B-129640, NOV. 2, 1956

B-129640: Nov 2, 1956

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO LETTER DATED OCTOBER 24. SINCE THE PRICE BID BY TUBE CITY WAS OUT OF LINE WITH THE VALUE OF THE SCRAP MATERIAL AND WITH OTHER BIDS RECEIVED. VERIFICATION OF LOTS AND PRICES WAS REQUESTED. WITH WHICH WAS SUBMITTED THE ORIGINAL WORKSHEET. WAS THE CORRECT PRICE. WHICH PRESUMABLY WOULD HAVE BEEN $300 A GROSS TON (300 G.T.). THE BIDDER EVIDENTLY CONSIDERED THAT ONE-THIRD OF EACH TON WAS COMPOSED OF IRON WHICH HAD NO VALUE ( 1/3 IRON NO VALUE) AND ACCORDINGLY SET UP AN EQUATION TO REDUCE ITS ULTIMATE SALES PRICE PER TON ONE-THIRD (FIG. SUCH REFERENCE MEANS THAT THE STAINLESS STEEL IS NON MAGNETIC. THERE APPEARS NO REASONABLE DOUBT THAT THE ALLEGED ERROR WAS MADE BY THE FIRM.

B-129640, NOV. 2, 1956

TO HONORABLE LEWIS L. STRAUSS, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO LETTER DATED OCTOBER 24, 1956, WITH ENCLOSURES, FROM THE ACTING GENERAL MANAGER, WHO REQUESTS A DECISION WHETHER TUBE CITY IRON AND METAL COMPANY, GLASSPORT, PENNSYLVANIA, SHOULD BE ALLOWED TO CORRECT ITS BID BECAUSE OF AN ERROR IT ALLEGED UPON REQUEST FOR VERIFICATION PRIOR TO AWARD.

IN RESPONSE TO SALE INVITATION SU-15, TUBE CITY IRON AND METAL COMPANY BID $256 PER GROSS TON FOR THE PURCHASE OF ITEM NO. 171, MISCELLANEOUS SCRAP AND BLACK IRON TURNINGS AND BORINGS. THE OTHER FOUR BIDS RECEIVED ON THIS ITEM RANGED FROM $12.05 TO $59.60. SINCE THE PRICE BID BY TUBE CITY WAS OUT OF LINE WITH THE VALUE OF THE SCRAP MATERIAL AND WITH OTHER BIDS RECEIVED, VERIFICATION OF LOTS AND PRICES WAS REQUESTED. BY LETTER DATED SEPTEMBER 20, 1956, WITH WHICH WAS SUBMITTED THE ORIGINAL WORKSHEET, THE FIRM ALLEGED THAT $156 PER GROSS TON, INSTEAD OF $256 PER GROSS TON, WAS THE CORRECT PRICE. THE LETTER OF THE ACTING GENERAL MANAGER ADEQUATELY DESCRIBES THE WORKSHEET (PARENTHETICAL REFERENCES) AS FOLLOWS:

"IN COMPUTING LOT NO. 171, THE BIDDER IN DETERMINING THE PRICE IT WOULD BID TO THE GOVERNMENT STARTED FROM ITS SALES PRICE TO THIRD PARTIES, WHICH PRESUMABLY WOULD HAVE BEEN $300 A GROSS TON (300 G.T.). THE BIDDER EVIDENTLY CONSIDERED THAT ONE-THIRD OF EACH TON WAS COMPOSED OF IRON WHICH HAD NO VALUE ( 1/3 IRON NO VALUE) AND ACCORDINGLY SET UP AN EQUATION TO REDUCE ITS ULTIMATE SALES PRICE PER TON ONE-THIRD (FIG. LOT NO. 171 AT 2/3 -18/8 TNG AT 300 G.T.). THE 18/8 TNG REFERENCE IN BIDDER'S EQUATION REFERRED TO THE TYPE OF STAINLESS STEEL. IN THIS CASE, SUCH REFERENCE MEANS THAT THE STAINLESS STEEL IS NON MAGNETIC. BIDDER THEN INTENDED TO DEDUCT FROM THE RESULT OF THIS EQUATION FREIGHT COSTS, MISCELLANEOUS, LOSS AND PROFIT TO ARRIVE AT ITS BID PRICE TO THE GOVERNMENT. INSTEAD OF MULTIPLYING 2/3 BY 300 EQUALS 200 G.T. AND DEDUCTING EXPENSES, LOSS AND PROFIT THEREFROM, IT DEDUCTED THESE ITEMS FROM THE 300 G.T. FIGURE. THIS RESULTED IN A PRICE OF $255 G.T. ($255 BID) INSTEAD OF $155. AS INDICATED ON THE WORKSHEET, THE BIDDER ADDED $1 TO ITS FIGURE IN SUBMITTING ITS BID.'

THE FIRM REQUESTS THAT ITS BID BE CORRECTED TO REFLECT A PRICE OF $156 PER GROSS TON.

ON THE BASIS OF THE FACTS OF RECORD, THERE APPEARS NO REASONABLE DOUBT THAT THE ALLEGED ERROR WAS MADE BY THE FIRM. ALSO, AS THE LETTER OF THE ACTING GENERAL MANAGER INDICATES, CORRECTION OF THE BID WILL NOT ADVERSELY AFFECT THE OTHER BIDDERS, SINCE THE CORRECTED BID WILL BE APPROXIMATELY TWO AND ONE-HALF TIMES HIGHER THAN THE NEXT HIGH BID. ACCORDINGLY, SINCE THE FIRM'S BID WAS BELIEVED TO BE ERRONEOUS, AND UPON REQUEST FOR VERIFICATION PRIOR TO AWARD THIS BELIEF WAS CONFIRMED AND THE INTENDED PRICE ESTABLISHED, THE BID SHOULD BE CORRECTED.

THE ENCLOSURES RECEIVED WITH THE LETTER OF OCTOBER 24 ARE RETURNED HEREWITH.