B-145935, JUN. 21, 1961

B-145935, JUN. 21, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MAY 19, 1961, FROM THE COMMANDANT OF THE MARINE CORPS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE F. P. SMITH EQUIPMENT COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. N67004-5709 IS BASED.

THE CONSOLIDATED SURPLUS SALES OFFICE, MARINE CORPS SUPPLY CENTER, ALBANY, GEORGIA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 101 UNUSED SELF-ALIGNING ROLLER BEARINGS MANUFACTURED BY SKF AND 270 SINGLE ROW ANNULAR BALL BEARINGS MANUFACTURED BY NEW DEPARTURE, ITEMS 5 AND 6, RESPECTIVELY. BOTH OF THE ITEMS WERE OFFERED ON AN "ANY OR ALL" BASIS. IN RESPONSE THE F. P. SMITH EQUIPMENT COMPANY SUBMITTED A BID OFFERING TO PURCHASE THE BEARINGS UNDER ITEM 5 AT THE FOLLOWING PRICES: 20 AT $40 EACH, 20 AT $35 EACH, 40 AT $30 EACH AND 21 AT $25 EACH. THE BID OF THE COMPANY WAS ACCEPTED AS TO ALL QUANTITIES UNDER ITEM 5 ON APRIL 24, 1961.

IT IS REPORTED THAT ON MAY 2, 1961, MR. F. P. SMITH OF THE F. P. SMITH EQUIPMENT COMPANY TELEPHONED ALLEGING THAT HE HAD NOT BID ON ITEM 5 AS SHOWN ON THE NOTICE OF AWARD; THAT WHEN MR. SMITH WAS ADVISED THAT HIS BID SHOWED THAT HE HAD BID ON ITEM 5, HE REPLIED THAT HE THOUGHT HE WAS BIDDING ON ITEM 6 AND THAT HIS WORKSHEET WOULD SUBSTANTIATE SUCH INTENT; AND THAT MR. SMITH ALSO STATED THAT HE DID NOT WANT THE MATERIAL COVERED BY ITEM 5 AND THAT HE WAS WILLING TO BE PLACED IN DEFAULT AND FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF ITEM 5. IN A CONFIRMING LETTER MR. SMITH REITERATED HIS CONTENTION THAT HE DID NOT INTEND TO BID ON ITEM 5. WITH THE LETTER, MR. SMITH SUBMITTED HIS WORKSHEET WHICH APPEARS TO BE A COPY OF THE INVITATION. AN EXAMINATION OF THE WORKSHEET INDICATES THAT THE COMPANY CIRCLED ITEM 6 AND PLACED THE NOTATION "ACQ.EA. 41.00" ALONGSIDE THE DESCRIPTION. THE WORKSHEET ALSO SHOWS A QUOTATION FOR ITEM 6; HOWEVER, NO QUOTATION APPEARS FOR ITEM 5.

THERE IS NOTHING ON THE FACE OF THE BID OF THE COMPANY TO INDICATE THAT THE PRICES QUOTED THEREIN FOR ITEM 5 WERE INTENDED FOR ITEM 6. RATHER A CONTRARY INTENTION IS INDICATED BY THE FACT THAT ITEM NO. 5 WAS CIRCLED BY THE COMPANY ON THE BID FORM SUBMITTED. THE ABSTRACT OF BIDS SHOWS THAT THE FIVE OTHER BIDS OF ITEM 5 RANGED FROM $3.10 TO $0.10. ON THE BASIS OF THE QUANTITIES AND THE PRICES QUOTED BY THE F. P. SMITH EQUIPMENT COMPANY IN ITS BID FOR ITEM 5, THE AVERAGE UNIT SMITH EQUIPMENT COMPANY IN ITS BID FOR ITEM 5, THE AVERAGE UNIT PRICE FOR THAT ITEM IS $31.93. ALTHOUGH THE BID SUBMITTED BY THE F. P. SMITH COMPANY WAS CONSIDERABLY HIGHER THAN THE NEXT HIGHEST BID RECEIVED ON ITEM 5, 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 OF THE COMPANY. IT SHOULD BE NOTED IN THIS CONNECTION THAT THE UNIT ACQUISITION COST OF THE BEARINGS, DESCRIBED AS "UNUSED, CONDITION GOOD," IS $112. THE AVERAGE BID OF $31.93 PER UNIT WOULD NOT SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS UNLESS, PERHAPS, IT CAN BE SAID THAT THE BEARINGS HAD NO VALUE EXCEPT AS SCRAP. FROM THE RECORD SUBMITTED THERE IS NO INDICATION THAT THIS IS THE CASE. MOREOVER, 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 WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE WHICH THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORP., 151 F.SUPP. 683, 689, CITING WITH APPROVAL 16 COMP. GEN. 596, 17 ID. 388; AND ID. 601. IN THE SABIN CASE, SUPRA, THE PRICE OF 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 P. 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 THE F. P. SMITH EQUIPMENT 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. SEE FRAZIER-DAVIS CONSTRUCTION CO. V. UNITED STATES, 100 CT.CL. 120, 163. ANY ERROR THAT WAS MADE IN THE BID OF THE COMPANY WAS UNILATERAL--- NOT MUTUAL--- AND DOES NOT ENTITLE THE COMPANY 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, 56 F.SUPP. 505, 507.

ACCORDINGLY, ITEM 5 OF CONTRACT NO. N67004-5709 MAY NOT BE CANCELED. SINCE THE COMPANY HAS ORALLY INDICATED THAT IF THE RELIEF REQUESTED WAS NOT GRANTED IT WISHED TO BE DECLARED IN DEFAULT UNDER THE CONTRACT, THE COMPANY MAY, AS IT HAS REQUESTED, BE PERMITTED TO FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF ITEM 5, IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION.