B-148834, MAY 28, 1962

B-148834, MAY 28, 1962

TO THE SECRETARY OF THE ARMY:

THIS REFERS TO A LETTER DATED MAY 7, 1962, WITH ENCLOSURES, FROM YOUR DEPARTMENT, REQUESTING OUR DECISION ON A CLAIM FOR A PRICE INCREASE OF $215,991, SUBMITTED BY THE GENERAL TIRE AND RUBBER COMPANY, BY REASON OF A MISTAKE IN BID ALLEGED AFTER AWARD OF CONTRACT NO. DA-30-070-CML-1578, ORDER NO. NY2-340, DATED SEPTEMBER 29, 1961.

INVITATION NO. GML-30-070-62-29, WAS ISSUED BY THE UNITED STATES ARMY CHEMICAL PROCUREMENT DISTRICT, NEW YORK, ON AUGUST 25, 1961, CALLING FOR BIDS ON A TOTAL QUANTITY OF 500,000 MASKS PROTECTIVE, FIELD M-17. THE BID OPENING WAS HELD ON SEPTEMBER 25, 1961, AND 6 BIDS WERE TABULATED AS FOLLOWS:

TABLE

UNIT PRICE OFFERED

GENERAL TIRE AND RUBBER COMPANY $ 9.57

2ND LOW BIDDER $10.12

3RD DO DO $10.53

4TH DO DO $11.68

5TH DO DO $13.33

6TH DO DO $18.023

ON SEPTEMBER 29, 1961, GENERAL TIRE AND RUBBER COMPANY RECEIVED AWARD OF CONTRACT NO. DA-03-070-CML-1578, AT A UNIT PRICE OF $9.57 OR A TOTAL CONTRACT PRICE OF $4,785,000.

BY LETTER DATED DECEMBER 12, 1961, THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICER THAT TWO ERRORS OCCURRED IN ITS BID. THE LETTER WAS IN CONFIRMATION OF ORAL CONVERSATIONS HELD THE PREVIOUS DAY AT THE CONTRACTING OFFICE. IT WAS STATED THAT ONE OF THE ERRORS RESULTED FROM AN IMPROPER PLACEMENT OF A DECIMAL IN THE COST OF ONE OF THE COMPONENTS, AND THE OTHER ERROR WAS THE OMISSION OF THE COST OF THE WOODEN BOX IN THE PACKAGING REQUIREMENT.

BY LETTER OF JANUARY 12, 1962, THE CONTRACTOR SUBMITTED DETAILS OF ITS ALLEGATION OF ERROR TOGETHER WITH COPIES OF ITS WORKSHEETS. WITH RESPECT TO THE MISPLACED DECIMAL, THE EVIDENCE SUBMITTED INDICATES THAT INSTEAD OF INCLUDING A COST FACTOR OF $125 PER THOUSAND FACEFORMS (BASED UPON A SUPPLIER'S QUOTATION OF 11 1/2 CENTS EACH, PLUS ONE CENT MARKUP), THE CONTRACTOR BY MISTAKE INCLUDED IN ITS BID ESTIMATE ONLY $12.50 PER THOUSAND. THIS RESULTED IN AN ERROR OF $56,250. HOWEVER, SINCE THE CONTRACTOR HAS ALLOWED A DISCOUNT OF 10 PERCENT, THE TOTAL CLAIMED ERROR IS $50,625.

THE SECOND ERROR PERTAINS TO AN ALLEGED FAILURE TO INCLUDE THE COST OF WOODEN BOXES AND KLIMPS. THE INVITATION AS ISSUED CONTAINED AN INCONSISTENCY IN THE TERMS RELATING TO PACKAGING REQUIREMENTS. AMENDMENT NO. 1 TO THE INVITATION, ISSUED ON SEPTEMBER 15, 1961, REDEFINED THE PACKAGING AND PACKING REQUIREMENTS TO REQUIRE FIBER BOARD AND WOODEN BOX PACK FOR ALL OF THE MASKS, AS SPECIFIED. THE CONTRACTOR STATES AS FOLLOWS:

"THE SPECIFICATIONS FOR PACKING HAVE BEEN CONFUSING AND CONTRADICTORY. THE FIRST M-17 CONTRACT WAS AWARDED TO GENERAL TIRE USING THE WOODEN PACKING BOX, HOWEVER, THE LAST LARGE PRODUCTION CONTRACT ON WHICH WE WERE A BIDDER EVEN THOUGH NOT SUCCESSFUL, WAS ON THE BASIS OF THE FIBERBOARD BOX. OUR CONTRACT NOW APPARENTLY SPECIFIES THE FIBERBOARD BOX, LESS THE COVER PACKED IN THE WOODEN BOX, PLUS THE KLIMPS.

"IN EXPLANATION OF OUR COSTS IT WILL BE NOTED IN EXHIBITS 3 AND 4 WE USED THE COST OF $144.15/M OR .14415/MASK, WHICH IS THE FIBERBOARD BOX COMPLETE. IN ERROR WE OMITTED THE COST OF THE WOODEN BOX SHOWN ON EXHIBIT 6 AND THE KLIMPS SHOWN ON EXHIBIT 7, BOTH OF WHICH WERE QUOTED TO US ONLY AFTER OUR ERROR BECAME KNOWN. COST ANALYSIS SHEET (EXHIBIT 8), SHOWS THE TOTAL AMOUNT THAT WAS OMITTED FROM OUR BID BY MISINTERPRETATION AND ERROR. THE ACTUAL AMOUNT OF ERROR II WAS $183,740.

"IT IS OUR OPINION THAT THERE WAS SO MUCH CONFUSION CAUSED BY THE EXTREME NUMBER OF CHANGES INVOLVED THAT IT IS SURPRISING THAT EVEN MORE ERRORS WERE NOT MADE. WE ARE NOT ATTEMPTING TO DISCREDIT THE CHEMICAL CORPS BY THE ABOVE COMMENTS OR THESE TO FOLLOW BUT ARE MERELY TRYING TO SHOW THAT A CONDITION DID EXIST, UNDESIRABLE BOTH TO THE CHEMICAL CORPS AND THE BIDDERS, WHICH WE FEEL GREATLY CONTRIBUTED TO THESE ERRORS.

"IT IS RECOGNIZED THAT THE PROCUREMENT OF THIS ITEM WAS MOST URGENT AND HAD TO BE MADE AT A TIME WHEN THE MASK HAD UNDERGONE NUMEROUS CHANGES, REQUIRING DRAWINGS AND SPECIFICATIONS TO BE REVISED AND THERE WAS NOT SUFFICIENT TIME TO DO SO BY THE CHEMICAL CORPS.

"WE REQUESTED BY TELEPHONE THAT AN EXTENSION BE GRANTED ON THE BID OPENING AND WERE ADVISED THIS WAS NOT POSSIBLE. THUS IT CAN BE SEEN THAT WE HAD VERY LITTLE ACTUAL TIME TO WORK ON A BID OF SUCH A COMPLEX NATURE AND A LARGE DOLLAR AMOUNT AND STILL HAVE IT IN YOUR HANDS BY THE CLOSING DATE OF SEPTEMBER 25.

"WE CERTAINLY REGRET SUCH AN ERROR AND AS YOU KNOW, IN DEALING WITH GENERAL TIRE IF IT WERE SMALLER IN NATURE NOTHING WOULD EVER BE SAID. THIS CASE, HOWEVER, WE ARE CERTAIN YOU ARE BUYING THIS ITEM FAR UNDER ITS TRUE COST AND FAR UNDER YOUR OWN ORIGINAL ESTIMATES. IN ADDITION YOU HAVE RECENTLY NEGOTIATED A CONTRACT WITH ANOTHER SUPPLIER FOR THE SAME ITEM, WHO IS SET UP, TOOLED AND IN PRODUCTION. WE BELIEVE THAT A COMPARISON OF THESE NEGOTIATED COSTS AND THOSE PRESENTED HERE WOULD SUBSTANTIATE OUR CLAIM.

"WE THEREFORE FEEL YOU CAN CLEARLY RECOGNIZE THAT AN ERROR HAS BEEN MADE AND WITH THE DATA FURNISHED YOU WILL EITHER BE IN A POSITION TO AMEND THE CONTRACT OR RECOMMEND THE APPROVAL OF SUCH AMENDMENT.'

IT IS REPORTED THAT THIS INVITATION WAS THE FOURTH PROCUREMENT OF THE M 17 MASK AND THE COMPETITION AMONG BIDDERS HAS BEEN SO KEEN THAT THE PRICE HAS STEADILY BEEN GOING DOWN. ON TWO PRIOR NEGOTIATED PROCUREMENTS OF THE MASK THE CONTRACTORS VOLUNTARILY OFFERED SUBSTANTIAL DISCOUNTS TO INSURE WINNING AN AWARD. ONE OF THESE CONTRACTORS IS THE SUBJECT CONTRACTOR, THE GENERAL TIRE AND RUBBER COMPANY.

UNDER THE TERMS OF THE CONTRACT DELIVERY IS TO COMMENCE IN JULY 1962, WITH COMPLETE DELIVERY BY JUNE 1963. IT IS REPORTED THAT NO DELIVERIES OR PAYMENTS HAVE BEEN MADE AT THIS TIME.

THERE IS EVIDENCE IN THE RECORD TO INDICATE THAT THE CONTRACTOR DID MAKE THE ERRORS IN BID AS ALLEGED. HOWEVER, WE FIND NO BASIS TO CONCLUDE THAT AT THE TIME THE BID WAS ACCEPTED BY THE CONTRACTING OFFICER HE WAS AWARE, OR SHOULD HAVE SUSPECTED THAT AN ERROR IN BID HAD OCCURRED. ANALYSIS OF THE BID PRICES REVEALS THAT THE DIFFERENCE BETWEEN THE LOW BID AND THE OTHER BIDS IS NOT SO SIGNIFICANT AS TO INDICATE AN ERROR OR PUT THE CONTRACTING OFFICER ON INQUIRY AS TO THE POSSIBILITY OF ERROR. THE VARIANCE BETWEEN THE GENERAL TIRE BID OF $9.37 PER UNIT AND THE NEXT LOW BID OF $10.12 IS 5.7 PERCENT, AND THERE IS A VARIANCE OF 10 PERCENT BETWEEN THE LOW BID AND THE THIRD LOW BID OF $10.53. WE DO NOT REGARD THESE VARIANCES AS UNUSUAL OR INDICATIVE OF ERROR IN THE LOW BID, ESPECIALLY CONSIDERING THE STRONG COMPETITION TO SECURE AWARDS IN THIS FIELD.

ALTHOUGH THE ORIGINAL INVITATION DID CONTAIN AN AMBIGUITY WITH REGARD TO THE PACKAGING AND PACKING REQUIREMENTS, THE AMBIGUITY WAS REMOVED BY AN AMENDMENT TO THE INVITATION WHICH, ACCORDING TO THE ADMINISTRATIVE FILE, REDEFINED THE EXACT PACKAGING AND PACKING REQUIREMENTS IN CLEAR AND UNMISTAKABLE TERMS. IT MAY BE THAT THE BIDDER WAS PRESSED FOR TIME IN THE PREPARATION OF ITS BID. HOWEVER, IF THE BIDDER UNDERTAKES TO SUBMIT A BID UNDER SUCH CONDITIONS, HE MUST ASSUME THE RESPONSIBILITY FOR ITS PREPARATION, AND IN THE ABSENCE OF ANYTHING TO PLACE THE CONTRACTING OFFICER ON NOTICE OF AN ERROR, THE ACCEPTANCE OF THE SUBMITTED BID CONSUMMATES A VALID AND BINDING CONTRACT UPON THE TERMS SUBMITTED. SEE 40 COMP. GEN. 326 AND CASES CITED THEREIN.

ACCORDINGLY YOU ARE ADVISED THAT WE FIND NO BASIS TO GIVE ANY RELIEF TO THE CONTRACTOR OR FOR PAYMENT OF ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE.