B-140718, SEP. 18, 1959

B-140718: Sep 18, 1959

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 10. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO SALES LETTER NO. THE INVITATION WAS ISSUED MARCH 17. THE CONTRACTING OFFICER STATES THAT THE ACQUISITION COST OF ITEM NO. 12 WAS $355.03. AWARD WAS MADE TO KAY SALES AS THE HIGHEST BIDDER ON ITEMS NOS 2 AND 12 (CONTRACT NO. THE CONTRACTING OFFICER STATES THAT HE DID NOT SUSPECT ERROR IN THE BID OF KAY SALES AND THAT THE BID WAS ACCEPTED IN GOOD FAITH. THE DISPARITY BETWEEN THE BID OF KAY SALES AND THE OTHER BIDS RECEIVED WAS NOT SUFFICIENT TO SERVE AS CONSTRUCTIVE NOTICE OF ERROR WITH RESPECT TO A BID ON SURPLUS MATERIAL. IN THAT CONNECTION IT WAS STATED IN 17 COMP.

B-140718, SEP. 18, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 10, 1959, FILE R11.2 L8) L8/NT4-4, AND ITS ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNT, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN BY YOUR DEPARTMENT WITH RESPECT TO AN ERROR ALLEGED BY KAY SALES, OXNARD, CALIFORNIA, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO SALES LETTER NO. SL-21-59-244 ISSUED BY THE UNITED STATES NAVAL SUPPLY DEPOT, SAN DIEGO, CALIFORNIA.

THE INVITATION WAS ISSUED MARCH 17, 1959, FOR BIDS--- TO BE OPENED APRIL 6, 1959--- FOR THE PURCHASE OF 49 ITEMS OF SURPLUS MATERIALS. EACH ITEM OCCUPIED A LINED SPACE MORE THAN A HALF INCH WIDE EXTENDING THE ENTIRE WIDTH OF A PAGE.

IN RESPONSE TO THE SALES LETTER, KAY SALES SUBMITTED A BID ON A NUMBER OF ITEMS INCLUDING A BID OF $157 ON ITEM NO. 12. THE OTHER BIDS RECEIVED ON ITEM NO. 12 RANGED FROM $12.56 TO $52.99. THE CONTRACTING OFFICER STATES THAT THE ACQUISITION COST OF ITEM NO. 12 WAS $355.03; ALSO THAT SIMILAR MATERIAL SOLD IN THE PAST HAS BROUGHT AN AVERAGE OF $0.15 PER POUND, INDICATING THAT $78.90 WOULD BE A FAIR PRICE FOR ITEM NO. 12. ON APRIL 14, 1959, AWARD WAS MADE TO KAY SALES AS THE HIGHEST BIDDER ON ITEMS NOS 2 AND 12 (CONTRACT NO. N244S-55629).

BY ITS LETTER DATED JUNE 19, 1959, THE CONTRACTOR STATED THAT IT INTENDED TO BID ON ITEM NO. 13 INSTEAD OF NO. 12 AND REQUESTED THAT THE CONTRACT BE CANCELED AS TO ITEM NO. 12. UNDER DATE OF JULY 23, 1959, THE CONTRACTOR FURNISHED ITS WORK SHEET, WHICH APPEARS TO SUPPORT ITS ALLEGATION OF ERROR. THE BIDS RECEIVED ON ITEM NO. 13 RANGED FROM $12.50 TO $185.85.

THE CONTRACTING OFFICER STATES THAT HE DID NOT SUSPECT ERROR IN THE BID OF KAY SALES AND THAT THE BID WAS ACCEPTED IN GOOD FAITH. THE DISPARITY BETWEEN THE BID OF KAY SALES AND THE OTHER BIDS RECEIVED WAS NOT SUFFICIENT TO SERVE AS CONSTRUCTIVE NOTICE OF ERROR WITH RESPECT TO A BID ON SURPLUS MATERIAL. BIDS SUBMITTED ON SURPLUS MATERIAL OFTEN VARY GREATLY. IN THAT CONNECTION IT WAS STATED IN 17 COMP. GEN. 976:

"THE BIDS HERE IN QUESTION WERE ON SURVEYED MATERIAL SOLD "AS IS, WHERE IS, AND IF IS," WITHOUT RECOURSE AS DISTINGUISHED FROM BIDS FOR THE PERFORMANCE OF WORK OR THE FURNISHING OF SUPPLIES, EQUIPMENT, ETC. CONSEQUENTLY, THERE MIGHT BE EXPECTED A WIDE RANGE IN THE BIDS WHICH WOULD BE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY WAS TO BE PUT BY THE PARTICULAR BIDDER OF THE CHANCES OF RESALE THEREOF. THE MERE DIFFERENCE IN THE PRICES BID FOR SUCH PROPERTY WOULD NOT NECESSARILY PUT THE CONTRACTING OFFICER ON NOTICE OF A MISTAKE AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED.'

SEE, ALSO , 28 COMP. GEN. 550; 17 ID. 388; ID. 601; 16 ID. 596.

IN 20 COMP. GEN. 652 IT WAS STATED:

"THE ESTABLISHED RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED, HE MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. 26 COMP. DEC. 286; 6 COMP. GEN. 526; 8 ID. 362.'

IN THE INSTANT MATTER, SUCH ERROR AS MAY HAVE BEEN MADE WAS NOT MUTUAL AND IT WAS NOT SO APPARENT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. NEITHER WAS THE ALLEGED ERROR INDUCED OR CONTRIBUTED TO IN ANY MANNER BY THE GOVERNMENT. THEREFORE, THE ESTABLISHED RULE ABOVE QUOTED IS FOR APPLICATION HERE. THE ACCEPTANCE OF THE BID CONSUMMATED A BINDING AND VALID CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; 26 COMP. GEN. 415; 29 ID. 323.

FOR THE REASONS ABOVE SET OUT, THERE APPEARS NO VALID BASIS FOR CANCELLATION OR MODIFICATION OF THE CONTRACT. THE CONTRACTOR'S LETTERS OF JUNE 19 AND JULY 23, 1959, AND THE WORK SHEET FURNISHED ARE RETURNED HEREWITH.