B-144369, NOV. 18, 1960

B-144369, NOV. 18, 1960

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 31, 1960, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING OUR DECISION AS TO WHETHER THERE MAY BE CANCELED CONTRACT NO. N128S-12378 WHICH WAS AWARDED TO THE BALL MACHINERY COMPANY UNDER INVITATION NO. B-38-61-128, IN VIEW OF AN ERROR ALLEGED BY THE COMPANY TO HAVE BEEN MADE IN THE RELATED BID.

BY THE REFERRED-TO INVITATION, THE NAVAL SUPPLY DEPOT, GREAT LAKES, ILLINOIS, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, ONE SIX SPINDLE DRILLING MACHINE, ITEM 2. IN RESPONSE THE BALL MACHINERY COMPANY SUBMITTED A BID OFFERING TO PURCHASE, AMONG OTHERS, THE DRILLING MACHINE COVERED BY ITEM 2 FOR THE SUM OF $1,227. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 2 ON SEPTEMBER 1, 1960.

IN HIS REPORT OF OCTOBER 13, 1960, IN WHICH HE RECOMMENDED THAT THE CONTRACT BE CANCELED, THE CONTRACTING OFFICER STATED THAT ON SEPTEMBER 6, 1960, A REPRESENTATIVE OF THE BALL MACHINERY COMPANY TELEPHONED ALLEGING THAT THE COMPANY HAD MADE AN ERROR IN ITS BID IN THAT IT HAD INTENDED TO BID ON THE MONARCH LATHE COVERED BY ITEM 1 INSTEAD OF THE DELTA DRILL COVERED BY ITEM 2.

IN A CONFIRMING LETTER DATED SEPTEMBER 14, 1960, MR. MASON OF THE BALL MACHINERY COMPANY STATED THAT BEFORE SUBMITTING THE COMPANY'S BID, HE INSPECTED THE EQUIPMENT AT THE ORDNANCE PLANT; THAT UPON RETURNING TO HIS OFFICE HE TOLD HIS SECRETARY "TO BID ON ITEM 2 A MONARCH LATHE, ITEM NO. 5 A LELAND AND GIFFORD DRILL AND ITEM NO. 10 A HARDING MILL; " THAT WHILE HE CORRECTLY DESCRIBED THE FIRST ITEM ON WHICH HE INTENDED TO BID, HE GAVE HIS SECRETARY THE WRONG ITEM NUMBER; AND THAT INSTEAD OF CLARIFYING THE AMBIGUITY WITH HIM, SHE ERRONEOUSLY ENTERED THE BID UNDER ITEM 2. MR. MASON ALSO STATED THAT WHEN HE WENT OUT TO THE ORDNANCE PLANT TO INSPECT THE EQUIPMENT HE WAS ACCOMPANIED BY A MR. JEROME ROSS, WHO, HE STATED, COULD VERIFY THAT HE NEVER EXPRESSED ANY INTEREST IN THE DELTA DRILL COVERED BY ITEM 2; AND THAT THE MARKET VALUE OF A DELTA DRILL SIMILAR TO THE ONE OFFERED FOR SALE UNDER ITEM 2 IS APPROXIMATELY $400 TO $500. THE COMPANY REQUESTED THAT THE CONTRACT BE CANCELED.

BY LETTER DATED SEPTEMBER 29, 1960, THE COMPANY ADVISED THAT WORKSHEETS WERE NOT AVAILABLE, AS PROOF OF THE INTENDED BID. WITH THE LETTER WERE THREE AFFIDAVITS FROM WITNESSES CERTIFYING THAT THE INTENTION OF THE BIDDER, AS EXPRESSED TO THEM, WAS TO BID ON ITEM 1, THE MONARCH LATHE, AND NOT ON ITEM 2, THE DELTA DRILL.

TWELVE OTHER BIDS RANGING FROM $690 TO $16 WERE RECEIVED ON ITEM 2 AND THE ORIGINAL ACQUISITION COST OF THE DELTA DRILL WAS $1,292.62. SINCE THE BID OF $1,227 OF THE BALL MACHINERY COMPANY FOR ITEM 2 REPRESENTS A PRICE WHICH IS ALMOST 95 PERCENT OF THE ACQUISITION COST OF THE DRILL, IT REASONABLY MAY BE CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF AN ERROR IN THE BID PRIOR TO AWARD.

IN VIEW OF THE FOREGOING, THE CONTRACT WITH THE BALL MACHINERY COMPANY MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY.