B-166711, MAY 8, 1969

B-166711: May 8, 1969

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KUNZIG: REFERENCE IS MADE TO LETTER DATED APRIL 16. THE FOLLOWING BIDS WERE RECEIVED ON ITEM 206: BIDDER PRICE PER GALLON MASS OXYGEN EQUIPMENT CO. WAS MADE TO MASS OXYGEN ON DECEMBER 12. THE CLAIM OF MISTAKE WAS CONFIRMED BY LETTER DATED DECEMBER 17. IN WHICH HE ALLEGED THAT THE COMPANY'S BID WAS INTENDED AS A BID OF $0.77 PER 100 CUBIC FEET. THE LETTER WITH INVOICE ATTACHED FROM ITS SUPPLIER SHOWS THAT THE CONTRACTOR IS PAYING $0.3469 PER 100 CUBIC FEET FOR NITROGEN BUT DOES NOT OFFER ANY EVIDENCE AS TO HOW IT ARRIVED AT THE BID PRICE OF $0.077 OR HOW IT INTENDED TO BID $0.77. WAS CONSIDERABLY LESS (ABOUT 62 PERCENT) THAN THE NEXT LOW BID OF $0.125 PER GALLON. IT IS CONCEDED BY THE CONTRACTING OFFICER THAT IT WAS INCUMBENT UPON HIM TO HAVE VERIFIED THE CORRECTNESS OF THE LOW BID PRIOR TO AWARD.

B-166711, MAY 8, 1969

TO MR. KUNZIG:

REFERENCE IS MADE TO LETTER DATED APRIL 16, 1969, FROM THE GENERAL COUNSEL, GENERAL SERVICES ADMINISTRATION (GSA), SUBMITTING FOR OUR REVIEW AND DECISION THE FINDINGS AND DETERMINATION OF AN ADMINISTRATION CONTRACTING OFFICER REGARDING A MISTAKE IN BID ALLEGED AFTER AWARD BY THE MASS OXYGEN EQUIPMENT COMPANY, INC., MALDEN, MASSACHUSETTS.

THE GSA BOSTON, MASSACHUSETTS, REGIONAL OFFICE ISSUED SOLICITATION NO. BO -C-I-11, 400-69 COVERING THE REQUIREMENTS FOR COMPRESSED AND LIQUIFIED GASES FOR THE PERIOD DECEMBER 1, 1968, THROUGH NOVEMBER 30, 1969. ITEM 206 OF THE INVITATION CALLED FOR AN ESTIMATED 30,000 GALLONS OF NITROGEN, TECHNICAL LIQUID, TYPE II, CLASS I, TO BE FURNISHED TO THE ARMY MATERIALS AND MECHANICS RESEARCH CENTER, WATERTOWN, MASSACHUSETTS, DURING THE CONTRACT PERIOD.

ON DECEMBER 2, 1968, THE FOLLOWING BIDS WERE RECEIVED ON ITEM 206:

BIDDER PRICE PER GALLON MASS OXYGEN EQUIPMENT CO., INC. (DEALER) $0.077 AIRCO INDUSTRIAL GASES (MANUFACTURER) 0.125 LIQUID CARBONIC CORP. 0.154 BURDETT OXYGEN CO. 0.31 ALSTATE GASES, INC. 0.34 WELDERS SUPPLY CO.

0.366 UNION CARBIDE CORP. 0.75

AWARD FOR ITEM 206, AMONG OTHERS, WAS MADE TO MASS OXYGEN ON DECEMBER 12, 1968, BASED ON ITS LOW BID. ON DECEMBER 16, 1968, AN OFFICIAL OF THE CONTRACTOR ORALLY ADVISED THE CONTRACTING OFFICER THAT HIS FIRM HAD MADE AN ERROR IN ITS BID FOR ITEM 206 BY MISPLACING THE DECIMAL POINT AND THAT IT INTENDED TO BID $0.77 RATHER THAN $0.077. THE CLAIM OF MISTAKE WAS CONFIRMED BY LETTER DATED DECEMBER 17, 1968, FROM THE CONTRACTOR, IN WHICH HE ALLEGED THAT THE COMPANY'S BID WAS INTENDED AS A BID OF $0.77 PER 100 CUBIC FEET. THE LETTER WITH INVOICE ATTACHED FROM ITS SUPPLIER SHOWS THAT THE CONTRACTOR IS PAYING $0.3469 PER 100 CUBIC FEET FOR NITROGEN BUT DOES NOT OFFER ANY EVIDENCE AS TO HOW IT ARRIVED AT THE BID PRICE OF $0.077 OR HOW IT INTENDED TO BID $0.77.

THE CONTRACTING OFFICER HAS NOTED THAT THE BID OF THE CONTRACTOR, A DEALER AND NOT A MANUFACTURER, WAS CONSIDERABLY LESS (ABOUT 62 PERCENT) THAN THE NEXT LOW BID OF $0.125 PER GALLON. BASED UPON THIS WIDE VARIATION IN THE TWO BID PRICES AND THE KNOWLEDGE THAT MANUFACTURERS COULD BE EXPECTED UNDER NORMAL CONDITIONS TO BID IN THE VICINITY OF $0.15 TO $0.20 PER GALLON FOR THE ITEM AND THAT DEALERS WOULD BID SUBSTANTIALLY HIGHER, IT IS CONCEDED BY THE CONTRACTING OFFICER THAT IT WAS INCUMBENT UPON HIM TO HAVE VERIFIED THE CORRECTNESS OF THE LOW BID PRIOR TO AWARD. IT IS FELT THAT IF THIS HAD BEEN DONE, THE BIDDER WOULD HAVE REALIZED ITS "CUBIC FOOT V GALLON" MISTAKE. IT IS THEREFORE RECOMMENDED THAT ITEM 206 BE DELETED FROM THE CONTRACT AWARDED TO MASS OXYGEN. THE CONTRACTOR ALREADY HAS MADE DELIVERIES OF THREE ORDERS (1,300 GALLONS ON FEBRUARY 6, 1969, 1,114 GALLONS ON MARCH 4, 1969, AND 1,450 GALLONS ON MARCH 24, 1969). IF RESCISSION IS APPROVED BY OUR OFFICE, IT IS PROPOSED TO NEGOTIATE WITH THE CONTRACTOR FOR PAYMENT FOR THE DELIVERED SUPPLIES ON A QUANTUM MERUIT BASIS, UP TO, BUT NOT TO EXCEED THE PRICE BID BY THE NEXT LOW BIDDER.

IN THE CIRCUMSTANCES, IT IS APPARENT THAT MASS OXYGEN MADE A BONA FIDE ERROR, AS ALLEGED, AS TO WHICH THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE. THEREFORE, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION FROM THE COMPANY. WHILE THE AWARD DID NOT CONSTITUTE A VALID AND BINDING CONTRACT, REFORMATION OF THE CONTRACT IS NOT FEASIBLE BECAUSE THE INTENDED BID PRICE FOR ITEM 206 CANNOT BE ASCERTAINED AND RESCISSION IS THE ONLY APPLICABLE RELIEF. THEREFORE, THE CONTRACTOR MAY BE RELIEVED OF ANY OBLIGATION TO MAKE FURTHER DELIVERIES UNDER ITEM 206. ADJUSTMENT OF THE PRICE FOR THE QUANTITIES ALREADY DELIVERED UNDER ITEM 206 MAY BE EFFECTED, AS PROPOSED, NOT TO EXCEED THE NEXT LOW BID PRICE OF $0.125 PER GALLON. 21 COMP. GEN. 362; 36 ID. 585.

THE FILE TRANSMITTED WITH THE GENERAL COUNSEL'S LETTER OF APRIL 16, 1969, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S FINDINGS AND DETERMINATION, IS RETURNED.