B-179915, MAY 3, 1974

B-179915, MAY 3, 1974

CORRECTION OF BID PRICE PERMITTED WHERE BIDDER ESTABLISHED AFTER OPENING OF BIDS THAT SUPPLIER HAD CHANGED QUOTATION TO OTHER CUSTOMERS PRIOR TO BID OPENING, BUT HAD ERRONEOUSLY CONFIRMED ORIGINAL QUOTATION TO BIDDER INSTEAD OF NOTIFYING BIDDER OF PRICE CHANGE.

TO FINAST METAL PRODUCTS, INC.:

ON JUNE 27, 1973, INVITATION FOR BIDS (IFB) DAAA09-73-B-0149, FOR THE FURNISHING OF A QUANTITY OF M49A3 PROJECTILES, 60 MM, HE, MPTS, IN RANGES THAT RAN FROM 500,000 TO 1,000,000 (RANGE A); 1,000,001 TO 1,500,000 (RANGE B); 1,500,001 TO 2,000,000 (RANGE C); AND 2,000,001 TO 2,500,000 (RANGE D) WAS ISSUED BY THE UNITED STATES ARMY ARMAMENT COMMAND, ROCK ISLAND, ILLINOIS.

ON SEPTEMBER 10, 1973, FIVE BIDS WERE OPENED. THE LOW BID OF AIRPORT MACHINING CORPORATION WAS DETERMINED TO BE NONRESPONSIVE AND WAS REJECTED. FINAST METAL PRODUCTS, INC. (FINAST), SUBMITTED THE SECOND LOW BID. FINAST ORALLY ALLEGED A MISTAKE IN BID. BY SUBSEQUENT CORRESPONDENCE TO OUR OFFICE, ATTORNEYS FOR FINAST HAVE FURNISHED EVIDENCE OF THE ALLEGED MISTAKE AND INTENDED BID.

PRIOR TO BIDDING, FINAST RECEIVED A QUOTATION FROM NATIONAL EXTRUDED METAL PRODUCTS CO. (NEMPCO) DATED JULY 18, 1973, OFFERING TO FURNISH 60 MM SHELLS AT A PRICE OF $1.14 EACH. THE QUOTATION ALSO STATED, "WE RECEIVE THE RIGHT TO ADJUST OUR PRICE DUE TO THE UNCERTAINTY OF PHASE IV, STEEL PRICES, AND POSSIBLE UNION CONTRACT, ETC." SUBSEQUENTLY, ON SEPTEMBER 6, 1973, PRIOR TO MAILING THE BID, THE PRESIDENT OF FINAST CALLED NEMPCO AND REQUESTED CONFIRMATION OF THE QUOTATION. THE NEMPCO PLANT SUPERINTENDENT ADVISED THE FINAST PRESIDENT THAT THE QUOTATION REMAINED UNCHANGED. ACCORDING TO THE WORKSHEET SUBMITTED UNDER THE AFFIDAVIT OF THE FINAST PRESIDENT, THE BID WAS PREPARED ON THE BASIS OF $1.14 PER UNIT. HOWEVER, TWO DAYS AFTER BID OPENING, BY TELEGRAM DATED SEPTEMBER 12, 1973, NEMPCO ADVISED FINAST:

"WE REVISED OUR PRICE ON 60 MM SHELL TO A NOT TO EXCEED $1.40 EACH. INADVERTENTLY, WE FAILED TO ADVISE YOU OF THIS ACTION WHILE QUOTING OTHER CUSTOMERS THIS PRICE."

FROM AN EXAMINATION OF THE WORKSHEET SUBMITTED BY FINAST, IT IS CLEAR THAT THE BID WAS PREPARED ON THE BASIS OF $1.14 PER UNIT AS CONTENDED. IS EQUALLY CLEAR THAT NEMPCO DID NOT ADVISE FINAST THAT THE PRICE HAD BEEN CHANGED UNTIL TWO DAYS AFTER BID OPENING. IN THE AFFIDAVIT OF THE FINAST PRESIDENT, ITIS STATED THAT THE NEMPCO PRESIDENT ADVISED IN A TELEPHONE CONVERSATION AFTER THE TELEGRAM WAS RECEIVED THAT THE PRICE CHANGE OCCURRED PRIOR TO SEPTEMBER 6, 1973. THE NEMPCO CONFIRMATION ON SEPTEMBER 6, 1973, WAS THEREFORE ERRONEOUS.

SINCE FINAST BASED THE BID UPON THE $1.14 QUOTATION RECEIVED FROM NEMPCO, IT IS REASONABLE IN THE CIRCUMSTANCES TO CONCLUDE THAT FINAST WAS RELYING UPON NEMPCO FOR A PRICE ON THE SHELLS AND THAT IF NEMPCO HAD NOT ERRONEOUSLY CONFIRMED THE PRICE AND HAD ADVISED FINAST PRIOR TO BIDDING, AS IT DID AFTER THE BID OPENING, THAT THE PRICE HAD BEEN CHANGED TO $1.40 PER UNIT, FINAST WOULD HAVE CALCULATED THE BID ON THAT BASIS. THE APPLICATION OF THE ADDITIONAL $0.26 TO THE FINAST BID AND THE ADJUSTMENT OF THE PROFIT FACTOR BASED ON THAT AMOUNT DOES NOT RESULT IN THE DISPLACEMENT OF BIDDERS. REGARDING THE PROFIT FACTOR, FINAST ALLEGES THAT IT ADDED A 10 PERCENT MARKUP FOR PROFIT. IT IS CLEAR THAT A 10 PERCENT FACTOR WAS USED FOR RANGES A, C AND D. HOWEVER, A LESSER PERCENTAGE, APPROXIMATELY 9.7 PERCENT, APPEARS TO HAVE BEEN USED FOR RANGE B.

ACCORDINGLY, SINCE ERROR IN THIS CASE WAS ALLEGED PRIOR TO AWARD AND SINCE THE EVIDENCE FURNISHED ESTABLISHES THE AMOUNT OMITTED FROM THE BID, THE BID OF FINAST MAY BE CORRECTED BY INCREASING THE UNIT PRICE OF EACH RANGE BY $0.26 AND A PROPORTIONATE AMOUNT FOR PROFIT, BEARING IN MIND THAT THE PROFIT FACTOR FOR RANGES A, C AND D IS 10 PERCENT WHEREAS IT IS ONLY 9.7 PERCENT FOR RANGE B. IN THIS REGARD, OUR OFFICE PREVIOUSLY HAS PERMITTED RELIEF FOR BIDDERS FOUNDED UPON ERRONEOUS QUOTATIONS FROM SUPPLIERS B-169901, JUNE 19, 1970, AND DECISIONS CITED THEREIN.