B-126922, APR. 26, 1956

B-126922: Apr 26, 1956

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VETERANS ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 7 AND APRIL 12. FOR FIVE DOUBLE-FACED RACKS OF STEEL SHELVING WAS BASED. THE CORPORATION'S BID OF $339.38 IS IN LINE WITH SIX OTHER BIDS. IT IS ENTIRELY OUT OF LINE WITH THE REMAINING FOUR BIDS. THE CORPORATION'S BID WAS ACCEPTED AS TO ITEM NO. 1 ONLY. THAT THE CORPORATION INTERPRETED THE SPECIFICATIONS AS REQUIRING A LOT OF ONLY TEN RACKS OF SIX ADJUSTABLE SHELVES EACH IS CLEARLY EVIDENT FROM THE FIGURES ON ITS ORIGINAL WORKSHEET. WHEN THE WORK ON THE ORDER WAS ABOUT TO BEGIN. SOME UNCERTAINTY AS TO THE CORRECTNESS OF THE QUANTITY OF SHELVES REQUIRED MUST HAVE ARISEN. - THAT THE LOT WAS INTENDED TO CONSIST OF FIVE TEN-UNIT RACKS.

B-126922, APR. 26, 1956

TO HONORABLE H. V. HIGLEY, ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 7 AND APRIL 12, 1956, WITH ENCLOSURES, RELATIVE TO AN ALLEGED ERROR ON ITEM NO. 1 OF A BID DATED FEBRUARY 23, 1955, SUBMITTED BY NIEMAN STEEL EQUIPMENT COMPANY, INC., ON WHICH PURCHASE ORDER NO. 1271, DATED MARCH 3, 1955, FOR FIVE DOUBLE-FACED RACKS OF STEEL SHELVING WAS BASED. YOU REQUEST A DECISION AS TO WHETHER THE CORPORATION, HAVING DELIVERED A PORTION OF THE SHELVING CALLED FOR UNDER THE PURCHASE ORDER, MAY BE RELEASED, BY REASON OF THE ALLEGED ERROR, FROM FURTHER PERFORMANCE.

THE VETERANS HOSPITAL AT LAKE CITY, FLORIDA, BY INVITATION NO. 5533, REQUESTED BIDS ON ITEMS NOS. 1 AND 2. EACH ITEM COVERED ONE LOT OF STEEL SHELVING. THE ABSTRACT OF BIDS RECEIVED ON ITEM NO. 1 SHOWS THAT THE ELEVEN BIDS RECEIVED THEREON FALL INTO TWO GROUPS. THE CORPORATION'S BID OF $339.38 IS IN LINE WITH SIX OTHER BIDS, RANGING FROM $390.91 TO $502.24, IN THE LOWER GROUP, BUT IT IS ENTIRELY OUT OF LINE WITH THE REMAINING FOUR BIDS, IN THE HIGHER GROUP, RANGING FROM $1,289.94 TO $1,764.22. THE CORPORATION'S BID WAS ACCEPTED AS TO ITEM NO. 1 ONLY.

YOU STATE THAT UPON RECEIPT OF THE PURCHASE ORDER, THE CORPORATION TELEPHONED THE CONTRACTING OFFICE ON MARCH 7, 1955, AND REQUESTED A CLARIFICATION OF THE SPECIFICATIONS CONCERNING THE QUANTITY OF SHELVING TO BE FURNISHED. BY LETTER OF MARCH 8, 1955, THE CHIEF, PROCUREMENT SECTION, REFERRED TO THE TELEPHONE CONVERSATION, FORWARDED "CUTS" SHOWING A SINGLE UNIT AND SINGLE AND DOUBLE FACED RACKS AND ADVISED, IN PERTINENT PART, AS FOLLOWS:

"A DOUBLE FACED RACK CONSISTS OF TWO SINGLE UNITS, BACK TO BACK. THEREFORE, THE SHELVING TO BE FURNISHED CONSISTS OF FIVE DOUBLE FACED RACKS JOINED TOGETHER, END TO END, WITH NECESSARY ENDS, BACKS AND PARTITIONS AS CALLED FOR IN THE ORDER TO MAKE IT CLOSED SHELVING, WITHOUT DOORS.'

THAT THE CORPORATION INTERPRETED THE SPECIFICATIONS AS REQUIRING A LOT OF ONLY TEN RACKS OF SIX ADJUSTABLE SHELVES EACH IS CLEARLY EVIDENT FROM THE FIGURES ON ITS ORIGINAL WORKSHEET. WHEN THE WORK ON THE ORDER WAS ABOUT TO BEGIN, HOWEVER, SOME UNCERTAINTY AS TO THE CORRECTNESS OF THE QUANTITY OF SHELVES REQUIRED MUST HAVE ARISEN, WHICH PROMPTED ITS REQUEST FOR A CLARIFICATION WITH RESPECT THERETO. SINCE THE REPLY RECEIVED CONTAINED NO REFERENCE TO THE FACT--- ONLY IMPERFECTLY STATED IN THE SPECIFICATIONS--- THAT THE LOT WAS INTENDED TO CONSIST OF FIVE TEN-UNIT RACKS, IT MERELY CONFIRMED THE CORPORATION'S ORIGINAL INTERPRETATION OF THE SPECIFICATIONS. CONSEQUENTLY, THE LOT OF SHELVING WAS CONSTRUCTED AND DELIVERED IN ACCORDANCE WITH ITS BELIEF THAT A TOTAL OF ONLY TEN UNITS WAS REQUIRED FOR THE LOT.

YOUR LETTER OF FEBRUARY 7, 1956, CONTAINS, AMONG OTHERS, THE FOLLOWING PERTINENT STATEMENT:

"IT IS FELT THAT THE SPECIFICATIONS WERE NOT AS CLEAR AS THEY MIGHT HAVE BEEN AND WERE CONTRIBUTORY TO THE BIDDER'S MISINTERPRETATION OF THE QUANTITY OF SHELVING REQUIRED. THIS IS ATTESTED TO BY THE WIDE RANGE OF THE BIDS RECEIVED. FURTHER, ALTHOUGH PURCHASE OF THE SHELVING FROM COMMERCIAL SOURCES WAS AUTHORIZED BY DEPARTMENT OF JUSTICE CLEARANCE NO. C -60494, DATED DECEMBER 16, 1954, AN EXAMINATION OF THE SCHEDULE OF PRODUCTS OF THE FEDERAL PRISON INDUSTRIES, INC., IN EFFECT ON MARCH 3, 1955, INDICATES THAT THE QUANTITY OF SHELVING REQUIRED WOULD HAVE COST APPROXIMATELY $1,268 IF PURCHASED FROM THE SCHEDULE.'

IF THERE HAD BEEN INSERTED ANYWHERE IN THE SPECIFICATIONS FOR THE CONSTRUCTION OF THE STEEL SHELVING CALLED FOR UNDER ITEM NO. 1 THE SIMPLE STATEMENT THAT THE ENTIRE LOT CONSISTED OF FIFTY UNITS OF SIX ADJUSTABLE SHELVES EACH, JOINED TOGETHER IN RACKS AS INSTRUCTED, UNDOUBTEDLY THE MISINTERPRETATION OF THE SPECIFICATIONS WOULD HAVE BEEN AVERTED. THAT THE SPECIFICATIONS WERE AMBIGUOUS IS APPARENT FROM THE FACT NOW OF RECORD THAT THE THREE NEXT LOWEST BIDDERS BASED THEIR LOT BID PRICES ON THE SAME INTERPRETATION OF THE SPECIFICATIONS AS THAT FOLLOWED BY THE NEIMAN COMPANY.

ON THE RECORD THERE IS NO DOUBT THAT THE CORPORATION MADE A BONA FIDE ERROR IN ITS BID, DUE TO A MISINTERPRETATION OF THE SPECIFICATIONS, AND THAT SUCH ERROR WAS INDUCED LARGELY BY THE AMBIGUITY IN THE SPECIFICATIONS AND CONTINUED BY THE INSUFFICIENCY OF THE GOVERNMENT'S SUBSEQUENT CLARIFICATION THEREOF. THE UNUSUAL VARIANCE IN THE BIDS SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE LOW BIDS RECEIVED, AND THEREFORE THE CORPORATION AND THE OTHER LOW BIDDERS SHOULD HAVE BEEN REQUESTED TO REVIEW THE SPECIFICATIONS AND VERIFY THEIR BID PRICES PRIOR TO THE AWARD. IN THE CIRCUMSTANCES, NO CONTRACT WAS EFFECTED BY THE ACCEPTANCE OF THE BID OF THE NEIMAN STEEL EQUIPMENT COMPANY, INC., AND IT IS ENTITLED TO PAYMENT OF A FAIR AND REASONABLE PRICE FOR THE MATERIAL WHICH HAS BEEN RECEIVED AND ACCEPTED BY THE GOVERNMENT.

ACCORDINGLY, THE PURCHASE ORDER SHOULD BE CANCELED, AND, SINCE YOU STATE IN YOUR LETTER OF APRIL 12, 1956, THAT $339.38 REPRESENTS THE FAIR AND REASONABLE VALUE OF THE SHELVING HERETOFORE DELIVERED, PAYMENT OF THAT AMOUNT MAY BE MADE TO THE CORPORATION.