B-155987, FEB. 10, 1965

B-155987, FEB. 10, 1965

TO VICE ADMIRAL JOSEPH M. LYLE, DIRECTOR, DEFENSE SUPPLY AGENCY:

BY LETTER DATED JANUARY 22, 1965, WITH ENCLOSURES (FILE REFERENCE DSAH- G), THE ASSISTANT COUNSEL REQUESTED OUR DECISION AS TO WHETHER THE SURPLUS SALES COMPANY AND/OR MR. JIMMIE H. DAVIS MAY BE RELIEVED FROM ITS OBLIGATIONS UNDER CONTRACT NO. DSA 37-S-4431 BECAUSE OF AN ERROR IN BID UPON WHICH THE CONTRACT WAS BASED.

ON DECEMBER 16, 1964, THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS, REQUESTED SPOT BIDS UNDER INVITATION NO. 37-S-65-43 ON VARIOUS VEHICLES DESCRIBED AS FOLLOWS ON PAGE 7 THEREOF:

"106. TRUCK, CARGO, 1/2 TON, FORD, MODEL F-100, 1959, FSN 2320-542 2527. CLOSED CONVENTIONAL CAB. AUTOMATIC TRANSMISSION. POWERED BY 8 CYLINDER V -8 GASOLINE ENGINE. SERIAL NO. F10C9D27601. (LOC: OUTSIDE STORAGE--- USED, REPAIRS REQUIRED). GOVERNMENT'S OPINION AS TO: COND

POOR TOTAL COST $1,261.00 EST TOTAL WT 3,400 LBS

1 EACH

"107. FORK LIFT, CLARK, MODEL Y150-CRS, 1957, 15,000 LBS CAPACITY. FSN 3930-328-5805. POWERED BY 6 CYLINDER HERCULES GASOLINE ENGINE, MODEL OXLD3ER8, ENGINE NO. 2913786. PNEUMATIC TIRES. SERIAL NO. 711591QL34RS. THIS VEHICLE HAS BEEN WRECKED. (LOC: OUTSIDE STORAGE--- USED, REPAIRS REQUIRED). GOVERNMENT'S OPINION AS TO: COND APPEARS POOR TOTAL COST $7,316.00 EST TOTAL WT 18,600 LBS

1 EACH"

IMMEDIATELY UNDER THE DESCRIPTION OF ITEM 106 APPEARED A PICTURE OF A FORK LIFT TRUCK UNDER WHICH WAS PRINTED "ITEM 107;, ITEM 107 WAS DESCRIBED ON THE RIGHT HAND SIDE OF PAGE 7 AND ITEM 106 WAS THE LAST DESCRIBED ITEM ON THE LEFT HAND SIDE OF PAGE 7. MR. DAVIS SUBMITTED A BID OF $1,009 FOR ITEM 106; THE NEXT HIGHEST BIDS RECEIVED WERE $151.40, $151, $88, AND $85.25. MR. DAVIS' BID WAS WITHIN 80 PERCENT OF THE ACQUISITION COST OF ITEM 106 AND MORE THAN SEVEN TIMES GREATER THAN THE NEXT HIGHEST BID. THE BASIS OF THE BIDS RECEIVED, AWARD WAS MADE TO MR. DAVIS FOR ITEM 106. ON DECEMBER 22, 1964, MR. DAVIS ADVISED THAT HE HAD MADE AN ERROR IN BID IN THAT HE INTENDED TO BID ON ITEM 107, AND THAT HIS ERROR WAS INDUCED BY THE FORMAT OF PAGE 7 OF THE INVITATION.

THE SALES CONTRACTING OFFICER REPORTED THAT THE JUXTAPOSITION OF ITEM 106 AND THE PICTURE OF ITEM 107 IN THE SALES CATALOG WOULD TEND TO CONFUSE A BIDDER AS IT DID HIM WHEN HE CHECKED THE SALES CATALOG FOR THE FIRST TIME. HE ADVISED THAT HE NOTICED THE DIFFERENCE BETWEEN THE HIGH AND SECOND HIGH BID ON ITEM 106 AND THE RELATION OF THE HIGH BID TO THE ITEM'S ACQUISITION COST. IT IS FURTHER STATED THAT HE SHOULD HAVE BEEN ON NOTICE THAT A BID PRICE OF $1,009 ON ITEM 106 WAS FAR IN EXCESS OF NORMAL BIDS RECEIVED ON LIKE ITEMS IN THE PAST. HOWEVER, THE SALES CONTRACTING OFFICER FAILED TO REQUEST VERIFICATION OF MR. DAVIS' BID. THE RECOMMENDATION OF THE SALES CONTRACTING OFFICER THAT THE CONTRACT BE RESCINDED HAS BEEN CONCURRED IN BY THE ASSISTANT COUNSEL, THE COUNSEL FOR THE DEFENSE LOGISTICS SERVICES CENTER, AND THE ACTING CHIEF OF REGIONAL OFFICE 3, DEFENSE LOGISTICS SERVICES CENTER.

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 MR. DAVIS 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 HAD 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, 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.

SINCE THE SALES CONTRACTING OFFICER BELIEVED THAT AN ERROR HAD OCCURRED, IT WAS INCUMBENT UPON HIM TO REQUEST A VERIFICATION OF THE BID FROM MR. DAVIS BEFORE AWARDING THE CONTRACT. SEE B-145673, MAY 3, 1961; B-153039, DECEMBER 30, 1963. ACCORDINGLY, THE CONTRACT MAY BE CANCELED ..END :