B-141209, JAN. 13, 1960

B-141209: Jan 13, 1960

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO A LETTER DATED DECEMBER 22. ATA-81956-1 WAS AWARDED. WAS ACCEPTED BY THE CONTRACTING OFFICER AND PURCHASE ORDER NO. WAS ISSUED AND MAILED TO THE COMPANY. THE COMPANY WAS ALSO INFORMED OF ITS RIGHT TO APPEAL THAT DECISION TO OUR OFFICE. FULTON SUPPLY COMPANY'S BID OF $5 PER 50-POUND CARTON ON ITEM NO. 1 WAS NOT CONSIDERED OUT OF LINE WHEN COMPARED WITH THE NEXT LOWEST BID OF $10.70 PER CWT ($5.35 PER 50 POUNDS) AND. WAS NOT QUESTIONED. IT IS NOW THE CONTRACTING OFFICER'S OPINION THAT THE FULTON SUPPLY COMPANY HAS OFFERED CONVINCING EVIDENCE OF A MISTAKE IN ITS BID. IT IS HER RECOMMENDATION THAT THE LOW BID OF $5 PER 50-POUND CARTON BE WITHDRAWN AND THAT PURCHASE ORDER NO.

B-141209, JAN. 13, 1960

TO HONORABLE FRANKLIN FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 22, 1959, WITH ENCLOSURES, FROM THE COMMISSIONER, FEDERAL SUPPLY SERVICE, FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO AN ERROR THE FULTON SUPPLY COMPANY, ATLANTA, GEORGIA, ALLEGES IT MADE IN ITS BID ON WHICH PURCHASE ORDER NO. ATA-81956-1 WAS AWARDED.

THE FEDERAL SUPPLY SERVICE, ATLANTA, GEORGIA, BY INVITATION ISSUED SEPTEMBER 4, 1959, REQUESTED BIDS FOR FURNISHING THREE ITEMS OF STEEL WIRE NAILS IN ACCORDANCE WITH THE SPECIFICATIONS STATED IN THE INVITATION, FOR DELIVERY F.O.B. 2110 LAWRENCE AVENUE, EAST POINT, GEORGIA. IN RESPONSE THERETO FULTON SUPPLY COMPANY SUBMITTED A BID QUOTING PRICES ON ALL THREE ITEMS. ITS BID ON ITEM NO. 1 OF $5 PER 50 POUND CARTON AND A TOTAL PRICE OF $720 FOR 144 CARTONS OF NAILS DESCRIBED AS ,5315-664-1469-SIZE 6D, LENGTH 2 INC," BEING THE LOWEST BID RECEIVED ON THAT ITEM, WAS ACCEPTED BY THE CONTRACTING OFFICER AND PURCHASE ORDER NO. ATA-81956-1, DATED OCTOBER 6, 1959, WAS ISSUED AND MAILED TO THE COMPANY.

BY LETTER DATED OCTOBER 7, 1959, FULTON SUPPLY COMPANY ACKNOWLEDGED RECEIPT OF THE PURCHASE ORDER, BUT ALLEGED THAT IT HAD MADE AN ERROR IN ITS BID BY QUOTING ITS COST PRICE WITHOUT ADDING ANYTHING FOR PROFIT. THE COMPANY REQUESTED EITHER A CHANGE OF THE UNIT PRICE TO $6 PER 50-POUND CARTON TO COVER COST OF LABELING, FREIGHT, AND FAIR PROFIT, OR CANCELLATION OF THE CONTRACT. IN SUBSTANTIATION OF THE ALLEGED ERROR, IT LATER FORWARDED ITS WORK SHEET AS WELL AS A COPY OF AN INVOICE DATED AUGUST 17, 1959, FROM ATLANTIC STEEL COMPANY, ATLANTA, GEORGIA, ITS SUPPLIER, SHOWING PRICES QUOTED ON VARIOUS TYPES OF NAILS IN 50-POUND CARTONS, INCLUDING A PRICE OF $10.15 CMT FOR SIZE "6-D" NAILS, THE SAME AS THOSE SPECIFIED BY ITEM NO. 1 OF THE INVITATION HERE IN QUESTION.

ON NOVEMBER 6, 1959, THE CONTRACTING OFFICER ADVISED FULTON SUPPLY COMPANY BY TELEPHONE, CONFIRMED BY LETTER DATED NOVEMBER 16, 1959, COMPANY BY TELEPHONE, CONFIRMED BY LETTER DATED NOVEMBER 16, 1959, BE REQUIRED TO PERFORM UNDER THE TERMS AND CONDITIONS OF THE CONTRACT. THE COMPANY WAS ALSO INFORMED OF ITS RIGHT TO APPEAL THAT DECISION TO OUR OFFICE.

IN LETTERS DATED NOVEMBER 9 AND 25, 1959, TO OUR OFFICE, FULTON SUPPLY COMPANY AGAIN ALLEGED A MISTAKE IN ITS BID AND REQUESTED THAT ITS BID PRICE BE CHANGED TO $5.34 PER CARTON INSTEAD OF $6 AS ORIGINALLY REQUESTED OF THE CONTRACTING OFFICER, OR THAT THE CONTRACT BE CANCELED. THE COMPANY FORWARDED A THERMOFAX COPY OF THE INVITATION TO BID, PURPORTING TO BE ITS WORK SHEET USED IN PREPARING ITS BID.

THE CONTRACTING OFFICER HAS REPORTED IN HER STATEMENT OF FINDINGS AND RECOMMENDATIONS CONCERNING THE COMPANY'S CLAIM THAT, WHILE THE COMPANY HAS OFFERED CONVINCING EVIDENCE OF A MISTAKE IN ITS BID, AT THE TIME SHE EVALUATED THE BIDS RECEIVED IN RESPONSE TO THE INVITATION, FULTON SUPPLY COMPANY'S BID OF $5 PER 50-POUND CARTON ON ITEM NO. 1 WAS NOT CONSIDERED OUT OF LINE WHEN COMPARED WITH THE NEXT LOWEST BID OF $10.70 PER CWT ($5.35 PER 50 POUNDS) AND, THEREFORE, WAS NOT QUESTIONED. IT IS NOW THE CONTRACTING OFFICER'S OPINION THAT THE FULTON SUPPLY COMPANY HAS OFFERED CONVINCING EVIDENCE OF A MISTAKE IN ITS BID, AS ALLEGED, AND IT IS HER RECOMMENDATION THAT THE LOW BID OF $5 PER 50-POUND CARTON BE WITHDRAWN AND THAT PURCHASE ORDER NO. ATA 81956-1 BE CANCELED.

AN EXAMINATION OF THE RECORD PERTAINING TO THE MATTER INDICATES THAT, WHILE FULTON SUPPLY COMPANY'S LOW BID ON ITEM NO. 1 OF $5 PER 50 POUND CARTON OF 2-INCH NAILS DOES NOT APPEAR OUT OF LINE WITH THE OTHER BIDS RECEIVED ON THAT ITEM, IT IS OUT OF LINE WHEN CONSIDERED WITH THE BIDS RECEIVED FOR ITEMS NOS. 2 AND 3 FOR 3 1/2 INCH AND 3 INCH NAILS, RESPECTIVELY, SINCE THE OTHER BIDS RECEIVED WERE HIGHER FOR THE 2-INCH NAILS AND LESS FOR THE LONGER NAILS UNDER ITEMS NOS. 2 AND 3, WHEREAS THE BID OF FULTON SUPPLY COMPANY WAS LESS FOR THE 2 INCH NAILS AND, ALSO, SINCE IT IS GENERALLY UNDERSTOOD THAT 2-INCH NAILS ARE PRICED HIGHER THAN 3 OR 3 1/2 INCH NAILS. IN THE CIRCUMSTANCES, IT APPEARS THAT THE VARIANCE IN THE RESPECTIVE BIDS WAS SUCH THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY OF AN ERROR IN THE FULTON SUPPLY COMPANY BID, AND THE BID ON ITEM NO. 1 SHOULD NOT HAVE BEEN ACCEPTED WITHOUT FIRST REQUESTING THE COMPANY TO VERIFY ITS BID. ON THE RECORD THERE IS NO REASONABLE DOUBT THAT THE FULTON SUPPLY COMPANY MADE AN ERROR IN ITS BID ON ITEM NO. 1, AS ALLEGED.

ACCORDINGLY, AND SINCE THE ERROR WAS ALLEGED PROMPTLY UPON RECEIPT OF THE PURCHASE ORDER AND SINCE IT IS REPORTED THAT NO DELIVERIES HAVE BEEN MADE UNDER THE CONTRACT, PURCHASE ORDER NO. ATA-81956-1 MAY BE CANCELED WITHOUT ANY LIABILITY TO THE FULTON SUPPLY COMPANY, AS RECOMMENDED BY THE CONTRACTING OFFICER AND CONCURRED IN BY THE COMMISSIONER OF FEDERAL SUPPLY SERVICE.

THE LETTER DATED OCTOBER 7, 1959, FROM FULTON SUPPLY COMPANY IS RETURNED.