B-145447, APR. 14, 1961

B-145447: Apr 14, 1961

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED MARCH 27. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. ON PAGE 7 OF THE INVITATION THE PROPERTY COVERED BY ITEM NO. 2 WAS DESCRIBED AS FOLLOWS: TABLE "DIESEL ENGINE. WHEREIN THE STATED WEIGHT WAS 3890 POUNDS). WAS "DIESEL ENGINE.'. THE PROPERTY WAS OFFERED FOR SALE ON AN "AS IS" AND "WHERE IS" BASIS AND IN PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS THE GOVERNMENT STATED THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION BUT DISCLAIMED ALL WARRANTIES. THE TWO OTHER BIDS RECEIVED ON ITEM NO. 2 WERE IN THE AMOUNTS OF $139 AND $42.69. THE CONTRACTING OFFICER STATES WITH RESPECT TO THE ENGINE DESCRIBED IN ITEM NO. 2: "THE LAST ENGINE OF THE TYPE AND MANUFACTURE WAS SOLD FOR $112.27.'.

B-145447, APR. 14, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MARCH 27, 1961, FILE R11.2, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY GROBAN SUPPLY COMPANY, 1139 SOUTH WABASH, CHICAGO, ILLINOIS, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. B-53-61-63070 ISSUED BY CONSOLIDATED SURPLUS SALES OFFICE, SAN DIEGO, CALIFORNIA, ON DECEMBER 15, 1960.

THE INVITATION REQUESTED BIDS--- TO BE OPENED JANUARY 5, 1961--- FOR THE PURCHASE OF 33 ITEMS OF SURPLUS PROPERTY. ON PAGE 7 OF THE INVITATION THE PROPERTY COVERED BY ITEM NO. 2 WAS DESCRIBED AS FOLLOWS:

TABLE

"DIESEL ENGINE,"NORFOLK NAVAL SHIPYARD," 6 CYLINDER,

60 BHP AT 1700 RPM, TYPE DB, 4 INCHES BORE DIA. 5 1/2 INCHES

LONG STROKE. WEIGHT EST. 2500 LBS., CUBE 138 FT. LOOSE

ON PALLET. REPAIRS REQUIRED.

COND. USED ACQ. COST $2,540.00 *S/APA 1 EA.'

ITEMS NOS. 1 AND 3 TO 8, INCLUSIVE, EACH COVERED "DIESEL ENGINE, "GRAYMARINE DIV. OF GM" " WEIGHT 3,825 POUNDS (EXCEPTING ITEM NO. 7, WHEREIN THE STATED WEIGHT WAS 3890 POUNDS), USED, ACQUISITION COST $4,000. ON THE BID PAGE, HOWEVER, THE ONLY DESCRIPTION OF THE ARTICLES FOR SALE UNDER EACH OF ITEM NOS. 1 TO 8, INCLUSIVE, WAS "DIESEL ENGINE.'

THE PROPERTY WAS OFFERED FOR SALE ON AN "AS IS" AND "WHERE IS" BASIS AND IN PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS THE GOVERNMENT STATED THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION BUT DISCLAIMED ALL WARRANTIES, EXPRESSED OR IMPLIED. PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS URGED BIDDERS TO INSPECT THE PROPERTY BEFORE BIDDING THEREON AND CAUTIONED THEM THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM AGAINST THE GOVERNMENT.

IN RESPONSE TO THE INVITATION, GROBAN SUPPLY COMPANY SUBMITTED A BID OF $566 ON EACH OF THE FIRST 8 ITEMS. THE TWO OTHER BIDS RECEIVED ON ITEM NO. 2 WERE IN THE AMOUNTS OF $139 AND $42.69. THE CONTRACTING OFFICER STATES WITH RESPECT TO THE ENGINE DESCRIBED IN ITEM NO. 2: "THE LAST ENGINE OF THE TYPE AND MANUFACTURE WAS SOLD FOR $112.27.' ON JANUARY 10, 1961, AWARD WAS MADE TO GROBAN SUPPLY COMPANY ON ITEMS NOS. 1, 2, 3, 4, 7 AND 8 AS THE HIGHEST BIDDER ON THOSE ITEMS (CONTRACT NO. N63070S-59756).

IN A LETTER DATED FEBRUARY 15, 1961, GROBAN SUPPLY COMPANY STATED THAT IN ITS HASTE IT INADVERTENTLY BID ON ITEM NO. 2 ALONG WITH ITS INTENDED BID ON THE 7 OTHER ITEMS COVERING DIESEL ENGINES AND REQUESTED THAT THE AMOUNT OF ITS PAYMENT ON ITEM NO. 2 ($566) BE REFUNDED, STATING THAT IT HAD RETURNED THE ENGINE INVOLVED TO THE BASE. THE CONTRACTING OFFICER EXPRESSES THE OPINION THAT "THE BIDDER MADE AN HONEST ERROR" AND RECOMMENDS RELIEF.

THE BASIC QUESTION FOR CONSIDERATION IS NOT WHETHER GROBAN SUPPLY COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. THE INVITATION WAS CLEAR AS TO THE MATERIALS COVERED BY THE VARIOUS ITEMS AND, THEREFORE, ANY ERROR WHICH MAY HAVE BEEN MADE WAS DUE SOLELY TO THE NEGLIGENCE OF GROBAN SUPPLY COMPANY AND SUCH ERROR WAS IN NO WAY CONTRIBUTED TO BY THE GOVERNMENT. THE BID SUBMITTED WAS UNAMBIGUOUS AND THERE WAS NOTHING ON ITS FACE TO INDICATE ERROR.

ALTHOUGH THE BID OF GROBAN SUPPLY COMPANY WAS CONSIDERABLY HIGHER THAN THE OTHER BIDS RECEIVED ON ITEM NO. 2, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. IN VIEW OF THE WIDE RANGE OF PRICES ORDINARILY RECEIVED ON WASTE, SALVAGE, AND SURPLUS PROPERTY, A MERE DIFFERENCE IN THE PRICES BID WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN A BID FOR THE PURCHASE OF SUCH PROPERTY, AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT OR SUPPLIES TO BE FURNISHED TO THE GOVERNMENT. PRICES OFFERED TO THE GOVERNMENT FOR ITS SURPLUS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO BE MADE OF THE PROPERTY BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE WHICH THE BIDDER MIGHT DESIRE TO TAKE. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689, CITING WITH APPROVAL 16 COMP. GEN. 596, 17 ID. 388; ID. 601. IN THE SABIN CASE, SUPRA, THE PRICE DISPARITY ON THE BIDS RECEIVED FOR THE SALE OF SURPLUS PROPERTY RANGED FROM A LOW OF $337.28 TO A HIGH OF $9,351.30. THE COURT, AT PAGE 688, SAID:

"THIS BEING A SALE OF SURPLUS ENGINE PARTS, THE CONTRACTING OFFICER HAD NO METHOD OF KNOWING THAT THERE WAS AN ERROR IN THE DEFENDANT'S BID. THE GOVERNMENT WAS INTERESTED ONLY IN GETTING THE HIGHEST POSSIBLE PRICE FOR THE MATERIAL TO BE SOLD; IT WAS NOT IN THE METAL TRADE. THERE IS NO REASON WHY THE SPREAD IN BIDS SHOULD HAVE APPEARED PALPABLE TO THE GOVERNMENT. THE ADMINISTRATIVE AGENCY WAS NOT REQUIRED TO EMPLOY OR UTILIZE EXPERTS FOR THE BENEFIT OF THE DEFENDANT, NOR TO ASSUME THE BURDEN OF EXAMINING EVERY LOW BID FOR POSSIBLE ERROR BY THE BIDDER.'

IN VIEW OF THE FOREGOING, AND AS NO ERROR WAS ALLEGED UNTIL AFTER AWARD AND THE BID WAS CLEAR AND UNAMBIGUOUS, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF THE BID OF GROBAN SUPPLY COMPANY WAS MADE IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. ANY ERROR THAT WAS MADE IN THE BID OF GROBAN SUPPLY COMPANY WAS UNILATERAL--- NOT MUTUAL--- AND DOES NOT ENTITLE IT TO RELIEF FROM ITS OBLIGATION UNDER THE CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249 AND SALIGMAN ET AL. V. UNITED STATES, 50 F.SUPP. 505, 507.

FOR THE REASONS ABOVE SET FORTH, THE AWARD TO GROBAN SUPPLY COMPANY MAY NOT BE CANCELED.

THE PAPERS TRANSMITTED WITH THE LETTER OF MARCH 27, 1961, ARE RETURNED HEREWITH.