B-170780, OCT. 5, 1970

B-170780, OCT. 5, 1970

MISTAKE IN BID - ERROR EVIDENCE DECISION AUTHORIZING CANCELLATION OF CONTRACT WITH DYNAMIC TECHNOLOGY, INC., ON BASIS OF ERROR IN BID FOR FABRICATION OF PRESSURE HEATING DEVICE FOR AGRICULTURE RESEARCH SERVICE. A 70 % DIFFERENCE BETWEEN THE LOW BID AND THE ONLY OTHER BID RECEIVED IS SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF POSSIBLE ERROR AND CONSEQUENTLY BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. CANCELLATION WITHOUT LIABILITY IS AUTHORIZED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 2, 1970, WITH ENCLOSURES, FROM THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY DYNAMIC TECHNOLOGY INC. TO HAVE BEEN MADE IN ITS BID WHICH WAS ACCEPTED ON JUNE 26, 1970.

THE AGRICULTURAL RESEARCH SERVICE, MANAGEMENT SERVICES DIVISION FOR MARKETING AND NUTRITION RESEARCH, NEW ORLEANS, LOUISIANA, BY INVITATION FOR BIDS NO. 120-U-ARS-70 REQUESTED BIDS FOR THE FABRICATION OF ONE PRESSURE-HEATING DEVICE ASSEMBLY IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS. IN RESPONSE, DYNAMIC SUBMITTED A BID DATED JUNE 10, 1970, OFFERING TO FURNISH THE EQUIPMENT FOR $14,600. THE ONLY OTHER BID RECEIVED WAS IN THE AMOUNT OF $24,925. THE BID OF DYNAMIC WAS ACCEPTED ON JUNE 26, 1970. IT IS REPORTED THAT DYNAMIC HAS DISCONTINUED ALL EFFORTS TOWARDS FABRICATION OF THE EQUIPMENT.

BY LETTERS DATED JULY 24 AND AUGUST 5, 1970, DYNAMIC ADVISED THAT AN ERROR HAD BEEN MADE IN COMPUTING ITS BID PRICE FOR THE EQUIPMENT IN THAT IT HAD FAILED TO INCLUDE THE COST OF THE POLISHING AND THAT NO ENGINEERING TIME WAS INCLUDED FOR LIAISON AND TESTING. IT ALSO ADVISED THAT VERBAL QUOTATIONS RECEIVED FROM ITS SUPPLIERS WERE SUBSTANTIALLY UNDERESTIMATED. DYNAMIC REQUESTED THAT THE PRICE OF THE EQUIPMENT BE INCREASED FROM $14,600 TO $36,650 AND STATED THAT THE HASTE IN WHICH THE CORPORATION AND ITS SUPPLIERS HAD TO RESPOND TO THE INVITATION CAUSED THE MISTAKES. SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED ITS REVISED ESTIMATE SHEET AND COPIES OF WRITTEN QUOTATIONS RECEIVED FROM ITS SUPPLIERS.

IN HIS REPORT, IN WHICH HE RECOMMENDED CANCELLATION OF THE CONTRACT, THE CONTRACTING OFFICER DOES NOT ADMIT THAT HE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF DYNAMIC. HOWEVER, THE DIRECTOR, PLANT AND OPERATIONS, STATES, AFTER POINTING OUT THAT THE ONLY OTHER BID WAS 170 PERCENT OF THE LOW BID OF DYNAMIC, THAT "EVEN IN THE ABSENCE OF A GOVERNMENT ESTIMATE THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF AN ERROR AND REQUESTED THAT THE BID BE VERIFIED."

IT IS OUR OPINION THAT THE 70 PERCENT DIFFERENCE BETWEEN THE DYNAMIC BID AND THAT OF THE ONLY OTHER BIDDER IS SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF POSSIBLE ERROR IN DYNAMIC'S BID AND, CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT FIRST REQUESTING VERIFICATION THEREOF.

ACCORDINGLY, WE WILL NOT OBJECT TO CANCELLATION OF THE SUBJECT CONTRACT, AS RECOMMENDED BY THE DIRECTOR, OFFICE OF PLANT AND OPERATIONS, WITHOUT LIABILITY TO THE CONTRACTOR.