B-129184, OCT. 3, 1956

B-129184: Oct 3, 1956

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 6. IS BASED. - FOR FURNISHING 406 RACK ASSEMBLIES WHICH WERE TO BE PHOSPHATE AND SECTIONALLY PLASTISOL COATED IN ACCORDANCE WITH DRAWING K7772165. WHICH WAS ACCEPTED ON FEBRUARY 29. THAT BECAUSE OF THE NOTE APPEARING ON PAGE 4 OF THE INVITATION TO THE EFFECT THAT "PAINTING AND STENCILING WILL BE DONE AT WATERTOWN ARSENAL. WHO WAS SECOND LOW BIDDER AT $12.25 EACH. (2) THAT THEY DID NOT HAVE A SUPPORTING QUOTATION FOR THIS COATING. IN WHICH THE COMPANY WAS QUOTED A PRICE OF $7.52 PER UNIT ON THE PLASTISOL COATING OF THE RACK ASSEMBLIES. THAT HE WAS INFORMED THAT THE ELECTRO-MECHANICAL PRODUCTS COMPANY. EXPRESSES THE OPINION THAT THERE WAS CONSTRUCTIVE NOTICE OF A MISTAKE IN THE BID IN QUESTION DUE TO THE KNOWN PRICE OF A PREVIOUS PRODUCER.

B-129184, OCT. 3, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 6, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE SHUNK MANUFACTURING COMPANY ALLEGES IT MADE IN ITS BID ON WHICH UNNUMBERED CONTRACT (PURCHASE ORDER NO. 56-1905) DATED FEBRUARY 29, 1956, IS BASED.

BY INVITATION NO. ORD-19-066-56-50, THE WATERTOWN ARSENAL, WATERTOWN, MASSACHUSETTS, REQUESTED BIDS--- TO BE OPENED JANUARY 23, 1956--- FOR FURNISHING 406 RACK ASSEMBLIES WHICH WERE TO BE PHOSPHATE AND SECTIONALLY PLASTISOL COATED IN ACCORDANCE WITH DRAWING K7772165, AS REVISED JUNE 1, 1954. IN RESPONSE THE SHUNK MANUFACTURING COMPANY SUBMITTED A BID DATED JANUARY 20, 1956, OFFERING TO FURNISH THE ASSEMBLIES AT A PRICE OF $9.60 EACH, WHICH WAS ACCEPTED ON FEBRUARY 29, 1956.

BY LETTERS DATED APRIL 2 AND MAY 25, 1956, THE COMPANY ADVISED THAT IT HAD MADE AN ERROR IN ITS BID IN THAT IT HAD FAILED TO INCLUDE IN ITS BID PRICE THE COST OF THE PLASTISOL COATING WHICH, TOGETHER WITH THE COST OF FREIGHT TO SUBCONTRACTOR'S PLANT, IT STATED, AMOUNTS TO $8.97 PER ASSEMBLY; THAT ITS ESTIMATOR, MR. FOREMAN, NOTED THE PAINTING SPECIFICATION OF PHOSPHATE BASE, PRIMER, ENAMEL AND STENCILING ON DRAWING K7772165, TOGETHER WITH THE NOTE ON THE SIDE RELATING TO THE VINYL PLASTISOL, BUT THAT BECAUSE OF THE NOTE APPEARING ON PAGE 4 OF THE INVITATION TO THE EFFECT THAT "PAINTING AND STENCILING WILL BE DONE AT WATERTOWN ARSENAL," HE DISREGARDED THIS FINISHING IN ITS ENTIRETY. THE COMPANY REQUESTED THAT THE UNIT PRICE OF THE RACK ASSEMBLIES BE INCREASED TO $18.57, AND STATED FURTHER THAT IT DISCOVERED THE ERROR OF OMISSION WHEN IT STARTED ORDERING MATERIALS; THAT IT IMMEDIATELY REQUESTED QUOTATIONS ON THE PLASTISOL COATING FROM TWO SUBCONTRACTORS WHO QUOTED PRICES OF $7.52 EACH AND APPROXIMATELY $12 EACH; THAT ON MARCH 26, 1956, IT CONTACTED THE MALKIN-ILLWIN COMPANY, IRVINGTON, NEWJERSEY, WHO WAS SECOND LOW BIDDER AT $12.25 EACH, IN AN EFFORT TO OBTAIN SOME INFORMATION ON THE COATING OPERATION, AND THAT THIS COMPANY INFORMED IT THAT (1) THEY HAD NO EXPERIENCE WITH PLASTISOL FINISH; (2) THAT THEY DID NOT HAVE A SUPPORTING QUOTATION FOR THIS COATING; (3) THAT THEY HAD USED AROUND $1 EACH TO COVER THIS FINISH; AND (4) THAT THEY WOULD BE RELUCTANT TO PROCEED ON A CONTRACT AFTER EARNING THE COST OF THE COATING. WITH THE LETTER OF APRIL 2, 1956, THE COMPANY SUBMITTED A COPY OF A LETTER QUOTATION DATED MARCH 27, 1956, RECEIVED FROM MUNRAY PRODUCTS, INC., CLEVELAND, OHIO, IN WHICH THE COMPANY WAS QUOTED A PRICE OF $7.52 PER UNIT ON THE PLASTISOL COATING OF THE RACK ASSEMBLIES.

THE ABSTRACT OF BIDS SHOWS THAT ON THE RACK ASSEMBLIES, SIX OTHER BIDDERS QUOTED PRICES RANGING FROM $12.25 EACH TO $40 EACH. IN AN UNDATED REPORT RECOMMENDING AN INCREASE IN THE UNIT PRICE OF THE ASSEMBLIES TO $16.90--- THE AMOUNT QUOTED BY THE THIRD LOW BIDDER--- THE CONTRACTING OFFICER STATES THAT, PRIOR TO THE ISSUANCE OF THE INVITATION FOR THE BIDS, HE REQUESTED INFORMATION FROM THE CADILLAC MOTOR CAR DIVISION, CLEVELAND TANK PLANT, CLEVELAND, OHIO, AS TO THE NAME OF THE PREVIOUS SUPPLIER AND AS TO THE PRICE PAID FOR ASSEMBLIES IDENTICAL TO THAT REQUIRED UNDER THE SUBJECT INVITATION; THAT HE WAS INFORMED THAT THE ELECTRO-MECHANICAL PRODUCTS COMPANY, INC., GARDEN CITY, MICHIGAN, HAD PRODUCED THE ITEM IN LOTS OF 500 AT A PRICE OF $19 EACH, AND THAT IN RESPONSE TO THE SUBJECT INVITATION, THE ELECTRO MECHANICAL PRODUCTS COMPANY, INC., HAD QUOTED A PRICE OF $40 EACH FOR THE RACK ASSEMBLIES. HE, THEREFORE, EXPRESSES THE OPINION THAT THERE WAS CONSTRUCTIVE NOTICE OF A MISTAKE IN THE BID IN QUESTION DUE TO THE KNOWN PRICE OF A PREVIOUS PRODUCER, THE MUCH HIGHER BIDS SUBMITTED BY FIVE OF THE SEVEN BIDDERS, AND THE PRE-AWARD SURVEY SPECIFYING LACK OF PERFORMANCE RECORDS AND OPERATIONAL SHEETS. UNDER THESE CIRCUMSTANCES, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID, AND THAT THE BID OF THE SHUNK MANUFACTURING COMPANY SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE IS LITTLE ROOM FOR DOUBT THAT THE SHUNK MANUFACTURING COMPANY MADE A BONA FIDE ERROR IN ITS BID, AS ALLEGED. HOWEVER, IF THE BID BE CORRECTED TO REFLECT THE PRICE REQUESTED BY THE COMPANY, IT WILL NOT BE THE LOWEST BID ON THE ASSEMBLIES. IT IS REPORTED THAT AS OF JULY 5, 1956, THE COMPANY HAD DELIVERED 150 OF THE REQUIRED 406 RACK ASSEMBLIES. IN HIS UNDATED STATEMENT THE CONTRACTING OFFICER STATES THAT IT APPEARS FROM THE COST OF THE PLASTISOL COATING AND OTHER EVIDENCE THAT THE NEXT LOWEST BIDDER, MALKIN-ILLWIN COMPANY, WHO QUOTED A PRICE OF $12.25 EACH FOR THE ASSEMBLIES, COULD NOT POSSIBLY PRODUCE THIS ITEM AT ITS BID PRICE WITHOUT A LOSS. HENCE, IT WOULD APPEAR THAT THE NEXT LOWEST CORRECT BID ON THE ASSEMBLIES IS THAT OF THE BRISTOL TOOL AND FORGING CORPORATION WHO QUOTED A PRICE OF $16.90 EACH. ACCORDINGLY, IN VIEW OF THE CONTRACTING OFFICER'S STATEMENT THAT THE BID OF THE NEXT LOW BIDDER, MALKIN-ILLWIN COMPANY, IS ALSO ERRONEOUS, PAYMENT IS AUTHORIZED TO BE MADE TO THE SHUNK MANUFACTURING COMPANY FOR THE QUANTITY OF RACK ASSEMBLIES DELIVERED UNDER THE CONTRACT AT A UNIT PRICE OF $16.90--- THE AMOUNT OF THE NEXT LOWEST CORRECT BID.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER OR VOUCHERS COVERING PAYMENT FOR THE RACK ASSEMBLIES.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S UNDATED STATEMENT, ARE RETURNED.