B-155704, DEC. 18, 1964

B-155704, DEC. 18, 1964

TO THE HONORABLE LAWSON B. KNOTT, JR., ACTING ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2, 1964, REQUESTING A DECISION AS TO WHAT RELIEF, IF ANY, SHOULD BE GRANTED TO WATSON STANDARD COMPANY UNDER CONTRACT NO. TC-GS-09S-12997 BY REASON OF A MISTAKE IN BID ALLEGED BEFORE AWARD.

BY INVITATION FOR BIDS NO. SFP 16355-64 BIDS WERE SOLICITED--- TO BE OPENED FEBRUARY 12, 1964--- FOR FURNISHING AN INDEFINITE QUANTITY OF PAINT PRODUCTS TO BE DELIVERED TO GENERAL SERVICES ADMINISTRATION (GSA) REGION 9 WAREHOUSES AS ORDERED DURING THE PERIOD FROM FEBRUARY 20, 1964, TO AUGUST 20, 1964. THE PROCUREMENT WAS INDICATED TO BE FOR THE "NORMAL SUPPLY UIREMENTS," AND PROVISION WAS MADE IN PARAGRAPHS 15 AND 16, PAGE 8, OF THE INVITATION FOR THE ACCEPTANCE BY THE CONTRACTOR OF MINIMUM AND MAXIMUM QUANTITY ORDERS BY THE GOVERNMENT. THE AWARDS WERE TO BE MADE BY GROUPS OF ITEMS. THE GROUP HERE INVOLVED WAS GROUP 11, CONSISTING OF ITEMS 70, 71 AND 72. THE ESTIMATED QUANTITY OF 50 GALLONS EACH OF THE THREE ITEMS WAS TO BE DELIVERED TO GSA SUPPLY DEPOTS AT SOUTH SAN FRANCISCO, OAKLAND AND BELL, CALIFORNIA, PACKED IN 1-GALLON CANS. WATSON-STANDARD COMPANY BID A UNIT PRICE OF $0.85 PER GALLON WITH NO DISCOUNT FOR PROMPT PAYMENT. THE OTHER BID RECEIVED ON THIS GROUP WAS $2.95 PER GALLON, WITH A DISCOUNT OF 1 PERCENT FOR PAYMENT WITHIN 20 DAYS.

BY WIRE DATED FEBRUARY 20, 1964, MR. WALTER J. KAUFMAN OF WATSON STANDARD WAS REQUESTED TO VERIFY THE UNIT PRICE OF $0.85 PER GALLON CAN AND HE WAS ALSO INFORMED THAT THE NEXT LOW BID WAS $2.95 PER GALLON CAN. IN HIS WIRE OF FEBRUARY 21, 1964, MR. KAUFMAN STATED THAT THE CORRECT UNIT PRICE WAS $2.95 PER GALLON. ON FEBRUARY 24, 1964, THE CONTRACTING OFFICER WROTE WATSON-STANDARD AND INFORMED IT OF THE REQUIREMENTS NECESSARY TO SUPPORT A CLAIM FOR MISTAKE IN BID. ALSO, IN THE LETTER THE CONTRACTING OFFICER INQUIRED AS TO WHETHER IT WOULD CONSIDER WITHDRAWING THE ALLEGATION OF MISTAKE AND ACCEPTING THE BID AS SUBMITTED IN VIEW OF THE COST AND DELAY INCIDENT TO SUBSTANTIATION OF THE MISTAKE. BY WIRE OF MARCH 3, 1964, AND CONFIRMING LETTER OF THE SAME DATE MR. KAUFMAN OF WATSON-STANDARD AGREED TO ACCEPT AWARD AT ITS PRICE OF $0.85 PER GALLON. ON MARCH 5, 1964, CONTRACT NO. TC-GS 09S-12997, COVERING ITEMS 70 TO 72, AND OTHER ITEMS NOT HERE INVOLVED, WAS AWARDED TO WATSON-STANDARD.

ON AUGUST 17, 1964, OR THREE DAYS PRIOR TO THE EXPIRATION OF THE CONTRACT, MR. KAUFMAN TELEPHONED THE GOVERNMENT BUYER STATING THAT HIS COMPANY WAS SUFFERING EXTREME HARDSHIP IN ADMINISTERING THE CONTRACT DUE TO THE FACT THAT PURCHASE ORDERS FOR LARGE QUANTITIES UNDER ITEMS 70 TO 72 WERE PLACED UNDER THE CONTRACT SO THAT THE LOSS WAS RUNNING INTO THOUSANDS OF DOLLARS. BY LETTER OF THE SAME DATE MR. KAUFMAN POINTED OUT THAT THE COMPANY HAD SHIPPED A TOTAL OF 664 GALLONS AND THAT IT HAD ON HAND AT THAT TIME ORDERS FOR AN ADDITIONAL 7,691 GALLONS. THIS TOTAL OF 8,355 GALLONS WAS, OF COURSE, GREATLY IN EXCESS OF THE ESTIMATE OF 150 GALLONS.

IT IS STATED IN YOUR LETTER THAT THE CONTRACTING OFFICER HAD MISTAKENLY BELIEVED THAT APPROXIMATELY 150 GALLONS WOULD BE THE TOTAL QUANTITY PURCHASED AND WITH THIS IN MIND HAD ENCOURAGED THE CONTRACTOR TO STAND BY ITS ORIGINAL OFFER. ALSO, IT IS STATED THAT THE ACTIONS OF THE CONTRACTING OFFICER LED THE CONTRACTOR TO BELIEVE THAT A RELATIVELY TRIVIAL AMOUNT WAS INVOLVED AND THAT AS A MATTER OF ACCOMMODATION THE CONTRACTOR AGREED TO TAKE THE AWARD. IT WAS ONLY WHEN ORDERS FOR LARGE QUANTITIES OF THESE ITEMS WERE PLACED THAT THE CONTRACTOR VIGOROUSLY PROTESTED.

THE CONTRACTOR HAS FURNISHED A COPY OF ITS COST SHEET DATED JANUARY 31, 1964, WHICH SHOWS THE COST OF ONE QUART AS $0.85 AND THE COST OF ONE GALLON AS $2.95, WHICH LATTER FIGURE IS THE SAME AS THE OTHER BID RECEIVED ON THIS GROUP OF SUPPLIES, EXCEPT FOR THE DISCOUNT OFFERED FOR PROMPT PAYMENT.

IN VIEW OF THE FACT THAT THE MISTAKE WAS ALLEGED BEFORE AWARD AND THE FACT THAT THE CONTRACTOR WAS, AS STATED IN YOUR LETTER,"LED INTO CONTRACTING AT A PRICE WHICH HE DID NOT INTEND TO OFFER," WE AGREE WITH YOUR RECOMMENDATION THAT THE CONTRACTOR BE PAID FOR THE ENTIRE QUANTITY AT THE UNIT PRICE OF THE NEXT LOW BIDDER, LESS DISCOUNT OF 1 PERCENT.