B-136496, JUL. 3, 1958

B-136496: Jul 3, 1958

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JUNE 18. THE BID WAS ACCEPTED ON FEBRUARY 3. THE COMPANY ADVISED THE CONTRACTING OFFICER THAT IT HAD MADE AN ERROR IN ITS BID AND REQUESTED CANCELLATION OF THE CONTRACT ON THE GROUND THAT ITS AGENT WAS INSTRUCTED TO BID ON ITEM NO. 3 AND NOT ON ITEM NUMBER 10. THE CONTRACTING OFFICER HAS REPORTED THAT ITEM NO. 3 IS A SALE BY LOT OF "MISCELLANEOUS HARDWARE.'. THE HIGHEST OFFER IS 335. ACQUISITION COST IS $12. THE PERCENTAGE OF RETURN IS 7.8 PERCENT. THE UNIT OF MEASURE FOR ITEM NO. 10 IS "EACH.' . THE TOTAL QUANTITY IS 66. THE ACQUISITION COST IS $1. 491.60 AND THE PERCENTAGE OF RETURN BASED ON SUBJECT CONTRACT PRICE IS 18.4 PERCENT.

B-136496, JUL. 3, 1958

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JUNE 18, 1958, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), REQUESTING A DECISION AS TO WHETHER RESCISSION OF CONTRACT NO. DA/S/92-557-FEC 20499, MAY BE MADE, ON THE GROUND THAT A NEWLY HIRED CLERK MADE A MISTAKE IN BIDDING ON ITEM 10 (BRACKET, OUTBOARD MOTOR) INSTEAD OF BIDDING ON ITEM 3 (MISCELLANEOUS HARDWARE).

THE UNITED STATES ARMY QUARTERMASTER CENTER, TOKYO, JAPAN, BY SALES INVITATION NO. 92-557-S-58-973, DATED DECEMBER 31, 1957, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF MISCELLANEOUS MATERIALS DESCRIBED UNDER ITEMS 1 TO 10, INCLUSIVE. IN RESPONSE THERETO THE FUJIMI COMMERCIAL COMPANY, LIMITED, YOKOHAMA, JAPAN, SUBMITTED ITS UNDATED BID, OFFERING TO PURCHASE, AMONG OTHER ARTICLES, ITEM 10 CONSISTING OF 66 BRACKETS, OUTBOARD MOTORS 22 HORSEPOWER, UNUSED, FOR THE PRICE OF 1,500 YEN EACH, OR FOR THE TOTAL PRICE OF 99,000 YEN. THE BID WAS ACCEPTED ON FEBRUARY 3, 1958. BY LETTER DATED FEBRUARY 21, 1958, THE COMPANY ADVISED THE CONTRACTING OFFICER THAT IT HAD MADE AN ERROR IN ITS BID AND REQUESTED CANCELLATION OF THE CONTRACT ON THE GROUND THAT ITS AGENT WAS INSTRUCTED TO BID ON ITEM NO. 3 AND NOT ON ITEM NUMBER 10.

THE CONTRACTING OFFICER HAS REPORTED THAT ITEM NO. 3 IS A SALE BY LOT OF "MISCELLANEOUS HARDWARE.' THE HIGHEST OFFER IS 335,000 YEN. ACQUISITION COST IS $12,000. THE PERCENTAGE OF RETURN IS 7.8 PERCENT. THE UNIT OF MEASURE FOR ITEM NO. 10 IS "EACH.' , AND THE TOTAL QUANTITY IS 66. THE ACQUISITION COST IS $1,491.60 AND THE PERCENTAGE OF RETURN BASED ON SUBJECT CONTRACT PRICE IS 18.4 PERCENT.

THE CONTRACTING OFFICER FURTHER REPORTED THAT CONSIDERING THE COMPANY'S STATEMENT THAT ITS OFFER WAS INTENDED FOR ITEM NO. 3 AND COMPARING THE TOTAL AMOUNT OF ITS CONTRACT PRICE OF ITEM NO. 3, THE PERCENTAGE OF RETURN WOULD BE .023 AND THAT IN EVALUATING THE PERCENTAGE OF RETURN ON ITEM NO. 10, IT IS CONSIDERED THAT A REASONABLE OFFER WAS MADE BY THE COMPANY. THE CONTRACTING OFFICER HAS RECOMMENDED THAT THE COMPANY'S REQUEST FOR RESCISSION BE DENIED ON THE BASIS THAT THERE IS NO EVIDENCE TO SUBSTANTIATE A MISTAKE.

THE FACTS IN THE INSTANT CASE ARE SIMILAR IN SOME MATERIAL RESPECTS CONSIDERED IN UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED BY UNITED STATES COURT OF APPEALS, SECOND CIRCUIT, ON APRIL 14, 1958, WHEREIN IT WAS HELD THAT WHERE THE GOVERNMENT HAS NO ACTUAL OR CONSTRUCTIVE NOTICE OF THE BIDDER'S UNILATERAL ERROR UNTIL IT ACCEPTED THE BID, THE BIDDER WOULD NOT BE RELIEVED OF ITS OBLIGATIONS UNDER THE CONTRACT. THERE IS NO SHOWING HERE THAT THE GOVERNMENT KNEW, OR HAD REASON TO KNOW, BECAUSE OF THE AMOUNT OF THE BID, OR OTHERWISE, THAT THE COMPANY MADE A MISTAKE. IN THE CIRCUMSTANCES, THE ACCEPTANCE OF THE BID BY THE GOVERNMENT CONSUMMATED A VALID AND BINDING CONTRACT.

IN VIEW OF THE FOREGOING THERE IS FOUND NO LEGAL BASIS FOR RESCINDING THE CONTRACT AND ACCORDINGLY, THE REQUEST FOR RESCISSION IS DENIED.