B-145654, MAY 3, 1961

B-145654, MAY 3, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED APRIL 19, 1961, WITH ENCLOSURES, FROM THE ACTING ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE INDUSTRIAL MACHINERY SUPPLY COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. N63067-2989 IS BASED.

THE CONSOLIDATED SURPLUS SALES OFFICE, NORFOLK, VIRGINIA, BY INVITATION NO. B-137-61-63067, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF MISCELLANEOUS MACHINE TOOLS. IN RESPONSE THE INDUSTRIAL MACHINERY SUPPLY COMPANY SUBMITTED A BID DATED FEBRUARY 24, 1961, OFFERING TO PURCHASE, AMONG OTHERS, THE BORING MACHINE COVERED BY ITEM 58 AT A PRICE OF $6,777.77. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 58 ON MARCH 6, 1961.

IN A REPORT DATED APRIL 3, 1961, IN WHICH HE RECOMMENDED CANCELLATION OF THE CONTRACT, THE CONTRACTING OFFICER STATED THAT ON MARCH 16, 1961, A REPRESENTATIVE OF THE INDUSTRIAL MACHINERY SUPPLY COMPANY TELEPHONED ALLEGING THAT THE COMPANY HAD MADE AN ERROR IN ITS BID IN THAT IT HAD INTENDED TO BID ON THE BORING, DRILLING AND MILLING MACHINE COVERED BY ITEM 57 INSTEAD OF THE BORING MACHINE COVERED BY ITEM 58.

IN A CONFIRMING LETTER DATED MARCH 23, 1961, MR. SEARLE OF THE INDUSTRIAL MACHINERY SUPPLY COMPANY STATED THAT BEFORE SUBMITTING THE COMPANY'S BID, HE INSPECTED THE BORING, DRILLING AND MILLING MACHINE COVERED BY ITEM 57; AND THAT HE THEN CONTACTED A PROSPECTIVE CUSTOMER IN LONGVIEW, TEXAS, AND INFORMED HIM THAT IF THE COMPANY WAS AWARDED ITEM 57, HE WOULD SEND THE MACHINE COVERED BY THAT ITEM TO LONGVIEW, TEXAS, ENROUTE TO HOUSTON, TEXAS, FOR HIS INSPECTION AND THAT IF HE WISHED TO PURCHASE IT, THE MACHINE WOULD BE UNLOADED IN HIS PLANT. MR. SEARLE FURTHER STATED THAT HIS BID PRICE FOR THE MACHINE COVERED BY ITEM 58 WAS OUT OF LINE WITH THE PRICE QUOTED BY THE NEXT HIGHEST BIDDER, WHO ORIGINALLY BUILT THE MACHINE. WITH THE LETTER WERE TWO AFFIDAVITS, ONE FROM THE PROSPECTIVE CUSTOMER AND THE OTHER FROM THE OWNER OF A TRUCKING COMPANY, WHO STATED THEREIN THAT WHEN HE TALKED WITH MR. SEARLE OF THE INDUSTRIAL MACHINERY SUPPLY COMPANY, HE WAS INFORMED THAT THE MACHINE TO BE PICKED UP BY HIM WOULD WEIGH APPROXIMATELY 30,000 POUNDS, WHEREAS THE MACHINE WHICH WAS ACTUALLY PICKED UP AT THE NAVAL SUPPLY CENTER WEIGHED APPROXIMATELY 8,000 POUNDS. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED A PHOTOSTATIC COPY OF ITS ORIGINAL WORKSHEET, WHICH INDICATES A BID OF $6,777.77 FOR ITEM 57, A MODEL 45 GIDDINGS AND LEWIS BORING, DRILLING AND MILLING MACHINE, BUT IT DOES NOT SHOW A QUOTATION FOR ITEM 58.

TEN OTHER BIDS RANGING FROM $2,312.80 TO $203 WERE RECEIVED ON ITEM 58 AND THE ORIGINAL ACQUISITION COST OF THE BORING MACHINE COVERED BY THAT ITEM WAS $7,152. SINCE THE BID OF $6,777.77 OF THE INDUSTRIAL MACHINERY SUPPLY COMPANY FOR ITEM 58 REPRESENTS A PRICE WHICH IS ALMOST 95 PERCENT OF THE ACQUISITION COST OF THE BORING MACHINE, IT REASONABLY MAY BE CONCLUDED THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF AN ERROR IN THE BID OF THE COMPANY AND SHOULD HAVE VERIFIED THE BID PRIOR TO AWARD.

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