B-155828, JAN. 4, 1965

B-155828, JAN. 4, 1965

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 22, 1964, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE AMERICAN AIR MOTIVE CORPORATION, MIAMI, FLORIDA, TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. 14-08- 0001-9713 IS BASED.

THE GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR, WASHINGTON, D.C., BY INVITATION NO. 3582 REQUESTED BIDS FOR THE OVERHAULING AND OTHER WORK ON TWO GOVERNMENT-OWNED PRATT AND WHITNEY AIRCRAFT ENGINES, ITEM 1. RESPONSE THE AMERICAN AIR MOTIVE CORPORATION SUBMITTED A BID DATED OCTOBER 21, 1964, OFFERING TO PERFORM THE REQUIRED WORK ON THE TWO AIRCRAFT ENGINES WAS THE LUMP SUM OF $15,682.20. THE ONLY OTHER BID RECEIVED WAS IN THE AMOUNT OF $30,975. IT IS REPORTED THAT THE GOVERNMENT ESTIMATE FOR THE WORK WAS IN THE AMOUNT OF $20,000. THE BID OF THE AMERICAN AIR MOTIVE CORPORATION WAS ACCEPTED ON NOVEMBER 12, 1964.

IT IS REPORTED THAT ON NOVEMBER 16, 1964, A REPRESENTATIVE OF THE AMERICAN AIR MOTIVE CORPORATION ADVISED THE CONTRACTING OFFICE BY TELEPHONE THAT THE CORPORATION HAD MADE AN ERROR IN ITS BID ON THE OVERHAULING OF THE TWO ENGINES. IN CONFIRMING LETTERS DATED NOVEMBER 23, AND DECEMBER 1, 1964, THE CORPORATION STATED THAT IT HAD INADVERTENTLY BASED ITS BID PRICE ON THE BASIS OF OVERHAULING AND CONVERTING ONE ENGINE RATHER THAN TWO ENGINES AS REQUIRED BY THE INVITATION. THE CORPORATION EXPLAINED THAT QUOTATIONS WERE PREPARED BY ITS AIRFRAME DIVISION AND ITS ENGINE DIVISION AND THAT THE ERROR OCCURRED WHEN THE MANAGER OF CONTRACT ADMINISTRATION, WHO COMPUTED THE FINAL BID PRICE, FAILED TO NOTE THAT THE QUOTATION OF THE ENGINE DIVISION IN THE AMOUNT OF $13,837.50, COVERED ONLY THE WORK ON ONE ENGINE RATHER THAN TWO ENGINES AS REQUIRED BY THE INVITATION. THE CORPORATION STATED FURTHER THAT ITS BIDS PRICE FOR THE OVERHAULING OF THE TWO ENGINES COVERED BY ITEM 1 OF THE INVITATION SHOULD HAVE READ $29,519.70. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED COPIES OF ITS ESTIMATE SHEET AND OF THE QUOTATION PREPARED BY THE ENGINE DIVISION. THE CORPORATION ALSO SUBMITTED COPIES OF ITS PRICE LISTS AND OF TWO INVOICES COVERING THE OVERHAUL OF SIMILAR ENGINES FOR THE UNITED STATES WEATHER BUREAU. ONE OF THE INVOICES SHOWS A PRICE OF $12,899.63 FOR THE WORK PERFORMED ON ONE ENGINE AND THE OTHER INVOICE SHOWS A PRICE OF $11,067.68 FOR THE WORK PERFORMED ON ONE ENGINE. IN REGARD TO THE INVOICES, THE CORPORATION STATED IN ITS LETTER OF DECEMBER 1, 1964, THAT THE MATERIAL COVERED BY SUCH INVOICES WAS BILLED AT COST DUE TO THE TOTAL CONTRACT; THAT THE CORPORATION WAS PAID A FEE IN ADDITION TO THIS PRICE; AND THAT THERE IS NO WARRANTY INVOLVED IN THESE TRANSACTIONS.

ORDINARILY, NO FAIR COMPARISON WITH OTHER BIDS CAN BE MADE WHERE, AS HERE, ONLY TWO WIDELY VARIANT BIDS WERE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH. 20 COMP. GEN. 286. HOWEVER, THERE ARE ADDITIONAL FACTORS WHICH ARE FOR CONSIDERATION HERE, NAMELY THE SUBSTANTIAL DIFFERENCE BETWEEN THE CORPORATION'S BID PRICE AND THE GOVERNMENT'S ESTIMATED PRICE AND THE 2 TO 1 RATIO BETWEEN THE ONLY TWO BIDS RECEIVED. IT WOULD APPEAR THAT THE REFERRED-TO RATIO SUPPORTS THE CORPORATION'S CONTENTION THAT ITS BID PRICE WAS BASED ON OVERHAULING ONE ENGINE INSTEAD OF TWO ENGINES. WE BELIEVE IT REASONABLE TO CONCLUDE THAT THESE FACTORS SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE CORPORATION'S BID. THEREFORE, THE LOW BID OF THE CORPORATION SHOULD NOT HAVE BEEN CONSIDERED WITHOUT REQUESTING VERIFICATION.

WHILE THE CORPORATION HAS ESTABLISHED THAT AN ERROR WAS MADE IN ITS BID, IT HAS NOT CONCLUSIVELY ESTABLISHED ITS INTENDED BID PRICE FOR THE WORK. ACCORDINGLY, AND SINCE IT IS REPORTED THAT NO WORK HAS BEEN COMMENCED BY THE AMERICAN AIR MOTIVE CORPORATION, CONTRACT NO. 14-08 0001-9713 MAY BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.

THE ENCLOSURES SUBMITTED WITH THE ASSISTANT SECRETARY'S LETTER ARE RETURNED, AS REQUESTED.