B-156200, MAR. 16, 1965

B-156200: Mar 16, 1965

Additional Materials:

Contact:

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

 

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

TO THE HONORABLE SECRETARY OF AGRICULTURE: REFERENCE IS MADE TO A LETTER DATED FEBRUARY 23. TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. 3-184 IS BASED. THE PULPWOOD WAS ADVERTISED WITH A MINIMUM ACCEPTABLE BID OF $3.65 PER CORD. THE PROSPECTUS CONTAINED THE FOLLOWING NOTICE: "THE PURCHASER WILL BE REQUIRED UPON COMPLETION OF HIS OPERATIONS TO DIVERT WATER FROM HIS HAUL ROADS BY WATER BREAKS AND OUTLETS AS DIRECTED. HE WILL ALSO BE REQUIRED TO SEED HIS ROADS AS AN EROSION CONTROL MEASURE. THE TWO OTHER BIDS WERE IN THE AMOUNTS OF $6.17 AND $3.81 PER CORD. IT IS REPORTED THAT UPON RECEIVING THE CONTRACT AND BOND FOR EXECUTION. CONTACTED THE DISTRICT RANGER AND THAT WHILE THEY WERE DISCUSSING THE CONTRACT PROVISIONS.

B-156200, MAR. 16, 1965

TO THE HONORABLE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 23, 1965, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY DIXIE WOOD, INC., MILLEDGEVILLE, GEORGIA, TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. 3-184 IS BASED.

THE UNITED STATES FOREST SERVICE, GAINESVILLE, GEORGIA, BY A PROSPECTUS DATED OCTOBER 26, 1964, OFFERED FOR SALE ALL THE TIMBER MARKED OR DESIGNATED FOR CUTTING ON AN AREA EMBRACING 483 ACRES IN COMPARTMENT 28,OCONEE NATIONAL FOREST, GREENE COUNTY, GEORGIA, ESTIMATED TO BE 1,058 CORDS OF PINE PULPWOOD. THE PULPWOOD WAS ADVERTISED WITH A MINIMUM ACCEPTABLE BID OF $3.65 PER CORD. THE PROSPECTUS CONTAINED THE FOLLOWING NOTICE:

"THE PURCHASER WILL BE REQUIRED UPON COMPLETION OF HIS OPERATIONS TO DIVERT WATER FROM HIS HAUL ROADS BY WATER BREAKS AND OUTLETS AS DIRECTED. HE WILL ALSO BE REQUIRED TO SEED HIS ROADS AS AN EROSION CONTROL MEASURE. IN THIS SEEDING A MINIMUM OF 600 LBS. OF 4-12-12 FERTILIZER, 20 LBS. OF SERICEA AND 20 LBS. OF KOREAN LESPEDEZA SEED MUST BE APPLIED PER ACRE AFTER DISCING AS AND WHEN DIRECTED BY THE FOREST SERVICE. THE PURCHASER MAY DO THIS HIMSELF OR HE MAY, WITH DEPOSIT OF THE ESTIMATED COST OF $ .52 PER CORD REQUEST THAT THE FOREST SERVICE DO THIS WORK.'

IN RESPONSE TO THE PROSPECTUS DIXIE WOOD, INC., SUBMITTED A BID OFFERING TO PURCHASE THE PULPWOOD AT A PRICE OF $6.77 PER CORD. THE TWO OTHER BIDS WERE IN THE AMOUNTS OF $6.17 AND $3.81 PER CORD.

IT IS REPORTED THAT UPON RECEIVING THE CONTRACT AND BOND FOR EXECUTION, MR. HATTAWAY, PRESIDENT OF DIXIE WOOD, INC., CONTACTED THE DISTRICT RANGER AND THAT WHILE THEY WERE DISCUSSING THE CONTRACT PROVISIONS, MR. HATTAWAY DISCOVERED THAT AN ERROR HAD BEEN MADE IN THE CORPORATION'S BID. MR. HATTAWAY ALLEGED THAT BECAUSE OF A MISUNDERSTANDING OF THE BIDDING PROCEDURES HE INADVERTENTLY INCLUDED IN HIS UNIT BID PRICE THE AMOUNT OF $0.52 FOR SOIL EROSION CONTROL.

IN A LETTER DATED NOVEMBER 27, 1964, THE PRESIDENT OF THE CORPORATION STATED:

"WE RECEIVED NOVEMBER 25, 1964 CONTRACTS TO BE EXECUTED BY US FOR 1058 CORDS PINE PULPWOOD ON YOUR SALE OF NOVEMBER 23, 1964 IN GREENE COUNTY, GA.

"DUE TO THE FACT THIS WAS OUR FIRST BID IN QUITE SOME TIME AND THE PRESENT CONTRACT BEING MUCH MORE IN DETAIL THAN THE LAST WE PURCHASED, I CARRIED ALL THIS TO THE GREENE COUNTY OFFICE FOR MR. ROY WEIDNER TO ASSIST ME IN HANDLING IN THE PROPER MANNER. I LEARNED FROM MR. WEIDNER, I HAD MADE AN ERROR IN THE MANNER I HAD ENTERED OUR BID.

"THE DAY I LOOKED AT THIS SALE WITH MR. DON CREDILLE, WE DISCUSSED THE 52 CENTS PER CORD FOR SEEDING AND FERTILIZING THE WOODS ROADS AND I UNDERSTOOD HIM TO ADVISE THAT IF WE WERE NOT GOING TO HANDLE THIS OURSELVES, THEN WE WOULD HAVE TO ADD TO OUR STUMPAGE BID PRICE 52 CENTS PER CORD AND THEY WOULD SEED AND FERTILIZE THE ROADS. WE FIGURED THE PULPWOOD AT $6.25 PER CORD AND THE ROADS AT .52 CENTS PER CORD MAKING A TOTAL STUMPAGE PRICE TO US OF $6.77 PER CORD.

"I WAS UNDER THE IMPRESSION THE 52 CENTS HAD TO BE PAID WHEN THE WOOD WAS PAID FOR AND NOT AFTER IT WAS CUT AND REMOVED. ADDING 52 CENTS TO $6.77 WOULD MAKE THE WOOD COST $7.29 PER CORD, WHICH I THINK YOU WILL AGREE IS MORE THAN ANY WOOD HAS EVER SOLD FOR IN THIS AREA.

"WE ARE PULPWOOD DEALERS FOR UNION BAG-CAMP PAPER CORP. IN THIS AREA AND HAVE BEEN FOR THE PAST 22 YEARS. WE DO NOT PRODUCE ANY WOOD OURSELVES AND HAVE NO EQUIPMENT FOR PLANTING AND FERTILIZING THE ROAD AREAS. THEREFORE WE INCLUDED THIS FEE IN OUR BID PRICE TO RELIEVE US OF THIS RESPONSIBILITY.

"I TRUST YOU WILL UNDERSTAND THIS WAS AN HONEST MISUNDERSTANDING BETWEEN MR. CREDILLE AND MYSELF AND GIVE YOUR FAVORABLE CONSIDERATION.'

WITH THE LETTER THE CORPORATION SUBMITTED ITS WORKSHEET WHICH SHOWS THAT THE CORPORATION ESTIMATED THE VALUE OF THE PULPWOOD AS $6.25 PER CORD AND THAT TO SUCH AMOUNT IT ADDED $0.52 FOR EROSION CONTROL TO ARRIVE AT ITS UNIT BID PRICE OF $6.77 PER CORD. IT IS REPORTED THAT WRITTEN STATEMENTS FROM CERTAIN FOREST SERVICE PERSONNEL TEND TO SUPPORT THE CONTENTIONS OF THE PRESIDENT OF THE CORPORATION.

THE $0.52 PER CORD IN QUESTION WAS STATED IN THE FIFTH PARAGRAPH OF THE PROSPECTUS AS THE AMOUNT WHICH THE FOREST SERVICE HAD ESTIMATED IT WOULD COST TO PERFORM THE REQUIRED SOIL RESTORATION WORK. AS AN ALTERNATIVE TO PERFORMANCE PURCHASERS WERE OFFERED THE OPPORTUNITY TO DEPOSIT THIS AMOUNT WITH THE FOREST SERVICE TO PAY THE COST OF PERFORMING SUCH WORK. IT IS REPORTED THAT THIS IS TREATED AS AN ELECTIVE DEPOSIT AND AS SUCH WAS NOT A REQUIRED PART OF THE BID. IN THE ASSISTANT SECRETARY'S LETTER IT IS POINTED OUT THAT NEITHER THE PROSPECTUS NOR THE ADVERTISEMENT SPECIFICALLY STATES THAT THE $0.52 IS IN ADDITION TO THE AMOUNT BID FOR STUMPAGE; THAT THE BID FORM ITSELF MAY BE CONFUSING INASMUCH AS IT PROVIDES FOR THE INCLUSION OF REQUIRED DEPOSITS WITH STUMPAGE AS PART OF THE BID; AND THAT NO REQUIRED DEPOSITS ARE INVOLVED IN THIS CASE. IN ADDITION, THE ASSISTANT SECRETARY POINTS OUT THAT THE FOREST SUPERVISOR IN HIS STATEMENT TO THE REGIONAL FORESTER COMPARES THE BID RATES ON THIS SALE WITH THOSE RECEIVED FOR COMPARABLE OFFERINGS AND INDICATES THAT THE BID OF DIXIE WOOD WAS OUT OF LINE.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS TO BE NO DOUBT THAT THE CORPORATION INADVERTENTLY INCLUDED THE AMOUNT OF $0.52 FOR SOIL EROSION IN ITS UNIT BID PRICE AND THAT SUCH INADVERTENT ACT RESULTED FROM A MISUNDERSTANDING OF BIDDING PROCEDURES INFORMATION FURNISHED BY FOREST SERVICE PERSONNEL. FURTHERMORE, IN VIEW OF THE NATURE OF THE PRODUCT OFFERED FOR SALE IT APPEARS THAT THE PRICE BID BY DIXIE WOOD WAS NOT ONLY OUT OF LINE WITH THE OTHER BIDS RECEIVED BUT ALSO CONSIDERABLY HIGHER THAN THE PRICES RECEIVED ON PRIOR SALES. CONSEQUENTLY, WE BELIEVE THAT VERIFICATION OF THE BID SHOULD HAVE BEEN MADE BEFORE AWARDING THE CONTRACT. ACCORDINGLY, THIS OFFICE WILL NOT OBJECT TO CONTRACT NO. 3-184 BEING AMENDED TO PROVIDE FOR A UNIT PRICE OF $6.25 PER CORD, AS RECOMMENDED BY THE ASSISTANT SECRETARY.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO BE ATTACHED TO THE CONTRACT.