B-132696, AUG. 13, 1957

B-132696, AUG. 13, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JULY 24, 1957, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE TAYLOR SALT AND CHEMICAL COMPANY, INC., NORFOLK, VIRGINIA, ALLEGES WAS MADE IN ITS BID ON WHICH CONTRACT NO. N189-36244A WAS AWARDED.

THE U.S. NAVY PURCHASING OFFICE, NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA, BY INVITATION NO. IFB-189-850-57, REQUESTED BIDS--- TO BE OPENED JUNE 3, 1957--- FOR FURNISHING, AMONG OTHER ITEMS, AN ESTIMATED QUANTITY OF 28,000 POUNDS OF POWDERED SOAP, ITEM M1-10, TO BE DELIVERED AS ORDERED BY NAVY VESSELS DURING THE QUARTER BEGINNING JULY 1, 1957, AND ENDING SEPTEMBER 30, 1957. ON PAGE 4 OF THE INVITATION, PROSPECTIVE BIDDERS WERE ADVISED THAT ITEM M1-10 AND CERTAIN OTHER ITEMS WERE TO BE PACKED IN 50-POUND NON- RETURNABLE DRUMS. IN RESPONSE THE TAYLOR SALT AND CHEMICAL COMPANY, INC., SUBMITTED A BID DATED MAY 10, 1957, OFFERING TO FURNISH, IN ADDITION TO ANOTHER ITEM, THE POWDERED SOAP UNDER ITEM M1-10 AT A PRICE OF $0.05 PER POUND,"F.O.B. DELIVERED ZONE 1.' OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $0.0795, $0.08 AND $0.083 PER POUND.

IT IS REPORTED THAT ON JUNE 20, 1957, THE TAYLOR SALT AND CHEMICAL COMPANY, INC., ADVISED THE CONTRACTING OFFICER, BY TELEPHONE, THAT AN ERROR HAD BEEN MADE IN ITS BID AND THAT ON JUNE 21, 1957, THE CORPORATION WAS REQUESTED BY SPEEDLETTER TO FURNISH A DETAILED STATEMENT EXPLAINING HOW THE ERROR IN ITS BID OCCURRED AND TO SUBMIT EVIDENCE IN SUPPORT THEREOF. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM M1-10 AND OTHER ITEMS ON JUNE 24, 1957.

IN A CONFIRMING LETTER DATED JUNE 24, 1957--- THE SAME DATE ON WHICH ITS BID WAS ACCEPTED-- THE TAYLOR SALT AND CHEMICAL COMPANY, INC., STATED---

"REFERENCE IS MADE TO YOUR SPEED LETTER DATED JUNE 21, 1957, AND OUR TELEPHONE CONVERSATION WITH YOUR MR. BAINES, NPO, REGARDING ERROR IN BID ON SUBJECT INQUIRY.

"IT IS OUR USUAL PRACTICE WHEN QUOTING ON GOVERNMENT INVITATIONS TO CONTACT THE PRODUCER OR MANUFACTURER TO BE SURE THAT THEIR PRODUCT MEETS THE GOVERNMENT SPECIFICATIONS. THIS WAS DONE ON SUBJECT INVITATION AND WE ARE ATTACHING HERETO A COPY OF OUR LETTER WHICH WE ARE CERTIFYING TO BE TRUE AND CORRECT. WE ARE ALSO ATTACHING THE REPLY FROM OUR PRINCIPALS, PHILADELPHIA QUARTZ COMPANY. IT WAS FROM THE QUOTATION CONTAINED THEREIN THAT WE BASED OUR PRICE. THIS WOULD HAVE LEFT US A PROFIT OF ABOUT 5 PERCENT. WE WERE UNDER THE IMPRESSION THAT THE SPECIFICATIONS DID INCLUDE THE PACKING. WE OVERLOOKED THE NOTATION ON PAGE 3 OF THE INVITATION WHICH STATES THAT ITEM 10 WOULD BE IN A 50 LB. NON-RETURNABLE DRUM.

"THE COST TO US FOR PACKING IN THE 50 LB. DRUM IS ABOUT 3 CENTS A POUND HIGHER THAN IN THE STANDARD PACKING OF 100 LB. BAGS, ON WHICH OUR ORIGINAL PRICE WAS BASED.

"WE TRUST THAT UNDER THE CIRCUMSTANCES YOU WILL ALLOW US TO WITHDRAW OUR BID.'

IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED A COPY OF A LETTER DATED MAY 1, 1957, IN WHICH IT REQUESTED THE PHILADELPHIA QUARTZ COMPANY, ITS SUPPLIER, TO QUOTE A PRICE ON 28,000 POUNDS OF "SOAP, TYPE I, POWERED SODIUM METASILICATE, SPECIFICATION O S-604A (1), DATED 3/23/54.' THE CORPORATION ALSO SUBMITTED A COPY OF A LETTER QUOTATION DATED MAY 2, 1957, RECEIVED FROM ITS SUPPLIER, IN WHICH THE CORPORATION WAS QUOTED A PRICE OF $4.45 PER ONE HUNDRED POUNDS LESS 5 PERCENT "F.O.B. OUR WORKS CHESTER, PENNSYLVANIA.'

IN HIS REPORTS, IN WHICH HE RECOMMENDED THAT THE CONTRACT PRICE OF THE POWERED SOAP BE INCREASED TO THE AMOUNT OF THE NEXT LOWEST BID ON THAT ITEM OR, IN THE ALTERNATIVE, THAT THE CONTRACT BE CANCELLED, THE SUCCESSOR CONTRACTING OFFICER STATED THAT THE VICE-PRESIDENT OF THE CORPORATION WOULD BE WILLING TO FURNISH THE POWERED SOAP AT A PRICE EQUAL TO THE AMOUNT OF THE NEXT LOWEST BID IN THE AMOUNT OF $0.0795 PER POUND; AND THAT RECORDS OF HIS OFFICE INDICATE THAT IDENTICAL POWERED SOAP HAD BEEN PREVIOUSLY PROCURED DURING THE PRIOR QUARTER AT A PRICE OF $0.08 PER POUND WHICH, HE STATED, WAS ALSO THE GOVERNMENT'S ESTIMATED COST.

IN VIEW OF THE DIFFERENCE BETWEEN THE CORPORATION'S BID, THE GOVERNMENT'S ESTIMATE, AND THE OTHER BIDS ON THE POWDERED SOAP AND THE FACT THAT, PRIOR TO AWARD, THE CORPORATION WAS REQUESTED BY THE CONTRACTING OFFICER TO SUBMIT EVIDENCE IN SUPPORT OF ITS VERBAL ALLEGATION OF ERROR, THE ACTION OF THE CONTRACTING OFFICER IN MAKING AN AWARD ON THE QUESTIONED BID WITHOUT ALLOWING A REASONABLE TIME FOR THE CORPORATION TO SUBMIT SUCH EVIDENCE MAY NOT BE REGARDED AS HAVING RESULTED IN A BINDING CONTRACT.

ACCORDINGLY, CONTRACT NO. N189-36244A SHOULD BE CANCELLED WITHOUT LIABILITY TO THE CORPORATION OR, IF DELIVERIES OF POWDERED SOAP HAVE BEEN MADE, THE CORPORATION MAY BE PAID FOR THE SOAP AT A PRICE NOT IN EXCESS OF THE NEXT LOW BID ON ITEM M1-10, AND THE CORPORATION MAY BE RELIEVED OF THE OBLIGATION OF ACCEPTING FUTURE ORDERS UNDER THE CONTRACT.

IN THE EVENT ANY PAYMENTS ARE MADE TO THE CORPORATION, A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHERS COVERING SUCH PAYMENTS.

THE PAPERS, WITH THE EXCEPTION OF THE SUCCESSOR CONTRACTING OFFICER'S ORIGINAL AND SUPPLEMENTAL REPORTS, ARE RETURNED.