B-152541, NOV. 6, 1963

B-152541: Nov 6, 1963

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WHICH WAS AWARDED TO THIS CONCERN UNDER CONTRACT NO. ITEMS 41 AND 42 WHICH ARE MATERIAL HERE WERE DESCRIBED AS FOLLOWS: CHART QUANTITY UNIT OF (NUMBER OF MEASURE UNITS) "41 PROPELLER ASSY. BIDS WERE OPENED ON JULY 9. IN RESPONSE TO THIS INVITATION SEVEN BIDS WERE RECEIVED FOR ITEM 41 RANGING IN PRICE FROM $389.89 TO $4. THE FAIR MARKET VALUE APPRAISAL OF THIS ITEM WAS $1. IT SHOULD BE NOTED THAT AT LEAST THREE OF THE BIDS FOR ITEM 41 WERE MORE THAN THE ACQUISITION COST FOR THIS ITEM QUOTED IN THE INVITATION AND AT LEAST TWO OF THE BIDS WERE HIGHER IN A CONSIDERABLE DEGREE THAN THE FAIR MARKET VALUE APPRAISAL FOR THIS ITEM. AWARD OF ITEM 41 WAS MADE TO CONTINENTAL AIR PARTS SUPPLY. AS THE HIGH BIDDER AND WE ARE INFORMED THAT NO PROTEST HAS BEEN FILED IN REGARD TO THIS AWARD.

B-152541, NOV. 6, 1963

TO LIEUTENANT GENERAL ANDREW T. MCNAMARA, DIRECTOR, DEFENSE SUPPLY AGENCY:

WE REFER TO A LETTER FROM THE ASSISTANT COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY, DATED SEPTEMBER 19, 1963 REQUESTING OUR DECISION CONCERNING A REQUEST BY CHARLOTTE AIRCRAFT CORPORATION, DELTA AIRBASE, P.O. BOX 9127, CHARLOTTE 5, NORTH CAROLINA, FOR CANCELLATION OF ITEM 42, WHICH WAS AWARDED TO THIS CONCERN UNDER CONTRACT NO. DSA 36-S-1711, DATED JULY 12, 1963.

ON JUNE 14, 1963, THE DEFENSE SURPLUS SALES OFFICE AT KELLY AIR FORCE BASE, TEXAS, ISSUED INVITATION FOR BIDS NO. 36-S-64-1 FOR THE SALE OF 233 ITEMS OF SURPLUS PROPERTY OF VARYING DESCRIPTIONS. ITEMS 41 AND 42 WHICH ARE MATERIAL HERE WERE DESCRIBED AS FOLLOWS:

CHART

QUANTITY UNIT OF

(NUMBER OF MEASURE

UNITS)

"41 PROPELLER ASSY, VARIABLE PITCH,

P/N 4013-43E60-301-6895A8, APPL

TO VARIOUS AIRCRAFT.

WOODEN BOXES

CONDITION: USED, MAY BE INCOMPLETE

FOR MINOR PARTS, APPEARS FAIR,

REPAIRS REQUIRED

TOTAL EST GROSS WT: 300 POUNDS

TOTAL ACQUISITION COST: $3,600.00 2 EA.

"42 PROPELLER ASSY, VARIABLE PITCH

P/N 4013-23E50-505-6359, APPL TO

VARIOUS AIRCRAFT.

WOODEN BOXES

CONDITION: USED, MAY BE INCOMPLETE

FOR MINOR PARTS, APPEARS FAIR,

REPAIRS REQUIRED

TOTAL EST GROSS WT: 300 POUNDS

TOTAL ACQUISITION COST: $3,656.00 2 EA.'

BIDS WERE OPENED ON JULY 9, 1963.

IN RESPONSE TO THIS INVITATION SEVEN BIDS WERE RECEIVED FOR ITEM 41 RANGING IN PRICE FROM $389.89 TO $4,231.88. CHARLOTTE AIRCRAFT CORPORATION SUBMITTED A BID OF $1,832.32 FOR EACH OF THE UNITS DESCRIBED IN ITEM 41 OR $3,664.64. THE FAIR MARKET VALUE APPRAISAL OF THIS ITEM WAS $1,800.00. IT SHOULD BE NOTED THAT AT LEAST THREE OF THE BIDS FOR ITEM 41 WERE MORE THAN THE ACQUISITION COST FOR THIS ITEM QUOTED IN THE INVITATION AND AT LEAST TWO OF THE BIDS WERE HIGHER IN A CONSIDERABLE DEGREE THAN THE FAIR MARKET VALUE APPRAISAL FOR THIS ITEM. AWARD OF ITEM 41 WAS MADE TO CONTINENTAL AIR PARTS SUPPLY, 7732 CLYBOURN AVENUE, SUN VALLEY, CALIFORNIA, AS THE HIGH BIDDER AND WE ARE INFORMED THAT NO PROTEST HAS BEEN FILED IN REGARD TO THIS AWARD.

THREE BIDS WERE RECEIVED FOR ITEM 42 RANGING IN PRICE FROM $10.20 EACH TO $1,832.32 EACH. ITEM 42 WAS AWARDED TO CHARLOTTE AIRCRAFT CORPORATION ON JULY 12, 1963 AS THE HIGH BIDDER ON THIS ITEM. THE FAIR MARKET APPRAISAL OF ITEM 42 AT THE TIME OF AWARD WAS $1,250. IT HAS BEEN ASCERTAINED THAT THE COMPONENT PARTS EVALUATION OF THIS ITEM IS $65; HOWEVER, THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER WAS AWARE OF THIS FACT AT THE TIME OF AWARD. THERE IS NO EVIDENCE THAT THE CONTRACTING OFFICER WAS AWARE AT THE TIME OF AWARD TO CHARLOTTE AIRCRAFT CORPORATION THAT THERE WAS ANY SUBSTANTIAL DIFFERENCE IN THE VALUE BETWEEN ITEM 41 AND ITEM 42.

ON JULY 15, 1963 CHARLOTTE AIRCRAFT CORPORATION NOTIFIED THE CONTRACTING OFFICER OF AN ERROR IN BID AND ON JULY 25, 1963, THIS BIDDER REQUESTED CANCELLATION OF THE AWARD OF ITEM 42. IN THIS REGARD CHARLOTTE ALLEGED THAT A SECRETARY HAD ERRONEOUSLY ENTERED A BID FOR ITEM 42 WHEN NO BID WAS INTENDED AND THAT THIS ERROR WAS NOT DISCOVERED WHEN THE BID WAS SIGNED. WITH ITS LETTER OF JULY 25, 1963 CHARLOTTE AIRCRAFT CORPORATION ALSO SUBMITTED ITS WORKPAPERS IN REGARD TO THE PREPARATION OF ITS BID AND ALSO LETTERS FROM OTHER SUPPLIERS OF ITEMS SIMILAR TO THE UNIT DESCRIBED IN ITEM 42 WHICH INDICATE THAT THIS ITEM CAN BE PROCURED FROM OTHER SOURCES FOR MUCH LESS THAN THE CHARLOTTE BID FOR THIS ITEM. THE CONTRACTING OFFICER STATES HE HAD NO ACTUAL KNOWLEDGE OF ERROR IN THE CHARLOTTE BID AND THAT THE OTHER RESPONSIBLE BIDS FOR THESE ITEMS DID NOT REFLECT THE ACTUAL VALUE OF THE PROPERTY BEING SOLD.

THE QUESTION PRESENTED IS WHETHER IN THESE CIRCUMSTANCES THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF ERROR IN THE CHARLOTTE BID PRIOR TO AWARD. IN THIS REGARD THE DIFFERENCE IN THE BID PRICES FOR ITEM 42 WOULD NOT, IN AND OF ITSELF, BE CONSTRUCTIVE NOTICE OF ERROR IN VIEW OF THE WIDE VARIANCE IN BIDS GENERALLY RECEIVED IN SALES OF GOVERNMENT SURPLUS PROPERTY. PRICES OFFERED TO THE GOVERNMENT FOR ITS SURPLUS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO WHICH THE RESALE WHICH THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689, CITING WITH APPROVAL 16 COMP. GEN. 596, AND 17 ID. 388. SEE ALSO B-147703, DECEMBER 22, 1961. THE FACT THAT THE CHARLOTTE BID FOR ITEM 42 WAS MORE THAN THE ACQUISITION COST OF ITEM 42 QUOTED IN THE INVITATION AND IN EXCESS OF THE MARKET APPRAISAL FOR THIS ITEM ALSO WOULD NOT BE SUFFICIENT TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR HERE. CONSIDERING THE SIMILARITY IN THE DESCRIPTIONS BETWEEN ITEM 41 AND ITEM 42 AND THE SIMILARITY IN THE ACQUISITION COST FOR THESE TWO ITEMS, AND CONSIDERING THE FACT THAT THE BIDS FOR ITEM 41 DID NOT REFLECT THE ACTUAL COST OF THIS ITEM, THE CONTRACTING OFFICER WAS JUSTIFIED IN CONCLUDING THAT THE BIDS FOR ITEM 42 ALSO DID NOT REFLECT THE ACTUAL COST. IN THESE CIRCUMSTANCES VERIFICATION WAS NOT REQUIRED.

WE FIND THAT THE AWARD OF ITEM 42 TO CHARLOTTE AIRCRAFT CORPORATION CONSUMMATED A VALID AND BINDING CONTRACT AND THE REQUEST FOR CANCELLATION IS DENIED.

THE PAPERS WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS ARE RETURNED.