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B-177176, NOV 7, 1972

B-177176 Nov 07, 1972
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IN THE EVENT NO OTHER BIDDER IS DISPLACED. JR.: REFERENCE IS MADE TO A LETTER DATED OCTOBER 2. THE SUBJECT CONTRACTS WERE SALES OF CONTRACTOR INVENTORY AND BOTH INVOLVED THE DISPOSAL OF A QUANTITY OF AIRCRAFT JACKS BY THE MCDONNELL DOUGLAS CORPORATION. A LETTER EXPLAINING THE ERROR WAS DATED AUGUST 2. AFTER NOTICE OF AWARD WAS SENT TO A&S ON JULY 27. WE BELIEVE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF A POSSIBILITY OF AN ERROR BECAUSE OF THE TELEPHONE CALL PRIOR TO AWARD AND THE FACT THAT THE BID WAS 6 1/2 TIMES HIGHER THAN THE NEXT BID AND. HE SHOULD HAVE REQUESTED VERIFICATION OF THE BID BEFORE MAKING AWARD. IN THE EVENT NO OTHER BIDDER IS DISPLACED. 18 COMP.

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B-177176, NOV 7, 1972

CONTRACTS - CONSTRUCTIVE KNOWLEDGE OF ERROR - RESCISSION OF CONTRACT WITHOUT LIABILITY DECISION CONCERNING ALLEGATIONS BY A&S METALS, INC., OF MISTAKES IN BIDS ALLEGED AFTER AWARDS OF SALES CONTRACTS 271223 AND 271225, FOR THE DISPOSAL OF A QUANTITY OF AIRCRAFT JACKS BY THE MCDONNELL DOUGLAS CORPORATION. A&S METALS' ORAL ALLEGATION OF ERROR IN ITS BID PRIOR TO AWARD CONSTITUTES CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF THE POSSIBILITY OF AN ERROR, THUS REQUIRING SUBSEQUENT VERIFICATION OF THE BID BEFORE MAKING AWARD. THEREFORE, SINCE ACCEPTANCE OF A BID WITH CONSTRUCTIVE KNOWLEDGE OF AN ERROR DOES NOT CREATE A BINDING AND VALID CONTRACT, CONTRACT 271225 MAY BE RESCINDED WITHOUT LIABILITY. IF A BIDDER CAN SHOW NOT ONLY THAT HE MADE A MISTAKE BUT ALSO THE AMOUNT HE INTENDED TO BID, THE CONTRACT MAY BE REFORMED, IN THE EVENT NO OTHER BIDDER IS DISPLACED. THEREFORE, A&S'S BID FOR CONTRACT 271223 MAY BE REFORMED TO READ $26 PER UNIT AS INTENDED.

TO LT. GENERAL WALLACE ROBINSON, JR.:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 2, 1972 (YOUR REFERENCE DSAH- G), FROM MR. JAMES P. ENGLAND, ASSISTANT COUNSEL, CONCERNING THE ALLEGATIONS BY A&S METALS, INC. (A&S) OF MISTAKES IN BIDS ALLEGED AFTER AWARDS OF SALES CONTRACTS 271223 AND 271225.

THE SUBJECT CONTRACTS WERE SALES OF CONTRACTOR INVENTORY AND BOTH INVOLVED THE DISPOSAL OF A QUANTITY OF AIRCRAFT JACKS BY THE MCDONNELL DOUGLAS CORPORATION.

A&S'S BID FOR CONTRACT 271223 READS AS FOLLOWS:

LOT ESTIMATED BID PER

NUMBER DESCRIPTION QUANTITY UNIT UNIT

1 B6-10 TON JACK 5 PCS EA. 130.00

2 B6-10 TON JACK 5 PCS EA. 130.00

3 B6-10 TON JACK 1 PC EA. 78.00

4 B4A, 30 TON JACK 1 PC EA. 31.00

5 B6-10 TON JACK 1 PCEA. 18.00

A&S ALLEGES THAT THE MISTAKE OCCURRED WHEN INEXPERIENCED OFFICE PERSONNEL ENTERED THE TOTAL PRICE INTENDED TO BE BID FOR BOTH LOTS 1 AND 2 OF $130 UNDER THE BID-PER-UNIT COLUMN INSTEAD OF THE INTENDED UNIT PRICE OF $26 EACH FOR THE 10 ITEMS COVERED BY LOTS 1 AND 2. THE ABSTRACT OF OTHER BIDS RECEIVED ON LOTS 1 AND 2 SHOW A RANGE FROM A LOW OF $2.50 TO A SECOND HIGH BID OF $20.

THE RECORD SHOWS THAT A&S MADE AN ORAL ALLEGATION OF ERROR IN ITS BID PRIOR TO AWARD BUT AT THAT TIME ONLY STATED THAT THE BIDS CONCERNED AIRCRAFT JACKS. A LETTER EXPLAINING THE ERROR WAS DATED AUGUST 2, 1972, AFTER NOTICE OF AWARD WAS SENT TO A&S ON JULY 27, 1972. A&S EXPLAINED THE BID OF $78 ON LOT 3 (CONSISTING OF A SINGLE JACK IDENTICAL WITH THOSE COVERED BY LOTS 1 AND 2) AS BEING HIGHER THAN THE $26 INTENDED BID FOR LOTS 1 AND 2 DUE TO THE FACT THAT A&S WANTED TO BE CERTAIN IT OBTAINED AT LEAST ONE OF THE ITEMS.

BASED ON THE ABOVE, WE BELIEVE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF A POSSIBILITY OF AN ERROR BECAUSE OF THE TELEPHONE CALL PRIOR TO AWARD AND THE FACT THAT THE BID WAS 6 1/2 TIMES HIGHER THAN THE NEXT BID AND, THEREFORE, HE SHOULD HAVE REQUESTED VERIFICATION OF THE BID BEFORE MAKING AWARD. B-171230, JANUARY 4, 1971. THE SALES OFFICE RECOMMENDS RESCISSION OF THE CONTRACT AND AWARD TO THE SECOND HIGHEST BIDDER, WHILE YOUR OFFICE RECOMMENDS THAT THE CONTRACT BE REFORMED BY SUPPLEMENTAL AGREEMENT INASMUCH AS A&S WOULD STILL BE HIGH BIDDER AT A PRICE OF $26 FOR EACH JACK.

IF A BIDDER CAN SHOW NOT ONLY THAT HE MADE A MISTAKE, BUT ALSO THE AMOUNT HE INTENDED TO BID, THE CONTRACT MAY BE REFORMED, IN THE EVENT NO OTHER BIDDER IS DISPLACED. 18 COMP. GEN. 594 (1939); B-171229, FEBRUARY 17, 1971. THEREFORE, A&S'S BID FOR CONTRACT 271223 MAY BE CORRECTED TO READ $26 PER UNIT AS INTENDED.

A SIMILAR TYPE ERROR OCCURRED WITH RESPECT TO CONTRACT 271225 WHICH CONSISTED OF 6 LOTS OF 7 AIRCRAFT JACKS (20-TON) AND ON WHICH A&S SUBMITTED A BID-PER-UNIT PRICE OF $89.60 THAT IT NOW CONTENDS WAS SUBMITTED AS A LOT PRICE AND THAT IT INTENDED A UNIT PRICE OF $12.80. THE THREE OTHER BIDS RECEIVED ON THE ITEMS WERE $15, $12 AND $10.01 PER UNIT. IT CAN BE SEEN THAT THE INTENDED BID OF A&S IS MORE IN LINE WITH THE OTHER BIDS THAN THE SUBMITTED BID OF $89.60 WHICH IS SIX TIMES THE NEXT HIGHEST BID.

FROM THE RECORD IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE POSSIBILITY OF AN ERROR. B-174525, DECEMBER 20, 1971. THEREFORE, SINCE ACCEPTANCE OF A BID WITH KNOWLEDGE, EITHER ACTUAL OR CONSTRUCTIVE, OF ERROR DOES NOT CREATE A BINDING AND VALID CONTRACT, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY. REFORMATION OF THIS CONTRACT WOULD BE INAPPROPRIATE SINCE THE BIDDER WHO SUBMITTED THE NEXT LOWEST PRICE OF $15 WOULD BE DISPLACED AS THE HIGHEST BIDDER.

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