B-160518, DEC. 19, 1966

B-160518, DEC. 19, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO LETTER DSAH-G DATED DECEMBER 6, 1966, WITH ENCLOSURES, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, REQUESTING OUR DECISION AS TO WHETHER ITEMS 17 AND 18 OF SALES CONTRACT NO. 46 7015-145, AWARDED ON SEPTEMBER 20, 1966, TO GROBAN SUPPLY COMPANY, INC. (GROBAN), BY THE DEFENSE SURPLUS SALES OFFICE, SAN DIEGO, CALIFORNIA, MAY BE RESCINDED BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD.

GROBAN SUBMITTED BIDS ON SEVERAL ITEMS. UPON RECEIPT OF THE CONTRACT, IT NOTIFIED THE SALES CONTRACTING OFFICER THAT IT INTENDED TO BID ON ITEM 16, BUT BECAUSE OF "INTERNAL "HUMAN" ERROR" ALSO SUBMITTED BIDS ON ITEMS 17 AND 18. ON ITS WORKSHEET, COMPRISED OF PAGE 4 OF ITS COPY OF THE INVITATION FOR BIDS UPON WHICH THE DESCRIPTIONS OF ITEMS 16 (FUEL PUMP), 17 (FUEL PUMP) AND 18 (THERMO SWITCH) APPEAR,"BID 3 93 EA.' IS WRITTEN NEXT TO THE DESCRIPTION OF ITEM 16 WHICH IS WITHIN THE UPPER PORTION OF A BRACE WHICH IS DRAWN DOWN THROUGH ITEM 17 INTO ITEM 18.

GROBAN'S BID ON ITEM 17 IS IN CLOSE PROXIMITY TO THE OTHER BIDS RECEIVED AND THE CURRENT MARKET APPRAISAL. HOWEVER, ITS BID ON ITEM 18 IS MORE THAN 39 TIMES HIGHER THAN THE NEXT HIGH BID RECEIVED AND IS MORE THAN 1 3/4 TIMES THE CURRENT MARKET APPRAISAL. WITH RESPECT TO ITEMS 17 AND 18, THE FOLLOWING DATA WAS FURNISHED BY THE SALES CONTRACTING OFFICER:

"A. ESTIMATED MARKET VALUE - ITEM 17 - $4.00 EACH.

B. ESTIMATED MARKET VALUE - ITEM 18 - $2.20 EACH.

C. OTHER BIDS ON ITEM 17 RANGED FROM $ .686 EACH TO $2.13 EACH.

D. OTHER BIDS ON ITEM 18 RANGED FROM $ .06 EACH TO $ .10 EACH.'

WHILE THE SALES CONTRACTING OFFICER HAS RECOMMENDED THAT GROBAN'S CLAIM FOR RELIEF BE DENIED, COUNSEL FOR THE DEFENSE LOGISTICS SERVICES CENTER (DLSC) HAS STATED THAT WHILE A COMPARISON OF BID PRICES USED AS EVALUATION FACTOR IN DETERMINING A PROBABLE ERROR IN A BID GENERALLY IS OF LITTLE USE FOR SUCH DETERMINATION IN A SALE OF USABLE GOVERNMENT SURPLUS PROPERTY, IT IS THE OPINION OF DLSC THAT WHEN A BID EXCEEDS THE NEXT HIGH BID BY NEARLY 40 TIMES AND EXCEEDS THE CURRENT MARKET APPRAISAL BY ALMOST 180 PERCENT, A CONFIRMATION OF THE BID IS IN ORDER PRIOR TO MAKING AN AWARD. COUNSEL FURTHER STATES THAT UPON SEEKING VERIFICATION OF THE BID SUBMITTED AS TO ITEM 18, IT IS APPARENT THE SALES CONTRACTING OFFICER WOULD HAVE BEEN MADE AWARE OF THE ALLEGED INTENTION NOT TO BID ON ITEM 17. IN VIEW THEREOF, DLSC RECOMMENDS THAT THE CONTRACTOR'S REQUEST FOR RESCISSION BE ALLOWED.

INSOFAR AS ITEM 18 IS CONCERNED, WE AGREE THAT THE DISPARITY BETWEEN GROBAN'S HIGH BID AND THE CURRENT MARKET APPRAISAL VALUE AND THE WIDE RANGE BETWEEN GROBAN'S BID AND THE OTHER BIDS RECEIVED SHOULD HAVE PLACED THE SALES CONTRACTING OFFICER ON NOTICE OF PROBABILITY OFERROR AND THEREFORE NECESSITATED CONFIRMATION OF THE BID BEFORE AWARD.

HOWEVER, WHILE SUCH A REQUEST FOR CONFIRMATION MIGHT HAVE RESULTED IN EVIDENCE BEING PRESENTED THAT THE BID ON ITEM 17 ALSO WAS NOT INTENDED, THE FACT REMAINS THAT THE ERROR ON THAT ITEM DID NOT COME TO LIGHT UNTIL AFTER AWARD. CORRECTION OF ERRORS ALLEGED AFTER AWARD IS AUTHORIZED ONLY WHEN THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. THE BID PRICE ON ITEM 17 IS CLOSE TO THE OTHER BIDS ON THAT ITEM AND THE BID IS WITHIN THE ESTIMATED MARKET VALUE OF THE ITEM. THUS IT CANNOT BE SAID THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF PROBABILITY OF ERROR IN THE ITEM 17 BID.

ACCORDINGLY, CANCELLATION ACTION MAY BE TAKEN ONLY WITH RESPECT TO ITEM 18.