B-177167, OCT 30, 1972

B-177167, OCT 30, 1972

CONTRACT - RESCISSION - CONSTRUCTIVE NOTICE OF ERROR DECISION CONCERNING A REQUEST BY GENERAL EXPORT IRON AND METAL CO., FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF A SALES CONTRACT UNDER AN IFB ISSUED BY THE GENERAL SERVICES ADMINISTRATION, REGION 7, FORT WORTH, TEX. WHILE A WIDE RANGE OF BID PRICES IN SURPLUS SALES ORDINARILY IS NOT SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR, THE UNUSUALLY WIDE DISCREPANCY IN THE INSTANT CASE CONSTITUTES CONSTRUCTIVE NOTICE AND THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD. ACCORDINGLY, THE COMP. GEN. RECOMMENDS RESCISSION OF THE CONTRACT WITH RESPECT TO THE ITEM IN QUESTION.

TO MR. SAMPSON:

REFERENCE IS MADE TO A LETTER OF SEPTEMBER 29, 1972, FROM YOUR GENERAL COUNSEL, SUBMITTING FOR DECISION A REQUEST BY GENERAL EXPORT IRON AND METAL CO. (GENERAL), FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF CONTRACT NO. GS-07-DPS)-30011-27, UNDER INVITATION NO. 7DPS-73-12, ISSUED JULY 21, 1972, BY GENERAL SERVICES ADMINISTRATION, REGION 7, FORT WORTH, TEXAS.

THE RECORD DISCLOSES THAT THE INVITATION COVERED THE SALE OF 70 ITEMS OF MISCELLANEOUS PROPERTY. GENERAL WAS THE HIGH BIDDER ON ITEM 34, WITH A PRICE OF $1028.88, WHICH WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"SCRAP RESIDUE OF HOUSEHOLD AND COMMERCIAL EQUIPMENT, INCLUDING: CABINETS, LOCKERS, WARDROBES, TABLES, CHAIRS, FLOOR POLISHERS, STERILIZER, ICE CREAM CABINETS, COFFEE URNS, DISPLAY CASE, ICE CREAM MACHINE, SHAKEMAKER MACHINE, BLENDER, TENDERIZER MACHINE, HYDROCOLLATOR, PROJECTORS, TELEVISION SETS, VACUUM CLEANERS AND OTHER ITEMS. ALL UNITS INOPERABLE AND INCOMPLETE, SUITABLE FOR PARTS AND/OR MATERIAL CONTENT ONLY. *** SCRAP: 1 LOT"

AFTER GENERAL WAS NOTIFIED OF AWARD, IT CONTACTED GSA AND ADVISED THAT IT HAD NOT INTENDED TO BID ON ITEM 34 BUT INSTEAD ON ITEM 36 WHICH READ AS FOLLOWS:

"ITEM DESCRIPTION

36 SCRAP METAL, HEAVY STEEL IN CONTAINERS (CONTAINERS NOT INCLUDED) CONSISTING OF CUT-UP BITS AND PIECES, MOTORS, REAR ENDS, TRANSMISSION AXLES. ESTIMATED WEIGHT 100 TONS ***"

THE MISTAKE ALLEGEDLY OCCURRED WHEN THE WRONG ITEM NUMBER WAS TYPED ON THE BID SHEET.

THE RECORD ALSO SHOWS THAT FOUR OTHER BIDS WERE RECEIVED ON ITEM 34 WHICH WERE $78.00, $31.00, $28.88, AND $12.87. THREE BIDS WERE RECEIVED ON ITEM 36 WHICH WERE $1,919.00, $1,358.00 AND $1,008.78. RECENT PRIOR SALES OF SIMILAR ITEMS AS CONTAINED IN ITEM 34 INDICATED AN AVERAGE SELLING PRICE OF $150.

AN ANALYSIS OF THE FACTS SHOWS THAT GENERAL'S BID WAS 13 TIMES HIGHER THAN THE NEXT HIGHEST BID ON ITEM 34 AND 7 TIMES HIGHER THAN PRICES REALIZED FROM RECENT SALES OF SIMILAR ITEMS. ALSO GENERAL'S BID WAS MORE IN LINE WITH THE BIDS RECEIVED UNDER ITEM 36. THE WORKSHEETS SUBMITTED BY GENERAL TO SUPPORT ITS ALLEGATION OF ERROR SHOW THAT IT INTENDED TO BID ON ITEM 36.

WHILE A WIDE RANGE OF BID PRICES IN SURPLUS SALES ORDINARILY IS NOT SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR, IN THE CIRCUMSTANCES IN THIS CASE WE CONCLUDE THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR IN BID AND SHOULD HAVE REQUESTED VERIFICATION OF GENERAL'S BID PRIOR TO AWARD. 174525, DECEMBER 20, 1971.

ACCORDINGLY, AS ADMINISTRATIVELY RECOMMENDED, RESCISSION OF THE CONTRACT ON ITEM 34 IS AUTHORIZED.