B-164553, AUG. 15, 1968

B-164553: Aug 15, 1968

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KNOTT: REFERENCE IS MADE TO A LETTER DATED JULY 12. THE SOLICITATION ADVISED PROSPECTIVE BIDDERS THAT BIDS WERE TO BE SUBMITTED ON A PER-POUND BASIS. THAT THE ADVERTISED SCRAP WAS BEING SOLD "AS IS. " "WHERE IS. THE RECORD INDICATES THAT A TOTAL OF EIGHT BIDS WAS RECEIVED IN RESPONSE TO THE SOLICITATION. WAS IN THE AMOUNT OF $0.0721. WHICH WAS APPROXIMATELY 13 CENTS PER POUND LOWER THAN H.D.'S BID. THE DIFFERENCE BETWEEN THE HIGH BID AND THE SECOND HIGH BID IS APPROXIMATELY TWICE AS MUCH AS THE DIFFERENCE BETWEEN THE SECOND HIGH BID AND THE LOW BID AND THE BALANCE OF THE BIDS RECEIVED WAS ABOUT EQUALLY DISTRIBUTED BETWEEN THE LATTER TWO BID PRICES. DISCOVERED THAT THE RATE OF RECOVERY WAS ONLY ABOUT 15 PERCENT.

B-164553, AUG. 15, 1968

TO MR. KNOTT:

REFERENCE IS MADE TO A LETTER DATED JULY 12, 1968, WITH ENCLOSURES, FROM THE GENERAL COUNSEL, REPORTING ON THE REQUEST OF HOBART B. HUGHES, ESQUIRE, ON BEHALF OF H.D. METAL CO., INC., TO RESCIND THE AWARD MADE TO THAT FIRM ON FEBRUARY 29, 1968, UNDER SALES LETTER NO. 3DPS-1CB-68 92, IN THE TOTAL AMOUNT OF $39,980.

THE SOLICITATION, ISSUED FEBRUARY 13, 1968, BY THE PROPERTY MANAGEMENT AND DISPOSAL SERVICE, REGION 3, SOLICITED BIDS FOR THE SALE OF APPROXIMATELY 200,000 POUNDS OF "NONFERROUS CONTAMINATED - SCRAP" LOCATED AT THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, WALLOPS STATION, WALLOPS ISLAND, VIRGINIA. THE SOLICITATION ADVISED PROSPECTIVE BIDDERS THAT BIDS WERE TO BE SUBMITTED ON A PER-POUND BASIS; THAT THE ADVERTISED SCRAP WAS BEING SOLD "AS IS," "WHERE IS," IN ACCORDANCE WITH THE VARIOUS TERMS AND CONDITIONS REFERENCED THEREIN; AND THAT THE PROPERTY COULD BE INSPECTED DURING CERTAIN HOURS FROM FEBRUARY 13 THROUGH 28, 1968.

THE RECORD INDICATES THAT A TOTAL OF EIGHT BIDS WAS RECEIVED IN RESPONSE TO THE SOLICITATION, RANGING FROM H.D.'S HIGH BID OF $0.1999 PER POUND TO A LOW OF $0.00691 PER POUND. THE SECOND HIGH BID SUBMITTED BY GARDEN CITY SCRAP IRON AND METAL, INC., WAS IN THE AMOUNT OF $0.0721, WHICH WAS APPROXIMATELY 13 CENTS PER POUND LOWER THAN H.D.'S BID, BUT ONLY 6-1/2 CENTS PER POUND HIGHER THAN THE LOW BID. RESTATED, THE DIFFERENCE BETWEEN THE HIGH BID AND THE SECOND HIGH BID IS APPROXIMATELY TWICE AS MUCH AS THE DIFFERENCE BETWEEN THE SECOND HIGH BID AND THE LOW BID AND THE BALANCE OF THE BIDS RECEIVED WAS ABOUT EQUALLY DISTRIBUTED BETWEEN THE LATTER TWO BID PRICES.

BY LETTERS DATED JUNE 6 AND JULY 2, 1968, MR. HUGHES ASSERTED THAT HIS CLIENT, H.D., HAD ERRONEOUSLY COMPUTED ITS BID, IN THAT IT HAD ASSUMED THAT THE RECOVERY RATE OF COPPER FROM THE SCRAP WOULD BE 50 PERCENT. HOWEVER, H.D., AFTER TAKING DELIVERY OF 25,000 POUNDS OF THE SCRAP, AND TESTING 100 POUNDS, DISCOVERED THAT THE RATE OF RECOVERY WAS ONLY ABOUT 15 PERCENT. WE NOTE THAT THE VARIOUS ESTIMATED ACTUAL RATES OF RECOVERY FOR THE DIFFERENT FORMS OF THE ADVERTISED SCRAP, AS STATED BY MR. HUGHES, HAVE BEEN CONFIRMED BY THE PROPERTY CUSTODIAN. THE CONTRACTING OFFICER REPORTS THAT, AFTER A CAREFUL REVIEW OF THE CIRCUMSTANCES, HE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR AND, THEREFORE, VERIFICATION OF THE BID SHOULD HAVE BEEN REQUESTED BEFORE AWARD.

ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT DEEMED TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. B-147427, NOVEMBER 6, 1961; B 149302, JULY 13, 1962. HOWEVER, WE HAVE STATED ON SEVERAL OCCASIONS THAT WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METALS BECAUSE OF THE LIMITED USES TO WHICH THEY MAY BE PUT. SEE B-160704, FEBRUARY 16, 1967; B-158334, JANUARY 21, 1966; AND B 149660,SEPTEMBER 21, 1962.

IN THE CIRCUMSTANCES AND SINCE THE CONTRACTING OFFICER ACCEPTED THE BID WITHOUT VERIFICATION AND WITHOUT CONSULTING THE HOLDING ACTIVITY AS TO THE REASONABLENESS OF THE BID PRICE FOR THE SCRAP, WE BELIEVE THAT THE RECORD REASONABLY JUSTIFIES THE GRANTING OF THE RELIEF REQUESTED. ACCORDINGLY, THE CONTRACT AWARDED TO H.D. MAY BE CANCELED IN THE MANNER ADMINISTRATIVELY RECOMMENDED.