B-153039, DEC. 30, 1963

B-153039: Dec 30, 1963

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER WITH ENCLOSURES. ITEMS 30 AND 31 WERE DESCRIBED AS FOLLOWS: TABLE "ITEM QUANTITY UNIT OF NO. MACHINE IS DISASSEMBLED. TWO OTHER BIDS WERE ALSO RECEIVED FOR THE SAME ITEM IN THE AMOUNTS OF $250 AND $128. THE WEBER COMPANY WAS AWARDED THE CONTRACT FOR THE ITEM IN QUESTION ON OCTOBER 17. ADMINISTRATIVELY IT IS REPORTED THAT THE CONTRACTING OFFICER NOTED THAT THE BID OF $4. 200 WAS EXCESSIVE IN VIEW OF THE FOLLOWING FACTS: THAT THE NEXT HIGHEST BID WAS ONLY $250. THAT THE ITEM WAS ACQUIRED BY THE GOVERNMENT IN 1943 AT A COST OF $2. THAT THE PRESENT APPRAISED VALUE OF THE ITEM WAS ONLY $225. VERIFICATION WAS NEVER ACCOMPLISHED. IT IS FURTHER REPORTED THAT BOTH THE ACTING COUNSEL.

B-153039, DEC. 30, 1963

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER WITH ENCLOSURES, DATED DECEMBER 6, 1963, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY, CAMERON STATION, REQUESTING OUR DECISION AS TO WHETHER THE CHARLES V. WEBER MACHINE SHOP, INC., MAY BE RELIEVED FROM PURCHASING ITEM NO. 31 UNDER CONTRACT NO. DSA 11-S-3236.

ON SEPTEMBER 27, 1963, THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, ISSUED INVITATION FOR BIDS NO. 11-S-64-44 ANNOUNCING THE SALE OF 100 ITEMS OF SURPLUS MACHINE TOOLS AND RELATED SHOP EQUIPMENT. ITEMS 30 AND 31 WERE DESCRIBED AS FOLLOWS:

TABLE

"ITEM QUANTITY UNIT OF

NO. DESCRIPTION AND LOCATION OF PROPERTY (NO. OF UNITS) MEASURE

"30 LATHE TURRET

MFR. GISHOLT MACHINE CO., SER.

NO. 3236-20, SADDLE TYPE, 30 HP,

FIXED CENTER, CAP. 3 1/2 INCH DIA. BAR,

23 INCH SWING, V-BELT DRIVE, MOTOR 220/440

V., A.C., 60 CYC., 3 PH., MACHINE IS

DISASSEMBLED, EST.WT. 12,500 LBS.,

CU.FT. 300.0

COND: USED, GOOD. ACQUISITION COST: $26,572.00

1 EACH

"31 FURNACE, ELECTRIC

METAL HEAT TREATING, MFR. C.I. HAYES,

INC., SER. NO. 7240, YEAR-1943

2,000 DEG. F., OVEN SIZE 30 INCHES BY 15

INCHES BY 9 INCHES, 10 1/2 INCH WALL

THICKNESS, 18 KW, 127 V., 82 AMPS., EST.WT.

2,400 LBS., CU.FT. 240.0.

COND: USED, GOOD. ACQUISITION COST: $2,072.00

1 EACH"

IN RESPONSE TO THE ABOVE INVITATION, THE CHARLES V. WEBER MACHINE COMPANY SUBMITTED A BID OF $4,200 FOR ITEM 31. TWO OTHER BIDS WERE ALSO RECEIVED FOR THE SAME ITEM IN THE AMOUNTS OF $250 AND $128. ON THE BASIS OF THESE BIDS, THE WEBER COMPANY WAS AWARDED THE CONTRACT FOR THE ITEM IN QUESTION ON OCTOBER 17, 1963, THE DATE SCHEDULED FOR OPENING OF BIDS. AFTER RECEIPT OF THE NOTICE OF AWARD, THE CONTRACTOR, BY LETTER DATED OCTOBER 24, 1963, NOTIFIED THE SALES CONTRACTING OFFICER THAT AN ERROR HAD BEEN MADE IN THAT THE COMPANY INTENDED TO BID ON ITEM 30, RATHER THAN ITEM 31. IN ORDER TO SUBSTANTIATE THIS CONTENTION, THE WEBER COMPANY SUBMITTED WORKSHEETS SHOWING THE FIGURE OF $4,200 APPEARING AFTER ITEM 30. FIGURE APPEARS AFTER ITEM 31.

ADMINISTRATIVELY IT IS REPORTED THAT THE CONTRACTING OFFICER NOTED THAT THE BID OF $4,200 WAS EXCESSIVE IN VIEW OF THE FOLLOWING FACTS: THAT THE NEXT HIGHEST BID WAS ONLY $250; THAT THE ITEM WAS ACQUIRED BY THE GOVERNMENT IN 1943 AT A COST OF $2,070; AND THAT THE PRESENT APPRAISED VALUE OF THE ITEM WAS ONLY $225. THE RECORD FURTHER INDICATES THAT WHILE THE CONTRACTING OFFICER MADE A NOTATION ON THE ABSTRACT OF BIDS TO OBTAIN CONFIRMATION OF THE $4,200 FIGURE, FOR REASONS UNKNOWN, VERIFICATION WAS NEVER ACCOMPLISHED. IT IS FURTHER REPORTED THAT BOTH THE ACTING COUNSEL, DEFENSE LOGISTICS SERVICES CENTER AND THE ASSISTANT COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY RECOMMEND THAT THE CONTRACT BE REFORMED BY THE DELETION OF ITEM 31 FROM THE CONTRACT IN QUESTION.

THIS OFFICE HAS GENERALLY TAKEN THE VIEW THAT A WIDE RANGE OF PRICES RECEIVED FOR THE PURCHASE OF GOVERNMENT SURPLUS PROPERTY, DOES NOT, IN AND OF ITSELF, PLACE A CONTRACTING OFFICER ON NOTICE AS TO THE PROBABILITY OF ERROR, AS MAY BE TRUE WHEN THE GOVERNMENT IS ATTEMPTING TO OBTAIN NEW EQUIPMENT OR SUPPLIES. THE RATIONALE BEHIND THIS IS THAT PRICES OFFERED FOR SURPLUS PROPERTY ARE GENERALLY 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 THE BIDDER MIGHT WISH TO TAKE. SEE 16 COMP. GEN. 596; 17 ID. 388; 28 ID. 261, AND ID. 550.

IN THE PRESENT CASE HOWEVER, THE EVIDENCE LEAVES LITTLE DOUBT THAT WEBER ERRED IN BIDDING ON THE WRONG ITEM. ORDINARILY, WHEN A BID HAS BEEN ACCEPTED, THE BIDDER WHO MADE SUCH MISTAKE WILL BE BOUND AND MUST BEAR THE CONSEQUENCES; BUT IF A PARTY RECEIVING A BID KNEW OF OR HAS REASON TO KNOW THAT THE BIDDER MADE A MISTAKE, WHETHER IT IS DUE TO THE AMOUNT OF THE BID OR OTHERWISE, THE CONTRACT IS VOIDABLE BY THE BIDDER. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956. NOR IS AN OFFER THAT CONTAINS AN OBVIOUS MISTAKE SUSCEPTIBLE OF ACCEPTANCE. SEE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK V. SIMON, 151 F.SUPP. 408. THE COURT IN UNIVERSAL TRANSISTOR PRODUCTS CORPORATION V. UNITED STATES, 214 F.SUPP. 486, HELD THAT WHILE THE APPEARANCE OF A LOW BID ALONE IS NOT SUFFICIENT TO JUSTIFY RESCISSION,THE COURT MAY, IN ORDER TO PREVENT UNJUST ENRICHMENT, RELIEVE THE BIDDER OF HIS ERROR WHEN THE OTHER PARTY WAS AWARE OF THE ERROR AND DID NOT BRING IT TO THE BIDDER'S ATTENTION.

THEREFORE, SINCE THE SALES CONTRACTING OFFICER HIMSELF FELT THAT AN ERROR HAD OCCURRED, IT WAS INCUMBENT UPON HIM TO OBTAIN SUCH VERIFICATION AS WAS NECESSARY BEFORE PROCEEDING TO AWARD THE CONTRACT IN QUESTION. SEE B- 145673, DATED MAY 3, 1961, A COPY OF WHICH IS ENCLOSED. IN VIEW THEREOF, WE ARE IN AGREEMENT WITH THE CONTRACTING OFFICER'S RECOMMENDATION THAT THE CONTRACT BE REFORMED BY OMITTING ITEM 31, WITHOUT PENALTY TO THE CONTRACTOR RESULTING THEREFROM.