B-159014, MAY 5, 1966

B-159014: May 5, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER DATED APRIL 22. TO HAVE BEEN MADE INITS BID ON WHICH SALES CONTRACT NO. 11-6051-031 IS BASED. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ESTIMATED TOTAL COST OF THE BEARINGS WAS $6. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 101 AND OTHER ITEMS ON DECEMBER 7. THE THREE OTHER BIDS ON ITEM 101 WERE IN THE AMOUNTS OF $1.691. IN HIS REPORT THE CONTRACTING OFFICER STATES THAT AN ERROR IN THE BID OF THE CORPORATION AS TO ITEM 101 WAS NOT SUSPECTED PRIOR TO AWARD BECAUSE HE HAD NO APPRAISAL OR HISTORY OF THE ITEM. THAT HIS OFFICE IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF THE CORPORATIONS'S BID BECAUSE OF THE FOLLOWING FACTORS.

B-159014, MAY 5, 1966

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED APRIL 22, 1966, 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 UNITED BEARING CO., INC., TO HAVE BEEN MADE INITS BID ON WHICH SALES CONTRACT NO. 11-6051-031 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA,BY INVITATION NO. 11-6051 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS, INCLUDING ITEM 101 DESCRIBED AS 409 UNUSED BEARINGS IN APPARENT GOOD CONDITION. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ESTIMATED TOTAL COST OF THE BEARINGS WAS $6,053. IN RESPONSE UNITED BEARING CO., INC., SUBMITTED A BID DATED NOVEMBER 26, 1965, OFFERING TO PURCHASE, AMONG OTHER ITEMS, THE BEARINGS OFFERED FOR SALE UNDER ITEM 101 AT A UNIT PRICE OF $11.599 EACH OR FOR A TOTAL PRICE OF $4,743.99. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 101 AND OTHER ITEMS ON DECEMBER 7, 1965.

IN A LETTER DATED DECEMBER 11, 1965, THE PRESIDENT OF THE CORPORATION ADVISED THE CONTRACTING OFFICER THAT IN USING THE WORKSHEET PREPARED BY HIM ONE OF HIS CLERKS MISREAD $1.1599 AS $11.599 AND INSERTED THAT AMOUNT IN THE CORPORATIONS'S BID AS THE UNIT PRICE FOR ITEM 101. BY LETTER DATED DECEMBER 15, 1965, THE PRESIDENT SUBMITTED AN AFFIDAVIT EXECUTED BY HIS CLERK AND HIS WORKSHEET, WHICH SHOWS A PRICE OF $1.1599 EACH FOR ITEM 101.

THE THREE OTHER BIDS ON ITEM 101 WERE IN THE AMOUNTS OF $1.691, $1.61 AND $0.50 EACH. IN HIS REPORT THE CONTRACTING OFFICER STATES THAT AN ERROR IN THE BID OF THE CORPORATION AS TO ITEM 101 WAS NOT SUSPECTED PRIOR TO AWARD BECAUSE HE HAD NO APPRAISAL OR HISTORY OF THE ITEM. IN THAT CONNECTION, THE ASSISTANT COUNSEL STATES IN HIS LETTER OF APRIL 22, 1966, THAT HIS OFFICE IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF THE CORPORATIONS'S BID BECAUSE OF THE FOLLOWING FACTORS. IT IS POINTED OUT THAT ALL PROPERTY OFFERED ON THIS SALE CONSISTED OF BEARINGS AND THAT BID PRICES ON ALL 119 ITEMS WERE IN COMPETITIVE PRICE RANGES WITH THE EXCEPTION OF TWO ITEMS OF WHICH ITEM 101 WAS ONE; THAT THE DISPARITY BETWEEN THE CORPORATIONS'S BID OF $1.691 AND $1.61 WAS RATHER MARKED; AND THAT THE OTHER BID PRICES QUOTED BY THE CORPORATION IN THE $12 AREA ON ITEMS 103, 112 AND 117 WERE COMPETITIVE WITH OTHER BIDS IN THE SAME RANGE.

CONSIDERING THE FOREGOING AND SINCE THE BID OF $4,743.99 OF UNITED BEARING CO., INC., FOR ITEM 101 REPRESENTS A PRICE WHICH IS ALMOST 80 PERCENT OF THE ACQUISITION COST OF THE BEARINGS, IT REASONABLY MAY BE CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF THE CORPORATION AND SHOULD HAVE VERIFIED THE BID PRIOR TO AWARD.

ACCORDINGLY, ITEM 101 OF CONTRACT NO. 11-6051-031 MAY BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.