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INC.: REFERENCE IS MADE TO YOUR LETTERS OF MAY 19 AND 22. WHICH READS: "PURCHASING OF CLASS 17B ITEMS HAS ALWAYS SHOWN A WIDE VARIANCE OF PRICES AND UNLESS THE SPREAD IS OVER 50 PERCENT. IS THE BID QUESTIONED AS TO RESPONSIBILITY.'. THE AWARDS TO THE COMPLETING CONTRACTORS WERE MADE AT PRICES 70 AND 55 PERCENT OVER YOUR BID PRICES ON THOSE ITEMS AND. THE SAME BASIS THE DIFFERENCES BETWEEN YOUR CONTRACT PRICES AND THE PRICES PAID ON THE REPLACEMENT ORDERS WERE 35 AND 41 PERCENT. IN ANY EVENT THE REPLACEMENT PRICES HAVE NO BEARING UPON THE PROPRIETY OF THE AWARDS MADE TO YOU. SINCE THE REPURCHASES COULD NOT BE MADE ON THE BASIS OF BIDS WHICH HAD EXPIRED LONG BEFORE BUT WAS PRESUMABLY MADE ON THE OPEN MARKET AS AUTHORIZED BY YOUR CONTRACT.

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B-126529, JUN. 6, 1956

TO MANHATTAN LIGHTING EQUIPMENT CO., INC.:

REFERENCE IS MADE TO YOUR LETTERS OF MAY 19 AND 22, 1956, RELATIVE TO OUR DECISION OF APRIL 16, 1956. YOU TAKE EXCEPTION TO A STATEMENT QUOTED IN OUR DECISION FROM THE ADMINISTRATIVE LETTER OF MARCH 2, 1956, WHICH READS: "PURCHASING OF CLASS 17B ITEMS HAS ALWAYS SHOWN A WIDE VARIANCE OF PRICES AND UNLESS THE SPREAD IS OVER 50 PERCENT, AND THEN ONLY IN PARTICULAR CASES, IS THE BID QUESTIONED AS TO RESPONSIBILITY.'

YOU CONTEND, IN SUBSTANCE, THAT, IN THE CASES OF ITEMS NOS. 21 AND 22 OF INVITATION NO. 04-609-55-64, THE AWARDS TO THE COMPLETING CONTRACTORS WERE MADE AT PRICES 70 AND 55 PERCENT OVER YOUR BID PRICES ON THOSE ITEMS AND, THEREFORE, YOU REQUEST TO BE RELIEVED OF THE EXCESS COSTS INCIDENT TO THEIR REPURCHASE BY THE GOVERNMENT AT THE HIGHER PRICES. THE PRICE DIFFERENTIALS OF 25 AND 35 PERCENT QUOTED IN OUR LETTER OF APRIL 16 EXPRESSED THE DIFFERENCES BETWEEN YOUR BID PRICES AND THOSE QUOTED ON THE ITEMS BY THE NEXT HIGHER BIDDER AS A PERCENTAGE OF THE LARGER AMOUNT. THE SAME BASIS THE DIFFERENCES BETWEEN YOUR CONTRACT PRICES AND THE PRICES PAID ON THE REPLACEMENT ORDERS WERE 35 AND 41 PERCENT. IN ANY EVENT THE REPLACEMENT PRICES HAVE NO BEARING UPON THE PROPRIETY OF THE AWARDS MADE TO YOU, SINCE THE REPURCHASES COULD NOT BE MADE ON THE BASIS OF BIDS WHICH HAD EXPIRED LONG BEFORE BUT WAS PRESUMABLY MADE ON THE OPEN MARKET AS AUTHORIZED BY YOUR CONTRACT.

OUR OFFICE HAS NEVER ADOPTED OR FOLLOWED ANY PERCENTAGE FORMULA FOR DETERMINING WHETHER A BID IS SO FAR OUT OF LINE WITH THE OTHERS AS TO CONSTITUTE CONSTRUCTIVE NOTICE OF PROBABLE ERROR. ON THE RECORD BEFORE US WE CONCLUDE THAT THE PRICE DIFFERENTIALS BETWEEN YOUR BIDS AND THE OTHERS RECEIVED ON THE PARTICULAR ITEMS ADVERTISED WERE NOT SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF A PROBABLE ERROR IN YOUR PROPOSAL. IN THESE CIRCUMSTANCES, IT MUST BE CONCLUDED THAT THE ACCEPTANCE BY THE GOVERNMENT OF YOUR UNQUALIFIED PROPOSAL ON THOSE ITEMS RESULTED IN A VALID AND BINDING CONTRACT WHICH OBLIGATED YOU EITHER TO PERFORM OR MAKE RESTITUTION TO THE UNITED STATES IN DAMAGES TO COMPENSATE FOR YOUR DEFAULT.

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