B-158765, APR. 8, 1966

B-158765, APR. 8, 1966

TO THE ADMINISTRATOR, GENERAL SERVICES

REFERENCE IS MADE TO YOUR LETTER OF MARCH 18, 1966, WHEREIN YOU SUBMITTED FOR OUR CONSIDERATION A REQUEST FOR CANCELLATION OF CONTRACT NO. GS-00S- 40626, BASED ON A MISTAKE IN BID ALLEGED AFTER AWARD BY THE WOODHOUSE STATIONERY COMPANY, 1222 H STREET, N.W., WASHINGTON, D.C.

THE CONTRACT COVERED ITEMS NOS. 9 THROUGH 12 OF INVITATION FOR BIDS NO. FPNSO-9R-2284-A-6-17-65, WHICH CONSISTED OF DIFFERENT SIZES AND COLORS OF MECHANICAL PENCIL LEADS. IN RESPONSE TO THE SUBJECT INVITATION WOODHOUSE SUBMITTED A BID OF $0.10 PER PACKAGE OF 72 LEADS, ON EACH OF 4 ITEMS, FOR AN INDEFINITE QUANTITY. THE ESTIMATED TOTAL CONTRACT PRICE WAS $9,252.

BY LETTER DATED SEPTEMBER 8, 1965, WOODHOUSE ADVISED THAT AN ERROR HAD BEEN MADE IN ITS BIDS IN THAT THEY WERE BASED ON ERRONEOUS QUOTATIONS FROM ITS SUPPLIER. WOODHOUSE SUBSEQUENTLY SUBMITTED SUPPORTING EVIDENCE WHICH INDICATED THAT THE SUPPLIER HAD PREDICATED ITS QUOTATIONS ON THE COST OF BLACK GRAPHITE LEAD WHEREAS THE INVITATION CALLED FOR MORE EXPENSIVE COLORED LEAD. THE CONTRACTOR'S REQUEST FOR CANCELLATION INCLUDED THE STATEMENT THAT, BASED ON ACTUAL COSTS, FULFILLMENT OF THE CONTRACT WOULD CAUSE A LOSS OF APPROXIMATELY $13,111.

THE FOUR BIDS SUBMITTED ON THE ITEMS IN QUESTION AND THE CURRENT CONTRACT PRICE FOR SIMILAR ITEMS ARE AS FOLLOWS:

PAL PONDA WOODHOUSE CURRENT

AUTOPOINT PRECISION PENCIL STATIONERY CONTRACT

ITEM NO. COMPANY PRODUCTS LEAD, INC. COMPANY PRICE

9 $0.135 $0.13 $0.165 $0.10 $0.14

10 0.135 0.13 0.165 0.10 0.14

11 0.12 0.1299 0.165 0.10 0.13

12 0.12 0.12 0.165 0.10 0.1276

THE SUPPLIER HAS FURTHER SUBMITTED EVIDENCE THAT BECAUSE OF THE NEED FOR NEW TOOLING AND PROCESSING METHODS HIS TRUE COSTS ON EACH OF THE ITEMS, WHICH ARE REFLECTIVE OF HIS INTENDED QUOTATIONS, WOULD BE AS FOLLOWS:

ITEM NO. TRUE COST WITHOUT OVERHEAD

9$0.24945

10 0.24945

11 0.22445

12 0.22445

THE GENERAL RULE IS THAT AN ACCEPTANCE OF A BID BY THE CONTRACTING OFFICER WHO NEITHER KNEW NOR HAD REASON TO KNOW OF ANY ERROR IN THE BID CONSUMMATES A VALID AND BINDING CONTRACT. HOWEVER, IN THE INSTANT CASE, HAVING REGARD FOR THE FACT THAT THE CONTRACTOR'S BID PRICES WERE BETWEEN 17 AND 23 PERCENT LESS THAN THE PRICES OF THE NEXT LOW BID AND BETWEEN 22 AND 27 PERCENT LESS THAN THE PREVIOUS CONTRACT PRICE, WE AGREE WITH THE CONTRACTING OFFICER THAT HE SHOULD HAVE BEEN PLACED ON NOTICE OF AN ERROR IN THE BID OF THE CONTRACTOR, AND CONSEQUENTLY THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT FIRST REQUESTING VERIFICATION THEREOF. SEE B- 157302, AUGUST 6, 1965. ACCORDINGLY, THE CONTRACT MAY BE CANCELLED AS YOU HAVE RECOMMENDED.