B-150435, JAN. 30, 1963

B-150435: Jan 30, 1963

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED DECEMBER 7. IT APPEARS FROM THE REPORT AND RECOMMENDATION OF THE SALES CONTRACTING OFFICER THAT THE BIDS RECEIVED PURSUANT TO SALES INVITATION NO. 25-S-63-28 WERE OPENED ON OCTOBER 4. THAT THE AWARDS WERE MAILED TO THE SUCCESSFUL BIDDERS ON OCTOBER 12. AMONG THE ITEMS INCLUDED IN THE SALES INVITATION WAS ITEM 130. FOUR BIDS WERE RECEIVED FOR ITEM 130. AWARD WAS MADE TO THE PECK IRON AND METAL COMPANY ON OCTOBER 12. STATING THAT HIS INTENDED BID PRICE WAS $0.00026 EACH. HE EXPLAINED THE ERROR BY STATING THAT HE WAS INTERESTED IN THE GROMMETS ONLY FOR THE SALVABLE BRASS IN EACH 100 GROMMETS. WAS ONE-HALF THE PRICE OFFERED BY THE PECK IRON AND METAL COMPANY.

B-150435, JAN. 30, 1963

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 7, 1962, WITH ENCLOSURES, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, SUBMITTING FOR OUR CONSIDERATION THE MATTER OF A MISTAKE IN BID ALLEGED BY THE PECK IRON AND METAL COMPANY, INC., P.O. BOX 100, PORTSMOUTH, VIRGINIA, AFTER THE AWARD OF CONTRACT NO. DSA-25-S 1089, DATED OCTOBER 12, 1962.

IT APPEARS FROM THE REPORT AND RECOMMENDATION OF THE SALES CONTRACTING OFFICER THAT THE BIDS RECEIVED PURSUANT TO SALES INVITATION NO. 25-S-63-28 WERE OPENED ON OCTOBER 4, 1962, AND THAT THE AWARDS WERE MAILED TO THE SUCCESSFUL BIDDERS ON OCTOBER 12, 1962. AMONG THE ITEMS INCLUDED IN THE SALES INVITATION WAS ITEM 130, CONSISTING OF 47,705 GROMMETS, RUBBER AND BRASS,"NET WEIGHT 100 EACH 1/2 LB., " AND HAVING A TOTAL ACQUISITION COST OF $2,385.25. FOUR BIDS WERE RECEIVED FOR ITEM 130, THE HIGHEST BEING THAT SUBMITTED BY PECK IRON AND METAL COMPANY AT THE PRICE OF $0.026 EACH, FOR A TOTAL OF $1,240.33. THE OTHER THREE BIDS RANGED FROM $0.00021 EACH TO $0.013 EACH. AS INDICATED ABOVE, AWARD WAS MADE TO THE PECK IRON AND METAL COMPANY ON OCTOBER 12, 1962.

UNDER DATE OF OCTOBER 18, 1962, THE CONTRACTOR ALLEGED AN ERROR IN BID, STATING THAT HIS INTENDED BID PRICE WAS $0.00026 EACH. HE EXPLAINED THE ERROR BY STATING THAT HE WAS INTERESTED IN THE GROMMETS ONLY FOR THE SALVABLE BRASS IN EACH 100 GROMMETS. THE CONTRACTOR STATED FURTHER THAT HE VALUED THE BRASS AT $0.026 FOR EACH ONE-FOURTH POUND AND HAD, THEREFORE, INTENDED TO BID $0.00026 PER GROMMET, AND IN SUPPORT THEREOF HE SUBMITTED A COPY OF HIS WORK SHEET.

IN HIS REPORT AND RECOMMENDATION THE SALES CONTRACTING OFFICER POINTED OUT THAT THE SECOND HIGH BIDDER'S PRICE OF $0.013 EACH, SUBMITTED BY AIRCRAFT SUPPLIES, WAS ONE-HALF THE PRICE OFFERED BY THE PECK IRON AND METAL COMPANY, THUS TENDING TO INDICATE THAT THAT FIRM WAS ATTEMPTING TO PURCHASE THE MATERIAL FOR RESALE, WHEREAS, THE PECK IRON AND METAL COMPANY WAS INTERESTED IN PURCHASING THE PROPERTY FOR ITS BASIC SCRAP METAL CONTENT. THE SALES CONTRACTING OFFICER THEN EXPRESSED THE OPINION THAT HE SHOULD HAVE BEEN AWARE THAT AN ERROR EXISTED, ETC., AND FOR THE REASONS STATED HE RECOMMENDED THAT THE CONTRACTOR BE ALLOWED TO WITHDRAW HIS BID AND RECEIVE A REFUND OF $1,240.33--- THE PURCHASE PRICE ON ITEM 130. IS REPORTED THAT PAYMENT OF THE BALANCE DUE UNDER THE INDICATED CONTRACT WAS MADE ON OCTOBER 16, 1962.

IN THE ADMINISTRATIVE REPORT OF THE DEFENSE LOGISTICS SERVICE CENTER DATED DECEMBER 3, 1962, IT WAS RECOMMENDED THAT NO RELIEF BE ALLOWED THE CONTRACTOR, IT BEING SUGGESTED THAT A BID REPRESENTING 52 PERCENT OF THE ACQUISITION COST, WHILE SOMEWHAT HIGH, WOULD NOT APPEAR TO BE SO UNREASONABLY HIGH AS IN ITSELF TO CHARGE THE SALES CONTRACTING OFFICER WITH NOTICE OF ERROR, MUCH GREATER DIFFERENCE THAN FIFTY PERCENT BEING COMMON IN THE SALE OF SURPLUS PROPERTY. IT WAS THEN POINTED OUR THAT THERE WERE NO OTHER FACTORS WHICH MIGHT HAVE RAISED A QUESTION AS TO THE CORRECTNESS OF THE BID.

IT SEEMS TO BE CLEAR THAT SUCH ERROR AS MAY HAVE BEEN MADE IN THIS CASE WAS DUE SOLELY TO THE CONTRACTOR'S OWN NEGLIGENCE AND WAS IN NO WAY CONTRIBUTED TO BY THE GOVERNMENT. EVEN IF THE CONTRACTOR'S STATEMENT THAT HE INTENDED TO BID $0.026 FOR EACH ONE-FOURTH POUND OF BRASS BE ACCEPTED AS TRUE, SUCH STATEMENT MUST BE CONSIDERED IN THE LIGHT OF HIS FURTHER STATEMENT THAT HE EXPECTED TO SALVAGE ONE-FOURTH POUND OF BRASS FROM EACH 100 GROMMETS. AN ACCURATE COMPUTATION WOULD HAVE SHOWN THAT ON THE BASIS INDICATED THE RESULTING BID PRICE SHOULD HAVE BEEN $12.40 RATHER THAN THE CONTRACTOR'S BID PRICE OF $1,240.33.

IN A DECISION DATED DECEMBER 16, 1936, A-82112, TO THE SECRETARY OF WAR-- - PUBLISHED AT 16 COMP. GEN. 596--- OUR OFFICE HAD UNDER CONSIDERATION AN ALLEGED MISTAKE IN BID SUBMITTED FOR THE PURCHASE OF WASTE MATERIAL AND SALVAGE PROPERTY SOLD "AS IS" AND "WHERE IS," AS DISTINGUISHED FROM BIDS FOR THE PERFORMANCE OF WORK OR THE FURNISHING OF SUPPLIES, EQUIPMENT, ETC. IN HOLDING THAT THE CONTRACTOR THERE INVOLVED WAS NOT ENTITLED TO RELIEF, THE FORMER ACTING COMPTROLLER GENERAL HELD THAT---

"* * * CONSEQUENTLY THERE MIGHT BE EXPECTED A WIDE RANGE IN THE BIDS WHICH WOULD BE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY WAS TO BE PUT BY THE PARTICULAR BIDDER OR THE CHANCE OF RESALE THEREOF. THERE MERE DIFFERENCE IS THE PRICES BID FOR SUCH PROPERTY WOULD NOT NECESSARILY PUT THE CONTRACTING OFFICER ON NOTICE OF A MISTAKE AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED.'

SEE, ALSO, 17 COMP. GEN. 388; ID. 601; ID. 976; AND 28 ID. 550.

ON THE BASIS OF THE RECORD IN THIS CASE AND IN VIEW OF THE SEVERAL CITED DECISIONS OF OUR OFFICE, IT APPEARS THAT, NOTWITHSTANDING THE OBVIOUS HARDSHIP THAT WILL BE IMPOSED ON THE CONTRACTOR, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT UNDER THE FACTS REPORTED THE SALES CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE NOTICE OF ERROR--- SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 253 F.2D 956, AND THUS THE ACCEPTANCE OF THE CONTRACTOR'S BID CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. IT IS WELL ESTABLISHED THAT THE RIGHTS OF THE UNITED STATES AS FIXED BY THE CONTRACT CANNOT BE CHANGED BY ANY ACTION OF GOVERNMENT OFFICERS EXCEPT FOR ITS OWN BENEFIT OR UPON SOME NEW AND VALUABLE CONSIDERATION PASSING TO THE GOVERNMENT. SEE PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 CT.CL. 327, 335.

FROM THE FACTS REPORTED IN THIS CASE WE FIND NO LEGAL BASIS FOR GRANTING THE CONTRACTOR RELIEF FROM ITS ACCEPTED BID.

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