B-158419, FEB. 9, 1966

B-158419: Feb 9, 1966

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THE AWARD WAS MADE TO THE ANDERSON BROTHERS TRUCK AND EQUIPMENT COMPANY. WHICH ARE INCLUDED IN THE FILE. THE GENERAL PRINCIPLES APPLICABLE TO THIS CASE WERE SET OUT IN SALIGMAN V. WHERE IT WAS HELD THAT IF THE PURCHASER MADE A UNILATERAL MISTAKE IN BID. WAS SUBSEQUENTLY AWARDED THE CONTRACT. - UNLESS THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE ERROR. IN THAT CASE THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS DEEMED NOT TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. THE CONTRACTOR'S BID OF $2.56 WAS TWICE AS MUCH AS THE SECOND HIGH BID OF $1.28.

B-158419, FEB. 9, 1966

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

BY LETTER DATED JANUARY 24, 1966, WITH ENCLOSURES (YOUR REFERENCE DSAH- G), THE ASSISTANT COUNSEL REQUESTED OUR DECISION AS TO WHETHER THE DEFENSE LOGISTICS SERVICE CENTER MAY RESCIND THE AWARD OF ITEM NO. 8 OF SURPLUS SALES CONTRACT NO. DSA 41-6042-054 BECAUSE OF AN ALLEGED MISTAKE IN BID AFTER AWARD. THE AWARD WAS MADE TO THE ANDERSON BROTHERS TRUCK AND EQUIPMENT COMPANY, 2640 HIGHWAY 99 NORTH, EUGENE, OREGON, ON DECEMBER 3, 1965, AS A RESULT OF ITS RESPONSIVE HIGH BID TO THE SUBJECT ITEM CONTAINED IN INVITATION FOR BIDS NO. 41-6042.

MR. A. I. ANDERSON, PRESIDENT OF THE ANDERSON BROTHERS TRUCK AND EQUIPMENT COMPANY, BY LETTER DATED DECEMBER 10, 1965, INFORMED THE CONTRACTING OFFICER THAT HIS BID OF $2.56 HAD BEEN ERRONEOUSLY SUBMITTED ON ITEM NO. 8, AND THAT, IN FACT, IT HAD BEEN INTENDED FOR ITEM NO. 3. SUPPORT OF HIS CONTENTION AND REQUEST FOR RELIEF HE ENCLOSED HIS WORK PAPERS, WHICH ARE INCLUDED IN THE FILE.

THE GENERAL PRINCIPLES APPLICABLE TO THIS CASE WERE SET OUT IN SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, 507, WHERE IT WAS HELD THAT IF THE PURCHASER MADE A UNILATERAL MISTAKE IN BID, AND WAS SUBSEQUENTLY AWARDED THE CONTRACT, HE WOULD BE BOUND BY IT AND MUST BEAR THE CONSEQUENCES--- UNLESS THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE ERROR. IN THAT CASE THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. SEE 5 WILLISTON, CONTRACTS, SEC. 1598; 23 COMP. GEN. 596; KEMP V. UNITED STATES, 38 F.SUPP. 568; WENDER PRESSES, INC. V. UNITED STATES, 343 F.2D 961.

ORDINARILY, A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS DEEMED NOT TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. HOWEVER, IN THIS CASE, THE CONTRACTOR'S BID OF $2.56 WAS TWICE AS MUCH AS THE SECOND HIGH BID OF $1.28, AND THE ONLY OTHER BIDS SUBMITTED ON THE ITEM WERE $0.32 AND $1.10. ANDERSON'S BID WAS ALMOST 26 TIMES THE MARKET APPRAISAL VALUE OF $0.10, WHICH IT IS REPORTED WAS KNOWN TO THE CONTRACTING OFFICER PRIOR TO BID OPENING.

NOTICE SHOULD ALSO BE TAKEN OF THE FACT THAT ANDERSON SUBMITTED BIDS ON EIGHT OTHER ITEMS, TOTALLING $1,460.88, WHICH ACCORDING TO HIS CALCULATIONS REQUIRED A $300 BID DEPOSIT. BUT SINCE ITEM NO. 8 WAS AWARDED AT A MUCH HIGHER TOTAL PRICE THAN INDICATED BY THE CONTRACTOR, A RECOMPUTATION OF THE TOTAL OF THE NINE BIDS WOULD HAVE DISCLOSED THAT THE REQUIRED BID DEPOSIT WOULD HAVE BEEN $477, OR $177 MORE THAN SUBMITTED.

ACCORDINGLY, FOR THE ABOVE-STATED REASONS, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS PLACED ON CONSTRUCTIVE NOTICE OF ERROR, AND THAT THE BID SHOULD HAVE BEEN VERIFIED. WE CONCUR WITH YOUR DETERMINATION THAT THE AWARD TO ANDERSON BROTHERS TRUCK AND EQUIPMENT COMPANY SHOULD BE RESCINDED AS TO ITEM NO. 8 OF THE CONTRACT.