B-134357, NOV. 29, 1957

B-134357, NOV. 29, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 7, 1957, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE AMERICAN MACHINE WORKS, SPOKANE, WASHINGTON, ALLEGES IT MADE IN ITS BID ON WHICH SALES CONTRACT NO. N406S-40924 WAS AWARDED.

BY INVITATION NO. B-19-58-406 THE NAVAL SUPPLY DEPOT, SEATTLE, WASHINGTON, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, 53 RIGHT FRONT AXLE SHAFTS, ITEM 11. IN RESPONSE THE AMERICAN MACHINE WORKS SUBMITTED A BID OFFERING TO PURCHASE, AMONG OTHER ARTICLES, THE AXLE SHAFTS COVERED BY ITEM 11 AT A PRICE OF $5.85 EACH FOR WHICH IT EXTENDED THE PRICE AS $31. THE BID OF THE AMERICAN MACHINE WORKS WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $460.71. THE ABSTRACT OF BIDS SHOWS THAT THE THREE OTHER BIDS ON ITEM 11 WERE IN THE AMOUNTS OF $3.01, $0.033, $0.0311 EACH.

IN HIS UNDATED REPORT THE CONTRACTING OFFICER STATES THAT BECAUSE THE TOTAL PRICE INSERTED IN THE COMPANY'S BID FOR ITEM 11 DID NOT AGREE WITH THE SPECIFIED UNIT PRICE MULTIPLIED BY THE STIPULATED QUANTITY, A CLERK IN HIS OFFICE CORRECTED THE TOTAL PRICE; THAT SUCH ACTION WAS TAKEN IN ACCORDANCE WITH PARAGRAPH 3, GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION TO BID, WHICH PROVIDES, AMONG OTHER THINGS, THAT "IN CASE OF ERROR IN THE EXTENSION OF PRICES IN THE BID, THE UNIT PRICES WILL GOVERN.' ON SEPTEMBER 25, 1957, ITEM 6, IN ADDITION TO ANOTHER ITEM, WAS AWARDED TO THE AMERICAN MACHINE WORKS ON THE BASIS OF THE CORRECTED TOTAL BID PRICE.

BY LETTER DATED OCTOBER 1, 1957, THE AMERICAN MACHINE WORKS PROTESTED THE ACTION OF THE ADMINISTRATIVE OFFICE IN CHANGING ITS TOTAL PRICE FOR ITEM 11 FROM $31 TO $310.05. THE COMPANY STATED THAT ITS FILE COPY SHOWS THAT IT QUOTED A TOTAL PRICE OF $31 FOR ITEM 11 AND IT POINTED OUT THAT THE AMOUNT OF ITS BID DEPOSIT WOULD NOT HAVE BEEN SUFFICIENT TO COVER ALL ITEMS BID UPON HAD THE TOTAL PRICE FOR ITEM 11 BEEN $310.05. IN A REPLY DATED OCTOBER 4, 1957, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT ITS BID SPECIFIED A UNIT PRICE OF $5.85 AND A TOTAL PRICE OF $31 FOR ITEM 11; THAT SINCE THE UNIT PRICE WHEN MULTIPLIED BY THE SPECIFIED QUANTITY DID NOT AGREE WITH THE EXTENDED TOTAL, THE LATTER WAS CORRECTED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS, WHICH PROVIDES THAT IN CASE OF AN ERROR IN THE EXTENSION OF PRICES IN THE BID, THE UNIT PRICES WILL GOVERN; AND THAT IF THE COMPANY WISHED TO PURSUE ITS CLAIM FURTHER, IT SHOULD SUBMIT ITS WORKSHEET TOGETHER WITH A STATEMENT EXPLAINING HOW THE ALLEGED ERROR OCCURRED AND THAT ITS CLAIM WOULD BE FORWARDED TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR DETERMINATION AND SETTLEMENT.

IN A LETTER DATED OCTOBER 8, 1957, THE COMPANY STATED THAT IT APPRAISED THE VALUE OF THE TOTAL QUANTITY OF AXLE SHAFTS TO BE $31 AND THAT IT THEN DIVIDED SUCH AMOUNT BY 53--- THE NUMBER OF SHAFTS OFFERED FOR SALE--- TO ARRIVE AT A UNIT PRICE OF $0.585; THAT IN TRANSFERRING THE UNIT PRICE FOR ITEM 11 FROM ITS WORKSHEET TO THE COPY OF THE BID SUBMITTED, THE DECIMAL POINT IN THE PRICE WAS MISPLACED AND ERRONEOUSLY SHOWN THEREIN AS BEING $5.85. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS WORKSHEET WHICH INDICATES A UNIT PRICE OF $0.585 AND AN EXTENDED TOTAL OF $31 FOR ITEM 11.

ERROR IS APPARENT ON THE FACE OF THE BID OF THE COMPANY AS TO ITEM 11 SINCE THE UNIT PRICE OF $5.85 WHEN MULTIPLIED BY THE QUANTITY OF 53 DOES NOT EQUAL THE AMOUNT OF $31 INSERTED IN THE TOTAL AMOUNT COLUMN. IF THE UNIT PRICE FOR THE SHAFTS BE CORRECTED TO $0.585 THE TOTAL WILL EQUAL THE EXTENDED PRICE OF $31. ALSO, THE TOTAL OF ALL ITEMS ON WHICH PRICES WERE QUOTED AMOUNTS TO $2,303.52 WHICH INCLUDES THE AMOUNT OF $31 FOR ITEM 11. THE BID DEPOSIT WAS REQUIRED TO BE AT LEAST 20 PERCENT OF THE TOTAL BID. SINCE THE COMPANY SUBMITTED A BID DEPOSIT OF $460.71--- EXACTLY 20 PERCENT OF THE TOTAL BID--- IT IS OBVIOUS THAT THE DEPOSIT WAS BASED ON A PRICE OF $31 FOR THAT ITEM, INDICATING THAT SUCH AMOUNT WAS THE INTENDED PRICE FOR ITEM 11. IN THE CIRCUMSTANCES, THE AMERICAN MACHINE WORKS SHOULD HAVE BEEN REQUESTED TO VERIFY ITS BID BEFORE ITS ACCEPTANCE.

WHILE THE INVITATION TO BID PROVIDED THAT IN CASE OF ERROR IN EXTENSION, UNIT PRICES WOULD GOVERN, AND WHILE IT HAS BEEN HELD THAT THERE IS NO DUTY UPON THE CONTRACTING OFFICER TO COMPUTE THE EXTENSIONS OF UNIT PRICES CONTAINED IN BIDS IN ORDER TO DETERMINE THE CORRECTNESS OF SUCH EXTENSIONS, THAT PRINCIPLE CLEARLY IS NOT FOR APPLICATION WHERE, AS HERE, AN ERROR IN UNIT PRICE IS APPARENT ON THE FACE OF THE BID AND THE CONTRACTING OFFICER WAS ON NOTICE OF SUCH ERROR PRIOR TO AND AT THE TIME OF MAKING THE AWARD. SEE 15 COMP. GEN. 746.

ALTHOUGH THERE APPEARS NO ROOM FOR DOUBT THAT THE AMERICAN MACHINE WORKS MADE AN ERROR IN INSERTING THE UNIT BID PRICE FOR ITEM 11, IF THE BID BE CORRECTED TO REFLECT ITS INTENDED UNIT BID PRICE OF $0.585 EACH FOR ITEM 11, IT WILL NOT BE THE HIGHEST BID RECEIVED ON THAT ITEM.

ACCORDINGLY, AWARD AS TO ITEM 11 OF CONTRACT NO. N406S-40924 MAY BE CANCELED WITHOUT LIABILITY TO THE AMERICAN MACHINE WORKS AND REFUND MAY BE MADE TO THE COMPANY OF THAT PORTION OF ITS BID DEPOSIT WHICH WAS RETAINED TO COVER THE PURCHASE OF ITEM 11.