B-129044, SEPTEMBER 28, 1956, 36 COMP. GEN. 254

B-129044, SEPTEMBER 28, 1956, 36 COMP. GEN. 254

CONTRACTS - MISTAKES - VERIFICATION - INDICATION OF SUSPECTED ERROR - CANCELLATION A BIDDER WHO, AT THE REQUEST OF THE CONTRACTING OFFICER, MERELY CONFIRMED THE TOTAL PRICE IN A BID FOR FURNISHING BEARINGS BECAUSE ATTENTION WAS NOT DIRECTED TO THE PACKAGING PRICE, WHICH WAS APPROXIMATELY ONE-EIGHTH OF THE PRICE QUOTED BY THE ONE OTHER BIDDER WHO SUBMITTED A SEPARATE PACKAGING QUOTATION, HAS NOT SUBSTANTIATED THE BID SO AS TO OVERCOME THE DOUBT WHICH SHOULD HAVE BEEN RAISED BY THE WIDE DISCREPANCY IN THE PACKAGING PRICES, AND, ACCORDINGLY, THE CONTRACT WHICH WAS AWARDED AFTER CONFIRMATION IS NOT LEGALLY ENFORCEABLE AND SHOULD BE CANCELED AND THE CONTRACTOR RELIEVED OF ALL LIABILITY.

TO THE SECRETARY OF THE ARMY, SEPTEMBER 28, 1956:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TAKEN CONCERNING AN ERROR THE KEYSTONE CARBON COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-20-113-ORD-19794 WAS AWARDED.

IT APPEAR THAT THE ORDNANCE TANK-AUTOMOTIVE COMPANY, DETROIT, MICHIGAN, BY AN EARLIER INVITATION, NO. ORD-20-113-55-1076, REQUESTED BIDS--- TO BE OPENED JUNE 6, 1955--- FOR THE MANUFACTURE OF 14,208 MAGNETO HOUSING BEARINGS AND THAT, IN RESPONSE TO THAT INVITATION, TEN BIDS WERE RECEIVED RANGING FROM $0.1075 TO $0.3248 PER BEARING, THE HIGHEST OF WHICH WAS SUBMITTED BY THE KEYSTONE CARBON COMPANY. IN THIRD ENDORSEMENT DATED JUNE 8, 1956, THE CONTRACTING OFFICER STATED THAT NO AWARD WAS MADE ON THE BASIS OF INVITATION NO. ORD-20-113-55 1076 FOR THE REASON THAT DIMENSIONAL ERROR HAD BEEN MADE IN THE SPECIFICATIONS AND, THEREFORE, SAID INVITATION WAS CANCELED; THAT INVITATION NO. ORD-20-113-55-1365 WAS ISSUED REQUESTING BIDS--- TO BE OPENED AUGUST 1, 1955--- FOR FURNISHING ESSENTIALLY THE SAME TYPE OF BEARINGS IN THE SAME QUANTITY AS SPECIFIED IN THE PREVIOUS INVITATION. IN RESPONSE TO THE LATTER INVITATION, THE KEYSTONE CARBON COMPANY SUBMITTED A BID DATED JULY 22, 1955, IN THE AGGREGATE AMOUNT OF $1,021.74, MADE UP AS FOLLOWS:

TABLE ITEM SUPPLIES OR SERVICES QUANTITY UNIT UNIT AMOUNT NO.

PRICE

G55-2825 1 BEARING, PLAIN SLEEVE, BUSHING 14,208 EA .042 596.74

TYPE, MAGNETO HOUSING.

MANUFACTURED IN ACCORDANCE WITH

DETROIT PLUS 295.00

ARSENAL PURCHASE DESCRIPTION AS

FOLLOWS: TOOLS

(1) MATERIAL IS BEARING BRONZE, PLUS 130.00

SINTERED, METAL POWDER, OIL IMPREGNATED PACKAGING

TYPE I, COMPOSITION A, SPECIFICATION MIL-B-5687A, DATED 9

SEPTEMBER 1953. 2 (2) DIMENSIONS ARE:

LENGTH . . . .--- .750 PLUS .055 726.74

OUTER DIAMETER--- .688 PLUS .000 MINUS .001 PLUS 295.00

INNER DIAMETER--- .516 PLUS .000 MINUS .001 TOOLS

THE ABSTRACT OF BIDS SHOWS THAT NINE OTHER BIDS WERE RECEIVED ON THE BEARINGS; THAT ONE OF THE BIDDERS SPECIFIED A PRICE OF $0.076 EACH FOR THE BEARINGS AND A SPECIAL PACKAGING CHARGE OF $0.072 PER BEARING, MAKING A TOTAL UNIT PRICE OF $0.1462 FOR THE ITEM, AND THAT THE OTHER BIDDERS ON THE BEARINGS QUOTED UNIT PRICES (PACKING INCLUDED), RANGING FROM $0.08085 TO $0.2304.

THE RECORD SHOWS THAT ON AUGUST 1, 1955, THE KEYSTONE CARBON COMPANY WAS REQUESTED BY TELEPHONE TO FURNISH A CERTIFICATION THAT THE PERSON WHO SIGNED THE COMPANY'S BID WAS AUTHORIZED TO SIGN BIDS AND CONTRACTS ON ITS BEHALF AND, ALSO, TO "CONFIRM THAT THE TOTAL PRICE OF THE BID IS $1021.74.' BY LETTER DATED AUGUST 1, 1955, THE COMPANY ADVISED THE " THE SUBJECT INVITATION IS CORRECTLY PRICED, TOTAL AMOUNT $1021.74 ARRIVED AT BY THE PIERCE PRICE, $596.74, TOOLS $295.00, PACKAGING $130.00.' THE BID OF THE KEYSTONE CARBON COMPANY WAS ACCEPTED ON AUGUST 10, 1955, AND ON AUGUST 19, 1955, THE CONTRACT WAS FORWARDED TO THE PITTSBURGH ORDNANCE DISTRICT FOR ADMINISTRATION BY THE ORDNANCE TANK-AUTOMOTIVE COMMAND.

BY LETTER DATED AUGUST 19, 1955, IN WHICH IT REQUESTED THAT IT BE RELIEVED FROM PERFORMANCE OF THE CONTRACT, THE KEYSTONE CARBON COMPANY ADVISED THAT AN ERROR HAD BEEN MADE IN ITS BID IN THAT THE CHARGE FOR PACKAGING THE BEARINGS SHOULD HAVE BEEN STATED AS BEING $130 PER THOUSAND OR $1,847.04 FOR PACKAGING THE TOTAL QUANTITY OF 14,208 BEARINGS. THE COMPANY CONTENDED THAT THE CONTRACTING OFFICER SHOULD NOT HAVE ACCEPTED ITS BID WITHOUT QUESTIONING THE COMPANY ABOUT THE INADEQUACY OF THE AMOUNT ALLOWED BY IT FOR THE PACKAGING FO THE BEARINGS. IN SUPPORT OF ITS ALLEGATION OR ERROR, THE COMPANY SUBMITTED A PHOTOSTATIC COPY OF A LETTER QUOTATION DATED JULY 15, 1955, RECEIVED FROM ITS SUBCONTRACTOR, FORT PITT PACKAGING COMPANY, INC., PITTSBURGH, PENNSYLVANIA, IN WHICH THE COMPANY WAS QUOTED A PRICE OF $0.11 EACH FOR PACKAGING 14,208 BEARING SLEEVES.

IT IS REPORTED THAT ONLY AN INFINITESIMAL COST DIFFERENTIAL EXISTS BETWEEN THE MANUFACTURE OF THE BEARINGS THAT WERE REQUIRED UNDER INVITATION NO. 20-113-55-1076--- THE CANCELED INVITATION--- AND THE MANUFACTURE OF THE BEARINGS REQUIRED UNDER THE SUBJECT INVITATION IS SUBSTANTIALLY HIGHER THAN THE COST OF THE PACKAGING THAT WAS REQUIRED UNDER THE CANCELED INVITATION; AND THAT THE PURCHASE ASSIGNMENT BOARD OF THE COMMAND HAD IN JUNE, 1955, ESTIMATED THE COST OF THE BEARINGS REQUIRED UNDER THE SUBJECT INVITATION AT $0.75 EACH. THE KEYSTONE CARBON COMPANY'S AVERAGE GROSS UNIT PRICE OF $0.0719 WAS THUS LESS THAN TEN PERCENT OF THE GOVERNMENT'S ESTIMATE, AND ITS LUMP-SUM PRICE OF $130 FOR PACKAGING, WHICH AMOUNTS TO APPROXIMATELY $0.0092 PER BEARING, WAS ALSO LESS THAN TEN PERCENT OF THE PACKAGING COST OF $0.11 PER UNIT, LABOR AND MATERIAL ONLY, COMPUTED BY THE PITTSBURGH ORDNANCE DISTRICT.

WHILE IT APPEARS THAT PRIOR TO AWARD, THE KEYSTONE CARBON COMPANY CONFIRMED ITS BID PRICE ON THE BEARINGS, IT DOES NOT APPEAR THAT THE REQUEST FOR CONFIRMATION WAS SUCH AS TO DIRECT ITS ATTENTION TO THE PACKAGING ELEMENT OF ITS BID, BUT RATHER THAT THE ONLY REASON STATED FOR CONTACTING THE KEYSTONE CARBON COMPANY WAS TO CLARIFY THE TOOLING CHARGE WHICH WAS SET FORTH IN TWO PLACES ON THE COMPANY'S BID. IN THE CIRCUMSTANCES, AND SINCE THE CONTRACTING OFFICER WAS AWARE OF THE FACT THAT THE PRICE QUOTED BY THE COMPANY FOR PACKAGING OF THE BEARINGS WAS APPROXIMATELY ONE-EIGHTH OF THE PRICE QUOTED BY THE ONE OTHER BIDDER QUOTING A SEPARATE PRICE FOR THE PACKAGING OF THE BEARINGS, IT MAY BE QUESTIONED WHETHER THE BARE CONFIRMATION OF THE TOTAL BID PRICE WAS SUFFICIENT TO OVERCOME THE DOUBT WHICH SHOULD HAVE BEEN RAISED BY THE WIDE DISCREPANCY BETWEEN THE PACKAGING PRICES QUOTED BY THE COMPANY AND BY THE OTHER BIDDER.

WE ARE ACCORDINGLY OF THE OPINION THAT THE CONTRACT IS NOT LEGALLY ENFORCEABLE, AND THAT THE AWARD MADE TO THE KEYSTONE CARBON COMPANY ON AUGUST 10, 1955, SHOULD BE CANCELED AND THE COMPANY RELIEVED OF ALL LIABILITY UNDER ITS BID AS RECOMMENDED BY THE SUCCESSOR CONTRACTING OFFICER.