B-156514, AUG. 17, 1965

B-156514: Aug 17, 1965

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WE HAVE BEEN FURNISHED WITH A REPORT ON THE REQUEST BY BERG METALS COMPANY FOR CANCELLATION OF AN AWARD FOR ITEM NO. 15 UNDER SALES INVITATION NO. THE ABOVE INVITATION WAS ISSUED BY REYNOLDS ELECTRICAL AND ENGINEERING COMPANY. ANY SIGNIFICANT PROBLEMS ARISING IN CONNECTION WITH THE SALE ARE REFERRED TO AEC FOR ADVICE AND GUIDANCE. AN ANNOUNCEMENT OF THE SALE WAS MAILED TO PROSPECTIVE BIDDERS ON DECEMBER 28. AN INVITATION WAS MAILED TO BERG AT THEIR REQUEST. THIS LETTER STATES: "WE ARE VERY SORRY TO INFORM YOU THAT UPON RECHECKING OUR BID NO. WE ARE HEREWITH REQUESTING CANCELLATION OF OUR BID ON ITEM 15. WE BID ON NET TON AND THE BID SAYS FAINTLY PRINTED EACH WHICH WAS OVERLOOKED.'. REYNOLDS ADVISED BERG THAT THEY WERE THE SUCCESSFUL BIDDER ON ITEMS NO. 7 AND 15.

B-156514, AUG. 17, 1965

TO THE HONORABLE GLENN T. SEABORG, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

BY LETTER DATED JULY 13, 1965, FROM YOUR GENERAL MANAGER, WE HAVE BEEN FURNISHED WITH A REPORT ON THE REQUEST BY BERG METALS COMPANY FOR CANCELLATION OF AN AWARD FOR ITEM NO. 15 UNDER SALES INVITATION NO. S 65- 1.

THE ABOVE INVITATION WAS ISSUED BY REYNOLDS ELECTRICAL AND ENGINEERING COMPANY, INC., AS CONTRACTOR FOR THE ATOMIC ENERGY COMMISSION UNDER CONTRACT NO. AT (29-2/-162. UNDER THIS AGREEMENT, REYNOLDS PERFORMS A VARIETY OF FUNCTIONS FOR THE AEC AT THEIR NEVADA TEST SITE INCLUDING PROCUREMENT AND DISPOSAL SERVICES. IN LINE WITH THIS AGREEMENT THE PRACTICE HAS BEEN FOR REYNOLDS TO HOLD SUCH SALES AS APPEAR NECESSARY ONLY AFTER CONCURRENCE BY AEC. ANY SIGNIFICANT PROBLEMS ARISING IN CONNECTION WITH THE SALE ARE REFERRED TO AEC FOR ADVICE AND GUIDANCE.

AN ANNOUNCEMENT OF THE SALE WAS MAILED TO PROSPECTIVE BIDDERS ON DECEMBER 28, 1964. ON JANUARY 18, 1965, AN INVITATION WAS MAILED TO BERG AT THEIR REQUEST. AMONG OTHER THINGS THE SOLICITATION (ARTICLE 8) PROVIDES THAT IF THE PURCHASER BREACHES HIS CONTRACT BY NOT REMOVING THE PROPERTY OR, IF HE FAILS TO MAKE PAYMENT, THE SELLER (I.E. THE GOVERNMENT) SHALL BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES 20 PERCENT OF THE PURCHASE PRICE.

ON JANUARY 29, 1965, THE DAY FOLLOWING THE SCHEDULED OPENING, BERG WROTE TO REYNOLDS ALLEGING AN ERROR HAD BEEN MADE IN ITS BID ON ITEM NO. 15. THIS LETTER STATES:

"WE ARE VERY SORRY TO INFORM YOU THAT UPON RECHECKING OUR BID NO. S 65-1, WHO MADE AN ERROR ON BIDDING ON ITEM 15 DUE TO THE POORLY PRINTED WORK SHEET. THEREFORE, WE ARE HEREWITH REQUESTING CANCELLATION OF OUR BID ON ITEM 15. WE BID ON NET TON AND THE BID SAYS FAINTLY PRINTED EACH WHICH WAS OVERLOOKED.'

BY LETTER DATED FEBRUARY 4, 1965, REYNOLDS ADVISED BERG THAT THEY WERE THE SUCCESSFUL BIDDER ON ITEMS NO. 7 AND 15. THERE WAS INCLUDED THEREWITH A CHECK IN THE AMOUNT OF $3,203.29 REPRESENTING THE DIFFERENCE BETWEEN THE AMOUNT OF THE BID DEPOSIT OF $7,258.63 AND THE TOTAL FOR THE TWO ITEMS AWARDED TO BERG OF $4,055.34.

ON FEBRUARY 8, 1965, BERG AGAIN WROTE REYNOLDS ASKING FOR CANCELLATION OF THE AWARD AS TO ITEM NO. 15. THE FOLLOWING IS AN EXCERPT FROM THAT LETTER:

"ITEM NO. 15 WAS DESIGNATED BY "EACH" AND OUR PRICE WAS SUPPOSEDLY THE PRICE FOR "NET TONS.' WE HAVE BOUGHT HUNDREDS OF TONS OF CYLINDERS PRIOR TO THIS BID AND HAVE NEVER BOUGHT CYLINDERS BY ,EACH.'

"THEY WERE IDENTIFIED AS SCRAP WHEN INDICATED IN THE BID AS "/FAILED TO PASS HYDROSTATIC TEST)" AND ON YOUR SUCCESSFUL BIDDERS SHEET DESIGNATED AS "/REJECTED).' THEY CAN BE USED FOR SCRAP IRON ONLY.'

THE GENERAL MANAGER'S LETTER STATES:

"REYNOLDS AND THE AEC HAVE MADE IT ABUNDANTLY CLEAR TO BERG, AT ALL STAGES OF THE CONTROVERSY, THAT THE DENIAL OF ITS REQUEST WAS BASED ON THE INSUFFICIENCY OF THE "EVIDENCE" PRESENTED AND THAT WE WOULD RECEIVE AND CONSIDER ANY FURTHER INFORMATION SUBMITTED BY BERG * * *. THE INFORMATION ALLEGEDLY INDICATIVE OF ERROR WHICH BERG HAS PRODUCED TO DATE CONSISTS OF THE FAINT PRINTING ARGUMENT (ONCE ABANDONED, THIS CONTENTION APPEARS TO HAVE BEEN REASSERTED IN BERG'S LETTER OF APRIL 6 TO YOU), THE LONGHAND WORK PAPERS, THE BID FORM WORK PAPERS AND VARIOUS GENERALIZED ARGUMENTS SUCH AS THAT THIS IS SCRAP MATERIAL AND SCRAP IS ALWAYS BID BY THE TON. AS TO THE FAINT PRINTING ARGUMENT, WE BELIEVE IT IS ANSWERED BY LOOKING AT THE COPY OF THE INVITATION INCLUDED AS EXHIBIT 1 AND THE BID SUBMITTED, EXHIBIT 2. FURTHERMORE, THE COPY OF BERG'S WORKING FORM INCLUDED WITH EXHIBIT 7, WHICH IS A COPY FOUR OR FIVE TIMES REMOVED FROM ITS ORIGINAL, IS SUFFICIENTLY LEGIBLE TO RENDER THIS ARGUMENT OF NO EFFECT, AS MR. TANENBERG ORALLY AGREED DURING THE MEETING OF FEBRUARY 16. THE LONGHAND WORK PAPERS IN OUR OPINION MERELY DEMONSTRATE THAT THE BID ITEMS CALLING FOR A PER-TON BID WERE LARGELY COMPUTED THAT WAY BY BERG. ON THE OTHER HAND, CERTAIN PIPE AND BATTERIES ARE LISTED IN THE WORK PAPERS BY THE NUMBERS OF EACH. WE HAVE DISCOVERED NOTHING IN THE WORK PAPERS SPECIFICALLY DIRECTED TO ITEM 15.

"THE WORKING BID FORM CONTAINS SOME SIGNIFICANT INFORMATION ON ITEM 15, INCLUDING THE NOTATION ,GOOD FOR RESALE" (NOT "GOOD USABLE," AS BERG'S APRIL 6 LETTER STATES). THIS NOTATION CAN ONLY WORK TO BERG'S DETRIMENT, HOWEVER, IN ITS ALLEGATION OF ERROR, AND IS NOT EXPLAINED AWAY MERELY BY SAYING IT IS A NOTATION FOR USE IN BIDDING. ITS PLAIN IMPORT, TOGETHER WITH THE OTHER FACTORS INVOLVED, IS THAT BERG VIEWED THE ITEM 15 MATERIAL AS HAVING MORE VALUE THAN MERE SCRAP.

"THE ARGUMENTS THAT SCRAP IS ALWAYS BID BY "TON" OR "LOT," REGARDLESS OF THE DESCRIPTION, DOES NOT ESTABLISH THAT A GOOD FAITH ERROR WAS MADE WHERE THE INVITATION FORM PLAINLY READS "EA" AND DOES NOT IDENTIFY THE MATERIAL AS SCRAP. PERSONNEL OF REYNOLDS AND AEC FAMILIAR WITH THE SALE STATE THAT NOT ONLY WAS THE MATERIAL NOT IDENTIFIED AS SCRAP, BUT THAT IT DOES NOT FALL IN THE SCRAP CATEGORY. THE ITEMS OF THE INVITATION WHICH DO FALL IN THAT CATEGORY ARE SO IDENTIFIED AND, AS BERG STATES IS PROPER PRACTICE, ALL CALL FOR PER TON BIDS. IN THIS CONNECTION, SEE ALSO THE ANNOUNCEMENT OF SALE INCLUDED WITH EXHIBIT 1, WHICH INDICATES THAT CERTAIN MATERIAL IS SCRAP AND THAT OTHER MATERIAL, INCLUDING THE CYLINDERS IN QUESTION, ARE NOT SCRAP.

"IT SHOULD BE NOTED, WITH RESPECT TO THE ALLEGATION OF ERROR, THAT THE MATERIAL IN ITEM 15, WHICH WAS AVAILABLE FOR BERG'S INSPECTION DURING ITS INSPECTION TOUR OF THE SITE, CONSISTS OF TWO CYLINDERS OF APPROXIMATELY 180 POUNDS EACH AND 124 CYLINDERS OF AN AVERAGE 118 POUNDS EACH. THE TOTAL IS APPROXIMATELY SEVEN TONS. IF THE BERG REPRESENTATIVE WHO MADE THE SITE INSPECTION SAW ITEM 15, IT IS DIFFICULT TO UNDERSTAND HOW SEVEN TONS OF MATERIAL COULD BE MISTAKEN FOR 126 TONS. ON THE OTHER HAND, 126 TONS OF CYLINDERS OF AN AVERAGE WEIGHT PER CYLINDER OF 118 POUNDS WOULD BE 2,142 CYLINDERS, WHICH EVEN A CURSORY CHECK OF ITEM 15 WOULD REVEAL TO BE AN ERRONEOUSLY HIGH ESTIMATE. * * *.'

ALTHOUGH BERG HAS REPEATEDLY MAINTAINED THAT AN ERROR HAD BEEN MADE ON ITEM NO. 15, WE AGREE THAT THE RECORD IS OTHERWISE COMPLETELY DEVOID OF ANY EVIDENCE WHICH SUBSTANTIATES THIS ALLEGATION. STATEMENTS TO THE EFFECT THAT BERG HAS PURCHASED HUNDREDS OF TONS OF CYLINDERS AND ALWAYS ON A PER-TON BASIS DOES NOT, OF ITSELF, ESTABLISH THAT AN ERROR OCCURRED. MOREOVER, AS PREVIOUSLY INDICATED, PERSONNEL FAMILIAR WITH THE SALE STATE THAT NOT ONLY WAS THE MATERIAL NOT IDENTIFIED AS SCRAP, BUT THAT IT DOES NOT FALL IN THE SCRAP CATEGORY. A MERE ALLEGATION OF ERROR UNSUPPORTED BY ANY EVIDENCE IS NOT SUFFICIENT TO FURNISH A BASIS FOR WITHDRAWAL OF A BID. UNITED STATES V. LIPMAN, 122 F.SUPP. 284; REFINING ASSOCIATES, INC. V. UNITED STATES, 124 CT.CL. 115; 19 COMP. GEN. 761; 7 ID. 514.

ON THE BASIS OF THE FACTS PRESENTED WE AGREE WITH THE GENERAL MANAGER THAT THERE IS NO LEGAL BASIS FOR RELIEVING BERG FROM LIABILITY UNDER ITS ACCEPTED BID. BERG STATES IN ITS LETTER OF APRIL 6, 1965, THAT IF THE AWARD ON ITEM NO. 15 CANNOT BE CANCELLED IN ITS ENTIRETY, IT DOES NOT DESIRE TO TAKE POSSESSION OF THE MATERIAL, BUT RATHER WISHES TO FORFEIT 20 PERCENT OF THE PURCHASE PRICE AS LIQUIDATED DAMAGES, AND TO HAVE THE BALANCE REFUNDED. UNDER ARTICLE 8 (DEFAULT) OF THE CONTRACT BERG MAY FOREGO THE MATERIAL, FORFEIT 20 PERCENT OF THE PURCHASE PRICE AS LIQUIDATED DAMAGES, AND HAVE THE BALANCE OF THE PURCHASE PRICE REFUNDED. 28 COMP. GEN. 550.