B-135526, APRIL 2, 1958, 37 COMP. GEN. 654

B-135526: Apr 2, 1958

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- INCLUDING LARGE BUSINESS SUPPLIERS WHOSE BIDS WERE NOT INVITED. 1958: REFERENCE IS MADE TO LETTER DATED MARCH 14. DA-33-031-QM-20544 IS BASED. BIRMINGHAM PAPER COMPANY WAS AWARDED A TOTAL SMALL- BUSINESS-SET-ASIDE CONTRACT TO SUPPLY FIBERBOARD BOXES. WITH THE RESULT THAT THE BID PRICES WERE EXTREMELY HIGH FOR THE SMALLER BOX SIZES AND EXTREMELY LOW FOR THE LARGER BOX SIZES. THE WORKSHEETS SUBMITTED BY THE CONTRACTOR IN SUPPORT OF ITS ALLEGATION OF ERROR BEAR OUT ITS EXPLANATION OF THE ERROR AND ESTABLISH WHAT THE BID PRICES WOULD HAVE BEEN BUT FOR THE ERROR. IS ALMOST DOUBLE THE PRICE ON ITEM 5. IS ALMOST DOUBLE THE PRICE ON ITEM 6. THE CONTRACTOR'S PRICES FOR THE ITEMS DELIVERED FROM THE EAST COAST TO THE WEST COAST ARE LOWER THAN THE PRICES BID BY THE BID BUSINESS SUPPLIERS ON THE WEST COAST.

B-135526, APRIL 2, 1958, 37 COMP. GEN. 654

CONTRACTS - MISTAKES - PRICE ADJUSTMENT - INTENDED PRICES NOT LOWEST - SMALL BUSINESS BID COMPARISON WHEN THE CORRECTION OF OBVIOUSLY ERRONEOUS CONTRACT PRICES QUOTED BY A CONTRACTOR IN A TOTAL SMALL-BUSINESS-SET-ASIDE AWARD WOULD RESULT IN SOME OF THE PRICES BEING HIGHER THAN THOSE QUOTED BY OTHER BIDDERS--- INCLUDING LARGE BUSINESS SUPPLIERS WHOSE BIDS WERE NOT INVITED--- THE CONTRACT PRICES MAY BE INCREASED TO THE INTENDED PRICE, NOT TO EXCEED THE AMOUNT OF THE NET LOW BID, LESS DISCOUNT, RECEIVED ON EACH ITEM FROM A SMALL BUSINESS SOURCE OF SUPPLY.

TO THE SECRETARY OF THE ARMY, APRIL 2, 1958:

REFERENCE IS MADE TO LETTER DATED MARCH 14, 1958, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY ( LOGISTICS) WHO REQUESTS A DECISION REGARDING AN ERROR BIRMINGHAM PAPER COMPANY, BIRMINGHAM, ALABAMA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-33-031-QM-20544 IS BASED.

ON JANUARY 17, 1958, BIRMINGHAM PAPER COMPANY WAS AWARDED A TOTAL SMALL- BUSINESS-SET-ASIDE CONTRACT TO SUPPLY FIBERBOARD BOXES, SIZES 10 INCHES X 10 INCHES X 10 INCHES AND 12 INCHES X 10 INCHES X 8 INCHES, F.O.B. VARIOUS DESTINATIONS. BY LETTER DATED JANUARY 23, 1958, THE CONTRACTOR ALLEGED THAT WHEN IT TRANSCRIBED ITS PRICES FROM THE WORKSHEETS TO THE BID FORM IT ERRONEOUSLY QUOTED THE PRICES FOR ITEM 3, BOX SIZE 8 INCHES X 8 INCHES X 6 INCHES, IN THE PLACES DESIGNATED FOR ITEM 5, BOX SIZE 10 INCHES X 10 INCHES X 10 INCHES, AND VICE VERSA, AND THE PRICES FOR ITEM 2, BOX SIZE 6 INCHES X 6 INCHES X 10 INCHES, IN THE PLACES DESIGNATED FOR ITEM 6, BOX SIZE 12 INCHES X 10 INCHES X 8 INCHES, AND VICE VERSA, WITH THE RESULT THAT THE BID PRICES WERE EXTREMELY HIGH FOR THE SMALLER BOX SIZES AND EXTREMELY LOW FOR THE LARGER BOX SIZES. THE WORKSHEETS SUBMITTED BY THE CONTRACTOR IN SUPPORT OF ITS ALLEGATION OF ERROR BEAR OUT ITS EXPLANATION OF THE ERROR AND ESTABLISH WHAT THE BID PRICES WOULD HAVE BEEN BUT FOR THE ERROR.

AN EXAMINATION OF THE CONTRACTOR'S BID REVEALS THAT THE PRICE ON ITEM 3, A BOX REQUIRING APPROXIMATELY 495 SQUARE INCHES OF MATERIAL AND HAVING A BURSTING STRENGTH OF 125 POUNDS, IS ALMOST DOUBLE THE PRICE ON ITEM 5, A BOX REQUIRING APPROXIMATELY 861 SQUARE INCHES OF MATERIAL AND HAVING BURSTING STRENGTH OF 200 POUNDS, AND SIMILARLY THE PRICE ON ITEM 2, A BOX REQUIRING APPROXIMATELY 425 SQUARE INCHES OF MATERIAL AND HAVING A BURSTING STRENGTH OF 125 POUNDS, IS ALMOST DOUBLE THE PRICE ON ITEM 6, A BOX REQUIRING APPROXIMATELY 855 SQUARE INCHES OF MATERIAL AND HAVING A BURSTING STRENGTH OF 200 POUNDS. FURTHERMORE, THE CONTRACTOR'S PRICES FOR THE ITEMS DELIVERED FROM THE EAST COAST TO THE WEST COAST ARE LOWER THAN THE PRICES BID BY THE BID BUSINESS SUPPLIERS ON THE WEST COAST. THEREFORE, THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED AN ERROR AND VERIFIED THE PRICES PRIOR TO MAKING AN AWARD.

THE PRICES THE CONTRACTOR INTENDED TO BID ARE ESTABLISHED SUFFICIENTLY BY THE CONTRACTOR'S WORKSHEETS. HOWEVER, IN SOME INSTANCES, IF THE CONTRACT PRICES WERE CORRECTED TO THE INTENDED PRICES, THEY WOULD NOT BE THE LOWEST PRICES RECEIVED. ACCORDINGLY, THE CONTRACT PRICES SHOULD BE INCREASED TO THE CONTRACTOR'S INTENDED PRICE, NOT TO EXCEED THE AMOUNT OF THE NEXT LOW BID, LESS DISCOUNT, RECEIVED ON EACH ITEM FROM A SMALL BUSINESS SOURCE OF SUPPLY.

ONE SET OF THE ENCLOSURES TRANSMITTED WITH THE ASSISTANT SECRETARY'S LETTER IS RETURNED.