B-143653, AUG. 15, 1960

B-143653, AUG. 15, 1960

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER (R11.2), WITH ENCLOSURES, DATED JULY 29, 1960, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, CONCERNING THE MATTER OF A MISTAKE IN BID ALLEGED BY WALKER DIESEL EQUIPMENT CO., MEMPHIS, TENNESSEE, AFTER AWARD TO IT OF ITEM NO. 1 ON SALES CONTRACT NO. N57078S-2150 (SN-2182). A DECISION IS REQUESTED AS TO WHETHER THE CONTRACT PROPERLY MAY BE CANCELED.

BY INVITATION NO. B-35-60, DATED MARCH 29, 1960, THE COLUMBIA RIVER GROUP, PACIFIC RESERVE FLEET, TONGUE POINT, ASTORIA, OREGON, SOLICITED BIDS--- TO BE OPENED AT 1 P.M., P.S.T., APRIL 19, 1960--- FOR THE PURCHASE FROM THE GOVERNMENT OF 60 ITEMS OF SURPLUS PROPERTY CONSISTING OF MISCELLANEOUS DIESEL ENGINE SPARE PARTS AND EQUIPMENT, AS LISTED AND DESCRIBED IN THE INVITATION. IN RESPONSE, WALKER DIESEL EQUIPMENT CO. SUBMITTED A BID DATED APRIL 9, 1960, OFFERING TO PURCHASE TWO OF THE ITEMS, INCLUDING ITEM NO. 1 AT $1,111.11 AND $1,222.22, RESPECTIVELY, FOR THE TWO UNITS DESCRIBED THEREIN AS FOLLOWS:

"SHAFT ASSY, CDA, PART NO. 3375237

2353.20 EACH ANY OR ALL

CONDITION: UNUSED-GOOD

GOV-T ACQ. COST: $4706.40"

THE ABSTRACT OF BIDS SHOWS THAT FIVE OTHER BIDS, RANGING FROM $67.80 TO $22.22 WERE ALSO RECEIVED ON ITEM NO. 1. THE BID OF WALKER DIESEL EQUIPMENT CO., BEING THE HIGHEST, WAS ACCEPTED BY THE CONTRACTING OFFICER AND AWARD OF ITEM NO. 1 WAS MADE ON CONTRACT NO. N57078S-2150 (SN-2182), DATED APRIL 21, 1960.

THE RECORD SHOWS THAT THEREAFTER, ON MAY 10, 1960, IN A TELEPHONE CONVERSATION, CONFIRMED BY LETTER DATED MAY 11, 1960, THE COMPANY ADVISED THE PROPERTY DISPOSAL OFFICER THAT IT COULD NOT ACCEPT ITEM NO. 1 BECAUSE OF AN ERROR IN ITS BID ON WHICH THE CONTRACT WAS BASED. IT EXPLAINED THAT THE FAILURE OF AN EMPLOYEE TO CHECK, AS DIRECTED BY THE OWNER OF THE COMPANY, THE PART NUMBER LISTED IN THE INVITATION FOR ITEM NO. 1 WITH THE COMPANY'S PARTS BOOK, TO MAKE SURE THAT THE MATERIAL COULD BE USED BY IT, RESULTED IN THE COMPANY ERRONEOUSLY SUBMITTING A BID ON THAT ITEM. AFTER THE AWARD OF ITEM NO. 1 TO IT THE COMPANY DETERMINED THAT THE ITEM WAS NOT A CRANKSHAFT ASSEMBLY AND, THEREFORE, COULD NOT POSSIBLY BE OF ANY USE OR VALUE TO IT. IN RESPONSE TO A LETTER DATED JUNE 15 FROM THE PROPERTY DISPOSAL OFFICER, THE COMPANY, IN A LETTER DATED JUNE 30, 1960, STATED THAT THERE IS NO WORKSHEET OR ANY OTHER RECORD KEPT ON THE BIDS, THAT ALL INFORMATION IS WRITTEN DIRECTLY ONTO THE BID SHEET, AND THAT THE ONLY TYPE OF RECORD THAT IS KEPT FOR ITS FILE IS THE "BIDDER'S SUMMARY SHEET.'

WHILE IT MAY BE THAT WALKER DIESEL EQUIPMENT CO. MAY HAVE MADE AN ERROR IN SUBMITTING A BID ON ITEM NO. 1, AS ALLEGED, BY ITS OWN ADMISSION, IT IS CLEAR THAT SUCH ERROR WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT BUT WAS DUE SOLELY TO THE COMPANY'S OWN NEGLIGENCE. THE ERROR, THEREFORE, WAS UNILATERAL--- NOT MUTUAL--- AND WOULD NOT ENTITLE THE PURCHASER TO ANY RELIEF, UNLESS THE CIRCUMSTANCES WERE SUCH THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH ERROR SO AS TO MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH.

THE BID OF WALKER DIESEL EQUIPMENT CO. WAS REGULAR ON ITS FACE AND THE RECORD DOES NOT INDICATE ANY CIRCUMSTANCES WHICH SHOULD HAVE MADE THE CONTRACTING OFFICER AWARE OF THE PROBABILITY OF AN ERROR IN THE BID. THIS WAS A SALE OF SURPLUS PROPERTY AND, SINCE A WIDE RANGE IN THE PRICES BID FOR SURPLUS PROPERTY IS USUAL AS BIDDERS GENERALLY CAN BE EXPECTED TO PLACE DIFFERENT VALUES ON SUCH MATERIALS DEPENDING ON THEIR INDIVIDUAL NEEDS OR THEIR CHANCES OF RESALE, A MERE DIFFERENCE IN THE AMOUNT OF THE BIDS WOULD NOT NECESSARILY PLACE THE CONTRACTING OFFICER ON NOTICE OF AN ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED THE GOVERNMENT. 28 COMP. GEN. 550, 551. SEE, ALSO, UNITED STATES V. SABIN METAL ORP., 151 F.SUPP. 683. NEITHER DOES IT APPEAR THAT A BID OF $2,333.33 WHEN COMPARED WITH THE ACQUISITION COST OF $4,706.40 FOR SUCH PROPERTY WOULD BE CONSIDERED UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS. FOR THESE REASONS AND SINCE ERROR WAS NOT ALLEGED BY THE BIDDER UNTIL AFTER AWARD OF ITEM NO. 1, IT MUST BE HELD THAT THE CONTRACTING OFFICER WAS WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ANY ERROR AND THAT HIS ACCEPTANCE OF THE BID OF WALKER DIESEL EQUIPMENT CO. WAS MADE IN GOOD FAITH. SUCH ACCEPTANCE RESULTED IN A VALID AND BINDING CONTRACT AND VESTED IN THE GOVERNMENT RIGHTS WHICH NO OFFICER OR AGENT OF THE GOVERNMENT IS AUTHORIZED TO WAIVE OR RELEASE. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, THERE IS NO LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED BY WALKER DIESEL ..END :