B-140894, OCT. 16, 1959

B-140894: Oct 16, 1959

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 NAVY: REFERENCE IS MADE TO LETTER DATED SEPTEMBER 25. BECAUSE OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID FOR THE PURCHASE OF SURPLUS GOVERNMENT EQUIPMENT TO BE DISPOSED OF UNDER SALES DOCUMENT NO. APPARENTLY THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT AN ERROR HAD BEEN MADE. THE ACQUISITION COST WAS $150. THE BID OF PITTSBURGH TESTING LABORATORY WAS NOT SUFFICIENTLY OUT OF LINE TO CHARGE THE DISPOSAL OFFICER WITH CONSTRUCTIVE KNOWLEDGE OF THE ALLEGED MISTAKE. FROM THE LIMITED INFORMATION AVAILABLE WE ARE OF THE OPINION THAT A BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE SUBJECT BID. IT APPEARS THAT THE BIDDER WILL CONTINUE TO REFUSE TO COMPLY WITH THE CONTRACT TERMS UPON THE GROUNDS THAT THE AGREEMENT IS UNENFORCEABLE BECAUSE OF THE ALLEGED ERROR.

B-140894, OCT. 16, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 25, 1959, FILE REFERENCE FR- 10/GC:MW) L6 (C) CL VOU 183402, FROM THE DIRECTOR, ACCOUNTS RECEIVABLE AND CLAIMS DIVISION, NAVY REGIONAL ACCOUNTS OFFICE, WASHINGTON, D.C., REFERRING TO US FOR DETERMINATION THE QUESTION WHETHER THERE MAY BE GRANTED THE RELIEF REQUESTED BY THE PITTSBURGH TESTING LABORATORY, DALLAS, TEXAS, BECAUSE OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID FOR THE PURCHASE OF SURPLUS GOVERNMENT EQUIPMENT TO BE DISPOSED OF UNDER SALES DOCUMENT NO. C-38-59 (6-59) BY CONVAIR, A DIVISION OF GENERAL DYNAMICS CORPORATION.

THE RECORD DISCLOSES THAT UPON RECEIPT OF ADVICE THAT ITS OFFER OF $65 FOR ITEM NO. 5 OF THE INVITATION FOR BIDS HAD BEEN ACCEPTED, THE BIDDER NOTIFIED THE DISPOSAL AGENCY THAT IT HAD INTENDED TO BID ON ITEM NO. 4, AND THAT IT HAD NO USE FOR THE ARTICLE LISTED UNDER ITEM NO. 5. DEPOSIT ACCOMPANIED ITS BID AND THE LABORATORY, BECAUSE OF ITS ERROR, REFUSED TO COMPLETE ITS PURCHASE CONTRACT BY PAYMENT FOR, AND ACCEPTANCE OF, THE EQUIPMENT.

APPARENTLY THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT AN ERROR HAD BEEN MADE, AND SINCE THE OFFERS RECEIVED RANGED FROM $0.50 TO $65, AND THE ACQUISITION COST WAS $150, THE BID OF PITTSBURGH TESTING LABORATORY WAS NOT SUFFICIENTLY OUT OF LINE TO CHARGE THE DISPOSAL OFFICER WITH CONSTRUCTIVE KNOWLEDGE OF THE ALLEGED MISTAKE. THEREFORE, FROM THE LIMITED INFORMATION AVAILABLE WE ARE OF THE OPINION THAT A BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE SUBJECT BID.

HOWEVER, IT APPEARS THAT THE BIDDER WILL CONTINUE TO REFUSE TO COMPLY WITH THE CONTRACT TERMS UPON THE GROUNDS THAT THE AGREEMENT IS UNENFORCEABLE BECAUSE OF THE ALLEGED ERROR. AND, IT IS ASSUMED THAT FOR THE SAME REASON THE BIDDER WILL DENY LIABILITY FOR ANY LOSS INCURRED BY THE GOVERNMENT IN THE EVENT OF SALE TO THE NEXT HIGHEST BIDDER.

UNDER THE CIRCUMSTANCE THE LOSS TO THE GOVERNMENT WILL AMOUNT TO $45, REPRESENTING THE DIFFERENCE BETWEEN THE TWO BIDS. IN VIEW OF THE SMALL AMOUNT INVOLVED, AND HAVING REGARD FOR THE TIME AND EXPENSE WHICH NECESSARILY WOULD BE INCURRED IN DEVELOPING AND PERFECTING THE CLAIM AGAINST THE PITTSBURGH TESTING LABORATORY, WE FEEL THAT FURTHER ACTION IN THIS CASE IS UNWARRANTED. ACCORDINGLY, NO OBJECTION WILL BE INTERPOSED BY THIS OFFICE TO THE SALE OF THE EQUIPMENT TO THE SECOND HIGHEST BIDDER.