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B-158730, MAY 4, 1966

B-158730 May 04, 1966
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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO THE LETTER OF APRIL 18. WHICH IT IS ALLEGED WAS THE INTENDED BID FOR THIS ITEM. ITEM 30 WAS DESCRIBED AS FOLLOWS: "30. ONE OTHER BID IN THE AMOUNT OF $451.79 WAS RECEIVED ON ITEM 30. BIDS WERE OPENED ON JANUARY 4. THE EXPLANATION GIVEN FOR THE MISTAKE IS THAT KENNETH T. WAS "VERY RUSHED IN INSPECTING THE ITEMS AT ABOVE 12:30 P.M. 275.00" WERE WRITTEN OPPOSITE ITEM 30. THE ASSISTANT CHIEF FOR PURCHASING CONCLUDED THAT THERE WAS NOT CLEAR AND CONVINCING EVIDENCE OF A MISTAKE IN THE BID AND ADVISED THAT THE BID WOULD BE CONSIDERED AS SUBMITTED. THE PRIMARY BASIS OF THIS CONCLUSION IS STATED THUSLY: "WHILE JONES AND GUERRERO'S BID FOR ITEM 30 IS HIGHER THAN THE OTHER BID RECEIVED FOR THE ITEM.

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B-158730, MAY 4, 1966

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO THE LETTER OF APRIL 18, 1966, AND ENCLOSURES FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FORWARDING FOR OUR CONSIDERATION THE REQUEST OF JONES AND GUERRERO CO., INC., THAT ITS BID OF $4,275 FOR ITEM 30 UNDER INVITATION FOR BIDS NO. 61119-S-66-37 BE CORRECTED TO $2,275, WHICH IT IS ALLEGED WAS THE INTENDED BID FOR THIS ITEM.

THE INVITATION, ISSUED NOVEMBER 30, 1965, REQUESTED BIDS ON VARIOUS ITEMS OF GOVERNMENT SURPLUS PROPERTY. ITEM 30 WAS DESCRIBED AS FOLLOWS:

"30. TRACTOR, CRAWLER W/CRANE ATTACHMENT, MFR. CATERPILLAR TRACTOR CO., YR. 1958, CAP. 22, 750 LBS. DRAW-BAR PULL (BOOM CAP. 13,900 LBS. (, MOD. NO. D-7, SER. NO. 7M4439, POWERED BY 4 CYL. DIESEL ENGINE, MOD. AND SER NO. N/A; PARTS MISSING. USED - 1 EACH - WT. 21,500 EST. LBS.

"USN NO. 48-10945 GOVT-S. OPINION AS TO CONDITION: APPEARS TO BE FAIR ACQUISITION: 28,495.00" IN ADDITION TO THE JONES AND GUERRERO BID OF $4,275, ONE OTHER BID IN THE AMOUNT OF $451.79 WAS RECEIVED ON ITEM 30. BIDS WERE OPENED ON JANUARY 4, 1966, AND ON JANUARY 5, 1966, JONES AND GUERRERO WROTE THE CONTRACTING OFFICER CLAIMING A MISTAKE IN ITS BID ON ITEM 30, IN THAT IT HAD BID $4,275 WHEREAS IT HAD INTENDED TO BID $2,275. THE EXPLANATION GIVEN FOR THE MISTAKE IS THAT KENNETH T. JONES, JR., PRESIDENT, WAS "VERY RUSHED IN INSPECTING THE ITEMS AT ABOVE 12:30 P.M. ON THE SAME AFTERNOON OF THE BID OPENING. I MADE AN ATTEMPT TO TELEPHONE THE ITEMS IN FROM THE SCRAP AND SALVAGE YARD. THE PHONE BEING BUSY, I DROVE TO THE COMMERCIAL PORT AND TELEPHONED THE ITEMS AND PRICES TO BE SUBMITTED TO OUR OFFICE IN AGANA.' THE BIDDER REQUESTED THAT IT BE PERMITTED TO CORRECT THE BID OR, IN LIEU THEREOF, TO WITHDRAW IT. UPON THE REQUEST OF THE CONTRACTING OFFICER, THE BIDDER LATER FURNISHED THE WORK SHEET (LIST OF ITEMS ATTACHED TO THE SOLICITATION) ON WHICH THE FIGURES "2,275.00" WERE WRITTEN OPPOSITE ITEM 30.

IN THE FIRST SUBMISSION OF THE REQUEST TO THE BUREAU, THE CONTRACTING OFFICER RECOMMENDED THAT WITHDRAWAL BE PERMITTED. THE ASSISTANT CHIEF FOR PURCHASING CONCLUDED THAT THERE WAS NOT CLEAR AND CONVINCING EVIDENCE OF A MISTAKE IN THE BID AND ADVISED THAT THE BID WOULD BE CONSIDERED AS SUBMITTED. THE PRIMARY BASIS OF THIS CONCLUSION IS STATED THUSLY:

"WHILE JONES AND GUERRERO'S BID FOR ITEM 30 IS HIGHER THAN THE OTHER BID RECEIVED FOR THE ITEM, THE MERE DISPARITY OF PRICES IS NOT NECESSARILY INDICATIVE OF AN ERROR, CONSIDERING THE WIDE RANGE OF BIDS ORDINARILY RECEIVED FOR SURPLUS MATERIAL. THE BID OF $4,275 REPRESENTS APPROXIMATELY 15 PERCENT OF THE ACQUISITION COST OF THE ITEM WHICH IS FAIR AND REASONABLE. ON ITEMS 4 AND 8, COVERING SIMILAR MATERIAL IN APPARENTLY LESS FAVORABLE CONDITION, THE CLAIMANT'S BIDS FOR THE RESPECTIVE ITEMS ARE $4,487.50 (OVER 28 PERCENT OF THE ACQUISITION COST) AND $5,625.75 (MORE THAN 35 PERCENT OF THE ACQUISITION COST). * * *"

UPON BEING ADVISED OF THE BUREAU'S INTENTION TO MAKE THE AWARD AT THE PRICE ORIGINALLY SUBMITTED, JONES AND GUERRERO REQUESTED RECONSIDERATION, POINTING OUT THE DISPARITY BETWEEN THE TWO BIDS SUBMITTED AND THE LOW RESALE VALUE OF THE EQUIPMENT, PARTICULARLY IN THE GUAM AREA, AS EVIDENCE OF THE MISTAKE AND THEIR INTENDED BID PRICE. THE CONTRACTING OFFICER SUBMITTED THE REQUEST FOR RECONSIDERATION TO THE BUREAU, WITH HIS CONCLUSION THAT BECAUSE THE BID EXCEEDED THE LOCAL COMMERCIAL VALUE OF THE EQUIPMENT THE CLAIM OF A MISTAKE IN BID SHOULD BE GIVEN FAVORABLE CONSIDERATION. IN THIS CONNECTION, HE POINTS OUT THE FOLLOWING:

"A. THE EQUIPMENT IS NOT ADAPTABLE FOR USE OTHER THAN THAT FOR WHICH IT WAS MANUFACTURED.

"B. THE TRACTOR IS MOUNTED ON CRAWLER TRACKS AND TRANSPORTATION BETWEEN JOB SITES IS REQUIRED.

"C. THE BOOM INSTALLED ON THE EQUIPMENT HAS A CAPACITY OF 7 TONS WITH A RADIUS OF 12 FEET THEREBY RESTRICTING ITS VERSATILITY AS A CRANE.

"D. THE EQUIPMENT HAS NO RESALE VALUE ON GUAM AND MUST BE EXPORTED. TRANSPORTATION AND HANDLING COSTS PLUS IMPORT DUTIES ARE HIGH AND ADDED TO THE PURCHASE PRICE WOULD RENDER THE EQUIPMENT UNSALABLE IN A MARKETABLE AREA.

"E. RECAPITULATION OF ALL OTHER BIDS RECEIVED ON IFB 61119-S-66 37.

CHART BIDDER NO. FIRM NAME ITEMS BID ON AMOUNT BID ITEM 30.

1 FEDERAL EQUIPMENT 11 NONE

FINANCE CORP.

2 TOBIAS O. GIERZA 22 AND 24 NONE

3 FEDERICO CHATO 17, 22 AND 23 NONE

4 CRUZ EQUIP. CO. 2, 3, 11, 14, NONE

17, 18 AND 21

5 GENERAL TRANSFER 27 AND 29 NONE

AND WAREHOUSES INC.

6 ISLAND EQUIPMENT 1 THROUGH 31 $451.79

COMPANY

7 JONES AND GUERRERO 1 THROUGH 24 $4,275.00

COMPANY INC. 26 DO. 31

8 PACIFIC REAL 2, 3, 4, 8, 10 NONE

ESTATE DEVELOPMENT 12, 22, 23, 24

COMPANY 26, 27, 28 AND 29

9 CHRIS BERG, INC. 9, 10 AND 31 NONE

10 USED MATERIAL AND 1, 2, 3, 4, 6, NONE EQUIPMENT STORE 8, 15, 16, 17, 22,

23, 24, 26, 27, 28 AND 29 "FIVE (5)

OF THE ABOVE COMPETING BIDDERS HAVE A

POSSIBLE USE OR MARKET FOR ITEM NO. 30, HOWEVER ONLY ONE OF THE FIVE ACTUALLY BID ON THE EQUIPMENT AND THEIR BID WAS IN THE AMOUNT OF $451.79. OF THE REMAINING THREE (3) POTENTIAL BUYERS, BIDDER NO. 1 OPERATES IN THE PHILIPPINE MARKET, BIDDER NO. 4 OPERATES A CONSTRUCTION EQUIPMENT RENTAL BUSINESS ON GUAM AND BIDDER NO. 9 IS A CONTRACTOR SPECIALIZING IN LARGE CONSTRUCTION PROJECTS. THIRTEEN (13) ADDITIONAL INVITATIONS WERE FORWARDED TO OTHER LOCAL FIRMS WHO HAVE A POTENTIAL USE FOR THE TYPE EQUIPMENT BUT THEY DID NOT PARTICIPATE. THE LOW BID ON ITEM NO. 30 SUBMITTED BY BIDDER NO. 6 OPERATES THE MAJOR SCRAP INDUSTRY ON GUAM.' THE MATTER HAS BEEN SUBMITTED TO THIS OFFICE WITH THE ADMINISTRATIVE RECOMMENDATION THAT THE BID BE CONSIDERED AS SUBMITTED.

IN 36 COMP. GEN. 441 WE STATED THE GENERAL RULE THAT ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT, AND REMARKED THAT "IN UNDERTAKING TO BIND A BIDDER BY ACCEPTANCE OF A BID AFTER NOTICE OF A CLAIM OF ERROR BY THE BIDDER, THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S CLAIM WAS NOT MADE IN GOOD FAITH.' THIS OF COURSE PRESUPPOSES THAT THE BIDDER HAS FURNISHED SUFFICIENT EVIDENCE TO MAKE A PRIMA FACIE CASE IN SUPPORT OF HIS ALLEGED ERROR.

IN THE PRESENT CASE WE FIND NOTHING IN THE RECORD TO JUSTIFY OVERRULING THE CONTRACTING OFFICER'S RECOMMENDATION, BASED ON HIS CONCLUSION THAT THE BIDDER HAD SATISFACTORILY ESTABLISHED THE ERROR ALLEGED AND THE BID INTENDED. THE STATEMENTS OF THE BIDDER AND THE EVIDENCE SUBMITTED IN SUPPORT THEREOF, CONSISTING OF ITS ORIGINAL WORK SHEETS, STAND UNCONTROVERTED BY ANY AFFIRMATIVE EVIDENCE. WE HAVE EXAMINED THE PAPERS CAREFULLY AND OBSERVE NOTHING THAT WOULD FURNISH ANY BASIS FOR SUSPECTING THAT THEY ARE NOT THE ORIGINAL WORK SHEETS AS PREPARED BY MR. JONES AS HE EXAMINED THE PROPERTY AND DETERMINED WHAT THE JONES AND GUERRERO BID WOULD BE.THE FACT THAT THE PRICES FOR THE VARIOUS ITEMS WERE PHONED TO THE OFFICE OF THE BIDDER FOR PREPARATION OF THE BID REASONABLY ACCOUNTS FOR THE ERROR. IN THE LIGHT OF THE FACTS STATED BY THE CONTRACTING OFFICER IN HIS LAST STATEMENT, QUOTED ABOVE, WE DO NOT BELIEVE THAT THE BIDS ON ITEMS 4 AND 8 ARE NECESSARILY INDICATIVE OF WHAT WAS THE INTENDED BID ON ITEM 30, SINCE, IN ADDITION TO DIFFERENCES IN THE DESCRIPTIONS OF THESE ITEMS, BOTH THE BIDDER AND THE CONTRACTING OFFICER HAVE INDICATED THAT ITEM 30 IS OF MUCH LESS VALUE ON GUAM AND IT APPEARS THAT BIDS WERE RECEIVED ON ITEMS 4 AND 8 FROM TWO OTHER BIDDERS WHO DID NOT BID ON ITEM 30.

WHILE IT IS THE GENERAL RULE THAT BIDDERS SHOULD NOT BE PERMITTED TO CHANGE THEIR BIDS AFTER OPENING WHERE SUCH ACTION WOULD PREJUDICE THE RIGHTS OF OTHER BIDDERS, THE STATUTES REQUIRING THE USE OF COMPETITIVE BIDDING ARE FOR THE BENEFIT OF THE UNITED STATES IN SECURING BOTH FULL AND FREE COMPETITION AND THE MOST FAVORABLE COMPETITIVE PRICES. RECOGNITION OF THE FOREGOING PRINCIPLE, THIS OFFICE HAS CONSISTENTLY HELD THAT WHERE A MISTAKE IN A BID IS ALLEGED AFTER OPENING BUT BEFORE AWARD AND THERE IS PRESENTED CLEAR AND CONVINCING EVIDENCE OF THE MISTAKE, HOW IT OCCURRED, AND WHAT THE BID WOULD HAVE BEEN EXCEPT FOR THE MISTAKE, THE INTERESTS OF THE UNITED STATES REQUIRE THAT THE BID BE CONSIDERED AS CORRECTED, IF SUCH CORRECTION WOULD NOT AFFECT THE RELATIVE STANDING OF OTHER BIDDERS. B 123562, MAY 10, 1955.

IN THE CIRCUMSTANCES HERE PRESENTED, WE CONCLUDE THAT JONES AND GUERRERO SHOULD BE PERMITTED TO CORRECT ITS BID AND, IF OTHERWISE PROPER, RECEIVE AWARD FOR ITEM 30 AT A PRICE OF $2,275. THE FILE ENCLOSED WITH THE LETTER OF APRIL 18, 1966, IS RETURNED.

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