B-177695, JAN 22, 1973

B-177695, JAN 22, 1973

CONTRACT - RESCISSION - REAL ESTATE SALE - MISTAKE IN BID DECISION ALLOWING RESCISSION OF A CONTRACT AWARDED TO C.F. BEAN UNDER AN IFB ISSUED BY GSA, FT. WORTH, TEX., FOR THE SALE OF TWO PARCELS OF GOVERNMENT-OWNED LAND LOCATED NEAR PLAQUEMINE, LA. A CONTRACT MAY ONLY BE RESCINDED DUE TO A MISTAKE IN BID IF THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE MISTAKE. COMP. GEN. 199, 201 (1969). ALTHOUGH, WITH REGARD TO THE SALE OF REAL ESTATE, A WIDE DISPARITY BETWEEN APPRAISED VALUE AND BID PRICE IS NOT NORMALLY SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF POSSIBLE MISTAKE, IN CIRCUMSTANCES WHERE THE PROPERTY IS DETERMINED TO BE OF LITTLE VALUE TO ANYONE OTHER THAN THE IMMEDIATE ADJACENT LANDOWNER, SUCH A WIDE DISPARITY IS SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE. B-160113, NOVEMBER 25, 1966.

TO MR. ARTHUR F. SAMPSON:

WE REFER TO YOUR GENERAL COUNSEL'S REPORT OF DECEMBER 21, 1972, WITH ENCLOSURES, SUBMITTING FOR OUR CONSIDERATION A REQUEST BY MR. C. F. BEAN, PLAQUEMINE, LOUISIANA, THAT A CONTRACT AWARDED TO HIM PURSUANT TO INVITATION FOR BIDS (IFB) GSA-R-741 BE RESCINDED ON THE BASIS OF AN ERROR IN HIS BID.

THE SUBJECT IFB WAS ISSUED BY THE GENERAL SERVICES ADMINISTRATION'S (GSA) PROPERTY MANAGEMENT AND DISPOSAL SERVICE, REAL PROPERTY DIVISION, FORT WORTH, TEXAS, FOR THE SALE OF TWO PARCELS OF GOVERNMENT-OWNED LAND LOCATED APPROXIMATELY 3 MILES SOUTHWEST OF PLAQUEMINE, LOUISIANA.

ITEM 1 WAS DESCRIBED AS A TRIANGULAR PARCEL CONTAINING APPROXIMATELY 5.629 ACRES OF LAND SITUATED ON THE SOUTH BANK OF BAYOU PLAQUEMINE CUT OFF AT DARDENNES BEND.

ITEM 2 WAS A THIN STRIP OF LAND CONTAINING APPROXIMATELY 1.281 ACRES OF LAND LOCATED ON THE NORTH BANK OF THE REFERENCED CUT-OFF.

ITEM 1 IS CHARACTERIZED AS ACCESSIBLE BY ROAD AND THE BAYOU, AND BY THE BAYOU CUT-OFF WHICH IS A NAVIGABLE COMMERCIAL WATERWAY LEADING TO THE MISSISSIPPI RIVER. A GSA STAFF APPRAISAL ESTIMATED THE VALUE OF THIS PARCEL TO BE $800 PER ACRE, ALTHOUGH THE VALUE TO THE SUCCESSFUL BIDDER (PLAQUEMINE HARDWOOD, INC., WHICH BID $10,600) WAS CONSIDERED GREATER DUE TO THAT FIRM'S SPECIAL NEED FOR THE PROPERTY IN CONNECTION WITH ITS LUMBER BUSINESS.

ITEM 2 WAS ESTIMATED TO BE OF LESSER VALUE PER ACRE THAN ITEM 1 DUE TO ITS PECULIAR CONFIGURATION (APPROXIMATELY 60 FEET BY 781 FEET), AND ITS LIMITED ACCESS. AS SUCH, IT WAS CONSIDERED BY GSA TO BE OF LITTLE PRACTICAL USE EXCEPT IN CONNECTION WITH THE ADJACENT LAND.

UPON THE OPENING OF BIDS ON OCTOBER 4, 1972, IT WAS DETERMINED THAT MR. BEAN'S BID OF $4,400 WAS HIGHEST FOR ITEM 2.

BY LETTER OF OCTOBER 13, 1972, MR. BEAN WAS ADVISED THAT HIS BID WAS ACCEPTED AND THAT HIS BID DEPOSIT HAD BEEN APPLIED AGAINST THE PURCHASE PRICE.

THE RECORD INCLUDES A MEMORANDUM DATED OCTOBER 16, 1972, FROM THE REALTY OFFICER, REAL PROPERTY DIVISION, PROPERTY MANAGEMENT AND DISPOSAL SERVICE, STATING THAT MR. BEAN, AFTER RECEIVING NOTIFICATION OF THE AWARD, TELEPHONED THE REALTY OFFICER AND ADVISED THAT HE HAD INADVERTENTLY BID ON THE WRONG ITEMS, HAVING INTENDED HIS BID OF $4,400 TO APPLY TO ITEM 1, AND HIS BID OF $1.00 ON ITEM 1 TO APPLY TO ITEM 2. HE EXPLAINED THAT HE CONSIDERED ITEM 2 TO BE OF NEGLIGIBLE WORTH.

BY LETTER OF OCTOBER 17, 1972, MR. BEAN ADVISED THE REALTY OFFICER IN WRITING OF THE FOREGOING, MAINTAINING THAT HIS BID OF $1.00 WAS INTENDED FOR ITEM 2 AND, IF SUCCESSFUL, MR. BEAN WOULD HAVE ATTEMPTED TO SELL ITEM 2 TO THE ADJACENT LANDOWNER. MR. BEAN REQUESTED THAT HIS BIDS OF $4,400 AND $1.00 BE REVERSED SO AS TO APPLY TO ITEMS 1 AND 2, RESPECTIVELY, OR THAT HIS BIDS BE DISREGARDED AND HIS DEPOSIT OF $1,200 RETURNED.

THE CONTRACTING OFFICER ADVISES THAT THE CIRCUMSTANCES STRONGLY SUPPORT MR. BEAN'S CONTENTIONS, THAT IT WOULD HAVE BEEN ILLOGICAL FOR HIM TO HAVE INTENDED HIS BID AS SUBMITTED, AND THAT THE ALLEGED ERROR WAS SO APPARENT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF A MISTAKE IN THE BID. IN VIEW THEREOF, THE CONTRACTING OFFICER RECOMMENDED RESCISSION OF THE CONTRACT.

OUR OFFICE HAS HELD THAT IF A BIDDER COMMITS A UNILATERAL MISTAKE, HE IS BOUND BY THE CONTRACT AS AWARDED UNLESS THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN OF THE MISTAKE AT THE TIME OF AWARD. IF THE CONTRACTING OFFICER WAS ACTUALLY OR CONSTRUCTIVELY ON NOTICE OF THE MISTAKE, THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. 49 COMP. GEN. 199, 201 (1969).

WITH SPECIFIC REGARD TO THE SALE OF REAL ESTATE, A WIDE DISPARITY BETWEEN APPRAISED VALUES AND BID PRICES IS NOT NORMALLY SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF A MISTAKE DUE TO THE MYRIAD OF USES TO WHICH THE SUBJECT LAND CAN USUALLY BE DEVOTED. HOWEVER, IN CIRCUMSTANCES WHERE THE PROPERTY IS DETERMINED TO BE OF LITTLE VALUE TO ANYONE OTHER THAN THE IMMEDIATE ADJACENT LANDOWNER, A WIDE DISPARITY BETWEEN THE APPRAISED VALUE AND THE HIGH BID IS SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH SUCH CONSTRUCTIVE NOTICE OF A PROBABLE ERROR. 160113, NOVEMBER 25, 1966.

THE RECORD INDICATES THIS WAS ALSO TRUE IN THE INSTANT CASE, SINCE THE NARROW CONFIGURATION OF ITEM 2 AND THE LIMITED ACCESS THERETO APPEARS TO CORROBORATE THE APPRAISAL THAT IT WAS OF LITTLE VALUE TO ANYONE EXCEPT THE ADJACENT LANDOWNER. INASMUCH AS MR. BEAN'S BID WAS MORE THAN FOUR TIMES GREATER THAN THE GOVERNMENT ESTIMATE OF "LESS THAN $800 PER ACRE", AND 4,400 TIMES MORE THAN HIS BID FOR THE LAND APPRAISED AT $800 PER ACRE AND OFFERED UNDER ITEM 1, WE MUST CONCUR WITH THE CONTRACTING OFFICER'S ADMISSION THAT HE IS CHARGEABLE WITH CONSTRUCTIVE NOTICE OF AN ERROR.

IN VIEW OF THE FOREGOING, OUR OFFICE WILL NOT OBJECT TO THE PROPOSED RESCISSION OF MR. BEAN'S CONTRACT.

THE FILE TRANSMITTED WITH THE REPORT OF DECEMBER 21, 1972, IS RETURNED.