B-154259, JUN. 8, 1964

B-154259, JUN. 8, 1964

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO YOUR ASSISTANT COUNSEL'S LETTER OF MAY 21, 1964, AND ENCLOSURES, FILE DSAH-G, REQUESTING A DECISION ON WHETHER THE REQUEST OF SOUTHEASTERN EQUIPMENT COMPANY, INC., AUGUSTA, GEORGIA, FOR RELIEF UNDER SALES CONTRACT NO. DSA-16-S-3963 MAY BE GRANTED.

THE DEFENSE SURPLUS SALES OFFICE, NEWPORT, RHODE ISLAND, BY INVITATION NO. 16-S-64-59 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, A USED TRUCK TRACTOR, ITEM 63, WHICH WAS DESCRIBED AS BEING IN POOR CONDITION AND REQUIRING REPAIRS. THE ORIGINAL ACQUISITION COST OF THE ITEM WAS SHOWN AS $13,058. IN RESPONSE SOUTHEASTERN EQUIPMENT COMPANY, INC., SUBMITTED A BID OFFERING TO PURCHASE THE TRUCK TRACTOR LISTED UNDER ITEM 63 AT A PRICE OF $1,511.11.

IN HER REPORT, THE CONTRACTING OFFICER STATES THAT DURING THE EVALUATION OF THE 13 BIDS RECEIVED ON THE ITEM IT WAS NOTED THAT THE HIGH BID SIGNED BY MR. JOHN S. SMITH AS PRESIDENT OF SOUTHEASTERN EQUIPMENT COMPANY, INC., WAS CONSIDERABLY HIGHER THAN THE NEXT HIGH BID OF $550, AS WELL AS BEING IN EXCESS OF THE MARKET APPRAISAL OF $950. A TELEGRAM REQUESTING CONFIRMATION OF THE BID OF $1,511.11 WAS DISPATCHED TO MR. SMITH ON MARCH 3, 1964. ON MARCH 4 MR. SMITH CALLED THE DEFENSE SURPLUS SALES OFFICE AND AN ENSUING CONVERSATION WITH A MEMBER OF THAT OFFICE IS REPORTED AS FOLLOWS:

"1. I ASKED MR. SMITH TO CONFIRM HIS BID OF $1511.11 IN WRITING ON ITEM 63, IFB 16-S-64-59.

"2. HE SURMISED THAT HE WAS TOO HIGH AS HE REMARKED "MY WRITING IS QUITE GOOD. WHAT'S THE MATTER? HAVE I BID TOO SUCH? " I INFORMED HIM THAT HIS BID WAS CONSIDERABLY HIGHER THAN THE NEXT HIGH BID THAT WAS SUBMITTED AND THAT IS ONE OF THE REASONS WHY WE DO VERIFY OR CONFIRM A BID.

"3. HE SAID "I MUST HAVE BID TOO HIGH.' BUT HE DID SAY THAT HE WOULD CONFIRM HIS BID OF $1511.11 AS SUBMITTED IN WRITING ON THIS DAY.'

PURSUANT TO SUCH CONVERSATION AS CONVEYED BY THE RECIPIENT TO THE CONTRACTING OFFICER, WHICH SHE UNDERSTOOD AND REPORTS AS "HE VERBALLY CONFIRMED HIS BID AND SAID HE WOULD CONFIRM IT IN WRITING," AWARD WAS MADE TO SOUTHEASTERN EQUIPMENT COMPANY, INC., ON THAT DAY. HOWEVER, INSTEAD OF SUPPLYING THE WRITTEN CONFIRMATION AS PROMISED, MR. SMITH DISPATCHED THE FOLLOWING LETTER ON MARCH 5 TO THE CONTRACTING OFFICER:

"REFERENCE TO YOUR TELEGRAM REGARDING OUR BID ON ITEM NO. 63, SALE 16-S- 64-59. I BELIEVE OUR BID ACCORDING TO OUR PHONE CONVERSATION SHOWS $1511.11. UPON LOOKING AT OUR CATALOG, WE FIND THAT WE SHOULD HAVE BID $511.11 AND HAVE THEREFORE MADE A SERIOUS ERROR IN THIS CASE.

"WE WOULD APPRECIATE YOUR REJECTING OUR BID COMPLETELY OR ELSE REDUCING IT TO THE AMOUNT WE INTENDED.'

WHEN THE CONTRACTING OFFICER RECEIVED THE LETTER ON MARCH 6 SHE CALLED MR. SMITH'S OFFICE AND IN HIS ABSENCE ADVISED HIS SECRETARY THAT A CONTRACT HAD COME INTO EFFECT BASED ON MR. SMITH'S VERBAL CONFIRMATION OF HIS BID AND THE ACCEPTANCE THEREOF, AND EXPLAINED THE REQUIREMENTS FOR PROCESSING AN ALLEGED MISTAKE IN BID. BY LETTER DATED MARCH 9 MR. SMITH ADVISED THE CONTRACTING OFFICER AS FOLLOWS:

"I AM ENCLOSING WORK SHEETS ON OUR BID ON SALES INVITATION 16-S-64 59 SHOWING OUR ERROR IN BIDDING ON ITEM 63 WHEREAS THE BID SHOULD HAVE BEEN SPLIT BETWEEN ITEMS 63 AND 37. INSTEAD OF SPLITTING OUR BID BETWEEN THE TWO ITEMS, WE SHOWED THE ENTIRE AMOUNT ON THE ONE ITEM THUS GREATLY INFLATING OUR BID ON ITEM 63.

"WE ARE RETURNING OUR AWARD ON THIS ITEM AS WE ARE IN HOPES THAT YOU WILL THROW OUT OUR BID ON THIS SALE COMPLETELY. PLEASE CONSIDER THESE FACTS AND LET US KNOW YOUR DECISION.'

THE "WORKSHEETS" SUBMITTED BY MR. SMITH APPEAR TO BE COPIES OF PAGES 29 AND 21 OF THE INVITATION AND CONTAIN SOME HANDWRITTEN NOTATIONS AS TO CONDITION OPPOSITE THE DESCRIPTIONS OF ITEM 63 AND ITEM 37 (A FORK LIFT TRUCK), TOGETHER WITH THE INSERTED AMOUNT OF $511.11 FOR ITEM 63 AND THE EVEN FIGURE OF $1,000 FOR ITEM 37.

ON THE RECORD BEFORE US WE CANNOT AGREE THAT THE EVIDENCE JUSTIFIES RESCISSION OF THE CONTRACT OF SALE. THE RESPONSIBILITY FOR PREPARATION OF THE BID SUBMITTED WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120, 163. EVEN ASSUMING THAT MR. SMITH ORIGINALLY INTENDED TO BID ONLY $511.11 FOR ITEM 63, THE QUESTION IS WHETHER THE ACCEPTANCE OF THE BID EFFECTED A VALID AND BINDING CONTRACT. UNLESS THE CONTRACTING OFFICER AT THE TIME WAS ON NOTICE OF THE ERROR, IT WAS ENTIRELY UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, WOULD NOT ENTITLE THE BIDDER TO RELIEF FROM HIS OBLIGATION UNDER THE CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249; AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

WE FIND NOTHING IN THE PRESENT RECORD TO INDICATE THAT THE CONTRACTING OFFICER'S ACCEPTANCE OF THE BID WAS OTHER THAN IN GOOD FAITH AND PURSUANT TO A REASONABLE DISCHARGE OF HER RESPONSIBILITIES IN THE MATTER. EVALUATING THE BIDS ON ITEM 63 SHE HAD DOUBT AS TO THE CORRECTNESS OF THE PRICE QUOTED BY MR. SMITH AND, THEREFORE, REQUESTED HIM BY TELEGRAM TO VERIFY HIS BID. ALTHOUGH MR. SMITH'S RETURN TELEPHONE CALL WAS RECEIVED BY ANOTHER MEMBER OF THE SALES OFFICE INSTEAD OF THE CONTRACTING OFFICER, SHE APPARENTLY WAS IN A POSITION TO OBTAIN CONSIDERABLY MORE INFORMATION CONCERNING THE CALL FROM THE PARTY WHO RECEIVED IT THAN THAT WHICH IS SHOWN IN THE MEMORANDUM MADE THEREOF, AND HER REPORT CONTAINS THE DEFINITE STATEMENT THAT MR. SMITH VERBALLY CONFIRMED HIS BID. IT IS NOTED IN THIS RESPECT THAT SHE ADVISED MR. SMITH'S SECRETARY THAT THE CONTRACT WAS MADE ON THAT BASIS AND IN HIS SUBSEQUENT COMMUNICATION MR. SMITH DID NOT DISPUTE THE POINT. AFTER THE CONTRACTING OFFICER RECEIVED INFORMATION THAT MR. SMITH HAD VERBALLY CONFIRMED HIS BID SHE WAS UNDER NO OBLIGATION TO WITHHOLD THE AWARDING OF THE CONTRACT PENDING ARRIVAL OF THE PROMISED ADDITIONAL CONFIRMATION IN WRITING OR TO MAKE FURTHER INQUIRY AS TO THE CORRECTNESS OF THE BID. SEE CARNEGIE STEEL CO. V. CONNELLY, 97 A. 774; SHRIMPTON MFG. CO. V. BRIN, 125 S.W. 942; AND ALABAMA SHIRT AND TROUSER CO. V. UNITED STATES, 121 CT.CL. 313. IN VIEW OF THE FACT THAT THE BID PRICE OF $1,511.11 ON ITEM 63 IS LESS THAN 12 PERCENT OF THE ACQUISITION COST OF THE ITEM, IT DOES NOT APPEAR THAT IT SHOULD NECESSARILY BE CONSIDERED EXCESSIVE, EVEN THOUGH IT MAY BE HIGHER THAN A REPORTED "MARKET APPRAISAL.'

ON THE RECORD, AND FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR RELEASING SOUTHEASTERN EQUIPMENT COMPANY, INC., FROM ITS OBLIGATION UNDER THE CONTRACT, WHICH RESULTED FROM ACCEPTANCE OF ITS BID.

THE PAPERS TRANSMITTED WITH THE ASSISTANT COUNSEL'S LETTER OF MAY 21 ARE RETURNED.