B-141847, FEB. 19, 1960

B-141847: Feb 19, 1960

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO A LETTER DATED JANUARY 25. THE STANDARD OIL COMPANY OF OHIO WAS AWARDED GENERAL SERVICES ADMINISTRATION CONTRACT NO. THE INVITATION AND THE RESULTING CONTRACT BOTH PROVIDED THAT PRICES WERE INCLUSIVE OF FEDERAL TAX. THESE INVOICES WERE RETURNED TO THE CONTRACTOR BY THE OAK RIDGE OPERATIONS OFFICE OF THE ATOMIC ENERGY COMMISSION WITH THE REQUEST THAT THEY BE REVISED TO $0.117 PER GALLON AS PROVIDED BY THE CONTRACT. STATING THAT ITS INTENDED PRICE WAS $0.147 PER GALLON BUT THAT FOR THE PURPOSE OF THE CLAIM IT REQUESTED AN ADJUSTMENT OF $0.028 PER GALLON TO A DELIVERED PRICE OF $0.145 PER GALLON. THE CONTRACTOR CONTENDS THAT ITS CLAIM SHOULD BE ALLOWED BECAUSE THE ERROR WAS SO OBVIOUS THAT IT SHOULD HAVE BEEN OBSERVED AND THE BID PRICE QUESTIONED BY THE CONTRACTING OFFICER PRIOR TO AWARD.

B-141847, FEB. 19, 1960

TO HONORABLE JOHN A. MCCONE, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO A LETTER DATED JANUARY 25, 1960, WITH ENCLOSURES, FROM YOUR ASSISTANT GENERAL MANAGER FOR ADMINISTRATION, REQUESTING A DECISION AS TO WHETHER A CLAIM ASSERTED BY THE STANDARD OIL COMPANY TO REVISE THE PRICE OF GASOLINE DELIVERED TO THE ATOMIC ENERGY COMMISSION, UNDER PURCHASE ORDERS NOS. OR59-1389 AND OR60-0085, MAY BE ALLOWED ON ACCOUNT OF AN ERROR IN BID ASSERTED AFTER AWARD OF A CONTRACT BUT PRIOR TO COMPLETION OF DELIVERIES.

THE RECORD SHOWS THAT BY RESPONSE TO INVITATION TO BID NO. CH-50819, THE STANDARD OIL COMPANY OF OHIO WAS AWARDED GENERAL SERVICES ADMINISTRATION CONTRACT NO. GS-05S-8442, ITEM NO. 213, FOR FURNISHING THE ATOMIC ENERGY COMMISSION, C/O NATIONAL LEAD COMPANY OF OHIO AT FERNALD, OHIO, AN ESTIMATED 60,000 GALLONS OF GASOLINE AT A MAXIMUM PRICE OF $0.117 PER GALLON AS REQUIRED BY AEC FOR THE PERIOD FROM MARCH 1, 1959, THROUGH AUGUST 31, 1959. THE INVITATION AND THE RESULTING CONTRACT BOTH PROVIDED THAT PRICES WERE INCLUSIVE OF FEDERAL TAX.

NOTWITHSTANDING THE CONTRACT PRICE, THE CONTRACTOR SUBMITTED TWO INVOICES, DATED MARCH 16, 1959, AND MARCH 30, 1959, PRICED AT $0.147 PER GALLON FOR 8,647 GALLONS OF GASOLINE DELIVERED UNDER PURCHASE ORDER NO. OR59-1389. THESE INVOICES WERE RETURNED TO THE CONTRACTOR BY THE OAK RIDGE OPERATIONS OFFICE OF THE ATOMIC ENERGY COMMISSION WITH THE REQUEST THAT THEY BE REVISED TO $0.117 PER GALLON AS PROVIDED BY THE CONTRACT. LETTER DATED MAY 13, 1959, THE CONTRACTOR ADVISED THE GSA THAT AN ERROR HAD BEEN MADE IN ITS BID FOR ITEM NO. 213 IN THAT THE $0.03 PER GALLON FEDERAL TAX HAD NOT BEEN INCLUDED IN ITS BID PRICE AND REQUESTED ADJUSTMENT OF THE UNIT PRICE TO THAT OF THE NEXT LOW BIDDER. SUBSEQUENTLY, BY LETTER OF SEPTEMBER 25, 1959, THE CONTRACTOR SUBMITTED ITS CLAIM TO THE ATOMIC ENERGY COMMISSION, OAK RIDGE, TENNESSEE, STATING THAT ITS INTENDED PRICE WAS $0.147 PER GALLON BUT THAT FOR THE PURPOSE OF THE CLAIM IT REQUESTED AN ADJUSTMENT OF $0.028 PER GALLON TO A DELIVERED PRICE OF $0.145 PER GALLON.

THE CONTRACTOR CONTENDS THAT ITS CLAIM SHOULD BE ALLOWED BECAUSE THE ERROR WAS SO OBVIOUS THAT IT SHOULD HAVE BEEN OBSERVED AND THE BID PRICE QUESTIONED BY THE CONTRACTING OFFICER PRIOR TO AWARD, BUT SINCE THE ERROR WAS NOT DISCOVERED UNTIL AFTER AWARD, THE CONTRACTOR DECIDED TO MAKE DELIVERIES, RATHER THAN MAKE AN ISSUE OF THE PRICE AT THAT TIME.

THE ABSTRACT OF BIDS REVEALS THAT THE CONTRACTOR BID $0.117 PER GALLON MAXIMUM FOR ITEM NO. 13; THE NEXT LOWEST BID WAS $0.149 PER GALLON MAXIMUM AND EIGHT OTHER BIDS RECEIVED RANGED FROM $0.1504 TO $0.1717 PER GALLON MAXIMUM FOR ITEM NO. 213.

IN A LETTER FROM GSA TO THE AEC PROCUREMENT OFFICER AT OAK RIDGE, DATED DECEMBER 1, 1959, WITH REFERENCE TO THIS MATTER, AND IN THE TRANSMITTAL LETTER FROM YOUR ASSISTANT GENERAL MANAGER, REFERRED TO ABOVE, THE OPINION IS EXPRESSED THAT THE CONTRACTOR'S QUOTATION OF $0.117 MAXIMUM PER GALLON WAS AN OBVIOUS ERROR OVERLOOKED BY THE CONTRACTING OFFICER AT THE TIME OF AWARD AND IT IS RECOMMENDED THAT THE REQUEST OF THE CONTRACTOR FOR AN INCREASE IN THE CONTRACT PRICE BE ALLOWED.

IN A RECENT DECISION OF THIS OFFICE INVOLVING FACTS SIMILAR TO THE SITUATION AT HAND, B-138899, MARCH 16, 1959, WE AGREED WITH AN ADMINISTRATIVE CONCLUSION THAT, SINCE THE PRICE OF GASOLINE IS RELATIVELY STABLE, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE MISTAKE IN BID AND SHOULD HAVE REQUESTED VERIFICATION BEFORE AWARD WHERE THERE WAS A VARIATION OF APPROXIMATELY 12 PERCENT BETWEEN THE CONTRACTOR'S PRICES AND THE PRICES OF THE NEXT LOW BIDDER.

THE VARIATION IN PRICE HERE BETWEEN THE LOW BIDDER ($0.117 PER GALLON) AND THE NEXT LOW BIDDER ($0.149 PER GALLON) IS APPROXIMATELY 21 PERCENT. BECAUSE OF THE STABILITY EXISTING IN THE PRICE OF GASOLINE, AS MENTIONED ABOVE, WE CONCUR WITH THE ADMINISTRATIVE RECOMMENDATION THAT, IN VIEW OF THE VARIANCE BETWEEN THE CONTRACTOR'S BID AS COMPARED WITH THE OTHER BIDS RECEIVED, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE MISTAKE AND SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRICE PRIOR TO MAKING THE AWARD.

ACCORDINGLY, THE CONTRACT PRICE MAY BE INCREASED TO $0.145 PER GALLON FOR 45,217 GALLONS OF GASOLINE DELIVERED UNDER PURCHASE ORDERS NO. OR59-1389 AND OR60-0085, WHICH PRICE IS LOWER THAN THE PRICE OFFERED BY THE NEXT LOW BIDDER, THEREBY INCREASING THE AMOUNT DUE THE CONTRACTOR BY $1,266.08.