B-167954, OCT. 14, 1969

B-167954, OCT. 14, 1969

MISTAKES--ALLEGATION AFTER AWARD--CONTRACTING OFFICER'S ERROR DETECTION DUTY--SUFFICIENCY OF VERIFICATION WHERE BID WAS SIGNIFICANTLY OUT OF LINE WITH OTHER BIDS AND GOVERNMENT ESTIMATE DUE TO ERROR OF OMITTING SUBSTANTIAL DIE CHARGES ORDINARILY ADDED TO BID PRICE, AND CONTRACTING OFFICER OBTAINED CONFIRMATION OF BID PRICE FROM CONTRACTOR'S NEW INSIDE SALESMAN, WHO WAS UNAWARE THAT ITEM WAS SUBJECT TO SUCH CHARGES, WHICH WAS CONDITIONED ON SUPPLIER'S QUOTATION, IT APPEARS FURTHER CLARIFICATION OF QUOTED PRICE WAS NEEDED PRIOR TO GOVT.'S ACCEPTANCE SINCE CONTRACTING OFFICER CANNOT DISCHARGE HIS VERIFICATION DUTY MERELY BY REQUESTING CONFIRMATION OF BID PRICE, BUT MUST APPRISE BIDDER OF SUSPECTED MISTAKE AND BASIS THEREFOR. CONSEQUENTLY, THERE IS NO OBJECTION TO EXECUTION OF SUPPLEMENTARY AGREEMENT INCREASING CONTRACT PRICE TO INCLUDE OMITTED CHARGES.

TO DR. PAINE:

REFERENCE IS MADE TO LETTER KDA-2 OF SEPTEMBER 19, 1969, WITH ENCLOSURES, FROM THE DIRECTOR OF PROCUREMENT, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE METAL GOODS DIVISION OF ALCAN ALUMINUM CORPORATION, HEREINAFTER REFERRED TO AS ALCAN, TO HAVE BEEN MADE IN ITS BID UPON WHICH NEGOTIATED CONTRACT (PURCHASE ORDER) NO. H- 58105A IS BASED.

THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, GEORGE C. MARSHALL SPACE FLIGHT CENTER, HUNTSVILLE, ALABAMA, BY REQUEST FOR PROPOSALS NO. 7-8 -18-40303 REQUESTED PROPOSALS FOR FURNISHING FOUR ITEMS OF ALUMINUM ALLOY EXTRUSION I-BEAMS AND CHANNELS. IN RESPONSE, ALCAN SUBMITTED A PROPOSAL DATED MARCH 13, 1969, OFFERING TO FURNISH THE SUPPLIES UNDER ITEMS 1 THROUGH 4, INCLUSIVE, AT THE UNIT PRICES SET FORTH OPPOSITE EACH ITEM OR FOR AN AGGREGATE TOTAL PRICE OF $676.54. THE TWO OTHER BIDDERS ON THE FOUR ITEMS OF I-BEAMS AND CHANNELS QUOTED AGGREGATE TOTAL PRICES OF $1,893.25 AND $2,204.80; THE GOVERNMENT'S ESTIMATE WAS $2,600.

IT IS REPORTED THAT SINCE THE BID OF ALCAN WAS SO LOW IN RELATION TO THE TWO OTHER BIDS AND THE GOVERNMENT'S ESTIMATE AND BECAUSE THE BIDS OF THE TWO OTHER BIDDERS INCLUDED SUBSTANTIAL DIE SERVICE CHARGES IN THE AMOUNTS OF $920 AND $850, WHEREAS THE BID OF ALCAN DID NOT INCLUDE ANY SUCH CHARGES, THE CONTRACTING OFFICER CONTACTED MR. H. S. ANDERSON OF ALCAN BY TELEPHONE ON MARCH 18, 1969, AND ASKED HIM WHETHER DIE SERVICE CHARGES SHOULD BE ADDED TO THE CORPORATION'S BID PRICES ON THE FOUR ITEMS. MR. ANDERSON STATED THAT HE HAD QUOTED EXACTLY AS THE MILL HAD QUOTED TO HIM, THAT THERE WOULD BE NO OTHER CHARGES TO BE ADDED TO THE QUOTATION, AND THAT HIS COMPANY WOULD ACCEPT AN ORDER ON THAT BASIS. ON MARCH 25, 1969, WITHOUT FURTHER VERIFICATION, A CONTRACT FOR FURNISHING THE I-BEAMS AND CHANNELS WAS AWARDED TO ALCAN.

BY LETTER DATED MAY 13, 1969, ALCAN ADVISED THE CONTRACTING OFFICER THAT UPON RECEIPT FROM ITS SUPPLIER OF AN ACKNOWLEDGMENT OF ITS ORDER FOR THE REQUIRED I-BEAMS AND CHANNELS, IT DISCOVERED THAT IT HAD FAILED TO INCLUDE IN ITS QUOTATION FOR THESE ITEMS DIE SERVICE CHARGES TOTALING $1,205. THE CORPORATION REQUESTED THAT THE CONTRACT PRICE OF THE ALUMINUM SUPPLIES BE INCREASED BY $1,205 TO COVER THE DIE SERVICE CHARGES IMPOSED BY THE MILL. IN A LETTER DATED JUNE 4, 1969, MR. ANDERSON, THE INSIDE SALESMAN WHO CONFIRMED HIS CORPORATION'S QUOTATION ON MARCH 18, 1969, STATED THAT AT THE TIME HE WAS REQUESTED TO CONFIRM THE CORPORATION'S QUOTATION, HE HAD BEEN WITH THE CORPORATION LESS THAN 1 MONTH AND WAS COMPLETELY NEW IN THE METAL INDUSTRY AND THAT HE DID NOT REALIZE THAT ALCAN WAS EXPECTED BY THE MILL TO KNOW WHAT ITEMS CARRY DIE SERVICE CHARGES, AND TO APPLY THEM ACCORDINGLY. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED PHOTOSTATIC COPIES OF THE ORDER ACKNOWLEDGMENTS RECEIVED FROM ITS SUPPLIER, HARVEY ALUMINUM. THERE IS A SEPARATE ACKNOWLEDGMENT FOR EACH ITEM. THE ACKNOWLEDGMENTS FOR ITEMS 1, 2, 3, AND 4 SHOW DIE SERVICE CHARGES OF $355, $285, $355, AND $210, RESPECTIVELY, WHICH TOTAL $1,205.

IN HIS LETTER OF SEPTEMBER 19, 1969, IN WHICH HE RECOMMENDED THAT THE CONTRACT PRICE OF THE ALUMINUM SUPPLIES BE INCREASED BY $1,205, THE DIRECTOR OF PROCUREMENT POINTS OUT THAT WHEN ALCAN'S SALES REPRESENTATIVE WAS REQUESTED BY TELEPHONE TO VERIFY HIS CORPORATION'S QUOTATION, HE WAS NOT SPECIFICALLY ADVISED THAT THE CORPORATION'S QUOTATION WAS SIGNIFICANTLY OUT OF LINE WITH THE OTHER QUOTATIONS AND WITH THE GOVERNMENT'S ESTIMATE. THE DIRECTOR ALSO STATED THAT AT THE TIME OF REQUEST FOR VERIFICATION, THE CONTRACTING OFFICER DID NOT POINT OUT TO ALCAN'S SALES REPRESENTATIVE THAT OTHER OFFERORS HAD INCLUDED DIE SERVICE CHARGES.

GENERALLY, WHEN A BIDDER IS REQUESTED TO AND DOES VERIFY HIS BID, THE SUBSEQUENT ACCEPTANCE OF THE BID CONSUMMATES A VALID AND BINDING CONTRACT. NEVERTHELESS, THE CONTRACTING OFFICER CANNOT DISCHARGE HIS VERIFICATION DUTY MERELY BY REQUESTING CONFIRMATION OF THE BID PRICE -- THE GOVERNMENT MUST APPRISE THE BIDDER OF THE MISTAKE WHICH IS SUSPECTED AND THE BASIS FOR SUCH SUSPICION. SEE B-154955, AUGUST 26, 1964; B- 144238, OCTOBER 28, 1960; 35 COMP. GEN. 136; 39 ID. 405, 407; 44 ID. 383, 386. SEE, ALSO, UNITED STATES V METRO NOVELTY MANUFACTURING CO., INC., 125 F.SUPP. 713; 37 COMP. GEN. 786, 788; B 158207, JANUARY 14, 1966; B- 134428, JANUARY 16, 1958. PARAGRAPH 2.406 3 (D) (1) OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION PROCUREMENT REGULATION (NASA PR) SPECIFICALLY PROVIDES THAT THE "REQUEST SHALL INFORM THE BIDDER WHY THE REQUEST FOR VERIFICATION IS MADE -- THAT A MISTAKE IS SUSPECTED AND THE BASIS FOR SUCH SUSPICION; E.G., THAT THE BID IS SIGNIFICANTLY OUT OF LINE WITH THE NEXT LOW OR OTHER BIDS OR WITH THE GOVERNMENT'S ESTIMATE.' SEE NASA PR 3.112; B 163031, FEBRUARY 9, 1968.

IT IS REPORTED THAT WHEN ALCAN'S SALES REPRESENTATIVE CONFIRMED HIS CORPORATION'S QUOTATION, 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 ALCAN'S QUOTATION -- CONDUCTED INFORMALLY OVER THE TELEPHONE AND INVOLVING AN IMMEDIATE "ON- THE-SPOT" CONFIRMATION OF THE QUOTATION 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 QUOTATION. THEREFORE, IT WOULD APPEAR THAT THERE STILL EXISTED, AFTER CONFIRMATION, AMPLE REASON TO HAVE REQUESTED A FURTHER CLARIFICATION OF THE CORPORATION'S QUOTATION PRIOR TO ITS ACCEPTANCE. THE CIRCUMSTANCES, AND SINCE THE ERROR HAS BEEN SATISFACTORILY EXPLAINED, ALCAN SHOULD NOT BE REQUIRED TO FURNISH THE I-BEAMS AND CHANNELS AT THE PRICES QUOTED IN ITS QUOTATION. SEE B-162820, NOVEMBER 8, 1967, TO YOUR PREDECESSOR.

THE RECORD INDICATES THAT DELIVERIES UNDER THE CONTRACT WERE COMPLETED BY ALCAN ON AUGUST 28, 1969. ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO THE EXECUTION OF A SUPPLEMENTAL AGREEMENT INCREASING THE AGGREGATE TOTAL CONTRACT PRICE BY $1,205 TO A TOTAL CONSIDERATION OF $1,881.54, AS ADMINISTRATIVELY RECOMMENDED.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE SUPPLEMENTAL AGREEMENT.

AS REQUESTED, THE FILE ENCLOSED WITH THE LETTER OF SEPTEMBER 19, 1969, IS RETURNED HEREWITH.