B-159939, SEP. 8, 1966

B-159939: Sep 8, 1966

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TO PERRY PACKAGING CORPORATION: REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 12. THE CONTRACT WAS AWARDED TO YOUR COMPANY ON THE BASIS OF A UNIT PRICE QUOTATION OF $0.766 AND A TOTAL OFFERED PRICE OF $1. ONLY TWO QUOTATIONS WERE RECEIVED ON THE 1. YOUR CLAIM WAS DISALLOWED ON THE BASIS OF THE GENERAL RULE THAT. WHERE ONLY TWO BIDS ARE RECEIVED ON A PROPOSED GOVERNMENT CONTRACT. WOULD NOT BE SUFFICIENT TO JUSTIFY A CONCLUSION THAT THE CONTRACTING OFFICER MUST BE PRESUMED TO HAVE KNOWN THAT A MISTAKE HAD BEEN MADE IN THE LOW BID. THE CONTRACTING OFFICER HAS REPORTED THAT IN SEPTEMBER 1964 YOUR COMPANY WAS AWARDED A CONTRACT FOR THE FURNISHING OF IDENTICAL ITEMS AT A UNIT PRICE OF $0.789.

B-159939, SEP. 8, 1966

TO PERRY PACKAGING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 12, 1966, RELATIVE TO SETTLEMENT DATED JULY 29, 1966, WHICH DISALLOWED YOUR CLAIM FOR $4,522.51 ON ACCOUNT OF A MISTAKE IN BID ON A QUANTITY OF 1,733 GASKETS DELIVERED UNDER DEFENSE SUPPLY AGENCY CONTRACT NO. DSA-7-5P 26053, DATED NOVEMBER 2, 1964.

THE CONTRACT WAS AWARDED TO YOUR COMPANY ON THE BASIS OF A UNIT PRICE QUOTATION OF $0.766 AND A TOTAL OFFERED PRICE OF $1,327.48. YOU CLAIMED THE ADDITIONAL SUM OF $4,522.51 ON BEHALF OF YOUR SUPPLIER WHO REQUESTED A PRICE ADJUSTMENT FROM YOUR COMPANY AFTER DISCOVERY OF A MISTAKE MADE IN ITS COST ESTIMATE OF $344 PER THOUSAND UNITS FOR THE PURCHASE OF CERTAIN MATERIAL. IT APPEARS THAT YOUR SUPPLIER INTENDED TO QUOTE A UNIT PRICE OF APPROXIMATELY $4.44 AND A TOTAL PRICE OF APPROXIMATELY $7,700 FOR 1,733 UNITS. HOWEVER, YOUR SUPPLIER REQUESTED A PRICE ADJUSTMENT OF $4,522.51, BASED PRIMARILY UPON THE COST OF THE MATERIAL INVOLVED, LESS PREVIOUS BILLINGS AMOUNTING TO $775.91, WHICH INCLUDED A PAID FREIGHT CHARGE OF $3.95.

ONLY TWO QUOTATIONS WERE RECEIVED ON THE 1,733 UNITS, YOUR QUOTATION OF $0.766 PER UNIT AND ANOTHER QUOTATION OF $7.47 PER UNIT. YOUR CLAIM WAS DISALLOWED ON THE BASIS OF THE GENERAL RULE THAT, WHERE ONLY TWO BIDS ARE RECEIVED ON A PROPOSED GOVERNMENT CONTRACT, A MERE COMPARISON OF THE BIDS, EVEN IF THEY VARY TO A CONSIDERABLE DEGREE, WOULD NOT BE SUFFICIENT TO JUSTIFY A CONCLUSION THAT THE CONTRACTING OFFICER MUST BE PRESUMED TO HAVE KNOWN THAT A MISTAKE HAD BEEN MADE IN THE LOW BID. HOWEVER, THE CONTRACTING OFFICER HAS REPORTED THAT IN SEPTEMBER 1964 YOUR COMPANY WAS AWARDED A CONTRACT FOR THE FURNISHING OF IDENTICAL ITEMS AT A UNIT PRICE OF $0.789; THAT FIVE OTHER BIDS HAD BEEN SUBMITTED, RANGING FROM $1.50 TO $3.08 PER UNIT; AND THAT YOUR CONTRACT PRICE WAS ADJUSTED IN SEPTEMBER 1964 TO $1.4925 PER UNIT, REPRESENTING THE UNIT PRICE OF THE SECOND LOWEST BIDDER AFTER DEDUCTION OF AN OFFERED ONE-HALF OF ONE PERCENT DISCOUNT. THE CONTRACTING OFFICER RECOMMENDED THAT A SIMILAR PRICE ADJUSTMENT BE ALLOWED IN THIS CASE.

IN VIEW OF THE CLOSE PROXIMITY BETWEEN THE TWO CONTRACT AWARDS, WE AGREE THAT THERE EXISTS A SUFFICIENT JUSTIFICATION FOR ALLOWANCE OF A PRICE INCREASE UNDER CONTRACT NO. DSA-7-5P-26053, BASED UPON THE NET UNIT PRICE OF THE SECOND LOWEST BIDDER ON THE PRIOR CONTRACT. AT SUCH RATE, THE COST OF 1,733 UNITS WOULD HAVE AMOUNTED TO THE SUM OF $2,586.50, OR $1,259.02 IN EXCESS OF THE CONTRACT PRICE OF $1,327.48.

ACCORDINGLY, AS RECOMMENDED BY THE CONTRACTING OFFICER, YOUR CLAIM WILL BE CERTIFIED FOR PAYMENT IN THE AMOUNT OF $1,259.02.