B-127755, MAY 7, 1956

B-127755, MAY 7, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED APRIL 26, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL) REQUESTING A DECISION AS TO WHETHER THE I. W. KAUFMAN COMPANY MAY PROPERLY BE RELEASED FROM CONTRACT NO. N665S- 27978 DATED MARCH 1, 1956, FOR THE SALE OF ITEM NO. 11 ON INVITATION NO. B -233-56, IN VIEW OF AN ALLEGED ERROR IN THE COMPANY'S BID.

ITEM NO. 11 COVERED 250 BARS OF PHOSPHOR SPRING TEMPER BRONZE EACH 5/32 INCHES BY 2 5/16 NCHES; ESTIMATED WEIGHT 3,115 POUNDS; ESTIMATED COST $1,027.95; CONDITION "UNUSED-FAIR.' THE COMPANY'S BID OF $17.51 PER BAR, A TOTAL OF $4,377.50 FOR THE ITEM, WAS OUT OF LINE WITH THE FOUR OTHER BIDS RECEIVED THEREON, RANGING FROM $1.28 TO $4.2369 PER BAR, AND WITH THE PUBLISHED ESTIMATED COST OF THE MATERIAL. ALTHOUGH IN ITS BID THE COMPANY QUOTED PRICES FOR OTHER COPPER AND BRASS ARTICLES, ITEMS 4, 5, 6, 7, 9, 10 AND 11, ITS BID WAS ACCEPTED ONLY AS TO ITEM NO. 11. UPON RECEIPT OF THE NOTICE OF AWARD THE COMPANY, BY ITS LETTER OF MARCH 3, 1956, ADVISED THAT IT HAD MADE AN ERROR IN PLACEMENT OF THE DECIMAL POINT IN ITS BID OF $17.51 EACH ON ITEM NO. 11, SINCE ITS INTENDED UNIT BID PRICE ON THAT ITEM WAS $1.751. IT STATED THAT IT WAS A DEALER IN SCRAP AND METAL AND THAT IT WAS INTERESTED IN THE PURCHASE OF ITEM NO. 11 AND THE OTHER BRASS ITEMS IT BID ON AS SCRAP ONLY. IN THIS CONNECTION IT IS FOR NOTING THAT WHEREAS ITS BID ON ITEMS NOS. 5, 6, 7, 9 AND 10, DID NOT EXCEED $0.16 PER POUND, ITS BID ON ITEM NO. 11 WAS OVER $1.40 PER POUND, GREATLY IN EXCESS OF THE ADVERTISED GOVERNMENT'S ESTIMATED ACQUISITION COST OF $0.33 PER POUND. IS FURTHER REPORTED THAT THE SAME TYPE OF MATERIAL IS CURRENTLY OBTAINABLE AT FROM $10 TO $13 PER PIECE.

IT IS UNLIKELY THAT, IN A SALE OF GOVERNMENT-OWNED USABLE PROPERTY ADVERTISED TO BE IN ONLY FAIR CONDITION, ANY BIDDER INTENTIONALLY WOULD OFFER OVER FOUR TIMES THE GOVERNMENT'S PUBLISHED ESTIMATED COST. IN VIEW THEREOF AND SINCE NONE OF THE PRICES QUOTED BY THE COMPANY IN ITS BID FOR OTHER ITEMS OF BRASS METAL EXCEEDED 16 1/2 PERCENT OF THE ESTIMATED COST THEREOF, ITS BID ON ITEM NO. 11 OF OVER 425 PERCENT OF THE PUBLISHED ESTIMATED COST SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY THAT THE COMPANY HAD MADE AN ERROR, OR AT LEAST PUT HIM ON INQUIRY AS TO CURRENT COMMERCIAL MARKET PRICES OF SIMILAR MATERIAL. THEREFORE, BEFORE THE BID WAS ACCEPTED AS TO ITEM NO. 11, THE COMPANY SHOULD HAVE BEEN REQUESTED TO VERIFY ITS BID THEREON. SINCE THIS WAS NOT DONE THE ACCEPTANCE OF THE BID DID NOT LEGALLY OBLIGATE THE COMPANY TO ACCEPT DELIVERY OF ITEM NO. 11 AT ITS ACCEPTED BID PRICE.

ACCORDINGLY, THE AWARD SHOULD BE CANCELLED AND THE BID DEPOSIT SHOULD BE RETURNED TO THE COMPANY.