B-162206, AUG. 16, 1967

B-162206: Aug 16, 1967

Additional Materials:

Contact:

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

 

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

PURCHASER WHO SUBMITTED TELEGRAPHIC BID OF ?32 ON ITEM RATHER THAN UNIT OF ?032 WHICH PRICE WAS 4 1/2 TIMES THE CURRENT MARKET PRICE AND 11 TIMES GREATER THAN SECOND HIGH BID MAY HAVE CONTRACT AMENDED BY DELETING PARTICULAR ITEM SINCE SUBSTANTIAL DIFFERENCE BETWEEN PRICES SHOULD HAVE PUT CONTRACTING OFFICES ON NOTICE OF ERROR REQUIRING CONFIRMATION. WHOSE TOTAL COST WAS STATED TO BE $6. THE CURRENT MARKET APPRAISAL ESTABLISHED FOR ITEM 71 WAS ?07 EACH. GROBAN'S BID OF ?32 PER UNIT IS REPORTED TO BE MORE THAN 4-1/2 TIMES THE CURRENT MARKET APPRAISAL AND MORE THAN 11 TIMES GREATER THAN THE SECOND HIGH BID. THE GOVERNMENT SALES CONTRACTING OFFICER REPORTS THAT THE BIDS WERE HURRIEDLY SCREENED.

B-162206, AUG. 16, 1967

CONTRACTS - MISTAKES - REFORMATION - JUSTIFICATION DECISION TO DEFENSE SUPPLY AGENCY RE REFORMATION OF CONTRACT FOR SALE OF SURPLUS BEARING VALVES. PURCHASER WHO SUBMITTED TELEGRAPHIC BID OF ?32 ON ITEM RATHER THAN UNIT OF ?032 WHICH PRICE WAS 4 1/2 TIMES THE CURRENT MARKET PRICE AND 11 TIMES GREATER THAN SECOND HIGH BID MAY HAVE CONTRACT AMENDED BY DELETING PARTICULAR ITEM SINCE SUBSTANTIAL DIFFERENCE BETWEEN PRICES SHOULD HAVE PUT CONTRACTING OFFICES ON NOTICE OF ERROR REQUIRING CONFIRMATION.

TO GENERAL HEDLUND:

BY LETTER DATED AUGUST 4, 1967, WITH ENCLOSURES, THE ASSISTANT COUNSEL REQUESTED OUR DECISION WHETHER SALES CONTRACT NO. 27-8002-047, AWARDED ON JULY 18, 1967, TO GROBAN SUPPLY CO., INC., MAY BE REFORMED BY DELETING ITEM 71 THEREFROM ON THE BASIS THAT THE CONTRACTOR MISTAKENLY SUBMITTED A TELEGRAPHIC UNIT BID OF ?32 ON THE ITEM RATHER THAN A UNIT BID OF ?032 AS INTENDED.

ITEM 71 COVERED THE PURCHASE OF 7,579 SURPLUS BEARING HALVES, UNUSED, IN GOOD CONDITION, WHOSE TOTAL COST WAS STATED TO BE $6,215. THE CURRENT MARKET APPRAISAL ESTABLISHED FOR ITEM 71 WAS ?07 EACH. GROBAN'S BID OF ?32 PER UNIT IS REPORTED TO BE MORE THAN 4-1/2 TIMES THE CURRENT MARKET APPRAISAL AND MORE THAN 11 TIMES GREATER THAN THE SECOND HIGH BID.

THE PURCHASER EXPLAINED BY LETTER DATED JULY 19, 1967, HOW THE ERROR OCCURRED AND FURNISHED WORK PAPERS TO SUPPORT ITS ALLEGED INTENDED BID, AND REQUESTED THAT THE BID BE RECONSIDERED AT THE INTENDED FIGURE OF ?032 EACH AND BE REGARDED AS THE CONTRACT PRICE OR, IN LIEU THEREOF, BE ELIMINATED FROM THE AWARD. IT APPEARS FROM THE RECORD THAT THE MISTAKE OCCURRED BY INADVERTENCE IN TELEPHONING OR TRANSMITTING THE BID TO THE TELEGRAPH COMPANY SINCE THE WORK PAPERS AND RETAINED BID COPY SHOW THE AMOUNT OF ?032 ENTERED FOR ITEM 71.

THE GOVERNMENT SALES CONTRACTING OFFICER REPORTS THAT THE BIDS WERE HURRIEDLY SCREENED, AND THAT ALTHOUGH SHE NOTICED THAT GROBAN'S BID WAS SUBSTANTIALLY HIGHER THAN THE NEXT HIGH BID, SHE DID NOT THEN CONSIDER IT SO OUT OF LINE AS TO REQUIRE CONFIRMATION OF THE BID BEFORE AWARD. UPON RECEIPT OF THE ALLEGATION OF MISTAKE AND A MORE CAREFUL PERUSAL OF THE BID, SHE NOW CONCLUDES THAT SHE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF A POSSIBLE ERROR REQUIRING BID CONFIRMATION. IT IS ADMINISTRATIVELY RECOMMENDED THAT DELETION OF ITEM 71 FROM THE CONTRACT BE AUTHORIZED.

WHILE A DIFFERENCE IN BID PRICES, IN ITSELF, WOULD NOT NECESSARILY BE CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF A MISTAKE (16 COMP. GEN. 596; 17 ID. 601), IN VIEW OF THE SUBSTANTIAL DIFFERENCE BETWEEN THE QUOTED BID PRICE AND THE NEXT HIGHER BID AND THE DIFFERENCE BETWEEN SUCH BID PRICE AND THE CURRENT MARKET APPRAISAL, WE FEEL THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF ERROR REQUIRING CONFIRMATION OF THE BID.

SINCE THE RELATED FACTS AND CIRCUMSTANCES SUPPORT THE CONCLUSION THAT A BONA FIDE MISTAKE WAS MADE AS ALLEGED AND THAT VERIFICATION OF THE BID SHOULD HAVE BEEN MADE BEFORE ACCEPTANCE, THE CONTRACT MAY BE AMENDED BY DELETING ITEM 71, AS ADMINISTRATIVELY RECOMMENDED, WITHOUT PENALTY TO GROBAN. B-158715, MARCH 22, 1966; B-154913, AUGUST 25, 1964.