B-158017, DEC. 27, 1965

B-158017: Dec 27, 1965

Additional Materials:

Contact:

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

 

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

SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 9. REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE UNIVERSAL STEEL AND TRADING CORPORATION TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. 11-6023-133 IS BASED. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ESTIMATED TOTAL COST OF THE TURNBUCKELS WAS $32. 221 AND THAT BIDS ON ITEM 47 WERE ACCEPTABLE IN INCREMENTS OF 400 EACH. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 47 ON SEPTEMBER 21. IT IS REPORTED THAT ON SEPTEMBER 24. IT IS REPORTED THAT THE GOVERNMENT'S ORIGINAL ACQUISITION COST OF THE TURNBUCKELS DESCRIBED UNDER ITEM 47 WAS APPROXIMATELY $1.30 EACH AND THAT THE FOLLOWING AWARDS WERE MADE ON ITEM 47: TABLE BIDDER PRICE QUANTITY UNIVERSAL STEEL AND TRADING $1.56 5200 TOPPER STEEL AND SUPPLY CO. .77 400 MAURICE RYBISKI .77 1600 SANDNES' SONS .72 400 THE HOLLOWAY CO. .717 400 TOPPER STEEL AND SUPPLY CO. .66 400 INDUSTRIAL SALES CO. .6166 16196 24596 TOTAL THERE WERE 26 OTHER UNSUCCESSFUL BIDS ON ITEM 47 RANGING FROM $0.6161 TO $0.0889 EACH.

B-158017, DEC. 27, 1965

TO VICE ADMIRAL JOSEPH M. LYLE, DIRECTOR, DEFENSE, SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 9, 1965, FILE REFERENCE DSAH -G, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE UNIVERSAL STEEL AND TRADING CORPORATION TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. 11-6023-133 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, BY INVITATION NO. 11-6023 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS, INCLUDING ITEM 47 DESCRIBED AS 24,596 UNUSED GALVANIZED STEEL TURNBUCKLES IN APPARENT GOOD CONDITION. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ESTIMATED TOTAL COST OF THE TURNBUCKELS WAS $32,221 AND THAT BIDS ON ITEM 47 WERE ACCEPTABLE IN INCREMENTS OF 400 EACH. RESPONSE THE UNIVERSAL STEEL AND TRADING CORPORATION SUBMITTED A BID DATED SEPTEMBER 13, 1965, OFFERING TO PURCHASE, AMONG OTHER ITEMS, 5,200 OF THE TURNBUCKELS OFFERED FOR SALE UNDER ITEM 47 AT A UNIT PRICE OF $1.56 OR FOR A TOTAL PRICE OF $8,112. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 47 ON SEPTEMBER 21, 1965.

IT IS REPORTED THAT ON SEPTEMBER 24, 1965, THE PRESIDENT OF THE CORPORATION TELEPHONED THE CONTRACTING OFFICER AND ALLEGED THAT AN ERROR HAD BEEN MADE IN THE CORPORATION'S BID ON ITEM 47. IN A LETTER DATED SEPTEMBER 27, 1965, THE CORPORATION'S PRESIDENT STATED THAT IN USING THE WORKSHEET PREPARED BY HIM, HIS SECRETARY MISREAD $0.156 AS $1.56 AND INSERTED THAT AMOUNT IN THE CORPORATION'S BID AS THE UNIT PRICE FOR ITEM 47. WITH THE LETTER THE PRESIDENT SUBMITTED HIS WORKSHEET, WHICH SHOWS A PRICE OF $0.156 EACH FOR ITEM 47.

IT IS REPORTED THAT THE GOVERNMENT'S ORIGINAL ACQUISITION COST OF THE TURNBUCKELS DESCRIBED UNDER ITEM 47 WAS APPROXIMATELY $1.30 EACH AND THAT THE FOLLOWING AWARDS WERE MADE ON ITEM 47:

TABLE

BIDDER PRICE QUANTITY

UNIVERSAL STEEL AND TRADING $1.56 5200

TOPPER STEEL AND SUPPLY CO. .77 400

MAURICE RYBISKI .77 1600

SANDNES' SONS .72 400

THE HOLLOWAY CO. .717 400

TOPPER STEEL AND SUPPLY CO. .66 400

INDUSTRIAL SALES CO. .6166 16196

24596 TOTAL

THERE WERE 26 OTHER UNSUCCESSFUL BIDS ON ITEM 47 RANGING FROM $0.6161 TO $0.0889 EACH.

IN HIS REPORT THE CONTRACTING OFFICER STATES THAT AN ERROR IN THE BID OF THE CORPORATION AS TO ITEM 47 WAS NOT SUSPECTED PRIOR TO AWARD BECAUSE THE CORPORATION'S BID PRICE OF $1.56 EACH WAS IN LINE WITH THE MARKET APPRAISAL PRICE WHICH WAS $1.25 TO $1 EACH. IN THAT CONNECTION, THE DEFENSE LOGISTICS SERVICE CENTER STATES THAT THE PRICES AT WHICH OTHER ELEMENTS OF ITEM 47 WERE AWARDED INDICATE THAT THE CURRENT MARKET APPRAISAL WAS UNREASONABLY HIGH AND THAT THE LACK OF DISPARITY AMONG THE SEVEN NEXT HIGH BIDS ON THAT ITEM TEND TO ESTABLISH THEIR VALIDITY. THE RECORD INDICATES THAT THE CORPORATION ALSO BID ON THE TURNBUCKELS OFFERED FOR SALE UNDER ITEMS 43, 44, 45, 46, 48 AND 49 AND THAT ALL OF ITS BID PRICES WERE APPROXIMATELY 15 PERCENT OF THE HIGHEST BIDS RECEIVED ON THOSE ITEMS. ALSO, THE MODEST PRICES QUOTED BY THE CORPORATION ON THE ABOVE ITEMS WOULD RAISE A QUESTION AS TO AN INTENDED BID PRICE OF DOUBLE THE AMOUNT ON ITEM 47, WHICH OFFERED THE SMALLEST SIZE OF TURNBUCKLE ADVERTISED IN THE GROUP BID UPON. WHILE A MERE DIFFERENCE IN THE PRICES QUOTED FOR SURPLUS GOVERNMENT PROPERTY WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW PROPERTY FOR SALE TO THE GOVERNMENT, IT IS UNLIKELY THAT A BIDDER, AS HERE, INTENTIONALLY WOULD OFFER FOR SURPLUS PROPERTY A PRICE ALMOST 120PERCENT OF WHAT WAS KNOWN TO BE THE ACQUISITION COST OF THE ITEM. IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT A REQUEST FOR VERIFICATION OF THE BID WOULD HAVE BEEN IN ORDER BEFORE ITS ACCEPTANCE.

IN VIEW OF THE FOREGOING, CONTRACT NO. 11-6023-133 MAY BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.