B-141901, FEB. 18, 1960

B-141901: Feb 18, 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 INTERIOR: REFERENCE IS MADE TO A LETTER DATED FEBRUARY 2. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. THE SIX OTHER RESPONSIVE BIDS RECEIVED WERE IN THE TOTAL NET AMOUNTS OF $6. THE GOVERNMENT ENGINEER'S ESTIMATE WAS IN THE AMOUNT OF $6. WAS REQUESTED TO CONFIRM ITS BID PRICES AND ALSO THAT THE CABLE INTENDED TO BE FURNISHED WOULD MEET THE SPECIFICATIONS. AWARD WAS MADE TO HERNING COMPANY. 011-A "AS WE DO NOT HAVE THE TESTING FACILITIES REQUIRED IN THE MANUFACTURE OF THIS TYPE OF CABLE. " WHICH FACT WAS REPORTED TO HERNING COMPANY. THAT IT WAS NOT HANDLING THE SUBJECT ORDER FOR HERNING COMPANY. THE CONTRACTOR EXPLAINED THAT IT WAS CONSIDERING BOTH THE SUBJECT INVITATION AND AN INVITATION FROM THE DEPARTMENT OF THE ARMY AT THE SAME TIME AND THAT ALL OF THE PRICES RECEIVED FROM ITS SUPPLIERS WERE BASED ON THE ARMY SPECIFICATIONS.

B-141901, FEB. 18, 1960

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 2, 1960, FROM THE ADMINISTRATIVE ASSISTANT, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY HERNING COMPANY, INC., OF SAN FRANCISCO, CALIFORNIA, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. (D) 90,011-A, ISSUED SEPTEMBER 14, 1959, BY THE BUREAU OF RECLAMATION, DENVER, COLORADO.

THE INVITATION REQUESTED BIDS--- TO BE OPENED OCTOBER 12, 1959--- FOR FURNISHING TWO ITEMS OF ELECTRICAL CABLE (25,000 FEET UNDER ITEM NO. 1 AND 10,000 FEET UNDER ITEM NO. 2) FOR USE IN CONNECTION WITH FLAMING GORGE DAM, COLORADO RIVER STORAGE PROJECT. IN RESPONSE TO THE INVITATION, HERNING COMPANY, INC., SUBMITTED ITS BID IN THE TOTAL NET AMOUNT OF $2,283.30 ($1,855 ON ITEM NO. 1 AND $474.90 ON ITEM NO. 2, LESS DISCOUNT). THE SIX OTHER RESPONSIVE BIDS RECEIVED WERE IN THE TOTAL NET AMOUNTS OF $6,575.50, $6,575.50, $6,575.50, $6,670, $7,190 AND $7,420. THE GOVERNMENT ENGINEER'S ESTIMATE WAS IN THE AMOUNT OF $6,800.

UNDER DATE OF OCTOBER 16, 1959, BECAUSE OF THE DISPARITY BETWEEN THE BID OF HERNING COMPANY, INC., AND THE OTHER BIDS RECEIVED AND THE ENGINEER'S ESTIMATE, HERNING COMPANY, INC., WAS REQUESTED TO CONFIRM ITS BID PRICES AND ALSO THAT THE CABLE INTENDED TO BE FURNISHED WOULD MEET THE SPECIFICATIONS. BY ITS LETTER DATED OCTOBER 22, 1959, THE BIDDER CONFIRMED BOTH ITS BID PRICES AND ITS INTENTION TO FURNISH CABLE FULLY IN ACCORDANCE WITH THE SPECIFICATIONS AND STATED THAT ITS SUPPLIER WOULD BE CAROL CABLE COMPANY. AWARD WAS MADE TO HERNING COMPANY, INC., ON OCTOBER 30, 1959 (CONTRACT NO. 14-06-D-3471).

IN ITS BID HERNING COMPANY, INC., LISTED AS ITS POTENTIAL SOURCE OF SUPPLY THE FOLLOWING THREE COMPANIES:

CAROL CABLE MANUFACTURING CO.

WESTERN INSULATED WIRE CO.

KAISER INDUSTRIES

HOWEVER, IN A LETTER DATED SEPTEMBER 24, 1959, TO THE CONTRACTING OFFICER, KAISER ALUMINUM AND CHEMICAL CORPORATION DECLINED TO SUBMIT A BID UNDER INVITATION NO. (D) 90,011-A "AS WE DO NOT HAVE THE TESTING FACILITIES REQUIRED IN THE MANUFACTURE OF THIS TYPE OF CABLE," WHICH FACT WAS REPORTED TO HERNING COMPANY, INC., BY THE CONTRACTING OFFICER IN THE LETTER OF OCTOBER 16, 1959, ABOVE MENTIONED. UNDER DATE OF NOVEMBER 10, 1959, REPLYING TO A LETTER DATED NOVEMBER 2, CAROL CABLE COMPANY WROTE TO THE BUREAU OF RECLAMATION, DENVER, COLORADO, THAT IT WAS NOT HANDLING THE SUBJECT ORDER FOR HERNING COMPANY, INC.; AND THE CONTRACTING OFFICER ADVISED HERNING COMPANY, C., ACCORDINGLY BY TELEGRAM DATED NOVEMBER 24, 1959, AND REQUESTED THE NAME AND ADDRESS OF A SUBSTITUTE SUPPLIER.

IN A LETTER DATED NOVEMBER 30, 1959, THE CONTRACTOR ALLEGED THAT ITS REPRESENTATIVE HAD MADE AN ERROR IN ITS BID AND ALSO IN CONFIRMING THE BID AND REQUESTED CANCELLATION OF THE CONTRACT, STATING THAT ITS COST IN FULFILLING THE CONTRACT WOULD BE APPROXIMATELY $2,500 MORE THAN THE AMOUNT OF THE BID. IN ITS NOTARIZED LETTER OF DECEMBER 3, 1959, THE CONTRACTOR EXPLAINED THAT IT WAS CONSIDERING BOTH THE SUBJECT INVITATION AND AN INVITATION FROM THE DEPARTMENT OF THE ARMY AT THE SAME TIME AND THAT ALL OF THE PRICES RECEIVED FROM ITS SUPPLIERS WERE BASED ON THE ARMY SPECIFICATIONS, WHICH PRICES WERE INADVERTENTLY USED IN SUBMITTING THE BID IN QUESTION. IT WAS STATED FURTHER THAT THE ERROR WAS NOT DISCOVERED UNTIL A PURCHASE ORDER AND SPECIFICATIONS WERE SENT TO CAROL CABLE COMPANY, WHEREUPON IT WAS LEARNED THAT THAT COMPANY HAD QUOTED ONLY ON THE ARMY SPECIFICATIONS. WITH THE LETTER OF DECEMBER 3 WAS ENCLOSED THE BIDDER'S WORK SHEET IN SUPPORT OF ITS ALLEGATION THAT THE BID WAS BASED ON CABLE SUCH AS THAT COVERED BY THE ARMY INVITATION.

HERNING COMPANY, INC., STATED FURTHER IN ITS LETTER OF DECEMBER 3 THAT SINCE LEARNING OF THE ERROR IT HAD CONTACTED EVERY MANUFACTURER WITH WHOM IT DEALS BUT HAD FOUND NONE IN A POSITION TO FURNISH CABLE SUCH AS THAT REQUIRED, THOUGH THEY ADVISED THAT, IF THEY WERE IN A POSITION TO QUOTE, THE PRICES WOULD BE APPROXIMATELY TWICE THE AMOUNT OF THE HERNING BID.

IN VIEW OF THE FACTS OF THIS MATTER AS ALLEGED AND SHOWN BY THE FILE, IT APPEARS THAT HERNING COMPANY, INC., MADE A BONA FIDE ERROR IN ITS BID AS ALLEGED AND EXPLAINED BY IT. IT APPEARS FURTHER THAT THE CABLE ON WHICH THE BID WAS BASED WOULD NOT MEET THE REQUIREMENTS OF THE INVITATION. HOWEVER, THERE IS FOR CONSIDERATION THE QUESTION WHETHER RELIEF MAY BE GRANTED, NOTWITHSTANDING THE FACT THAT VERIFICATION OF THE BID WAS REQUESTED AND RECEIVED BY THE CONTRACTING OFFICER BEFORE AWARD.

GENERALLY, AWARD OF A CONTRACT FOLLOWING VERIFICATION OF A BID UPON REQUEST OF THE CONTRACTING OFFICER RESULTS IN A BINDING CONTRACT. COMP. GEN. 942, 947; 27 ID. 17. HOWEVER, IN VIEW OF THE GREAT DISPARITY BETWEEN THE BID OF HERNING COMPANY, INC., AND THE OTHER BIDS RECEIVED AND THE GOVERNMENT'S ESTIMATE, WE BELIEVE IT WOULD BE GROSSLY INEQUITABLE TO REQUIRE THE BIDDER TO FURNISH THE CABLE AT THE BID PRICE, WHICH IS ONLY 34.72 PERCENT OF THE NEXT LOW RESPONSIVE BIDS DESPITE THE VERIFICATION.

ACCORDINGLY, THE AWARD SHOULD BE CANCELED WITHOUT LIABILITY ON THE PART OF HERNING COMPANY, INC.

AS REQUESTED, THE PAPERS TRANSMITTED WITH THE LETTER OF FEBRUARY 2, 1960, FROM YOUR DEPARTMENT ARE RETURNED HEREWITH, EXCEPTING THE EXTRA COPY OF THE MEMORANDUM OF DECEMBER 16, 1959, FROM THE HEAD, INVITATIONS AND AWARDS SECTION, DENVER, COLORADO, TO THE ASSISTANT COMMISSIONER AND CHIEF ENGINEER, WHICH IS BEING RETAINED HERE.