B-148074, FEB. 12, 1962

B-148074, FEB. 12, 1962

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED JANUARY 29, 1962, WITH ENCLOSURES, FILE 031C, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF ASSISTANT ADMINISTRATOR FOR MANAGEMENT SERVICES, REQUESTING A DECISION AS TO WHETHER THE RELIEF SOUGHT BY ENSCO, INCORPORATED, UNDER UNNUMBERED CONTRACT DATED DECEMBER 15, 1961, MAY BE GRANTED.

IT APPEARS THAT DR. THOMAS KING OF THE DEPARTMENT OF SURGERY, VETERANS ADMINISTRATION HOSPITAL, KANSAS CITY, MISSOURI, INFORMALLY REQUESTED ENSCO, INCORPORATED, TO SUBMIT AN INFORMAL QUOTATION ON PHYSIOLOGICAL MONITORING EQUIPMENT AND THAT IN RESPONSE THERETO ENSCO, INCORPORATED, SUBMITTED A LETTER QUOTATION DATED NOVEMBER 1, 1961, WHEREIN IT OFFERED TO FURNISH THE BASIC COMPONENTS OF THE MONITORING EQUIPMENT FOR THE LUMP SUM OF $7,570 AND OPTIONAL ACCESSORIES AT THE PRICES SPECIFIED OPPOSITE EACH ITEM.

ON NOVEMBER 27, 1961, THE SUPPLY DIVISION OF THE VETERANS ADMINISTRATION HOSPITAL, KANSAS CITY, MISSOURI, BY INVITATION NO. 62 35 REQUESTED BIDS FOR FURNISHING PHYSIOLOGICAL MONITORING EQUIPMENT, ENSCO, INCORPORATED, OR EQUAL. THE BASIC COMPONENTS OF THE MONITORING SYSTEM AND THE REQUIRED ACCESSORIES WERE DESCRIBED ON PAGE 2 OF THE INVITATION. IN RESPONSE TO THE INVITATION, ENSCO, INCORPORATED, SUBMITTED A BID OFFERING TO FURNISH THE BASIC COMPONENTS OF THE MONITORING SYSTEM AND THE REQUIRED ACCESSORIES FOR THE LUMP SUM OF $6,205. BIDS WERE ALSO RECEIVED FROM THE MINNEAPOLIS HONEYWELL REGULATOR COMPANY AND THE SANBORN COMPANY. THE MINNEAPOLIS HONEYWELL REGULATOR COMPANY SUBMITTED TWO ALTERNATE BIDS IN WHICH IT QUOTED PRICES OF $10,467 AND $15,079. THE SANBORN COMPANY SUBMITTED AN ALTERNATE BID IN WHICH IT QUOTED A PRICE OF $7,654. THE ABSTRACT OF BIDS INDICATES THAT THE BID OF SANBORN COMPANY DOES NOT INCLUDE A FLOWMETER. IN CONNECTION WITH THE FLOWMETER, THE ORIGINAL WORKSHEET OF ENSCO, INCORPORATED, SHOWS THAT IN COMPUTING ITS BID PRICE FOR THE MONITORING EQUIPMENT, IT ALLOWED $2,100 TO COVER THE COST OF THE FLOWMETER. THE BID OF ENSCO, INCORPORATED, WAS ACCEPTED ON DECEMBER 15, 1961.

IN A MEMORANDUM DATED DECEMBER 22, 1961, THE PURCHASING AGENT STATES THAT ON THIS DAY HE RECEIVED A TELEPHONE CALL FROM MR. LONGSON OF ENSCO, INCORPORATED, WHO ALLEGED THAT AN ARITHMETICAL ERROR OF $2,000 HAD BEEN MADE BY HIM IN COMPUTING THE CORPORATION'S BID PRICE FOR THE MONITORING EQUIPMENT AND THAT THE CORPORATION'S BID PRICE FOR THE EQUIPMENT SHOULD HAVE READ $8,205 INSTEAD OF $6,205. THE PURCHASING AGENT ALSO STATED THAT MR. LONGSON INVITED HIS ATTENTION TO THE FACT THAT THE CORPORATION'S INFORMAL QUOTATION OF NOVEMBER 1, 1961, TO THE MEDICAL SERVICE, INDICATES AN AGGREGATE TOTAL PRICE OF $8,205 FOR THE REQUIRED MONITORING EQUIPMENT AND ACCESSORIES.

IN A CONFIRMING LETTER DATED DECEMBER 26, 1961, MR. LONGSON OF ENSCO, INCORPORATED, STATED THAT THE ARITHMETICAL ERROR ON HIS ESTIMATE SHEET WAS MADE WHEN HE ADDED THE OPTIONAL FEATURES AND SHIPPING COSTS TO THE MAIN FIGURE OF $7,570, WHICH IT APPEARS COVERS THE COST OF THE BASIC COMPONENTS OF THE MONITORING SYSTEM. WITH HIS LETTER MR. LONGSON SUBMITTED A PHOTOSTATIC COPY OF THE WRITTEN QUOTATION HE HAD SUBMITTED TO DR. KING ON NOVEMBER 1, 1961.

BY LETTER DATED JANUARY 9, 1962, MR. LONGSON SUBMITTED HIS ORIGINAL ESTIMATE SHEET AND A PRICE LIST OF ENSCO, INCORPORATED. THE UPPER HALF OF THE ESTIMATE SHEET LISTS THE PRICES FOR THE BASIC COMPONENTS OF THE MONITORING SYSTEM WHICH TOTAL $7,570. ON THE BOTTOM HALF OF THE ESTIMATE SHEET THERE ARE LISTED FIVE AMOUNTS, ONE OF WHICH IS $7,570 AND THE TOTAL OF SUCH AMOUNTS IS SHOWN AS BEING $6,205. THE CORRECT TOTAL OF SUCH AMOUNTS IS $8,205.

THE RECORD INDICATES THAT BY LETTER DATED NOVEMBER 22, 1961, MR. LONGSON OF ENSCO, INCORPORATED, FORWARDED THE CORPORATION'S DESCRIPTIVE CATALOG SHEETS ON CERTAIN MONITORING SYSTEMS TO THE CHIEF OF PURCHASING OF THE VETERANS ADMINISTRATION HOSPITAL AND THAT IN SUCH LETTER MR. LONGSON ADVISED THAT OFFICIAL AS FOLLOWS:

"THE SYSTEM WE HAVE PROPOSED TO FURNISH TO DR. ZIMMERMAN AND DR. KING WILL BE ASSEMBLED BY USING THE BASIC COMPONENTS DESCRIBED IN THESE BROCHURES.'

SINCE THE ABOVE LETTER ADVISED THE PURCHASING OFFICE OF THE HOSPITAL THAT THE MONITORING SYSTEM WAS GOING TO BE FURNISHED TO DR. KING OF THAT HOSPITAL AND SINCE DR. KING WAS IN RECEIPT OF AN INFORMAL WRITTEN QUOTATION DATED NOVEMBER 1, 1961, FROM ENSCO, INCORPORATED, IN WHICH THE CORPORATION INDICATED THAT THE BASIC COMPONENTS OF THE MONITORING SYSTEM WITHOUT ANY ACCESSORIES WOULD COST $7,570--- $1,365 MORE THAN THE PRICE QUOTED BY THE CORPORATION FOR THE COMPLETE MONITORING SYSTEM WITH ACCESSORIES AND HAVING REGARD FOR THE FACT THAT THE PURCHASING OFFICE WAS ON NOTICE THAT THE NEXT LOWEST BIDDER'S BID PRICE OF $7,654 DID NOT INCLUDE THE COST OF THE FLOWMETER, WHICH IT APPEARS COSTS APPROXIMATELY $2,100, WE ARE OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY OF ERROR IN THE CORPORATION'S BID OF $6,205 AND, CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE CORPORATION TO VERIFY ITS BID.

ON THE RECORD, THERE IS LITTLE ROOM FOR DOUBT THAT ENSCO, INCORPORATED, MADE A BONA FIDE ERROR IN ITS BID, AS ALLEGED. ACCORDINGLY, THE UNNUMBERED CONTRACT (PURCHASE ORDER NO. 1696) DATED DECEMBER 15, 1961, MAY BE AMENDED TO PROVIDE FOR A PRICE OF $8,205. THE PRICE OF $8,205 WILL STILL BE THE LOWEST RECEIVED ON THE EQUIPMENT IF THE COST OF THE FLOWMETER --- $2,100--- IS ADDED TO THE BID PRICE QUOTED BY THE NEXT LOWEST BIDDER ON THE EQUIPMENT.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO BE ATTACHED TO THE CONTRACT.