B-160520, DEC. 23, 1966

B-160520: Dec 23, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO LETTER AND ENCLOSURES DATED DECEMBER 7. THE S AND R METALS CO.'S BID WAS HIGH AT $0.6009 PER POUND. THE NEXT HIGH UNIT BID WAS $0.47008 PER POUND. IT IS REPORTED THAT THE CURRENT MARKET APPRAISAL WAS SET AT $0.37 PER POUND. THAT THE CORRECT BID SHOULD HAVE BEEN $0.5009 PER POUND. HE WOULD HAVE BEEN ON NOTICE OF A PROBABLE ERROR AND CONSEQUENTLY WOULD HAVE REQUESTED BID CONFIRMATION. THE GENERAL PRINCIPLE TO BE APPLIED IN A CASE LIKE THIS IS FOUND 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.

B-160520, DEC. 23, 1966

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO LETTER AND ENCLOSURES DATED DECEMBER 7, 1966, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, REQUESTING OUR DECISION AS TO WHETHER ITEM 78, CONTRACT 11-7004-051, AWARDED TO THE S AND R METALS CO. MAY BE RESCINDED BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD.

ITEM 78 OF THE CONTRACT CONSISTED OF 13,000 POUNDS OF COPPER WIRE AND CABLE, INSULATED, SCRAP ,CONSISTING OF VARIOUS TYPES, SIZES AND LENGTHS OF COMMUNICATION WIRE AND CABLE.' THE S AND R METALS CO.'S BID WAS HIGH AT $0.6009 PER POUND. THE NEXT HIGH UNIT BID WAS $0.47008 PER POUND. IT IS REPORTED THAT THE CURRENT MARKET APPRAISAL WAS SET AT $0.37 PER POUND, AND THAT ON THE DAY OF THE SALE THE AMERICAN METAL MARKET LISTED DEALERS' BUYING PRICES FOR THIS TYPE OF COPPER AT $0.51 TO $0.53 PER POUND.

AFTER AWARD OF THE CONTRACT, THE S AND R METALS CO. NOTIFIED THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE IN ITEM 78, THAT THE CORRECT BID SHOULD HAVE BEEN $0.5009 PER POUND, AND REQUESTED THAT THE AWARD OF ITEM 78 BE RESCINDED. THE CONTRACTING OFFICER RECOMMENDS THAT THE AWARD BE RESCINDED ON THE GROUNDS THAT IF HE HAD SCRUTINIZED THIS BID MORE CLOSELY, HE WOULD HAVE BEEN ON NOTICE OF A PROBABLE ERROR AND CONSEQUENTLY WOULD HAVE REQUESTED BID CONFIRMATION.

THE GENERAL PRINCIPLE TO BE APPLIED IN A CASE LIKE THIS IS FOUND 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. THAT CASE THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. SEE 5 WILLISTON ON CONTRACTS, SEC. 1598; 23 COMP. GEN. 596 AND ALSO B-159371, DATED JUNE 28, 1966.

UNDER THE CIRCUMSTANCES ABOVE INDICATED, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE ERROR AND SHOULD HAVE VERIFIED THE BID PRIOR TO AWARD.

ACCORDINGLY, WE AGREE WITH YOUR RECOMMENDATION THAT THE SUBJECT CONTRACT BE RESCINDED.