B-162820, NOV. 8, 1967

B-162820: Nov 8, 1967

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VERIFY THE BID PRICE ON BASIS OF SUPPLIER QUOTATION AND WHO AFTER AWARD SUBMITS EVIDENCE FROM SUPPLIER INDICATING CLERICAL ERROR IN EXTENSION OF PRICE MAY HAVE CONTRACT CANCELLED SINCE INFORMAL VERIFICATION BASED ON SPOT CHECK MAY BE REGARDED AS CONDITIONAL VERIFICATION INSUFFICIENT TO OVERCOME CONTRACTING OFFICER'S DOUBT AS TO PRICE WHICH WAS CONSIDERABLY LOWER THAN GOVERNMENT ESTIMATE AND OTHER BIDS. WEBB: REFERENCE IS MADE TO A LETTER DATED OCTOBER 24. REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE PENINSULA PLUMBING SUPPLY COMPANY TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. NAS6-1454 IS BASED. 480 AND THE GOVERNMENT'S ESTIMATE WAS $5. IT IS REPORTED THAT BECAUSE THE BID OF PENINSULA WAS MUCH LOWER THAN THE OTHER BIDS AND MUCH LOWER THAN THE GOVERNMENT'S ESTIMATE.

B-162820, NOV. 8, 1967

CONTRACTS - MISTAKES - CANCELLATION DECISION TO NASA AS TO ACTION ON ERROR ALLEGED AFTER AWARD BY PENINSULA PLUMBING SUPPLY CO. IN BID FOR AIR CONDITIONERS. A CONTRACTOR WHO HAD HIS REPRESENTATIVE, AT VISIT TO CONTRACTING OFFICE, VERIFY THE BID PRICE ON BASIS OF SUPPLIER QUOTATION AND WHO AFTER AWARD SUBMITS EVIDENCE FROM SUPPLIER INDICATING CLERICAL ERROR IN EXTENSION OF PRICE MAY HAVE CONTRACT CANCELLED SINCE INFORMAL VERIFICATION BASED ON SPOT CHECK MAY BE REGARDED AS CONDITIONAL VERIFICATION INSUFFICIENT TO OVERCOME CONTRACTING OFFICER'S DOUBT AS TO PRICE WHICH WAS CONSIDERABLY LOWER THAN GOVERNMENT ESTIMATE AND OTHER BIDS.

TO MR. WEBB:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 24, 1967, WITH ENCLOSURES, FROM THE DIRECTOR OF PROCUREMENT, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE PENINSULA PLUMBING SUPPLY COMPANY TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. NAS6-1454 IS BASED.

THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, WALLOPS STATION, WALLOPS ISLAND, VIRGINIA, BY INVITATION NO. P-1712 REQUESTED BIDS FOR FURNISHING 20 WINDOW-TYPE AIR CONDITIONERS, COOLING CAPACITY 18,000 OR MORE BTU-HR. IN RESPONSE THERETO, THE PENINSULA PLUMBING SUPPLY COMPANY SUBMITTED A BID OFFERING TO FURNISH THE 20 AIR CONDITIONERS AT A UNIT PRICE OF $140 OR FOR A TOTAL PRICE OF $2,800. THE FIVE OTHER BIDS ON THE TOTAL QUANTITY OF AIR CONDITIONERS RANGED FROM $4,229.20 TO $5,480 AND THE GOVERNMENT'S ESTIMATE WAS $5,000.

IT IS REPORTED THAT BECAUSE THE BID OF PENINSULA WAS MUCH LOWER THAN THE OTHER BIDS AND MUCH LOWER THAN THE GOVERNMENT'S ESTIMATE, THE CONTRACTING OFFICER SUSPECTED THAT PENINSULA HAD MADE AN ERROR IN ITS BID. WHEN THE SALES REPRESENTATIVE OF PENINSULA VISITED THE CONTRACTING OFFICE ON SEPTEMBER 6, 1967, HE WAS REQUESTED TO CONFIRM HIS COMPANY'S BID. PENINSULA'S REPRESENTATIVE ADVISED THE CONTRACTING OFFICER THAT HIS COMPANY'S BID PRICE OF $2,800 FOR THE AIR CONDITIONERS WAS A FIRM PRICE BASED UPON THE QUOTATION SUBMITTED BY ITS SUPPLIER. ON THE FOLLOWING DAY, SEPTEMBER 7, 1967, WITHOUT FURTHER VERIFICATION, A CONTRACT FOR FURNISHING THE 20 AIR CONDITIONERS FOR A TOTAL PRICE OF $2,800 WAS AWARDED TO PENINSULA.

THE RECORD INDICATES THAT ON SEPTEMBER 13, 1967, PENNINSULA'S SALES REPRESENTATIVE AGAIN VISITED THE CONTRACTING OFFICE AND AT THAT TIME THE REPRESENTATIVE ADVISED THE CONTRACTING OFFICER THAT THE COMPANY'S SUPPLIER, S.S. FRETZ, JR., INC., HAD MADE A CLERICAL MISTAKE IN ITS QUOTATION TO PENINSULA AND THAT PENINSULA HAD RELIED ON THAT QUOTATION IN DETERMINING ITS BID PRICE. IT APPEARS THAT THE MISTAKE IN PENINSULA'S BID AROSE FROM A QUOTATION DATED AUGUST 25, 1967, BY FRETZ TO PENINSULA FOR 20 AIR CONDITIONERS AT A "TOTAL PRICE F.O.B. PHILA......$2,230.00.' FRETZ, THE SUPPLIER,CLAIMS IT INTENDED TO QUOTE A UNIT PRICE OF $223 EACH FOR THE AIR CONDITIONERS.

BY LETTER DATED SEPTEMBER 18, 1967, PENINSULA REQUESTED THAT THE CONTRACT FOR FURNISHING THE AIR CONDITIONERS BE CANCELED WITHOUT LIABILITY TO THE COMPANY. THE COMPANY STATED THAT WHEN IT RECEIVED ITS SUPPLIER'S QUOTATION OF $2,230 FOR 20 AIR CONDITIONERS IT ADDED ITS MARKUP AND FREIGHT COSTS TO THAT AMOUNT TO ARRIVE AT ITS TOTAL BID PRICE OF $2,800. IN SUPPORT OF THE ALLEGATION OF ERROR, PENINSULA SUBMITTED A COPY OF THE ERRONEOUS QUOTATION DATED AUGUST 25, 1967, RECEIVED FROM ITS SUPPLIER, FRETZ, AND A COPY OF ITS PRINTED PRICE LIST WHICH SHOWS A DEALER PRICE OF $253 EACH FOR THE AIR CONDITIONERS CALLED FOR BY THE SUBJECT INVITATION FOR BIDS. PENINSULA ALSO SUBMITTED A COPY OF A LETTER DATED SEPTEMBER 13, 1967, IN WHICH FRETZ, ITS SUPPLIER, STATES THAT IT WAS RESCINDING ITS QUOTATION OF AUGUST 25, 1967,"DUE TO A CLERICAL ERROR OF EXTENSION" AND THAT THE CORRECT PRICE FOR THE AIR CONDITIONERS IS $223 EACH. IN VIEW OF THE FOREGOING, AND THE DISPARITY BETWEEN THE CONTRACTOR'S LOW BID AND THE OTHER BIDS RECEIVED AND THE GOVERNMENT'S ESTIMATE, IT IS OBVIOUS THAT THE CONTRACTOR MADE A BONA FIDE MISTAKE IN BID.

GENERALLY, WHEN A BIDDER IS REQUESTED TO AND DOES VERIFY HIS BID, THE SUBSEQUENT ACCEPTANCE OF THE BID CONSUMMATES A VALID AND BINDING CONTRACT. SEE 18 COMP. GEN. 942, 947; AND 27 ID. 17. HOWEVER, IT IS REPORTED THAT WHEN PENINSULA'S SALES REPRESENTATIVE CONFIRMED HIS COMPANY'S BID PRICE, SUCH CONFIRMATION WAS NOT UNEQUIVOCAL BUT CONDITIONED ON THE SUPPLIER'S QUOTATION BEING CORRECT. IN VIEW THEREOF, IT WOULD NOT APPEAR THAT THE CONDITIONAL VERIFICATION OF PENINSULA'S BID--CONDUCTED INFORMALLY DURING THE SALES REPRESENTATIVE'S ROUTINE WEEKLY VISIT AND INVOLVING AN IMMEDIATE "ON THE SPOT" CONFIRMATION OF THE BID WITHOUT APPARENT FURTHER CHECK OF THE SUPPLIER'S QUOTATION--WAS SUFFICIENTLY ADEQUATE TO DISPEL THE ALREADY EXISTING DOUBT THAT THE CONTRACTING OFFICER HAD AS TO THE CORRECTNESS OF THE BID. THEREFORE, IT WOULD APPEAR THAT THERE STILL EXISTED, AFTER CONFIRMATION, AMPLE REASON FOR THE CONTRACTING OFFICER TO HAVE REQUESTED A FURTHER CLARIFICATION OF THE COMPANY'S BID PRIOR TO ITS ACCEPTANCE. IN THE CIRCUMSTANCES, AND SINCE THE ERROR HAS BEEN SATISFACTORILY EXPLAINED, PENINSULA SHOULD NOT BE REQUIRED TO FURNISH THE AIR CONDITIONERS AT THE PRICE QUOTED IN ITS BID.

THE RECORD INDICATES THAT NO DELIVERIES UNDER THE CONTRACT HAVE BEEN MADE BY THE PENINSULA PLUMBING SUPPLY COMPANY. ACCORDINGLY, CONTRACT NO. NAS6- 1454 MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY, AS RECOMMENDED BY THE DIRECTOR OF PROCUREMENT.

THE FILE SUBMITTED WITH THE LETTER OF OCTOBER 24, 1967, IS RETURNED AS REQUESTED.