B-147656, DEC. 12, 1961

B-147656, DEC. 12, 1961

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 21, 1961, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT SERVICES, FORWARDING, FOR CONSIDERATION BY THIS OFFICE, THE FILE AND RELATED DOCUMENTS CONCERNING AN ALLEGATION OF MISTAKE IN BIDS BY THE SHADUR BOX COMPANY OF MILWAUKEE, WISCONSIN, AFTER AN AWARD OF CONTRACT TO THAT FIRM. THE LETTER OF NOVEMBER 21, 1961, ENCLOSING A REPORT OF THE MATTER PREPARED BY THE VETERANS ADMINISTRATION SUPPLY DEPOT, HINES, ILLINOIS, CONTAINS THE STATEMENT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN PUT ON NOTICE OF POSSIBLE ERROR OWING TO THE CONSIDERABLE DIFFERENCE BETWEEN THE CONTRACTOR'S BID PRICE AND THOSE OF THE OTHER BIDDERS.

THE RECORD SHOWS THAT INVITATION FOR BIDS NO. M7-44-62 WAS ISSUED OCTOBER 3, 1961, SOLICITING BIDS FROM SMALL BUSINESS CONCERNS ONLY FOR THE PURCHASE AND DELIVERY OF BOXES, TELESCOPING, INCLUDING CASE AND LID. THE INVITATION CONTAINED THREE ITEMS. ITEM NO. 1 COVERED 19,296 BOXES OF SIZE 1 FOR DELIVERY AT HINES, ILLINOIS. ITEM NO. 2 COVERED 3,242 BOXES OF SIZE 2 FOR DELIVERY AT WILMINGTON, CALIFORNIA, AND ITEM NO. 3 COVERED 21,168 BOXES OF SIZE 2 FOR DELIVERY AT HINES, ILLINOIS. THE ABSTRACT OF BIDS SHOWED BIDS WERE RECEIVED FROM SIX BIDDERS WITH PRICES RANGING FROM $0.0473 TO $0.749 FOR ITEM NO. 1, $0.06 TO $0.13 FOR ITEM NO. 2, AND $0.0498 TO $0.09575 FOR ITEM NO. 3. THE SHADUR BOX COMPANY BID WAS $0.0749 FOR ITEM NO. 1, $0.06 FOR ITEM NO. 2 AND $0.0498 FOR ITEM NO. 3. SINCE THE PROTESTANT WAS LOW BIDDER ON ITEMS 2 AND 2 ACCEPTANCE OF BID WAS ACCOMPLISHED BY THE ISSUANCE OF PURCHASE ORDER NO. 62-HI-70116 DATED OCTOBER 26, 1961, FOR 3,242 BOXES FOR ITEM NO. 2 AND FOR THE 21,168 BOXES FOR ITEM NO. 3. BY LETTER DATED OCTOBER 31, 1961, THE SHADUR BOX COMPANY ALLEGED A MISTAKE IN ITS BID STATING THAT BID PRICES ON ITEMS 1 AND 3 WERE REVERSED, THAT THE PRICE QUOTED FOR ITEM NO. 1 WAS INTENDED FOR ITEM NO. 3 AND VICE VERSA. REQUEST WAS MADE FOR THE RELEASE OF THE OBLIGATION IMPOSED BY THE CONTRACT AS TO ITEM NO. 3.

IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH IN FPR-1-2.406-4 THE PROTESTANT WAS REQUESTED TO FURNISH EVIDENCE TO SUBSTANTIATE THE ALLEGATION OF ERROR. COST SUMMARIES FURNISHED BY THE PROTESTANT, FACTORING IN COSTS FOR MATERIAL, DIRECT LABOR AND OVERHEAD, SHOW TOTAL COSTS FOR ITEM NO. 1 (SMALL BOX) OF $62.50 PER THOUSAND AGAINST WHICH WAS BID THE UNIT PRICE OF $0.0749. IT IS STATED THAT THE INTENDED BID PRICE WAS $0.0498 EACH. COST SUMMARY PREPARED FOR ITEM NO. 3 (LARGE BOX) SHOWS TOTAL COSTS COMPUTED AS ABOVE TOTALING $75.80 PER THOUSAND AGAINST WHICH WAS BID THE UNIT PRICE OF $0.0498. THE INTENDED BID PRICE FOR THIS ITEM IS ALLEGED TO HAVE BEEN $0.0749 EACH.

IN THE LIGHT OF THE COST DATA FURNISHED BY THE BIDDER, WE THINK IT IS REASONABLY ESTABLISHED THAT AN ERROR IN FACT WAS MADE. MOREOVER, CONSIDERING THE FACT THAT THE CONTRACTOR HAD BID A HIGHER PRICE FOR THE SMALLER BOX (ITEM 1) THAN FOR THE LARGER BOX (ITEM 3), A MORE EXPENSIVE ITEM, TOGETHER WITH THE FACT THAT THERE WAS A SUBSTANTIAL PRICE DIFFERENCE BETWEEN THE BID OF THE SHADUR BOX COMPANY AND THE OTHER BIDS ON ITEM NO. 3, WE AGREE THAT THE PROBABILITY OF ERROR WAS APPARENT AND THAT THE COMPANY'S BID ON ITEM NO. 3 SHOULD NOT HAVE BEEN ACCEPTED BY THE CONTRACTING OFFICER WITHOUT REQUESTING IT TO VERIFY ITS BID.

ACCORDINGLY, ACTION SHOULD BE TAKEN TO REFORM THE CONTRACT MADE WITH THE SHADUR BOX COMPANY BY DELETING ITEM NO. 3, AND PURCHASE OF THIS ITEM MAY BE MADE FROM THE NEXT LOWEST RESPONSIBLE BIDDER WHOSE OFFER HAS REMAINED OPENED.