B-154203, MAY 26, 1964

B-154203, MAY 26, 1964

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO LETTER DATED MAY 14, 1964, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY, CAMERON STATION, ALEXANDRIA, VIRGINIA, REQUESTING OUR DECISION WHETHER THE VICTORY SALVAGE COMPANY MAY BE GRANTED RELIEF UNDER CONTRACT NO. DSA 46-S-3602, DATED FEBRUARY 11, 1964.

SPOT BID SALE INVITATION NO. 46-S-64-64, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, DEFENSE LOGISTICS SERVICES CENTER, SAN DIEGO, CALIFORNIA, SOLICITED BIDS ON 214 ITEMS OF SURPLUS PROPERTY. PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS ON PAGE 3 OF THE INVITATION PROVIDED, IN PART, AS FOLLOWS:

"UNLESS THE INVITATION OTHERWISE PROVIDES, BIDS MAY BE SUBMITTED ON ANY OR ALL ITEMS. HOWEVER, UNLESS THE INVITATION OTHERWISE PROVIDES, A BID COVERING ANY LISTED ITEM MUST BE SUBMITTED ON THE BASIS OF THE UNIT SPECIFIED FOR THAT ITEM AND MUST COVER THE TOTAL NUMBER OF UNITS DESIGNATED FOR THAT ITEM. IN CASE OF ERROR IN THE EXTENSION OF PRICES, UNIT PRICES WILL GOVERN.'

ARTICLE P OF THE SPECIAL CONDITIONS ON PAGE 5 OF THE INVITATION PROVIDED AS FOLLOWS:

"WHEN BIDS ARE SOLICITED ON A UNIT PRICE BASIS, BIDDERS WILL INSERT THEIR UNIT PRICES AND TOTAL PRICES IN THE SPACE PROVIDED FOR EACH ITEM. IN THE EVENT THE BIDDER INSERTS A TOTAL PRICE ON THE ITEM BUT FAILS TO INSERT A UNIT PRICE, THE GOVERNMENT WILL DETERMINE THE UNIT PRICE BY DIVIDING THE TOTAL PRICE BY THE QUANTITY OF THE ITEM SET OUT IN THE INVITATION. THE UNIT PRICE SO DETERMINED SHALL BE USED FOR THE PURPOSE OF BID EVALUATION, AWARD AND ALL PHASES OF CONTRACT ADMINISTRATION.'

VICTORY SALVAGE COMPANY SUBMITTED A MAILED BID ON SEVERAL ITEMS, INCLUDING ITEM NO. 182, LISTED AS 6 EACH ELECTRIC POWER UNIT. EXCEPT FOR ITEM NO. 45, ON WHICH A PRICE PER POUND WAS QUOTED, AND ITEM NO. 48, ON WHICH A PRICE PER FOOT WAS QUOTED, BID PRICES WERE ENTERED IN THE TOTAL BID PRICE COLUMN ONLY. THE TOTAL PRICE OF $173.94 QUOTED BY VICTORY SALVAGE COMPANY ON ITEM NO. 182 WAS ABSTRACTED AS A UNIT PRICE, AND THE COMPANY WAS AWARDED THE ITEM ON FEBRUARY 11, 1964, AT A PRICE OF $1,043.64 (6 TIMES $173.94), TOGETHER WITH SEVEN OTHER ITEMS AT A TOTAL CONTRACT PRICE OF $3,163.27.

ON MARCH 6, 1964, THE PURCHASER REMOVED THE PROPERTY AFTER PAYMENT OF THE CONTRACT PRICE. LATER ON THE SAME DAY, IT ADVISED THE CONTRACTING OFFICER BY TELEPHONE THAT ITS BID OF $173.94 ON ITEM NO. 182 WAS A LOT BID AND, THEREFORE, THE AWARD AT A UNIT PRICE OF $173.94 WAS ERRONEOUS. BY LETTER OF MARCH 10, 1964, THE PURCHASER CONFIRMED THE TELEPHONE CONVERSATION OF MARCH 6 STATING THAT ITS UNIT PRICE ON ITEM NO. 182 WAS $28.99.

OR $173.94 TOTAL PRICE. REQUEST WAS MADE THAT THE MATERIAL BE PICKED UP BY THE SALES OFFICE AND THAT THE PURCHASE PRICE OF $1,043.64 BE REFUNDED.

THE ABSTRACT OF BIDS REVEALS THAT THE UNIT PRICES SUBMITTED BY OTHER BIDDERS ON ITEM NO. 182 RANGED FROM $61.00 TO $16.81. THE "UPSET" PRICE OR FAIR MARKET VALUE ESTABLISHED BY THE SALES OFFICE PRIOR TO THE SALE WAS $35.00 EACH.

THE PRICE OF $28.99 WHICH THE PURCHASER ALLEGES WAS ITS UNIT PRICE FOR ITEM NO. 182 IS IN LINE WITH THE COMPETING BIDS ON THE ITEM AND WITH THE GOVERNMENT UPSET UNIT PRICE OF $35.00. THEREFORE, THERE IS LITTLE ROOM FOR DOUBT THAT THE PRICE OF $173.94 WAS QUOTED AS A PRICE FOR THE LOT, AS CONTENDED BY THE PURCHASER.

MORE IMPORTANT, SINCE THE PURCHASER FAILED TO QUOTE A UNIT PRICE ON ITEM NO. 182, THE PROVISIONS OF ARTICLE P OF THE SPECIAL CONDITIONS OF THE INVITATION REQUIRED THAT THE GOVERNMENT DETERMINE THE UNIT PRICE BY DIVIDING THE TOTAL PRICE BY SIX, THE QUANTITY OFFERED FOR SALE. THEREFORE, AWARD ON THE BASIS OF A UNIT PRICE OF $173.94, TOTAL PRICE OF $1,043.64, WAS ERRONEOUS.

IN VIEW OF THE FOREGOING AND SINCE THE PURCHASER PROTESTED IMMEDIATELY AFTER PAYMENT AND REMOVAL OF THE PROPERTY, THE CONTRACT MAY BE CANCELLED AS TO ITEM NO. 182, AND THE PRICE PAID FOR THE ITEM MAY BE REFUNDED TO THE PURCHASER UPON RETURN OF THE PROPERTY TO THE GOVERNMENT.

THE PAPERS ENCLOSED WITH THE ASSISTANT COUNSEL'S LETTER OF MAY 14 ARE RETURNED HEREWITH.