B-145234, MAY 5, 1961

B-145234, MAY 5, 1961

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 3, 1961, WITH ENCLOSURES, FURNISHING A REPORT IN REGARD TO THE REQUEST OF THE CRANE SUPPLY COMPANY, BELTSVILLE, MARYLAND, FOR RELIEF UNDER CONTRACT NO. GS 03S-22137, IN VIEW OF AN ERROR THAT WAS MADE IN ITS BID UPON WHICH THE CONTRACT WAS AWARDED.

IN RESPONSE TO INVITATION NO. WA-IT-R-1092-10-27-60, WHICH WAS ISSUED ON OCTOBER 5, 1960, BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, REGION 3, THE CRANE SUPPLY COMPANY SUBMITTED A BID DATED OCTOBER 20, 1960, OFFERING TO FURNISH, IN COMPLIANCE WITH THE APPLICABLE REQUIREMENTS, SUCH QUANTITIES OF VARIOUS SIZED WROUGHT IRON AND STEEL NIPPLES COVERED BY ITEMS NOS. 1 THROUGH 197, AS MAY BE REQUIRED BY THE GOVERNMENT DURING THE PERIOD DECEMBER 1, 1960, THROUGH NOVEMBER 30, 1961, AT THE PRICES SET FORTH IN THE BID. UPON EVALUATING THE BIDS RECEIVED, IT BECAME EVIDENT TO THE GOVERNMENT CONTRACTING OFFICER THAT THE CRANE SUPPLY COMPANY HAD MADE AN ERROR IN ITS BID ON ITEMS NOS. 1 THROUGH 26 AND 57. THEREFORE, A TELEPHONE REQUEST WAS DIRECTED TO THE COMPANY ON OCTOBER 28, 1960, FOR A VERIFICATION OF ITS BID. AT THAT TIME THE CONTRACTING OFFICER WAS ADVISED THAT THE COMPANY'S BID WAS CORRECT AND BY A LETTER DATED NOVEMBER 8, 1960, THE COMPANY CONFIRMED THE CORRECTNESS OF THE PRICES QUOTED. SUBSEQUENTLY, THE BID OF THE CRANE SUPPLY COMPANY, WHICH WAS THE LOWEST BID RECEIVED ON ITEMS NOS. 1 THROUGH 26, 57, 136 AND 192 THROUGH 195, WAS ACCEPTED BY THE GENERAL SERVICES ADMINISTRATION ON NOVEMBER 17, 1960, THEREBY CONSUMMATING CONTRACT NO. GS-03S-22137. IT APPEARS THAT AFTER RECEIPT OF THE FIRST ORDER UNDER THE CONTRACT, THE CRANE SUPPLY COMPANY ADVISED THE GENERAL SERVICES ADMINISTRATION THAT ITS SUPPLIER, L. E. BECK AND SON, INC., HAD ERRONEOUSLY QUOTED IT A PRICE ON STEEL NIPPLES INSTEAD OF THE WROUGHT IRON AS SPECIFIED UNDER ITEMS NOS. 1 THROUGH 26. THE CRANE SUPPLY COMPANY REQUESTS SOME RELIEF IN VIEW OF THIS ERROR.

GENERALLY, THE ACCEPTANCE OF A BID BY A GOVERNMENT CONTRACTING OFFICER AFTER ITS CORRECTNESS HAS BEEN VERIFIED CONSTITUTES A VALID AND BINDING CONTRACT. HOWEVER, IN THE INSTANT CASE, AS AN EXAMPLE, THE CRANE SUPPLY COMPANY BID $5.54, $7.53 AND $5.67 A CARTON, FOR ITEMS NOS. 1, 2 AND 3, RESPECTIVELY, AS AGAINST THE PRICES OF THE THREE OTHER BIDDERS WHICH RANGED FROM $12 TO $12.80 FOR ITEM NO. 1, $16.52 TO $17.40 FOR ITEM NO. 2, AND $12.39 TO $13.77 FOR ITEM NO. 3. MOREOVER, A COMPARABLE DISPARITY EXISTED BETWEEN THE BID PRICES QUOTED BY THE CRANE SUPPLY COMPANY AND THE THREE OTHER BIDDERS ON ALL OF THE REMAINING ITEMS NOS. 4 THROUGH 26 AND ON ITEM NO. 57--- ORIGINALLY INVOLVED IN THE CONTRACTING OFFICER'S SUSPICION OF ERROR. THUS, IT IS SHOWN THAT THE CRANE BID WAS APPROXIMATELY 100 PERCENT LOWER THAN ALL OTHER BIDS RECEIVED. ALSO, IT IS REPORTED THAT THE COMPANY'S BID WAS BELOW THE GOVERNMENT'S ESTIMATE OF COST. IN ADDITION, THE COMPANY'S BID ON PRACTICALLY ALL OTHER ITEMS, NOS. 27 THROUGH 197, WAS COMPLETELY IN LINE WITH THE OTHER BIDS RECEIVED, ALTHOUGH IT APPEARS THAT THE ONLY BASIC CHANGE WAS THE FURNISHING OF STEEL INSTEAD OF WROUGHT IRON NIPPLES. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT THERE WAS AMPLE REASON FOR THE CONTRACTING OFFICER TO HAVE REQUESTED EVEN A STILL FURTHER CLARIFICATION OF THE COMPANY'S BID ON ITEMS NOS. 1 THROUGH 26 AND 57, PRIOR TO ACCEPTING THE BID. MOREOVER, THERE CAN BE NO DOUBT FROM THE AMOUNT OF THE CRANE SUPPLY COMPANY'S BID ITSELF ON THE QUESTIONABLE ITEMS AND FROM LETTERS OF THE COMPANY AND ITS SUPPLIER THAT AN ERROR WAS MADE IN THE BID, AS ALLEGED.

IN VIEW OF THE FOREGOING, AND SINCE ENFORCEMENT OF CONTRACT NO. GS 03S- 22137 WOULD BE INEQUITABLE, WE THINK IT SHOULD BE AMENDED AS TO ITEMS NOS. 1 THROUGH 26 AND 57, TO REFLECT THE CORRECT COST PRICES OF L. E. BECK AND SON, INC., TO THE CRANE SUPPLY COMPANY, BUT IN NO EVENT TO EXCEED THE PRICE OF THE NEXT LOW ACCEPTABLE BID FOR THOSE ITEMS. THE AMENDMENT SHOULD BE EFFECTIVE RETROACTIVELY TO DECEMBER 1, 1960.

A COPY OF A LETTER FROM THE CRANE SUPPLY COMPANY DATED MARCH 16, 1961, SHOWING EXAMPLES OF ITS CORRECT COST PRICES, AND THE FORMULA FOR ARRIVING AT SAME, TOGETHER WITH A LETTER DATED DECEMBER 30, 1960, FROM L. E. BECK AND SON, INC., AND THAT CORPORATION'S LIST PRICE AND DISCOUNT SHEETS ARE ENCLOSED FOR YOUR USE IN VERIFYING AND ARRIVING AT THE PROPER AMENDED PRICES.