B-141698, JAN. 25, 1960

B-141698: Jan 25, 1960

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 LETTER DATED JANUARY 13. THE ITEM WAS DESCRIBED IN THE INVITATION AND THE CONTRACTOR SUBMITTED A BID THEREON AS FOLLOWS: "ITEM NO. 4966 HEAD: MFG. TOTAL BID PRICE $504.00" THE ABOVE ITEM WAS ONE OF FIVE ITEMS ON WHICH THE CONTRACTOR SUBMITTED BIDS UNDER THE INVITATION. IT WAS NOT A SUCCESSFUL BIDDER WITH RESPECT TO THE OTHER ITEMS. THE 24 PIECES COMPRISING THE ITEM APPEAR TO HAVE BEEN SHIPPED TO THE CONTRACTOR AT JACKSONVILLE. THE CONTRACTOR ADVISED THE CONTRACTING OFFICER AS FOLLOWS: "THE BID WE HAD INTENDED TO SUBMIT WAS A UNIT PRICE OF ?875 FOR A TOTAL BID PRICE OF $21.00. THE LIST PRICE OF THIS ITEM AS SOLD NOW BY THE GENERAL MOTORS CORPORATION IS $3.75 EACH WHICH.

B-141698, JAN. 25, 1960

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JANUARY 13, 1960, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REF: R11.2, REQUESTING A DECISION AS TO WHETHER CONTRACT NO. N189S-47656A (S), DATED NOVEMBER 2, 1959, WITH DIESEL MARINE ENGINEERS, FOR THE SALE OF ITEM NO. 4966 UNDER INVITATION NO. B-71-60 189, ISSUED BY THE NAVAL SUPPLY CENTER, U.S. NAVAL BASE, NORFOLK, VIRGINIA, MAY BE CANCELLED BY REASON OF THE ERROR IN BID ALLEGED.

THE ITEM WAS DESCRIBED IN THE INVITATION AND THE CONTRACTOR SUBMITTED A BID THEREON AS FOLLOWS:

"ITEM NO. 4966

HEAD: MFG. BY GENERAL MOTORS CORP., PART NO: 8074093, USED ON MODELS 12- 567 ALT P AND 12-567 ALT S GENERAL MOTORS DIESEL ENGINES. APPARENTLY UNUSED, GOOD CONDITION 24 EACH

UNIT BID PRICE $21.00 EA. TOTAL BID PRICE $504.00"

THE ABOVE ITEM WAS ONE OF FIVE ITEMS ON WHICH THE CONTRACTOR SUBMITTED BIDS UNDER THE INVITATION, BUT IT WAS NOT A SUCCESSFUL BIDDER WITH RESPECT TO THE OTHER ITEMS. THE 24 PIECES COMPRISING THE ITEM APPEAR TO HAVE BEEN SHIPPED TO THE CONTRACTOR AT JACKSONVILLE, FLORIDA, ON NOVEMBER 19, 1959, AND BY LETTER OF DECEMBER 3, 1959, THE CONTRACTOR ADVISED THE CONTRACTING OFFICER AS FOLLOWS:

"THE BID WE HAD INTENDED TO SUBMIT WAS A UNIT PRICE OF ?875 FOR A TOTAL BID PRICE OF $21.00. THE LIST PRICE OF THIS ITEM AS SOLD NOW BY THE GENERAL MOTORS CORPORATION IS $3.75 EACH WHICH, AS YOU CAN SEE, IS IN LINE WITH OUR BID.

"IF THERE IS ANY POSSIBLE RELIEF ON THIS MATTER, PLEASE ADVISE AS THE AMOUNT OF MONEY INVOLVED IN THIS ERROR REPRESENTS A CONSIDERABLE INVESTMENT.'

IN RECOMMENDING IN HIS LETTER OF DECEMBER 15, 1959, THAT THE CONTRACTOR BE GRANTED RELIEF IN THE MATTER, THE CONTRACTING OFFICER STATES:

"4. THE NORFOLK NAVAL SHIPYARD REPORTED THIS ITEM FOR SALE AT AN ACQUISITION UNIT PRICE OF $4.50, AND HAS FURNISHED INFORMATION THAT THE ITEM IS CURRENTLY CARRIED IN STOCK AT THE SAME PRICE.

"5. ALTHOUGH NOT APPREHENDED PRIOR TO AWARD, IT IS CLEARLY EVIDENT THAT THE BUYER ERRED IN SUBMITTING HIS BID. FOR THE NAVY TO HOLD THE PURCHASER TO A CONTRACT AT A UNIT COST OF $21.00 FOR AN ITEM WHICH CAN BE PURCHASED NEW FROM THE MANUFACTURER AT A UNIT COST OF APPROXIMATELY $4.50 WOULD APPEAR TO CONSTITUTE AN UNCONSCIONABLE AGREEMENT. SINCE DELIVERY OF THE PROPERTY HAS BEEN MADE, WITHDRAWAL OF THE BID CANNOT BE RECOMMENDED. IS BELIEVED THAT THE MOST FITTING SOLUTION WOULD BE TO ALLOW THE BUYER TO RETURN THE PROPERTY AT HIS OWN EXPENSE, UPON RECEIPT OF WHICH THE PROPERTY WOULD BE REOFFERED FOR SALE AND FULL REFUND MADE.'

UNDER THE CIRCUMSTANCES, THERE WOULD APPEAR TO BE NO DOUBT AS TO THE FACT THAT THE CONTRACTOR MADE AN ERROR IN ITS BID AND THAT IT WOULD BE UNCONSCIONABLE TO HOLD THE CONTRACTOR TO ITS BARGAIN.

ACCORDINGLY, RETURN OF THE PROPERTY TO THE NORFOLK NAVAL SUPPLY CENTER AT THE CONTRACTOR'S EXPENSE, AND REFUND OF THE PURCHASE PRICE, IS AUTHORIZED. HOWEVER, WE WOULD NOT OBJECT IF THE CONTRACTOR WERE ALLOWED TO RETAIN THE PROPERTY FOR THE AMOUNT OF ITS INTENDED BID, OR FOR A HIGHER PRICE, PROVIDED IT IS ADMINISTRATIVELY DETERMINED TO REPRESENT A REASONABLE PRICE FOR THE PROPERTY.