B-152430, DEC. 9, 1963

B-152430, DEC. 9, 1963

TO THE ADMINISTRATOR, FEDERAL AVIATION AGENCY:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 5, 1963, WITH ENCLOSURES,FROM THE ASSOCIATE ADMINISTRATOR FOR DEVELOPMENT REQUESTING OUR DECISION AS TO WHETHER THE CONTRACT AWARD TO MID CONTINENT AIR MOTIVE CORPORATION UNDER INVITATION NO. 3AC-6-256 MAY BE RESCINDED IN VIEW OF THE CIRCUMSTANCES REPORTED.

THE FEDERAL AVIATION AGENCY, INSTALLATION AND MATERIEL DEPOT, AIRCRAFT PURCHASING STATION, OKLAHOMA CITY, OKLAHOMA, BY INVITATION ISSUED MAY 15, 1963, REQUESTED BIDS FOR FURNISHING SIX ITEMS OF BENDIX PRODUCTS TOOLS, OR EQUAL. THE INVITATION CONTAINED THE STANDARD PROVISION CONCERNING THE SHOWING OF THE UNIT PRICE AND IN CASE OF ERROR IN EXTENSION OF PRICE THAT THE UNIT PRICE WILL GOVERN. IN RESPONSE, THREE BIDS, ALL ON BENDIX TOOLS, WERE RECEIVED BY JUNE 6, 1963, THE DATE OF THE BID OPENING. MID CONTINENT AIR MOTIVE CORPORATION BID A BASE UNIT PRICE FOR EACH OF THE SIX ITEMS LESS A 45 PERCENT DISCOUNT AMOUNTING TO A TOTAL NET BID OF $2,038.78. THE BENDIX CORPORATION, BENDIX PRODUCTS AEROSPACE DIVISION, BID A NET UNIT PRICE FOR EACH ITEM AMOUNTING TO A TOTAL NET BID OF $3,108.63. THE THIRD BID, ALSO PREPARED ON THE BASIS OF A NET UNIT PRICE FOR EACH ITEM, WAS MADE BY THE SOUTHWEST AIR MOTIVE COMPANY IN THE TOTAL AMOUNT OF $3,706.86. AWARD WAS MADE ON JUNE 12, 1963, TO MID CONTINENT AIR MOTIVE CORPORATION ON BASIS OF THE LOWEST BID RECEIVED, AND A PURCHASE ORDER WAS ISSUED ON THAT DATE.

BY LETTER DATED JUNE 26, 1963, THE CONTRACTOR ALLEGED AN ERROR IN ITS BID RESULTING FROM QUOTING THE LIST PRICE LESS 45 PERCENT. IT STATES THAT THE DISCOUNT TO THE GOVERNMENT WOULD HAVE BEEN CORRECT FOR SPARE PARTS; HOWEVER, BENDIX TOOLS WHICH THERETOFORE WERE IDENTIFIED WITH A PREFIX LETTER "T" BEFORE THE NUMBER ARE NOT A STOCK ITEM EITHER WITH THE CONTRACTOR OR THE FACTORY AND MUST BE SPECIALLY ORDERED. THE CONTRACTOR FURTHER STATES THAT IT VERY SELDOM BIDS ON TOOLS AND THE ERROR OCCURRED WHEN A SALES CLERK ERRONEOUSLY PENCILED IN THE DISCOUNT OF 45 PERCENT AFTER THE UNIT LIST PRICES QUOTED BY THE BENDIX CORPORATION INSTEAD OF SHOWING THE LIST PRICES AS NET. IN SUPPORT OF ITS ALLEGATIONS THE COMPANY HAS FURNISHED AMONG OTHER THINGS THE WORK COPY OF THE BID AND A COPY OF A TELETYPE MESSAGE FROM BENDIX PRODUCTS AEROSPACE DIVISION DATED MAY 21, 1963, QUOTING THE PRICES SHOWN IN THE UNIT PRICE COLUMN OF THE BID SCHEDULE AND SPECIFYING ONLY A TEN PERCENT DISCOUNT.

THE CONTRACTING OFFICER STATES THAT HE WAS ABLE TO CONFIRM THE CONTRACTOR'S WRITTEN STATEMENTS PERTAINING TO DISCOUNT PERCENTAGES AND THAT THE TOOL PREFIX "T" WAS USED ON ALL BENDIX FIVE DIGIT TOOL PART NUMBERS BUT WAS NOT BEING USED ON SEVEN DIGIT TOOL PART NUMBERS.

IN THE STATEMENT OF HIS FINDINGS, THE CONTRACTING OFFICER SAID:

"THE ITEMS REQUESTED IN IFB 3AC-6-256 ARE AIRCRAFT TIRE TOOLS, USED ON THE BOEING 720 AIRCRAFT AND HAVE NOT PREVIOUSLY BEEN PURCHASED BY THE INSTALLATION AND MATERIEL DEPOT, OKLAHOMA CITY, OKLAHOMA. THEREFORE, THE AIRCRAFT PURCHASING BRANCH, IM-992, HAD NO PREVIOUS PRICING INFORMATION TO ASSIST THEM IN THE AWARD OF IBB. HOWEVER, IT APPEARS THAT THE CONTRACTING OFFICER WAS ON NOTICE THAT A MISTAKE-IN BID HAD OCCURRED SINCE THE LOW BIDDER (MID CONTINENT AIR MOTIVE CORPORATION), A BENDIX DISTRIBUTOR, WAS UNDERBIDDING THE MANUFACTURER (THE BENDIX CORPORATION) WHO HERETOFORE HAS BEEN THE LOWEST BIDDER FOR BENDIX PRODUCTS.

"FURTHER, THE "AMOUNT" COLUMN OF MID CONTINENT AIR MOTIVE CORPORATION BID SHOWS "45 PERCENT" AT THE TOP OF THE COLUMN, AND THEN SHOWS A TOTAL, FOR EACH ITEM, AFTER APPLICATION OF THIS PERCENTAGE FACTOR. HERE, THE CONTRACTING OFFICER CORRECTLY IMPLIED THAT THE 45 PERCENT WAS OFFERED AS A DISCOUNT, ALTHOUGH THIS WAS NOT MADE SPECIFIC BY THE BIDDER.

"SINCE THE BID OF MID CONTINENT AIR MOTIVE WAS APPROXIMATELY 34.5 PERCENT LESS FOR FOUR (4) ITEMS AND 28.1 PERCENT LESS FOR ONE (1) ITEM,THAN THE BID OF BENDIX, THE CONTRACTING OFFICER WAS ON NOTICE AND SHOULD HAVE REQUESTED A VERIFICATION OF THE BID.'

UNDER THE CIRCUMSTANCES, WHILE THE BID ANALYSIS SHEET OF ITSELF DOES NOT INDICATE THAT THE PRICE DIFFERENCES WERE SO GREAT THAT THE LOW BID PRICE NECESSARILY MUST HAVE BEEN ERRONEOUS, THE FACT THAT ALL BIDS WERE ON BENDIX TOOLS AND THE BID OF MID CONTINENT AIR MOTIVE CORPORATION WAS SUBSTANTIALLY LESS THAN THAT OF THE SUPPLIER MANUFACTURER SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. THEREFORE, AS ADMINISTRATIVELY SUGGESTED, THE BID OF MID CONTINENT AIR MOTIVE CORPORATION SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE CORPORATION TO VERIFY ITS BID.

SINCE THE ERROR WAS ALLEGED PROMPTLY AFTER AWARD, AND SINCE IT APPEARS THAT THE COMPANY HAS TAKEN NO FURTHER ACTION TOWARDS COMPLETION OF THE CONTRACT, THE AWARD MAY BE CANCELLED AS RECOMMENDED BY THE CONTRACTING OFFICER AND THE CONTRACTOR RELEASED FROM ITS OBLIGATION THEREUNDER.