B-130318, FEB. 4, 1957

B-130318, FEB. 4, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 10, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL), SUBMITTING FOR CONSIDERATION THE MATTER OF A MISTAKE IN BID ALLEGED BY PROFESSIONAL SURPLUS CO., INC., BROOKLYN, NEW YORK, IN CONNECTION WITH CONTRACT NO. N-665S-31304 AWARDED TO THAT COMPANY BY NAVAL SUPPLY DEPOT CLEAR FIELD, OGDEN, UTAH, AND REQUESTING A DECISION AS TO WHETHER THE CONTRACT PROPERLY MAY BE CANCELLED.

INVITATION NO. B-87-57-665, ISSUED NOVEMBER 1, 1956, BY THE NAVAL SUPPLY DEPOT CLEAR FIELD, OGEDEN, UTAH, REQUESTED BIDS--- TO BE OPENED AT 10:39 A.M. (MST), NOVEMBER 21, 1956--- FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS OF USABLE MISCELLANEOUS PROPERTY. IN RESPONSE THERETO, PROFESSIONAL SURPLUS CO., INC., SUBMITTED A BID (UNDATED) FOR THE PURCHASE OF ONE LOT OF 1,754 PACKAGES OF SUTURES, LISTED AS ITEM NO. 11 IN THE INVITATION, AT A PRICE OF ?724 FOR EACH PACKAGE, OR A TOTAL OF $1,269.90 FOR THE LOT, AND ENCLOSED A BID DEPOSIT OF $261. THIS BID ON ITEM NO. 11, BEING THE HIGHEST, WAS ACCEPTED ON NOVEMBER 27, 1956.

SUBSEQUENT TO THE RECEIPT BY IT ON NOVEMBER 29, 1956, OF NOTICE OF AWARD OF THE CONTRACT ON ITEM NO. 11, PROFESSIONAL SURPLUS CO., INC., IN A LETTER DATED DECEMBER 3, 1956, TO THE CONTRACTING OFFICER ALLEGED THAT A MISTAKE HAD BEEN MADE IN PREPARING ITS FINAL BID IN THAT A BID PRICE OF ?724 PER PACKAGE FOR ITEM NO. 11 HAD BEEN SUBMITTED INSTEAD OF ?0724 AS INTENDED AND THAT ONLY AFTER MAILING THE BID WAS IT NOTICED THAT AN ERROR HAD BEEN MADE IN FILLING OUT THE BID. IN REPLY TO THE COMPANY'S REQUEST FOR ADVICE AS TO WHETHER THERE WAS ANY WAY TO STRAIGHTEN OUT THE MATTER AND SAVE IT FROM TAKING THE LOSS NOTWITHSTANDING ITS ADMISSION OF FULL RESPONSIBILITY FOR THE ERROR, THE CONTRACTING OFFICER BY LETTER OF DECEMBER 6 ADVISED THE COMPANY OF THREE COURSES OF ACTION IT MIGHT TAKE. THEREUPON, ON DECEMBER 17, 1956, THE PRESIDENT OF THE COMPANY FILED A FORMAL CLAIM OF ERROR AND A STATEMENT OF FACTS AS TO HOW THE ERROR OCCURRED. IN HIS STATEMENT HE INDICATED THAT HE WAS AWARE OF THE ALLEGED ERROR PRIOR TO THE DATE OF ACCEPTANCE OF THE COMPANY'S BID AND AWARD OF THE CONTRACT--- PROBABLY EVEN BEFORE THE OPENING OF BIDS, BUT HE DID NOTHING TO APPRISE THE CONTRACTING OFFICER OF THE ALLEGED ERROR UNTIL AFTER RECEIPT OF NOTICE OF AWARD OF THE CONTRACT TO THE COMPANY AS THE HIGHEST BIDDER.

THE CONTRACTING OFFICER REPORTS THAT THE BID SUBMITTED BY PROFESSIONAL SURPLUS CO., INC., ON ITEM 11 WAS RECORDED AND CONSIDERED AS ?724 PER PACKAGE, THE EXTENSION OF THE TOTAL PRICE BID WAS PROPERLY SHOWN ON THE BID AS $1,269.90, AND AN ADEQUATE DEPOSIT ACCOMPANIED THE BID. HE REPORTS FURTHER THAT ALTHOUGH THE BID OF ?724 PER PACKAGE WAS MUCH HIGHER THAN THE FOUR OTHER BIDS ON THE ITEM--- ?04299, ?0333, ?01291 AND ?0031, THE PRICE WAS CONSIDERED ACCEPTABLE BUT NOT EXCESSIVE AND A FAIR RETURN FOR THE SUTURES; AND THEREFORE THE BID OF THE PROFESSIONAL SURPLUS CO., INC., BEING THE HIGHEST BID, WAS ACCEPTED AND CONTRACT AWARDED ON NOVEMBER 27, 1956.

A VARIANCE IN PRICES BID ON AN ITEM WOULD NOT NECESSARILY INDICATE ERROR SINCE A WIDE RANGE IN THE PRICES BID FOR SURPLUS PROPERTY IS USUAL, AS BIDDERS GENERALLY CAN BE EXPECTED TO PLACE DIFFERENT VALUES ON SUCH MATERIALS DEPENDING ON THEIR INDIVIDUAL NEEDS OR THEIR CHANCES OF RESALE. THIS BEING TRUE, A MERE DIFFERENCE IN THE AMOUNTS OF THE BIDS WOULD NOT NECESSARILY PLACE THE CONTRACTING OFFICER ON NOTICE OF AN ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED THE GOVERNMENT. SEE IN THIS CONNECTION 28 COMP. GEN. 550, 551.

THE PROPERTY HERE IN QUESTION WAS OFFERED FOR SALE AS SURPLUS AND DESCRIBED AS "UNUSED-GOOD," AND THE TOTAL BID PRICE OF $1,269.90 FOR THE LOT WAS CONSIDERABLY LOWER THAN THE TOTAL ACQUISITION COST OF $4,876.12 QUOTED ON ITEM 11 IN THE INVITATION. FURTHERMORE, IN THIS REGARD THE CONTRACTING OFFICER REPORTS THAT THESE SUTURES ARE NOT AFFECTED BY AGE AS EACH SUTURE IS PACKED IN A STERILE GLASS TUBE. AS THE BID WAS REGULAR ON ITS FACE, WAS NOT OUT OF LINE WITH THE OTHER BIDS RECEIVED CONSIDERING THE TRANSACTION INVOLVED A SALE OF SURPLUS PROPERTY, AND WAS ACCOMPANIED BY AN ADEQUATE BID DEPOSIT; AND SINCE THE COMPANY DID NOT ALLEGE ERROR UNTIL AFTER THE AWARD OF THE CONTRACT, IT DOES NOT APPEAR THAT THE CONTRACTING OFFICER HAD ANY REASON FOR SUCH SUSPICION OF ERROR IN THE COMPANY'S BID AS WOULD REQUIRE HIM TO REQUEST PROFESSIONAL SURPLUS CO. TO VERIFY ITS BID. ACCORDINGLY, IT MUST BE CONCLUDED THAT THE CONTRACTING OFFICER ACCEPTED THE BID OF PROFESSIONAL SURPLUS CO., INC., IN GOOD FAITH, AND THAT SUCH ACTION CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. THE CONTRACT VESTED IN THE GOVERNMENT THE RIGHT TO HAVE PERFORMANCE IN STRICT ACCORDANCE WITH THE TERMS OF THE ACCEPTED BID AND NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT OR ACQUIRED BY IT UNDER A CONTRACT. SEE UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, AND CERTIORARI DENIED, 28 U.S. 574; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584, 607, CERTIORARI DENIED, 292 U.S. 645; AND PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.CLS. 327, 335.

IN THE CIRCUMSTANCES, WE ARE UNABLE TO FIND ANY LEGAL BASIS FOR RELIEVING PROFESSIONAL SURPLUS CO., INC., FROM ITS OBLIGATION UNDER CONTRACT NO. N665S-31304.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND ALLEGATIONS, ARE RETURNED.