B-130027, DEC. 27, 1956

B-130027, DEC. 27, 1956

THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 7, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH CHANSLOR AND LYON COMPANY, SAN FRANCISCO, CALIFORNIA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. BA-7339-56 WAS AWARDED.

THE BENICIA ARSENAL, BENICIA, CALIFORNIA, BY INVITATION NO. ORD-04 015-56 -119, REQUESTED BIDS--- TO BE OPENED APRIL 19, 1956--- FOR FURNISHING THREE TYPES OF BEARING SETS DESCRIBED UNDER ITEM 1 (100), 2/2), AND 3/1). IN RESPONSE CHANSLOR AND LYON COMPANY, A REGULAR DEALER, SUBMITTED A BID DATED APRIL 18, 1956, OFFERING TO FURNISH THREE TYPES OF BEARING SETS DESCRIBED UNDER THE THREE ITEMS AT A UNIT PRICE OF $2.04 PER SET. THE FIVE OTHER BIDS ON ITEM 1/100) RANGED FROM $2.75 PER SET TO $6.74 PER SET. THE BID OF CHANSLOR AND LYON COMPANY WAS ACCEPTED AS TO ITEM 1/100) ON APRIL 30, 1956.

IN A LETTER DATED MAY 16, 1956, IN WHICH IT REFERRED TO ITS PREVIOUS TELEPHONE CONVERSATION WITH THE CONTRACTING OFFICE, CHANSLOR AND LYON COMPANY STATED THAT, IN INSERTING THE COMPANY'S BID PRICE FOR ITEM 1/100) ON THE BID FORM SUBMITTED, ITS TYPIST INADVERTENTLY COPIED THE WRONG FIGURES FROM ITS WORKSHEET. THE COMPANY REQUESTED THAT IT BE RELIEVED OF ANY OBLIGATION UNDER THE CONTRACT. WITH ITS LETTER THE COMPANY SUBMITTED ITS WORKSHEET, WHICH APPEARS TO BE A COPY OF THE SUBJECT INVITATION AND WHICH SHOWS A UNIT PRICE OF $5.04 FOR ITEM 1/100), THE ITEM ON WHICH ERROR IS ALLEGED BY THE COMPANY. IN A LETTER DATED JUNE 8, 1956, THE COMPANY STATED THAT IT HAD INTENDED TO QUOTE A PRICE OF $5.04 PER SET FOR THE BEARING SETS COVERED BY ITEM 1/100) AND IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY FURNISHED A COPY OF THE PRINTED PRICE LIST OF ITS SUPPLIER, ALUMINUM INDUSTRIES, INC., CINCINNATI, OHIO, WHICH WAS MADE EFFECTIVE APRIL 26, 1956. PAGE 17 OF THE PRICE LIST SPECIFIES FOR PERMITE -BOHN PART NO. 1395K-030--- THE BEARING SET REQUIRED UNDER ITEM 1/100/--- A LIST PRICE OF $15.36 AND A NET PRICE OF $5.70. IN ITS LETTER THE COMPANY STATED THAT ON THE BEARING SETS, IT RECEIVES FROM ITS SUPPLIER ADDITIONAL DISCOUNTS OF 5 AND 20 PERCENT, WHICH WOULD MAKE ITS COST $4.332 PER SET.

THE BID OF CHANSLOR AND LYON COMPANY CONTAINED ON ITS FACE THE IDENTICAL PRICE OF $2.04 PER SET BOTH FOR THE BEARING SETS REQUIRED UNDER ITEM 1/100) AND FOR THE BEARING SETS REQUIRED UNDER ITEM 2/2). IT SEEMS EXTREMELY IMPROBABLE THAT THE COMPANY INTENDED TO QUOTE AN IDENTICAL PRICE FOR BOTH ITEMS 1/100) AND 2/2), SINCE ITEM 2/2) APPEARS TO BE A MORE EXPENSIVE ITEM THAN ITEM 1 (100). IN HER REPORT DATED NOVEMBER 6, 1956, THE CONTRACTING OFFICER STATED:

"2. DUE TO THE FOLLOWING FACTS IT WOULD SEEM THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF PROBABLE ERROR:

"A. CHANSLOR AND LYON, A REGULAR DEALER, BID $2.04 ON ITEM 1 OF INVITATION FOR BID WHILE NEXT LOW BID OF $2.75 WAS SUBMITTED BY GENERAL MOTORS CORPORATION, LISTED AS A REGULAR DEALER AND MANUFACTURER.

"B. ALL OTHER BIDS SUBMITTED ON ITEM 2 OF SUBJECT INVITATION FOR BID WERE MUCH LOWER THAN THOSE SUBMITTED BY THE SAME BIDDERS ON ITEM 1, AND IN MOST CASES ONLY ONE-THIRD AS MUCH, WHILE CHANSLOR AND LYON'S BID WAS THE SAME AS ON ITEM 1, $2.04.

"3. IN VIEW OF THE ABOVE ALLEGATIONS AND FACTS, AND SUBSTANTIATED PROOF OF COST TO CONTRACTOR, RECOMMENDATION IS MADE THAT THE REQUEST FOR RESCISSION BE GRANTED.'

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS LITTLE ROOM FOR DOUBT THAT THE COMPANY MADE A BONA FIDE ERROR IN ITS BID, AS ALLEGED, AND IN THE CIRCUMSTANCES, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY OF ERROR IN THE COMPANY'S BID PRICE OF $2.04 PER SET FOR ITEM 1/100), AND CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

ACCORDINGLY, SINCE IT IS REPORTED THAT NO DELIVERIES OF THE BEARING SETS REQUIRED UNDER ITEM 1/100) HAVE BEEN MADE BY CHANSLOR AND LYON COMPANY, CONTRACT NO. BA-7339-56 MAY BE CANCELLED WITHOUT LIABILITY TO THE COMPANY.

THE PAPERS, WITH THE EXCEPTION OF THE ABSTRACT OF BIDS AND THE CONTRACTING OFFICER'S STATEMENT OF NOVEMBER 6, 1956, ARE RETURNED.