B-129065, SEP. 7, 1956

B-129065, SEP. 7, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 22, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN BY YOUR DEPARTMENT IN CONNECTION WITH A MISTAKE IN BID ALLEGED BY THE MAX LUMBER AND MILLWORK CORPORATION, JERSEY CITY, NEW JERSEY, AFTER THE AWARD OF UNNUMBERED CONTRACT 7217-PH-56-92, DATED APRIL 26, 1956.

IN RESPONSE TO INVITATION NO. LAB SC-36-039-56-108, DATED APRIL 3, 1956, THE MAX LUMBER AND MILLWORK CORPORATION SUBMITTED A BID FOR FURNISHING 600 SHEETS OF HARDBOARD, OIL TEMPERED, 1/8 INCH BY 4 FEET BY 8 FEET, MASONITE, AT A UNIT PRICE OF $2, OR FOR A TOTAL OF $1,200. THE BID WAS ACCEPTED ON APRIL 26, 1956, BY THE ISSUANCE OF ORDER NO. 7217-PH-56-92.

IT IS REPORTED THAT ON APRIL 30, 1956, THE PRESIDENT OF THE CONTRACTING CORPORATION CALLED THE CONTRACTING OFFICER CLAIMING THAT ITS BID OF $2 PER UNIT WAS THE RESULT OF A CLERICAL ERROR AND SHOULD HAVE BEEN $3 PER UNIT. BY A LETTER OF THAT DATE THE CONTRACTOR FORMALLY ALLEGED ERROR AND STATED THAT THE CARLOAD PRICE ON "THIS MATERIAL" WAS WELL ABOVE ITS BID PRICE, AND REQUESTED THAT THE CONTRACT EITHER BE CANCELLED OR THAT THE PRICE BE ADJUSTED TO $1,800 FOR THE LOT. PURSUANT TO A REQUEST BY THE CONTRACTING OFFICER THE CONTRACTOR BY LETTER OF MAY 29, 1956, SUBMITTED A SHEET FROM A DEALER PRICE LIST FOR MASONITE PRODUCTS INDICATING THAT THE PRICE TO BIDDERS FOR MASONITE SHEETS OF THE TYPE BEING PROCURED WAS $78 PER 1,000 SQUARE FEET, OR APPROXIMATELY $2.50 PER 1/8 INCH BY 4 FEET BY 8 FEET SHEET.

IN THE CONTRACTING OFFICER'S STATEMENT RELATING TO THE ALLEGED MISTAKE IN BID, IT WAS STATED THAT AT THE TIME OF THE BID OPENING IT WAS NOTED THAT CONTRACTOR'S BID WAS SUBSTANTIALLY LOWER THAN THE NINE OTHER BIDS; THAT THE CONTRACTOR'S BID CONTAINED A CORRECTION FROM A STILL LOWER UNIT PRICE AND THAT THE BID AS CORRECTED WAS INITIALED BY THE PRESIDENT OF THE CORPORATION PRIOR TO THE SUBMISSION OF THE BID. ON THE BASIS OF THESE FACTS AWARD WAS MADE WITHOUT FURTHER QUESTION.

IN RECOMMENDING THAT THE CONTRACTOR BE HELD TO ITS BID PRICE, THE CONTRACTING OFFICER STATED THAT, IN HIS OPINION, THE MISTAKE WAS NOT THE RESULT OF AN "INADVERTENT CLERICAL ERROR" AS CLAIMED BY THE CONTRACTOR; THAT IT DOES NOT SEEM REASONABLE THAT SUCH A GLARING OVERSIGHT WOULD OCCUR, AND THAT IT IS MORE LIKELY THAT THE BIDDER WAS NOT FAMILIAR WITH THE COMMODITY AND THAT THE INTENDED BID WAS IN ERROR.

THE ABSTRACT OF BIDS SHOWS THAT TEN BIDS WERE RECEIVED AND THAT THE OTHER NINE RANGED FROM $2.55 TO $3.18 PER SHEET. IT IS OUR VIEW THAT TAKING INTO CONSIDERATION THE NATURE OF THE MATERIAL TO BE FURNISHED--- OF STANDARD MANUFACTURE AND WIDE GENERAL COMMERCIAL USE--- THE CONTRACTOR'S BID OF $2 PER SHEET WAS SUFFICIENTLY OUT OF LINE TO PLACE THE CONTRACTING OFFICER ON NOTICE OF PROBABLE ERROR, AND THUS TO REQUIRE CONFIRMATION BEFORE AWARD. ACCORDINGLY, IT IS OUR CONCLUSION THAT THE CONTRACT HEREIN SHOULD BE CANCELLED.

THE PAPERS TRANSMITTED WITH THE LETTER OF AUGUST 22, 1956, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT AND THE STATEMENT DATED JULY 13, 1956, BY JOHN C. GREGG, ACTING CHIEF, LEGAL DIVISION, ARE RETURNED HEREWITH.