B-128006, JUN. 26, 1956

B-128006: Jun 26, 1956

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED MAY 21. A DECISION IS REQUESTED AS TO WHETHER RELIEF PROPERLY MAY BE GRANTED IN THIS CASE AS RECOMMENDED BY THE CONTRACTING OFFICER. THE BID WAS ACCOMPANIED BY A BID DEPOSIT OF $4. AWARD WAS MADE TO THE AMERICAN IRON AND METAL COMPANY AS THE HIGHEST BIDDER AND ON THE SAME DAY A REQUEST WAS MADE FOR PAYMENT OF THE BALANCE OF THE CONTRACT PRICE OR $3. THAT IT WAS NEVER THE CONTRACTOR'S INTENTION TO BID ON ITEM 5. THAT HAD IT INTENDED TO BID ON ITEM 5 ITS BID DEPOSIT WOULD HAVE BEEN ONLY FOR THE SUM OF $1. WE ARE SATISFIED FROM THE RECORD SUBMITTED THAT THE CONTRACTOR MADE AN ERROR IN SUBMITTING ITS BID ON ITEM 5 INSTEAD OF ON ITEM 4.

B-128006, JUN. 26, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MAY 21, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), RELATING TO A MISTAKE IN BID ALLEGED BY THE AMERICAN IRON AND METAL COMPANY, ATLANTA, GEORGIA, UNDER CONTRACT NO. N191-43151 (SALES INVITATION NO. B-85-56), ISSUED BY THE CHARLESTON NAVAL SHIPYARD, U.S. NAVAL BASE, CHARLESTON, SOUTH CAROLINA. IN VIEW OF THE FACTS SET FORTH IN THE ENCLOSURES TO THE LETTER OF MAY 21, 1956, A DECISION IS REQUESTED AS TO WHETHER RELIEF PROPERLY MAY BE GRANTED IN THIS CASE AS RECOMMENDED BY THE CONTRACTING OFFICER.

THE RECORD SHOWS THAT BY INVITATION NO. B-85-56, DATED APRIL 2, 1956, THE CHARLESTON NAVAL SHIPYARD OFFERED FOR SALE CERTAIN MISCELLANEOUS SCRAP METALS, BY SEALED BIDS, TO BE OPENED ON APRIL 26, 1956. IN RESPONSE THE AMERICAN IRON AND METAL COMPANY SUBMITTED A BID ON ITEM 5 OF THE INVITATION, CONSISTING OF 40,000 POUNDS OF PAINTED ALUMINUM SCRAP WITH STEEL ATTACHMENTS, ETC., AT A PRICE OF $0.185291 PER POUND, OR FOR A TOTAL PRICE OF $7,411.64. THE BID WAS ACCOMPANIED BY A BID DEPOSIT OF $4,000. UNDER DATE OF APRIL 30, 1956, AWARD WAS MADE TO THE AMERICAN IRON AND METAL COMPANY AS THE HIGHEST BIDDER AND ON THE SAME DAY A REQUEST WAS MADE FOR PAYMENT OF THE BALANCE OF THE CONTRACT PRICE OR $3,411.64.

BY LETTER DATED MAY 2, 1956, THE CONTRACTOR ALLEGED MISTAKE IN THAT IT INTENDED TO BID ON ITEM 4 INSTEAD OF ITEM 5, IT BEING STATED BY THE CONTRACTOR THAT ITS REPRESENTATIVE HAD INSPECTED THE MATERIAL COVERED BY ITEM 4, CONSISTING OF 90,000 POUNDS OF MIXED ALUMINUM SCRAP (NEW CLIPS), WHICH AT THE BID PRICE OF $0.185291 PER POUND AMOUNTED TO $16,676.19, AND THAT IT WAS NEVER THE CONTRACTOR'S INTENTION TO BID ON ITEM 5. IN SUPPORT OF THE ALLEGED MISTAKE, THE CONTRACTOR STATED THAT PRIOR TO SUBMITTING ITS BID IT CHECKED THE MARKET VALUE OF NEW ALUMINUM CLIPS AND FOUND THE PRICE TO BE APPROXIMATELY $0.19 PER POUND AS AGAINST A MARKET VALUE OF $0.13 PER POUND FOR THE MATERIAL COVERED BY ITEM 5; ALSO, THAT HAD IT INTENDED TO BID ON ITEM 5 ITS BID DEPOSIT WOULD HAVE BEEN ONLY FOR THE SUM OF $1,500. THE CONTRACTING OFFICER THEREAFTER OBTAINED INDEPENDENT CONFIRMATION OF THE BIDDER'S STATEMENT CONCERNING THE MARKET VALUES OF THE MATERIALS, AND RECOMMENDS THAT THE PURCHASER BE RELEASED.

WE ARE SATISFIED FROM THE RECORD SUBMITTED THAT THE CONTRACTOR MADE AN ERROR IN SUBMITTING ITS BID ON ITEM 5 INSTEAD OF ON ITEM 4. THE QUESTION THUS IS PRESENTED, WHETHER THE CONTRACTING OFFICER WAS OR SHOULD HAVE BEEN ON NOTICE, AT THE TIME OF HIS ACCEPTANCE OF THE BID, OF SUCH FACTS AS WOULD PREVENT THAT ACT FROM CONSUMMATING A BINDING CONTRACT. CONSIDERING THE FACT THAT PARAGRAPH 24 OF THE TERMS OF SALE SPECIFICALLY PROVIDED THAT THE PROPERTY WAS OFFERED AND PURCHASED AS SCRAP AND THAT THE PURCHASER WOULD DISPOSE OF IT ONLY AS SCRAP; THAT THE SPECIFIC MATERIAL INVOLVED HAD A READILY ASCERTAINABLE ESTABLISHED MARKET VALUE AS SCRAP; AND THAT THE BID WAS APPROXIMATELY FIFTY PERCENT HIGHER THAN THE MARKET VALUE, AS WELL AS THE OTHER BIDS RECEIVED, WE CONCLUDE THAT THE ACCEPTANCE OF THE BID WITHOUT VERIFICATION OR INQUIRY WAS NOT JUSTIFIED. ACCORDINGLY, THE CONTRACT SHOULD BE CANCELLED AND REFUND MADE OF THE BID DEPOSIT.

THE PAPERS TRANSMITTED WITH THE LETTER OF MAY 21, 1956, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS, ARE RETURNED HEREWITH.