B-147368, JAN. 12, 1962

B-147368, JAN. 12, 1962

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

THIS REFERS TO A LETTER OF NOVEMBER 6, 1961 FROM DIMOND AND THORMAN, ATTORNEYS AT LAW, ON BEHALF OF NATIONAL STEEL PRODUCTS, INC., RELATIVE TO AN ERROR IN BID ALLEGED AFTER THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. 62-22, WHICH MATTER IS THE SUBJECT OF REPORTS DATED OCTOBER 23 AND DECEMBER 7, 1961 (REF. 031C), FROM YOUR OFFICE OF MANAGEMENT SERVICES TO THIS OFFICE.

THE RECORD SHOWS THAT INVITATION FOR BIDS NO. 62-22 WAS ISSUED ON JUNE 30, 1961, BY THE VETERANS ADMINISTRATION HOSPITAL, PERRY POINT, MARYLAND, COVERING FOUR SETS OF SELF-SUPPORTING STRUCTURAL STEEL STAIRS. THE FACE OF INVITATION NO. 62-22 SETS FORTH THE REQUIRED UNIT AND STATES "ALL IN STRICT ACCORDANCE WITH THE FOLLOWING SPECIFICATIONS AND DETAILED DRAWING WHICH ARE AVAILABLE FOR INSPECTION IN RESIDENT ENGINEER'S OFFICE, BUILDING 8.'

BIDS WERE OPENED ON JULY 19, 1961, AND THE FOLLOWING TWO BIDS WERE RECEIVED AND TABULATED:

TABLE

UNIT PRICE TOTAL AMOUNT NATIONAL STEEL PRODUCTS, INC. $ 2,117 $ 8,468 POTOMAC IRON WORKS, INC. 2,950 11,800

AWARD WAS MADE TO NATIONAL STEEL PRODUCTS, INC., ON JULY 19, 1961, AND CONFIRMING PURCHASE ORDER NO. 312 WAS ISSUED THE SAME DATE. ALSO, UNDER DATE OF JULY 19, 1961, THE SENIOR RESIDENT ENGINEER FORWARDED TO THE CONTRACTOR DETAILED SHEETS AND JOB DRAWINGS TO ASSIST THE CONTRACTOR IN MAKING REQUIRED SHOP DRAWINGS FOR SUBMISSION AND APPROVAL.

BY TELEPHONE ON JULY 20, 1961. THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICE THAT IT HAD MADE AN ERROR IN BID. IN A LETTER OF JULY 24, 1961, THE CONTRACTOR STATED THAT ON A PREVIOUS INVITATION (INVITATION NO. 61- 70), BID ON JUNE 14, 1961, THE CONTRACTOR HAD VISITED THE SITE AND HAD OBTAINED INFORMATION ABOUT THE TYPE OF STAIRWAY REQUIRED. AT THAT TIME, THE CONTRACTOR STATED, IT WAS INFORMED THAT MORE STAIRS WOULD SOON BE OUT FOR BIDS VERY SIMILAR TO THOSE REQUIRED BY INVITATION NO. 61-70. PREPARING ITS BID ON INVITATION NO. 62-22, SINCE PLANS WERE NOT PROVIDED, IT ASSUMED THAT STAIRS SIMILAR TO THOSE REQUIRED BY THE PREVIOUS INVITATION WERE REQUIRED. THE CONTRACTOR SAYS THAT FOR THE MORE COSTLY UNIT SPECIFIED IN INVITATION NO. 62-22 IT WOULD HAVE BID $3,265 INSTEAD OF $2,117.

NATIONAL STEEL PRODUCTS, INC., WAS DECLARED IN DEFAULT OF CONTRACT FOR FAILURE TO PERFORM, AND THE REQUIREMENT HAS BEEN READVERTISED.

IT IS REPORTED THAT BIDS RECEIVED IN RESPONSE TO THE PREVIOUS INVITATION (NO. 61-70) WERE AS FOLLOWS:

TABLE

EACH NATIONAL STEEL PRODUCTS, INC.

$2,117 POTOMAC IRON WORKS, INC. 1,562

IN EVALUATING THE BIDS RECEIVED ON INVITATION NO. 62-22 THE CONTRACTING OFFICER STATES THAT THE DIFFERENCE IN PRICE BETWEEN THE LOWEST AND THE NEXT LOWEST BID WAS NOT QUESTIONED INASMUCH AS THE PRICE SUBMITTED FOR SIMILAR STAIRS UNDER INVITATION NO. 61-70 ALSO HAD A WIDE VARIANCE. ADVISES THAT IN A READVERTISEMENT OF THE REQUIREMENT STATED BY INVITATION NO. 62-22 (INVITATION NO. 62-50) POTOMAC IRON WORKS BID $2,550 PER UNIT, ON THE IDENTICAL STAIRS, A REDUCTION OF $400 FROM ITS PREVIOUS BID.

THE GENERAL RULE IS THAT THE ACCEPTANCE OF A BID WITH EITHER ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF ERROR THEREIN DOES NOT GIVE RISE TO A VALID AND BINDING CONTRACT. SEE 36 COMP. GEN. 441. HERE THE LOW BIDDER SUBMITTED A BID PRICE OF $2,117 PER UNIT, AS COMPARED WITH THE OTHER BID OF $2,950. FEW WEEKS EARLIER, UNDER LESS COSTLY SPECIFICATIONS FOR THE SAME TYPE ITEM, ISSUED BY THE SAME PROCURING OFFICE, THE SAME BIDDER, NATIONAL STEEL PRODUCTS, ALSO BID $2,117, WHICH BID WAS NOT LOW. THE OTHER BIDDER COMMON TO BOTH THESE PROCUREMENTS, NAMELY POTOMAC IRON WORKS, INC., SIGNIFICANTLY, SUBMITTED PRICES PER UNIT ALMOST $1,400 APART. (IT BID $2,950 ON INVITATION NO. 62-22 AS COMPARED WITH $1,562 ON INVITATION NO. 61-70). CONSIDERING THAT THE PROCUREMENTS WERE CLOSE TOGETHER IN POINT OF TIME, AND THAT A COMPARISON OF THE BIDS RECEIVED UNDER THE PROCUREMENTS DOES RAISE A SUSPICION OF THE ERROR ALLEGED, WE THINK THAT THE ACCEPTANCE OF THE NATIONAL STEEL PRODUCTS, INC., BID DID NOT RESULT IN A LEGAL AND BINDING CONTRACT. SEE B-133655, OCTOBER 8, 1957.

ACCORDINGLY, IT IS OUR CONCLUSION THAT NATIONAL STEEL PRODUCTS, INC., IS NOT LIABLE FOR ANY EXCESS COST PURSUANT TO ITS DEFAULTED CONTRACT.