B-133767, SEP. 26, 1957

B-133767: Sep 26, 1957

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TO SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED SEPTEMBER 9. FOR THE SALE OF A QUANTITY OF SCRAP LEAD MAY BE CANCELLED IN VIEW OF AN ERROR ALLEGED BY THE CORPORATION TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. RATHER ITS BID WAS INTENDED FOR ITEM 5. THE ERROR COMMITTED BY ITS SECRETARY WAS NOT DETECTED UNTIL A COPY OF THE CONTRACT HAD BEEN RECEIVED IN THE MAIL BY THE BIDDER. IN THE ABOVE REQUEST FOR A DECISION IN THE MATTER THE VIEW IS EXPRESSED THAT SINCE THE MARKET PRICE FOR NEW LEAD WAS $0.16 PER POUND AT THE TIME OF THE AWARD. IT SHOULD HAVE BEEN APPARENT TO THE CONTRACTING OFFICER THAT THE OFFERED PRICE OF $0.175665 PER POUND FOR SCRAP LEAD WAS IN ERROR.

B-133767, SEP. 26, 1957

TO SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 9, 1957, FILE R11.2 L4-1 14/NB7, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO WHETHER CONTRACT NO. 129S-15419, WITH N. KASDEN AND SONS, INC., FOR THE SALE OF A QUANTITY OF SCRAP LEAD MAY BE CANCELLED IN VIEW OF AN ERROR ALLEGED BY THE CORPORATION TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. B-68- 57.

THE RECORD SHOWS THAT UPON RECEIPT OF NOTICE OF AWARD THE CONTRACTOR PROMPTLY NOTIFIED THE DISPOSAL OFFICER THAT IT HAD NOT INTENDED TO BID ON ITEM 6, BEING SCRAP LEAD, BUT RATHER ITS BID WAS INTENDED FOR ITEM 5, CONSISTING OF SALVAGE BRASS CASTINGS. THE ERROR COMMITTED BY ITS SECRETARY WAS NOT DETECTED UNTIL A COPY OF THE CONTRACT HAD BEEN RECEIVED IN THE MAIL BY THE BIDDER.

IN THE ABOVE REQUEST FOR A DECISION IN THE MATTER THE VIEW IS EXPRESSED THAT SINCE THE MARKET PRICE FOR NEW LEAD WAS $0.16 PER POUND AT THE TIME OF THE AWARD, IT SHOULD HAVE BEEN APPARENT TO THE CONTRACTING OFFICER THAT THE OFFERED PRICE OF $0.175665 PER POUND FOR SCRAP LEAD WAS IN ERROR. REPORT DATED AUGUST 13, 1957, THE DISPOSAL OFFICER STATES THAT IN MANY CASES INVOLVING THE SALE OF SCRAP METALS THE BID PRICE EXCEEDS THE MARKET PRICE SHOWN IN THE "WASTE TRADE JOURNAL.' IN THIS PARTICULAR CASE THE OTHER BIDS RANGED FROM $0.10 TO $0.1326 PER POUND, WHEREAS THE AVERAGE MARKET PRICE LISTED IN THE FOREGOING PUBLICATION FOR THE SAME PERIOD IS STATED TO BE $0.125 PER POUND. IT APPEARS, HOWEVER, THAT THIS WAS THE MARKET PRICE OF SCRAP, WHEREAS THE BID PRICE WAS IN EXCESS OF THE MARKET PRICE OF NEW LEAD, $0.16.

WHILE THERE APPEARS TO BE NO REASON TO DISPUTE THE CONTENTIONS OF THE CONTRACTING OFFICER AS TO THE FREQUENT SALE OF SALVAGE MATERIALS AT PRICES EXCEEDING THE AVERAGE OR PREVAILING MARKET QUOTATIONS FOR SCRAP METALS, IT SEEMS UNREASONABLE TO PRESUME THAT A PROSPECTIVE PURCHASER WOULD INTENTIONALLY SUBMIT A BID PRICE FOR SCRAP WHEN THE NEW METAL COULD BE PURCHASED FOR LESS ON THE OPEN MARKET. THE SUPPOSITION WOULD APPEAR TO BE PARTICULARLY TRUE WHERE, AS HERE, IT IS KNOWN THAT SUCH OFFER WAS BEING MADE AS A DEALER IN SALVAGE MATERIAL AND THAT THE PURCHASE OF THE SCRAP LEAD WAS BEING MADE SOLELY FOR THE PURPOSE OF RESALE. FOR THOSE REASONS WE CONCUR WITH THE VIEW EXPRESSED IN LETTER OF SEPTEMBER 9, 1957, SUBMITTING THE MATTER TO US FOR CONSIDERATION, THAT NOTICE OF PROBABLE ERROR MUST BE CHARGED TO THE DISPOSAL OFFICER, AND THEREFORE THE QUOTED PRICE SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD.

SINCE THERE DOES NOT APPEAR TO BE ANY DOUBT THAT AN ERROR WAS MADE AS ALLEGED, AND EXPLAINED PROMPTLY AFTER AWARD, THE SUBJECT CONTRACT MAY BE CANCELLED.