B-151141, APR. 3, 1963

B-151141, APR. 3, 1963

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MARCH 25, 1963, FROM THE ASSISTANT CHIEF OF NAVAL MATERIAL (FIELD OPERATIONS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE POWER PRESS SALES COMPANY TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. N62776-1582 IS BASED.

THE INSPECTOR OF NAVAL MATERIAL, CONTRACT TERMINATION DEPARTMENT (SALES), BOSTON, MASSACHUSETTS, BY INVITATION NO. B-5-63-62776 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, ONE BUTT WELDER, ITEM 19, THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $11,450. IN RESPONSE THE POWER PRESS SALES COMPANY SUBMITTED A BID OFFERING TO PURCHASE THE WELDER COVERED BY ITEM 19 AT A PRICE OF $1,389. THE BID OF THE POWER PRESS SALES COMPANY WAS ACCEPTED AS TO ITEM 19 ON MARCH 1, 1963.

BY LETTER DATED MARCH 8, 1963, THE POWER PRESS SALES COMPANY ADVISED THAT IT HAD MADE A MISTAKE IN ITS BID IN THAT IT DID NOT INTEND TO BID ON THE MACHINE COVERED BY ITEM 19. THE ITEM FOR WHICH THE BID PRICE OF $1,389 WAS INTENDED WAS NOT IDENTIFIED IN THE LETTER. THE COMPANY REQUESTED THAT THE CONTRACT BE CANCELLED AND INDICATED THAT IF SUCH RELIEF COULD NOT BE GRANTED IT WAS WILLING TO BE PLACED IN DEFAULT AND FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF ITEM 19.

THERE WAS NOTHING ON THE FACE OF THE BID OF THE POWER PRESS SALES COMPANY TO INDICATE THAT THE PRICE QUOTED THEREIN FOR ITEM 19 WAS INTENDED FOR ANOTHER ITEM. THE ABSTRACT OF BIDS SHOWS THAT ONLY ONE OTHER BID IN THE AMOUNT OF $410 WAS RECEIVED ON ITEM 19. ALTHOUGH THE BID SUBMITTED BY THE COMPANY WAS CONSIDERABLY HIGHER THAN THE OTHER BID RECEIVED ON ITEM 19, 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. 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, AFFIRMED, 253 F.2D 956. 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 THE POWER PRESS SALES 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 EDWIN DOUGHERTY AND M. H. OGDEN V. UNITED STATES, 102 CT.CL. 249; AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

ACCORDINGLY, CONTRACT NO. N62776-1582 MAY NOT BE CANCELED. SINCE THE COMPANY HAS 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 19, IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION.