B-134325, DEC. 16, 1957

B-134325: Dec 16, 1957

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4. REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED THE GRAY MANUFACTURING COMPANY IN CONNECTION WITH AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF SUB-ITEM 61 OF ITEM NO. 54-M-24980-100 OF CONTRACT NO. IS FOR SUPPLYING THE NEEDS OF THE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS IN THE EXECUTIVE BRANCH OF THE FEDERAL GOVERNMENT. THE PRICES FOR EACH OF THE ITEMS AND THE APPLICABLE FEDERAL EXCISE TAX WERE SHOWN SEPARATELY AS REQUESTED. MANY OF THE ACCESSORIES FOR THE MACHINES WERE MARKED TO INDICATE THAT THEY WERE NOT SUBJECT TO FEDERAL EXCISE TAX EXCEPT WHEN ORDERED WITH THE MACHINES.

B-134325, DEC. 16, 1957

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

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4, 1957, REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED THE GRAY MANUFACTURING COMPANY IN CONNECTION WITH AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS OF SUB-ITEM 61 OF ITEM NO. 54-M-24980-100 OF CONTRACT NO. GS-OOS-15265, DATED JUNE 24, 1957.

THE FEDERAL SUPPLY SERVICE, NATIONAL BUYING DIVISION, ON FEBRUARY 1, 1957, REQUESTED QUOTATIONS FOR SUPPLYING OFFICE EQUIPMENT; PURCHASE, RENTAL, REPAIR AND MAINTENANCE OF OFFICE MACHINES OTHER THAN TYPEWRITERS (CLASS 54, PART III, SECTION B, AND CLASS 54, PART II) FOR THE PERIOD JULY 1, 1957, THROUGH JUNE 30, 1958. UNDER THE TERMS OF THE SOLICITATION, THE CONTRACT TO BE AWARDED, WITH CERTAIN LIMITATIONS, IS FOR SUPPLYING THE NEEDS OF THE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS IN THE EXECUTIVE BRANCH OF THE FEDERAL GOVERNMENT, INCLUDING THE DISTRICT OF COLUMBIA, DURING THE YEAR ENDING JUNE 30, 1958. THE SOLICITATION REQUESTED BIDDERS TO SUBMIT ILLUSTRATED AND/OR DESCRIPTIVE PRICE LIST INDICATING APPLICABLE ITEM NUMBER THEREON, QUOTE UNIT PRICES, EXCISE TAXES, DISCOUNT, TIME OF DELIVERY AND EXPORT PACKING CHARGES.

IN RESPONSE TO THE SOLICITATION, THE GRAY MANUFACTURING COMPANY SUBMITTED A QUOTATION OFFERING VARIOUS OF THE ITEMS FOR THE PRICES SET FORTH. THE PRICES FOR EACH OF THE ITEMS AND THE APPLICABLE FEDERAL EXCISE TAX WERE SHOWN SEPARATELY AS REQUESTED. MANY OF THE ACCESSORIES FOR THE MACHINES WERE MARKED TO INDICATE THAT THEY WERE NOT SUBJECT TO FEDERAL EXCISE TAX EXCEPT WHEN ORDERED WITH THE MACHINES. THE AMOUNT OF THE FEDERAL EXCISE TAX ON THE MAJORITY OF THE ACCESSORY ITEMS IS 6 PERCENT OF THE PRICE OF THE ITEMS. ON ITEM 54-N-24980-100, SUB-ITEM 61, COVERING GM-6 EXECUTIVE CONFERENCE DICTATION MICROPHONE, THE PRICE WAS SHOWN AS $69.00 EACH, PLUS $3.45 FEDERAL EXCISE TAX IF APPLICABLE, TOTALING $72.54. THE QUOTATIONS WERE ACCEPTED ON JUNE 24, 1957, BY CONTRACT NO. GS-OOS-15265.

BY LETTER DATED JULY 11, 1957, THE GRAY MANUFACTURING COMPANY ALLEGED THAT AN ERROR HAD BEEN MADE ON SUB-ITEM 61 OF ITEM 54-M-24980 100, IN THAT THE FEDERAL EXCISE TAX FOR THE ITEM SHOULD HAVE BEEN $4.14, 6 PERCENT OF THE PRICE, RATHER THAN $3.45. IT IS ALLEGED THAT THE ITEM INVOLVED WAS A NEW ITEM THIS YEAR AND DUE TO A MIXUP BETWEEN ITS HOME AND WASHINGTON, D.C. OFFICES, THE AMOUNT OF THE FEDERAL EXCISE TAX ON THAT ITEM WAS IMPROPERLY SHOWN. THE COMPANY STATES THAT THE FEDERAL EXCISE TAX ON ACCESSORIES FOR THE GRAY AUDOGRAPH DICTATING EQUIPMENT, UNDER RULINGS OF THE INTERNAL REVENUE SERVICE, IS COMPUTED AT 6 PERCENT OF THE LIST PRICE OF THE ACCESSORY.

THE PRIMARY PART OF THE CONTRACT IS THE PRICE FOR THE ITEMS. THE FEDERAL EXCISE TAX IS INVOLVED ONLY IF APPLICABLE. THE AMOUNT OF THE TAX IS FIXED BY LAW OR RULINGS OF THE INTERNAL REVENUE SERVICE AND IS A MATTER OVER WHICH THE CONTRACTOR HAS NO CONTROL, AND ARTICLE 19 OF THE GENERAL PROVISIONS FOR FEDERAL SUPPLY SCHEDULE CONTRACTS, INCORPORATED IN THE SUBJECT CONTRACT, PROVIDES FOR PRICE ADJUSTMENTS IN CASE OF CHANGES IN THE TAX. ALSO, THE AMOUNT OF THE TAX COLLECTED IS PAYABLE TO THE GOVERNMENT. IN THE CIRCUMSTANCES IT SEEMS CLEAR THAT IT WAS THE INTENTION OF THE PARTIES TO INCORPORATE IN THE PRICE THE CORRECT AMOUNT OF TAX ACTUALLY APPLICABLE, AND SINCE THERE APPEARS NO DOUBT THAT AN ERROR WAS MADE IN THE BID AS ALLEGED, CONTRACT NO. GS OOS-15265 MAY BE AMENDED TO INCREASE THE AMOUNT OF THE FEDERAL EXCISE TAX APPLICABLE TO SUB-ITEM 61 OF ITEM 54-M- 24980-100 TO $4.14, WHICH IS 6 PERCENT OF THE LIST PRICE OF $69.00.