B-133819, OCT. 17, 1957

B-133819, OCT. 17, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 13, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATING TO MISTAKES IN BID ALLEGED BY THE MONMOUTH PAPER SUPPLY CO., HIGHLAND PARK, NEW JERSEY, AFTER THE AWARD OF CONTRACT NO. OI-28-043 57-6199, DATED MAY 1, 1957. A DECISION IS REQUESTED AS TO WHETHER THE COMPANY MAY BE GRANTED RELIEF IN THIS CASE.

BY INVITATION NO. 28-043-57-153, DATED APRIL 11, 1957, THE PURCHASING AND CONTRACTING DIVISION, FORT MONMOUTH, NEW JERSEY, SOLICITED BIDS FOR FURNISHING 16 ITEMS OF PACKAGING SUPPLIES AS LISTED ON PAGE 4 OF THE INVITATION. IN RESPONSE THERETO, UNDER DATE OF APRIL 19, 1957, MONMOUTH PAPER SUPPLY CO. SUBMITTED A BID AS TO ALL ITEMS LISTED. ITS PRICE QUOTATIONS OF $2.88M, $4.69M, $5.25M, AND $3.52M ON ITEMS NOS. 11, 12, 13, AND 16, RESPECTIVELY, FOR FURNISHING VARIOUS SIZES OF "MEAT TRAYS, RODEO WHITE," AND OF $3.75M ON ITEM NO. 14 FOR "MEAT TRAYS, SHO-PAK," WERE ACCEPTED AND AWARD WAS MADE TO MONMOUTH PAPER SUPPLY CO. ON THESE ITEMS UNDER DATE OF MAY 1, 1957, BY CONTRACT NO. OI-28-043-57-6199 IN A TOTAL AMOUNT OF $557.90.

AFTER RECEIPT OF THE AWARD OF THE CONTRACT, MONMOUTH PAPER SUPPLY CO., ON MAY 10, 1957, TELEPHONED THE CONTRACTING OFFICER ADVISING THAT ITS BID PRICES ON THESE ITEMS WERE INADVERTENTLY PRICED ON THE BASIS OF "PER THOUSAND" WHEREAS THEY SHOULD HAVE BEEN ON THE BASIS OF "PER CASE" AS PACKED BY THE MANUFACTURER, NAMELY, 500 PER CASE AS TO ITEMS NOS. 11, 12, 13, AND 16, AND 250 PER CASE AS TO ITEM NO. 14. THIS INFORMATION WAS CONFIRMED IN LETTER FROM THE COMPANY, DATED MAY 10, 1957, TO THE CONTRACTING OFFICE, IN WHICH THE COMPANY REQUESTED THAT IT BE PERMITTED TO PROCEED WITH THE PURCHASE ORDER ON THE BASIS OF PRICES LISTED PER CASE. IN SUPPORT OF ITS CONTENTION OF ERRORS, THE COMPANY SUBMITTED MANUFACTURERS' PRINTED PRICE LISTS FOR THE SUPPLIES COVERED BY THE CONTRACT. THESE LISTS SHOW THE SUPPLIER'S PRICE PER THOUSAND, IN CARLOAD QUANTITIES AND PACKED IN CASES OF 500 EACH, AS $5.71 FOR ITEM NO. 11, $9.25 FOR ITEM NO. 12, $10.31 FOR ITEM NO. 13, AND $6.93 FOR ITEM NO. 16; AND THE SUPPLIER'S PRICE FOR SUPPLIES UNDER ITEM NO. 14, IN CARLOAD QUANTITIES, IS SHOWN AS $3.80 PER CASE OF 250, OR $15.20 PER THOUSAND.

THE ABSTRACT OF BIDS SHOWS THAT SIX OTHER BIDS WERE RECEIVED ON ITEMS NOS. 11, 12, 13, AND 16, AT A UNIT PRICE PER THOUSAND, RANGING FROM $5.64 TO $5.90 ON ITEM NO. 11; $9.14 TO $9.54 ON ITEM NO. 12; $9.50 TO $16.66 ON ITEM NO. 13; AND $6.80 TO $7.16 ON ITEM NO. 16, AND THAT FIVE OTHER BIDS WERE RECEIVED ON ITEM NO. 14 RANGING FROM $14.76 TO $16.20 PER THOUSAND. THE REQUISITIONING ACTIVITY'S ESTIMATES PER THOUSAND ARE AS FOLLOWS: ITEM NO. 11, $5.95; ITEM NO. 12, $9.60; ITEM NO. 13, $9.60; ITEM NO. 14, $15.90; AND ITEM NO. 16, $7.20. THE NEXT LOW BIDS AND THE GOVERNMENT'S ESTIMATES AS TO ITEMS NOS. 11, 12, 13, AND 16 ARE APPROXIMATELY TWICE THE AMOUNTS BID BY THE MONMOUTH PAPER SUPPLY CO., AND AS TO ITEM NO. 14 THE NEXT LOW BID AND THE GOVERNMENT'S ESTIMATE ARE APPROXIMATELY FOUR TIMES THE AMOUNT BID BY MONMOUTH PAPER SUPPLY CO.

FROM THE RECORD IT REASONABLY APPEARS THAT THE BID PRICES SUBMITTED BY MONMOUTH PAPER SUPPLY CO. ON ITEMS NOS. 11, 12, 13, AND 16 WERE PER CASE OF 500 RATHER THAN ON A UNIT OF 1,000, AS REQUESTED BY THE INVITATION, AND THAT ITS BID PRICE ON ITEM NO. 14 WAS PER CASE OF 250 RATHER THAN ON A UNIT OF 1,000. THUS, THE EVIDENCE PRESENTED TENDS TO ESTABLISH THE EXISTENCE OF THE CONTRACTOR'S MISTAKES IN ITS BID AS ALLEGED. IN THE CIRCUMSTANCES, IT WOULD APPEAR THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE, AT THE TIME OF ACCEPTANCE, OF THE PROBABILITY OF ERROR IN THE COMPANY'S BID PRICES ON ITEMS NOS. 11, 12, 13, 14, AND 16. CONSEQUENTLY, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS PRICES. ACCEPTANCE OF THE BID, THEREFORE, MAY NOT BE CONSIDERED TO HAVE CONSUMMATED A VALID AND BINDING CONTRACT REQUIRING THE COMPANY TO FURNISH THESE SUPPLIES FOR THE PRICES STATED IN ITS BID; HOWEVER, IF AN ADJUSTMENT TO A UNIT PRICE PER 1,000 AT THE RATE OF THE CONTRACTOR'S INTENDED BID PRICES, AS REQUESTED BY IT, WERE GRANTED, IT WOULD RESULT IN PAYMENT OF AMOUNTS IN EXCESS OF THE NEXT LOWEST BIDS RECEIVED ON THE ITEMS HERE INVOLVED. THERE IS NO LEGAL AUTHORITY FOR PAYMENT TO A CONTRACTOR OF ANY AMOUNT IN EXCESS OF THAT FOR WHICH THE ITEM IN A CONTRACT COULD HAVE BEEN OBTAINED FROM THE NEXT LOWEST BIDDER.

ACCORDINGLY, ON THE BASIS OF THE FACTS AND CIRCUMSTANCES, AND IN ACCORDANCE WITH THE CONTRACTING OFFICER'S RECOMMENDATION, PAYMENT IS AUTHORIZED TO BE MADE TO MONMOUTH PAPER SUPPLY CO. FOR SUPPLIES DELIVERED BY IT UNDER ITEMS NOS. 11, 12, 13, 14 AND 16 OF THE CONTRACT IN AN AMOUNT NOT IN EXCESS OF THE NEXT LOWEST CORRECT BID ON EACH OF THE RESPECTIVE ITEMS.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING PAYMENT UNDER THE CONTRACT.

THE PAPERS TRANSMITTED WITH YOUR LETTER OF SEPTEMBER 13, 1957, WITH THE EXCEPTION OF THE ABSTRACT OF BIDS, THE STATEMENT OF THE CONTRACTING OFFICER, AND THE MEMORANDUM (COMMENT NO. 3) OF THE PROCUREMENT LAW BRANCH, ARE RETURNED.