B-129034, SEP. 4, 1956

B-129034, SEP. 4, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER OF AUGUST 21, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE GATES ENGINEERING COMPANY, WILMINGTON, DELAWARE, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N251-10286A WAS AWARDED.

BY INVITATION NO. IFB-251/533/56, THE PUGET SOUND NAVAL SHIPYARD, BREMERTON, WASHINGTON, REQUESTED BIDS--- TO BE OPENED JUNE 26, 1956, FOR FURNISHING NEOPRENE SYNTHETIC RUBBER SHEETING, 60 INCHES WIDE, AND IN THICKNESSES OF 1/16 INCH AND 1/8 INCH, ITEMS 1 AND 2, RESPECTIVELY, AND RUBBER SHAFT COVERING MATERIAL AS DESCRIBED UNDER ITEMS 3 TO 7, CONTEMPLATED, THE GOVERNMENT RESERVED THE RIGHT TO AWARD BY ITEM WHEN BIDDERS WERE ADVISED THAT WHILE AN AGGREGATE AWARD ON ALL ITEMS WAS THE CONTRACTING OFFICER DETERMINES THAT IS ADVANTAGEOUS TO THE GOVERNMENT. RESPONSE THE GATES ENGINEERING COMPANY SUBMITTED A BID DATED JUNE 25, 1956, OFFERING TO FURNISH THE SHEETING REQUIRED UNDER ITEMS 1 AND 2 AT PRICES OF $2.20 AND $3.50 PER LINEAL FOOT, RESPECTIVELY, AND TO FURNISH THE ANCILLARY ITEMS COVERED BY ITEMS 3 TO 7, INCLUSIVE, AT THE PRICES SET FORTH OPPOSITE EACH ITEM. ON THE BASIS OF THE PRICES SHOWN IN THE COMPANY'S BID, ITS AGGREGATE BID PRICE FOR ITEMS 1 TO 7, INCLUSIVE IS $775.10. IN ITS BID THE COMPANY SPECIFIED THE PLACE OF MANUFACTURE OF THE SUPPLIES AS ITS PLANT IN WILMINGTON, DELAWARE. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEMS 1 TO 7, INCLUSIVE, ON JULY 11, 1956.

BY LETTER DATED JULY 11, 1956--- THE DATE OF THE AWARD--- CONFIRMING ITS LONG DISTANCE TELEPHONE CALL OF THAT DATE, THE COMPANY REQUESTED THAT IT BE RELEASED FROM OBLIGATION UNDER ITS BID, ON THE GROUND THAT ITS BID PRICES OF $2.20 AND $3.50 PER LINEAL FOOT FOR ITEMS 1 AND 2, RESPECTIVELY, WERE ERRONEOUS IN THAT THEY WERE BASED ON FURNISHING A 36 INCH WIDTH SHEET AND NOT A 60 INCH WIDTH SHEET AS REQUIRED. IT STATED FURTHER THAT IT WAS NOT EQUIPPED TO MANUFACTURE THE 60 INCH WIDTH SHEET MATERIAL. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED A COPY OF ITS PRINTED PRICE LIST WHICH SPECIFIES FOR GACO NEOPRENE COLD BOND SHEET STOCK N-3S, 36 INCH WIDTH SHEETS, A PRICE OF $2.20 PER LINEAL FEET--- THE PRICE QUOTED BY THE COMPANY FOR ITEM 1--- FOR THE 1/16 INCH THICKNESS AND A PRICE OF $3.50 PER LINEAL FOOT--- THE PRICE QUOTED BY THE COMPANY FOR ITEM 2--- FOR THE 1/8 INCH THICKNESS.

THE LIST OF THE BIDS IN THE CONTRACTING OFFICER'S REPORT OF JULY 31, 1956, SHOWS THAT THE TWO OTHER RESPONSIVE BIDDERS QUOTED PRICES OF $3.12 AND $3.23 PER LINEAL FOOT ON ITEM 1, AND PRICES OF $4.75 AND $5.01 PER LINEAL FOOT FOR ITEM 2; AND THAT THEIR AGGREGATE BID PRICES WERE $1,023.86 AND $1,074.25 FOR ITEMS 1 TO 7, INCLUSIVE. IT ALSO SHOWS THAT THE PLACE OF BUSINESS OF EACH OF THESE BIDDERS IS SEATTLE, WASHINGTON, WHICH IS ONLY A SHORT DISTANCE FROM F.O.B. DELIVERY POINT, BREMERTON, WASHINGTON. THUS, THE AGGREGATE BID OF THE GATES ENGINEERING COMPANY OF $775.10 FOR ITEMS 1 TO 7, INCLUSIVE, AND ITS UNIT PRICES OF $2.20 AND $3.50 PER LINEAL FOOT FOR ITEMS 1 AND 2, RESPECTIVELY, IS SUBSTANTIALLY OUT OF LINE WITH THE UNIT PRICES AND AGGREGATE BID PRICES QUOTED BY THE OTHER BIDDERS. THIS FACT IS EMPHASIZED WHEN IT IS CONSIDERED THAT THE TWO OTHER RESPONSIVE BIDDERS, BECAUSE OF THEIR PROXIMITY TO THE POINT OF DESTINATION, MAY NOT HAVE BEEN REQUIRED TO INCLUDE SUCH SUBSTANTIAL FREIGHT CHARGES IN THEIR BID PRICES AS THE GATES ENGINEERING COMPANY WAS REQUIRED TO DO BECAUSE OF THE DISTANCE BETWEEN ITS PLANT (WILMINGTON, DELAWARE) AND THE DELIVERY POINT (BREMERTON, WASHINGTON).

THE DIFFERENCE BETWEEN THE AGGREGATE BID OF THE GATES ENGINEERING COMPANY ON ITEMS 1 TO 7, INCLUSIVE, AND THE OTHER AGGREGATE BIDS RECEIVED THEREON, TOGETHER WITH THE FACT THAT ON ITEM 1 THERE WAS ONLY A DIFFERENCE OF $0.11 BETWEEN THE UNIT PRICES QUOTED BY THE OTHER BIDDERS ON THAT ITEM, APPEARS TO HAVE BEEN SUFFICIENT TO INDICATE THE PROBABILITY OF ERROR AND, THEREFORE, THE BID SHOULD NOT HAVE BEEN ACCEPTED BY THE CONTRACTING OFFICER, IN THE ABSENCE OF KNOWLEDGE BY HIM OF OTHER FACTS INDICATING THAT THE LOW BID WAS FAIR AND REASONABLE, WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

ON THE RECORD, THERE IS NO ROOM FOR DOUBT THAT THE COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. ACCORDINGLY, SINCE ERROR WAS ALLEGED BY THE GATES ENGINEERING COMPANY ALMOST SIMULTANEOUSLY WITH THE ACCEPTANCE OF ITS BID, AND APPARENTLY BEFORE IT BECAME AWARE OF THE ACCEPTANCE, THE COMPANY MAY BE RELEASED FROM LIABILITY UNDER THE CONTRACT AWARD.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'SSTATEMENT DATED JULY 31, 1956, ARE RETURNED.