B-132453, JUL. 22, 1957

B-132453: Jul 22, 1957

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VETERANS ADMINISTRATION: REFERENCE IS MADE TO LETTER DATED JULY 5. WHICH THE CONTRACTOR ALLEGES WAS OMITTED IN THE PREPARATION OF ITS BID. QUOTATIONS WERE TO BE MADE ON A DELIVERED AND STORED BASIS. ON THE ERRONEOUS ASSUMPTION THAT THE FACILITY WAS SERVED BY A RAIL SIDING. THE AMOUNT BID IS COMPOSED OF THE F.O.B. WHICH OFFER WAS ACCEPTED WITHOUT QUESTION OR VERIFICATION ON MARCH 19. IT IS STATED THAT ON PREVIOUS SOLICITATIONS BIDDERS HAVE ADDED A TRUCKING CHARGE TO THE COST OF THE COAL FOR DELIVERY TO THE HOSPITAL AT WEST HAVEN AND THAT THERE WAS NO REASON TO BELIEVE THAT SUCH CHARGES WERE NOT INCLUDED IN THE BID PRICE OF THE CONTRACTOR. IT IS NOTED THAT THE ACTUAL RAIL FREIGHT RATE FROM THE POINTS OF ORIGIN SHOWN ON THE BID.

B-132453, JUL. 22, 1957

TO HONORABLE H. V. HIGLEY, ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED JULY 5, 1957, WITH ENCLOSURES, FROM THE ASSISTANT DEPUTY ADMINISTRATOR REQUESTING A DECISION AS TO WHETHER THE CONTRACT PRICE SUBMITTED BY THE F AND D COAL SALES COMPANY FOR THE FURNISHING OF ANTHRACITE COAL TO THE VETERANS ADMINISTRATION HOSPITAL, WEST HAVEN, CONNECTICUT, MAY BE MODIFIED TO INCLUDE A TRUCKING CHARGE OF $1.25 PER TON, WHICH THE CONTRACTOR ALLEGES WAS OMITTED IN THE PREPARATION OF ITS BID.

THE INVITATION INVOLVED, NO. C-41-57, INSTRUCTED ALL BIDDERS THAT UNDER CERTAIN ITEMS, INCLUDING ITEM NO. 5, QUOTATIONS WERE TO BE MADE ON A DELIVERED AND STORED BASIS. ALSO, IN ORDER FOR A BID TO BE CONSIDERED RESPONSIVE THE CONDITIONS OF THE INVITATION REQUIRED THAT SCHEDULE NO. (BIDDING FORM) WHICH ACCOMPANIED THE SOLICITATIONS, SHOW THE F.O.B. ORIGIN PRICE PER TON, THE FREIGHT RATE, AND THE PRICE F.O.B. DESTINATION. THE CONTRACTOR QUOTED A PRICE OF $11.75 PER TON DELIVERED AND STORED, ON THE ERRONEOUS ASSUMPTION THAT THE FACILITY WAS SERVED BY A RAIL SIDING. THE AMOUNT BID IS COMPOSED OF THE F.O.B. COST OF $7.25 PER TON AT THE MINE, PLUS FREIGHT OF $4.50, WHICH OFFER WAS ACCEPTED WITHOUT QUESTION OR VERIFICATION ON MARCH 19, 1957. THEREAFTER, BY LETTERS OF APRIL 8 AND JUNE 14, 1957, THE CONTRACTOR STATES THAT IT FAILED TO INCLUDE A TRUCKING CHARGE FOR TRANSPORTING THE COAL FROM THE RAIL SIDING AT DESTINATION TO THE VETERANS ADMINISTRATION HOSPITAL, WEST HAVEN, CONNECTICUT, AND THEREFORE REQUESTS THAT THE CONTRACT PRICE PER TON BE INCREASED $1.25 PER TON TO COVER THE ACTUAL COSTS INVOLVED FOR SUCH TRUCKING SERVICES.

IN THE SUBMISSION LETTER OF JULY 5, 1957, IT IS STATED THAT ON PREVIOUS SOLICITATIONS BIDDERS HAVE ADDED A TRUCKING CHARGE TO THE COST OF THE COAL FOR DELIVERY TO THE HOSPITAL AT WEST HAVEN AND THAT THERE WAS NO REASON TO BELIEVE THAT SUCH CHARGES WERE NOT INCLUDED IN THE BID PRICE OF THE CONTRACTOR. HOWEVER, IT IS NOTED THAT THE ACTUAL RAIL FREIGHT RATE FROM THE POINTS OF ORIGIN SHOWN ON THE BID, TO DESTINATION, FORMERLY WAS $4.50 PER TON, THE AMOUNT SHOWN ON THE CONTRACTOR'S BID. THE CONTRACTOR WAS REQUIRED TO QUOTE ONLY THE NET PRICE F.O.B. MINE SITE, AND SINCE THAT AMOUNT, $7.25, ADDED TO THE STATED PER TON RAIL FREIGHT RATE OF $4.50 (CURRENT RATE, $4.75) EQUALS THE DELIVERED PRICE OF $11.75, IT IS CLEAR THAT NO ALLOWANCE WAS INCLUDED IN THE COMPONENT FIGURES OR IN THE TOTAL PRICE TO COVER THE TRUCKING CHARGES INVOLVED AT POINT OF DELIVERY ON THE SHIPMENTS MADE AND TO BE MADE UNDER THE TERMS OF THE CONTRACT.

IN THE CIRCUMSTANCES THERE WOULD APPEAR TO BE A SUBSTANTIAL BASIS FOR CHARGING THE CONTRACTING OFFICER WITH CONSTRUCTIVE KNOWLEDGE OF THE CONTRACTOR'S ERROR IN OMITTING ON THE FACE OF THE BID THE NECESSARY TRUCKING COSTS AT DESTINATION, AND THEREFORE THE CONTRACT, UPON VERIFICATION OF THE CORRECTNESS OF REPORTED TRUCK DELIVERY CHARGES, MAY BE MODIFIED TO PERMIT PAYMENT OF THE ADDITIONAL COST OF $1.25 PER TON. REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT AND SUPPLEMENTAL PAYMENT VOUCHERS.