B-125439, SEP. 30, 1955

B-125439, SEP. 30, 1955

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 6, 1955, WITH ENCLOSURES, RELATIVE TO AN ALLEGED ERROR ON ITEM NO. 3 OF A BID DATED NOVEMBER 18, 1954, SUBMITTED IN RESPONSE TO INVITATION NO. E 41-014-55 31 BY GRAYBAR ELECTRIC COMPANY, INC., ON WHICH UNNUMBERED CONTRACT, PURCHASE ORDER NO. 4 -A-ENG-802 DATED DECEMBER 10, 1954, WAS BASED.

UNDER ITEM NO. 3 PRICES WERE REQUESTED FOR FURNISHING 940 FEET OF UNDERGROUND CABLE,"NO. 6, 3 CONDUCTOR, 5000 V, VC LC.' IN ITS BID ON ITEM THE COMPANY QUOTED A PRICE ON FURNISHING 1,500 FEET OF "GENERAL ELECTRIC NO. SI-12350 SOLID" AT $658 PER THOUSAND FEET, OR $987.

THE ABSTRACT OF BIDS SHOWS THAT OF THE FOUR OTHER BIDS RECEIVED FOR FURNISHING THE SPECIFIED 940 FEET, THE THREE LOWEST WERE ON THE BASIS OF $1.109 PER FOOT EACH AND THE REMAINING BID, AND THE HIGHEST, WAS $1.11 PER FOOT.

BY LETTER DATED JUNE 18, 1955, THE CONTRACTOR REFERRED TO THE AWARD OF THREE ITEMS AND THE COVERING PURCHASE ORDER IN THE AMOUNT OF $999.75, WHICH WAS STATED NOT TO HAVE BEEN RECEIVED UNTIL APRIL 27, 1955, AND ALLEGED ERROR IN ITS BID ON WHICH THE AWARD WAS BASED, STATING THAT THE PRICE QUOTED WAS FOR 600-VOLT, INSTEAD OF THE 5,000 VOLT CABLE CALLED FOR UNDER ITEM NO. 3. PHOTOSTATIC COPIES OF PAGES 13 AND 14 OF THE PRINTED PRICE SHEETS DATED OCTOBER 25, 1954, ISSUED BY ITS SUPPLIER, THE GENERAL ELECTRIC COMPANY, WERE FURNISHED WITH THE LETTER. THE FORMER PAGE CLEARLY SHOWS THE LIST PRICE TO BE $658 PER THOUSAND FEET IN A QUANTITY OF 1,000 FEET AND OVER, FOR THE 600 VOLT CABLE, THE PRICE QUOTED IN THE CONTRACTOR'S BID, AND THE LATTER PAGE ESTABLISHES THE LIST PRICE FOR THE 5,000-VOLT CABLE OF THE REQUIRED TYPE TO BE $1,109 PER THOUSAND FEET IN A QUANTITY OF 1,000 FEET AND OVER. ON EACH PAGE IT IS STATED THAT LISTED PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE. ALSO, THERE WAS FORWARDED THE GENERAL ELECTRIC COMPANY'S COVERING INVOICE, DATED MAY 10, 1955, FOR THE 1,500 FEET OF CABLE FURNISHED IN THE AMOUNT OF $1,615.95 WHICH PRICE IS ON THE BASIS OF $1,134, LESS 5 PERCENT DISCOUNT, PER THOUSAND FEET. THE CONTRACTOR EXPLAINED THAT THE DIFFERENCE BETWEEN THE INVOICED PRICE AND THE PRICE SHOWN ON PAGE 14 OF THE REFERRED-TO SUPPLIER'S PRICE LIST WAS DUE TO A PRICE INCREASE WHICH BECAME EFFECTIVE BETWEEN THE TIME OF ITS BID AND THE DELAYED RECEIPT OF THE NOTICE OF AWARD AND THE GOVERNMENT PURCHASE ORDER.

THE CONTRACTING OFFICER STATES IN A REPORT DATED JULY 13, 1955, THAT UPON CONSIDERING THE BIDS, IT WAS OBSERVED THAT THE PURCHASE OF THE 1,500 FEET OF CABLE OFFERED BY THE CONTRACTOR AT $0.658 PER FOOT WOULD RESULT IN A SMALLER EXPENDITURE OF FUNDS THAN THE PURCHASE OF 940 FEET AT THE NEXT LOWEST PRICE PER THOUSAND FEET AND, THEREFORE, SINCE THE ADDITIONAL "FOOTAGE" COULD BE USED, A CONTRACT FOR THE 1,500 FEET WAS AWARDED TO THE CONTRACTOR ON DECEMBER 10, 1954. HE FURTHER STATES THAT ALTHOUGH THE RECORD INDICATES THAT THE CONTRACT WAS MAILED ON THE DATE OF AWARD, APPARENTLY IT WAS NOT RECEIVED BY THE CONTRACTOR, SINCE THE LATTER DISCLAIMS ANY KNOWLEDGE OF THE AWARD PRIOR TO THE RECEIPT OF INQUIRIES PERTAINING TO DELIVERY. A COPY OF THE CONTRACT WAS THEN MAILED WHICH OBVIOUSLY WAS NOT RECEIVED UNTIL 4 1/2 MONTHS AFTER AWARD. IT IS REPORTED FURTHER THAT ALTHOUGH THE DELIVERY OF THE CABLE WAS COMPLETED ON MAY 20, 1955, NO PAYMENT HAS BEEN MADE SINCE THE CONTRACTOR ELECTED TO WITHHOLD ITS INVOICE UNTIL A DECISION IS RECEIVED CONCERNING ITS REQUEST FOR AN INCREASE IN THE CONTRACT PRICE.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE IS NO DOUBT THAT THE CONTRACTOR MADE A BONA FIDE ERROR IN ITS BID AND THAT, IF NOT FOR THE ERROR, ITS BID WOULD HAVE BEEN $1,109 PER THOUSAND, AS ALLEGED. IN VIEW OF THIS FACT, AND SINCE THE DISCREPANCY BETWEEN THE CONTRACTOR'S BID AND THE AMOUNT AND UNIFORMITY OF THE PRICES QUOTED BY THE FOUR OTHER BIDDERS SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE LOW BID, THE CONCLUSION IS WARRANTED THAT THE CONTRACTOR SHOULD HAVE BEEN AFFORDED AN OPPORTUNITY TO VERIFY ITS BID PRIOR TO AWARD.

ACCORDINGLY, PAYMENT IS AUTHORIZED TO BE MADE TO GRAYBAR ELECTRIC COMPANY, INC., AT A PRICE OF $1,109 PER THOUSAND FEET, AS ADMINISTRATIVELY RECOMMENDED, FOR THE 1,500 FEET OF CABLE FURNISHED UNDER THE CONTRACT, SUCH PRICE BEING NOT IN EXCESS OF THE NEXT LOWEST PRICE RECEIVED ON THE ITEM.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING SUCH PAYMENT.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FINDINGS AND RECOMMENDATIONS DATED JULY 13, 1955, ARE RETURNED.