B-145004, FEB. 23, 1961

B-145004, FEB. 23, 1961

TO SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER (R11.2) DATED FEBRUARY 6, 1961, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, CONCERNING A MISTAKE ALLEGED BY DOHENY SUPPLY COMPANY, LOS ANGELES, CALIFORNIA, IN ITS BID ON WHICH ITEM NO. 64 OF SALES CONTRACT NO. N63070S-59413 WAS BASED. A DECISION IS REQUESTED AS TO WHETHER RELIEF PROPERLY MAY BE DENIED.

BY BID INVITATION NO. B-28-61-63070 DATED OCTOBER 4, 1960, CONSOLIDATED SURPLUS SALES OFFICE, SAN DIEGO, CALIFORNIA, SOLICITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 95 ITEMS OF SURPLUS PROPERTY DESCRIBED THEREIN. IN RESPONSE TO THE INVITATION DOHENY SUPPLY COMPANY SUBMITTED A BID WITH A QUOTATION ON ITEM NO. 64 ONLY OF $225.83, TOGETHER WITH A BID DEPOSIT IN THE AMOUNT OF $100. THIRTEEN OTHER BIDS, RANGING FROM $166.72 TO $7.10, WERE ALSO RECEIVED ON ITEM NO. 64. THE BID OF DOHENY SUPPLY COMPANY, BEING THE HIGHEST, WAS ACCEPTED ON NOVEMBER 1, 1960, AND AWARD OF THE LOT OF MATERIAL IN ITEM NO. 64 AT ITS BID PRICE OF $225.83 WAS MADE TO THE COMPANY ON CONTRACT NO. N63070S-59413.

ON NOVEMBER 4, 1960, IN A TELEPHONE CONVERSATION AND A CONFIRMING LETTER OF THE SAME DATE MR. SAMUEL SMITH, OWNER OF DOHENY SUPPLY COMPANY, ACKNOWLEDGED RECEIPT OF THE NOTICE OF AWARD OF ITEM NO. 64 TO HIS COMPANY AND ADVISED THAT THE COMPANY'S BID WAS INTENDED FOR ITEM NO. 65. MR. SMITH EXPLAINED THAT HIS DUPLICATE RECORD SHOWED ITEM NO. 65 AS THE ONLY ITEM BID ON AND THAT IF HE MADE AN ERROR IN PUTTING THE BID ON THE WRONG LINE IT WAS PURELY UNINTENTIONAL; ALSO, THAT HIS COMPANY HANDLES ONLY PLUMBING FITTINGS AND VALVES AND THAT ITEM NO. 64 WAS COMPLETELY FOREIGN TO HIM. IN SUPPORT OF HIS CLAIM OF ERROR AND THAT THE BID OF $225.83 WAS INTENDED FOR ITEM NO. 65 INSTEAD OF ITEM NO. 64 MR. SMITH FORWARDED COPIES OF PAGES 14 AND 5 OF THE BID INVITATION AS HIS ORIGINAL WORKSHEETS. MR. SMITH REQUESTED TO BE ADVISED WHETHER LOT NO. 65 COULD BE AWARDED TO HIS COMPANY, OR IF THE COMPANY COULD BE RELIEVED OF THE AWARD OF LOTNO. 64. HE STATED THAT IF THIS COULD NOT BE DONE HE WOULD HAVE TO REQUEST THAT THE COMPANY BE PENALIZED 20 PERCENT AND A REFUND BE MADE TO HIM OF THE BALANCE OF HIS COMPANY'S BID DEPOSIT.

ON PAGE 14 OF THE INVITATION, ITEM NO. 64 WAS ADVERTISED AS ONE LOT OF "REPAIR PARTS: FOR CLEAVER-BROOKS STILL MODEL MVC-17-A," WITH A TOTAL ACQUISITION COST OF $1,503; AND ITEM NO. 65 WAS ADVERTISED AS ONE LOT OF "PIPE FITTINGS," WITH A TOTAL ACQUISITION COST OF $756. THE VARIOUS PARTS WERE LISTED UNDER EACH ITEM AND WERE DESCRIBED AS "UNUSED, GOOD CONDITION.'

THE CONTRACTING OFFICER IN HIS STATEMENT OF FACTS AND RECOMMENDATIONS REGARDING THE SALE TRANSACTION STATES THAT THE RANGES OF BIDS RECEIVED ON BOTH ITEM NO. 64 AND ITEM NO. 65 WERE WIDE SPREAD, OF APPROXIMATELY THE SAME RANGE, AND CONSIDERABLY UNDER THE RESPECTIVE ACQUISITION COSTS. ALSO, THERE HAD BEEN NO PREVIOUS SALE BY HIS OFFICE OF PARTS FOR THE CLEAVER-BROOKS STILL MODEL OF THE SAME TYPE OF PARTS BEING SOLD WHICH COULD BE USED FOR PRICE COMPARISON PURPOSES. THEREFORE, AN ERROR IN BID WAS NOT APPARENT TO HIM.

WHILE IT MAY BE THAT MR. SMITH MADE AN ERROR IN HIS COMPANY'S BID, AS ALLEGED, THE BASIC QUESTION FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. MOFFETT, HODGKINS AND CLARK COMPANY V. ROCHESTER, 178 U.S. 373.

DOHENY SUPPLY COMPANY DID NOT ALLEGE ERROR IN ITS BID UNTIL AFTER AWARD OF THE CONTRACT, AND THERE IS NOTHING IN ITS BID TO SUGGEST THAT THE BID ON ITEM NO. 64 WAS NOT AS INTENDED. NOR DOES THE RECORD INDICATE THAT THE CONTRACTING OFFICER OTHERWISE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. ALTHOUGH THE BID WAS CONSIDERABLY HIGHER THAN THE NEXT HIGH BID SUBMITTED ON ITEM NO. 64 THAT FACT ALONE WOULD NOT BE SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH NOTICE OF ERROR IN ITS BID SINCE THIS WAS A SALE OF GOVERNMENT SURPLUS PROPERTY. UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689. NOR WOULD A BID OF $225.83 SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS FOR SUCH MATERIAL DESCRIBED AS "UNUSED, GOOD CONDITION," WITH A TOTAL ACQUISITION COST OF $1,503.

CONSEQUENTLY, 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 DOHENY SUPPLY COMPANY WAS IN GOOD FAITH. SUCH ACCEPTANCE, THEREFORE, 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. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

IN THESE CIRCUMSTANCES, THERE IS NO LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED BY DOHENY SUPPLY COMPANY UNDER SALES CONTRACT NO. N63070S- 59413.

THE ENCLOSURES, EXCEPT THE LETTER DATED NOVEMBER 4, 1960, FROM THE COMPANY AND ITS WORKSHEETS, FORWARDED WITH THE LETTER OF FEBRUARY 6, 1961, ARE RETURNED.