B-128583, JUL. 18, 1956
Highlights
NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS: REFERENCE IS MADE TO A LETTER DATED JULY 11. THE DENNISON ELECTRIC COMPANY SUBMITTED A TELEGRAPHIC BID WHICH WAS LATER CONFIRMED ON A STANDARD FORM 21. 160 AND THE GOVERNMENT'S ESTIMATE OF THE COST OF THE WORK WAS $9. IT IS STATED IN THE ACTING EXECUTIVE OFFICER'S LETTER THAT. WAS IN ERROR BECAUSE OF A MISTAKE IN PRICING ITEM 7 ON PAGE ONE OF MY ESTIMATE SHEETS. ESTIMATE SHEETS AND A CATALOGUE PAGE AND DISCOUNT SHEET TAKEN FROM AN ALLEN BRADLEY COMPANY CATALOGUE ARE ENCLOSED HEREWITH: "ITEM SEVEN. "THE CORRECT COST IS FIVE (5) STARTERS AT $293.00 EACH LESS 36 PERCENT EQUALS $187.52 EACH. "IF THIS AMOUNT HAD BEEN INCLUDED AS IT SHOULD HAVE BEEN.
B-128583, JUL. 18, 1956
TO HONORABLE JEROME C. HUNSAKER, CHAIRMAN, NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS:
REFERENCE IS MADE TO A LETTER DATED JULY 11, 1956, WITH ENCLOSURES, FROM THE ACTING EXECUTIVE OFFICER OF YOUR COMMITTEE, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE DENNISON ELECTRIC COMPANY ALLEGES IT MADE IN ITS BID OPENED ON JUNE 21, 1956.
THE LEWIS FLIGHT PROPULSION LABORATORY, CLEVELAND, OHIO, BY INVITATION NO. C-5570, REQUESTED BIDS FOR FURNISHING MATERIALS AND LABOR AND PERFORMING THE WORK NECESSARY FOR THE INSTALLATION OF POWER AND INTERCONNECTING CONTROLS FOR VALVES, THERMOCOUPLE LEADS, CONDUIT AND MISCELLANEOUS LIGHTING FOR THE COMBUSTION AIR HEATER AT THE ENGINE RESEARCH BUILDING. IN RESPONSE, THE DENNISON ELECTRIC COMPANY SUBMITTED A TELEGRAPHIC BID WHICH WAS LATER CONFIRMED ON A STANDARD FORM 21, BID FORM (CONSTRUCTION CONTRACT), OFFERING TO PERFORM THE WORK FOR THE SUM OF $8,800. THE TWO OTHER BIDDERS ON THE PROJECT SPECIFIED PRICES OF $11,070 AND $26,160 AND THE GOVERNMENT'S ESTIMATE OF THE COST OF THE WORK WAS $9,700.
IT IS STATED IN THE ACTING EXECUTIVE OFFICER'S LETTER THAT, PRIOR TO THE SUBMISSION OF ITS CONFIRMING BID, THE DENNISON ELECTRIC COMPANY ORALLY ADVISED THAT, IN COMPUTING THE NET UNIT PRICE FOR THE FIVE ALLEN-BRADLEY A.C. COMBINATION REVERSING STARTERS (NO. 707BCA99) REQUIRED UNDER THE INVITATION, IT INADVERTENTLY APPLIED A DISCOUNT OF 50 PERCENT INSTEAD OF THE CORRECT DISCOUNT OF 36 PERCENT TO THE LIST PRICE SHOWN ON THE ALLEN- BRADLEY COMPANY'S PRICE LIST AND THAT IT MADE AN ADDITIONAL ERROR BY NOT EXTENDING THE UNIT PRICE FOR THE FIVE STARTERS ON ITS ESTIMATE SHEET.
IN A CONFIRMING LETTER DATED JUNE 22, 1956, THE DENNISON ELECTRIC COMPANY STATED:
"OUR BID OF EIGHTY EIGHT HUNDRED DOLLARS ($8800.00) FOR ELECTRICAL WORK COVERED BY YOUR SPECIFICATIONS C-5570, WAS IN ERROR BECAUSE OF A MISTAKE IN PRICING ITEM 7 ON PAGE ONE OF MY ESTIMATE SHEETS. ESTIMATE SHEETS AND A CATALOGUE PAGE AND DISCOUNT SHEET TAKEN FROM AN ALLEN BRADLEY COMPANY CATALOGUE ARE ENCLOSED HEREWITH:
"ITEM SEVEN, PAGE ONE, SHOWS FIVE (5) SIZE 1 NEMA IV AB707BCA99 STARTERS TO COST $146.50, TOTAL COST FOR FIVE STARTERS.
"THE CORRECT COST IS FIVE (5) STARTERS AT $293.00 EACH LESS 36 PERCENT EQUALS $187.52 EACH, TIMES 5 EQUALS $937.60, MAKING MY ESTIMATED COST TOO LOW BY $791.10.
"IF THIS AMOUNT HAD BEEN INCLUDED AS IT SHOULD HAVE BEEN, AND WAS THEN MARKED UP IN THE CUSTOMARY WAY TO ARRIVE AT A SELLING PRICE, IT WOULD HAVE INCREASED MY BID TO YOU BY ELEVEN HUNDRED DOLLARS ($1100.00), MAKING MY BID PRICE NINETY NINE HUNDRED DOLLARS ($9900.00).
CHART
"VIS.--- ERROR IN COST 791.10
JOB FACTOR 10 PERCENT 79.11
TOTAL 870.21
OVERHEAD 15 PERCENT 130.53
TOTAL 1000.74
PROFIT 10 PERCENT 100.07
INCREASE IN SELLING PRICE $ 1100.81
"WE WOULD QUOTE EVEN DOLLARS, ELEVEN HUNDRED DOLLARS ($1100.00).
"AS YOU CAN SEE BY THE ESTIMATE, THERE IS ONLY $794.46 PROFIT FIGURED IN THE ESTIMATE AND THE $1100.00 WOULD MAKE A NET LOSS OF $305.54 FOR THE JOB.
"IF YOU CAN DO ANYTHING TO HELP US RECOVER THIS MONEY IT WILL BE GREATLY APPRECIATED.'
THE COMPANY ALSO SUBMITTED ITS ORIGINAL ESTIMATE SHEETS AND THE PRINTED PRICE LIST AND DISCOUNT SHEET OF ITS SUPPLIER, THE ALLEN BRADLEY COMPANY. THIS SUPPORTING DATA APPEARS TO ESTABLISH THAT THE ERRORS WERE MADE AS ALLEGED.
ON THE BASIS OF FACTS AND EVIDENCE OF RECORD, THERE THUS APPEARS NO DOUBT THAT THE COMPANY USED THE WRONG DISCOUNT IN COMPUTING THE UNIT PRICE FOR THE STARTERS AND THAT IT FAILED TO EXTEND THE UNIT PRICE FOR THE STARTERS ON ITS ESTIMATE SHEET. ACCORDINGLY, SINCE THE ERRORS WERE ALLEGED AND EXPLAINED PRIOR TO AWARD AND THE INTENDED BID PRICE FULLY ESTABLISHED, THE BID OF THE DENNISON ELECTRIC COMPANY MAY BE CORRECTED TO SHOW THE PRICE AS $9,900, AND AS SO CORRECTED MAY BE CONSIDERED IN MAKING THE AWARD.
IN THE EVENT OF AWARD TO THE DENNISON ELECTRIC COMPANY, A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT.
THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTOR'S ESTIMATE SHEETS AND ITS SUPPLIER'S PRICE LIST, ARE RETURNED.