B-173077, AUG 31, 1971

B-173077, AUG 31, 1971

CONTRACTS - MISTAKE IN BID - SALE BY LOTS DECISION ALLOWING A PRICE ADJUSTMENT OF $137.25 ON THE CLAIM OF ALAN BAKER CO. DUE TO AN ALLEGED MISTAKE IN BID INCIDENT TO A SPOT BID SALE OF VARIOUS ITEMS INCLUDING SODIUM GLUCONATE CRYSTALS SOLD ON A LOT BASIS. THE LOT IN QUESTION CONTAINED ONLY 10 DRUMS OF SODIUM GLUCONATE CRYSTALS AS OPPOSED TO 16 DRUMS IN EACH OF THE OTHER LOTS. THEREFORE, BAKER'S BID AVERAGED $36 PER DRUM OR ALMOST 150 PERCENT MORE THAN THE $15 CURRENT MARKET VALUE. THE CONTRACTING OFFICER SHOULD HAVE REQUESTED BID VERIFICATION BEFORE MAKING AN AWARD. ACCORDINGLY, THE PRICE ADJUSTMENT SHOULD BE ALLOWED, AS ADMINISTRATIVELY RECOMMENDED.

TO GENERAL ROBINSON:

REFERENCE IS MADE TO LETTER DSAH-G DATED MAY 21, 1971, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, FORWARDING FOR OUR DECISION THE CLAIM OF THE ALAN BAKER CO. (BAKER) FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD ON ITEM 129 OF SALES CONTRACT NO. 44 1096-014, AWARDED BY THE DEFENSE SURPLUS SALES OFFICE, OAKLAND, CALIFORNIA.

A REPRESENTATIVE OF BAKER ATTENDED SPOT BID SALE NO. 44-1096. THE REPRESENTATIVE SUBMITTED BIDS ON VARIOUS ITEMS INCLUDING A NUMBER DESCRIBED AS SODIUM GLUCONATE CRYSTALS LISTED CONSECUTIVELY AS ITEMS 110 THROUGH 129. EACH OF THESE ITEMS WAS ADVERTISED FOR SALE ON A "LOT" BASIS. WHILE EACH OF THE LOTS CONTAINED 16 DRUMS OF MATERIAL, WITH THE SOLE EXCEPTION OF ITEM 129 WHICH CONSISTED OF 10 DRUMS, THE ITEM DESCRIPTIONS DID NOT SPECIFY THE NUMBER OF DRUMS MAKING UP EACH LOT.

BAKER RECEIVED AWARD FOR SEVERAL OF THE SODIUM GLUCONATE ITEMS IDENTIFIED AS ITEMS 115, 119, 123, 125, 127, 128 AND 129 AT PRICES VARYING FROM $340 TO $370. THE AWARD OF ITEM 129, THE ITEM CONSISTING OF A LOT OF ONLY 10 DRUMS, WAS FOR $366, THE SAME PRICE BID ON TWO OF THE OTHER SODIUM GLUCONATE ITEMS.

AFTER BAKER TOOK DELIVERY OF THE AWARDED ITEMS, IT ADVISED THE CONTRACTING OFFICER BY LETTER DATED DECEMBER 11, 1970, THAT THERE WERE ONLY 10 DRUMS IN ITEM 129 WHEN IT WAS REMOVED FROM GOVERNMENT CUSTODY, WHILE ALL THE REMAINING ITEMS OF SODIUM GLUCONATE CONTAINED 16 DRUMS EACH. BAKER ADVISED THAT ITS BID WAS BASED ON A PRICE OF $22.87-1/2 PER DRUM AND SINCE THERE WERE ONLY 10 DRUMS IN ITEM 129, BAKER CLAIMS AN ADJUSTMENT OF $137.25 SHOULD BE MADE.

THE RECORD REFLECTS THAT THE ACTUAL NUMBER OF DRUMS IN EACH LOT OF SODIUM GLUCONATE WAS INITIALLY REPORTED TO THE SALES OFFICE. HOWEVER, THIS INFORMATION WAS DELETED BY SALES OFFICE PERSONNEL WHEN THE ITEM DESCRIPTIONS WERE PREPARED FOR THE SPOT BID SALE.

BASED ON THE FOREGOING, IT IS THE VIEW OF THE SALES CONTRACTING OFFICER THAT BAKER MADE A MISTAKE IN SUBMITTING THE BID OF $366 FOR ITEM 129 CONTAINING ONLY 10 DRUMS OF SODIUM GLUCONATE CRYSTALS AS IT DID FOR OTHER ITEMS CONTAINING 16 DRUMS AND THAT THE SALES OFFICE CONTRIBUTED TO THE MISTAKE WHEN IT DELETED THE NUMBER OF DRUMS FROM THE ITEM DESCRIPTIONS OF THE SODIUM GLUCONATE CRYSTALS. COUNSEL FOR THE DEFENSE LOGISTICS SERVICES CENTER CONCURS IN THE SALES CONTRACTING OFFICER'S VIEW THAT THE BIDDER MADE THE MISTAKE ALLEGED AND IS OF THE OPINION THAT THE CONTRACTING OFFICER MUST BE CHARGED WITH KNOWLEDGE OF THE ERROR SINCE THE QUANTITIES WERE IDENTIFIED IN THE TURN-IN DOCUMENT AND WERE KNOWN TO THE SALES OFFICE BUT WERE NOT CONSIDERED IN EVALUATING THE BIDS ON ITEM 129. IT IS FURTHER INDICATED THAT THE CURRENT MARKET APPRAISAL FOR THE MATERIAL WAS $15 PER DRUM.

WHILE THE HIGHEST LOT AWARD TO BAKER IN THE AMOUNT OF $370 AVERAGES $23 PER DRUM, THE LOT PRICE ON ITEM 129 AVERAGED $36 PER DRUM OR ALMOST 150 PERCENT MORE THAN THE $15 CURRENT MARKET VALUE AND MORE THAN 50 PERCENT IN EXCESS OF THE $23 AVERAGE PER DRUM PRICE. IN SIMILAR CIRCUMSTANCES OUR OFFICE HAS HELD THAT WHERE THE BID PRICE ON A SALE IS GREATLY IN EXCESS OF THE COMMERCIAL VALUE OF THE ITEM, THE CONTRACTING OFFICER SHOULD REQUEST BID VERIFICATION BEFORE MAKING AN AWARD. B 162650, NOVEMBER 16, 1967.

ACCORDINGLY, ON THE RECORD, A PRICE ADJUSTMENT OF $137.25 MAY BE ALLOWED AS ADMINISTRATIVELY RECOMMENDED.