B-160521, DEC. 22, 1966

B-160521: Dec 22, 1966

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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO A LETTER AND ENCLOSURES DATED DECEMBER 7. L. POHLMAN COMPANY ON THOSE ITEMS WERE IN THE AMOUNTS OF $36. THE NEXT HIGHEST BIDS WERE $22.22 EACH FOR ITEMS 99 THROUGH 103 AND $31 EACH FOR ITEM 104. THE CURRENT MARKET APPRAISAL WAS $15 FOR ALL ITEMS AND IN THE PAST SALES HAD GENERALLY RANGED FROM $18 TO $23. OCCASIONALLY GOING AS HIGH AS $36 WHEN THE HOISTS WERE IN SHORT SUPPLY. SUBSTANTIATION OF THE ERROR WAS REQUESTED BY THE CONTRACTING OFFICER AND WHILE WORKSHEETS WERE NOT AVAILABLE BECAUSE THE BID PRICES HAD BEEN DICTATED AND THE DICTATION COPY SUBSEQUENTLY DESTROYED. THE SECRETARY TO WHOM THE BID PRICES WERE DICTATED BOTH SUBMITTED SWORN STATEMENTS TO THE EFFECT THAT THE DECIMAL POINTS WERE MISPLACED.

B-160521, DEC. 22, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER AND ENCLOSURES DATED DECEMBER 7, 1966, FILE DSAH-G, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, REQUESTING OUR DECISION AS TO WHETHER ITEMS 99 THROUGH 104 OF SURPLUS SALES CONTRACT 37- 6138-051, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS, AND AWARDED TO R. L. POHLMAN COMPANY, MARYLAND HEIGHTS, MISSOURI, MAY BE RESCINDED BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD.

THE SUBJECT ITEMS CONSIST OF ELECTRIC HOISTS IN FAIR TO GOOD CONDITION AND THE BIDS OF R. L. POHLMAN COMPANY ON THOSE ITEMS WERE IN THE AMOUNTS OF $36, $43, $69, $53, $69 AND $63 EACH, FOR A TOTAL EXTENDED BID OF $6,273. THE NEXT HIGHEST BIDS WERE $22.22 EACH FOR ITEMS 99 THROUGH 103 AND $31 EACH FOR ITEM 104. OTHER BIDS RANGED UPWARD FROM $3. THE CURRENT MARKET APPRAISAL WAS $15 FOR ALL ITEMS AND IN THE PAST SALES HAD GENERALLY RANGED FROM $18 TO $23, OCCASIONALLY GOING AS HIGH AS $36 WHEN THE HOISTS WERE IN SHORT SUPPLY.

UPON RECEIPT OF THE CONTRACT, THE CONTRACTOR NOTIFIED THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE IN DECIMAL POINT PLACEMENT ON THE POHLMAN BIDS MAKING THEM 10 TIMES MORE THAN INTENDED. SUBSTANTIATION OF THE ERROR WAS REQUESTED BY THE CONTRACTING OFFICER AND WHILE WORKSHEETS WERE NOT AVAILABLE BECAUSE THE BID PRICES HAD BEEN DICTATED AND THE DICTATION COPY SUBSEQUENTLY DESTROYED, MR. R. L. POHLMAN, JR., PRESIDENT OF R. L. POHLMAN COMPANY, AND THE SECRETARY TO WHOM THE BID PRICES WERE DICTATED BOTH SUBMITTED SWORN STATEMENTS TO THE EFFECT THAT THE DECIMAL POINTS WERE MISPLACED.

THE CONTRACTING OFFICER'S REPORT ACKNOWLEDGES THAT THE POHLMAN BID WAS SUSPECTED OF BEING IN ERROR SINCE "PRICES BID BY PURCHASER WERE TWO AND THREE TIMES GREATER THAN THE NEXT HIGH BID.' THE CONTRACTING OFFICER THEREFORE DISCUSSED THE BID WITH THE SALES SPECIALIST BUT IT WAS DECIDED THAT VERIFICATION WAS NOT NECESSARY BECAUSE THE BID WAS "ADMINISTRATIVELY AND MATHEMATICALLY CORRECT.' MR. HOMANN AND THE COUNSEL, DEFENSE LOGISTICS SERVICES CENTER, BOTH RECOMMEND THAT THE AWARD BE RESCINDED ON THE GROUNDS THAT THE POHLMAN PRICES WERE NOT ONLY SUBSTANTIALLY HIGHER THAN THE OTHER BIDS, BUT ALSO WERE SUBSTANTIALLY HIGHER THAN THE CURRENT MARKET APPRAISAL AND THE PAST SALES HISTORY, AND THAT THESE FACTS TAKEN TOGETHER WERE SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR. THE FACT THAT THE CONTRACTING OFFICER SUSPECTED THE PHOLMAN BID BUT DID NOT SEEK VERIFICATION IS ADVANCED AS A FURTHER INDICATION OF CONSTRUCTIVE NOTICE.

WE ARE OF THE OPINION THAT THE STATEMENTS OF MR. POHLMAN AND HIS SECRETARY ARE SUFFICIENT TO ESTABLISH THE EXISTENCE OF A MISTAKE AND THE AMOUNT OF THE INTENDED BID. WE ALSO CONCUR IN THE RECOMMENDATION THAT THE CONTRACT BE RESCINDED. WHILE A WIDE RANGE OF BID PRICES IN SURPLUS SALES ORDINARILY IS NOT ENOUGH TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR, WE FEEL THAT THE FACTS SET OUT ABOVE, PARTICULARLY THE FACT THAT THE BID WAS QUESTIONED BUT NOT VERIFIED, ARE SUFFICIENT TO SUPPORT A FINDING THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE THAT AN ERROR HAD BEEN MADE.

ACCORDINGLY, THIS OFFICE HAS NO OBJECTION TO RESCISSION OF THE CONTRACT.