B-128268, JUN. 27, 1956

B-128268: Jun 27, 1956

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED JUNE 13. N665S-28796 WAS BASED. PROSPECTIVE PURCHASERS WERE ADVISED THAT THEY COULD BID ON ANY OR ALL OF THESE SETS. BIDS WERE OPENED ON APRIL 13. THE PUGET SOUND SALVAGE COMPANY'S HIGH BID OF $566.99 PER SET FOR ALL SEVEN SETS WAS ACCEPTED ON APRIL 18. THE CONTRACTOR WAS ADVISED THAT A BALANCE ON THE PURCHASE PRICE WAS DUE AND UNPAID. THE CONTRACTOR WAS FURTHER ADVISED ON MAY 7. THAT IT WAS IN DEFAULT. AS OUR BID ON THIS ITEM WAS A MISTAKE IN JUDGMENT.'. THE BASIC QUESTION FOR DETERMINATION IN THIS CASE IS NOT WHETHER THE CONTRACTOR MADE AN ERROR IN ITS BID. WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF.

B-128268, JUN. 27, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JUNE 13, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL) RELATIVE TO AN ALLEGED ERROR IN AN UNDATED BID SUBMITTED BY PUGET SOUND SALVAGE CO. ON WHICH CONTRACT OF SALE NO. N665S-28796 WAS BASED. YOU REQUEST A DECISION AS TO WHETHER THE RELIEF REQUESTED BY THE CONTRACTOR PROPERLY MAY BE DENIED.

THE RECORD SHOWS THAT BY INVITATION NO. B-265-56 THE DISPOSAL DIVISION, U.S. NAVAL SUPPLY DEPOT, CLEAR FIELD, UTAH, OFFERED FOR SALE VARIOUS ITEMS OF GOVERNMENT-OWNED, USABLE PROPERTY INCLUDING SEVEN (7) RADAR SETS, ITEM NO. 34. PROSPECTIVE PURCHASERS WERE ADVISED THAT THEY COULD BID ON ANY OR ALL OF THESE SETS. BIDS WERE OPENED ON APRIL 13, 1956, AND THE PUGET SOUND SALVAGE COMPANY'S HIGH BID OF $566.99 PER SET FOR ALL SEVEN SETS WAS ACCEPTED ON APRIL 18, 1956.

BY LETTER DATED APRIL 27, 1956, THE CONTRACTOR WAS ADVISED THAT A BALANCE ON THE PURCHASE PRICE WAS DUE AND UNPAID. THE CONTRACTOR WAS FURTHER ADVISED ON MAY 7, 1956, THAT IT WAS IN DEFAULT. IN RESPONSE TO THE FOREGOING ADVICE, THE CONTRACTOR, BY LETTER DATED MAY 9, 1956, ADVISED, IN PERTINENT PART, AS FOLLOWS:

"WE WOULD GREATLY APPRECIATE IT IF YOU WOULD RELEASE US FROM OUR RESPONSIBILITIES UNDER THIS CONTRACT, AS OUR BID ON THIS ITEM WAS A MISTAKE IN JUDGMENT.'

UPON RECEIPT OF ADVICE FROM THE CONTRACTING OFFICER THAT THE CONTRACT COULD NOT BE RESCINDED, THE CONTRACTOR SUGGESTED THAT ITS REQUEST FOR RELIEF BE REFERRED TO OUR OFFICE FOR A DECISION.

THE BASIC QUESTION FOR DETERMINATION IN THIS CASE IS NOT WHETHER THE CONTRACTOR MADE AN ERROR IN ITS BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. THE SALE WAS ON AN "AS IS" BASIS WITH AN EXPRESS DISCLAIMER OF WARRANTY OF ANY KIND. BIDDERS WERE URGED TO INSPECT THE PROPERTY PRIOR TO SUBMITTING THEIR BIDS. THE PROSPECTIVE PURCHASERS WERE ADVISED "NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED; THIS IS NOT A SALE BY SAMPLE.' THE ABSTRACT OF BIDS SHOWS THAT EIGHT OTHER BIDDERS OFFERED TO PURCHASE ALL OF THE SEVEN SETS INVOLVED AT UNIT PRICES RANGING FROM $118.59 TO $25 PER SET. ELEVEN BIDDERS OFFERED TO PURCHASE FROM ONE TO FIVE OF THE SETS AT UNIT PRICES RANGING FROM $151 TO $6.12.

APPARENTLY THE CONTRACTING OFFICER DID NOT NOTICE OR HAVE REASON TO SUSPECT THERE WAS ANY ERROR IN THE CONTRACTOR'S BID, SINCE, IN HIS REPORT COVERING THE FACTS OF THE CASE AND HIS RECOMMENDATION, HE STATES THAT HE CONSIDERED THE BID OF $566.99 PER SET "ACCEPTABLE BUT NOT EXCESSIVE.' THIS IS UNDERSTANDABLE SINCE, AS DESCRIBED IN THE INVITATION, THE SETS WERE PACKED IN 42 WOODEN BOXES, THEIR CONDITION WAS STATED TO BE "UNUSED- GOOD" AND THE ADVERTISED ACQUISITION COST THEREOF WAS $104,580 OR $14,940 PER SET. WHILE THE CONTRACTOR'S BID IS CONSIDERABLY HIGHER THAN ANY OF THE OTHER BIDS THE DIFFERENCE IS NOT GREAT ENOUGH, IN VIEW OF THE TERMS AND CONDITIONS OF THE SALE AND THE PUBLISHED ACQUISITION COST OF THE PROPERTY, TO WARRANT THE CONCLUSION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ANY PROBABILITY OF ERROR IN THE BID AND SHOULD, BY REASON THEREOF, HAVE REQUESTED A VERIFICATION OF THE BID. A MERE DIFFERENCE IN THE PRICES BID IN A SALE OF GOVERNMENT-OWNED SURPLUS PROPERTY GENERALLY WOULD NOT PLACE A CONTRACTING OFFICER ON NOTICE OF ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED FOR NEW EQUIPMENT, OR SUPPLIES, TO BE FURNISHED TO THE GOVERNMENT. SEE 20 COMP. GEN. 286. IT IS REASONABLE TO ASSUME THAT THERE WOULD BE A WIDE RANGE IN THE PRICES OFFERED IN SUCH A SALE. SEE 16 COMP. GEN. 596; 17 ID. 601; ID. 976; 28 ID. 550.

SO FAR AS AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE COMPANY'S BID WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. SINCE THE RESPONSIBILITY FOR THE PREPARATION OF THE BID WAS UPON THE BIDDER AND SINCE IT IS EVIDENT THAT IF AN ERROR WAS MADE, AS ALLEGED, SUCH ERROR WAS UNILATERAL, NOT MUTUAL, THE CONTRACTOR IS NOT ENTITLED TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259; AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. MOREOVER, ACCORDING TO THE CONTRACTOR'S ABOVE-QUOTED STATEMENT, THE ALLEGED ERROR IN ITS BID WAS A MISTAKE IN JUDGMENT, FOR WHICH RELIEF IS NEVER GRANTED AFTER THE BID HAS BEEN ACCEPTED IN GOOD FAITH WITHOUT PRIOR NOTICE, ACTUAL OR CONSTRUCTIVE, OF ANY ERROR THEREIN. WHEN SUBMITTED THE BID WAS AS INTENDED. CONSEQUENTLY, THE CONCLUSION IS WARRANTED THAT THE CONTRACTOR'S REQUEST FOR RELIEF IN THIS CASE IS SOLELY AN ATTEMPT TO AVOID THE CONSEQUENCES OF AN ILL-ADVISED BID. SEE 11 COMP. GEN. 445; ID. 476.

ACCORDINGLY, NO LEGAL BASIS IS FOUND FOR RELEASING THE PUGET SOUND SALVAGE CO. FROM ITS OBLIGATIONS UNDER THE TERMS OF THE CONTRACT.