B-147487, JAN. 2, 1962

B-147487: Jan 2, 1962

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 AIR FORCE: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 27. BIDDERS WERE REQUESTED TO QUOTE A PRICE FOR ENGINEERING AND TECHNICAL DATA. IT IS REPORTED THAT UPON EVALUATING THE BIDS IT WAS NOTED THAT THE BID OF D-FAB ENGINEERING. ON ITEM 1 WAS SUBSTANTIALLY LOWER THAN THE NEXT LOW BID AND THAT. THE CORPORATION WAS REQUESTED TO VERIFY ITS BID. IN WHICH THE CORPORATION WAS QUOTED A PRICE OF $210.07 EACH FOR THE 114 TROLLEY HOISTS TO BE USED IN ASSEMBLING THE 57 HOISTING UNITS REQUIRED UNDER THE INVITATION. THE STATUTES REQUIRING ADVERTISEMENT FOR BIDS AND THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDERS ARE FOR THE BENEFIT OF THE UNITED STATES IN SECURING BOTH FREE COMPETITION AND THE LOWEST COMPETITIVE PRICES IN ITS PROCUREMENT ACTIVITIES.

B-147487, JAN. 2, 1962

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 27, 1961, FROM THE DEPUTY FOR PROCUREMENT AND PRODUCTION, OFFICE OF THE ASSISTANT SECRETARY OF THE AIR FORCE (MATERIEL), FURNISHING A REPORT ON THE PROTEST OF D-FAB ENGINEERING, INC., AGAINST ANY AWARD OF A CONTRACT UNDER BROOKLEY AIR FORCE BASE INVITATION NO. 01-601-62-728 TO ANY OTHER BIDDER OTHER THAN THAT CORPORATION.

BY THE REFERRED-TO INVITATION, HEADQUARTERS, MOBILE AIR MATERIEL AREA, DIRECTORATE OF PROCUREMENT AND PRODUCTION, BROOKLEY AIR FORCE BASE, ALABAMA, REQUESTED BIDS--- TO BE OPENED SEPTEMBER 29, 1961--- FOR FURNISHING 57 HOISTING UNITS, ITEM 1. UNDER ITEMS 2 AND 3, BIDDERS WERE REQUESTED TO QUOTE A PRICE FOR ENGINEERING AND TECHNICAL DATA, RESPECTIVELY. IN RESPONSE D-FAB ENGINEERING, INC., SUBMITTED A BID, OFFERING TO FURNISH THE HOISTING UNITS UNDER ITEM 1 AT A UNIT PRICE OF $1,172 OR FOR A TOTAL PRICE OF $66,804. THE FIVE OTHER BIDDERS ON ITEM 1 QUOTED UNIT PRICES RANGING FROM $1,510 TO $4,500.

IT IS REPORTED THAT UPON EVALUATING THE BIDS IT WAS NOTED THAT THE BID OF D-FAB ENGINEERING, INC., ON ITEM 1 WAS SUBSTANTIALLY LOWER THAN THE NEXT LOW BID AND THAT, THEREFORE, THE CORPORATION WAS REQUESTED TO VERIFY ITS BID. BY TELEGRAM DATED OCTOBER 3, 1961, D-FAB ENGINEERING, INC., ALLEGED THAT AN ERROR HAD BEEN MADE IN ITS BID ON ITEM 1 IN THAT IN COMPUTING ITS BID PRICE IT HAD USED THE PRICE FOR ONE HOIST INSTEAD OF FOR TWO HOISTS AS REQUIRED FOR EACH HOISTING UNIT. THE CORPORATION REQUESTED THAT THE UNIT PRICE OF ITEM 1 BE INCREASED BY $211 FROM $1,172 TO $1,383 TO COVER THE COST OF THE OMITTED HOIST. THE ABOVE INCREASE DID NOT COVER COMPENSATING INCREASES FOR PROFIT, G AND A AND COMMISSION. THE CORPORATION SUBMITTED PHOTOSTATIC COPIES OF ITS ESTIMATE SHEETS AND OF THE QUOTATION IT HAD RECEIVED ON THE HOIST TO SUBSTANTIATE ITS ALLEGATION OF ERROR.

THE RECORD INDICATES THAT THE CONTRACTING OFFICER INFORMED D-FAB ENGINEERING, INC., BY TELEPHONE THAT IT WOULD NOT BE PERMITTED TO CORRECT ITS BID AND THEREAFTER THE CORPORATION BY TELEGRAM DATED OCTOBER 17, 1961, PROTESTED AGAINST ANY POSSIBLE AWARD OF A CONTRACT TO ANOTHER COMPANY UNDER INVITATION NO. 01-601-62-728. IN A LETTER DATED OCTOBER 18, 1961, ADDRESSED TO OUR OFFICE, THE CORPORATION REITERATED ITS PROTEST AND CONTENDED THAT THE EVIDENCE SUBMITTED BY IT CLEARLY ESTABLISHES THE EXISTENCE OF AN ERROR IN ITS BID AND ITS INTENDED BID PRICE. BY LETTER DATED OCTOBER 19, 1961, THE CORPORATION SUBMITTED TO OUR OFFICE NOTARIZED PHOTOSTATIC COPIES OF ITS ESTIMATE SHEETS AND OF A CONFIRMING LETTER QUOTATION DATED SEPTEMBER 26, 1961--- THREE DAYS BEFORE THE BID OPENING--- RECEIVED FROM ITS SUPPLIER, THE YALE AND TOWNE MANUFACTURING COMPANY, IN WHICH THE CORPORATION WAS QUOTED A PRICE OF $210.07 EACH FOR THE 114 TROLLEY HOISTS TO BE USED IN ASSEMBLING THE 57 HOISTING UNITS REQUIRED UNDER THE INVITATION. IN ITS LETTER THE CORPORATION GAVE A BREAKDOWN OF ITS ORIGINAL AND INTENDED BID PRICES FOR ITEM 1.

THE STATUTES REQUIRING ADVERTISEMENT FOR BIDS AND THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDERS ARE FOR THE BENEFIT OF THE UNITED STATES IN SECURING BOTH FREE COMPETITION AND THE LOWEST COMPETITIVE PRICES IN ITS PROCUREMENT ACTIVITIES. IN CERTAIN CASES WHERE A MISTAKE HAS BEEN ALLEGED PROMPTLY AFTER OPENING OF BIDS BUT BEFORE AWARD OF THE CONTRACT, AND THERE HAS BEEN A TIMELY PRESENTATION OF CONVINCING EVIDENCE THAT A MISTAKE WAS MADE, ITS NATURE, HOW IT OCCURRED, AND WHAT THE BID PRICE WOULD HAVE BEEN EXCEPT FOR THE MISTAKE, OUR OFFICE HAS PERMITTED THE BID TO BE CORRECTED. COMPARE EDMUND J. RAPPOLI COMPANY, INC. V. UNITED STATES, 98 CT.CL. 499.

THE QUESTION FOR DETERMINATION IS WHETHER THE EVIDENCE OF RECORD ESTABLISHES THAT AN ERROR ACTUALLY WAS MADE BY THE CORPORATION, AS ALLEGED, AND WHETHER THE AMOUNT OF THE INTENDED BID HAS BEEN ESTABLISHED. THE BASIC (SUMMARY) ESTIMATE SHEETS, CONSISTING OF TWO PAGES, SUBMITTED BY THE CORPORATION SHOW THE PRICES FOR MATERIAL, DIRECT LABOR, OVERHEAD, TOOLS, INDIVIDUAL TEST, PREPRODUCTION SAMPLE TEST, PROFIT (10 PERCENT) G AND A (5 PERCENT) AND COMMISSION (2 1/2 PERCENT), AND THE TOTAL OF SUCH PRICES IS SHOWN AS $1,172, THE CORPORATION'S ORIGINAL BID PRICE FOR ITEM 1. BASIC ESTIMATE SHEET NO. 1 SHOWS, UNDER THE MATERIAL COLUMN, A PRICE OF $211 FOR A QUANTITY OF 2 HOISTS, Y AND T NO. 549703. THE QUOTATION RECEIVED FROM THE YALE AND TOWNE MANUFACTURING COMPANY, THE CORPORATION'S SUPPLIER, SHOWS THAT THE CORPORATION WAS QUOTED A PRICE OF $210.07 EACH FOR A Y AND T HOIST NO. 549703. IT APPEARS THAT, PRIOR TO ENTERING THE PRICE OF THE HOIST ON THE ESTIMATE SHEET, THE CORPORATION ROUNDED SUCH PRICE TO AN EVEN DOLLAR AMOUNT, NAMELY, $211. IF THE AMOUNT OF $211 IS MULTIPLIED BY TWO--- THE NUMBER OF HOISTS REQUIRED FOR EACH HOISTING UNIT- -- THE SUBTOTAL WILL BE $422 AND IF TO SUCH SUM THE OTHER ITEMS OF COST OF PRODUCTION SHOWN ON THE ESTIMATE SHEET ARE ADDED, THE TOTAL WILL BE $1,209. IN ITS LETTER OF OCTOBER 19, 1961, THE CORPORATION SHOWS THAT THE AMOUNTS SHOWN ON ITS ESTIMATE SHEET FOR PROFIT, G AND A AND COMMISSION REPRESENT PERCENTAGES OF 10 PERCENT, 5 PERCENT AND 2 1/2 PERCENT, RESPECTIVELY, AND IF THE STATED PERCENTAGES ARE APPLIED TO THE AMOUNT OF $1,209--- THE ALLEGED SHOP COST OF ONE HOISTING UNIT--- THE TOTAL WILL BE $1,420, THE CORPORATION'S ALLEGED INTENDED BID PRICE FOR ITEM 1. WHERE, AS HERE, THE AMOUNTS COMPUTED FOR PROFIT, G AND A AND COMMISSION WERE BASED ON DEFINITE PERCENTAGES OF THE ACTUAL COST OF LABOR, MATERIALS, ETC. (ROUNDED OUT TO THE EVEN DOLLAR), THE INCLUSION OF AN OMITTED ITEM OF $211 FOR EACH OF 57 HOISTING UNITS MAY BE CONSIDERED AS INCREASING THE INTENDED BID PRICE BY AMOUNTS REPRESENTING THE RESPECTIVE PERCENTAGES OF $211 EACH FOR PROFIT, G AND A AND COMMISSION. CORRECTION OF THE BID ON THIS BASIS WILL RESULT IN D FAB ENGINEERING, INC., BEING THE LOWEST BIDDER BY ABOUT $4,000.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE IS NO DOUBT THAT D-FAB ENGINEERING, C., MADE AN ERROR IN ITS BID, AS ALLEGED, AND IT IS APPARENT THAT THE INTENDED BID PRICE FOR ITEM 1 WAS $1,420. ACCORDINGLY, YOU ARE ADVISED THAT THE BID OF D-FAB ENGINEERING, INC., MAY BE CORRECTED AND CONSIDERED FOR AWARD.

THE FILE SUBMITTED WITH THE LETTER OF NOVEMBER 27, 1961, IS RETURNED.