B-141364, DEC. 16, 1959

B-141364, DEC. 16, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 27, 1959, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), CONCERNING THE REQUEST BY JERSEY TRUCK SALES, ELIZABETH, NEW JERSEY, FOR CANCELLATION OF THE AWARD TO IT OF ITEMS NOS. 25 AND 26 OF SPOT BID SALE NO. 30-127-S- 60-1, ON THE GROUND OF THE MISTAKE IN ITS BID DISCLOSED AND ALLEGED SUBSEQUENT TO THE AWARD.

UNDER DATE OF JULY 10, 1959, SCHENECTADY GENERAL DEPOT, U.S. ARMY, INVITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 102 ITEMS OF SURPLUS PROPERTY LISTED ON SPOT BID SALE ANNOUNCEMENT NO. 30-127-S-60-1 TO BE SOLD ON JULY 31, 1959. ALL BIDDERS WERE URGED TO REVIEW GENERAL SALE TERMS AND CONDITIONS ON PAGE 3 AND SPECIAL CONDITIONS ON PAGES 4 AND 5 OF THE ANNOUNCEMENT. IN RESPONSE TO THE INVITATION, JERSEY TRUCK SALES PRESENTED SPOT BID CARDS OFFERING TO PURCHASE, AMONG OTHER, ITEMS NOS. 25 AND 26 AT THE RESPECTIVE AMOUNTS OF $917.11 AND $1,826.11. SIX OTHER BIDS--- RANGING FROM $885 TO $320--- WERE RECEIVED ON ITEM NO. 25, AND EIGHT OTHER BIDS--- RANGING FROM $885 TO $320--- WERE RECEIVED ON ITEM NO. 26. THE BIDS OF JERSEY TRUCK SALES ON THOSE ITEMS WERE THE HIGHEST AND AWARDS OF ITEMS NOS. 25 AND 26 WERE MADE TO JERSEY TRUCK SALES UPON ANNOUNCEMENT BY THE CONTRACTING OFFICER OF THE HIGH BID ON EACH ITEM AS THE BIDS ON THE RESPECTIVE ITEMS WERE CALLED FOR.

THE RECORD SHOWS THAT AFTER AWARD OF ITEMS NOS. 25 AND 26 HAD BEEN MADE AND WHILE BIDS WERE BEING CONSIDERED FOR ITEM NO. 27, BUT PRIOR TO THE CONTRACTING OFFICER ANNOUNCING THE SALE OF ITEM NO. 27 TO THE HIGHEST BIDDER, MR. SACCO, PRESIDENT OF JERSEY TRUCK SALES, WHO WAS PRESENT DURING THE SALE AND AWARD TO HIS FIRM OF ITEMS NOS. 25 AND 26, STATED THAT HE HAD MADE A MISTAKE IN HIS FIRM'S BID, EXPLAINING THAT HE WAS INTERESTED IN THE GRADES COVERED BY ITEMS NOS. 26 AND 27 AND THAT HE HAD NOT INTENDED TO BID ON ITEM NO. 25 BUT INTENDED THE BID PLACED ON THAT ITEM TO APPLY TO ITEM NO. 26 AND THE BID ON ITEM NO. 26 TO ITEM NO. 27. MR. SACCO GAVE NO EXPLANATION AS TO WHY HE HAD NOT PROTESTED IMMEDIATELY WHEN HIS FIRM WAS ANNOUNCED AS THE HIGHEST BIDDER ON ITEM NO. 25.

IN LETTER DATED AUGUST 6, 1959, MR. SACCO STATED THAT HIS FIRM WISHED TO WITHDRAW ITS BID ON ITEM NO. 25 SINCE IT HAD NOT INTENDED TO BID ON THAT ITEM BUT ON ITEMS NOS. 26 AND 27, EXPLAINING THAT DUE TO THE VAST CONFUSION AND HIS CONVERSING WITH OTHER BIDDERS HE HAD MISJUDGED THE ITEM NUMBER IN PRESENTING HIS BIDS. IN SUPPORT OF THE CLAIMED ERROR HE FORWARDED A PHOTOSTATIC COPY OF THE FIRM'S WORK SHEET -- A COPY OF PAGE 10 OF THE SALE ANNOUNCEMENT BEARING THE SIGNATURE OF MR. SACCO AND PENCIL NOTATIONS ON ITEMS NOS. 24, 26, AND 27 AS TO THE CONDITION OF THE PROPERTY DESCRIBED AND FIGURES OF "$900" ON ITEMS NO. 26 AND "$1,800" ON ITEM NO. 27. NO NOTATIONS APPEARED ON ITEMS NO. 25. SUBSEQUENTLY, HE REQUESTED THAT JERSEY TRUCK SALES BE RELIEVED OF THE TWO ITEMS.

ON THE BASIS OF THE EVIDENCE SUBMITTED, IT APPEARS THAT JERSEY TRUCK SALES MADE AN ERROR IN ITS BID AS TO ITEMS NOS. 25 AND 26, AS ALLEGED. HOWEVER, THE BASIC QUESTION FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER THE ACCEPTANCE OF THE BID AS TO THOSE ITEMS BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT ACCEPTANCE OF A BID CONSUMMATES A VALID CONTRACT UNLESS THE OFFICER ACCEPTING IT WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE THE ACCEPTANCE AN ACT OF BAD FAITH. SEE MOFFETT, HODGKINS AND CLARK COMPANY V. CITY OF ROCHESTER, 178 U.S. 373.

IT IS CLEAR FROM THE RECORD THAT THE ERROR WAS DUE SOLELY TO THE NEGLIGENCE OF JERSEY TRUCK SALES IN ENTERING ITS BIDS FROM ITS WORK SHEET TO THE SPOT BID CARS SUBMITTED TO THE DEPOT AND THAT SUCH ERROR WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THE BIDS ON ITEMS NOS. 25 AND 26 AS SUBMITTED WERE CLEAR AND UNAMBIGUOUS AND THERE WAS NOTHING ON THE FACE OF THE BID CARDS TO INDICATE THAT THE ITEM NUMBERS NOTED THEREON WERE NOT AS INTENDED.

ALTHOUGH THE BIDS RESPECTIVELY SUBMITTED ON ITEMS NOS. 25 AND 26 BY JERSEY TRUCK SALES WERE CONSIDERABLY HIGHER THAN THE OTHER BIDS RECEIVED ON THOSE ITEMS, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BIDS OF THE COMPANY. IN THIS CONNECTION, THE ACQUISITION COST OF THE PROPERTY DESCRIBED IN ITEM NO. 25 IS $3,848, AND FOR ITEM NO. 26 IS $12,431. A BID OF $917.11 FOR ITEM NO. 25 AND OF $1,826.11 FOR ITEM NO. 26 WOULD NOT SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS. FURTHERMORE, THIS WAS A SALE OF SURPLUS PROPERTY AND, IN VIEW OF THE WIDE RANGE OF PRICES ORDINARILY RECEIVED ON WASTE, SALVAGE, AND SURPLUS PROPERTY, A MERE DIFFERENCE IN THE PRICES BID WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN A BID FOR THE PURCHASE OF SUCH PROPERTY, AS WOULD LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT OR SUPPLIES TO BE FURNISHED TO THE GOVERNMENT. PRICES OFFERED TO THE GOVERNMENT FOR ITS SURPLUS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689, CITING WITH APPROVAL 16 COMP. GEN. 596; 17 ID. 388; AND ID. 601. IN THE SABIN CASE, SUPRA, THE PRICE DISPARITY ON THE BIDS RECEIVED FOR THE SALE OF SURPLUS PROPERTY RANGED FROM A LOW OF $377.28 TO A HIGH OF $9,351.30. THE COURT, AT P. 688, SAID:

"THIS BEING A SALE OF SURPLUS ENGINE PARTS, THE CONTRACTING OFFICER HAD NO METHOD OF KNOWING THAT THERE WAS AN ERROR IN THE DEFENDANT'S BID. THE GOVERNMENT WAS INTERESTED ONLY IN GETTING THE HIGHEST POSSIBLE PRICE FOR THE MATERIAL TO BE SOLD; IT WAS NOT IN THE METAL TRADE. THERE IS NO REASON WHY THE SPREAD IN BIDS SHOULD HAVE APPEARED PALPABLE TO THE GOVERNMENT. THE ADMINISTRATIVE AGENCY WAS NOT REQUIRED TO EMPLOY OR UTILIZE EXPERTS FOR THE BENEFIT OF THE DEFENDANT, NOR TO ASSUME THE BURDEN OF EXAMINING EVERY LOW BID FOR POSSIBLE ERROR BY THE BIDDER.'

IN VIEW OF THE FOREGOING AND AS NO ERROR WAS ALLEGED UNTIL AFTER AWARD AND THERE WAS NOTHING ON THE SPOT BID CARDS TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR IN THE BIDS, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF THE BIDS OF JERSEY TRUCK SALES ON ITEMS NOS. 25 AND 26 WAS MADE ON GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES.

ACCORDINGLY, THE AWARD OF ITEMS NOS. 25 AND 26 TO JERSEY TRUCK SALES PURSUANT TO SPOT BID SALE ANNOUNCEMENT NO. 30-127-S-60-1 MAY NOT BE CANCELED.

THE PAPERS FORWARDED WITH THE LETTER OF NOVEMBER 27, 1959, ARE RETURNED.