B-126946, FEB. 24, 1956

B-126946: Feb 24, 1956

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TO HONORABLE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED FEBRUARY 8. WAS BASED. THE SALE WAS ON AN "AS IS" BASIS. BOTH THE INVITATION FOR BIDS AND THE COMPANY'S BID IN RESPONSE THERETO WERE SPECIFIC. THE BID WAS REQUESTED. THE OPENING OF THE BIDS WAS ON NOVEMBER 17. THE COMPANY'S BID WAS ACCEPTED AS TO ITEMS NOS. 38. NOTICE OF ACCEPTANCE WAS MAILED TO THE BIDDER ON THE NEXT DAY. THE COMPANY ALLEGED THAT IT MADE AN ERROR IN ITS BID IN THAT IT HAD NOT INTENDED TO MAKE ANY BID ON ITEM NO. 124 AND THAT THE OFFER OF $175.50 ON THAT ITEM ACTUALLY WAS INTENDED FOR LOT NO. 125. NO EVIDENCE OF ANY KIND WAS FURNISHED IN SUBSTANTIATION OF THE ALLEGATION OF ERROR. THE BASIC QUESTION FOR DETERMINATION IS NOT WHETHER THE CONTRACTOR MADE A MISTAKE IN THE PREPARATION OF ITS BID.

B-126946, FEB. 24, 1956

TO HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 8, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL) RELATIVE TO AN ALLEGED ERROR ON ITEM NO. 124 OF AN UNDATED BID SUBMITTED BY RIVERSIDE SCRAP IRON AND METAL CO. IN A SALE OF GOVERNMENT-OWNED SURPLUS MATERIAL ON WHICH CONTRACT NO. N62204-77 DATED NOVEMBER 21, 1955, WAS BASED.

THE SALE WAS ON AN "AS IS" BASIS. BOTH THE INVITATION FOR BIDS AND THE COMPANY'S BID IN RESPONSE THERETO WERE SPECIFIC, CLEAR AND UNAMBIGUOUS. THE BID WAS REQUESTED, SUBMITTED AND ACCEPTED AS TO EACH OF THESE ITEMS ON THE LOT BASIS. THE OPENING OF THE BIDS WAS ON NOVEMBER 17, 1955. NOVEMBER 21, 1955, THE COMPANY'S BID WAS ACCEPTED AS TO ITEMS NOS. 38, 46, 88 AND 124, AND NOTICE OF ACCEPTANCE WAS MAILED TO THE BIDDER ON THE NEXT DAY. IN A LETTER DATED DECEMBER 7, 1955, THE COMPANY ALLEGED THAT IT MADE AN ERROR IN ITS BID IN THAT IT HAD NOT INTENDED TO MAKE ANY BID ON ITEM NO. 124 AND THAT THE OFFER OF $175.50 ON THAT ITEM ACTUALLY WAS INTENDED FOR LOT NO. 125. NO EVIDENCE OF ANY KIND WAS FURNISHED IN SUBSTANTIATION OF THE ALLEGATION OF ERROR. HOWEVER, IT REFERRED TO ERROR AS OBVIOUS AND REQUESTED AN ADJUSTMENT IN THE CONTRACT BY REASON THEREOF.

THE BASIC QUESTION FOR DETERMINATION IS NOT WHETHER THE CONTRACTOR MADE A MISTAKE IN THE PREPARATION OF ITS BID--- NO PROOF OF WHICH HAS BEEN FURNISHED--- BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. THE ABSTRACT OF BIDS SHOWS THAT THE EIGHT OTHER BIDS RECEIVED ON ITEM NO. 124 RANGED FROM $66.66 TO $7.50 AND THAT THE TWELVE BIDS RECEIVED ON ITEM NO. 125 RANGED FROM $611.89 TO $101. THUS, WHILE IT MAY BE SEEN THAT THERE IS A SUBSTANTIAL VARIANCE IN THE BIDS RECEIVED FOR EITHER ITEM SUCH VARIANCE IS NOT NECESSARILY UNUSUAL, SINCE IN A SALE OF GOVERNMENT OWNED SURPLUS PROPERTY THERE MIGHT BE EXPECTED A WIDE RANGE IN THE BIDS WHICH WOULD BE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY WAS INTENDED TO BE PUT BY THE PARTICULAR BIDDER OR THE CHANCE OF RESALE THEREOF. IN OTHER WORDS, A MERE DIFFERENCE IN THE PRICES BID FOR SURPLUS PROPERTY SUCH AS HERE INVOLVED, PARTICULARLY WHEN SOLD BY LOT, WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED TO THE GOVERNMENT. SEE 16 COMP. GEN. 596; 17 ID. 388; ID. 601; ID. 976; AND 28 ID. 550. UNDER THE CIRCUMSTANCES, IT MAY NOT BE SAID THAT THERE WAS ANYTHING APPEARING ON THE FACE OF THE COMPANY'S BID TO JUSTIFY THE CONCLUSION THAT THE CONTRACTING OFFICER SHOULD HAVE SUSPECTED ERROR THEREIN AND REQUESTED THE COMPANY TO VERIFY ITS BID. AS ADVERTISED, THE LOT OF SPARE PARTS OFFERED FOR SALE UNDER ITEM NO. 124 WAS APPARENTLY UNUSED AND IN GOOD CONDITION. THE ACQUISITION COST WAS $240, WHICH WAS CONSIDERABLY IN EXCESS OF THE COMPANY'S BID PRICE. SO FAR AS THE PRESENT RECORD INDICATES, THE CONTRACTING OFFICER WAS NOT ON NOTICE OF ANY ERROR IN THE BID PRIOR TO AWARD. HENCE, THE ACCEPTANCE OF THE BID APPEARS TO HAVE BEEN IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL MORE THAN TWO WEEKS AFTER THE AWARD. IT FOLLOWS THAT THE ACCEPTANCE OF THE BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE 28 COMP. GEN. 550, SUPRA, AND THE AUTHORITIES THERE CITED.

MOREOVER, THE RESPONSIBILITY FOR THE PREPARATION OF THE BID WAS UPON THE COMPANY, NOT THE GOVERNMENT. IF THE COMPANY MADE AN ERROR IN ITS BID, WHICH HAS NOT BEEN ESTABLISHED, BY QUOTING ON ITEM NO. 124 A PRICE IT INTENDED TO QUOTE FOR ITEM NO. 125, AS IT NOW STATES, SUCH ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE AND WAS NOT INDUCED OR CONTRIBUTED TO IN ANY MANNER BY THE GOVERNMENT. CONSEQUENTLY, IF MADE AS ALLEGED, THE ERROR WAS UNILATERAL, NOT MUTUAL, AND THEREFORE DOES NOT ENTITLE THE CONTRACTOR TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

ACCORDINGLY, THE COMPANY MAY NOT BE RELEASED FROM ITS OBLIGATION UNDER THE TERMS OF THE CONTRACT. AS PROVIDED IN PARAGRAPH 18 OF THE "GENERAL SALE TERMS AND CONDITIONS," IN THE EVENT RIVERSIDE SCRAP IRON AND METAL CO. REFUSES TO ACCEPT DELIVERY OF ITEM NO. 124 AND FULLY COMPLY WITH ITS CONTRACT TERMS, ITS RIGHTS TO THE PROPERTY INVOLVED SHALL BE FORFEITED BY ITS FAILURE TO DO SO AND 20 PERCENT OF THE PURCHASE PRICE FOR THE ITEM, OR $35.10, SHOULD BE RETAINED FROM THE BID DEPOSIT AS LIQUIDATED DAMAGES. THE BALANCE, IF ANY, SHOULD BE REFUNDED TO THE COMPANY IF OTHERWISE ENTITLED THERETO.

THE PAPERS FORWARDED WITH YOUR LETTER OF FEBRUARY 8, 1956, WILL BE RETAINED IN OUR OFFICE FILES UNLESS THEIR RETURN IS REQUESTED.