B-136116, MAY 28, 1958

B-136116, MAY 28, 1958

TO HONORABLE SUMNER G. WHITTIER, ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED MAY 9, 1958, FILE REFERENCE 134C2, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE FREEPORT SALVAGE COMPANY, INC., JACKSONVILLE, FLORIDA, ALLEGES IT MADE IN ITS BID ON WHICH UNNUMBERED CONTRACT DATED APRIL 24, 1958, WAS AWARDED.

THE VETERANS ADMINISTRATION HOSPITAL, LAKE CITY, FLORIDA, BY INVITATION NO. 58-30, REQUESTED BIDS--- TO BE OPENED APRIL 3, 1958--- FOR THE SALE AND OFF-SITE REMOVAL OF A 3-STORY BRICK CORRIDOR CONNECTED TO THE EASTWING OF BUILDING NO. 38 AT THE HOSPITAL. THE INVITATION REQUIRED RESPECTIVE BIDDERS TO SUBMIT A DEPOSIT EQUAL TO TEN PERCENT OF THE AMOUNT OF THEIR BID.

IT IS REPORTED THAT ONLY TWO BIDS WERE RECEIVED IN RESPONSE TO THE SALES INVITATION; THAT ONE BID WAS SUBMITTED BY THE CUYAHOGA WRECKING COMPANY AND THAT SUCH BID WAS REJECTED FOR THE REASON THAT THE COMPANY HAD WRITTEN ACROSS THE FACE OF ITS BID THE FOLLOWING STATEMENT: BY THE FREEPORT SALVAGE COMPANY, INC., WHO INSERTED THE AMOUNT OF $3,800 IN THE TOTAL PRICE COLUMN OF ITS BID. IN ITS BID THE FREEPORT SALVAGE COMPANY, INC., INDICATED BY THE WORD "NONE" THAT NO BID DEPOSIT WAS BEING SUBMITTED. PRIOR TO THE SUBMISSION OF ITS FORMAL BID, THE CORPORATION ADVISED THE HOSPITAL BY TELEGRAM DATED APRIL 2, 1958, AS FOLLOWS:

"REFERENCE INVITATION NUMBER 58-30 OUR PRICE IS THIRTY EIGHT HUNDRED DOLLARS PERCENT BID CONFIRMING THIS WAS MAILED APRIL 2ND"

THE BID OF THE FREEPORT SALVAGE COMPANY, INC., WAS ACCEPTED ON APRIL 24, 1958.

BY LETTER DATED APRIL 30, 1958, THE FREEPORT SALVAGE COMPANY, INC., ADVISED THE CONTRACTING OFFICER AS FOLLOWS:

"OUR BID TO YOU WAS INTENDED TO MEAN THAT THE HOSPITAL WOULD PAY US THIRTY EIGHT HUNDRED DOLLARS ($3800.00) FOR REMOVING THE CORRIDOR. IT IS ABSOLUTELY UNHEARD OF FOR A DEMOLITION CONTRACTOR TO PAY FOR A BUILDING. THE ONLY EXCEPTION BEING FOR COMPLETE PLANTS WITH MACHINERY ETC.

"THE JOB YOU HAVE WOULD HAVE LESS THAN FOUR HUNDRED DOLLARS ($400.00) WORTH OF SALVAGE.

"WE WOULD STILL BE WILLING TO ENTER INTO A CONTRACT WITH YOU PROVIDED THE VETERANS ADMINISTRATION WOULD PAY US THIRTY EIGHT HUNDRED DOLLARS ($3800.00) FOR THE WORK.'

THE RECORD INDICATES THAT PRIOR TO MAKING THE AWARD TO THE FREEPORT SALVAGE COMPANY, INC., THE CONTRACTING OFFICER REQUESTED AUTHORITY TO MAKE SUCH AWARD FROM THE CENTRAL OFFICE IN WASHINGTON, D.C., AND THAT AFTER RECEIVING THE CONTRACTING OFFICER'S LETTER OF APRIL 8, 1958, WHICH CONTAINED CERTAIN HISTORICAL AND PRICE DATA ON THE CORRIDOR, THE CENTRAL OFFICE GRANTED THE REQUESTED AUTHORITY. IN THE LETTER OF APRIL 8, 1958, TO THE CENTRAL OFFICE, THE CONTRACTING OFFICER STATED, IN PERTINENT PART, AS FOLLOWS:

TABLE

"/9) FAIR MARKET VALUE - $3800.00 BASED ON ACTUAL BID ALREADY RECEIVED

"/10) ESTIMATED VALUE OF SALVAGEABLE MATERIAL IN BUILDING$150.00

LESS COST OF DEMOLITION - ESTIMATED $1400.00

NET SALVAGE VALUE $ MINUS 1250.00 (*)

(*) CEMENT MORTAR MIX WAS USED AND BRICK WORK CANNOT BE SALVAGED. SLATE ROOF, WINDOWS, WINDOW SCREENS AND ROOF RAFTERS ARE THE ONLY ITEMS THAT CAN BE SALVAGED.'

THE FREEPORT SALVAGE COMPANY, INC., ALLEGES THAT THE AMOUNT OF $3,800 INSERTED BY IT IN ITS BID WAS INTENDED AS THE AMOUNT THE GOVERNMENT WOULD PAY IT FOR REMOVING THE CORRIDOR RATHER THAN THE AMOUNT IT WOULD PAY TO THE GOVERNMENT. WHILE THE BID FORM, ON ITS FACE, SEEMS CLEARLY TO CONTEMPLATE AN OFFER OF A PRICE BY THE BIDDER FOR THE PURCHASE OF THE BUILDING, THE RECORD INDICATES THAT THE CONTRACTING OFFICER, PRIOR TO AWARD, WAS AWARE OF THE FACT THAT THE GOVERNMENT HAD ESTIMATED THE VALUE OF THE SALVAGEABLE MATERIAL IN THE CORRIDOR AS BEING APPROXIMATELY $150 AND THAT IT WOULD COST APPROXIMATELY $1,400 TO DEMOLISH AND REMOVE THE CORRIDOR. IT IS EXTREMELY IMPROBABLE THAT A BIDDER WOULD INCUR THE EXPENSE OF APPROXIMATELY $1,400 TO OBTAIN SALVAGEABLE MATERIAL HAVING A VALUE OF APPROXIMATELY $150 AND THEN, IN ADDITION THERETO, PAY THE GOVERNMENT THE SUM OF $3,800. IN THE LIGHT OF THE FACTS STATED AND PARTICULARLY IN VIEW OF THE FACT THAT THE ONLY OTHER BIDDER HAD INDICATED IN HIS BID THAT THE GOVERNMENT WAS TO PAY HIM THE SUM OF $2,200 FOR DEMOLISHING AND REMOVING THE CORRIDOR, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF THE PROBABILITY OF AN ERROR OF OMISSION IN THE CORPORATION'S BID. HENCE, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE CORPORATION TO VERIFY WHETHER THE AMOUNT INSERTED BY IT IN ITS BID WAS THE AMOUNT TO BE PAID BY THE GOVERNMENT OR THE CORPORATION.

ACCORDINGLY, THE AWARD MADE TO THE FREEPORT SALVAGE COMPANY, INC., ON APRIL 24, 1958, MAY BE ..END :