B-158211, FEB. 1, 1966

B-158211, FEB. 1, 1966

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

BY LETTER DATED DECEMBER 17, 1965, WITH ENCLOSURES (REFERENCE DSAH G), THE ASSISTANT COUNSEL REQUESTED OUR DECISION AS TO WHETHER CONTRACT NO. DSA 37-6021-174 WITH THE CARBONIC SALES COMPANY MAY BE RESCINDED, WITH REFUND OF THE REQUIRED BID DEPOSIT, ON THE BASIS OF A MISTAKE IN BID ALLEGED SUBSEQUENT TO AWARD.

IT IS REPORTED BY THE SALES CONTRACTING OFFICER IN HIS STATEMENT AND RECOMMENDATION THAT BIDS RECEIVED UNDER SEALED BID SALE NO. 37-6021 WERE OPENED ON SEPTEMBER 9, 1965, AND THAT AWARD OF ITEM NO. 120 WAS MADE TO CARBONIC SALES ON SEPTEMBER 15, 1965, AS HIGH BIDDER IN THE AMOUNT OF $2,580, LESS ITS BID DEPOSIT OF $516, LEAVING A BALANCE DUE OF $2,064. ITEM NO. 120 CONSISTED OF ONE LOT OF CYLINDERS AND AIR BOTTLES, INCLUDING 172 EACH "CYLINDER, CARBON DIOXIDE, 1.71 LBS TARE WEIGHT, .50 LBS CAPACITY, * * *.' TWO OTHER BIDS WERE RECEIVED ON THIS ITEM IN THE AMOUNTS OF $78.88 AND $58.88. ON SEPTEMBER 16, 1965, CARBONIC SALES ADVISED THE SALES CONTRACTING OFFICER THAT THE PROPERTY DISPOSAL OFFICER HAD TOLD THEM ORALLY THAT THE 172 CYLINDERS WERE OF 50-POUND CAPACITY AND THAT THEY HAD BID ACCORDINGLY EVEN THOUGH IT WAS SUBSEQUENTLY DISCOVERED THAT THE CYLINDERS WERE 1/2 POUND CARTRIDGES. THE PROPERTY DISPOSAL OFFICER FURNISHED AN EXPLANATION OF THE ORAL ADVICE GIVEN TO CARBONIC SALES AS FOLLOWS:

"IN REFERENCE TO CARBONIC SALES COMPANY, HOUSTON 19 TEXAS, BID FOR LOT 120 ON IFB 37-6021, THE STATEMENTS AS LISTED ARE ESSENTIALLY CORRECT. THE ONLY DIFFERENCE IN FACT CONSISTED OF THE FACT THAT WHEN THE INQUIRY WAS MADE TO ME RELATIVE TO THE CYLINDERS BEING 50 POUNDS OR NOT AS DESCRIBED IN THE CATALOG, I ANSWERED THAT IF THEY WERE SO DESCRIBED THAT THEY WERE AND THE DESCRIPTION WAS GUARANTEED ACCURATE.

"THE BALANCE OF THE FACTS AS REPORTED ARE ACCURATE; HOWEVER, AS STATED IN THE LETTER I HAD NOT IDENTIFIED THE VARIOUS CYLINDERS AND COULD NOT STATE THAT THEY DID OR DID NOT HAVE VALVES.

"I DID NOT VERIFY THE DESCRIPTION AS WRITTEN IN THE CATALOG AGAINST THE VERBAL INTERPRETATION AS QUESTIONED ON THE TELEPHONE AT THE TIME OF THE INQUIRY INASMUCH AS THE CATALOG DESCRIPTION WAS SUBJECT TO THE "GUARANTEED DESCRIPTION" CLAUSE.

"THE CONTENTION THAT THE BUYER WAS BIDDING ON 50 POUND CYLINDERS APPEARS TO BE BORNE OUT BY THE FACT THAT HE DID ASK IF THE CYLINDERS WERE 50 POUND CYLINDERS AS DESCRIBED.'

THEREAFTER, CARBONIC SALES REQUESTED RELIEF FROM THE CONTRACT ON THE BASIS THAT IT HAD BID ON THE BASIS OF 50 POUND CYLINDERS AND NOT ON 1/2 POUND CARTRIDGES AND THAT SUCH MISTAKE RESULTED FROM THE ERRONEOUS ADVICE GIVEN BY THE PROPERTY DISPOSAL OFFICER.

THE SALES CONTRACTING OFFICER REPORTS THAT THE $58.88 BID WAS A SCRAP BID AND THAT THE $78.88 PROBABLY WAS A TOKEN BID. HE FURTHER REPORTS THAT THE CARBONIC SALES BID WAS REGARDED AS A LEGITIMATE BID SINCE THE BIDDER IS A RECOGNIZED USER OF CYLINDERS; THAT THE BID ITSELF DID NOT INDICATE ANY POSSIBLE ERROR SO AS TO REQUIRE VERIFICATION THEREOF, AND THAT THE WIDE VARIANCE OF BIDS WAS NOT CONSIDERED UNUSUAL IN THE SALE OF USABLE PROPERTY. HOWEVER, THE SALES CONTRACTING OFFICER REPORTS, AFTER CONSIDERING THE EVIDENCE OF ERROR, THAT CARBONIC SALES DID MISINTERPRET THE CAPACITY OF THE 172 CYLINDERS AND POSSIBLY WAS MISLED BY THE PROPERTY DISPOSAL OFFICER.

WE HAVE BEEN FURNISHED A SUPPLEMENTAL REPORT DATED JANUARY 18, 1966, FROM THE DISPOSAL AGENCY WHEREIN THE SALES CONTRACTING OFFICER STATES:

"PRIOR TO SALE, THE CURRENT MARKET APPRAISAL WAS ESTABLISHED FOR ITEM 120 AT $500.00. THE SALES CONTRACTING OFFICER EXPECTED RETURNS FROM $600.00 TO $800.00 AS BEING A FAIR APPRAISAL FOR THIS QUANTITY OF CYLINDERS. AFTER THE COMPLAINT WAS RECEIVED FROM CARBONIC SALES, THE SALES CONTRACTING OFFICER REQUESTED A RECHECK OF THE CURRENT MARKET APPRAISAL AND RECEIVED A CURRENT MARKET APPRAISAL OF $650.00 FROM THE PROPERTY SALES SPECIALIST.'

THE PRIMARY QUESTION HERE IS WHETHER THE ACCEPTANCE OF CARBONIC SALES' BID UNDER SUCH CIRCUMSTANCES CONSUMMATED A VALID CONTRACT. THE EVIDENCE OF RECORD HERE LEAVES LITTLE DOUBT THAT THE SALES CONTRACTING OFFICER HAD CONSTRUCTIVE, IF NOT ACTUAL, NOTICE OF ERROR. THE FACT THAT CARBONIC SALES' BID EXCEEDED THE MARKET APPRAISAL BY A MOST SUBSTANTIAL AMOUNT, TOGETHER WITH THE WIDE VARIANCE BETWEEN SUCH BID AND THE OTHERS SUBMITTED, SHOULD HAVE IMPELLED THE SALES CONTRACTING OFFICER TO REQUEST VERIFICATION OF THE BID. THEREFORE, THE ACCEPTANCE OF THE BID MAY NOT BE HELD TO HAVE RESULTED IN A VALID CONTRACT. SEE B 154913, AUGUST 25, 1964; B-153039, DECEMBER 30, 1963, AND THE CASES THERE CITED.

ACCORDINGLY, CONTRACT NO. DSA 37-6021-174 MAY BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR.