B-135040, FEBRUARY 21, 1958, 37 COMP. GEN. 532

B-135040, FEBRUARY 21, 1958, 37 COMP. GEN. 532

CONTRACTS - MISTAKES - PREAWARD SURVEY EFFECT - ERROR ESTABLISHMENT A PREAWARD SURVEY CONDUCTED AT THE LOW BIDDER'S PLANT TO DETERMINE HIS ABILITY TO FULFILL THE CONTRACT CANNOT BE REGARDED AS INCLUDING VERIFICATION OF THE BID TO PRECLUDE THE SUBSEQUENT ESTABLISHMENT OF AN ERROR RESULTING FROM A MISPRINT IN THE SPECIFICATIONS.

TO THE SECRETARY OF THE ARMY, FEBRUARY 21, 1958:

REFERENCE IS MADE TO A LETTER DATED JANUARY 23, 1958, FROM THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS), WITH ENCLOSURES, RELATIVE TO AN ERROR ALLEGED BY GARLYNN ENGINEERING COMPANY, SAN FRANCISCO, CALIFORNIA, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. ORD- 36-038-57-M-546 ISSUED MAY 7, 1957, BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA, FOR THE MANUFACTURE AND FURNISHING OF 14,012 PLOTTING BOARDS AND 14,012 CARRYING CASES. A DECISION IS REQUESTED AS TO WHETHER THE RESULTING CONTRACT NO. DA-36 038-ORD-20199 MAY BE REFORMED SO AS TO PROVIDE FOR AN ADDITIONAL PAYMENT OF $56,494.29.

BIDS WERE OPENED JUNE 7, 1957, AND THREE BIDS WERE RECEIVED IN THE AMOUNTS OF $249,693.44, $337,969.44 AND $415,876.16, THE LOW BID BEING SUBMITTED BY GARLYNN ENGINEERING COMPANY. THE GOVERNMENT'S ESTIMATE WAS $701,000. A PREAWARD SURVEY RELATIVE TO THE LOW BIDDER WAS CONDUCTED BY THE SAN FRANCISCO ORDNANCE DISTRICT AND A REPRESENTATIVE OF FRANKFORD ARSENAL AND AWARD WAS MADE TO GARLYNN ENGINEERING COMPANY ON JUNE 26, 1957. IT IS REPORTED THAT THE CONTRACTOR IS PROCEEDING WITH THE PERFORMANCE OF THE CONTRACT.

BY LETTER DATED JULY 8, 1957, THE CONTRACTOR ALLEGED AN ERROR IN ITS BID RESULTING FROM ITS MISUNDERSTANDING OF THE FINISHING REQUIREMENTS FOR THE MAGNESIUM COMPONENTS. THE MISUNDERSTANDING WAS ALLEGED TO HAVE ARISEN BECAUSE OF A MISPRINT ON PAGE 10 OF MIL-STD-194 ( ORD), MADE A PART OF THE DRAWINGS, SPECIFYING MIL-C-1335 COATING FOR MAGNESIUM SURFACES WHEREAS IT WAS ASCERTAINED SUBSEQUENTLY THAT MIL-C-13335 WAS REQUIRED, INVOLVING THE HAE PROCESS, WHICH IS PATENTED. IT IS ALLEGED THAT THE SAID ERROR CAUSED DIFFICULTY IN CONTRACTING SUBCONTRACTORS AND IN OBTAINING PRICES ON WHICH TO BASE A BID AND THAT THE SAN FRANCISCO ORDNANCE DISTRICT ADVISED "THAT THEY HAD NO RECORD OF SUCH A NUMBER NOR COULD THEY ADVISE WHAT THE SPECIFICATION WOULD COVER.' IT APPEARS THAT THE ITEM FOR COATING MAGNESIUM SURFACES WAS INCLUDED IN THE BID AT A PRICE OF 20 CENTS PER PLOTTING BOARD, WHEREAS IT SHOULD HAVE BEEN AT LEAST $3.17 EACH AS NOW REQUESTED BY THE CONTRACTOR.

IN THE CONTRACTING OFFICER'S REPORT DATED AUGUST 27, 1957, IT IS STATED:

5. DURING THE PREAWARD SURVEY, THE ARSENAL REPRESENTATIVE SPECIFICALLY ASKED THE BIDDER ABOUT THE FINISHING REQUIREMENTS STRESSING THE FACT THAT THE HAE PROCESS WAS REQUIRED ON THE MAGNESIUM COMPONENTS. THE BIDDER REPLIED THAT HE WAS SUBCONTRACTING THE FINISHING REQUIREMENT AND THAT HIS SUBCONTRACTOR RECOGNIZED IT AS A NEW PROCESS SPECIFICALLY SUITED TO MAGNESIUM COMPONENTS AND THAT HE APPARENTLY KNEW WHAT THE GOVERNMENT REQUIRED.

6. THE ARSENAL REPRESENTATIVE THEN EXAMINED THE BIDDER'S COST FOR THE ASSUMED HAE FINISHING REQUIREMENT AND FINDING IT TO BE $0.14 PER UNIT DETERMINED THAT THE PROCESS WAS ADEQUATELY COVERED COSTWISE. THE ARSENAL REPRESENTATIVE MADE THIS DETERMINATION BASED ON THE FACT THAT PRIOR TO VISITING THE PLANT OF THE GARLYNN ENG. CO. HE HAD VISITED THE PLANT OF G. FELSENTHAL AND SONS, THE SECOND LOWEST BIDDER, AND HAD FOUND THAT FELSENTHAL HAD ESTIMATED THE COST OF THE HAE FINISH AT $0.055 PER UNIT AND THAT THIS BIDDER ALSO PLANNED TO SUBCONTRACT THE HAE FINISHING REQUIREMENT.

AS STATED ABOVE THE ARSENAL REPRESENTATIVE MADE THE DETERMINATION OF REALISTIC PRICING FOR THE HAE FINISHING PROCESS AS A RESULT OF COMPARING THE TWO LOWEST BIDDERS' COSTS. HE DID NOT PRIOR TO HIS VISITS TO THE BIDDERS' PLANTS ASCERTAIN FROM AVAILABLE SOURCES AT THIS ARSENAL THE ACTUAL COST OF APPLYING THE HAE PROCESS.

THE CONTRACTING OFFICER STATES FURTHER THAT THE ALLEGATIONS IN THE CONTRACTOR'S LETTER OF JULY 8, 1957, ARE CORRECT, AND THAT THE REQUESTED PRICE ADJUSTMENT IS FAIR AND REASONABLE.

IT IS TO BE OBSERVED THAT IN THE LIST OF SPECIFICATIONS ATTACHED TO THE INVITATION FOR BIDS THERE IS INCLUDED "/MIL-C-13335 (1) ).' IN THAT CONNECTION, IT IS STATED IN THE CONTRACTOR'S LETTER OF JULY 8, 1957, THAT ON JULY 1, 1957,"THE WRITER STARTED READING OUR COPY OF THE ALPHABETICAL LIST OF ARMY SPECIFICATIONS, LINE BY LINE, AND FINALLY FOUND SPECIFICATION NUMBERED MIL-C-13335 COVERING COATINGS FOR MAGNESIUM.' HOWEVER, AS STATED ABOVE, MIL-C-13335 IS SHOWN ON PAGE 10 OF MIL-STD-194 (1ORD), TABLE VIII " TREATMENT AND FINISHES FOR MAGNESIUM SURFACES.'

UNDER THE CIRCUMSTANCES, IT MAY BE REGARDED AS SATISFACTORILY ESTABLISHED THAT GARLYNN ENGINEERING COMPANY MADE A BONA FIDE ERROR IN ITS BID AS ALLEGED AND EXPLAINED BY IT. THE REFERRED-TO MISPRINT IN MIL-STD-194 ( ORD) WAS CONDUCIVE TO ERROR AND COMPELS THE CONCLUSION THAT THE GOVERNMENT CONTRIBUTED TO THE ERROR. ALSO, BECAUSE OF THE GREAT DISPARITY BETWEEN ITS BID AND THE OTHER BIDS RECEIVED AND THE INORDINATE DISPARITY BETWEEN THE LOW BID AND THE GOVERNMENT'S ESTIMATE, IT SEEMS EVIDENT THAT A REASONABLY COMPLETE VERIFICATION OF THE BID SHOULD HAVE BEEN MADE BEFORE MAKING THE AWARD, SUCH VERIFICATION TO BE BASED ON ACCURATE AND COMPLETE INFORMATION AS TO THE REQUIREMENTS OF THE INVITATION.

THE PREAWARD SURVEY APPARENTLY CONTEMPLATED ONLY A DETERMINATION AS TO THE ABILITY OF THE BIDDER TO FULFILL THE CONTRACT AND CANNOT BE REGARDED AS INCLUDING VERIFICATION OF THE BID. FURTHERMORE, THE REPRESENTATIVES OF THE GOVERNMENT WHO CONFERRED WITH THE BIDDER WERE UNABLE TO FURNISH ACCURATE INFORMATION AS TO THE REQUIREMENTS OF THE INVITATION AND APPARENTLY CONFIRMED THE BIDDER'S ERRONEOUS BELIEF THAT ITS BID WAS BASED ON PROPER INFORMATION.

IN VIEW OF THE FOREGOING, THE CONTRACT MAY BE MODIFIED SO AS TO PERMIT PAYMENT OF AN ADDITIONAL AMOUNT OF $56,494.29 AS REQUESTED. WITH THIS MODIFICATION THE CONTRACT PRICE WILL STILL BE WELL BELOW THE SECOND LOW BID. A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT.

THE PAPERS, WITH THE EXCEPTION OF A COPY OF THE CONTRACTING OFFICER'S REPORT DATED AUGUST 27, 1957, ARE RETURNED HEREWITH.