B-150043, OCT. 11, 1962

B-150043: Oct 11, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO ARCHITECT OF THE CAPITOL: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 4. THE OTHER THREE BIDS RECEIVED WERE IN THE AMOUNTS OF $6. YOU STATE THAT IT WAS NOTED THAT THE LOW BID OF KEYSTONE ELECTRIC CO. WAS CONSIDERABLY OUT OF LINE WITH THE OTHER BIDS SUBMITTED AND ALSO WITH THE ESTIMATE OF THE PROJECT DIRECTOR AND. THE CORPORATION WAS REQUESTED TO VERIFY ITS BID. THAT THE CORPORATION WAS ADVISED THAT IT WOULD BE NECESSARY FOR IT TO SUBMIT EVIDENCE IN SUPPORT OF ITS ALLEGATION OF ERROR AND INTENDED BID PRICE. THESE CALCULATIONS WERE MADE DIRECTLY ON THE DRAWINGS SUBMITTED RATHER THAN ON THE CONVENTIONAL FORMS. "MATERIAL QUOTATIONS ON ALL PRINTS ARE CORRECT AS SHOWN. CIRCLED IN RED ARE CORRECT.

B-150043, OCT. 11, 1962

TO ARCHITECT OF THE CAPITOL:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 4, 1962, REQUESTING TO BE ADVISED WHETHER THERE MAY BE CORRECTED THE LOW BID SUBMITTED BY KEYSTONE ELECTRIC CO., INC., FOR JOB NO. 6296, COVERING THE FURNISHING OF GUIDE WHEEL ASSEMBLIES FOR THE SENATE SUBWAY.

THE KEYSTONE ELECTRIC CO., INC., SUBMITTED A BID FOR THE JOB IN THE AMOUNT OF $1,776. THE OTHER THREE BIDS RECEIVED WERE IN THE AMOUNTS OF $6,072, $6,528 AND $6,840. YOU STATE THAT IT WAS NOTED THAT THE LOW BID OF KEYSTONE ELECTRIC CO., INC., WAS CONSIDERABLY OUT OF LINE WITH THE OTHER BIDS SUBMITTED AND ALSO WITH THE ESTIMATE OF THE PROJECT DIRECTOR AND, THEREFORE, THE CORPORATION WAS REQUESTED TO VERIFY ITS BID. YOU FURTHER STATE THAT AFTER CHECKING ITS BID PAPERS, THE CORPORATION ADVISED YOUR OFFICE BY TELEPHONE THAT IT HAD MADE AN ERROR IN ITS ESTIMATING PROCEDURE BUT THAT NEVERTHELESS IT WOULD ACCEPT THE AWARD AND PERFORM THE WORK AT ITS BID PRICE; AND THAT THE CORPORATION WAS ADVISED THAT IT WOULD BE NECESSARY FOR IT TO SUBMIT EVIDENCE IN SUPPORT OF ITS ALLEGATION OF ERROR AND INTENDED BID PRICE.

IN A LETTER DATED OCTOBER 1, 1962, THE CORPORATION STATED:

"WE WISH TO CORRECT AN ERROR IN THE COMPUTATION OF LABOR COST THAT OCCURRED IN A RECENT BID TO YOU.

"ENCLOSED FIND CERTIFIED ORIGINAL ESTIMATE CALCULATIONS USED TO ARRIVE AT THE BID PRICE ENTERED BY US ON YOUR BID CONTRACT NO. 6296.

"IN VIEW OF THE SMALL NUMBER OF PARTS INVOLVED, THESE CALCULATIONS WERE MADE DIRECTLY ON THE DRAWINGS SUBMITTED RATHER THAN ON THE CONVENTIONAL FORMS.

"MATERIAL QUOTATIONS ON ALL PRINTS ARE CORRECT AS SHOWN, BEING OUR DIRECT COST PLUS 20 PERCENT. ALSO, COST ESTIMATES SHOWN ON DRAWING SCM-1, SHEET 1 OF 5, CIRCLED IN RED ARE CORRECT.

"HOWEVER, THE LABOR FIGURES ON DRAWINGS SCM 1, SHEETS 2 THRU 5, ARE NOT CORRECT. YOU WILL NOTE THE INDICATED SELLING PRICE OF LABOR IS ACTUALLY THE ESTIMATED HOURS REQUIRED TIMES THE LABOR RATE, WHICH, IN REALITY, IS OUR DIRECT LABOR COST. THIS COST SHOULD HAVE BEEN MULTIPLIED BY OUR MS-1 FACTOR, WHICH IS THREE.

"IN EXPLANATION, MS DENOTES MACHINE SHOP AND 1 DENOTES WORK PERFORMED ON ENGINE LATHES, HORIZONTAL AND VERTICAL MILLS, SHAPERS, GRINDERS, ETC. OTHER TYPES OF WORK SUCH AS BENCH WORK, DYNAMIC BALANCING, MOTOR WINDING, OUTSIDE SERVICE WORK, ETC. HAVE OTHER DESIGNATIONS WITH DIFFERENT MULTIPLIERS. THE MS-1 MULTIPLIER OF 3 TIMES DIRECT LABOR RECOVERS THE COST OF THE MACHINE USE, ITS OPERATION AND MAINTENANCE, DIRECT LABOR, OVERHEAD AND PROFIT.

"THE ENCLOSED REVISED ESTIMATE SHEETS ARE CORRECT, AND WHEN COMPARED WITH THE ORIGINAL ESTIMATE, WILL WE BELIEVE, INDICATE THE NATURE OF THE ERROR IN OUR QUOTATION.

"IF YOU SEE FIT TO REVIEW THIS MATERIAL SUBMITTED AND PERMIT THE CORRECTION OF OUR QUOTATION, AND IT IS OTHERWISE ACCEPTABLE TO YOU, WE CAN DELIVER ALL ITEMS WITHIN FIVE WEEKS OF YOUR APPROVAL. IF, ON THE OTHER HAND, OUR CORRECTED QUOTATION IN THE AMOUNT OF $3,628.00 IS REJECTED, WE FEEL THAT UNDER THE CIRCUMSTANCES WE SHOULD ACCEPT YOUR INSTRUCTIONS TO PROCEED WITH THE CONTRACT AT THE PRICE ORIGINALLY QUOTED.

"NEEDLESS TO SAY, WE REGRET THIS ERROR ON OUR PART AND THE INCONVENIENCE IT HAS CAUSED YOU, BUT SINCERELY HOPE THAT REGARDLESS OF YOUR DECISION, IN THIS MATTER, IT WILL NOT JEOPARDIZE OUR POSITION AS A BIDDER ON FUTURE WORK.'

YOU STATE THAT WHEN A MULTIPLIER OF 3 IS APPLIED TO THE ESTIMATED DIRECT LABOR COSTS AS RECORDED ON THE PRINTS SUBMITTED BY THE CORPORATION THE SUM THEREOF DOES, IN FACT, EQUAL THE AMOUNT OF $3,628, WHICH IS STATED BY THE CORPORATION AS BEING ITS INTENDED BID. YOU FURTHER STATE THAT THE PROJECT ENGINEER AND THE COORDINATING ENGINEER FOR YOUR OFFICE CONFIRMED THAT THE PROCEDURE FOR ESTIMATING TOTAL COSTS OF MACHINE SHOP WORK (DIRECT LABOR TIMES 3), ALLEGED BY THE CORPORATION AS BEING ITS STANDARD PROCEDURE, CONFORMS IN SUBSTANCE TO THAT USED BY MEDIUM-SIZED JOB SHOPS DOING THIS TYPE OF WORK, AND THAT BASED ON ITS ESTIMATING FIGURES AS SUBMITTED, THE REVISED AMOUNT OF $3,628 WOULD ACCURATELY REFLECT ITS INTENDED BID.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS NO DOUBT THAT THE CORPORATION MADE AN ERROR IN ITS BID, AS ALLEGED, AND IT IS APPARENT THAT THE INTENDED PRICE FOR THE JOB IS $3,628. ACCORDINGLY, YOU ARE ADVISED THAT THE BID OF KEYSTONE ELECTRIC CO., INC., MAY BE CORRECTED AND CONSIDERED FOR AWARD.

IN THE EVENT THAT AWARD IS MADE TO KEYSTONE ELECTRIC CO., INC., A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT.