B-128625, NOV. 1, 1956

B-128625, NOV. 1, 1956

TO THE HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 18, 1956, WITH ENCLOSURES, FURNISHING A REPORT RELATIVE TO AN ERROR ALLEGED BY MARTIN W. BELL, ATTORNEY FOR KESSLER INTERNATIONAL CORPORATION, TO HAVE BEEN MADE IN THE CORPORATION'S BID ON ITEMS NO. 678 AND 689 OF INVITATION FOR BIDS NO. FNW- 3L-66382-A-5-25-56, WHICH WAS ACCEPTED UNDER CONTRACT NO. GS-OOS-2893- ICA.

THE FEDERAL SUPPLY SERVICE, INTERNATIONAL BUYING DIVISION, ON MAY 15, 1956, REQUESTED INFORMAL BIDS FROM KESSLER INTERNATIONAL CORPORATION AND WILLYS MOTORS, INC., FOR 811 ITEMS OF REPLACEMENT PARTS FOR SHIPMENT TO IRAN. THE CLOSING DATE WAS SPECIFIED AS 5:00 P.M., MAY 25. AT THE REQUEST OF BOTH COMPANIES, THE CLOSING DATE WAS EXTENDED TO JUNE 1 AND WAS AGAIN EXTENDED TO JUNE 5, AT THE REQUEST OF WILLYS MOTORS, INC.

THE 811 SEPARATE ITEMS WERE DESCRIBED IN A 19-PAGE SINGLE SPACED LIST ATTACHED TO THE INVITATION AND CONSISTED OF THREE GROUPINGS:

ITEMS 1-311, SPARE PARTS FOR GENERAL MOTORS CHEVROLET TRUCK.

ITEMS 312-551, SPARE PARTS FOR WILLYS JEEP MODEL CJ-3B.

ITEMS 552-811, SPARE PARTS FOR WILLYS JEEP TRUCK 4-WHEEL DRIVE.

IN RESPONSE TO THE INVITATION IT APPEARS THAT KESSLER INTERNATIONAL CORPORATION SUBMITTED QUOTATIONS ON 663 OF THE ITEMS. QUOTATIONS WERE SUBMITTED ON 163 ITEMS OF THE FIRST GROUP (ITEMS NOS. 1-311) AND ON ALL OF THE 500 ITEMS IN THE SECOND AND THIRD GROUPS. THE BID OF KESSLER INTERNATIONAL CORPORATION ON GROUPS TWO AND THREE, ITEMS NOS. 312 THROUGH 811, WITH THE EXCEPTION OF ITEM NO. 331, WAS ACCEPTED ON JUNE 13, 1956, BY CONTRACT NO. GS-OOS-2863-ICA, IN THE TOTAL AMOUNT OF $65,966.68, BOXED FOR EXPORT, FAS NEW YORK.

SHORTLY AFTER RECEIPT OF THE NOTICE OF AWARD, KESSLER INTERNATIONAL CORPORATION ALLEGED THAT AN ERROR HAD BEEN MADE IN ITS BID IN THAT THE PRICES QUOTED ON ITEMS NOS. 678 AND 689 OF $1.49 AND $2.95 EACH, SHOULD HAVE BEEN $149 AND $295 EACH, RESPECTIVELY. IN LETTER TO THIS OFFICE DATED JULY 13, 1956, THE CORPORATION'S ATTORNEY REQUESTED THAT THE CONTRACT BE AMENDED BY INCREASING THE PRICES FOR THE TWO ITEMS TO THE CORPORATION'S ALLEGED INTENDED PRICES OR THAT THE CORPORATION BE RELIEVED FROM FURNISHING THE TWO ITEMS INVOLVED.

ITEM 678 COVERS 12 "CASE, TRANSFER ASSY, WITH FLANGE" PART NO. 642889; AND ITEM 689 COVERS 16 ,AXLE WITH BRAKES, HUBS AND DRUMS, FRONT" PART NO. 649799. THE QUOTATIONS SUBMITTED BY THE TWO BIDDERS ON THE ITEMS WERE AS FOLLOWS:

TABLE

ITEM 678

KESSLER - 12 AT $ 1.49 - BOXED FOR EXPORT FAS NEW YORK

WILLYS - 12 AT 126.60 - DO. DO. DO. FOB TOLEDO, OHIO

ITEM 689

KESSLER - 16 AT 2.95 - BOXED FOR EXPORT FAS NEW YORK

WILLYS - 16 AT 206.34 - DO. DO. DO. FOB TOLEDO, OHIO

IT IS STATED IN YOUR LETTER THAT THE ESTIMATED WEIGHT PER EACH UNIT, UNBOXED, OF ITEMS NOS. 678 AND 689 IS 175 POUNDS AND 285 POUNDS, RESPECTIVELY, AND THAT A CHECK OF AVAILABLE SOURCES, AS TO THE PRICES FOR THE ITEMS, FAILED TO DISCLOSE ANY PRICES NEARLY AS LOW AS THOSE OFFERED BY KESSLER INTERNATIONAL CORPORATION. IT IS FURTHER STATED THAT A REVIEW OF THE TRANSACTION REVEALS THAT THE PRICES OFFERED BY KESSLER ON THE TWO ITEMS IN QUESTION WERE ABSURDLY LOW AND THAT THE DIFFERENCE BETWEEN THE TWO PRICES SHOULD HAVE BEEN SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE THAT AN ERROR HAD BEEN MADE.

IN A STATEMENT SUBMITTED WITH YOUR LETTER, THE CONTRACTING OFFICER STATES THAT, AT THE TIME OF THE AWARD, HE DID NOT NOTICE THE POSSIBILITY OF ERROR AS THE EVALUATION OF THE 499 ITEMS WAS MADE ON A LOT BASIS AS REQUESTED BY THE INVITATION.

ALTHOUGH IT APPEARS FROM THE COPY OF THE INVITATION SUBMITTED WITH YOUR LETTER THAT LUMP-SUM BIDS WERE CONTEMPLATED FOR ALL 811 ITEMS, IT DOES NOT APPEAR THAT THE AWARD WAS MADE ON THAT BASIS, HAVING BEEN ONLY FOR GROUPS TWO AND THREE, ITEMS NOS. 312 THROUGH 811, AND EVEN AS TO GROUP TWO, ITEM NO. 331 WAS OMITTED FROM THE AWARD. THEREFORE, WHILE IT MAY BE THAT, FOR ADMINISTRATIVE PURPOSES, THE BIDS WERE EVALUATED AS BETWEEN THE TWO BIDDERS ON A LOT BASIS FOR ALL ITEMS WHICH IT WAS CONSIDERED ADVISABLE TO AWARD, NEVERTHELESS THE BID AND THE AWARD WERE ACTUALLY ON AN ITEM-BY-ITEM BASIS AS PROVIDED FOR IN PARAGRAPH 8 (C) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS NO DOUBT THAT AN ERROR WAS MADE IN THE BID, AS ALLEGED. FURTHERMORE, THE PRICES QUOTED ON THE TWO ITEMS WERE SO LOW THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER WAS ON NOTICE OF THE POSSIBILITY OF ERROR. UNDER THE CIRCUMSTANCES, IT MAY NOT BE CONSIDERED THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT REQUIRING KESSLER INTERNATIONAL CORPORATION TO FURNISH THE TWO ITEMS INVOLVED FOR THE AMOUNT QUOTED IN ITS BID. IF THE PRICES FOR THE TWO ITEMS BE CORRECTED, THE TOTAL AMOUNT OF THE CONTRACT WITH KESSLER INTERNATIONAL CORPORATION WOULD STILL BE LOWER THAN THE AMOUNT OF THE BID OF WILLYS MOTORS, INC.

ACCORDINGLY, CONTRACT NO. GS-OOS-2863-ICA MAY BE AMENDED TO REFLECT AN ADJUSTMENT BY INCREASING THE PRICE BY THE AMOUNT NECESSARY TO COVER ITEMS NOS. 678 AND 689 AT $149 AND $295 EACH, RESPECTIVELY, PLUS TWO PERCENT ON THE ADDITIONAL AMOUNT FOR EXPORT BOXING.