B-133645, SEP. 20, 1957

B-133645: Sep 20, 1957

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED AUGUST 29. 400 TRANSFORMERS FOR A TOTAL BID PRICE OF $754.40 BEING THE HIGHEST ON THAT ITEM WAS ACCEPTED AND CONTRACT NO. DA/S) 41-187-AIV-1330 WAS AWARDED TO TALLEN CO. CLAIMING ERROR IN THAT THEIR UNIT PRICE FOR THAT ITEM SHOULD HAVE BEEN "?0041" AND AN EXTENDED TOTAL OF . THE TOTAL PRICE IS SO WRITTEN THEREON THAT "$754" APPEARS ON THE DOLLAR SIDE AND "4" ON THE CENTS SIDE IN THE TOTAL-PRICE COLUMN. THE RECORD SHOWS THAT TWO OTHER BIDS WERE RECEIVED ON ITEM NO. 12. THE PROPERTY HERE IN QUESTION WAS OFFERED FOR SALE AS SURPLUS. FOR THE MATERIAL DESCRIBED IN ITEM NO. 12 WAS A SMALL PERCENTAGE OF THE ORIGINAL ACQUISITION COST OF $62.

B-133645, SEP. 20, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED AUGUST 29, 1957, WITH ENCLOSURES, FROM ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), SUBMITTING FOR CONSIDERATION A REQUEST BY TALLEN CO., INC., OF BROOKLYN, NEW YORK, FOR RELIEF FROM THE TERMS OF CONTRACT NO. DA/S) 41-187-AIV-1330 ON THE GROUNDS OF AN ALLEGED MISTAKE IN BID, AND REQUESTING A DECISION IN THE MATTER.

INVITATION NO. 41-187-S-57-13, DATED APRIL 24, 1957, INVITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 80 ITEMS OF SURPLUS PROPERTY-- BIDS TO BE PUBLICLY OPENED AT WAREHOUSE S-17, FORT WORTH GENERAL DEPOT, FORT WORTH, TEXAS, AT 10 A.M., MAY 14, 1957.

IN RESPONSE TO THE INVITATION, TALLEN CO., INC., SUBMITTED PRICE QUOTATIONS ON SIX ITEMS LISTED THEREIN, TOGETHER WITH A BID DEPOSIT OF $225. THEIR BID ON ITEM NO. 12 IN THE AMOUNT OF $0.041 EACH FOR 18,400 TRANSFORMERS FOR A TOTAL BID PRICE OF $754.40 BEING THE HIGHEST ON THAT ITEM WAS ACCEPTED AND CONTRACT NO. DA/S) 41-187-AIV-1330 WAS AWARDED TO TALLEN CO., INC., ON MAY 20, 1957. THE BALANCE OF THE PURCHASE PRICE HAS NOT BEEN PAID.

AFTER AWARD OF THE CONTRACT, TALLEN CO., INC., IN LETTER DATED MAY 29, 1957, TO THE PROPERTY DISPOSAL OFFICER, REQUESTED THAT THEY BE PERMITTED TO WITHDRAW THEIR BID ON ITEM NO. 12, CLAIMING ERROR IN THAT THEIR UNIT PRICE FOR THAT ITEM SHOULD HAVE BEEN "?0041" AND AN EXTENDED TOTAL OF ,$75.44" INSTEAD OF "?041" AND "$754.40" AS SHOWN ON THE BID. THE COMPANY EXPLAINED THAT THE ERROR OCCURRED IN TRANSFERRING THE DATA FROM THE WORKSHEET TO THE BID FORM, AND IN SUPPORT OF THEIR ALLEGATION FORWARDED TO THE FORT WORTH GENERAL DEPOT A NOTARIZED LETTER DATED JUNE 17, 1957, AND THEIR WORKSHEET COPY OF THE INVITATION SHOWING AN INK FIGURE OF "?0041" IN THE UNIT COLUMN, BUT THE TOTAL PRICE IS SO WRITTEN THEREON THAT "$754" APPEARS ON THE DOLLAR SIDE AND "4" ON THE CENTS SIDE IN THE TOTAL-PRICE COLUMN.

THE RECORD SHOWS THAT TWO OTHER BIDS WERE RECEIVED ON ITEM NO. 12, ONE OF $31.12 AND ANOTHER OF $202.40. THE PROPERTY HERE IN QUESTION WAS OFFERED FOR SALE AS SURPLUS, AND THE TOTAL PRICE OF $754.40 BID BY TALLEN CO. FOR THE MATERIAL DESCRIBED IN ITEM NO. 12 WAS A SMALL PERCENTAGE OF THE ORIGINAL ACQUISITION COST OF $62,040 SHOWN IN THE INVITATION AND LESS THAN FOUR TIMES GREATER THAN THE NEXT HIGH BID. THE CONTRACTING OFFICER STATES THAT HE HAD NO KNOWLEDGE EITHER ACTUAL OR CONSTRUCTIVE OF ANY ERROR IN THE BID OF TALLEN CO., THAT HE DID NOT SUSPECT ERROR IN THEIR BID AS TO ITEM NO. 12, AND THAT THERE IS NOTHING OTHER THAN THE PRICE DIFFERENCE AS SHOWN ON THE WORKSHEET AND THE BID TO INDICATE THE EXISTENCE OF A MISTAKE.

THE PRIMARY QUESTION IN THIS CASE IS NOT WHETHER THE COMPANY MADE A MISTAKE IN THEIR BID AS TO ITEM NO. 12 BUT WHETHER A VALID CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THEIR BID. IT IS WELL ESTABLISHED THAT THE ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING IT WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. SEE 28 COMP. GEN. 550, 551.

THE BID AS TO ITEM NO. 12 WAS REGULAR ON ITS FACE, AND THERE WAS NOTHING TO INDICATE THAT THE PRICE QUOTATION WAS NOT AS INTENDED BY TALLEN CO., INC. THE VARIANCE BETWEEN THEIR BID PRICE AND OTHER BIDS ON THE MATERIAL LISTED FOR SALE UNDER ITEM NO. 12 WAS NOT SO GREAT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR, AS BIDDERS MAY BE EXPECTED TO PLACE A WIDE RANGE OF VALUES ON SURPLUS PROPERTY BASED ON INDIVIDUAL NEEDS OR OPPORTUNITIES FOR RESALE. SINCE TALLEN CO. DID NOT ALLEGE ERROR UNTIL AFTER AWARD OF THE CONTRACT AND SINCE IT DOES NOT APPEAR THAT THE CONTRACTING OFFICER HAD ANY REASON TO SUSPECT THAT THE COMPANY'S BID WAS NOT INTENDED AS SHOWN OR THAT HE HAD ANY INFORMATION TO PUT HIM ON NOTICE OF PROBABILITY OF ERROR, IT MUST BE CONCLUDED THAT THE CONTRACTING OFFICER ACCEPTED THE COMPANY'S BID ON ITEM NO. 12 IN GOOD FAITH AND WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ERROR. 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.

IN VIEW OF THE ABOVE, WE ARE UNABLE TO FIND ANY LEGAL BASIS FOR RELIEVING TALLEN CO., INC., FROM THEIR OBLIGATIONS WITH REGARD TO THE PURCHASE OF ITEM NO. 12 UNDER CONTRACT NO. DA/S) 41-187-AIV-1330.

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