B-130878, APR. 15, 1957

B-130878, APR. 15, 1957

TO THE HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED MARCH 26, 1957, FROM THE COMMISSIONER, FEDERAL SUPPLY SERVICE, FURNISHING A REPORT RELATIVE TO A REQUEST BY THE HUNTINGTON SEATING COMPANY, NEW YORK, N.Y., TO BE RELIEVED FROM LIABILITY UNDER UNNUMBERED CONTRACT DATED JANUARY 15, 1957, PURCHASE ORDER NO. FNW- 5567/CS2, DATED JANUARY 16, 1957, ON ACCOUNT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN THE BID ON WHICH THE CONTRACT IS BASED.

THE FEDERAL SUPPLY SERVICE, NATIONAL BUYING DIVISION, BY INVITATION NO. FNW-1F-5575-A-1-3-57, REQUESTED BIDS FOR FURNISHING THE FOLLOWING:

"STOOLS, GENERAL PURPOSE, STEEL, SHALL BE IN ACCORDANCE WITH FEDERAL SPECIFICATION AA-S-700, DATED FEBRUARY 20, 1956; TYPE II (ROTARY), WITH NATURAL FINISH WOOD SEAT; SIZE 1--- ADJUSTABLE HEIGHT 30 TO 35 INCHES; OLIVE GREEN FINISH.'

BIDDERS WERE REQUESTED TO QUOTE UNDER ITEM 1 ON FURNISHING 240 OF THE STOOLS F.O.B., KEARNEY, NEW JERSEY, AND UNDER ITEM 2 ON FURNISHING 27 OF THE STOOLS, F.O.B., FORT MONMOUTH, NEW JERSEY. THE REQUIREMENTS UNDER ITEM 2 WERE LATER WITHDRAWN AND NO AWARD WAS MADE ON THAT ITEM. THEREFORE, ONLY ITEM 1 WILL BE DISCUSSED HEREAFTER.

IN RESPONSE TO THE INVITATION, HUNTINGTON SEATING COMPANY SUBMITTED A BID DATED DECEMBER 17, 1956, OFFERING TO FURNISH THE STOOLS FOR $7.43 EACH, NET. THE COMPANY STATED IN THE BID THAT IT WAS A REGULAR DEALER IN THE SUPPLIES BID UPON AND THAT DELIVERY WOULD BE EFFECTED WITHIN 30 DAYS AFTER RECEIPT OF NOTICE OF AWARD. WHILE IT CANNOT BE DEFINITELY DETERMINED FROM THE RECORD FURNISHED, THE CONTRACTING OFFICER REPORTS THAT "THE BID INDICATED THAT STOOL MODEL 28-B WAS BEING OFFERED AND PHOTOGRAPH OF SUCH STOOL WAS ATTACHED.' APPARENTLY THE INFORMATION AS TO THE TYPE AND MAKE OF THE STOOL OFFERED ALSO INDICATED THAT IT WAS MANUFACTURED BY THE ANGLE STEEL, INC. THE ABSTRACT OF BIDS SHOWS THAT SIX OTHER BIDS WERE RECEIVED. THE TWO NEXT LOWEST BIDS WERE FROM THE DEPENDABLE MANUFACTURING COMPANY AT $9.95 EACH AND THE ANGLE STEEL, INC., AT $10.90 EACH. THE BID OF THE HUNTINGTON SEATING COMPANY, BEING THE LOWEST RECEIVED, WAS ACCEPTED ON JANUARY 16, 1957, BY THE ISSUANCE OF PURCHASE ORDER NO. FNW-5576/CS2.

UPON RECEIPT OF THE PURCHASE ORDER, HUNTINGTON SEATING COMPANY ADVISED, BY LETTER OF JANUARY 18 AND SUBSEQUENT CORRESPONDENCE, THAT AN ERROR HAD BEEN MADE IN ITS BID AND REQUESTED THAT IT BE PERMITTED TO FURNISH THE STOOLS AT THE CORRECT PRICE OF $12.50 EACH OR THAT THE ORDER BE CANCELLED. IT WAS ALLEGED THAT THE BID WAS BASED ON A FACTORY COST PRICE OF STOOL MODEL 22-B, A STATIONARY SEAT STOOL, ADJUSTABLE 26 TO 34 INCHES AS SHOWN ON PAGE 19 OF ANGLE STEEL, INC. CATALOG, RATHER THAN ON MODEL 28- B, SHOWN ON PAGE 22 OF THE CATALOG. IT IS STATED THAT THE PRICE ON THE CORRECT MODEL SHOULD HAVE BEEN $12.50 EACH. THE BIDDER WAS ADVISED BY LETTER DATED JANUARY 23, 1957, THAT ITS REQUEST WAS ADMINISTRATIVELY DENIED AND THAT THE BIDDER WAS EXPECTED TO FULFILL ITS CONTRACTUAL OBLIGATIONS AND FAILURE TO DELIVER MIGHT RESULT IN TERMINATION OF THE CONTRACT FOR DEFAULT. BY LETTER DATED FEBRUARY 25, THE BIDDER APPEALED TO THIS OFFICE FOR RELIEF.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD THERE APPEARS NO DOUBT THAT AN ERROR WAS MADE IN THE BID AS ALLEGED; HOWEVER, SINCE THE ERROR WAS NOT ALLEGED UNTIL AFTER ACCEPTANCE AND THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON NOTICE OF THE PROBABILITY OF ERROR, THE QUESTION IS WHETHER THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER IS CHARGEABLE WITH CONSTRUCTIVE NOTICE OF ERROR.

AS HEREINBEFORE STATED, THE BID OF HUNTINGTON SEATING COMPANY SHOWED THAT IT WAS A DEALER, THAT IT PROPOSED TO FURNISH MODEL 28-B STOOL MANUFACTURED BY ANGLE STEEL, INC., FOR A PRICE OF $7.43 EACH, AND THAT DELIVERY WOULD BE EFFECTED WITHIN 30 DAYS. IT REASONABLY MAY NOT BE CONSIDERED THAT A DEALER WOULD HAVE ON HAND THE QUANTITY OF STOOLS BID UPON (267, ITEMS 1 AND 2) OR IF IT DID, CONSIDERING THE DISTANCE INVOLVED, DELIVERY PROBABLY WOULD HAVE BEEN OFFERED SOONER THAN WITHIN THE 30 DAYS SPECIFIED. THE COMPANY'S BID PRICE WAS APPROXIMATELY 25 PER CENT LOWER THAN THE NEXT LOW BID AND OVER 30 PER CENT LOWER THAN THE THIRD LOW BID, WHICH WAS SUBMITTED BY ITS SUPPLIER, ANGLE STEEL, INC.

IN VIEW OF THE DIFFERENCE BETWEEN THE BID PRICES AND PARTICULARLY BETWEEN THE PRICES QUOTED BY HUNTINGTON SEATING COMPANY AND ANGLE STEEL, HUNTINGTON'S SUPPLIER, IT IS OUR OPINION THAT THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER MUST BE CHARGED WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF HUNTINGTON SEATING COMPANY.

IN THE CIRCUMSTANCES AND SINCE ERROR WAS ALLEGED PROMPTLY UPON RECEIPT OF THE NOTICE OF AWARD AND NO DELIVERIES HAVE BEEN EFFECTED, PURCHASE ORDER NO. FNW-5576/CS2, DATED JANUARY 16, 1957, SHOULD BE CANCELLED WITHOUT LIABILITY TO EITHER PARTY.