B-142503, APR. 22, 1960

B-142503: Apr 22, 1960

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED APRIL 1. IS BASED. WAS THE LOW SUCCESSFUL BIDDER ON ITEM 13. WAS AWARDED TO DETROIT SUPPLY COMPANY. WHO WAS ALSO BIDDING ON SEVERAL ITEMS MANUFACTURED BY BONNY TOOL AND FORGE WORKS. THAT SUCH OCCURRENCE IS NOT UNUSUAL SINCE IT IS NOT AN UNCOMMON PRACTICE FOR A MANUFACTURER TO PURPOSELY SUBMIT A HIGHER BID ON ITS OWN PRODUCT TO PROTECT FRANCHISES GRANTED TO ITS REGULAR DEALERS. THE ADMINISTRATIVE OFFICE IS OF THE OPINION THAT THERE WAS NOTHING ON THE FACE OF THE BID ITSELF OR IN THE VARIATION IN BID PRICES WHICH SHOULD HAVE CAUSED THE CONTRACTING OFFICER TO SUSPECT AN ERROR. IT IS THEIR RECOMMENDATION THAT NO RELIEF BE GRANTED TO THE BIDDER AND THAT THE CONTRACT AWARDED FOR ITEM 13 SHOULD BE ALLOWED TO STAND.

B-142503, APR. 22, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED APRIL 1, 1960, WITH ENCLOSURES, FROM THE CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, IN BEHALF OF THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR DETROIT SUPPLY COMPANY, INCORPORATED, ALLEGED IT MADE IN ITS BID ON WHICH UNNUMBERED CONTRACT O.I. 3300-QOB-60, DATED DECEMBER 8, 1959, IS BASED.

BY INVITATION NO. QM-30-127-60-67, DATED OCTOBER 15, 1959, THE PURCHASING DIVISION, U.S. ARMY GENERAL DEPOT, SCHENECTADY, NEW YORK, REQUESTED BIDS FOR FURNISHING 104 VARIOUS ITEMS OF HAND TOOLS IN ACCORDANCE WITH "BRAND NAME OR EQUAL" PROVISIONS DESCRIBED IN THE INVITATION. DETROIT SUPPLY COMPANY, INCORPORATED, 113 SOUTH BRANDYWINE AVENUE, SCHENECTADY, NEW YORK, WAS THE LOW SUCCESSFUL BIDDER ON ITEM 13, CALLING FOR 94 OPEN END WRENCHES, NO. OA-24-2, AS MANUFACTURED BY OWATONNA TOOL CO., OR EQUAL, BY SUBMITTING A BID OF $21.94 PER UNIT, FOR A TOTAL AMOUNT OF $2,062.36. DECEMBER 8, 1959, UNNUMBERED CONTRACT O.I. 3300-QOB-60, COVERING SEVERAL ITEMS, WAS AWARDED TO DETROIT SUPPLY COMPANY, INCORPORATED, FOR A TOTAL AMOUNT OF $2,574.74, INCLUDING THE AMOUNT BID ON ITEM 13. ON DECEMBER 30, 1959, SUBSEQUENT TO RECEIPT OF AWARD, THE LOW BIDDER ORALLY NOTIFIED THE CONTRACTING OFFICE THAT IT HAD MADE A MISTAKE IN ITS BID PRICE FOR ITEM 13 AND REQUESTED THAT ITS BID BE WITHDRAWN. BY LETTER OF JANUARY 4, 1960, THE BIDDER CONFIRMED ITS ALLEGATION OF MISTAKE AND ADVISED THAT THE ALLEGED MISTAKE OCCURRED BECAUSE THE BIDDER, WHO WAS ALSO BIDDING ON SEVERAL ITEMS MANUFACTURED BY BONNY TOOL AND FORGE WORKS, ERRONEOUSLY APPLIED THE BONNY DISCOUNT OF 50 PERCENT TO THE LIST PRICE OF OWATONNA. OWATONNA'S PRICE LIST SHOWS THE PRICE FOR ITEM 13 TO THE USER AT $36.50 AND TO THE JOBBER AT $27.38. AN UNDATED WORKSHEET SUBMITTED BY THE BIDDER SHOWS THAT IT DEDUCTED 50 PERCENT FROM THE PRICE OF $36.50, ADDED A 10 PERCENT MARK UP, PLUS FREIGHT AND OVERSEAS PACKING, TO ARRIVE AT THE QUOTED PRICE OF $21.94.

THE ADMINISTRATIVE OFFICE REPORTS THAT THE MANUFACTURER OF THE ITEM IN QUESTION ALSO BID ON THE ITEM AND QUOTED A HIGHER PRICE THAN THAT QUOTED BY THE LOW BIDDER, BUT THAT SUCH OCCURRENCE IS NOT UNUSUAL SINCE IT IS NOT AN UNCOMMON PRACTICE FOR A MANUFACTURER TO PURPOSELY SUBMIT A HIGHER BID ON ITS OWN PRODUCT TO PROTECT FRANCHISES GRANTED TO ITS REGULAR DEALERS. THE ADMINISTRATIVE OFFICE IS OF THE OPINION THAT THERE WAS NOTHING ON THE FACE OF THE BID ITSELF OR IN THE VARIATION IN BID PRICES WHICH SHOULD HAVE CAUSED THE CONTRACTING OFFICER TO SUSPECT AN ERROR, ESPECIALLY IN VIEW OF THE FACT THAT THE DEPOT HAD NO PREVIOUS EXPERIENCE IN THE PROCUREMENT OF THE ITEMS IN QUESTION. IT IS THEIR RECOMMENDATION THAT NO RELIEF BE GRANTED TO THE BIDDER AND THAT THE CONTRACT AWARDED FOR ITEM 13 SHOULD BE ALLOWED TO STAND.

THE ABSTRACT OF BIDS REVEALS THAT FOUR OTHER BIDDERS QUOTED PRICES FOR ITEM 13 IN THE AMOUNTS OF $25.72, $27.37 (THE MANUFACTURERS BID), $27.85 AND $30.66. ALL BIDDERS OFFERED THE PRODUCT SPECIFIED.

THE VARIATION BETWEEN THE TWO LOW BIDS IS APPROXIMATELY 15 PERCENT AND BOTH OF THESE BIDS ARE LOWER THAN THE BID SUBMITTED BY THE MANUFACTURER OF THE ITEM INVOLVED. WE BELIEVE THAT THERE IS NOTHING ON THE FACE OF THE LOW BID NOR IN THE VARIATION OF THE QUOTED BID PRICES WHICH SHOULD HAVE INDICATED TO A CONTRACTING OFFICER THAT A MISTAKE IN BID HAD PROBABLY OCCURRED. THE RECORD ESTABLISHES THAT THE LOW BID WAS ACCEPTED IN GOOD FAITH, NO ERROR HAVING ALLEGED UNTIL AFTER THE AWARD. THE ACCEPTANCE OF A BID UNDER SUCH CIRCUMSTANCES GIVES RISE TO A VALID AND BINDING CONTRACT WHICH FIXES THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE SABIN METAL CORPORATION V. UNITED STATES, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956; 26 COMP. GEN. 415; AND CASES CITED THEREIN.

ACCORDINGLY THERE IS NO BASIS FOR THIS OFFICE TO ALLOW THE BID TO BE WITHDRAWN OR TO GRANT RELIEF FROM THE OBLIGATIONS IMPOSED UNDER THE TERMS OF THE CONTRACT.