE DISCREPANCY BETWEEN THE UNIT PRICE AND THE TOTAL PRICE SHOWN WAS SUFFICIENT.

B-126536, JAN. 23, 1956

TO THE HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 5, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), REQUESTING A DECISION AS TO WHETHER RELIEF PROPERLY MAY BE GRANTED TO MR. J. E. NIELSEN, WALNUT GROVE, CALIFORNIA, ON ACCOUNT OF AN ALLEGED MISTAKE IN BID UNDER CONTRACT NO. N228S-12726, DATED OCTOBER 31, 1955, ISSUED BY THE U.S. NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA.

THE RECORD SHOWS THAT BY INVITATION NO. B-120-56, DATED OCTOBER 4, 1955, THE DISPOSAL DIVISION, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, OFFERED FOR SALE CERTAIN MISCELLANEOUS USABLE MATERIAL, THE BIDS TO BE OPENED OCTOBER 25, 1955. ON THAT DAY AN APPARENTLY HIGH BID OF $0.067 PER POUND WAS RECEIVED ON ITEM 46 FROM MR. NIELSEN, THAT IS TO SAY, A UNIT PRICE READING "$0.067," BUT WITH AN EXTENSION OF $36.10 FOR THE ADVERTISED QUANTITY OF 5,387 POUNDS OF MATERIAL COVERED BY ITEM 46. THE CONTRACTING OFFICER REPORTED THAT UNDER DATE OF NOVEMBER 15, 1955, MR. NIELSEN WAS AWARDED CONTRACT NO. N228S-12726, AT THE PRICE OF $360.93, THE TOTAL EXTENSION HAVING BEEN CHANGED FROM $36.10 TO COINCIDE WITH THE UNIT PRICE AND QUANTITY.

BY LETTER DATED NOVEMBER 17, 1955, THE CONTRACTOR STATED THAT HIS BID WAS INTENDED TO BE ".067 MILLS" WITH A TOTAL OF $36.10 BID ON THIS ITEM, THERE BEING TRANSMITTED WITH THE LETTER A WORKSHEET INDICATING THE FIGURES USED TO DETERMINE THE AMOUNT BID. IN CONNECTION WITH HIS RECOMMENDATION THAT RELIEF BE GRANTED IN THIS CASE, THE CONTRACTING OFFICER POINTED OUT IN HIS STATEMENT OF FACTS AND RECOMMENDATION DATED OCTOBER 19, 1955, THAT MR. NIELSEN'S BID IS FAR IN EXCESS OF THE APPROXIMATE CURRENT MARKET VALUE OF $0.0175 PER POUND FOR SCRAP STEEL, AND THAT THE TOTAL BID EXCEEDS THE ADVERTISED ACQUISITION COST BY APPROXIMATELY 50 PERCENT. NO CONFIRMATION OF THIS BID WAS REQUESTED PRIOR TO THE AWARD.

IT IS APPARENT THAT MR. NIELSEN MADE A BONA FIDE MISTAKE IN SUBMITTING HIS BID IN THIS CASE. WHILE IT IS TRUE, AS POINTED OUT IN THE CONTRACTING OFFICER'S LETTER OF DECEMBER 1, 1955, THAT UNDER PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS THE UNIT PRICE WILL GOVERN IN CASE OF ERROR IN THE EXTENSION OF PRICES IN THE BID, IT SEEMS CLEAR THAT THE DISCREPANCY BETWEEN THE UNIT PRICE AND THE TOTAL PRICE SHOWN WAS SUFFICIENT, IN THE LIGHT OF THE OTHER FACTS REFERRED TO ABOVE, TO PLACE THE CONTRACTING OFFICER ON NOTICE OF PROBABLE ERROR AND REQUIRE VERIFICATION BEFORE AWARD. UNDER THE REPORTED FACTS, THE CONTRACT MAY BE CANCELED AND A REFUND MADE TO THE CONTRACTOR OF THE AMOUNT OF THE BID DEPOSIT.

THE PAPERS TRANSMITTED WITH THE LETTER OF JANUARY 5, 1956, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND RECOMMENDATION, ARE RETURNED HEREWITH.