B-136188, JUN. 12, 1958

B-136188: Jun 12, 1958

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED MAY 19. N228S-27905 WAS AWARDED. THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO HAVE BEEN $123.90. THE CONDITION OF THE BEARINGS WAS DESCRIBED IN THE INVITATION AS BEING "APPARENTLY UNUSED. PROSPECTIVE BIDDERS WERE ADVISED THAT THE BEARINGS DESCRIBED UNDER ITEMS 1 THROUGH 31 HAVE BEEN IN PRESERVATION FOR SOME TIME AND THAT WHILE THEY ARE DESCRIBED AS "UNUSED. PROSPECTIVE BIDDERS WERE REQUESTED TO ENTER THEIR BID PRICES ON THE SUMMARY BID SHEET INSTEAD OF OPPOSITE THE DESCRIPTION OF EACH ITEM. IT INDICATED THAT IT WAS BIDDING ON NINE LOTS OF BEARINGS INCLUDING ITEM 17 ON WHICH IT BID A UNIT PRICE OF $0.801 EACH. NO TOTAL PRICE FOR ITEM 17 WAS SHOWN BY THE COMPANY ON THE SUMMARY BID SHEET BUT THE UNIT PRICE WAS EXTENDED BY THE CONTRACTING OFFICER.

B-136188, JUN. 12, 1958

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MAY 19, 1958, FILE REFERENCE R11.218 L8/NT4-28, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR MONTAG COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N228S-27905 WAS AWARDED.

BY SALES INVITATION NO. B-161-58-228, THE NAVAL SUPPLY CENTER, DISPOSAL DIVISION, OAKLAND, CALIFORNIA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF MISCELLANEOUS MATERIALS DESCRIBED UNDER ITEMS 1 TO 92, INCLUSIVE. ITEM 17 COVERED A QUANTITY OF 209 TYPE K-4 ANTI FRICTION BEARINGS, THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO HAVE BEEN $123.90. THE CONDITION OF THE BEARINGS WAS DESCRIBED IN THE INVITATION AS BEING "APPARENTLY UNUSED--- IN GOOD CONDITION.' IN A NOTE AT THE BOTTOM OF PAGE 5 OF THE INVITATION, PROSPECTIVE BIDDERS WERE ADVISED THAT THE BEARINGS DESCRIBED UNDER ITEMS 1 THROUGH 31 HAVE BEEN IN PRESERVATION FOR SOME TIME AND THAT WHILE THEY ARE DESCRIBED AS "UNUSED, IN GOOD CONDITION," THERE MAY BE EVIDENCE OF RUST AND PITTING. PROSPECTIVE BIDDERS WERE REQUESTED TO ENTER THEIR BID PRICES ON THE SUMMARY BID SHEET INSTEAD OF OPPOSITE THE DESCRIPTION OF EACH ITEM. THE SUMMARY BID SHEET CONTAINS FOUR COLUMNS TITLED: (1) ITEM NO.; (2) DESCRIPTION; (3) PRICE BID PER UNIT; AND (4) TOTAL PRICE BID. IN RESPONSE MONTAG COMPANY SUBMITTED A BID IN WHICH, ON THE SUMMARY BID SHEET, IT INDICATED THAT IT WAS BIDDING ON NINE LOTS OF BEARINGS INCLUDING ITEM 17 ON WHICH IT BID A UNIT PRICE OF $0.801 EACH. NO TOTAL PRICE FOR ITEM 17 WAS SHOWN BY THE COMPANY ON THE SUMMARY BID SHEET BUT THE UNIT PRICE WAS EXTENDED BY THE CONTRACTING OFFICER, INDICATING A TOTAL OF $167.41. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $125, WAS ACCEPTED AS TO ITEM 17 ON MARCH 24, 1958.

BY LETTER DATED APRIL 16, 1958, MONTAG COMPANY ADVISED THAT A MISTAKE HAD BEEN MADE IN ITS BID IN THAT IT INTENDED TO BID $0.081 EACH INSTEAD OF $0.801 EACH FOR ITEM 17 AND IT REQUESTED THAT ITS BID PRICE FOR THAT ITEM BE CORRECTED ACCORDINGLY OR THAT ITS BID DEPOSIT BE RETURNED. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS ORIGINAL WORKSHEETS, WHICH APPEAR TO BE A COPY OF THE SUMMARY BID SHEET AND COPIES OF THE DESCRIPTION SHEETS COVERING ITEMS 1 THROUGH 38, INCLUSIVE. A UNIT PRICE OF ".801" AND A TOTAL PRICE OF "14.63" ARE SHOWN ON THE SUMMARY BID SHEET FOR ITEM 17. HOWEVER, A CLOSE EXAMINATION OF THE SUMMARY BID SHEET INDICATES THAT THE FIGURE ".801" APPEARING IN THE UNIT PRICE COLUMN FOR ITEM 17 WAS WRITTEN OVER THE FIGURE ".0701.' IF THE AMOUNT OF $0.07 IS MULTIPLIED BY 209--- THE NUMBER OF BEARINGS OFFERED FOR SALE UNDER ITEM 17 --- THE TOTAL WILL EQUAL THE EXTENDED PRICE OF $14.63 SHOWN ON THE SUMMARY BID SHEET FOR THAT ITEM.

THE ABSTRACT OF BIDS INDICATES THAT THE GOVERNMENT'S ORIGINAL ACQUISITION UNIT COST OF THE BEARINGS COVERED BY ITEM 17 WAS $123.90, OR $0.5928229 EACH, AND THAT THE 11 OTHER BIDDERS ON ITEM 17 QUOTED PRICES RANGING FROM $0.377 EACH TO $0.031 EACH. THUS, THE COMPANY'S BID OF $0.801 EACH FOR ITEM 17 IS SOMEWHAT OUT OF LINE WITH THE OTHER BIDS RECEIVED ON THAT ITEM. WHILE A MERE DIFFERENCE IN THE PRICES QUOTED FOR SURPLUS GOVERNMENT PROPERTY WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW PROPERTY FOR SALE TO THE GOVERNMENT, IT MUST BE CONCEDED THAT IT IS UNLIKELY THAT A BIDDER, AS HERE, INTENTIONALLY WOULD OFFER FOR BEARINGS, THE QUALITY OF WHICH IS NOT GUARANTEED BY THE GOVERNMENT, 135 PERCENT OF WHAT WAS KNOWN TO BE THE ACQUISITION COST OF THE ITEM. IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT A REQUEST FOR VERIFICATION OF THE BID WOULD HAVE BEEN IN ORDER BEFORE ITS ACCEPTANCE.

ON THE RECORD, THERE IS NO ROOM FOR DOUBT THAT MONTAG COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. ACCORDINGLY, SINCE IT APPEARS THAT THE COMPANY HAS NOT TAKEN AY FURTHER STEPS TOWARDS COMPLETION OF THE CONTRACT, CONTRACT NO. N228S-27905 MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY AND REFUND OF THE BID DEPOSIT MAY BE MADE TO THE COMPANY.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S UNDATED STATEMENT AND THE ABSTRACT OF BIDS, ARE RETURNED.