B-133556, SEP. 9, 1957

B-133556, SEP. 9, 1957

TO THE SECRETARY OF INTERIOR:

REFERENCE IS MADE TO LETTER DATED AUGUST 22, 1957, WITH ENCLOSURES, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, RELATIVE TO AN ERROR ALLEGED BY HARTWELL BROTHERS BOULEVARD GARAGE, ASHLAND, OREGON, TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF CONTRACT NO. 14-06-128 27, DATED JULY 8, 1957.

THE BUREAU OF RECLAMATION, ROGUE PROJECT OFFICE, CAMP WHITE, OREGON, BY INVITATION NO. 128-600, REQUESTED BIDS FOR AUTOMOTIVE REPAIR AND MAINTENANCE OF GOVERNMENT VEHICLES IN THE VICINITY OF ASHLAND, OREGON, DURING THE FISCAL YEAR 1958. IN RESPONSE TO THE INVITATION, HARTWELL BROTHERS BOULEVARD GARAGE SUBMITTED A BID QUOTING PRICES FOR THE VARIOUS ITEMS AS SET FORTH THEREIN. ON ITEMS 3, 4 AND 5, COVERING PARTS FOR VARIOUS TYPES OF VEHICLES, THE BIDDER QUOTED A DISCOUNT OF 10 PERCENT FROM THE PRICE LIST OF HARRISON PARTS COMPANY, ASHLAND, OREGON. ON PAGE 1 OF STANDARD FORM 33 THE BID, AS SUBMITTED, OFFERED A PROMPT PAYMENT DISCOUNT OF 10 PERCENT--- 10 DAYS; 10 PERCENT--- 20 DAYS; AND 10 PERCENT--- 30 DAYS. THE BID WAS ACCEPTED ON JULY 8, 1957, ON THE BASIS SUBMITTED.

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

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS TO BE NO DOUBT THAT THE BIDDER MADE A MISTAKE IN ITS BID AS ALLEGED. FURTHERMORE, IT WOULD APPEAR THAT THE CIRCUMSTANCES WERE SUCH THAT THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING CONFIRMATION. THEREFORE, IT MAY NOT BE CONSIDERED THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT REQUIRING THE APPLICATION OF THE PROMPT PAYMENT DISCOUNT PROVISION.

ACCORDINGLY, YOU ARE ADVISED THAT CONTRACT NO. 14-06-128-27 MAY BE AMENDED TO DELETE THE PROVISION FOR 10 PERCENT DISCOUNT FOR PAYMENT WITHIN 10, 20 AND 30 DAYS, RESPECTIVELY. THE CONTRACT, AS SO AMENDED, IS STILL LOWER THAN THE NEXT LOWEST BID.