B-128997, SEP. 10, 1956

B-128997, SEP. 10, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 15, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATING TO A MISTAKE IN BID ALLEGED BY THE MONMOUTH PAPER SUPPLY COMPANY, HIGHLAND PARK, NEW JERSEY, AFTER THE AWARD OF PURCHASE ORDER NO. 28-013-4426-56, DATED MARCH 16, 1956. A DECISION IS REQUESTED AS TO WHETHER THE CONTRACTOR MAY BE GRANTED RELIEF IN THIS CASE.

BY INVITATION NO. 28-013-4426-56, DATED MARCH 1, 1956, THE POST PURCHASING AND CONTRACTING OFFICE, FORT DIX, NEW JERSEY, SOLICITED BIDS FROM EIGHTEEN BIDDERS FOR FURNISHING SUPPLIES FOR MEAT MARKET PREPACKAGING, AMONG WHICH WERE ITEMS 12, 13, 14 AND 15, COVERING CERTAIN PAPER TRAYS OF VARIOUS SIZES IN LOTS OF ONE THOUSAND. IN RESPONSE THERETO, THE MONMOUTH PAPER SUPPLY COMPANY SUBMITTED BIDS OF $4.55, $2.92, $2.94 AND $3.48, RESPECTIVELY, AS TO THESE ITEMS. ONLY THE LATTER THREE ITEMS ARE BEING CONSIDERED HEREIN SINCE THE CONTRACTOR ALLEGES NO MISTAKE AS TO ITEM 12.

WITH THE LETTER OF AUGUST 15, 1956, THERE WAS TRANSMITTED AN ABSTRACT OF BIDS SHOWING THAT SIX OTHER BIDS WERE RECEIVED AS TO ITEM 13 IN THE AMOUNTS OF $6.16, $5.75, $6.25, $6.16, $5.94 AND $6.45; THAT SIX OTHER BIDS WERE RECEIVED AS TO ITEM 15 IN THE AMOUNTS OF $7.47, $7.10, $7.65, $7.47, $7.24 AND $7.64. THE ABSTRACT ALSO SHOWS THAT ON ITEM 12--- WHICH WAS APPARENTLY IDENTICAL TO ITEMS 13, 14, AND 15, EXCEPT OF A SMALLER SIZE --- THE OTHER BIDS WERE $4.84, $4.60, $4.90, AND $4.84, AS AGAINST THE MONMOUTH COMPANY'S BID OF $4.55. THE PURCHASING AND CONTRACTING OFFICER REPORTS THAT WHEN REVIEWING THE BID AMOUNTS, HE SUSPECTED AN ERROR IN THE BIDS OF THE MONMOUTH PAPER SUPPLY COMPANY AS TO THE ITEMS HERE INVOLVED; THAT VERIFICATION WAS REQUESTED, AND THAT UPON RECEIPT OF VERBAL VERIFICATION AWARD WAS MADE ON SAID ITEMS AT THE PRICES BID.

AFTER THE RECEIPT OF THE ORDER, THE CONTRACTOR'S REPRESENTATIVE CONTACTED THE POST PURCHASING AND CONTRACTING OFFICER BY TELEPHONE AND STATED THAT AN ERROR HAD BEEN MADE. HE WAS INSTRUCTED TO CONFIRM THE ERROR BY LETTER AND TO INCLUDE DETAILED DATA TO SUPPORT THE CLAIM. THEREAFTER, THERE WAS RECEIVED FROM THE LOW BIDDER A LETTER DATED MARCH 22, 1956, CONTAINING THE FOLLOWING ARAGRAPH:

"WE WISH TO ACKNOWLEDGE THAT ON MARCH 15TH, MR. KISH CALLED THIS OFFICE AND ADVISED US TO CHECK OUR QUOTATION AS IT WAS SO VERY FAR BELOW OTHERS. THE WRITER DID CHECK THE QUOTATION AGAINST OUR COST SHEET, BUT FAILED TO TAKE INTO CONSIDERATION THE FACT THAT ITEMS 13, 14 AND 15 ARE PACKED 500 TO THE CASE. HISTORICALLY, THESE ITEMS HAVE ALWAYS BEEN SOLD BY THE CASE.'

A FURTHER LETTER DATED MAY 22, 1956, WAS RECEIVED FROM THE MONMOUTH PAPER SUPPLY COMPANY STATING THAT ITS INTENDED BID PRICES AS TO ITEMS 13, 14 AND 15 WERE $5.94, $5.88, AND $6.96, RESPECTIVELY. IT THUS REASONABLY APPEARS THAT THE BIDS SUBMITTED WERE ITS CASE PRICES FOR CASES OF 500 RATHER THAN ON THE UNITS OF 1,000 REQUESTED BY THE INVITATION. IT IS REPORTED THAT THE CONTRACTOR MADE COMPLETE DELIVERY OF ALL ITEMS ON MARCH 23, 1956, AND THAT PAYMENT WAS MADE AT THE UNIT PRICE BID, LESS EARNED DISCOUNT.

THE PURCHASING AND CONTRACTING OFFICER RECOMMENDS THAT THE CONTRACTOR'S REQUEST FOR PRICE ADJUSTMENT BE FAVORABLY CONSIDERED, STATING THAT AFTER SUCH ADJUSTMENT THE SUBJECT CONTRACTOR IS STILL LOW BIDDER ON ITEMS 14 AND 15, AND THAT THE EXTENDED AMOUNT DIFFERENTIAL ON ITEM 13 BETWEEN THEIR BID AND THE NEXT LOW BID IS ONLY 74 CENTS GREATER, AFTER DISCOUNT.

UNDER THE REPORTED FACTS, AND CONSIDERING THE INFORMAL NATURE OF THE TELEPHONIC REQUEST FOR VERIFICATION, IT IS BELIEVED THAT THIS CASE MAY BE CONSIDERED AN EXCEPTION TO THE GENERAL RULE THAT THE AWARD OF A CONTRACT, FOLLOWING CONFIRMATION OF THE BID, CONSTITUTES A VALID AND BINDING OBLIGATION. IN VIEW OF THE RECOMMENDATION MADE BY THE PURCHASING AND CONTRACTING OFFICER, AND SINCE THE PRICES QUOTED BY THE MONMOUTH PAPER SUPPLY COMPANY ON THE SUBJECT ITEMS ARE SO ENTIRELY OUT OF LINE WITH ITS ALLEGED INTENDED BID PRICES--- TWICE THE AMOUNT OF THE ACTUAL BID PRICES-- - AS WELL AS WITH ITS BID ON IDENTICAL ITEMS OF SMALLER SIZE, AND ESPECIALLY WITH THE OTHER BIDS RECEIVED, IT WOULD APPEAR THAT ACCEPTANCE OF THE BIDS AT THOSE PRICES COULD NOT BE FULLY JUSTIFIED, DESPITE THE PURPORTED VERIFICATION.

SINCE THE SUPPLIES HAVE BEEN DELIVERED AND PAYMENT MADE THEREFOR AT THE UNIT PRICES BID, LESS EARNED DISCOUNT, PAYMENT IS AUTHORIZED TO BE MADE IN CONNECTION WITH ITEMS 14 AND 15 OF SUCH ADDITIONAL AMOUNT AS WILL EQUAL THE INTENDED BID PRICES AS TO THESE ITEMS, LESS THE TWO PERCENT DISCOUNT OFFERED. AS TO ITEM 13, PAYMENT IS AUTHORIZED TO BE MADE OF SUCH ADDITIONAL AMOUNT AS WILL EQUAL THE NEXT LOWEST BID, THAT IS TO SAY, THE BID OF THE CARTER PAPER COMPANY, INC., IN THE AMOUNT OF $5.75, LESS ONE PERCENT DISCOUNT.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT DATED APRIL 25, 1956, ARE RETURNED HEREWITH.