B-158507, AUG. 1, 1966

B-158507: Aug 1, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO THE CLAIM OF ALABAMA OXYGEN COMPANY. WHICH WAS AWARDED TO IT BY THE DEFENSE LOGISTICS SERVICES CENTER (DLSC). WHICH IS FOUNDED UPON AN ALLEGED MISTAKE MADE IN COMPUTING ITS BID. WAS THE SUBJECT OF A REPORT FURNISHED US BY YOUR ASSISTANT COUNSEL BY LETTER DSAH-G. THE TOTAL COST OF THE PLANT TO THE GOVERNMENT WAS SHOWN IN THE INVITATION AS $683. PRIOR TO THE TIME THE PLANT WAS OFFERED FOR SALE. UNDER THE TERMS OF THE INVITATION BIDDERS WERE REQUIRED TO SUBMIT A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID AND TITLE TO THE PROPERTY WAS TO VEST IN THE PURCHASER UPON FULL PAYMENT. AT WHICH TIME HE WAS REQUIRED TO REMOVE THE SAME. THE BID WAS SIGNED ON BEHALF OF THE COMPANY BY SOLOMON P.

B-158507, AUG. 1, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO THE CLAIM OF ALABAMA OXYGEN COMPANY, INC., FOR CANCELLATION OF A CONTRACT FOR THE PURCHASE FROM THE GOVERNMENT OF A LIQUID OXYGEN-NITROGEN GENERATING PLANT LOCATED AT LINCOLN AIR FORCE BASE, LINCOLN, NEBRASKA, WHICH WAS AWARDED TO IT BY THE DEFENSE LOGISTICS SERVICES CENTER (DLSC), BATTLE CREEK, MICHIGAN, UNDER INVITATION NO. 01- 6008, AND REFUND OF ITS BID DEPOSIT. THE CLAIM, WHICH IS FOUNDED UPON AN ALLEGED MISTAKE MADE IN COMPUTING ITS BID, WAS THE SUBJECT OF A REPORT FURNISHED US BY YOUR ASSISTANT COUNSEL BY LETTER DSAH-G, DATED MARCH 15, 1966.

THE INVITATION SOLICITED BIDS, TO BE OPENED DECEMBER 29, 1965, AT THE FEDERAL CENTER, BATTLE CREEK, MICHIGAN, FOR THE PLANT IN QUESTION, AS WELL AS ANOTHER ITEM. THE TOTAL COST OF THE PLANT TO THE GOVERNMENT WAS SHOWN IN THE INVITATION AS $683,000. PRIOR TO THE TIME THE PLANT WAS OFFERED FOR SALE, THE PROPERTY DISPOSAL SPECIALIST FOR THE MARKETING DIVISION OF DLSC HAD MADE A PHYSICAL INSPECTION AND ESTIMATED ITS SCRAP VALUE TO BE APPROXIMATELY $35,000 AND ITS VALUE TO AN END USER TO BE BETWEEN 15 AND 20 PERCENT OF THE ACQUISITION COST.

UNDER THE TERMS OF THE INVITATION BIDDERS WERE REQUIRED TO SUBMIT A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID AND TITLE TO THE PROPERTY WAS TO VEST IN THE PURCHASER UPON FULL PAYMENT, AT WHICH TIME HE WAS REQUIRED TO REMOVE THE SAME. THE INVITATION PROVIDED (CLAUSE 7, DEFAULT, OF THE GENERAL SALE TERMS AND CONDITIONS) THAT IF THE PURCHASER FAILED TO PAY FOR THE PROPERTY OR REMOVE THE SAME WITHIN THE PRESCRIBED TIME, HE WOULD LOSE ALL RIGHT, TITLE AND INTEREST THEREIN, AND THE GOVERNMENT AT ITS ELECTION, UPON DUE NOTICE OF DEFAULT TO THE PURCHASER, WOULD BE ENTITLED TO RETAIN AS LIQUIDATED DAMAGES, A SUM EQUAL TO 20 PERCENT OF THE PURCHASE PRICE, SUCH SUM TO BE THE MAXIMUM AMOUNT RECOVERABLE FOR SUCH DEFAULT.

ALABAMA OXYGEN COMPANY, INC., SUBMITTED A BID DATED DECEMBER 23, 1965, IN THE AMOUNT OF $327,615 FOR THE PLANT. THE BID WAS SIGNED ON BEHALF OF THE COMPANY BY SOLOMON P. KIMERLING AS ,V.P., " AND IT WAS ACCOMPANIED BY A BID DEPOSIT IN THE FORM OF A CERTIFIED CHECK IN THE AMOUNT OF $65,600. THE 14 OTHER BIDS RECEIVED IN RESPONSE TO THE INVITATION (EXCLUDING A SO- CALLED NEGATIVE BID, NO. 13, WHICH WAS ELIMINATED AT THE OUTSET AS NONRESPONSIVE), ARRANGED IN DESCENDING DOLLAR AMOUNTS, WERE AS FOLLOWS:

TABLE

DOLLAR AMOUNT BID OPENING NO.

1ST GROUP ( 103,151.11 7

OR RANGE ( 101,000.00 8

( 101,000.00 11

2ND GROUP ( 76,687.89 15

OR RANGE( 50,101.00 12

( 37,262.15 2

( 20,500.00 6

( 20,110.11 16

3RD GROUP ( 9,999.00 1

OR RANGE ( 6,800.00 3

( 3,600.00 14

( 3,167.99 4

( 2,500.00 10

( 2,268.00 9

BIDS NOS. 3, 4 AND 12, ABOVE, WERE DETERMINED TO BE NONRESPONSIVE DUE TO FAILURE TO SIGN AND RETURN AN AMENDMENT TO THE INVITATION, AS REQUIRED. THE SALES CONTRACTING OFFICER MAILED HIS SIGNED ACCEPTANCE OF ALABAMA OXYGEN'S BID TO THE COMPANY ON DECEMBER 30, 1965.

IT APPEARS FROM AN AFFIDAVIT EXECUTED ON FEBRUARY 22, 1966, BY MR. EUGENE M. ZEIDMAN, ATTORNEY AT LAW, BIRMINGHAM, ALABAMA (ANNEX VI TO THE BRIEF FILED WITH OUR OFFICE BY MR. E. K. GUBIN, ATTORNEY AT LAW, WASHINGTON, D.C., IN SUPPORT OF ALABAMA OXYGEN'S CLAIM, A COPY OF WHICH WAS SUPPLIED TO YOUR AGENCY FOR CONSIDERATION IN MAKING THE REPORT FURNISHED US IN THIS MATTER), THAT ON JANUARY 4, 1966, MESSRS. MAX L. KIMERLING, PRESIDENT, AND HIS SON SOLOMAN P. KIMERLING, VICE PRESIDENT AND CHIEF OPERATING OFFICER OF ALABAMA OXYGEN, CAME TO HIS OFFICE AND STATED THAT UPON RECHECKING THEIR WORKSHEETS THEY HAD DISCOVERED AN ERROR HAD BEEN MADE IN TRANSPOSING THE AMOUNT INTENDED TO BE BID FOR THE PLANT FROM THE WORKSHEETS TO THE BID WHICH HAD BEEN SUBMITTED TO THE GOVERNMENT THEREFOR; THAT MR. ZEIDMAN ATTEMPTED TO REACH THE SALES CONTRACTING OFFICER BY TELEPHONE THE SAME DAY, AND FOR SEVERAL DAYS THEREAFTER, TO ADVISE HIM OF THE MISTAKE AND SEEK RELIEF ON BEHALF OF HIS CLIENTS, BUT WAS UNSUCCESSFUL. ON JANUARY 10, 1966, HE CALLED THE DISPOSAL ACTIVITY AND TALKED TO THE CHIEF, SALES SUPPORT BRANCH, MARKETING SERVICE DIVISION, DIRECTORATE OF MARKETING, AND, FOLLOWING THAT OFFICER'S ADVICE, WROTE A LETTER TO THE SALES CONTRACTING OFFICER UNDER DATE OF JANUARY 14, 1966, SETTING FORTH THE FACTS IN REGARD TO THE MISTAKE, AND SUBMITTED THEREWITH WHAT ARE STATED TO BE THE WORKSHEETS WHICH WERE USED IN PREPARING THE BID.

IT APPEARS FROM THE FACTS SET FORTH IN MR. ZEIDMAN'S REFERRED-TO LETTER AND AFFIDAVIT, AND FROM AN AFFIDAVIT OF SOLOMAN P. KIMERLING DATED FEBRUARY 22, 1966, WITH SUPPORTING ATTACHMENTS (ANNEX II TO MR. GUBIN'S BRIEF), THAT SOLOMON P. KIMERLING PREPARED ALL THE WORKSHEETS AND THAT THE AMOUNT SUBMITTED AS ALABAMA OXYGEN'S BID FOR THE PLANT WAS TAKEN FROM THE WORKSHEET REFERRED TO IN HIS AFFIDAVIT AS THE "RESUME PAGE," WHICH CONTAINS THE FOLLOWING INFORMATION:

CHART

"RESUME

"PLANT COST (FROM GOV-T) 181,715

"CRYOGENIC VESSELS 114,700

"PUMPING EQUIPMENT 31,200

327,615

"TO BE ADDED TO ABOVE MUST BE SUCH ITEMS AS

1. REPAIRS

2. LAND

3. DISMANTLING

4. RE-ERECTION

5. REPAIRS TO PLANT

6. BUILDING

7. MISCELLANEOUS"

THE MISTAKE HERE ALLEGED CONSISTED OF INSERTING AS THE AMOUNT OF THE BID THE SUM OF THE FIGURES SHOWN ABOVE, INSTEAD OF THE FIGURE $181,715, WHICH ALABAMA OXYGEN CONTENDS IT INTENDED TO BID. THE AFFIDAVIT AND SUPPORTING WORKSHEETS FROM WHICH THE ABOVE FIGURES WERE DERIVED INDICATE THAT ALABAMA OXYGEN ESTIMATED IT COULD PRUDENTLY EXPEND APPROXIMATELY $500,000 FOR A COMPLETE OXYGEN-NITROGEN GENERATING PLANT SET UP AND READY TO OPERATE ON ITS SITE. OF THIS AMOUNT, $181,715 REPRESENTED THE SUM TO BE BID FOR THE PLANT AT LINCOLN. THIS FIGURE IS SHOWN TO HAVE BEEN DERIVED BY AVERAGING THE RESULTS OBTAINED BY THREE DIFFERENT METHODS OF ARRIVING AT THE VALUE OF THE PLANT, ALL THREE OF WHICH FELL WITHIN A RANGE OF A FEW THOUSAND DOLLARS. TO THIS AMOUNT WERE ADDED THE AMOUNT OF $114,700, REPRESENTING THE ESTIMATED COST OF TWO CRYOGENIC VESSELS (STORAGE TANKS) WHICH WERE REQUIRED FOR THE OPERATION OF THE PLANT, BUT WERE NOT INCLUDED IN THE EQUIPMENT TO BE SUPPLIED BY THE GOVERNMENT UNDER THE IFB, AND THE AMOUNT OF $31,200, REPRESENTING THE ESTIMATED COST OF TWO PUMPS, TOGETHER WITH FILTERS, WHICH WOULD BE REQUIRED IN THE OPERATION OF THE STORAGE TANKS, TO ARRIVE AT THE SUM OF $327,615, SHOWN ABOVE. THE ESTIMATED COST OF THE SEVEN ADDITIONAL ITEMS LISTED ON THE "RESUME PAGE" WAS $235,000, WHICH WOULD BRING THE ESTIMATED TOTAL COST OF THE PLANT IN PLACE AND READY FOR OPERATION, TO $562,615.

RELATIVE TO HOW THE MISTAKE WITH RESPECT TO SUBMISSION OF ALABAMA OXYGEN'S BID OCCURRED AND THE TIME WHEN IT WAS FIRST DISCOVERED BY THE COMPANY, THE SOLOMON P. KIMBERLING AFFIDAVIT STATES:

"* * * WHEN I DECIDED A FEW DAYS BEFORE DECEMBER 23RD THAT THE BID SHOULD GO IN AT THE FIGURE OF $181,715, WHICH FIGURE I TOOK FROM PAGE 12 OF MY WORKSHEETS, I KNEW I HAD TO HAVE THE OFFICIAL BID DOCUMENT TYPED AND MAILED. I FOUND THAT MOST OF MY OWN CLERICAL PEOPLE WERE BUSY WITH THEIR TASKS SO I HANDED THE WORKSHEETS TO I. LANDAU, WHO IS OFFICE MANAGER FOR ONE OF OUR AFFILIATED COMPANIES. HE HAD NOTHING TO DO WITH THE WORKSHEETS OR CALCULATIONS I USED, AND HAD NOTHING TO DO WITH WORKING ON THE PARTICULAR PROJECT. I ONLY GAVE HIM THE WORKSHEETS AND THE BID FORM AND TOLD HIM TO TYPE UP THE BID FROM THE RESUME PAGE BECAUSE I FELT HE WOULD DO THIS RAPIDLY AND WOULD MAKE CERTAIN THAT IT WOULD GET MAILED TO THE GOVERNMENT. I ALSO USED HIM BECAUSE I KNEW HE WOULD KNOW HOW TO GET UP THE NECESSARY BID DEPOSIT CHECK BECAUSE HE WAS THE ONE THAT ALWAYS WENT TO THE BANK TO DEPOSIT CHECKS AND DRAW MONEY FOR THE AFFILIATED COMPANY.

"I DO NOT REMEMBER WHETHER I SIGNED A BLANK COPY OF THE BID FORM BEFORE THE FIGURES WERE TYPED IN OR WHETHER I SIGNED THE BID FORM AFTERWARDS TOGETHER WITH A LARGE NUMBER OF OTHER PAPERS, BUT I HAVE NO RECOLLECTION OF EVER LOOKING AT THE TYPED BID FIGURES TO SEE IF THEY CONFORMED TO THE FIRST LINE OF THE RESUME SHEET WHICH I HAD ALWAYS INTENDED WOULD BE THE BID FIGURES TO BE USED.

"THE NEXT TIME I HEARD ABOUT THE MATTER WAS WHEN MY FATHER PHONED ME THE EVENING OF DECEMBER 29 TO MERELY STATE THAT WE WERE THE HIGH BIDDER AND WON THE LINCOLN PLANT. NO FIGURES WERE DISCUSSED.

"BECAUSE THE OFFICE WAS NOT FUNCTIONING NORMALLY UNTIL AFTER THE FIRST OF THE YEAR, AT WHICH TIME, POSSIBLY MONDAY OR TUESDAY, JANUARY 3RD OR 4TH, MY FATHER AND I FIRST LEARNED OF AND DISCUSSED THE NAMES AND BID AMOUNTS OF EACH OF THE OTHER BIDDERS.

"YOU COULD HAVE KNOCKED ME OVER WITH A FEATHER WHEN I LEARNED THEN THAT THE BID I SIGNED ACTUALLY HAD A MUCH HIGHER FIGURE ON IT THAN THE FIGURE I HAD INTENDED FOR OUR COMPANY TO BID. WE WENT TO OUR ATTORNEY, EUGENE ZEIDMAN, AT ABOUT THAT TIME OR SHORTLY THEREAFTER, AND FROM THEN ON WE LEFT IN HIS HANDS WHAT TO DO.

"IT WAS ONLY AFTER I LEARNED OF THE AMOUNT WHICH HAD BEEN MISTAKENLY PLACED ON OUR BID, THAT I LOOKED BACK AT MY WORKSHEETS AND FOUND THAT MR. LANDAU HAD MISTAKENLY COPIED THE WRONG LINE FROM MY RESUME PAGE.'

IN AN AFFIDAVIT DATED FEBRUARY 22, 1966 (ANNEX III TO MR. GUBIN'S BRIEF), ISRAEL LANDAU, THE INDIVIDUAL REFERRED TO IN THE ABOVE QUOTE, STATES THAT HE IS OFFICE MANAGER FOR M. KIMERLING AND SONS, INC., AN AFFILIATE OF ALABAMA OXYGEN COMPANY, INC., AND ORDINARILY PERFORMS NO SERVICES FOR THE LATTER COMPANY WITH THE EXCEPTION OF MAKING BANK DEPOSITS. HOWEVER, WITH RESPECT TO THE TRANSACTION HERE INVOLVED, HE STATES:

"ON DECEMBER 23, 1965, MR. SOL KIMERLING ASKED ME TO TYPE IN AND PROPERLY EXECUTE IFB 01-6008, AT WHICH TIME HE GAVE ME SOME WORK PAPERS WHICH I DID NOT EXAMINE CAREFULLY DUE TO THE RUSH OF WORK, AS OUR OFFICE WAS TO BE CLOSED DECEMBER 24, 1965, BECAUSE OF THE CHRISTMAS HOLIDAY. ON THE SHEET ENTITLED RESUME, I ASSUMED THE FIGURE TO USE WAS $327,615.00 AND DID NOT NOTICE THE FIRST LINE ON THE RESUME. I TRANSFERRED THE FIGURE $327,615.00 TO THE IFB 01-6008. I DO NOT REMEMBER WHETHER THE BLANK IFB WAS SIGNED BEFORE I ENTERED THE AMOUNT OF $327,615.00.

"I THEN HAD MR. HYMAN KIMERLING SIGN THE DEPOSIT CHECK IN THE AMOUNT OF $65,600.00 WHICH I CALCULATED FROM THE BID FIGURE, AND THE CHECK WAS THEN CERTIFIED AND THE BID MAILED.'

IT APPEARS FROM AN AFFIDAVIT EXECUTED BY JAMES D. SHERRILL UNDER DATE OF FEBRUARY 22, 1966 (ANNEX V TO MR. GUBIN'S BRIEF), THAT MR. SHERRILL, PLANT ENGINEER FOR ALABAMA OXYGEN COMPANY, NC., WAS PRESENT ON DECEMBER 29, 1965, WHEN BIDS RECEIVED IN RESPONSE TO IFB 01-6008 WERE OPENED. THE AFFIANT STATES THAT AS SOON AS POSSIBLE AFTER THE BIDS WERE OPENED, HE ATTEMPTED TO REACH MR. SOLOMON P. KIMERLING BY TELEPHONE IN BIRMINGHAM, BUT WAS UNABLE TO DO SO, AND THAT HE FINALLY CONTACTED MR. MAX KIMERLING AND TOLD HIM THAT ALABAMA OXYGEN WAS THE HIGH BIDDER, GIVING HIM THE NAMES OF SOME OF THE BIDDERS BUT NOT THE AMOUNTS BID. HE FURTHER STATES THAT HE MADE A RECAP OF THE BIDS AND RETURNED TO BIRMINGHAM ON FRIDAY, DECEMBER 31, 1965, BUT BECAUSE OF THE "END OF THE YEAR CLOSING" DID NOT GIVE MR. SOLOMON P. KIMERLING THE RECAP THAT DAY, BUT DID "LAY IT ON HIS DESK" SOMETIME MONDAY, JANUARY 3, 1966. THE AFFIANT ALSO STATES THAT HE WAS NOT AWARE OF THE AMOUNT OF ALABAMA OXYGEN'S BID PRIOR TO THE TIME THE BIDS WERE OPENED.

IN HIS AFFIDAVIT OF FEBRUARY 22, 1966 (ANNEX I TO MR. GUBIN'S BRIEF), MAX L. KIMERLING STATES, IN MATERIAL PART, THAT HE WORKED WITH HIS SON, SOLOMON P. KIMERLING, IN ESTIMATING THE ENTIRE COSTS THAT WOULD BE INVOLVED IN SETTING UP A PLANT FOR THE MANUFACTURE OF LIQUID OXYGEN (THE COMPANY PREVIOUSLY HAVING BEEN ENGAGED SOLELY IN THE MANUFACTURE OF GASEOUS OXYGEN AND NITROGEN) UP TO THE POINT OF PREPARING THE ACTUAL BID THAT WAS SUBMITTED TO THE GOVERNMENT UNDER IFB 01-6008, AND THAT IT WAS UNDERSTOOD, AS EVIDENCED BY THE COST ESTIMATES OBTAINED AND MADE BY ALABAMA OXYGEN PRIOR TO SUBMISSION OF THE BID, COPIES OF WHICH ARE ATTACHED TO THE AFFIDAVIT, THAT THE TOTAL COST OF THE PLANT WAS TO BE IN THE NEIGHBORHOOD OF $500,000, OF WHICH THE PRICE TO BE PAID FOR THE PLANT AT LINCOLN WAS JUST ONE ITEM. MR. KIMERLING STATES THAT IT WAS NOT UNTIL MONDAY, JANUARY 3, 1966, THE FIRST WORKING DAY OF THE NEW YEAR, OR PERHAPS TUESDAY, JANUARY 4, THAT HE FIRST LEARNED THE NAMES OF THE BIDDERS FOR THE PLANT AT LINCOLN, AND THE AMOUNTS OF THEIR BIDS, AND WHEN HE SAW THAT CHEMETRON CORPORATION (NATIONAL CYLINDER GAS DIVISION/--- A COMPANY IN THE CRYOGENIC FIELD--- HAD SUBMITTED A BID WHICH WAS LESS THAN A THIRD OF ALABAMA OXYGEN'S BID HE QUICKLY CHECKED THE LATTER BID AND FOUND THE ERROR IN QUESTION. AS INDICATED IN YOUR ASSISTANT COUNSEL'S LETTER, THE EVIDENCE PRESENTED REASONABLY MAY BE ACCEPTED AS ESTABLISHING THAT ALABAMA OXYGEN MADE THE MISTAKE IN BID AS ALLEGED. THE SALES CONTRACTING OFFICER HAS STATED, AND IT IS NOT CONTENDED OTHERWISE, THAT HE HAD NO ACTUAL NOTICE OF THE MISTAKE PRIOR TO THE TIME THE BID WAS ACCEPTED. THEREFORE, ALABAMA OXYGEN'S RIGHT TO RELIEF DEPENDS UPON WHETHER THE CIRCUMSTANCES WERE SUCH AS TO INDICATE TO THE SALES CONTRACTING OFFICER THAT A MISTAKE MUST HAVE BEEN MADE, OR THAT THERE WAS A REAL POSSIBILITY OF ERROR IN THE BID. SEE UNITED STATES V. SABIN METAL CORPORATION (DIST.CT.S.D.N.Y., 1957), 151 F.SUPP. 683; C. N. MONROE MANUFACTURING COMPANY V. UNITED STATES (DIST.CT.E.D.MICH., 1956), 143 F.SUPP. 449; WENDER PRESSES, INC. V. UNITED STATES (CT.CLS., 1965), 343 F.2D 961.

IN THE REPORT SUBMITTED BY THE SALES CONTRACTING OFFICER UNDER DATE OF JANUARY 26, 1966, ON THE MERITS OF THE CLAIM IT IS STATED:

"4. NO PREVIOUS SALES EXPERIENCE WAS AVAILABLE UPON WHICH A MARKET APPRAISAL COULD BE BASED; THEREFORE, MR. A. WEISMAN, PROPERTY DISPOSAL SPECIALIST FROM THE MARKETING DIVISION OF DLSC MADE A PHYSICAL INSPECTION OF THE LIQUID OXYGEN/NITROGEN PLANT AND ESTIMATED THE SCRAP VALUE OF ITEM 1 TO BE APPROXIMATELY $35,000.00 AND ITS VALUE TO AN END USER TO BE BETWEEN 15 AND 20 PERCENT OF THE ACQUISITION COST. ALTHOUGH THE PRICES SUBMITTED BY ALABAMA OXYGEN COMPANY REPRESENTED A RETURN OF APPROXIMATELY 50 PERCENT, I DID NOT DEEM THE BID SUBMITTED TO BE EXCESSIVE OR UNREALISTIC. AT THE TIME THE BIDS WERE OPENED I HAD NO PERSONAL ESTIMATE AS TO THE VALUE OF THE PROPERTY OFFERED FOR SALE. AFTER THE BID OPENING AND CONSIDERATION OF THE ESTIMATE BY MR. WEISMAN REFERENCED ABOVE, AND IN VIEW OF THE COMPLETE LACK OF PRIOR SALES EXPERIENCE, I CONCLUDED THAT THE BID PRICE OF ALABAMA OXYGEN COMPANY WAS COMPLETELY PROPER. IN THIS CONNECTION THE BIDDER ADDRESSED A TELEGRAM TO THIS OFFICE DATED 23 DECEMBER 1965 ADVISING THAT THEIR BID HAD BEEN MAILED IN AMPLE TIME FOR BID OPENING (ENCLOSURE 6). ADDITIONALLY, A REPRESENTATIVE OF THE BIDDER WAS PRESENT DURING BID OPENING. IT WAS THEREFOR APPARENT THAT ALABAMA OXYGEN WAS UNUSUALLY INTERESTED IN THE PROPERTY. ACCORDINGLY, AFTER OBTAINING NECESSARY APPROVAL FROM THE CHIEF, MARKETING SERVICES, I APPROVED THE SALE PRICES AND AWARDED ITEM 1 ON SALE 01-6008 TO ALABAMA OXYGEN CO.'

SINCE THE TELEGRAM DISPATCHED TO THE SALES CONTRACTING OFFICER BY SOLOMON P. KIMERLING ON DECEMBER 23, 1965, REFERRED TO ABOVE, DID NOT MENTION THE AMOUNT OF THE COMPANY'S BID, ITS RECEIPT WOULD NOT BE MATERIAL IN DECIDING WHETHER OR NOT THE SALES CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR. THE FACT THAT ALABAMA OXYGEN HAD A REPRESENTATIVE AT THE BID OPENING WHO MADE NO COMMENT WHEN THE AMOUNT OF ITS BID WAS READ OUT WOULD BE CALCULATED TO ALLAY ANY SUSPICION THAT A MISTAKE HAD BEEN MADE. HOWEVER, ALABAMA OXYGEN HAS OFFERED A REASONABLE EXPLANATION FOR THE SILENCE MAINTAINED BY ITS REPRESENTATIVE AT THE BID OPENING, AND THERE WERE OTHER CIRCUMSTANCES WHICH THE SALES CONTRACTING OFFICER COULD NOT IGNORE IN DECIDING WHETHER THE COMPANY'S BID SHOULD BE ACCEPTED WITHOUT VERIFICATION.

THE SALES CONTRACTING OFFICER HAS ADMITTED THAT HE HAD NO "PERSONAL ESTIMATE" AS TO THE VALUE OF THE PLANT, AND HE DOES NOT INDICATE THAT HE HAD ANY REASON FOR DOUBTING THE RELIABILITY OF MR. WEISMAN'S ESTIMATE. THIS ESTIMATE INDICATED THAT THE PLANT WOULD BE WORTH BETWEEN $102,450 AND $136,600 TO AN END USER. AS INDICATED ABOVE, OF THE THREE BIDS RECEIVED FOR THE PLANT WHICH WERE NEXT HIGHEST TO THAT OF ALABAMA OXYGEN-S, ONE WAS IN THE AMOUNT OF $103,151.11 AND THE OTHER TWO WERE IN THE AMOUNT OF $101,000. ONE OF THE LATTER WAS SUBMITTED BY CHEMETRON CORPORATION (NATIONAL CYLINDER GAS DIVISION), A RECOGNIZED PRODUCER. THE OTHER TWO BIDS IN THIS FIRST GROUP OR RANGE OF BIDS WERE SUBMITTED BY WENDER PRESSES, INC., AND UNION MINERALS AND ALLOYS. THE RECORD DOES NOT INDICATE WHETHER THE LATTER CONCERNS WERE INTERESTED IN OBTAINING THE PLANT AS ,PROPOSED OPERATORS," AS SUGGESTED IN MR. GUBIN'S BRIEF, OR WHETHER IT WAS DESIRED FOR RESALE. IT DOES SEEM FAIRLY OBVIOUS THAT NONE OF THE BIDDERS IN THE $100,000 CLASS WERE BIDDING ON THE PLANT ON THE BASIS OF ITS SCRAP VALUE, AND IT WOULD BE REASONABLE TO ASSUME THAT THEY WERE IN THE GENERAL CATEGORY OF END USERS.

CONSIDERING THE AMOUNTS AND CLOSE RANGE OF THE THREE BIDS IN THE FIRST GROUP AND THE GOVERNMENT'S ESTIMATE, WHICH WAS ROUGHLY EQUAL THERETO, AND THE FACT THAT ALABAMA OXYGEN'S BID WAS APPROXIMATELY THREE TIMES THE AVERAGE AMOUNT OF THESE BIDS, AS WELL AS THE GOVERNMENT'S ESTIMATE, WE THINK IT CLEAR THAT THE SALES CONTRACTING OFFICER SHOULD HAVE SOUGHT AND OBTAINED A VERIFICATION OF THE BID PRIOR TO ACCEPTANCE, AND THAT ACCEPTANCE OF ALABAMA OXYGEN'S BID UNDER THE CIRCUMSTANCES DID NOT, UNDER THE PRINCIPLES OF LAW ENUNCIATED IN THE ABOVE CITED CASES, GIVE RISE TO A VALID CONTRACT.

ACCORDINGLY, ALABAMA OXYGEN COMPANY, INC., SHOULD BE REFUNDED THE AMOUNT OF ITS BID DEPOSIT. THE CHECK THEREFOR, MADE PAYABLE TO THE COMPANY, SHOULD BE TRANSMITTED TO MR. E. K. GUBIN, SUITE 1100 17TH ST., N.W., WASHINGTON, D.C. 20036, AS ATTORNEY FOR THE COMPANY.