B-135853, APR. 29, 1958

B-135853: Apr 29, 1958

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER DATED APRIL 14. ITEM 10 OF THE IFB WAS DESCRIBED AS 6. ?1982 PER POUND WERE RECEIVED ON THIS ITEM. THE HIGH BID OF ?1982 PER POUND WAS SUBMITTED BY THE SCHUMANN COMPANY AND THE CONTRACT IN QUESTION WAS ACCORDINGLY AWARDED ON DECEMBER 13. UPON RECEIPT OF THE NOTICE OF AWARD AN EMPLOYEE OF THE CONTRACTOR CONTACTED THE CONTRACTING OFFICER AND ADVISED THAT THE INTENDED BID PRICE WAS ?0982 PER POUND AND THAT THE PRICE SUBMITTED WAS THE RESULT OF A TYPOGRAPHICAL ERROR. FORMAL ALLEGATION OF ERROR WAS MADE BY LETTER DATED DECEMBER 13. WHICH STATED THAT THE INTENDED BID PRICE OF ?0982 WAS COMPUTED ON THE BASIS OF A PRICE OF ?20 PER POUND FOR COPPER.

B-135853, APR. 29, 1958

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED APRIL 14, 1958, FROM THE DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE REQUESTING OUR DECISION AS TO WHETHER I. SCHUMANN AND COMPANY MAY BE RELIEVED FROM PERFORMANCE UNDER SALES CONTRACT NO. 33/602/-S-58-74.

THE RECORD SHOWS THAT ON NOVEMBER 15, 1957, SHELBY AIR FORCE DEPOT ISSUED IFB NO. 33/602/-S-58-5 REQUESTING BIDS ON 22 ITEMS OF SCRAP METAL. ITEM 10 OF THE IFB WAS DESCRIBED AS 6,000 POUNDS OF SCRAPPED COPPER WIRE AND CABLE ITEMS. EIGHT BIDS IN AMOUNTS OF ?025, ?0425, .0505, ?0678, ?082, ?0826, ?0977, AND ?1982 PER POUND WERE RECEIVED ON THIS ITEM. THE HIGH BID OF ?1982 PER POUND WAS SUBMITTED BY THE SCHUMANN COMPANY AND THE CONTRACT IN QUESTION WAS ACCORDINGLY AWARDED ON DECEMBER 13, 1957.

UPON RECEIPT OF THE NOTICE OF AWARD AN EMPLOYEE OF THE CONTRACTOR CONTACTED THE CONTRACTING OFFICER AND ADVISED THAT THE INTENDED BID PRICE WAS ?0982 PER POUND AND THAT THE PRICE SUBMITTED WAS THE RESULT OF A TYPOGRAPHICAL ERROR. FORMAL ALLEGATION OF ERROR WAS MADE BY LETTER DATED DECEMBER 13, 1957, WHICH STATED THAT THE INTENDED BID PRICE OF ?0982 WAS COMPUTED ON THE BASIS OF A PRICE OF ?20 PER POUND FOR COPPER, A 50 PERCENT COPPER CONTENT IN THE SCRAP MATERIAL, AND AN ALLOWANCE OF ?0018 PER POUND FOR CLEANING AND HANDLING COSTS. BY LETTERS DATED DECEMBER 26, 1957, AND JANUARY 27, 1958, MR. BUD SCHUMANN ADVISED THAT HE GAVE THE INTENDED BID PRICE OF ?0982 TO HIS SECRETARY WITH INSTRUCTIONS TO PREPARE THE BID DURING HIS ABSENCE FOR THE SIGNATURE OF IRVING SCHUMANN; HOWEVER, SHE ERRONEOUSLY INTERPRETED HER NOTES TO READ ?1982 AND THE ERROR WAS NOT NOTED AT THE TIME THE BID WAS SIGNED. WHILE THE CONTRACTOR HAS FAILED TO SUBMIT WORK PAPERS OR ANY OTHER EVIDENCE TO SUPPORT THE INTENDED BID PRICE, HE HAS REQUESTED THAT THE BID BE CORRECTED TO ?0982 PER POUND, WHICH WOULD STILL BE HIGHER THAN THE SECOND HIGH BID, OR THAT HE BE RELIEVED ENTIRELY FROM PERFORMANCE OF THE CONTRACT.

THE FACT THAT THE BID PRICE SUBMITTED BY THE SCHUMANN COMPANY WAS IN ERROR IS SUPPORTED NOT ONLY BY THE AMOUNT OF DIFFERENCE BETWEEN ITS BID AND THE SECOND HIGH BID BUT ALSO BY ADVICE FROM THE DEPUTY ASSISTANT SECRETARY THAT THE MARKET VALUE OF THE SCRAP MATERIAL WAS DETERMINED TO BE APPROXIMATELY 10 CENTS PER POUND AND THAT DISPOSAL OFFICIALS AT THE SHELBY DEPOT CALCULATED THE ,UPSET" PRICE AT 10 CENTS PER POUND. VIEWING THE AMOUNTS OF THE REMAINING BIDS IN CONNECTION WITH SUCH INFORMATION, IT WOULD THEREFORE APPEAR THAT THE CONTRACTING OFFICER MAY PROPERLY BE CHARGED WITH CONSTRUCTIVE NOTICE OF AN ERROR IN THE HIGH BID. UNDER SUCH CIRCUMSTANCES AN AWARD WITHOUT VERIFICATION OF THE BID PRICE DOES NOT RESULT IN A BINDING CONTRACT. KEMP V. UNITED STATES, 38 F.S. 568. ACCORDINGLY, SINCE THE CONTRACT PRICE MAY NOT BE REFORMED IN THE ABSENCE OF SUPPORTING EVIDENCE CONCLUSIVELY ESTABLISHING THE INTENDED BID PRICE (SEE 28 COMP. GEN. 403; 23 ID. 596), THE AWARD SHOULD BE CANCELLED AND THE DEPOSIT ACCOMPANYING THE BID SHOULD BE REFUNDED.