B-160550, JAN. 27, 1967

B-160550: Jan 27, 1967

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER SPTS-LSPD DATED JANUARY 9. CONCERNING AN ERROR ALLEGED TO HAVE BEEN MADE BY THE NORMANDY ELECTRIC WIRE CORP. (NORMANDY) IN ITS BID WHICH WAS THE BASIS OF CONTRACT NO. 37 AND 38 WERE DESCRIBED GENERALLY AS FOLLOWS: ITEM 36. NORMANDY'S BID ON ITEMS 36 AND 37 WERE THE HIGHEST RECEIVED AND BOTH THESE ITEMS WERE AWARDED TO NORMANDY ON MAY 31. 574.24 (INDICATED ON THE BID AS THE TOTAL BID PRICE FOR ITEM 37) WAS INTENDED FOR AND COVERED BOTH ITEMS 37 AND 38. THE MISTAKE ALLEGED APPARENTLY AROSE BECAUSE THE PAGES ON WHICH ITEMS 37 AND 38 APPEARED IN THE INVITATION WERE STAPLED SO CLOSELY THAT IT APPEARED THE PROPERTY DESCRIBED UNDER BOTH NUMBERS WAS ONLY COVERED BY THE NUMERICAL DESIGNATION OF ITEM NO. 37.

B-160550, JAN. 27, 1967

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER SPTS-LSPD DATED JANUARY 9, 1967, WITH ENCLOSURES, FROM THE OFFICE OF THE CHIEF OF SUPPORT SERVICES, CONCERNING AN ERROR ALLEGED TO HAVE BEEN MADE BY THE NORMANDY ELECTRIC WIRE CORP. (NORMANDY) IN ITS BID WHICH WAS THE BASIS OF CONTRACT NO. USA-92-557-S- 1530.

THE UNITED STATES ARMY DEPOT, JAPAN, DIRECTORATE FOR PROPERTY DISPOSAL, SOLICITED BIDS UNDER SALES INVITATION NO. 92-557-S-66-62--- OPENING DATE MAY 26, 1966--- COVERING 64 ITEMS OF SURPLUS PROPERTY AS LISTED AND DESCRIBED THEREIN. ITEMS 36, 37 AND 38 WERE DESCRIBED GENERALLY AS FOLLOWS:

ITEM 36. ELECTRICAL CABLE

UNUSED: POOR THROUGH GOOD CONDITION

ESTIMATED WEIGHT: 3 SHORT TONS

ESTIMATED ACQUISITION COST: $2,740

ITEM 37. ELECTRICAL POWER CABLE

UNUSED: EXCELLENT CONDITION

ESTIMATED WEIGHT: 5.9 SHORT TONS

ESTIMATED ACQUISITION COST: $12,900

ITEM 38. ELECTRICAL WIRE AND CABLE

UNUSED: EXCELLENT CONDITION

ESTIMATED WEIGHT: 5.6 SHORT TONS

ESTIMATED ACQUISITION COST: $11,870

IN RESPONSE TO THE INVITATION, NORMANDY SUBMITTED A BID DATED MAY 9, 1966, ON ITEMS 36 AND 37 IN THE AMOUNTS OF $1,484.56 AND $16,574.24, RESPECTIVELY. NORMANDY'S BID ON ITEMS 36 AND 37 WERE THE HIGHEST RECEIVED AND BOTH THESE ITEMS WERE AWARDED TO NORMANDY ON MAY 31, 1966, IN THE TOTAL AMOUNT OF $18,058.80.

AFTER RECEIPT OF THE NOTICE OF AWARD OF THE CONTRACT, NORMANDY BY CABLEGRAMS DATED JUNE 4, 1966, NOTIFIED THE SALES OFFICE THAT A MISTAKE IN ITS BID HAD BEEN MADE IN THAT ITS BID OF $16,574.24 (INDICATED ON THE BID AS THE TOTAL BID PRICE FOR ITEM 37) WAS INTENDED FOR AND COVERED BOTH ITEMS 37 AND 38. BY SUBSEQUENT CORRESPONDENCE, NORMANDY ADVISED THAT IT INTENDED TO BID $8,766.50 FOR ITEM 37 AND $7,807.74 FOR ITEM 38 AND FURNISHED WORKSHEETS AND OTHER PERTINENT EVIDENCE IN SUPPORT OF ITS ALLEGATION OF ERROR. THE MISTAKE ALLEGED APPARENTLY AROSE BECAUSE THE PAGES ON WHICH ITEMS 37 AND 38 APPEARED IN THE INVITATION WERE STAPLED SO CLOSELY THAT IT APPEARED THE PROPERTY DESCRIBED UNDER BOTH NUMBERS WAS ONLY COVERED BY THE NUMERICAL DESIGNATION OF ITEM NO. 37.

THE SALES CONTRACTING OFFICER REPORTS THAT AT THE TIME OF EVALUATING THE BIDS IT WAS NOT APPARENT TO HIM THAT THE AMOUNT OF $16,574.24 BID BY NORMANDY ON ITEM 37, ALTHOUGH IN EXCESS OF THE ESTIMATED ACQUISITION COST OF THE ITEM, MAY HAVE BEEN SUBMITTED IN ERROR.

THE BID ON ITEM 37 IS NEARLY 130 PERCENT OF THE ACQUISITION COST OF THE ELECTRICAL POWER CABLE OFFERED FOR SALE. OUR OFFICE HAS HELD THAT A BID MORE THAN 88 PERCENT OF THE ACQUISITION COST WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. B 146136, JULY 14, 1961; SEE, ALSO, B-157656, SEPTEMBER 23, 1965, AND B 158017, DECEMBER 27, 1965.

WHILE THE SALES CONTRACTING OFFICER REPORTED THAT HE SHOULD NOT HAVE BEEN ON NOTICE OF POSSIBLE ERROR IN NORMANDY'S BID DUE TO THE "RECENT RAISING MARKET PRICES FOR COPPER" AND, FOR THAT REASON, WOULD NOT ALLOW NORMANDY TO CORRECT ITS BID SO AS TO MAKE IT THE HIGH BIDDER ON BOTH ITEMS 37 AND 38, THE REPORT CONTAINS A STATEMENT TO THE EFFECT THAT THE SITUATION IN THIS CASE COULD HAVE BEEN AVOIDED HAD INSTRUCTIONS BEEN FOLLOWED IN REGARD TO THE VERIFICATION OF ALL BIDS ON SALES WHICH ARE IN EXCESS OF ACQUISITION COST. SINCE THE BID OF NORMANDY FOR ITEM 37 REPRESENTS A PRICE WHICH IS ALMOST 130 PERCENT OF THE ACQUISITION COST OF THAT ITEM, 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 REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD.

ACCORDINGLY, ITEM 37 OF THE SUBJECT CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.