B-157960, NOV. 23, 1965

B-157960: Nov 23, 1965

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PUBLIC PRINTER: REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 1. TO ARNOLD BUSINESS FORMS COMPANY MAY BE CANCELED BECAUSE OF AN ALLEGED ERROR IN THE COMPANY'S BID ON WHICH AN AWARD AND THE PURCHASE ORDER WERE BASED. YOU REPORT THAT THERE WERE FIVE BIDS RECEIVED FOR THIS PROCUREMENT RANGING IN PRICE FROM A LOW OF $39. 200 WAS SUBMITTED BY MCGREGOR PRINTING CORPORATION. AWARD WAS MADE ON OCTOBER 22. 425 WAS ISSUED AND MAILED ON THE SAME DAY. THE CONTRACTOR HAS EXPLAINED THAT IT DID NOT INCLUDE ANY BASIC CARBON CHARGE IN ITS BID PRICE AND THAT ONLY ONE PATTERN HAD BEEN CHARGED WHEN IT SHOULD HAVE CHARGED FOR THREE PATTERNS. COPIES OF ESTIMATE SHEETS AND PRICE LISTS SUBMITTED BY THE CONTRACTOR IN THIS MATTER SHOW HOW THE CONTRACTOR MADE ITS ERROR BY INCLUDING ONLY $2.90 FOR ONE PATTERN CARBON INSTEAD OF THREE AND ALSO SHOW THAT NO CHARGE WAS MADE FOR THE CARBON.

B-157960, NOV. 23, 1965

TO THE HONORABLE JAMES L. HARRISON, PUBLIC PRINTER:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 1, 1965, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER PURCHASE ORDER NO. 46397, ISSUED OCTOBER 22, 1965, TO ARNOLD BUSINESS FORMS COMPANY MAY BE CANCELED BECAUSE OF AN ALLEGED ERROR IN THE COMPANY'S BID ON WHICH AN AWARD AND THE PURCHASE ORDER WERE BASED.

ON OCTOBER 12, 1965, THE GOVERNMENT PRINTING OFFICE ADVERTISED FOR PRICES ON THE PRODUCTION OF 2,500,000 4-PART SINGLE STUB, CARBON INTERLEAVED SETS OF FORMS, SIZE 8 BY 10 1/2 INCHES, PLUS 1/2 TO 3/4 INCH STUB, AS PER SPECIFICATIONS, WITH ALL SUPPLIES AND SERVICES TO BE FURNISHED BY THE CONTRACTOR AND COMPLETE SHIPMENT TO BE MADE ON OR BEFORE DECEMBER 17, 1965.

YOU REPORT THAT THERE WERE FIVE BIDS RECEIVED FOR THIS PROCUREMENT RANGING IN PRICE FROM A LOW OF $39,425 FROM ARNOLD BUSINESS FORMS COMPANY, TO A HIGH OF $46,250 FROM DUPLEX PRODUCTS, INCORPORATED. THE SECOND LOW BID OF $44,200 WAS SUBMITTED BY MCGREGOR PRINTING CORPORATION.

AWARD WAS MADE ON OCTOBER 22, 1965, TO ARNOLD BUSINESS FORMS COMPANY AS THE LOW BIDDER AND PURCHASE ORDER NO. 46397 CALLING FOR 2,500,000 SETS OF FORMS FOR A TOTAL COST OF $39,425 WAS ISSUED AND MAILED ON THE SAME DAY. THEREAFTER, ON OCTOBER 25, 1965, THE CONTRACTING OFFICER RECEIVED A TELEPHONE CALL FROM MR. WILLIAM ARNOLD OF ARNOLD BUSINESS FORMS COMPANY ADVISING THAT HE HAD RECEIVED THE PURCHASE ORDER AND HAD FOUND THAT HE HAD MADE A VERY SERIOUS ERROR IN HIS BID. ALSO, ARNOLD'S VICE PRESIDENT OF SALES CONFIRMED THE ERROR BY LETTER DATED OCTOBER 25, 1965, AND REQUESTED TO BE RELIEVED OF THE RESPONSIBILITY OF FILLING THIS ORDER. HE RETURNED THE PURCHASE ORDER AND ALL OTHER DOCUMENTS WHICH HAD BEEN FORWARDED TO HIM FOR THE PERFORMANCE OF THE WORK. IN EXPLANATION OF ITS ERROR, THE CONTRACTOR HAS EXPLAINED THAT IT DID NOT INCLUDE ANY BASIC CARBON CHARGE IN ITS BID PRICE AND THAT ONLY ONE PATTERN HAD BEEN CHARGED WHEN IT SHOULD HAVE CHARGED FOR THREE PATTERNS, AND THAT THE DIFFERENCE AS A RESULT OF THIS ERROR AMOUNTED TO $10.15 PER THOUSAND SETS OF FORMS, OR A TOTAL OF $25,375 IN ITS BID. COPIES OF ESTIMATE SHEETS AND PRICE LISTS SUBMITTED BY THE CONTRACTOR IN THIS MATTER SHOW HOW THE CONTRACTOR MADE ITS ERROR BY INCLUDING ONLY $2.90 FOR ONE PATTERN CARBON INSTEAD OF THREE AND ALSO SHOW THAT NO CHARGE WAS MADE FOR THE CARBON, RESULTING IN A DIFFERENTIAL OF $10.15 PER THOUSAND SETS OF FORMS.

IT IS STATED THAT UPON RECEIVING THE NOTICE OF ERROR FROM ARNOLD BUSINESS FORMS COMPANY, THE CONTRACTING OFFICER REVIEWED ALL BIDS WHICH HAD BEEN RECEIVED FOR THIS REQUIREMENT. THIS REVIEW REVEALED THAT A PREVIOUS PURCHASE FOR A SIMILAR REQUIREMENT HAD BEEN MADE FROM MCGREGOR PRINTING COMPANY FOR A COST OF $16.74 PER THOUSAND SETS OR A TOTAL OF $58,220 FOR 3 MILLION SETS. THIS PRICE WAS CONSIDERED FAIR AND REASONABLE TO PAY FOR THE 4-PART CARBON INTERLEAVED SETS WHICH ARE VERY SIMILAR TO THOSE ORDERED FROM ARNOLD BUSINESS FORMS COMPANY. THE CONTRACTING OFFICER REPORTS THAT BECAUSE OF THE PRESSURE OF WORK AT THE TIME THE INSTANT AWARD WAS MADE HE FAILED TO MAKE A COMPARISON OF PRICES WITH PAST PROCUREMENTS, AND THAT HE SHOULD HAVE NOTED THAT THE ARNOLD BID WAS UNUSUALLY LOW FOR THIS REQUIREMENT AND THEREFORE, HE SHOULD HAVE GIVEN ARNOLD BUSINESS FORMS COMPANY AN OPPORTUNITY TO REVIEW THE SPECIFICATIONS AND CONFIRM ITS BID PRICE. IN VIEW OF THE FOREGOING, YOU RECOMMEND THAT YOUR OFFICE BE AUTHORIZED TO CANCEL THE PURCHASE ORDER WITH ARNOLD BUSINESS FORMS COMPANY AND TO READVERTISE THE PROCUREMENT.

ON THE RECORD, THERE IS NO DOUBT THAT ARNOLD BUSINESS FORMS COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED, AND THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE POSSIBILITY OF ERROR IN THE BID AND SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO ITS ACCEPTANCE. HIS ACCEPTANCE OF THE BID, THEREFORE, DID NOT RESULT IN A VALID AND BINDING CONTRACT. THESE CIRCUMSTANCES, AND SINCE THE CONTRACTOR PROMPTLY ALLEGED ERROR IN ITS BID UPON RECEIPT OF THE PURCHASE ORDER AND, FURTHER, SINCE NO WORK HAS BEEN PERFORMED THEREUNDER, WE WILL NOT OBJECT TO CANCELLATION OF PURCHASE ORDER NO. 46397 AND READVERTISEMENT OF THE PROCUREMENT. SEE B-143593, DATED JULY 29, 1960, AND B-157281, DATED AUGUST 2, 1965.

THE PAPERS, EXCEPT THE CORRESPONDENCE PERTAINING TO THE ERROR IN BID, THE ESTIMATE SHEETS, AND THE PRICE LISTS, ARE RETURNED HEREWITH AS REQUESTED.