B-148642, APR. 25, 1962

B-148642: Apr 25, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO YOUR ASSISTANT COUNSEL'S LETTER OF APRIL 10. THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $60. WHICH WAS ACCOMPANIED BY BID GUARANTEE IN THE AMOUNT OF $740. WAS ACCEPTED AS TO ITEM 4 ON DECEMBER 5. HUTCHINGS WAS ADVISED THAT PAYMENT IN FULL FOR THE PROPERTY PURCHASED MUST BE MADE ON OR BEFORE DECEMBER 11. HUTCHINGS THAT HE WAS IN DEFAULT IN PERFORMANCE OF THE CONTRACT AND THAT HE WAS BEING GIVEN 15 DAYS TO CURE THE DEFAULT. IT IS REPORTED THAT ON JANUARY 18. HUTCHINGS TELEPHONED ALLEGING THAT HE BELIEVED THAT HE HAD PAID TOO MUCH FOR THE LATHE COVERED BY ITEM 4 AND INDICATED THAT HE MAY HAVE MADE A MISTAKE IN HIS BID AND THAT MR. HUTCHINGS WAS ADVISED BY THE CONTRACTING OFFICER THAT HE SHOULD SEND A TELEGRAM GIVING FULL DETAILS REGARDING THE MISTAKE IN HIS BID.

B-148642, APR. 25, 1962

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO YOUR ASSISTANT COUNSEL'S LETTER OF APRIL 10, 1962, DSAH-G, REQUESTING A DECISION AS TO WHETHER THE REQUEST OF MR. S. E. HUTCHINGS FOR RELIEF UNDER SALES CONTRACT O.I. 4568 MAY BE GRANTED.

THE COLUMBUS CONSOLIDATED SURPLUS SALES OFFICE, COLUMBUS GENERAL DEPOT, U.S. ARMY, COLUMBUS, OHIO, BY INVITATION NO. 33-167-S-62-32 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, ONE LEBLOND LATHE, THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $60,512, ITEM 4. IN RESPONSE MR. S. E. HUTCHINGS, ATLANTA, GEORGIA, SUBMITTED A BID DATED NOVEMBER 27, 1961, OFFERING TO PURCHASE THE LATHE COVERED BY ITEM 4 AT A PRICE OF $3,700. THE BID OF MR. HUTCHINGS, WHICH WAS ACCOMPANIED BY BID GUARANTEE IN THE AMOUNT OF $740, WAS ACCEPTED AS TO ITEM 4 ON DECEMBER 5, 1961. IN THE NOTICE OF AWARD MR. HUTCHINGS WAS ADVISED THAT PAYMENT IN FULL FOR THE PROPERTY PURCHASED MUST BE MADE ON OR BEFORE DECEMBER 11, 1961, AND THAT THE PROPERTY MUST BE REMOVED BY JANUARY 4, 1962.

BY LETTER DATED JANUARY 4, 1962, THE CONTRACTING OFFICER ADVISED MR. HUTCHINGS THAT HE WAS IN DEFAULT IN PERFORMANCE OF THE CONTRACT AND THAT HE WAS BEING GIVEN 15 DAYS TO CURE THE DEFAULT. IT IS REPORTED THAT ON JANUARY 18, 1962, MR. HUTCHINGS TELEPHONED ALLEGING THAT HE BELIEVED THAT HE HAD PAID TOO MUCH FOR THE LATHE COVERED BY ITEM 4 AND INDICATED THAT HE MAY HAVE MADE A MISTAKE IN HIS BID AND THAT MR. HUTCHINGS WAS ADVISED BY THE CONTRACTING OFFICER THAT HE SHOULD SEND A TELEGRAM GIVING FULL DETAILS REGARDING THE MISTAKE IN HIS BID. BY TELEGRAM DATED JANUARY 18, 1962, MR. HUTCHINGS REQUESTED THAT DEFAULT ACTION BE DELAYED SO AS TO PERMIT HIM TO FILE A PROTEST REGARDING THE PRICE PAID BY HIM FOR ITEM 4.

BY LETTER DATED FEBRUARY 6, 1962, MR. HUTCHINGS ALLEGED THAT IT WAS HIS INTENTION TO QUOTE A PRICE OF $2,100 INSTEAD OF $3,700 FOR ITEM 4 AND HE REQUESTED THAT THE BID PRICE OF THAT ITEM BE CORRECTED TO REFLECT HIS INTENTION. WITH THE LETTER MR. HUTCHINGS SUBMITTED HIS WORKSHEET WHICH APPEARS TO BE A COPY OF THE INVITATION. ON THE WORKSHEET OPPOSITE THE DESCRIPTION OF ITEM 4 APPEARS THE NOTATION "2,100.' IN AN AFFIDAVIT DATED FEBRUARY 8, 1962, MR. HUTCHINGS CONTENDED THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN THAT HIS BID PRICE OF $3,700 WAS IN ERROR BECAUSE OF THE FACT THAT THE ITEM WAS A HIGHLY SPECIALIZED MACHINE AND VALUABLE ONLY FOR USABLE PARTS WHICH MIGHT BE SALVAGED FROM IT, BECAUSE OF THE DISPARITY BETWEEN HIS BID OF $3,700 AND THE SECOND HIGHEST BID OF $1,169, AND BECAUSE OF THE COST OF SHIPPING THE MACHINE.

THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY MR. HUTCHINGS TO INDICATE THAT THE PRICE QUOTED THEREIN FOR ITEM 4 WAS NOT AS INTENDED. HIS REPORT THE CONTRACTING OFFICER STATES THAT PRIOR TO ISSUING THE INVITATION, IT HAD BEEN ADMINISTRATIVELY DETERMINED THAT BIDS OF $3,000 OR MORE ON ITEM 4 WOULD BE ACCEPTED. THE CONTRACTING OFFICER ALSO STATED THAT SINCE THE BID PRICE OF MR. HUTCHINGS ON ITEM 4 WAS ONLY 23 PERCENT GREATER THAN THE LOW ACCEPTABLE PRICE AS DETERMINED PRIOR TO ADVERTISING, HE HAD NO INFORMATION WHICH WOULD HAVE PLACED HIM ON NOTICE OF AN ERROR IN MR. HUTCHINGS' BID. THE LIST OF BIDS RECEIVED SHOWS THAT THE SEVEN OTHER BIDS ON ITEM 4 RANGED FROM $1,169 TO $188.20. ALTHOUGH THE BID SUBMITTED BY MR. HUTCHINGS WAS CONSIDERABLY HIGHER THAN THE NEXT HIGHEST BID RECEIVED ON ITEM 4, 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 MR. HUTCHINGS. IT SHOULD BE NOTED IN THIS CONNECTION THAT THE ACQUISITION COST OF THE LATHE, DESCRIBED AS "USED, GOOD," IS $60,512. A BID OF $3,700 WOULD NOT SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS. 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 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 MR. HUTCHINGS WAS MADE IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. IT IS THEREFORE CONCLUDED THAT HE IS NOT ENTITLED TO RELIEF FROM HIS OBLIGATION UNDER THE CONTRACT.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT DATED FEBRUARY 15, 1962, ARE RETURNED.