B-162797, FEB. 26, 1968

B-162797: Feb 26, 1968

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BIDDER FOR SURPLUS SCRAP WHO BEFORE AWARD AGREED TO ACCEPT PROPERTY AT BID PRICE WHEN ADVISED THAT PUMP ITEMS HAD BEEN REMOVED MUST HAVE AWARD CONSIDERED AS CONSUMMATING AN ENFORCEABLE CONTRACT. DEFENSE SUPPLY AGENCY IS ADVISED THAT BIDDER MAY BE GIVEN REASONABLE TIME TO EITHER ACCEPT DELIVERY AT BID PRICE OR THAT AWARD BE CANCELLED AND DEPOSIT RETURNED. INC.: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 23. THE DCASR IS THE ACTIVITY WITHIN THE DEFENSE SUPPLY AGENCY (DSA) WHICH ADMINISTERS THE PROGRAM OF DISPOSAL OF CONTRACTOR INVENTORY FOR THE MILITARY DEPARTMENTS. THE INVITATION OFFERED TWO LOTS OF SCRAP METALS FOR SALE BY WEIGHT ON AN "AS IS. WHERE IS" BASIS. ESTIMATED WEIGHTS WERE STATED FOR EACH LOT.

B-162797, FEB. 26, 1968

BIDS - SALES - CONTENT CHANGES DECISION TO PECK IRON AND METAL CO., INC. DENYING PRICE REDUCTION BECAUSE OF CHANGES IN CONTENT OF A LOT OF SCRAP WHEN GOVERNMENT REMOVED. BIDDER FOR SURPLUS SCRAP WHO BEFORE AWARD AGREED TO ACCEPT PROPERTY AT BID PRICE WHEN ADVISED THAT PUMP ITEMS HAD BEEN REMOVED MUST HAVE AWARD CONSIDERED AS CONSUMMATING AN ENFORCEABLE CONTRACT. HOWEVER, IN VIEW OF POSSIBILITY OF MISUNDERSTANDING, DEFENSE SUPPLY AGENCY IS ADVISED THAT BIDDER MAY BE GIVEN REASONABLE TIME TO EITHER ACCEPT DELIVERY AT BID PRICE OR THAT AWARD BE CANCELLED AND DEPOSIT RETURNED.

TO PECK IRON AND METAL COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 23, 1967, AND ENCLOSURES, PROTESTING AGAINST CHANGES MADE BY THE GOVERNMENT TO THE CONTENT OF A LOT OF SCRAP GENERATED UNDER A DEPARTMENT OF THE NAVY COST-TYPE CONTRACT AND OFFERED FOR SALE UNDER IVITATION NO. 67B-S28, ISSUED SEPTEMBER 7, 1967, BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), PHILADELPHIA, PENNSYLVANIA, AND REQUESTING AN ADJUSTMENT OF THE PURCHASE PRICE. THE DCASR IS THE ACTIVITY WITHIN THE DEFENSE SUPPLY AGENCY (DSA) WHICH ADMINISTERS THE PROGRAM OF DISPOSAL OF CONTRACTOR INVENTORY FOR THE MILITARY DEPARTMENTS.

THE INVITATION OFFERED TWO LOTS OF SCRAP METALS FOR SALE BY WEIGHT ON AN "AS IS, WHERE IS" BASIS. ESTIMATED WEIGHTS WERE STATED FOR EACH LOT, AND THE ULTIMATE PURCHASE PRICES WERE TO BE BASED ON THE PRICES PER POUND QUOTED BY THE SUCCESSFUL BIDDERS AND ON THE ACTUAL WEIGHT OF THE SCRAP AS EVIDENCED BY CERTIFICATES OF WEIGHT TO BE FURNISHED BY THE PURCHASERS. THE INVITATION REQUESTED THAT INTERESTED PARTIES VISUALLY INSPECT THE PROPERTY AT THE SITE, NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, NEWPORT NEWS, VIRGINIA, BEFORE SUBMITTING QUOTATIONS. PURCHASERS WERE ADVISED THAT THE EXECUTION OF A WARRANTY TO THE GOVERNMENT THAT THE MATERIAL WOULD BE USED AS SCRAP ONLY WOULD BE REQUIRED ON EACH LOT, AND BY THE TERMS OF THE WARRANTY RELEASE THEREFROM COULD BE OBTAINED ONLY FROM, AND UPON PAYMENT OF CONSIDERATION TO, THE UNITED STATES. FURTHER, THE GOVERNMENT RESERVED TO ITSELF THE RIGHT TO REJECT ANY OR ALL BIDS.

THE PROPERTY WITH WHICH YOUR PROTEST IS CONCERNED WAS DESIGNATED AS LOT NO. 1 AND WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"LOT NO. 1 "SCRAP - MIXED METALS, APPROXIMATELY 100,000 LBS., CONSISTING OF A SONAR DOME, IMPULSE TRAPS, VALVES, MOTORS, ELECTRICAL COMPONENTS, HEATERS, LADDERS, DOOR FRAMES AND ASSEMBLIES, LOCKERS, RELAYS, CONNECTORS, BOLTS, BRACKETS, CABLE, WELDING ASSEMBLIES, WASHING MACHINE, TRACK, BEARINGS, ETC. APPROX. 100,000 LBS.

BID PRICE ---------- PER LB.' YOUR PROTEST LETTER READS, IN PART, AS FOLLOWS: "IN RESPONSE TO THAT SALE, OUR COMPANY SUBMITTED A BID AND AWARD WAS MADE BY LETTER DATED 29 SEPTEMBER 1967, A COPY OF WHICH IS ENCLOSED. AFTER RECEIPT OF AWARD, WE AGAIN INSPECTED THE MATERIAL OFFERED AND FOUND THAT SUBSEQUENT TO THE AWARD DATE, CERTAIN MATERIAL WAS REMOVED FROM THE LOT OFFERED FOR SALE AND OTHER MATERIAL OF A SUBSTANTIALLY LOWER VALUE WAS SUBSTITUTED THEREFOR. THIS WAS CALLED TO THE ATTENTION OF THE GOVERNMENT'S REPRESENTATIVES BY OUR LETTER DATED 6 OCTOBER 1967. ON 19 OCTOBER WE RECEIVED A RESPONSE FROM THE GOVERNMENT'S AGENT INDICATING THAT THEY WERE OF THE OPINION THAT THE ABOVE SUBSTITUTION IS PERMISSIBLE. OUR LETTER DATED 23 OCTOBER RESTATES OUR POSITION. WE SHOULD LIKE TO REQUEST THAT YOU REVIEW THIS MATTER AND TAKE WHATEVER ACTIONS YOU DEEM PROPER SO AS TO MINIMIZE THE ESTABLISHMENT OF LIABILITY ON THE PART OF THE GOVERNMENT.'

THE ENCLOSURES WHICH WERE RECEIVED WITH YOUR LETTER WERE FOUR LETTERS, THE SUBSTANCE OF WHICH IS AS FOLLOWS: 1. LETTER DATED SEPTEMBER 29, 1967, ADDRESSED TO YOU BY THE MANAGER OF PURCHASES AT THE CONTRACTOR'S PLANT, NOTIFYING YOU OF THE AWARD OF LOT NO. 1 TO YOU AT YOUR BID PRICE OF .3107 PER POUND, PLUS LOADING AND HANDLING CHARGE BUT MINUS YOUR BID DEPOSIT, AND FURNISHING YOU COPIES OF THE SCRAP WARRANTY FOR EXECUTION. 2. LETTER DATED OCTOBER 6, 1967, ADDRESSED BY YOU TO THE NAVY PROPERTY ADMINISTRATOR AT THE CONTRACTOR'S PLANT, ADVISING THAT YOU HAD BECOME AWARE ,SUBSEQUENT TO THE BID DATE" THAT THE GOVERNMENT WAS DESIROUS OF REMOVING CERTAIN MATERIAL FROM LOT NO. 1 AND, IN ADDITION, HAD ADDED NEW MATERIAL TO THE LOT, THE EFFECT OF WHICH WAS TO CHANGE THE LOT SIGNIFICANTLY FROM THE MATERIAL SHOWN FOR INSPECTION THROUGH THE DATE OF SALE, AND INDICATING YOUR WILLINGNESS TO COOPERATE WITH THE GOVERNMENT WITH A VIEW TO RESOLVING THE ISSUE IN A MUTUALLY SATISFACTORY MANNER. 3. LETTER DATED OCTOBER 19, 1967, FROM THE MANAGER OF PURCHASES TO YOU, NOTIFYING YOU THAT UNLESS THE LOT NO. 1 MATERIAL WAS PICKED UP WITHIN 15 DAYS, YOUR BID DEPOSIT WOULD BE FORFEITED AND THAT YOU WOULD BE LIABLE FOR THE DIFFERENCE BETWEEN YOUR BID PRICE AND THE NEXT HIGHEST BID PRICE, AND CALLING YOUR ATTENTION TO THE DISCLAIMER OF WARRANTY OF DESCRIPTION INCLUDED IN THE CONTRACT OF SALE TERMS. 4. LETTER DATED OCTOBER 23, 1967, ADDRESSED BY YOU TO THE MANAGER OF PURCHASES, DESIGNATING THE REMOVAL BY THE GOVERNMENT OF MATERIAL FROM LOT NO. 1 AS A BREACH OF CONTRACT BY THE GOVERNMENT AND REFERRING TO YOUR WILLINGNESS TO NEGOTIATE A MODIFICATION OF THE SALES CONTRACT TO MINIMIZE THE ALLEGED LIABILITY OF THE GOVERNMENT. IN THIS CONNECTION, YOU SPECIFICALLY STATED THAT THE REMOVAL OF THE PUMPS AND ADDITION OF NEW MATERIAL BY THE GOVERNMENT OCCURRED SUBSEQUENT TO THE DATE OF AWARD WITH A DECREASE OF APPROXIMATELY $20,000 IN THE VALUE OF THE PROPERTY.

IN A LETTER DATED NOVEMBER 6, WHICH YOU ADDRESSED TO THE DCASR, YOU MAKE THE FOLLOWING STATEMENTS: "THIS HAS REFERENCE TO OUR TELEPHONE CONVERSATIONS OF THIS AFTERNOON RELATING TO LOT NO. 1 ON INVITATION 67B- S28. "IN THAT CONVERSATION I INDICATED THAT UPON RECEIPT OF THE AWARD DATED 29 SEPTEMBER 1967, OUR PERSONNEL PROCEEDED TO MAKE COMMITMENTS TO RESELL THE MATERIAL COVERED BY THE AWARD NOTICE. IT IS OUR CONCERN WITH FULFILLING THIS COMMITMENT THAT PROMPTED ME TO SUGGEST THE FOLLOWING SETTLEMENT. "AS YOU ARE AWARE, THE OTHER BIDDERS ON THE LOT IN QUESTION WERE AS FOLLOWS:

SPOONER SALVAGE COMPANY ?178/LB.

GARDEN CITY IRON AND METAL .148/LB.

KELLY .100/LB. "IN VIEW OF THE FACT THAT THE LOT WAS REPRESENTED TO CONTAIN 100,000 POUNDS, THE RETURN OFFERED BY THE SECOND HIGHEST BIDDER WOULD HAVE YIELDED THE GOVERNMENT $17,800. IT IS OUR SUGGESTION THAT: 1. THE GOVERNMENT BE ALLOWED TO RETAIN THAT MATERIAL WHICH IT HAS REMOVED FROM THE ORIGINAL LOT. IT IS OUR UNDERSTANDING THAT THIS MATERIAL REPRESENTS APPROXIMATELY 20,000 POUNDS. 2. THE PURCHASE PRICE BE ADJUSTED SO THAT THE RETURN TO THE GOVERNMENT FOR THE MATERIAL WHICH REMAINS SUBSEQUENT TO THE REMOVAL OF THE ITEMS REFERRED TO IN NO. 1 ABOVE, WOULD BE 10 PERCENT GREATER THAN THAT OFFERED BY THE SECOND HIGHEST BIDDER - OR A TOTAL OF $19,580 FOR THE REMAINING MATERIAL IN LOT NO. 1. 3. PECK IRON AND METAL WOULD WAIVE ANY CLAIMS WHICH IT MIGHT HAVE AGAINST THE GOVERNMENT AS A RESULT OF THE GOVERNMENT'S ACTIONS UNDER THIS CONTRACT. "WE ARE OF THE OPINION THAT THIS SUGGESTION REPRESENTS AN EQUITABLE SOLUTION, IN THAT THE GOVERNMENT WILL RECEIVE A RETURN FOR THE RESIDUAL MATERIAL GREATER THAN IT WOULD HAVE RECEIVED UNDER THE SECOND HIGHEST BID FOR THE ENTIRETY OF THE ORIGINAL MATERIAL AND, IN ADDITION, THE GOVERNMENT WILL BE ALLOWED TO RETAIN THOSE ITEMS WHICH IT HAS ALREADY REMOVED FROM THE LOT.' THE DCASR, HOWEVER, HAS ELECTED TO DEFER ANY FURTHER ACTION IN THE MATTER PENDING OUR DECISION ON YOUR PROTEST AND THEREFORE HAS ADVISED YOU BY LETTER OF NOVEMBER 7 THAT YOUR SETTLEMENT OFFER HAS BEEN REFERRED TO OUR OFFICE FOR CONSIDERATION AND DECISION.

A REPORT FURNISHED TO OUR OFFICE BY DSA, WHICH WE MUST ACCEPT AS CORRECT ABSENT EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF ITS CORRECTNESS, STATES THAT ON SEPTEMBER 22, 1967, THE DATE THE BIDS WERE OPENED, THE DEPARTMENT OF THE NAVY DETERMINED THAT CERTAIN PUMPS, PUMP MOTORS AND PUMP BODIES, WHICH WERE INCLUDED IN THE LOT NO. 1 MATERIAL AS ADVERTISED FOR SALE, SHOULD BE WITHDRAWN FROM DISPOSAL ACTION AND HELD FOR INSTRUCTIONS FROM THE SECRETARY OF THE NAVY CONCERNING THEIR DISPOSITION, AND THE RECORD INDICATES THAT SUCH INFORMATION WAS CONVEYED BY TELEPHONE ON THE SAME DATE TO MR. J. N. BRISTOW, THE NAVY'S REPRESENTATIVE AT NEWPORT NEWS. THE RECORD FURTHER INDICATES THAT THE DEPARTMENT CONFIRMED SUCH INSTRUCTIONS IN A TELEGRAM DATED SEPTEMBER 25 TO ITS NEWPORT NEWS OFFICE. FURTHER, MR. BRISTOW HAS FURNISHED A STATEMENT TO THE EFFECT THAT ON SEPTEMBER 25 OR 26, AFTER THE NECESSITY FOR THE REMOVALS HAD BEEN CONFIRMED, MR. BRISTOW CONFERRED BY TELEPHONE WITH MR. DAVID PECK OF YOUR COMPANY WITH THE RESULT THAT MR. PECK, WHO HAD INSPECTED THE LOT NO. 1 MATERIAL AS ADVERTISED FOR SALE BEFORE YOUR BID WAS SUBMITTED, AGAIN VISITED THE CONTRACTOR'S PLANT AND WAS SHOWN THE MATERIAL WHICH WAS TO BE RETAINED. MR. BRISTOW FURTHER STATES THAT DURING THE COURSE OF SUCH VISIT MR. PECK DELIBERATED AND THEREAFTER STATED THAT HE WAS AGREEABLE TO ACCEPTING "THE AWARD AS BID IN SPITE OF THE REMOVALS" AND THAT SUCH DECISION WAS CONFIRMED BY MR. PECK IN A TELEPHONE CALL TO MR. BRISTOW WITHIN TWO HOURS AFTER MR. PECK'S DEPARTURE FROM THE PROPERTY SITE. THE AWARD OF LOT NO. 1 TO YOU FOLLOWED ON SEPTEMBER 29.

IN ADDITION TO THE CHANGE OCCASIONED BY THE REMOVAL OF THE PUMP ITEMS, WHICH DSA REPORTS HAD AN ESTIMATED WEIGHT OF 17,000 POUNDS AND AN ESTIMATED COST OF $47,100, THE RECORD SHOWS THAT THE CONTENT OF LOT NO. 1 WAS FURTHER CHANGED BY THE ADDITION OF THREE ITEMS OF 90-PERCENT BRASS WITH AN ESTIMATED WEIGHT OF 3,590 POUNDS AND AN ESTIMATED COST OF $6,520. HOWEVER, THERE IS NO INDICATION IN THE RECORD AS TO THE DATE THE ADDITION WAS MADE.

YOU CONTEND THAT THE CHANGES IN THE CONTENT OF LOT NO. 1 WERE MADE BY THE GOVERNMENT AFTER AWARD TO YOU AND THEREFORE A REDUCTION IN YOUR PURCHASE PRICE IS WARRANTED TO COMPENSATE FOR THE REDUCTION IN THE VALUE OF THE PROPERTY. DSA, HOWEVER, CONTENDS THAT THE AWARD WHICH WAS MADE TO YOU ON SEPTEMBER 29 COVERED THE MATERIAL AS CONSTITUTED ON THAT DATE, THAT IS, THE MATERIAL MINUS THE ITEMS REMOVED BY THE NAVY AS SHOWN TO MR. PECK ON SEPTEMBER 25 OR 26 ON HIS SECOND VISIT TO THE PROPERTY SITE, WHICH HE AGREED TO ACCEPT AT THE PRICE BID ON THE ORIGINALLY ADVERTISED MATERIAL. FURTHER, DSA ASSERTS, SHOULD IT BE DETERMINED THAT AT THE TIME OF SUCH VISIT THERE WAS A MISUNDERSTANDING AS TO THE CONTENT OF THE PROPERTY AVAILABLE FOR SALE AND/OR THE PROPERTY WHICH YOU WERE WILLING TO ACCEPT AT YOUR BID PRICE, THERE WAS A MUTUAL MISTAKE OF FACT AND THEREFORE NO VALID CONTRACT RESULTED. ADDITIONALLY, DSA POINTS OUT THAT SINCE THE PROPERTY MAY BE USED ONLY AS SCRAP, ANY DAMAGES WHICH MIGHT BE CONSIDERED DUE WOULD BE LIMITED TO THE SCRAP VALUE OF THE DELETED ITEMS.

FROM THE FOREGOING IT WOULD APPEAR THAT ONE OF TWO CONCLUSIONS MUST BE REACHED; THAT IS, EITHER YOU DID NOT CONSIDER THE GOVERNMENT'S PROPOSED ACTION IN REMOVING THE PUMP ITEMS FROM LOT NO. 1 AS HAVING ANY MATERIAL EFFECT UPON YOUR PER POUND BID PRICE AND THEREFORE AFFIRMED YOUR BID PRICE FOR THE REMAINDER OF LOT NO. 1, OR YOU HAD NO UNDERSTANDING, PRIOR TO AWARD AND AS A RESULT OF THE CONVERSATIONS BETWEEN MR. BRISTOW AND YOUR MR. PECK, THAT THE PUMP ITEMS WERE TO BE REMOVED FROM LOT NO. 1, AND THEREFORE IT WAS NOT YOUR INTENTION TO CONFIRM YOUR PER POUND UNIT BID PRICE ON THAT BASIS. ON THE BASIS OF THE PRESENT RECORD IT IS OUR OPINION THAT THE FIRST CONCLUSION WOULD BE PROPER, AND SINCE WE ARE AWARE OF NO REASON WHY A REQUEST FOR AFFIRMATION OF YOUR BID PRICE WOULD BE IMPROPER IN A SALE OF THE TYPE HERE INVOLVED, THE FURTHER CONCLUSION WOULD APPEAR TO BE REQUIRED THAT THE AWARD ACTION CONSUMMATED A BINDING CONTRACT WHICH REQUIRES YOU TO TAKE DELIVERY OF LOT NO. 1, LESS THE PUMP ITEMS, AT YOUR PER POUND UNIT BID PRICE.

CONVERSELY, IF THE SECOND CONCLUSION IS PROPER, THE FACT STILL REMAINS THAT INSOFAR AS THE GOVERNMENT WAS CONCERNED ITS INTENT WAS TO ACCEPT A BID ON THE CHANGED PROPERTY ONLY, AND THEREFORE THE FURTHER CONCLUSION IS REQUIRED THAT SINCE THERE WAS NO MEETING OF THE MINDS THE AWARD WHICH WAS MADE TO YOU ON SEPTEMBER 29 DID NOT RESULT IN A VALID AND BINDING CONTRACT. FURTHER, EVEN IF THE GOVERNMENT HAD NOT SERVED NOTICE ON YOU PRIOR TO THE AWARD AS TO THE CHANGE IN THE CONTENT OF LOT NO. 1, IT WOULD APPEAR THAT THE GOVERNMENT COULD BE CHARGED WITH NO GREATER OFFENSE THAN A PARTIAL BREACH OF ITS OBLIGATION TO DELIVER ALL OF LOT NO. 1, IN WHICH EVENT THE MEASURE OF YOUR DAMAGES AND THE GOVERNMENT'S LIABILITY WOULD APPEAR TO BE SUCH LOST PROFIT AS YOU MAY BE ABLE TO SHOW YOU WOULD HAVE REALIZED IF YOU HAD RECEIVED THE 17,000 POUNDS OF MATERIAL WHICH WAS REMOVED FROM LOT NO. 1 BY THE GOVERNMENT.

WE SEE NO VALID BASIS UPON WHICH IT MAY BE CONTENDED UNDER EITHER OF THE FOREGOING CONCLUSIONS THAT ANY REDUCTION SHOULD BE MADE IN YOUR PER POUND UNIT BID PRICE AND THAT YOU SHOULD BE REQUIRED, OR PERMITTED, TO PURCHASE LOT NO. 1 AS PRESENTLY CONSTITUTED AT SUCH A REDUCED BID PRICE. CLEARLY, A REDUCTION IN YOUR BID PRICE COULD BE JUSTIFIED ONLY UPON A SHOWING THAT REMOVAL OF THE PUMP ITEMS FROM LOT NO. 1 RESULTED IN A LOWER AVERAGE PER POUND VALUE OF THE MATERIAL REMAINING IN THE LOT THAN THE AVERAGE PER POUND VALUE OF LOT NO. 1 PRIOR TO SUCH ACTION. SINCE THE RECORD DOES NOT INDICATE THAT THE SCRAP VALUE OF THE METALS IN THE PUMP ITEMS WAS ANY GREATER THAN THE SCRAP VALUE OF THE METALS IN THE REMAINING ITEMS IN LOT NO. 1, WE SEE NO VALID BASIS ON WHICH IT MAY BE CONCLUDED THAT YOUR PER POUND BID PRICE WAS COMPROMISED BY REMOVAL OF THE PUMP ITEMS, ESPECIALLY IN VIEW OF OUR UNDERSTANDING THAT THE TOTAL WEIGHT OF THE REMAINDER OF LOT NO. 1 HAS BEEN FOUND TO BE CONSIDERABLY IN EXCESS OF THE ESTIMATED WEIGHT OF 100,000 BY WHICH LOT NO. 1 WAS DESCRIBED IN THE SOLICITATION FOR BIDS, AND THAT THE PER POUND SCRAP VALUE OF THE 3,590 POUNDS OF 90 PERCENT BRASS ITEMS ADDED TO LOT NO. 1 SHOULD BE HIGHER THAN EITHER THE PER POUND SCRAP VALUE OF THE PUMP ITEMS OR OF THE OTHER MIXED METALS COMPRISING LOT NO. 1. IN VIEW THEREOF WE MUST CONCLUDE THAT ANY DOWNWARD REVISION IN YOUR BID PRICE WOULD BE IMPROPER, AND THAT ANY DELIVERIES TO YOU OF THE LOT 1 METALS UNDER THE CONTRACT AWARDED TO YOU ON SEPTEMBER 29, 1967, MUST BE PAID FOR AT YOUR BID PRICE OF ?3107 PER POUND.

AS INDICATED ABOVE, IT IS OUR OPINION THAT THE PRESENT RECORD SUPPORTS A CONCLUSION THAT THE AWARD TO YOU CONSUMMATED AN ENFORCEABLE CONTRACT AT YOUR UNIT BID PRICE FOR LOT NO. 1 LESS THE PUMP ITEMS, AND THAT ANY REFUSAL ON YOUR PART TO TAKE DELIVERY AND MAKE PAYMENT AT YOUR BID PRICE WOULD CONSTITUTE A BREACH OF YOUR CONTRACT. HOWEVER, IN VIEW OF THE POSSIBILITY OF A MISUNDERSTANDING BETWEEN MR. PECK AND MR. BRISTOW AS TO THE INTENT OF MR. PECK'S VERBAL ADVICE ON SEPTEMBER 25 OR 26, IN WHICH EVENT THERE WAS NO REAL MEETING OF THE MINDS, WE ARE ADVISING DSA THAT WE WILL HAVE NO OBJECTION IF YOU ARE GIVEN A REASONABLE TIME IN WHICH TO ADVISE THAT AGENCY EITHER THAT YOU WILL ACCEPT DELIVERY OF LOT NO. 1 AS PRESENTLY CONSTITUTED AND MAKE PAYMENT AT YOUR BID PRICE OF ?3107 PER POUND, OR THAT IT WAS NOT YOUR INTENTION TO AFFIRM YOUR BID PRICE ON LOT NO. 1 WITHOUT THE PUMP ITEMS AND THAT YOU THEREFORE REQUEST CANCELLATION OF THE AWARD ACTION AND RETURN OF YOUR DEPOSIT. IN THE EVENT DSA DOES NOT RECEIVE ADVICE IN ACCORD WITH ONE OF THE FOREGOING ALTERNATIVES WITHIN SUCH DESIGNATED PERIOD, WE ARE ADVISING THE AGENCY TO TREAT SUCH FAILURE AS A BREACH OF YOUR CONTRACT, AND TO INSTITUTE SUCH ACTION AS MAY BE APPROPRIATE TO CHARGE YOU WITH DEFAULT, TO RESOLICIT BIDS ON LOT NO. 1 AS PRESENTLY CONSTITUTED, AND TO APPLY YOUR BID DEPOSIT AS LIQUIDATED DAMAGES AS SET OUT IN THE SOLICITATION DOCUMENT UNDER WHICH YOUR BID WAS SUBMITTED.

WE ARE INFORMALLY ADVISED BY DSA THAT YOU ARE CORRECT IN YOUR BELIEF THAT THE MATERIAL IN QUESTION HAS BEEN MOVED INTO COMMERCIAL STORAGE AT THE PLANT OF THE SECOND HIGH BIDDER, AND THAT SUCH ACTION WAS NECESSARY BECAUSE NEWPORT NEWS SHIPBUILDING AND DRYDOCK COMPANY NEEDED THE SPACE THE MATERIAL WAS OCCUPYING AT ITS PLANT. IN VIEW THEREOF, AND SINCE THIS ACTION WAS TAKEN AFTER AWARD AND IS THEREFORE UNRELATED TO YOUR PRESENT PROTEST, IT CANNOT AFFECT OUR CONCLUSIONS AS SET OUT ABOVE. IN THIS CONNECTION, IT IS OUR UNDERSTANDING THAT CONSIDERATION WILL BE GIVEN TO EQUALIZING ANY COMPETITIVE ADVANTAGE WHICH MAY ACCRUE TO A BIDDER IN POSSESSION IF BIDS ARE AGAIN SOLICITED ON THE MATERIAL IN QUESTION.