B-124625, SEP. 30, 1955

B-124625, SEP. 30, 1955

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR THE PALLEY SUPPLY COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N261S-210 IS BASED.

BY SALES CATALOG NO. B-204-55, THE U.S. NAVAL SUPPLY DEPOT, SAN PEDRO, CALIFORNIA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF MISCELLANEOUS USABLE PLANT AND SHOP EQUIPMENT. IN RESPONSE, THE PALLEY SUPPLY COMPANY SUBMITTED A BID DATED APRIL 13, 1955, OFFERING TO PURCHASE VARIOUS ARTICLES AT CERTAIN SPECIFIED PRICES INCLUDING THE FOLLOWING:

* * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * *

THE ABSTRACT OF BIDS SHOWS THAT THE SEVEN OTHER BIDS ON ITEM 19 RANGED FROM $1.436 EACH TO $0.04 EACH. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $500, WAS ACCEPTED AS TO ITEM 19 ON APRIL 18, 1955.

BY LETTER DATED APRIL 20, 1955, THE PALLEY SUPPLY COMPANY ADVISED AS FOLLOWS:

"CONFIRMING OUR TELEPHONE CONVERSATION OF THIS DATE, WE WOULD LIKE TO CALL YOUR ATTENTION TO AN ERROR ON OUR BID WHEREIN WE INADVERTENTLY PLACED A $3.28 BID ON ITEM 19, CONFUSING IT WITH ITEM 18. YOU WILL NOTE ON ITEM 20 WE REMEDIED OUR MISTAKE AND CHANGED OUR BID TO .282 BUT OVERLOOKED ITEM 19. IN CHECKING OVER OUR ENTIRE BID, YOU WILL NOTE ON COMPARABLE ITEMS WE BID WITHIN THE RANGE AS SHOWN ON ITEM 20.

"THEREFORE, WE WOULD BEG YOUR INDULGENCE IN THAT YOU CANCEL OUT OUR BID ON ITEM 19 AND RETURN THE DEPOSIT OF $500.00 SINCE WE WERE NOT HIGH ON ANY OTHER ITEMS.'

THE ARTICLES COVERED BY ITEMS 19 AND 20 ARE IDENTICAL IN EVERY RESPECT AND FOR THOSE ITEMS THE PALLEY SUPPLY COMPANY QUOTED PRICES OF $3.28 EACH AND $0.282 EACH, RESPECTIVELY. IT IS OBVIOUS THAT THE COMPANY DID NOT INTEND TO QUOTE 11 TIMES MORE FOR THE DRILLS COVERED BY ITEM 19 THAN FOR THE IDENTICAL DRILLS COVERED BY ITEM 20. ALSO, IN CONTRAST TO THE QUOTATION OF $3.28 EACH FOR THE 1 1/32 INCH SIZE DRILLS COVERED BY ITEM 19, THE COMPANY QUOTED ONLY $0.282 EACH FOR THE 27/32 INCH SIZE OF THE SAME TYPE OF DRILLS UNDER ITEMS 21 AND 22. FURTHERMORE, IT IS NOTED THAT THE PRICE QUOTED BY THE COMPANY FOR ITEM 19 IS APPROXIMATELY 86 PERCENT OF ITS ORIGINAL ACQUISITION COST WHEREAS THE PRICES QUOTED BY THE COMPANY ON 21 OF THE 24 OTHER ITEMS IT BID ON DO NOT IN ANY INSTANCE EXCEED SIX PERCENT OF THE ORIGINAL ACQUISITION COST OF THE ITEM INVOLVED. IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID AND, THEREFORE, THE BID OF THE PALLEY SUPPLY COMPANY AS TO ITEM 19 SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID.

ACCORDINGLY, THE AWARD TO THE PALLEY SUPPLY COMPANY ON ITEM 19 SHOULD BE CANCELED AND ITS BID DEPOSIT SHOULD BE REFUNDED.