B-128976, AUG. 29, 1956

B-128976: Aug 29, 1956

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TO THE ATTORNEY GENERAL: REFERENCE IS MADE TO LETTER DATED AUGUST 13. OUR DECISION IS REQUESTED AS TO THE PROPER ACTION TO BE TAKEN ON PURCHASE ORDER NO. 14-2967-6. WHICH WAS ISSUED TO THE BIDDER PRIOR TO RECEIPT OF ADVICE OF SUCH ERROR. THE ENCLOSURES SUBMITTED WITH YOUR LETTER INDICATE THAT BIDS WERE SOLICITED FOR FURNISHING ASPHALT FLOOR TILE AND CEMENT AS FOLLOWS: TABLE QUANTITY ITEM NO. BIDS WERE ALSO RECEIVED FROM JOHNS-MANVILLE SALES CORPORATION IN THE AMOUNT OF $5. THREE ADDITIONAL BIDS WERE RECEIVED FROM RETAIL SUPPLIERS. THE LOWEST OF WHICH WAS THAT RECEIVED FROM SEARS ROEBUCK AND COMPANY IN THE AMOUNT OF $6. PURCHASE ORDER NO. 14-2967-6 WAS ISSUED TO FLOORMEN'S SUPPLY COMPANY AS THE LOWEST BIDDER ON JUNE 11.

B-128976, AUG. 29, 1956

TO THE ATTORNEY GENERAL:

REFERENCE IS MADE TO LETTER DATED AUGUST 13, 1956, FROM THE ADMINISTRATIVE ASSISTANT ATTORNEY GENERAL, FORWARDING AN ALLEGATION OF ERROR IN A BID SUBMITTED BY FLOORMEN'S SUPPLY COMPANY IN RESPONSE TO INVITATION FOR BIDS NO. 14-4205, ISSUED BY THE UNITED STATES PENITENTIARY, LEWISBURG, PENNSYLVANIA. OUR DECISION IS REQUESTED AS TO THE PROPER ACTION TO BE TAKEN ON PURCHASE ORDER NO. 14-2967-6, WHICH WAS ISSUED TO THE BIDDER PRIOR TO RECEIPT OF ADVICE OF SUCH ERROR.

THE ENCLOSURES SUBMITTED WITH YOUR LETTER INDICATE THAT BIDS WERE SOLICITED FOR FURNISHING ASPHALT FLOOR TILE AND CEMENT AS FOLLOWS:

TABLE

QUANTITY ITEM NO. (NO. OF UNITS) UNIT

1. 9 INCHES BY 9 INCHES,

JOHNS-MANVILLE COLOR NO.

D-126 (SAND) 22,000 EA

2. 9 INCHES BY 9 INCHES,

JOHNS-MANVILLE COLOR NO.

C-121 (RUST) 29,700 EA

3. CEMENT; ASPHALT TILE;

SHALL BE SUITABLE FOR

INSTALLING ASPHALT TILE

ON CONCRETE FLOORS, ABOVE

GROUND, WITHOUT THE

NEED FOR AN ADDITIONAL

BINDER; IN ACCORDANCE

WITH ALL APPLICABLE

REQUIREMENTS OF FED.SPEC.

SS-A-128; IN 5 GALLON

CANS. 300 GAL

THE BID, IN THE TOTAL AMOUNT OF $3,532.70, SUBMITTED BY FLOORMEN'S SUPPLY COMPANY, A FACTORY REPRESENTATIVE OF MASTIC TILE CORPORATION OF AMERICA, QUOTED UNIT PRICES OF $ .0725 FOR "MATICO" B-100 ON ITEM 1 AND $ .061 FOR "MATICO" C-420 ON ITEM 2. BIDS WERE ALSO RECEIVED FROM JOHNS-MANVILLE SALES CORPORATION IN THE AMOUNT OF $5,212.59 QUOTING $ .1068 ON ITEM 1 AND $ .0902 ON ITEM 2, AND FROM THE TILE-TEX DIVISION OF THE FLINTKOT COMPANY IN THE AMOUNT OF $5,301.06 QUOTING $ .1086 ON ITEM 1 AND $ .0917 ON ITEM 2. THREE ADDITIONAL BIDS WERE RECEIVED FROM RETAIL SUPPLIERS, THE LOWEST OF WHICH WAS THAT RECEIVED FROM SEARS ROEBUCK AND COMPANY IN THE AMOUNT OF $6,404.80, OFFERING TO SUPPLY "MATICO" TILES IDENTICAL TO THOSE OFFERED BY FLOORMEN'S SUPPLY COMPANY AT $ .133 PER UNIT FOR ITEM 1 AND $ .112 PER UNIT FOR ITEM 2.

PURCHASE ORDER NO. 14-2967-6 WAS ISSUED TO FLOORMEN'S SUPPLY COMPANY AS THE LOWEST BIDDER ON JUNE 11, 1956, WITHOUT VERIFICATION OF BID PRICES. IMMEDIATELY AFTER RECEIPT THEREOF THE CONTRACTOR ALLEGED ERROR IN ITS BID AND THEREAFTER SUBMITTED A COPY OF MATICO FACTORY PRICE LIST NO. 16, QUOTING TRUCK OR CARLOAD LOTS OF 3/16 INCH "MATICO" B-100 AND C-420 AT $5.70 AND $4.78 PER CARTON RESPECTIVELY, AND INDICATING THAT A CARTON CONTAINS 54 PIECES OF 3/16 INCH TILE OR 80 PIECES OF 1/8 INCH TILE. THE CONTRACTOR ALLEGES THAT IN COMPUTING THE UNIT PRICE OF 3/16 TILE FOR BID PURPOSES, AFTER ADDING $0.12 TO THE CARTON LIST PRICE TO COVER SHIPPING CHARGES, HE ERRONEOUSLY COMPUTED THE UNIT PRICE BY DIVIDING 80, INSTEAD OF 54, INTO THE RESULTING CARTON PRICES. BUT FOR THIS ERROR HE CONTENDS THAT HIS UNIT PRICES WOULD HAVE BEEN $ .108 FOR ITEM 1 AND $ .09 FOR ITEM 2. HE CONTENDS FURTHER THAT THE DIFFERENCE BETWEEN HIS ACTUAL BID PRICES AND THE PRICES BID BY OTHER MANUFACTURERS OF ASPHALT TILE WAS SUFFICIENTLY GREAT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY THAT AN ERROR HAD BEEN MADE, AND THAT PURCHASE ORDER NO. 14-2967-6 SHOULD THEREFORE BE CANCELLED.

ON THE BASIS OF THE FACTS OF RECORD THERE APPEARS TO BE NO DOUBT THAT THE BIDDER MADE A BONA FIDE ERROR IN ITS BID. IN THE CIRCUMSTANCES, THE SOLE QUESTION FOR DETERMINATION IS WHETHER THE PRICE DIFFERENCES IN THE BIDS SUBMITTED WERE SO GREAT THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE OF THE LIKELIHOOD OF ERROR.

THE CONTRACTING OFFICER CONTENDS THAT BECAUSE OF THE WIDE RANGE OF BID PRICES RECEIVED, AND THE COMPARATIVELY SMALL PRICE DIFFERENCE BETWEEN THE LOW AND SECOND LOW BIDS, HE HAD NO REASON TO SUSPECT THAT THE LOW BID WAS IN ERROR, AND EXECUTION OF THE PURCHASE ORDER WAS THEREFORE ACCOMPLISHED IN GOOD FAITH. ASIDE FROM THE FACT THAT THE SECOND LOW BIDS WERE ACTUALLY NEARLY FIFTY PERCENT HIGHER THAN THE LOW BID, IT MUST BE NOTED THAT THE FIVE HIGHER BIDDERS IN THIS CASE WERE READILY IDENTIFIABLE AS REPRESENTING TWO DISTINCT CLASSES, NAMELY, MANUFACTURER'S REPRESENTATIVES AND RETAIL OUTLETS. THE SECOND AND THIRD LOW BIDS WERE SUBMITTED BY JOHNS-MANVILLE SALES CORPORATION AND THE TILE-TEX DIVISION OF THE FLINTKOTE COMPANY, OFFERING TILES OF THEIR OWN MANUFACTURE, WHILE THE REMAINING BIDS WERE SUBMITTED BY SEARS ROEBUCK AND COMPANY, LEWISBURG BUILDERS SUPPLY COMPANY, AND HARRISBURG LUMBER COMPANY, ONE OFFERING MATICO TILES AND THE OTHER TWO JOHNS-MANVILLE. THE LOW BID SUBMITTED BY FLOORMEN'S SUPPLY COMPANY DOES NOT INDICATE THE BIDDERS AFFILIATION WITH MASTIC TILE CORPORATION OF AMERICA AS FACTORY REPRESENTATIVE, NOR DOES THE RECORD INDICATE THAT THE CONTRACTING OFFICER WAS AWARE OF SUCH AFFILIATION. HOWEVER, IN THE CASE OF AN ITEM OF SUCH GENERAL AND WIDESPREAD PUBLIC USE AS ASPHALT FLOOR TILE, WHICH IS REGULARLY ADVERTISED BY DEALERS IN DAILY NEWSPAPERS, IT IS OUR VIEW THAT THE RECEIPT OF A BID FROM ANY SOURCE QUOTING PRICES A THIRD LESS THAN THE PRICES SUBMITTED BY REPRESENTATIVES OF COMPETING MANUFACTURERS, AND SCARCELY MORE THAN HALF THE PRICES OFFERED BY A MAJOR MAIL ORDER RETAIL HOUSE ON THE IDENTICAL BRAND, IS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF PROBABLE ERROR.

ACCORDINGLY, IT IS OUR OPINION THAT THE CONTRACTING OFFICER SHOULD NOT HAVE ACCEPTED THE LOW BID WITHOUT REQUESTING THE BIDDER TO VERIFY ITS PRICE, AND THAT THE PURCHASE ORDER EXECUTED ON THE BASIS OF SUCH BID DOES NOT CONSTITUTE AN ENFORCEABLE CONTRACT.

SINCE THE CORRECTED UNIT PRICES OF $0.108 FOR ITEM 1 AND $0.09 FOR ITEM 2, REQUESTED BY THE BIDDER WOULD RESULT IN A TOTAL OVERALL PRICE LOWER THAN THAT OF THE SECOND LOW BIDDER, AND IN VIEW OF THE FACT THAT THE TIME FOR ACCEPTANCE OF THE SECOND AND THIRD LOW BIDS HAS EXPIRED AND THAT IT IS STATED THAT THE MATERIALS ARE NEEDED CURRENTLY, THIS OFFICE WOULD OFFER NO OBJECTION, IF IT IS ADMINISTRATIVELY DETERMINED TO BE IN THE BEST INTEREST OF THE UNITED STATES, TO AMENDMENT OF THE PURCHASE ORDER BY THE INSERTION OF THE CORRECTED UNIT PRICES WITHOUT FURTHER ADVERTISEMENT FOR BIDS. THAT EVENT, A COPY OF THIS LETTER SHOULD BE ATTACHED TO THE VOUCHER UPON WHICH PAYMENT IS MADE TO THE CONTRACTOR.