B-133981, OCT. 11, 1957

B-133981, OCT. 11, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 2, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE L AND L SALES COMPANY, SAN FRANCISCO, CALIFORNIA, ALLEGES WAS MADE IN ITS BID ON WHICH UNNUMBERED CONTRACT (PURCHASE ORDER NO. BA-1725-57 FS)DATED AUGUST 15, 1956, WAS AWARDED.

THE BENICIA ARSENAL, BENICIA, CALIFORNIA, BY INVITATION NO. ORD-04 015-57 -49, REQUESTED BIDS--- TO BE OPENED AUGUST 7, 1956--- FOR FURNISHING, AMONG OTHER ITEMS, 1,027 PISTONS, CHRYSLER CORPORATION PART NO. 1780- 1241684 OR EQUAL, ITEM 17/42. IN RESPONSE THE L AND L SALES COMPANY SUBMITTED A BID DATED AUGUST 7, 1956, OFFERING TO FURNISH, AMONG OTHERS, THE PISTONS UNDER ITEM 17/42 AT A PRICE OF $1.93 EACH. THE NINE OTHER BIDS ON ITEM 17/42 RANGED FROM $3.95 EACH TO $7.27 EACH.

THE RECORD SHOWS THAT ON AUGUST 8, 1956, THE CONTRACTING OFFICE REQUESTED AND RECEIVED, BY TELEPHONE, VERIFICATION THAT THE PRICES BID BY THE L AND L SALES COMPANY ON ALL ITEMS WERE CORRECT AND THAT THEY WERE BASED ON FURNISHING GENUINE CHRYSLER PARTS; AND THAT ON AUGUST 15, 1956, THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 17/42 AND OTHER ITEMS.

BY LETTER DATED AUGUST 28, 1956, THE L AND L SALES COMPANY ADVISED THE CONTRACTING OFFICER THAT ITS BID PRICE OF $1.93 EACH FOR ITEM 17/42 WAS ERRONEOUS IN THAT IT WAS BASED ON AN ERRONEOUS TELEPHONE QUOTATION RECEIVED FROM ITS SUPPLIER; THAT ON AUGUST 22, 1956, IT RECEIVED ITS COPY OF AN AWARD FOR ITEMS 6/24, 8/26, AND 17/42, AND THAT AT THAT TIME IT PLACED ITS ORDER FOR SUCH ITEMS WITH ITS SUPPLIER; AND THAT ON AUGUST 27, 1956, ITS SUPPLIER ADVISED THE COMPANY, BY TELEGRAM, THAT ITS PRICE FOR ITEM 17/42 WOULD BE $3.62 PLUS 8 PERCENT FEDERAL EXCISE TAX. THE COMPANY ALSO STATED THAT ITS SUPPLIER ORIGINALLY QUOTED, BY TELEPHONE, A PRICE OF $1.74 EACH FOR THE PISTONS COVERED BY ITEM 17/42; THAT ITS SUPPLIER NOW REFUSES TO ACKNOWLEDGE ITS ERROR; AND THAT, IF THE COMPANY IS FORCED TO SUPPLY THE ITEM AT ITS ORIGINAL BID PRICE, IT WOULD LOSE APPROXIMATELY $2,000. THE COMPANY REQUESTED THAT ITEM 17/42 OF THE CONTRACT BE CANCELED. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED A COPY OF THE TELEGRAM RECEIVED FROM ITS SUPPLIER, BADGER MANUFACTURING COMPANY, CHICAGO, ILLINOIS, AND A COPY OF ITS WORKSHEET, WHICH APPEARS TO BE A SHEET FROM THE INVITATION AND WHICH INDICATES THAT ON AUGUST 6, 1956, THE COMPANY RECEIVED A TELEPHONE QUOTATION OF $1.74 EACH (TAX INCLUDED) ON THE PISTONS COVERED BY ITEM 17/42 FROM "GEO. BEAN-BADGER.'

GENERALLY, WHEN A BIDDER IS REQUESTED TO AND DOES VERIFY HIS BID, THE SUBSEQUENT ACCEPTANCE OF THE BID CONSUMMATES A VALID AND BINDING CONTRACT. SEE 18 COMP. GEN. 942, 947; AND 27 ID. 17. HOWEVER, SINCE IN THE PRESENT CASE NEITHER THE ALLEGED BID CONFIRMATION NOR THE REQUEST THEREFOR WAS IN WRITING, LESS WEIGHT SHOULD ATTACH THERETO THAN IF THE VERIFICATION WERE REQUESTED AND RECEIVED IN THE CUSTOMARY FORMAL MANNER--- PARTICULARLY IN VIEW OF THE FACT THAT THE MEMORANDUM OF THE CONVERSATION INDICATES THAT THE BIDDER WAS NOT EVEN ADVISED OF ANY REASON FOR REQUESTING VERIFICATION OR OF THE PARTICULAR ITEM QUESTIONED OR THE RANGE OF OTHER BIDS THEREON. IN THESE CIRCUMSTANCES, SINCE THE COMPANY'S BID PRICE FOR ITEM 17/42 WAS LESS THAN ONE-HALF OF THE PRICE QUOTED BY THE NEXT LOWEST BIDDER, THE CONTRACTING OFFICER -- NOTWITHSTANDING THE BID CONFIRMATION--- STILL SHOULD HAVE SUSPECTED THAT THE BID OF $1.93 EACH WAS ERRONEOUS. IN HER LETTER OF SEPTEMBER 3, 1957, TO THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, THE CONTRACTING OFFICER STATES THAT, IN VIEW OF THE WIDE DIFFERENTIAL IN PRICES IN THE LOW BID AND THE OTHER BIDS RECEIVED, IT WAS HER BELIEF THAT THE VERIFICATION WAS TOO GENERAL AND THAT A MORE THOROUGH INVESTIGATION SHOULD HAVE BEEN MADE PRIOR TO AWARD. SINCE THE ERROR WAS ALLEGED AND ESTABLISHED PROMPTLY AFTER RECEIPT OF THE PURCHASE ORDER, WE CONCLUDE THAT THE L AND L SALES COMPANY SHOULD NOT BE REQUIRED TO FURNISH THE PISTONS COVERED BY ITEM 17/42 AT THE PRICE QUOTED IN ITS BID, AND THAT ITEM OF PURCHASE ORDER NO. BA-1725-57-FS MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY, AS RECOMMENDED BY THE CONTRACTING OFFICER.