B-179809, FEB 21, 1974

B-179809: Feb 21, 1974

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WHERE ESTIMATE FOR KEYPUNCHING AND VERIFYING SERVICES FOR OFFERS EXPECTED ON SALE OF CARSON CITY SILVER DOLLARS WAS GROSSLY OVERSTATED IN CONTRACT BECAUSE IT WAS OUT OF LINE WITH MARKET SURVEY MADE BEFORE ISSUANCE OF IFB. ESTIMATE WAS NOT BASED ON BEST INFORMATION AVAILABLE. WAS A REQUIREMENTS CONTRACT FOR KEYPUNCHING AND VERIFYING SERVICES FOR OFFERS EXPECTED TO BE RECEIVED ON THE FIRST SALE OF THE CARSON CITY SILVER DOLLARS. THE CONTRACT PERIOD WAS OCTOBER 21. PARAGRAPH 7B OF THE CONTRACT PROVIDED THAT THE REQUIREMENTS ARE FOR THE KEYPUNCHING AND VERIFICATION OF APPROXIMATELY FOUR TO FIVE MILLION CARSON CITY SILVER DOLLAR CARDS. 184 CARDS PER DAY WERE REQUIRED TO BE PROCESSED. NO WORK AT ALL WAS REQUIRED BY GSA.

B-179809, FEB 21, 1974

WHERE ESTIMATE FOR KEYPUNCHING AND VERIFYING SERVICES FOR OFFERS EXPECTED ON SALE OF CARSON CITY SILVER DOLLARS WAS GROSSLY OVERSTATED IN CONTRACT BECAUSE IT WAS OUT OF LINE WITH MARKET SURVEY MADE BEFORE ISSUANCE OF IFB, ESTIMATE WAS NOT BASED ON BEST INFORMATION AVAILABLE, SO GSA SHOULD TAKE STEPS TO NEGOTIATE CLAIM OF CONTRACTOR ARISING FROM OVERESTIMATE.

TO INPUT DATA:

GENERAL SERVICES ADMINISTRATION CONTRACT NO. GS-095-29550, AWARDED ON SEPTEMBER 8, 1972, TO INPUT DATA, WAS A REQUIREMENTS CONTRACT FOR KEYPUNCHING AND VERIFYING SERVICES FOR OFFERS EXPECTED TO BE RECEIVED ON THE FIRST SALE OF THE CARSON CITY SILVER DOLLARS. THE CONTRACT PERIOD WAS OCTOBER 21, 1972, TO MARCH 31, 1973. PARAGRAPH 7B OF THE CONTRACT PROVIDED THAT THE REQUIREMENTS ARE FOR THE KEYPUNCHING AND VERIFICATION OF APPROXIMATELY FOUR TO FIVE MILLION CARSON CITY SILVER DOLLAR CARDS. THE CONTRACT FURTHER REQUIRED IN PARAGRAPHS 12A AND 12B, THAT THE CONTRACTOR BE CAPABLE OF PROCESSING AND, WHEN ORDERED, DELIVER A MINIMUM OF 93,700 CARDS PER REGULAR WORKDAY, MONDAY THROUGH FRIDAY, EXCLUSIVE OF GOVERNMENT HOLIDAYS. ALSO, THESE PARAGRAPHS REQUIRED THE CONTRACTOR TO PICK UP FROM FORT MASON THREE TIMES A DAY AND PROMPTLY RETURN THE COMPLETED DAILY WORK, TOGETHER WITH THE SOURCE DOCUMENTS, TO GSA BY MIDNIGHT THAT SAME EVENING.

THE CLAIM ASSERTED BY INPUT DATA RESULTS FROM THE FACT THAT THE APPROXIMATED QUANTITIES, AS SET FORTH IN THE CONTRACT, NEVER MATERIALIZED. INSTEAD OF PROCESSING AN AVERAGE OF 93,700 CARDS PER DAY AS APPROXIMATED, ONLY AN AVERAGE OF 4,184 CARDS PER DAY WERE REQUIRED TO BE PROCESSED. MOREOVER, ON SEVERAL OF THE REGULAR WORKDAYS, NO WORK AT ALL WAS REQUIRED BY GSA. INPUT DATA ALLEGES THAT GSA HAS BREACHED THE CONTRACT AND SHOULD BE LIABLE FOR LOSSES INCURRED AS A RESULT OF THE SHORTFALL FROM THE APPROXIMATED AMOUNT OF WORK AS STATED IN PARAGRAPH 7 AND 12 OF THE CONTRACT. THE ESTIMATE IN THE CONTRACT WAS ABOUT 88 PERCENT MORE THAN THE ACTUAL AMOUNT OF WORK REQUIRED.

INPUT DATA'S CLAIM FOR $122,648 IS BASED UPON THE FACT THAT IT HAD CERTAIN FIXED COSTS WHICH IT HAD PRORATED OVER THE ESTIMATED NUMBER OF CARDS IN THE CONTRACT AND THAT THE COST PER UNIT WOULD HAVE BEEN HIGHER IF THE ESTIMATED NUMBER OF CARDS WERE LOWER.

IN B-176750, MARCH 27, 1963, IT WAS STATED:

"IN REGARD TO REQUIREMENTS CONTRACTS, IN B-169037, MAY 4, 1970, OUR OFFICE STATED:

'*** THERE IS A BASIS FOR RELIEF WHEN THE ESTIMATE OF THE REQUIREMENTS IS NOT BASED ON THE BEST INFORMATION AVAILABLE ***.'

"IN B-173356, SEPTEMBER 27, 1971, OUR OFFICE STATED FURTHER:

'*** WE BELIEVE *** THAT A SHOWING OF GOOD FAITH REQUIRES THAT A DETERMINATION OF THE ESTIMATED REQUIREMENTS BE BASED ON THE BEST INFORMATION AVAILABLE AT THE TIME THE ESTIMATES ARE FORMULATED. ***'"

IN THIS CASE, GSA HAS RECOMMENDED THAT THE CONTRACTOR NOT BE PROVIDED RELIEF BECAUSE IT IS CONTENDED THAT THE ESTIMATE IN THE CONTRACT WAS ISSUED IN GOOD FAITH. IN THAT REGARD, IT IS STATED THAT THE KEYPUNCH AND VERIFICATION CONTRACT WAS ISSUED USING AN ESTIMATE THAT WAS A MAJOR PART OF THE GOVERNMENT'S CRITERIA FOR DETERMINING ITS OWN STAFFING PATTERNS.

ALTHOUGH THE ESTIMATE MAY HAVE BEEN USED FOR GOVERNMENT STAFFING, IT HAS BEEN ASCERTAINED BY OUR OFFICE THAT THE ESTIMATE WAS NOT BASED ON THE BEST INFORMATION AVAILABLE. WE HAVE BEEN ADVISED INFORMALLY THAT THE PROJECT OFFICER FOR THE CARSON CITY SILVER DOLLAR SALE DETERMINED AFTER RESEARCHING THE MATTER THAT THERE ARE 60,000 REGISTERED COIN COLLECTORS. BASED ON THIS AND RELATED FACTS HE CONCLUDED THAT 50,000 "CERTAIN" OFFERS COULD BE EXPECTED WITH AN OUTSIDE LIMIT OF 1,000,000 OFFERS. HOWEVER, THERE HAD BEEN SOME INDICATION THAT THE CONGRESSIONAL EXPECTATION WAS FOR ABOUT 12 TO 15 MILLION OFFERS FOR THE COINS. THERE WAS DOUBT IN GSA THAT SUCH EXPECTATION WOULD BE MET. IT WAS DECIDED THAT A BETTER EXPECTATION MIGHT BE ABOUT FOUR TO FIVE MILLION OFFERS. THEREFORE, THE LATTER ESTIMATE WAS INCLUDED IN THE INVITATION FOR BIDS FOR THE CONTRACT.

SINCE THE ESTIMATE ADOPTED FOR THE CONTRACT WAS SO GROSSLY OUT OF LINE WITH THE RESEARCH CONDUCTED, WE CANNOT AGREE THAT IT TOOK INTO CONSIDERATION THE BEST INFORMATION AVAILABLE AT THE TIME.

THEREFORE, WE CONCLUDE THAT UNDER THE PRINCIPLES QUOTED ABOVE INPUT DATA IS ENTITLED TO RELIEF.

ACCORDINGLY, OUR OFFICE RECOMMENDS THAT GSA TAKE APPROPRIATE STEPS TO NEGOTIATE A SETTLEMENT OF THE INPUT DATA CLAIM.