B-132076, JUN. 27, 1957

B-132076, JUN. 27, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MAY 31, 1957, FROM THE ASSISTANT SECRETARY (LOGISTICS), WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY HOLLEY, INC., TALLAHASSEE, FLORIDA, TO HAVE BEEN MADE IN ITS BID FOR FURNISHING HAMMERS SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 01 044-57-49, ISSUED BY THE CONTRACTING OFFICER, FORT RUCKER, ALABAMA, UNDER DATE OF DECEMBER 31, 1956. THE BID WAS ACCEPTED AND BECAME THE BASIS OF PURCHASE ORDER NO. 1964-57 (4).

THE INVITATION REQUESTED BIDS, TO BE OPENED JANUARY 23, 1957, FOR FURNISHING 69 ITEMS OF SUPPLIES INCLUDING 388 HAMMERS WHICH ARE DESCRIBED IN ITEM NO. 38 AS FOLLOWS:

"5120-357-6074 (8560) HAMMER, INSERTED FACE, PLASTIC, 1 INCH HEAD DIAM, 3 1/2 INCH HEAD LGH, 5 OZ., WITH 2 EA SOFT, MED, TOUGH AND NYLON FACES"

IN RESPONSE TO THE INVITATION, HOLLEY, INC., SUBMITTED BIDS ON NUMEROUS ITEMS, INCLUDING A BID OF $1.155 EACH FOR THE HAMMERS DESCRIBED IN ITEM NO. 38. THE EIGHT OTHER BIDS RECEIVED ON THIS ITEM WERE IN THE FOLLOWING AMOUNTS: $3.77, $6.23, $6.40, $6.50, $6.65, $6.88, $6.95, AND $8.488. UNDER DATE OF JANUARY 30, 1957, BECAUSE OF THE DISPARITY IN BID PRICES, THE CONTRACTING OFFICER SENT THE FOLLOWING TELEGRAM TO HOLLEY, INC.:

"RE INVITATION 01-044-57-49 REQUEST VERIFICATION BY RETURN WIRE OF UNIT PRICE OF ITEM 38.'

BY TELEGRAM DATED JANUARY 31, 1957, HOLLEY, INC. REPLIED:

"REF YOUR WIRE INVITATION 01-044-57-49 ITEM 38 IS CORRECT AT 1.155 EACH; TOTAL $448.14. WE BID ON PLOMB TOOL NO P100.'

BY LETTER DATED FEBRUARY 12, 1957, THE CONTRACTING OFFICER NOTIFIED HOLLEY, INC., THAT ITS BID HAD BEEN ACCEPTED AS TO THREE ITEMS, INCLUDING ITEM NO. 38. IT IS REPORTED THAT ON OR ABOUT MARCH 15, 1957, HOLLEY, INC., ADVISED THE CONTRACTING OFFICER THAT IT HAD MADE A MISTAKE IN ITS BID ON ITEM NO. 38. THE CONTRACTOR WAS INSTRUCTED TO FURNISH THE SUPPLIES, WHICH WERE URGENTLY NEEDED, AND TO APPLY FOR ADDITIONAL PAYMENT. ACCORDINGLY, THE SUPPLIES WERE FURNISHED AND BY LETTER DATED MARCH 28, 1957, THE CONTRACTOR EXPLAINED THE ERROR AS FOLLOWS:

"WE ARE ENCLOSING PHOTOSTAT COPIES OF OUR QUOTATION FROM PROTO TOOL CO., SO YOU MAY SEE HOW THE ERROR WAS MADE. WE FIGURED ON JUST THE P 100 HAMMER WHICH LIST FOR 2.20 EACH LESS 50 PERCENT DISCOUNT PLUS 5 PERCENT WHICH GAVE OUR BID PRICE OF 1.555 EA. WHEREAS THE ADDITIONAL HEADS YOU REQUIRED WE DID NOT PICK UP FROM PROTO QUOTATION. THE 388 UNITS AS REQUIRED BY YOUR QUOTATION LIST FOR A TOTAL PRICE OF $4500.80 LESS 50 PERCENT GIVING OUT NET COST OF $2250.40. WE WOULD APPRECIATE YOUR INCREASING YOUR PURCHASE ORDER ON THIS ITEM TO MEET OUR ACTUAL COST OF $2,250.40.

"WE REALIZE THIS IS STRICTLY AN ERROR ON OUR PART. SINCE YOU WIRED US TO VERIFY OUR QUOTATION BY RETURN WIRE ON ITEM 38. WE OF COURSE AGAIN LOOKED UP PROTO QUOTATION AND SEEING THEIR BID ON THE P-100, WIRED YOU BACK TO EFFECT WE WERE BIDDING ON PROTO P-100, AGAIN NOT CATCHING THE EXTRA HEADS AS LISTED UNDERNEATH.'

UNDER DATE OF APRIL 5, 1957, THE CONTRACTING OFFICER SENT A TELEGRAM TO THE NEXT LOW BIDDER (DOTHAN HARDWARE AND SUPPLY COMPANY) AS FOLLOWS:

"RE INVITATION 01-044-57-49 ITEM 38 AS FOLLOWS 51-20-6074 (8560) HAMMER, INSERTED FACE, PLASTIC, 1 INCH HEAD DIAM, 3 1/2 INCH HEAD LGH, 5 OZ, WITH 2 EA SOFT, MEDIUM, TOUGH AND NYLON FACE ON WHICH YOUR UNIT PRICE WAS THREE DOLLARS SEVENTY-SEVEN CENTS PD IT IS REQUIRED THAT THIS OFFICE BE INFORMED AS SOON AS POSSIBLE AS TO WHETHER OR NOT THAT QUOTATION INCLUDED THE PRICE OF 2 EA SOFT, MEDIUM, TOUGH AND NYLON FACES"

BY LETTER DATED APRIL 11, 1957, DOTHAN HARDWARE AND SUPPLY COMPANY STATED IN EFFECT THAT IT HAD MADE AN ERROR IN ITS BID, WHICH WAS BASED ON ANOTHER TYPE HAMMER THAN THE ONE SPECIFIED.

IN VIEW OF THE FACTS OF THIS MATTER AS ALLEGED AND SHOWN BY THE FILE, IT APPEARS THAT HOLLEY, INC., MADE A BONA FIDE ERROR IN ITS BID AS ALLEGED AND EXPLAINED BY IT. IT APPEARS TO BE SATISFACTORILY ESTABLISHED, ALSO, THAT BUT FOR THE ERROR HOLLEY, INC., WOULD HAVE BID $5.80 EACH FOR THE HAMMERS, INCLUDING THE SEVERAL TYPES OF HEADS SPECIFIED, WHICH PRICE WOULD STILL BE THE LOWEST CORRECT BID AND IS ADMINISTRATIVELY REPORTED TO BE A FAIR PRICE FOR THE ITEM. HOWEVER, THERE IS FOR CONSIDERATION THE QUESTION WHETHER RELIEF MAY BE GRANTED NOTWITHSTANDING THE FACT THAT VERIFICATION OF THE BID WAS REQUESTED AND RECEIVED BY THE CONTRACTING OFFICER BEFORE AWARD.

GENERALLY, AWARD OF A CONTRACT FOLLOWING VERIFICATION OF A BID UPON REQUEST OF THE CONTRACTING OFFICER PRECLUDES ANY ASSUMPTION THAT THE CONTRACTING OFFICER ACTED IN BAD FAITH AND RESULTS IN A BINDING CONTRACT. 18 COMP. GEN. 942, 947; 27 ID. 17. HOWEVER, IN VIEW OF THE GREAT DISPARITY BETWEEN THE BID OF HOLLEY, INC., AND THE OTHER BIDS ON ITEM NO. 38, IT APPEARS DOUBTFUL WHETHER THE PERFUNCTORY TELEGRAPHIC REQUEST FOR VERIFICATION WAS ADEQUATE TO AFFORD THE BIDDER A SUFFICIENT OPPORTUNITY TO CHECK ITS QUOTATIONS TO THE EXTENT THAT IT SHOULD BE BOUND BY ITS ANSWER. IN THIS CONNECTION, THERE IS TO BE NOTED THE VAST DIFFERENCE BETWEEN THE BRIEF TELEGRAM SENT BY THE CONTRACTING OFFICER TO HOLLEY, INC., AND THE MUCH MORE DETAILED TELEGRAM SUBSEQUENTLY SENT TO DOTHAN HARDWARE AND SUPPLY COMPANY, BOTH OF WHICH ARE QUOTED ABOVE. IT HAS BEEN HELD THAT WHERE, AS HERE, THE CONTRACTING OFFICER HAS NOTICE OF THE PROBABILITY THAT AN ERROR HAS BEEN MADE IN A BID, THE GOVERNMENT, IN REQUESTING VERIFICATION THEREOF, MUST GIVE THE BIDDER SUFFICIENT FACTS TO PUT HIM ON NOTICE OF THE MISTAKE SURMISED, IF THE SUBSEQUENT ACCEPTANCE OF THE BID IS TO RESULT IN A VALID CONTRACT. THE GOVERNMENT DOES NOT NECESSARILY FULFILL ITS DUTY IN THIS RESPECT BY MERELY REQUESTING A VERIFICATION OF THE BID PRICE. SEE UNITED STATES V. METRO NOVELTY MANUFACTURING COMPANY, INC., 125 F.SUPP. 713; 35 COMP. GEN. 136; 36 ID. 254.

FOR THE REASONS ABOVE SET OUT, IT IS CONCLUDED THAT THE AWARD TO HOLLEY, INC., DID NOT CONSUMMATE A VALID CONTRACT AS TO ITEM NO. 38 AND THAT PAYMENT FOR THE HAMMERS FURNISHED UNDER THAT ITEM MAY BE MADE IN THE AMOUNT OF $5.80 EACH, THAT BEING THEIR FAIR MARKET VALUE AND BEING LESS THAN THE NEXT LOWEST CORRECT BID.