B-151079, MAR. 28, 1963

B-151079: Mar 28, 1963

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 MARCH 12. THE UNIT ACQUISITION COST OF WHICH WAS STATED TO BE $75. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEMS 4 AND 7 ON OCTOBER 24. A UNIT PRICE OF ".787" AND A TOTAL PRICE OF "$3305.40" FOR A QUANTITY OF 420 IS SHOWN ON THE SUMMARY BID SHEET FOR ITEM 4. THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY AUTOMOTIVE TIRE SERVICE. TO INDICATE THAT THE PRICE QUOTED FOR ITEM 4 WAS NOT AS INTENDED. WAS CONSIDERABLY HIGHER THAN THE NEXT HIGHEST BID RECEIVED. 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 CORPORATION.

B-151079, MAR. 28, 1963

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO YOUR ASSISTANT COUNSEL'S LETTER OF MARCH 12, 1963, REQUESTING A DECISION AS TO WHETHER THE REQUEST OF AUTOMOTIVE TIRE SERVICE, INC., FOR RELIEF UNDER SALES CONTRACT NO. DSA-41-S-556 MAY BE GRANTED.

THE DEFENSE SURPLUS SALES OFFICE, UTAH GENERAL DEPOT, OGDEN, UTAH, BY INVITATION 41-S-63-33 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, 420 AIRCRAFT TIRES, ITEM 4, THE UNIT ACQUISITION COST OF WHICH WAS STATED TO BE $75. IN RESPONSE AUTOMOTIVE TIRE SERVICE, INC., BOSTON, MASSACHUSETTS, SUBMITTED A BID DATED OCTOBER 19, 1962, OFFERING TO PURCHASE, AMONG OTHERS, 420 TIRES COVERED BY ITEM 4 AT A UNIT PRICE OF $7.87 EACH OR FOR A TOTAL PRICE OF $3,305.40. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEMS 4 AND 7 ON OCTOBER 24, 1962.

BY LETTER DATED OCTOBER 26, 1962, AUTOMOTIVE TIRE SERVICE, INC., ADVISED THAT A MISTAKE HAD BEEN MADE IN ITS BID IN THAT IT INTENDED TO BID $0.787 INSTEAD OF $7.87 EACH FOR ITEM 4. THE CORPORATION EXPLAINED THE ERROR BY STATING THAT AS A RESULT OF AN INADVERTENT SECRETARIAL ERROR A TRANSPORTATION OF A DECIMAL POINT RESULTED IN COMPUTATIONS BEING EFFECTED AT $7.87 RATHER THAN $0.787. THE CORPORATION REQUESTED THAT THE UNIT PRICE FOR ITEM 4 BE CORRECTED TO READ $0.787 EACH OR, IN THE ALTERNATIVE, THAT ITEM 4 OF THE CONTRACT BE CANCELED. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED ITS WORKSHEETS, WHICH APPEAR TO BE A COPY OF THE SUMMARY BID SHEET AND A COPY OF THE DESCRIPTION SHEET COVERING ITEM 4. A UNIT PRICE OF ".787" AND A TOTAL PRICE OF "$3305.40" FOR A QUANTITY OF 420 IS SHOWN ON THE SUMMARY BID SHEET FOR ITEM 4. ON THE DESCRIPTION SHEET COVERING ITEM 4 APPEAR THE FOLLOWING FIGURES ".787" AND "3305.40.'

THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY AUTOMOTIVE TIRE SERVICE, INC., TO INDICATE THAT THE PRICE QUOTED FOR ITEM 4 WAS NOT AS INTENDED. THE ABSTRACT OF BIDS SHOWS THAT THREE OF THE FOUR OTHER BIDDERS ON THIS ITEM QUOTED UNIT PRICES RANGING FROM $2.06 TO $0.50 AND THAT THE FOURTH BIDDER QUOTED A UNIT PRICE OF $4.50 FOR A QUANTITY OF 4 TIRES. ALTHOUGH THE BID SUBMITTED BY AUTOMOTIVE TIRE SERVICE, INC., WAS CONSIDERABLY HIGHER THAN THE NEXT HIGHEST BID RECEIVED, 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 CORPORATION. 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, AFFIRMED 253 F.2D 956, 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 PAGE688, 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 AUTOMOTIVE TIRE SERVICE, INC., 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 THE CORPORATION IS NOT ENTITLED TO RELIEF FROM ITS OBLIGATION UNDER THE CONTRACT.