B-141128, NOV. 3, 1959

B-141128: Nov 3, 1959

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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 27. IT IS REPORTED THAT THE FOUR OTHER BIDDERS ON ITEM 1 QUOTED LOT PRICES RANGING FROM $69. THAT THE GOVERNMENT'S ESTIMATE OF THE COST OF ITEM 1 IS $75. THE PROCUREMENT OFFICER AT LANGLEY FIELD STATES THAT WHEN THE BIDS WERE OPENED. IT WAS NOTED THAT THE BID OF NORTH ELECTRIC COMPANY ON ITEM 1 WAS LOW COMPARED WITH LANGLEY'S ESTIMATE OF $75. IN VIEW THEREOF THE COMPANY WAS REQUESTED BY TELEPHONE ON AUGUST 19. TWO OFFICIALS OF THE COMPANY VISITED LANGLEY RESEARCH CENTER AND ALLEGED THAN AN ERROR WAS MADE IN THE COMPANY'S BID BUT THAT THEY WOULD TRY TO DETERMINE IF THEY COULD ABSORB THE LOSS IN THE PRICE BID.

B-141128, NOV. 3, 1959

TO MR. RALPH E. CUSHMAN, ACTING DIRECTOR, PROCUREMENT AND SUPPLY, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 27, 1959, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE NORTH ELECTRIC COMPANY, GALION, OHIO, ALLEGES IT MADE IN ITS BID OPENED ON AUGUST 10, 1959.

THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, LANGLEY FIELD, VIRGINIA, REQUESTED BIDS FOR SERVICES AND MATERIALS NECESSARY FOR FURNISHING ONE OPERATIONAL INTERCOMMUNICATION SYSTEM IN ACCORDANCE WITH NATIONAL AERONAUTICS AND SPACE ADMINISTRATION SPECIFICATION L-584 DATED JULY 23, 1959, ITEM 1. IN RESPONSE THE NORTH ELECTRIC COMPANY SUBMITTED A BID OFFERING TO FURNISH THE SERVICES AND MATERIALS REQUIRED UNDER ITEM 1 FOR THE LOT PRICE OF $44,212.28. IT IS REPORTED THAT THE FOUR OTHER BIDDERS ON ITEM 1 QUOTED LOT PRICES RANGING FROM $69,119 TO $128,375.11, AND THAT THE GOVERNMENT'S ESTIMATE OF THE COST OF ITEM 1 IS $75,000.

IN HIS REPORT OF OCTOBER 7, 1959, THE PROCUREMENT OFFICER AT LANGLEY FIELD STATES THAT WHEN THE BIDS WERE OPENED, IT WAS NOTED THAT THE BID OF NORTH ELECTRIC COMPANY ON ITEM 1 WAS LOW COMPARED WITH LANGLEY'S ESTIMATE OF $75,000 FOR ITEM 1 AND THE OTHER BIDS RECEIVED. IN VIEW THEREOF THE COMPANY WAS REQUESTED BY TELEPHONE ON AUGUST 19, 1959, TO CONFIRM ITS BID PRICE ON ITEM 1. ON AUGUST 21, 1959, TWO OFFICIALS OF THE COMPANY VISITED LANGLEY RESEARCH CENTER AND ALLEGED THAN AN ERROR WAS MADE IN THE COMPANY'S BID BUT THAT THEY WOULD TRY TO DETERMINE IF THEY COULD ABSORB THE LOSS IN THE PRICE BID. BY LETTER DATED SEPTEMBER 4, 1959, THE COMPANY ADVISED THAT AN ERROR OF $10,000 HAD BEEN MADE IN COMPUTING ITS BID PRICE FOR ITEM 1 WHICH COULD NOT BE ABSORBED IN THE ORIGINAL BID; THAT THE MISTAKE OCCURRED IN DETERMINING THE AMOUNT OF GROSS PROFIT; AND THAT THE CORRECT PRICE FOR ITEM 1 SHOULD HAVE BEEN $54,212.28. THE PROCUREMENT OFFICER FURTHER STATES THAT BY LETTER DATED SEPTEMBER 12, 1959, THE COMPANY FURNISHED DETAILED WORK SHEETS WHICH INDICATED THE ESTIMATED COST FOR THE PROJECT WAS $43,369.83, CONSISTING OF $39,059.83 FACTORY COST, $535 FOR TOOLING, AND $3,775 FOR ENGINEERING EXPENSES. IN ITS LETTER THE COMPANY STATED THAT AT THE TIME IT WAS COMPUTING ITS BID PRICE FOR ITEM 1, A MEETING WAS HELD IN THE OFFICE OF ITS GOVERNMENT CONTRACT ADMINISTRATOR AND THAT AT SUCH MEETING IT WAS AGREED AMONG THE FIRM'S OFFICIALS THAT THE PROJECT SHOULD BE BID AT A GROSS MARGIN OF 20 PERCENT TO SALES PRICE OR 25 PERCENT OF THE TOTAL ESTIMATED COST BY THE COMPANY OF $43,369.83, AND IN MAKING THE MULTIPLICATION OF $43,369.83 BY 125 PERCENT, AN ERROR OF $10,000 WAS MADE. THE COMPANY STATED THAT IT COULD NOT FURNISH THE SPECIFIC PIECE OF PAPER ON WHICH THE REFERRED-TO MISCALCULATION WAS MADE. IN FURTHER SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY BY LETTERS DATED OCTOBER 19 AND 23, 1959, FURNISHED AN AFFIDAVIT OF ITS GOVERNMENT CONTRACT ADMINISTRATOR AND COPIES OF TWO BIDS SUBMITTED IN RESPONSE TO PREVIOUS INVITATIONS ISSUED BY OTHER GOVERNMENT AGENCIES, WHICH SHOW APPROXIMATE PROFIT PERCENTAGES OF 25 PERCENT AND 33 1/3 PERCENT.

THE BASIC RULE IS THAT BIDS MAY NOT BE CHANGED AFTER THE TIME FIXED FOR OPENING. THE EXCEPTION TO SUCH RULE, WHICH PERMITS CORRECTION OF A BID UPON SUFFICIENT EVIDENCE TO ESTABLISH THAT THE BIDDER ACTUALLY INTENDED TO BID AN AMOUNT OTHER THAN THAT SET FORTH IN THE BID, WHERE THE CONTRACTING OFFICER IS ON NOTICE OF PROBABLE ERROR PRIOR TO ACCEPTANCE, DOES NOT EXTEND TO THE RECALCULATION OR CHANGING OF THE BID WITHOUT CONCLUSIVE PROOF AS TO THE AMOUNT OF THE INTENDED BID. SEE 17 COMP. GEN. 575, 577; AND 31 ID. 183, 184. IN THE PRESENT CASE THE NORTH ELECTRIC COMPANY HAS NOT SUBMITTED SUCH PROOF. WHILE THE COMPANY HAS SUBMITTED COPIES OF BIDS SUBMITTED IN RESPONSE TO PREVIOUS INVITATIONS, WHICH SHOW APPROXIMATE PROFIT PERCENTAGES OF 25 AND 33 1/3 PERCENT, SUCH BIDS MAY NOT BE ACCEPTED AS CONCLUSIVE PROOF THAT THE AMOUNT OF THE PROFIT PERCENTAGE OF THE SUBJECT BID WAS INTENDED TO BE 25 PERCENT OF THE ESTIMATED COST, AS ALLEGED.

IN THE CIRCUMSTANCES, THE BID OF THE NORTH ELECTRIC COMPANY AS TO ITEM 1 MAY NOT BE CORRECTED. ACCORDINGLY, SINCE IT WAS BELIEVED THAT THE BID WAS ERRONEOUS, AND SINCE SUCH BELIEF WAS CONFIRMED AND THE ERROR WAS EXPLAINED BY THE COMPANY PRIOR TO AWARD, THE BID OF THE NORTH ELECTRIC COMPANY AS TO ITEM 1 MAY BE DISREGARDED IN MAKING THE AWARD.

THE PAPERS, WITH THE EXCEPTION OF THE PROCUREMENT OFFICER'S REPORT OF OCTOBER 7, 1959, ARE RETURNED.