B-132183, JUL. 8, 1957

B-132183: Jul 8, 1957

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED JUNE 11. N228S 19605 IS BASED. THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $1. THE CONDITION OF THE TUBES COVERED BY ITEM 47 WAS DESCRIBED IN THE INVITATION AS BEING "APPARENTLY UNUSED. WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $850. WAS ACCEPTED AS TO ITEMS 44 AND 47 ON APRIL 23. THAT IT WAS ITS INTENTION TO QUOTE A UNIT PRICE OF $0.072 EACH FOR THE TUBES COVERED BY ITEM 47. THE COMPANY STATED FURTHER THAT A CHECK BY THE CONTRACTING OFFICER OF PREVIOUS TUBE SALES WOULD REVEAL THAT THE BIDDERS GENERALLY QUOTE PRICES AMOUNTING TO 5 TO 20 PERCENT OF THE ORIGINAL ACQUISITION COST AND THAT THE FACT THAT THE COMPANY HAD QUOTED A PRICE AMOUNTING TO 96 PERCENT OF THE ACQUISITION COST SUBSTANTIATES ITS STATEMENT THAT ITS BID PRICE FOR ITEM 47 IS ERRONEOUS.

B-132183, JUL. 8, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JUNE 11, 1957, WITH ENCLOSURES, FROM CAPTAIN D. C. MACKENZIE, ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE JSH SALES COMPANY, LOS ANGELES, CALIFORNIA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N228S 19605 IS BASED.

BY SALES INVITATION NO. B-251-57-228, THE NAVAL SUPPLY CENTER, DISPOSAL DIVISION, OAKLAND, CALIFORNIA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, 2,600 RCA TYPE 12A6 ELECTRONIC TUBES, ITEM 47, THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $1,995.84. THE CONDITION OF THE TUBES COVERED BY ITEM 47 WAS DESCRIBED IN THE INVITATION AS BEING "APPARENTLY UNUSED--- IN GOOD CONDITION.' RESPONSE THE JSH SALES COMPANY SUBMITTED A BID OFFERING TO PURCHASE, AMONG OTHER ARTICLES, THE TUBES COVERED BY ITEM 47 AT A UNIT PRICE OF $0.72 EACH OR FOR A TOTAL PRICE OF $1,872. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $850, WAS ACCEPTED AS TO ITEMS 44 AND 47 ON APRIL 23, 1957.

IN HIS REPORT OF MAY 20, 1957, IN WHICH HE RECOMMENDED THAT ITEM 47 OF THE CONTRACT BE CANCELLED, THE CONTRACTING OFFICER STATED THAT ON APRIL 25, 1957, UPON RECEIPT OF NOTICE OF AWARD, A REPRESENTATIVE OF THE JSH SALES COMPANY TELEPHONED ALLEGING THAT THE COMPANY HAD MADE AN ERROR IN BIDDING ON ITEM 47 OF ITS BID. IN A CONFIRMING LETTER OF THE SAME DATE THE COMPANY ADVISED THE CONTRACTING OFFICER THAT ITS SECRETARY HAD MADE A DECIMAL POINT ERROR IN TRANSFERRING ITS UNIT PRICE FOR ITEM 47 FROM ITS WORKSHEET TO THE BID FORM, THAT IT WAS ITS INTENTION TO QUOTE A UNIT PRICE OF $0.072 EACH FOR THE TUBES COVERED BY ITEM 47, AND REQUESTED THAT ITS BID BE CORRECTED ACCORDINGLY. THE COMPANY STATED FURTHER THAT A CHECK BY THE CONTRACTING OFFICER OF PREVIOUS TUBE SALES WOULD REVEAL THAT THE BIDDERS GENERALLY QUOTE PRICES AMOUNTING TO 5 TO 20 PERCENT OF THE ORIGINAL ACQUISITION COST AND THAT THE FACT THAT THE COMPANY HAD QUOTED A PRICE AMOUNTING TO 96 PERCENT OF THE ACQUISITION COST SUBSTANTIATES ITS STATEMENT THAT ITS BID PRICE FOR ITEM 47 IS ERRONEOUS. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED (1) ITS ORIGINAL WORKSHEET WHICH INDICATES A UNIT PRICE OF $0.072 EACH FOR ITEM 47, (2) A COPY OF AN INVOICE RENDERED BY THE COMPANY TO ONE OF ITS CUSTOMERS, WHICH INDICATES A SELLING PRICE OF $0.22 EACH FOR TYPE 12A6 TUBES, (3) A COPY OF A CREDIT MEMORANDUM ISSUED BY THE COMPANY TO SUCH CUSTOMER FOR SHORTAGE IN SHIPMENT AND RETURNED DEFECTIVE TUBES, AND (4) A COPY OF THE PRINTED PRICE LIST OF MID-AMERICA INC., WHICH INDICATES THAT TYPE 12A6 TUBES, WHICH ARE GUARANTEED AS TO QUALITY BY THE CORPORATION, ARE SOLD BY THAT CORPORATION AT A PRICE OF $0.29 EACH--- $0.43 LESS THAN THE PRICE QUOTED BY THE COMPANY FOR THE TYPE 12A6 TUBES COVERED BY ITEM 47.

THE ABSTRACT OF BIDS INDICATES THAT THE GOVERNMENT'S ORIGINAL ACQUISITION UNIT COST OF THE TYPE 12A6 TUBES COVERED BY ITEM 47 WAS $0.7676307 EACH AND THAT THE 13 OTHER BIDDERS ON ITEM 47 QUOTED PRICES RANGING FROM $0.1612 EACH TO $0.0131 EACH. THUS, THE COMPANY'S BID OF $0.72 EACH FOR ITEM 47 IS COMPLETELY OUT OF LINE WITH THE OTHER BIDS RECEIVED ON THAT ITEM. WHILE A MERE DIFFERENCE IN THE PRICES QUOTED FOR SURPLUS GOVERNMENT PROPERTY WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICE QUOTED ON NEW PROPERTY FOR SALE TO THE GOVERNMENT, IT MUST BE CONCEDED THAT IT IS UNLIKELY THAT A BIDDER, AS HERE, INTENTIONALLY WOULD OFFER FOR ELECTRONIC TUBES, THE QUALITY OF WHICH IS NOT GUARANTEED BY THE GOVERNMENT, 96 PERCENT OF WHAT WAS KNOWN TO BE THE ACQUISITION COST OF THE ITEM, PARTICULARLY SINCE SUCH BIDDER COULD PROCURE FROM A REPUTABLE DEALER THE SAME TYPE OF TUBES WITH A GUARANTEE AS TO QUALITY AT A PRICE OF $0.29 EACH --- $0.43 LESS THAN THE COMPANY'S BID PRICE FOR ITEM 47. IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT A REQUEST FOR VERIFICATION OF THE BID WOULD HAVE BEEN IN ORDER BEFORE ITS ACCEPTANCE.

ON THE RECORD, THERE IS NO ROOM FOR DOUBT THAT THE JSH SALES COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. ACCORDINGLY, AWARD AS TO ITEM 47 OF CONTRACT NO. N228S-19605 MAY BE CANCELLED WITHOUT LIABILITY TO THE COMPANY AND REFUND MAY BE MADE TO THE COMPANY OF THAT PORTION OF ITS BID DEPOSIT APPLICABLE TO THAT ITEM.

THE PAPERS, WITH EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF MAY 20, 1957, AND THE ABSTRACT OF BIDS ARE RETURNED.