B-162650, NOV. 16, 1967

B-162650, NOV. 16, 1967

CONTRACTS - MISTAKES - CANCELLATION DECISION TO SECRETARY OF THE NAVY AUTHORIZING CANCELLATION OF A SALES CONTRACT DUE TO A MISTAKE IN BID ALLEGED AFTER AWARD. WHERE BIDDER FOR SURPLUS AIRCRAFT AND AUTOMOBILE TIRES PROMPTLY AFTER AWARD ALLEGED THAT HE HAD ERRONEOUSLY PLACED THE WRONG TOTAL AFTER AN ITEM AND RECORD SHOWS NOT ONLY A WIDE DISPARITY IN BID PRICES BUT TOTAL GREATLY IN EXCESS OF LOCAL COMMERCIAL VALUE CONSTRUCTIVE NOTICE OF ERROR IS ESTABLISHED AND THE CONTRACTING OFFICER SHOULD NOT HAVE MADE THE AWARD WITHOUT REQUESTING VERIFICATION. ACCORDINGLY THE PARTICULAR ITEM OF THE CONTRACT SHOULD BE CANCELLED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 5, 1967 (REFERENCE SUP 0232C), WITH ENCLOSURES, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, REQUESTING OUR DECISION AS TO WHETHER ITEM 13 OF SALES CONTRACT NO. N61119S-7214, ISSUED BY THE UNITED STATES NAVAL SUPPLY DEPOT, GUAM, AND AWARDED TO AUTOMOTIVE TIRE SERVICE, INC., OF BOSTON, MASSACHUSETTS, MAY BE CANCELED DUE TO AN ERROR IN BID ALLEGED AFTER AWARD.

THE SUBJECT ITEM COVERS 90 USED AIRCRAFT AND AUTOMOTIVE TIRES DESCRIBED BY THE GOVERNMENT AS SCRAP. THE BID OF AUTOMOTIVE TIRE SERVICE, INC. (AUTOMOTIVE) WAS $1422.63 OR APPROXIMATELY $15.85 PER TIRE. THE REMAINING TWO BIDS ON ITEM 13 WERE $399.00 AND $227.89, RESPECTIVELY. THE SALES CONTRACTING OFFICER ADVISES THAT THE CONTRACT PRICE IS APPROXIMATELY $10 PER TIRE ABOVE THE AVERAGE BID RECEIVED ON PREVIOUS ADVERTISEMENTS OF SCRAP TIRES OF LIKE SIZE AND CONDITION AND IS ABOVE THE COMMERCIAL VALUE OF THE ITEM.

UPON RECEIPT OF THE CONTRACT, AUTOMOTIVE NOTIFIED THE CONTRACTING OFFICER THAT IT HAD MADE A MISTAKE IN ITS BID ON ITEM 13, EXPLAINING THAT ON ITS WORK SHEETS IT HAD BID $9.22 EACH ON ITEM 13 FOR A TOTAL OF $829.80 AND $1422.63 ON ITEM 14, WHICH WAS VOIDED. HOWEVER, IN TRANSCRIBING THE BID FIGURES TO THE BID SHEETS, THE FIGURE $1422.63 WAS ERRONEOUSLY COPIED DOWN FOR ITEM 13. AUTOMOTIVE HAS REQUESTED THAT THE UNIT PRICE FOR ITEM 13 BE CORRECTED TO $9.22 EACH OR, IN THE ALTERNATIVE, THAT THE AWARD FOR ITEM 13 BE CANCELED.

THE SOLE QUESTION FOR CONSIDERATION IN THIS TYPE OF CASE IS NOT WHETHER AN ERROR WAS, IN FACT, MADE IN AUTOMOTIVE'S BID ON ITEM 13, BUT WHETHER THERE EXISTED ANY CIRCUMSTANCES WHICH WOULD IMPUTE NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, TO THE GOVERNMENT CONTRACTING OFFICER AS TO THE PROBABILITY OF AN ERROR PRIOR TO AWARD. THERE WAS NO ACTUAL NOTICE, SINCE THE ERROR WAS NOT ALLEGED UNTIL AFTER AWARD. REGARDING THE EXISTENCE OF CONSTRUCTIVE NOTICE, ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT DEEMED SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF POSSIBLE ERROR, SINCE THE PRICES ARE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE WHICH THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORP., 151 F.SUPP. 683, AFFIRMED 253 F.2D 956, CITING WITH APPROVAL 16 COMP. GEN. 596; 17 ID.388; AND ID.601. SEE ALSO 17 COMP. GEN. 976; 28 ID.261; B-151079, MARCH 28, 1963. HOWEVER, WHERE IT DEFINITELY APPEARS THAT THE PROPERTY INVOLVED IS SCRAP, OF A KIND SO GENERALLY DEALT IN AS TO HAVE A FAIRLY WELL ESTABLISHED AND ASCERTAINABLE MARKET VALUE, WE HAVE HELD THAT A BID SUBSTANTIALLY IN EXCESS OF SUCH MARKET VALUE SHOULD NOT BE ACCEPTED WITHOUT VERIFICATION. B-139470, MAY 21, 1959. SINCE IN THE PRESENT CASE IT APPEARS NOT ONLY THAT THERE WAS A WIDE DISPARITY IN BID PRICES, BUT ALSO THAT THE CONTRACTING OFFICER REPORTS THAT AUTOMOTIVE'S BID PRICE WAS GREATLY IN EXCESS OF THE LOCAL COMMERCIAL VALUE OF THE ITEMS, THE SALES CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION BEFORE MAKING THE AWARD. SEE B-149118, JUNE 25, 1962; B-158334, JANUARY 21, 1966; B-149660, SEPTEMBER 21, 1962; B 147855, JANUARY 18, 1962; B- 137846, JANUARY 30, 1959; B-137414, OCTOBER 2, 1958; B-137593, OCTOBER 20, 1958.

ACCORDINGLY, SINCE THE RECORD INDICATES THAT AUTOMOTIVE PROMPTLY BROUGHT THE ALLEGED ERROR TO THE ATTENTION OF THE SALES CONTRACTING OFFICER UPON RECEIPT OF NOTICE OF AWARD AND PRESENTED EVIDENCE SUFFICIENT TO ESTABLISH THAT AN ERROR HAD BEEN MADE, ITEM 13 OF THE CONTRACT MAY BE CANCELLED.

THE FILE TRANSMITTED WITH YOUR DEPUTY COMMANDER'S LETTER OF OCTOBER 5 IS RETURNED.