B-136610, JUL. 15, 1958

B-136610: Jul 15, 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 NAVY: REFERENCE IS MADE TO A LETTER OF JUNE 26. TO HAVE BEEN MADE IN ITS BID OPENED MAY 8. WHICH BID WAS SUBSEQUENTLY REDUCED BY TELEGRAM RECEIVED BEFORE BID OPENING TO ?4139 PER POUND FOR A TOTAL PRICE OF $1. IT APPEARS THAT PRIOR TO AWARD THE PRESIDENT OF THE COMPANY INQUIRED BY TELEPHONE AS TO WHETHER THE COMPANY WAS THE SUCCESSFUL BIDDER ON ANY OF THE ITEMS ADVERTISED IN THE INVITATION. WAS ADVISED ACCORDINGLY AND MADE AWARE THAT THERE WAS A LARGE BID PRICE DIFFERENTIAL BETWEEN HIS COMPANY'S BID AND THAT OF THE NEXT HIGHEST BIDDER ON ITEM 9. SINCE IT IS A MATTER OF MATERIAL CONTENT. THAT IT IS BELIEVED THE PRESIDENT OF THE COMPANY DID NOT INSPECT THE MATERIALS PRIOR TO BIDDING.

B-136610, JUL. 15, 1958

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER OF JUNE 26, 1958, WITH ENCLOSURES, FROM THE ACTING ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION IN REGARD TO AN ERROR ALLEGED BY THE CAPCO ALLOY STEEL CO., LOS ANGELES, CALIFORNIA, TO HAVE BEEN MADE IN ITS BID OPENED MAY 8, 1958.

IN RESPONSE TO INVITATION TO BID NO. B-46-58, DATED APRIL 17, 1958, THE CAPCO ALLOY STEEL COMPANY SUBMITTED ITS UNDATED BID, OFFERING TO PURCHASE, AMONG OTHERS, ITEM 9, DESCRIBED AS 3,020 POUNDS OF STEEL BAR, NICKEL- COPPER ALLOY, ROUND, 2 1/2 INCHES DIA TIMES 18.8 NO/FT. FOR THE PRICE OF ?4639 PER POUND, FOR A TOTAL PRICE OF $1,405, WHICH BID WAS SUBSEQUENTLY REDUCED BY TELEGRAM RECEIVED BEFORE BID OPENING TO ?4139 PER POUND FOR A TOTAL PRICE OF $1,249.98.

IT APPEARS THAT PRIOR TO AWARD THE PRESIDENT OF THE COMPANY INQUIRED BY TELEPHONE AS TO WHETHER THE COMPANY WAS THE SUCCESSFUL BIDDER ON ANY OF THE ITEMS ADVERTISED IN THE INVITATION, WAS ADVISED ACCORDINGLY AND MADE AWARE THAT THERE WAS A LARGE BID PRICE DIFFERENTIAL BETWEEN HIS COMPANY'S BID AND THAT OF THE NEXT HIGHEST BIDDER ON ITEM 9. HE REGISTERED NO PROTEST AND PROCEEDED TO FURNISH SHIPPING INSTRUCTIONS FOR THE MATERIAL.

IT FURTHER APPEARS THAT ON MAY 22, 1958, THE CONTRACTING OFFICER RECEIVED ANOTHER TELEPHONE CALL FROM THE PRESIDENT OF THE COMPANY WHEREIN HE STATED THAT THE ITEM HAD BEEN RECEIVED, AND THAT TESTS OF THE BAR DISCLOSED IT TO BE MILD STEEL RATHER THAN NICKEL COPPER ALLOY. THE PRESIDENT OF THE COMPANY CONFIRMED HIS CONTENTION IN WRITING AND OFFERED A BID PRICE OF $0.015 PER POUND FOR THE MILD STEEL BAR.

THE CONTRACTING OFFICER HAS REPORTED THAT THE TESTS ACCOMPLISHED BY THE COMPANY REFLECT THE TRUE NATURE OF THE MATERIAL; THAT INVESTIGATION OF THE FACTS SHOW A CLERICAL ERROR AT THE ACTIVITY RESULTED IN THE MISDESCRIPTION; THAT VISUAL CHECKING OF THE MATERIAL, PRIOR TO PRESENTATION OF THE SALE TO THE PUBLIC, DID NOT UNCOVER THIS ERROR, SINCE IT IS A MATTER OF MATERIAL CONTENT, DETERMINABLE BY ACID OR SPARK TEST, AND THAT IT IS BELIEVED THE PRESIDENT OF THE COMPANY DID NOT INSPECT THE MATERIALS PRIOR TO BIDDING; HOWEVER, BIDS RECEIVED FROM THE OTHER BIDDERS INSPECTING THE MATERIALS INDICATE THEY, TOO, RELIED UPON THE ACTIVITY'S DESCRIPTION.

THE CONTRACTING OFFICER HAS FURTHER REPORTED THAT ALTHOUGH THE GENERAL SALE TERMS AND CONDITIONS OF THE SALE PROVIDE FOR BIDDER'S VISUAL INSPECTION AND THE OFFERING OF THE PROPERTY ON AN "AS IS" "WHERE IS" BASIS, IT IS BELIEVED THAT THIS CLAIM IS DUE SOLELY TO THE ACTIVITY'S ERROR IN DESCRIPTION AND THAT THE PURCHASER WOULD NOT HAVE REASON TO SUSPECT THAT THE MATERIAL WAS NOT AS ADVERTISED, SINCE IT IS A QUESTION OF MATERIAL CONTENT, NOT DISTINGUISHABLE BY VISUAL INSPECTION.

THE CONTRACTING OFFICER HAS EXPRESSED THE OPINION THAT THE COMPANY IS ENTITLED TO RELIEF AND RECOMMENDS THAT RELIEF BE GRANTED; THAT THE COMPANY IS WITHOUT BLAME AND THAT TO FORCE AN AWARD ON THE COMPANY WOULD INDICATE BAD FAITH DEALING ON THE PART OF THE GOVERNMENT.

IT IS ADMINISTRATIVELY STATED THAT THE OFFER OF THE PRESIDENT OF THE COMPANY TO PURCHASE THE MILD STEEL BAR FOR A PRICE OF $0.015 PER POUND IS BELIEVED TO REPRESENT AN EQUITABLE RETURN, WHICH WOULD RESULT IN AN OVERALL SAVING TO THE GOVERNMENT BY ELIMINATING THE NECESSITY FOR INCURRING ADDITIONAL FREIGHT CHARGES TO MOVE THE MATERIAL TO ANOTHER ACTIVITY FOR RESALE.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD THERE APPEARS NO ROOM FOR DOUBT THAT BY REASON OF THE REPORTED CLERICAL ERROR MADE BY THE GOVERNMENT IN THE DESCRIPTION OF THE MATERIAL UNDER ITEM 9 THAT DESCRIPTION WAS NOT BASED ON THE BEST INFORMATION AVAILABLE, AND THAT THE COMPANY IS ENTITLED TO RELIEF AS CLAIMED. IN VIEW OF THE PARTICULAR CIRCUMSTANCES, AUTHORITY IS GRANTED TO NEGOTIATE A SALE TO THE COMPANY OF THE MILD STEEL BAR AT A PRICE OF $0.015 PER POUND AND TO REFUND THE DIFFERENCE BETWEEN SUCH ADJUSTED PRICE AND THE AMOUNT PREVIOUSLY PAID, FREIGHT CHARGES TO BE BORNE BY THE PURCHASER.

THE PAPERS, WITH THE EXCEPTION OF THE COMPANY'S LETTER OF MAY 28, 1958, ARE RETURNED.