B-141563, JAN. 7, 1960

B-141563: Jan 7, 1960

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED DECEMBER 23. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 62649/B-16-60 ISSUED BY THE U.S. THE INVITATION WAS ISSUED AUGUST 10. AWARD WAS MADE TO ITEMS NOS. 1 AND 7 TO NIWA SHOTEN AS THE HIGHEST BIDDER (CONTRACT NO. AN EMPLOYEE OF THE CORPORATION ERRONEOUSLY SUBMITTED TO THE NAVAL SUPPLY DEPOT A BID WHICH SHOULD HAVE BEEN SUBMITTED TO THE ARMY "BECAUSE THE BID NOS. WERE BY CHANCE VERY SIMILAR TO EACH OTHER.'. STATING THAT THE BID SUBMITTED ON ITEMS NOS. 1 AND 7 OF NAVY INVITATION NO. 16 WAS INTENDED FOR ITEMS NOS. 1 AND 7 OF ARMY INVITATION NO. 116. THE ARMY INVITATION REFERRED TO WAS NO. 92-557-S-60-116 ISSUED AUGUST 19.

B-141563, JAN. 7, 1960

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 23, 1959, FILE R11.2 L8/NT4- 44, AND ITS ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN BY YOUR DEPARTMENT WITH RESPECT TO AN ERROR ALLEGED BY NIWA SHOTEN OF KURE SHI., JAPAN, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 62649/B-16-60 ISSUED BY THE U.S. NAVAL SUPPLY DEPOT, YOKOSUKA, JAPAN.

THE INVITATION WAS ISSUED AUGUST 10, 1959, FOR BIDS--- TO BE OPENED SEPTEMBER 1, 1959--- FOR THE PURCHASE OF SEVEN ITEMS OF SURPLUS BOATS. ITEMS NOS. 1 AND 7 EACH COVERED ONE AIRCRAFT REFUELING BOAT HAVING AN ACQUISITION COST OF $36,000, THE CONDITION BEING STATED AS: "USED; AIR; REQUIRES REPAIRS.' THE INVITATION REQUIRED THAT THE BOATS, EXCEPT THE ENGINES, BE REDUCED TO SCRAP BY THE CONTRACTOR.

IN RESPONSE TO THE INVITATION, NIWA SHOTEN SUBMITTED A BID OF 301,900 YENS ($838.61) ON ITEM NO. 1 AND 291,000 YENS ($808.33) ON ITEM NO. 7. OTHER BIDS RECEIVED ON ITEM NO. 1 RANGED FROM $125 TO $347.22 AND OTHER BIDS RECEIVED ON ITEM NO. 7 RANGED FROM $125 TO $333.33. ON SEPTEMBER 9, 1959, AWARD WAS MADE TO ITEMS NOS. 1 AND 7 TO NIWA SHOTEN AS THE HIGHEST BIDDER (CONTRACT NO. N62649S-8513). IN A LETTER DATED SEPTEMBER 15, 1959, THE REPRESENTATIVE DIRECTOR OF NIWA SHOTEN ALLEGED AN ERROR IN ITS BID AND REQUESTED CANCELLATION OF THE CONTRACT, STATING THAT IN HER ABSENCE OF SEVERAL DAYS BECAUSE OF A DEATH IN HER FAMILY, AN EMPLOYEE OF THE CORPORATION ERRONEOUSLY SUBMITTED TO THE NAVAL SUPPLY DEPOT A BID WHICH SHOULD HAVE BEEN SUBMITTED TO THE ARMY "BECAUSE THE BID NOS. WERE BY CHANCE VERY SIMILAR TO EACH OTHER.' UNDER DATE OF OCTOBER 1, 1959, THE CONTRACTING OFFICER DENIED THE REQUEST FOR CANCELLATION, STATING THAT HE HAD BEEN UNABLE TO CONFIRM THE ALLEGED SIMILARITY OF INVITATION NUMBERS. IN ITS LETTER OF OCTOBER 10, 1959, TO THE CONTRACTING OFFICER, THE CONTRACTOR REQUESTED RECONSIDERATION AND TRANSMITTED PAPERS INTENDED TO SUPPORT ITS ALLEGATION OF ERROR, STATING THAT THE BID SUBMITTED ON ITEMS NOS. 1 AND 7 OF NAVY INVITATION NO. 16 WAS INTENDED FOR ITEMS NOS. 1 AND 7 OF ARMY INVITATION NO. 116.

THE ARMY INVITATION REFERRED TO WAS NO. 92-557-S-60-116 ISSUED AUGUST 19, 1959, REQUESTING BIDS--- TO BE OPENED OCTOBER 2, 1959--- FOR THE PURCHASE OF 10 ITEMS OF SURPLUS TRUCKS AND AUTOMOTIVE PARTS AND SUPPLIES. IT IS REPORTED THAT BIDS RECEIVED ON ITEM NO. 1 OF THE ARMY INVITATION RANGED FROM 680,000 YENS TO 1,250,000 YENS AND THE ONLY BID RECEIVED ON ITEM NO. 7 OF THE ARMY INVITATION WAS IN THE AMOUNT OF 245,400 YENS, WHEREAS THE BID ALLEGED BY NIWA SHOTEN TO HAVE BEEN INTENDED FOR SUBMISSION ON THESE ITEMS WAS IN THE AMOUNTS OF 301,900 YENS AND 291,000 YENS RESPECTIVELY.

IN VIEW OF THE FACTS AS SHOWN BY THE FILE, IT IS CONCLUDED THAT ERROR IN THE SUBMISSION OF NIWA SHOTEN'S BID IS NOT SATISFACTORILY ESTABLISHED. THE NUMBERS OF THE ARMY INVITATION AND THE NAVY INVITATION ARE QUITE DISSIMILAR. THE DISPARITY BETWEEN THE BID OF NIWA SHOTEN ON ITEM NO. 1 (301,900 YENS) AND THE OTHER BIDS ACTUALLY RECEIVED ON ITEM NO. 1 OF THE ARMY INVITATION (RANGING FROM 680,000 YENS TO 1,250,000 YENS) DOES NOT INDICATED A PROBABILITY THAT NIWA SHOTEN INTENDED ITS BID FOR SUBMISSION UNDER THE ARMY INVITATION. THE FACT THAT NIWA SHOTEN BY A TELEGRAM SENT AUGUST 31, 1959, DIRECTED ITS AGENT IN TOKYO TO SUBMIT THE BID INDICATES AN INTENTION TO BID UNDER THE NAVY INVITATION, SINCE THAT INVITATION INVITED BIDS FOR OPENING ON SEPTEMBER 1, 1959, WHEREAS BIDS UNDER THE ARMY INVITATION WERE TO BE OPENED OCTOBER 2, 1959--- MORE THAN A MONTH AFTER THE DATE OF THE TELEGRAM.

MOREOVER, THE MODERATE DISPARITY BETWEEN NIWA SHOTEN'S BID ON ITEMS NOS. 1 AND 7 OF THE NAVY INVITATION AND THE OTHER BIDS RECEIVED WAS NOT SUFFICIENT TO SERVE AS CONSTRUCTIVE NOTICE OF ERROR WITH RESPECT TO A BID OF 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 OR 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.'

EVEN THOUGH THE BID MAY HAVE BEEN ERRONEOUS, THE ERROR 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 ERROR INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. ACCORDINGLY, THE ESTABLISHED RULE ABOVE QUOTED FROM 20 COMP. GEN. 652 IS FOR APPLICATION HERE. THE ACCEPTANCE OF THE BID UNDER THE CIRCUMSTANCES CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

FOR THE REASONS ABOVE SET FORTH, THERE APPEARS NO VALID BASIS FOR CANCELLATION OR MODIFICATION OF THE CONTRACT.