B-159490, JUL. 1, 1966

B-159490: Jul 1, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER AND ENCLOSURES DATED JUNE 20. SERVICE WAS HIGH AT $ .30 PER POUND AND ITEM 80 WAS AWARDED TO THAT FIRM. THREE OTHER BIDS WERE SUBMITTED ON ITEM 80. CURRENT MARKET APPRAISALS OF $ .005 AND $ .02 PER POUND WERE FURNISHED BY THE OFFICE SALES SPECIALIST AND THE HOLDING ACTIVITY. THESE APPRAISALS WERE BEFORE THE CONTRACTING OFFICER AT THE TIME AWARD WAS MADE. THAT THE CORRECT BID SHOULD HAVE BEEN $ .030 PER POUND RATHER THAN $ .30 PER POUND. COSETTI SUBMITTED WORKSHEETS SUBSTANTIATING HIS ALLEGATION THAT HIS INTENDED BID WAS $ .030 PER POUND. BID AND THE OTHER BIDS WAS SO GREAT THAT IT SHOULD HAVE PLACED HIM ON NOTICE OF THE POSSIBILITY THAT A MISTAKE HAD BEEN MADE.

B-159490, JUL. 1, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER AND ENCLOSURES DATED JUNE 20, 1966, FILE DSAH-G, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, REQUESTING OUR DECISION AS TO WHETHER ITEM 80 OF SURPLUS SALES CONTRACT 44-6088 043, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, OAKLAND, CALIFORNIA, AND AWARDED TO J.M.T. SERVICE, HAYWOOD, CALIFORNIA, MAY BE RESCINDED BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD.

ITEM 80 OF THE SUBJECT CONTRACT CONSISTED OF 14,500 POUNDS OF IRON AND STEEL SCRAP,"CONSISTING OF INSULATED STEEL WIRE WITH FOREIGN MATTER CONSISTING OF COPPER STRANDS IN PORTIONS OF SOME RE.' THE BID OF J.M.T. SERVICE WAS HIGH AT $ .30 PER POUND AND ITEM 80 WAS AWARDED TO THAT FIRM. THREE OTHER BIDS WERE SUBMITTED ON ITEM 80, IN THE AMOUNTS OF $ .0511, $ .042, AND $ .0212 PER POUND. CURRENT MARKET APPRAISALS OF $ .005 AND $ .02 PER POUND WERE FURNISHED BY THE OFFICE SALES SPECIALIST AND THE HOLDING ACTIVITY, RESPECTIVELY, AND THESE APPRAISALS WERE BEFORE THE CONTRACTING OFFICER AT THE TIME AWARD WAS MADE.

AFTER PAYMENT HAD BEEN MADE, MR. J. L. COSETTI, OWNER OF J.M.T. SERVICE, ADVISED THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE ON THE J.M.T. BID ON ITEM 80, AND THAT THE CORRECT BID SHOULD HAVE BEEN $ .030 PER POUND RATHER THAN $ .30 PER POUND. MR. COSETTI SUBMITTED WORKSHEETS SUBSTANTIATING HIS ALLEGATION THAT HIS INTENDED BID WAS $ .030 PER POUND, AND REQUESTED THAT THE AWARD OF ITEM 80 TO HIS FIRM BE RESCINDED. THE CONTRACTING OFFICER RECOMMENDS THAT THE AWARD BE RESCINDED ON THE GROUNDS THAT THE EVIDENCE SUBMITTED SUBSTANTIATES THE ALLEGATION OF MISTAKE AS WELL AS THE AMOUNT OF THE INTENDED BID, AND THAT THE DISPARITY BETWEEN THE J.M.T. BID AND THE OTHER BIDS WAS SO GREAT THAT IT SHOULD HAVE PLACED HIM ON NOTICE OF THE POSSIBILITY THAT A MISTAKE HAD BEEN MADE. IT IS POINTED OUT THAT THE J.M.T. BID WAS NEARLY SIX TIMES THE AMOUNT OF THE NEXT LOWEST BID AND THIRTY TIMES THE AMOUNT OF THE AVERAGE OF THE TWO MARKET APPRAISALS LISTED ABOVE.

WHILE A WIDE RANGE OF BID PRICES IN SURPLUS SALES ORDINARILY IS NOT ENOUGH TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF AN ERROR BECAUSE OF THE VARIETY OF USES TO WHICH THE SURPLUS MAY BE PUT, WE FEEL THAT THE FACTS SET OUT ABOVE ARE SUFFICIENT TO SUPPORT A FINDING THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE THAT AN ERROR HAD BEEN MADE.

ACCORDINGLY, WE AGREE WITH THE CONTRACTING OFFICER'S RECOMMENDATION THAT THE SUBJECT CONTRACT BE RESCINDED AND THE CONTRACT PRICE REFUNDED TO J.M.T. SERVICE.