B-143346, JUL. 12, 1960

B-143346, JUL. 12, 1960

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 28, 1960, WITH ENCLOSURES, REGARDING A MISTAKE ALLEGED TO HAVE BEEN MADE BY THE LION OIL COMPANY IN FAILING TO INCLUDE THE FEDERAL GASOLINE TAX OF $0.04 PER GALLON IN ITS BID OF JANUARY 19, 1960, COVERING ITEM NO. 20 FOR THE FURNISHING OF GASOLINE TO THE INTERAGENCY MOTOR POOL AT LITTLE ROCK, ARKANSAS. THE ACCEPTANCE OF THE BID WAS CONSUMMATED ON MARCH 3, 1960, BY THE AWARD OF CONTRACT NO. GS- 07-7187.

THE CONTRACT REQUIRED THE FURNISHING OF APPROXIMATELY 30,000 GALLONS TO THE INTERAGENCY MOTOR POOL DURING THE PERIOD APRIL 1, 1960, THROUGH SEPTEMBER 30, 1960, AT A COST OF $0.12056 PER GALLON. THE CONTRACT PROVIDED ON PAGE 5 THAT THE "PRICES QUOTED FOR ALL ITEMS SHALL INCLUDE ALL APPLICABLE FEDERAL TAXES IN EFFECT ON DATE SET FOR THE OPENING OF BIDS.' ON MARCH 28, 1960, THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICER OF AN ALLEGED MISTAKE IN BID IN THAT ITS TYPIST FAILED TO ADD TO THE BASIC PRICE PER GALLON OF GASOLINE THE FEDERAL GASOLINE TAX OF $0.04 PER GALLON. OTHER BIDS RECEIVED ON ITEM NO. 20 WERE $0.1565, $0.1601, $0.165, $0.1665, $0,1686, $0.17392 AND $0.183 PER GALLON.

YOU ADVISE THAT THE CONTRACTING OFFICER HAS CONCLUDED THAT THE CONTRACTOR HAD SUBMITTED CLEAR AND CONVINCING EVIDENCE OF THE OCCURRENCE OF THE MISTAKE, AND THAT THE MISTAKE SHOULD HAVE BEEN DETECTED SINCE THE CONTRACTOR'S BID WAS UNREASONABLY LOW IN RELATION TO THE OTHER BIDS SUBMITTED. IN THAT CONNECTION, YOU POINT OUT THAT THE CONTRACTING OFFICER'S POSITION IS STRENGTHENED WHEN IT IS CONSIDERED THAT THE PRICE OF GASOLINE IS RELATIVELY STABLE AND ONLY MINOR PRICE VARIATIONS USUALLY OCCUR.

YOU REQUEST THAT AUTHORITY BE GRANTED TO RESCIND THE CONTRACT AND TO MAKE ADDITIONAL REIMBURSEMENT TO THE CONTRACTOR FOR DELIVERIES ALREADY MADE UP TO AN AMOUNT NOT IN EXCESS OF THE AMOUNT OF THE NEXT LOW BID. AND YOU PROPOSE, IF WE CONCUR, TO IMMEDIATELY NEGOTIATE FOR THE GASOLINE REQUIREMENTS FOR THE REMAINDER OF THE CONTRACT PERIOD INASMUCH AS READVERTISEMENT WOULD RESULT IN EXCESSIVE DELAY.

UNDER THE FACTS REPORTED, IT IS OUR VIEW THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE CONTRACTOR'S BID AND, THEREFORE, SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD. ACCORDINGLY, SINCE THE AMOUNT OF THE INTENDED BID WAS IN EXCESS OF THE NEXT LOWEST BID, THE CONTRACT PRICE MAY BE CORRECTED SO THAT THE TOTAL AMOUNT PAID OR PAYABLE WILL NOT EXCEED THE PRICE OFFERED BY THE NEXT LOW BIDDER.

WITH REGARD TO YOUR PROPOSAL TO READVERTISE THE REMAINING CONTRACT REQUIREMENTS, YOU ARE ADVISED THAT WE WOULD NOT OBJECT TO SUCH PROCEDURE IF SUCH IS DEEMED TO BE ADMINISTRATIVELY FEASIBLE UNDER THE CIRCUMSTANCES.