B-126826, FEB. 9, 1956

B-126826, FEB. 9, 1956

TO THE HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 27, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), REQUESTING A DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN BY YOUR DEPARTMENT IN CONNECTION WITH A MISTAKE IN BID ALLEGED BY RANCHO SUPPLY, DOWNEY, CALIFORNIA, UNDER CONTRACT NO. N244S-49492, COVERING THE SALE OF VARIOUS ITEMS OF SURPLUS PROPERTY BY THE U.S. NAVAL SUPPLY DEPOT, SAN DIEGO, CALIFORNIA.

THE RECORD SHOWS THAT BY INVITATION NO. B-75-56, THE U.S. NAVAL SUPPLY DEPOT OFFERED FOR SALE CERTAIN USABLE PIPE AND BOILER ROOM FITTINGS. RESPONSE THERETO, RANCHO SUPPLY SUBMITTED BIDS ON SEVERAL (19) OF THE ITEMS INVOLVED IN THE INVITATION AND THE SAME WERE ACCEPTED AS TO ITEMS 16, 19, 26, 31, 32, AND 33. IN AN UNDATED COMMUNICATION--- SUBSEQUENTLY REPORTED AS HAVING BEEN DATED OCTOBER 27, 1955--- THE BIDDER ALLEGED MISTAKE IN BID AS TO ITEMS 26, 31, 32, AND 33, IT BEING STATED THAT AN ERROR WAS MADE IN PLACING THE DECIMAL POINT IN THE UNIT PRICES, THE CORRECT AMOUNTS BEING THOSE SHOWN BY THE "DOLLAR" EXTENSION OF TOTAL PRICES.

RESPECTING THE ALLEGED ERROR, THE CONTRACTING OFFICER REPORTS THAT THE BID WAS READ AND RECORDED ON THE BASIS OF THE UNIT PRICES STATED ON THE INVITATION, AND THAT SINCE THE UNIT PRICE AND EXTENSION DID NOT AGREE, AWARD WAS MADE IN ACCORDANCE WITH PARAGRAPH 3, PAGE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, WHICH PROVIDED THAT UNIT PRICES SHOULD CONTROL. IN FURTHER SUPPORT OF HIS RECOMMENDATION THAT RELIEF IN THIS CASE BE DENIED, THE CONTRACTING OFFICER STATED THAT THE BID AS AWARDED DID NOT APPEAR TO BE EXCESSIVE, AS INDICATED BY THE DIFFERENCE BETWEEN THE BID PRICES AND THE ACQUISITION COSTS.

IT SEEMS APPARENT FROM AN EXAMINATION OF THE BIDS IN THIS CASE THAT ERRORS WERE MADE EITHER IN THE UNIT PRICES OR IN THE EXTENSIONS, SINCE THE QUANTITIES MULTIPLIED BY THE UNIT PRICES DO NOT EQUAL THE AMOUNTS OF THE EXTENSIONS. THE CONTRACTOR ALLEGES THAT HE MISPLACED THE DECIMAL POINT IN THE UNIT PRICES, AND THAT HE INTENDED TO BID ONLY THE AMOUNTS SHOWN IN THE EXTENSIONS. THIS ALLEGATION OF ERROR IS SUPPORTED BY THE FACT THAT THE BIDDER MADE A DEPOSIT OF $168, REPRESENTING APPROXIMATELY TWENTY PERCENT OF HIS TOTAL BID PRICES AS SHOWN BY THE EXTENSIONS OF THE 19 ITEMS ON WHICH BIDS WERE MADE, BUT MUCH LESS THAN THE TOTAL BIDS IF COMPUTED ON THE BASIS OF THE UNIT PRICES.

SINCE THE EXTENDED TOTAL PRICES ON THE ITEMS IN QUESTIONS WERE IN LINE WITH THE OTHER BIDS RECEIVED, WHEREAS THE UNIT PRICES QUOTED RESULTED IN TOTALS IN THE RANGE OF TEN TIMES THE OTHERS, WE FEEL THAT THE CONTRACTING OFFICER SHOULD HAVE CALLED FOR VERIFICATION OF THE BIDS BEFORE ACCEPTING THE UNIT PRICES WHICH WERE INCONSISTENT BOTH WITH THE TOTALS SHOWN AND WITH OTHER BIDS. IT IS OUR VIEW THAT THE ACQUISITION COSTS OF THE SEVERAL ITEMS IS NOT PERSUASIVE WHERE A SUFFICIENT NUMBER OF BIDS WITHIN A FAIRLY CLOSE RANGE WERE RECEIVED TO INDICATE A GENERAL CONCURRENCE AMONG BIDDERS AS TO FAIR VALUE.

INASMUCH AS IT APPEARS FROM THE RECORD IN THIS CASE THAT THE CONTRACTOR MADE A BONA FIDE ERROR IN QUOTING ON THE FOUR ITEMS DUE TO MISPLACING THE DECIMAL POINT IN THE UNIT PRICES, AND THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD, THE AWARD MAY NOT BE REGARDED AS BINDING AND SHOULD BE CANCELED.

THE ENCLOSURES TO THE LETTER OF JANUARY 27, 1956, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS, ARE RETURNED HEREWITH.