B-128185, AUG. 29, 1956

B-128185, AUG. 29, 1956

TO HONORABLE FRANKLIN G. FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 9, 1956, WITH ENCLOSURES, FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO AN ERROR THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION ALLEGES IT MADE IN ITS BID OPENED ON NOVEMBER 14, 1955, AND ACCEPTED ON NOVEMBER 21, 1955, BY PURCHASE ORDER NO. 56D-4818-2.

THE FEDERAL SUPPLY SERVICE, DENVER, COLORADO, BY INVITATION NO. 4818, REQUESTED BIDS FOR FURNISHING VARIOUS QUANTITIES OF ELECTRICAL FITTINGS AS DESCRIBED UNDER ITEMS 1 TO 23, INCLUSIVE. THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION SUBMITTED A BID DATED NOVEMBER 9, 1955, ON ITEM 11, IN PART, AS FOLLOWS:

TABLE

ITEM SUPPLIES OR SERVICES QUANTITY UNIT UNITAMOUNT

NO. PRICE

11. (17-C-3400-65) CAPS,

INNERSPRING ATTACHMENT PLUG,

STANDARD SIZE, RUBBER, TWO

WIRE CIRCUIT, NON-POLARIZED,

PARALLEL BLADES 13/32 INCH

SIZE CORD HOLE. IN ACCORDANCE

WITH FED. SPEC. W-R-1514.

STYLE 426 EXCEPT "TO INCLUDE

STEEL SPRINGS BETWEEN BENT

COPPER CONTACTS.' SIMILAR

TO URELL NO. U-1 1,000 EA. ?105 $105.00

THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 11 ON NOVEMBER 21, 1955.

BY LETTER DATED JANUARY 23, 1956, THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION ADVISED THAT IT HAD BEEN UNABLE TO PROCURE THE TYPE OF CAPS REQUIRED BY THE SPECIFICATIONS FROM ITS SUPPLIER; THAT IT WAS MAILING A SAMPLE OF A PLUG WHICH IT COULD FURNISH, AND THAT IF THE SAMPLE PLUG WAS ACCEPTABLE TO THE GOVERNMENT, THE CONTRACT PRICE OF THE PLUGS WOULD BE REDUCED $2.00 PER HUNDRED. BY SPEEDLETTER DATED JANUARY 30, 1956, THE PURCHASING AGENT ADVISED THE CORPORATION THAT THE SAMPLE PLUG SUBMITTED WITH ITS LETTER OF JANUARY 23, 1956, WAS NOT ACCEPTABLE TO THE GOVERNMENT BECAUSE IT DID NOT HAVE STEEL SPRINGS BETWEEN THE BENT COPPER CONTACTS AS REQUIRED BY THE SPECIFICATIONS, AND THAT ITS FAILURE TO DELIVER THE REQUIRED CAPS BY FEBRUARY 8, 1956, COULD RESULT IN TERMINATION AND DEFAULT ACTION WITHOUT FURTHER NOTICE. IN A REPLY DATED FEBRUARY 6, 1956, THE CORPORATION STATED THAT IT WAS NOT UNTIL AFTER RECEIPT OF THE PURCHASE ORDER THAT IT DISCOVERED THAT ITS SUPPLIER'S QUOTATION WAS BASED ON A PLUG WHICH DOES NOT MEET THE REQUIREMENTS OF THE SPECIFICATIONS. THE CORPORATION REQUESTED THAT ITEM 11 OF THE PURCHASE ORDER BE CANCELED IF THE SAMPLE PLUG WAS NOT ACCEPTABLE TO THE GOVERNMENT.

BY TELEGRAM DATED FEBRUARY 17, 1956, THE PURCHASING AGENT ADVISED THE CORPORATION THAT ITS RIGHT TO PROCEED WITH THE CONTRACT WAS TERMINATED. SUBSEQUENTLY A REPLACEMENT CONTRACT FOR THE SAME CAPS WAS ENTERED INTO WITH URELL, INCORPORATED, THE HIGHEST BIDDER ON ITEM 11, AT AN EXCESS COST OF $135 TO THE GOVERNMENT.

IN A LETTER DATED MARCH 15, 1956, THE CORPORATION PROTESTED THE ASSESSMENT OF THE EXCESS COSTS INCURRED BY THE GOVERNMENT IN PROCURING THE FITTINGS COVERED BY ITEM 11 FROM URELL, INCORPORATED, AND IT CONTENDED THAT THE DIFFERENCE OF APPROXIMATELY 60 PERCENT BETWEEN ITS BID PRICE AND THE PRICE QUOTED BY THE MANUFACTURER WAS SUFFICIENT TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE THAT ITS BID PRICE WAS NOT BASED ON A PLUG MEETING THE REQUIREMENTS OF THE SPECIFICATIONS.

IN A LETTER DATED JUNE 6, 1956, TO OUR OFFICE, THE CORPORATION REQUESTED THAT IT BE RELIEVED OF ANY LIABILITY FOR THE EXCESS COSTS INCURRED BY THE GOVERNMENT.

THE ABSTRACT OF BIDS SHOWS THAT URELL, INCORPORATED, THE MANUFACTURER OF THE REQUIRED ITEM, QUOTED A PRICE OF $0.24 EACH FOR ITEM 11 AND THAT TWO OTHER BIDDERS ON THAT ITEM QUOTED PRICES OF $0.21 EACH AND $0.23 EACH. IS REPORTED THAT THE CAPS REQUIRED UNDER THAT ITEM WERE PREVIOUSLY PROCURED ON DIFFERENT OCCASIONS AT PRICES RANGING FROM $0.217 EACH TO $0.26 EACH. IN VIEW OF THE SUBSTANTIAL DIFFERENCE BETWEEN THE BID OF THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION OF $0.105 EACH FOR ITEM 11 AND THE OTHER BIDS RECEIVED ON THAT ITEM, AND THE PRICES PREVIOUSLY PAID THEREFOR, THE PROBABILITY OF ERROR WAS APPARENT AND, IN THE CIRCUMSTANCES, THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION'S BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING IT TO VERIFY ITS BID. THERE APPEARS NO ROOM FOR DOUBT THAT THE BID OF THE CORPORATION WAS NOT BASED ON FURNISHING THE TYPE OF CAPS REQUIRED.

IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CONTRACT AS TO ITEM 11 WAS NOT LEGALLY ENFORCEABLE. IT FOLLOWS THAT THE INDEBTEDNESS FOR EXCESS COSTS STATED AGAINST THE ELECTRIC INDUSTRIAL EQUIPMENT AND SUPPLY CORPORATION SHOULD BE CANCELED.