B-165454, NOV. 8, 1968

B-165454: Nov 8, 1968

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SANDERS PECAN COMPANY ON ACCOUNT OF A MISTAKE IN BID UPON WHICH SALES CONTRACT 21-9023-079 WAS BASED. IS APPLICABLE.'. INC. .031 DIXIE IRON AND METAL CO. .0251 THE CONTRACTING OFFICER'S REPORT DISCLOSES THAT THE GOVERNMENT'S CURRENT MARKET APPRAISAL FOR SCRAP LEAD BATTERIES WAS ?05 PER POUND. WHILE SANDERS' UNIT PRICE BID WAS ?422. THE TOTAL PRICE BID BY SANDERS ON ITEM 93 WAS $1. WAS $2. ATTACHED TO THE BID WAS A CHECK IN THE AMOUNT OF $570.16 WHICH REPRESENTED THE 20-PERCENT BID BOND. THREE DAYS AFTER BIDS WERE OPENED. SANDERS WAS AWARDED A CONTRACT ON TWO OF THE ITEMS ON WHICH IT HAD BID. THE UNIT PRICE WAS STATED AS ?422 AND THE TOTAL PRICE AS $16. THE LATTER FIGURE IS CLEARLY THE CORRECT RESULT OF MULTIPLYING A UNIT PRICE OF ?422 BY A QUANTITY OF 40.

B-165454, NOV. 8, 1968

TO GENERAL HEDLUND:

WE REFER TO A LETTER OF THE ASSISTANT COUNSEL DATED OCTOBER 15, 1968 (YOUR REFERENCE DSAH-G), RECOMMENDING THAT RELIEF BE GRANTED TO THE W.C. SANDERS PECAN COMPANY ON ACCOUNT OF A MISTAKE IN BID UPON WHICH SALES CONTRACT 21-9023-079 WAS BASED.

INVITATION FOR BIDS (IFB) NO. 21-9023 SOLICITED BIDS ON A VARIETY OF ARTICLES WHICH THE DEFENSE SUPPLY AGENCY INTENDED TO SELL AS SCRAP. ITEM 93 IN THE IFB READS AS FOLLOWS: "LEAD BATTERIES, SCRAP: VEHICLE, FREE OF LIQUID AND EXTRANEOUS MATTER. OUTSIDE 40,000 POUND ARTICLE EQ, DANGEROUS PROPERTY, IS APPLICABLE.' THE IFB ALSO REQUIRED A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID.

THE CONTRACTING OFFICER RECEIVED THE FOLLOWING BIDS ON ITEM 93:

UNIT BID PRICE

-------------- W.C. SANDERS PECAN CO.

?422 MADE WELL AND MADE WELL

.04433 NATIONAL LEAD CO. .0427 SOUTHEASTERN LEAD CO. .0419 S. BORNSTEIN METALS, INC.

.0388 M. SABEL AND SONS

.036 OLIVER MARTIN CO., INC. .035 GAINESVILLE SCRAP IRON AND METAL CO. .0336 MONTGOMERY IRON AND METAL CO., INC.

.031 DIXIE IRON AND METAL CO. .0251

THE CONTRACTING OFFICER'S REPORT DISCLOSES THAT THE GOVERNMENT'S CURRENT MARKET APPRAISAL FOR SCRAP LEAD BATTERIES WAS ?05 PER POUND. WHILE SANDERS' UNIT PRICE BID WAS ?422, THE TOTAL PRICE BID BY SANDERS ON ITEM 93 WAS $1,688 ON A STATED WEIGHT OF 40,000 POUNDS. SANDERS ALSO SUBMITTED BIDS ON FOUR OTHER ITEMS LISTED IN THE IFB, AND ITS TOTAL PRICE FOR ALL ITEMS, INCLUDING ITEM 93, WAS $2,850.80. ATTACHED TO THE BID WAS A CHECK IN THE AMOUNT OF $570.16 WHICH REPRESENTED THE 20-PERCENT BID BOND.

ON AUGUST 30, 1968, THREE DAYS AFTER BIDS WERE OPENED, SANDERS WAS AWARDED A CONTRACT ON TWO OF THE ITEMS ON WHICH IT HAD BID. THE AWARD INCLUDED ITEM 93. IN THE CONTRACT, THE UNIT PRICE WAS STATED AS ?422 AND THE TOTAL PRICE AS $16,880. THE LATTER FIGURE IS CLEARLY THE CORRECT RESULT OF MULTIPLYING A UNIT PRICE OF ?422 BY A QUANTITY OF 40,000 POUNDS. THE DISCREPANCY IN THE TOTAL PRICE BID ON ITEM 93 AND THE TOTAL PRICE IN THE CONTRACT FOR ITEM 93 WAS DISCOVERED SHORTLY AFTER AWARD. CONFIRMATION WAS REQUESTED IMMEDIATELY AND SANDERS ADVISED BY TELEPHONE AND BY LETTER THAT IT HAD INTENDED TO BID A UNIT PRICE OF ?0422 RATHER THAN ?422.

THE IFB AT PAGE 14 ADVISED BIDDERS AS FOLLOWS: "ENTER A PRICE PER UNIT IN THE -UNIT PRICE BID- COLUMN AND EXTEND THE TOTAL TO THE -TOTAL PRICE BID- COLUMN WHEN BIDS ARE SOLICITED IN UNITS OF EACH, FOOT, POUND, ETC. ENTER ONLY A TOTAL PRICE FOR THE LOT IN THE -TOTAL PRICE BID- COLUMN WHEN BIDS ARE SOLICITED BY THE LOT.' IT IS CLEAR THAT AS TO ITEM 93 BIDS WERE SOLICITED IN TERMS OF ,POUND," AND ALL BIDS ON THESE BATTERIES QUOTED PRICES PER POUND. OTHER ITEMS IN THIS IFB, UPON WHICH LOT BIDS WERE DESIRED, WERE EACH DISTINCTLY MARKED "1 LOT.'

PAGE 10 OF THE IFB INCORPORATED BY REFERENCE PARTS 1, 2 AND 3 OF DEFENSE LOGISTICS SERVICES CENTER PAMPHLET ENTITLED "SALE BY REFERENCE INSTRUCTIONS, TERMS AND CONDITIONS APPLICABLE TO DEPARTMENT OF DEFENSE SURPLUS PERSONAL PROPERTY.' IN PART 2 OF SUCH PAMPHLET, THERE APPEARS THE FOLLOWING RELEVANT PROVISION: "23. BID PRICE DETERMINATION. WHEN BIDS ARE SOLICITED ON A UNIT PRICE BASIS, BIDDERS WILL INSERT THEIR UNIT PRICES AND TOTAL PRICES IN THE SPACE PROVIDED FOR EACH ITEM. (1) IN THE EVENT THE BIDDER INSERTS A TOTAL PRICE ON THE ITEM BUT FAILS TO INSERT A UNIT PRICE, THE GOVERNMENT WILL DETERMINE THE UNIT PRICE BY DIVIDING THE TOTAL PRICE BY THE QUANTITY OF THE ITEM SET OUT IN THE INVITATION. THE UNIT PRICE SO DETERMINED SHALL BE USED FOR THE PURPOSE OF BID EVALUATION, AWARD, AND ALL PHASES OF CONTRACT ADMINISTRATION.'

ALTHOUGH IT IS NOT EXPLICITLY STATED IN THE IFB THAT IN CASE OF CONFLICT BETWEEN UNIT PRICE AND EXTENDED PRICE THE UNIT PRICE CONTROLS, THE ABOVE- QUOTED PROVISION WOULD INDICATE AN INTENT TO GIVE GREATER SIGNIFICANCE TO THE UNIT PRICE THAN THE TOTAL PRICE WHEN BIDS ARE SOLICITED ON A UNIT PRICE BASIS. HOWEVER, IN DECISION B-162221, OCTOBER 16, 1967, WE HELD: "* * * ALTHOUGH THE INVITATION PROVIDES THAT IN CASE OF AN ERROR IN THE EXTENDED PRICE, THE UNIT PRICE WILL GOVERN, THIS PROVISION APPLIES ONLY WHERE THE UNIT PRICE ACTUALLY REPRESENTS THE INTENDED PRICE. SEE 37 COMP. GEN. 829.' SINCE SANDERS CLEARLY INTENDED TO QUOTE A UNIT PRICE OF ?0422, ITS UNIT PRICE FIGURE OF ?422 SHOULD NOT HAVE BEEN CONTROLLING OVER THE EXTENDED PRICE.

WE BELIEVE THAT SANDERS' UNIT PRICE BID ON ITEM 93 WAS SO OUT OF LINE WITH ALL THE OTHER UNIT PRICES BID, SO AT VARIANCE FROM THE GOVERNMENT ESTIMATE, AND SO INCONSISTENT WITH ITS TOTAL PRICE BID ON ITEM 93, THAT THE UNIT PRICE BID OF ?422 CAN ONLY BE CONSIDERED AS PATENTLY ERRONEOUS. THIS CASE APPEARS TO BE ONE WHICH FALLS INTO THE CATEGORY REPRESENTED BY B -159490, JULY 1, 1966, AND B-162206, AUGUST 16, 1967. IN EACH OF THESE DECISIONS WE RECOGNIZED THE GENERAL RULE IN SURPLUS SALES CONTRACTS THAT A SIGNIFICANT DIFFERENCE IN BID PRICES ORDINARILY IS NOT ENOUGH TO PUT A CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF AN ERROR IN BID. HOWEVER, IN BOTH DECISIONS WE GRANTED RELIEF BECAUSE OF THE EXTREME DISCREPANCY IN THE UNIT PRICES BID, THE DIFFERENCE IN EACH CASE BEING CAUSED BY A MISPLACED DECIMAL POINT. IN B-159490, THE CONTRACT WAS AWARDED ON A BID OF ?30 PER POUND OF INSULATED STEEL WIRE, WHEREAS THE CURRENT MARKET APPRAISALS WERE ?005 AND ?02 PER POUND AND THE THREE OTHER BIDS WERE ?0511, ?042 AND ?0212 PER POUND. SINCE THE CONTRACTOR HAD INTENDED TO BID ?030 PER POUND, WE GRANTED THE REQUESTED RELIEF TO THE CONTRACTOR. A SIMILAR SITUATION WAS CONSIDERED IN B-162206 AND WE GRANTED RELIEF CITING B-158715, MARCH 22, 1966; AND B-154913, AUGUST 25, 1964.

IN VIEW OF THE FOREGOING AND SINCE THE RECORD SUPPORTS THE CONCLUSION THAT A BONA FIDE MISTAKE WAS MADE AS ALLEGED AND THAT VERIFICATION OF THE BID ON ITEM 93 SHOULD HAVE BEEN MADE BEFORE ACCEPTANCE, THE CONTRACT MAY BE AMENDED BY DELETING ITEM 93, AS ADMINISTRATIVELY RECOMMENDED, WITHOUT LIABILITY TO THE SANDERS COMPANY.