B-167721, SEP 11, 1969

B-167721: Sep 11, 1969

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PURCHASER WHO AFTER AWARD ALLEGES MISTAKE ON ONE ITEM OF BID BUT WHO HAS NOT SUBMITTED EVIDENCE ESTABLISHING ERROR THAT WAS NOT APPARENT ON FACE OF BID MAY NOT HAVE PRICE REDUCED TO ACCOUNT FOR ALLEGED MISTAKE OR BE RELIEVED FROM OBLIGATION. SECRETARY: REFERENCE IS MADE TO A LETTER DATED AUGUST 13. HAS ALLEGED ITS MISTAKE WAS MADE) WAS DESCRIBED AS FOLLOWS: "ITEM NO. SUBMITTED A BID ON ITEM 28 WHICH WAS THE HIGHEST BID FOR THIS ITEM AT $263.99 (YEN EQUIVALENT 95. THIS HIGH BID WAS FOUND TO BE ACCEPTABLE. AWARD TO GROBAN WAS DELAYED PENDING THE BIDDER'S SIGNATURE OF AMENDMENT NO. 1. WAS RECEIVED ON APRIL 29. AWARD OF THE ITEM WAS MADE TO GROBAN ON THAT DATE. GROBAN NOTIFIED THE SALES CONTRACTING OFFICER THAT A MISTAKE IN BID HAD BEEN MADE IN THAT ITS BID FOR ITEM 28 SHOULD HAVE READ $263.99 FOR THE LOT OF SEVEN PUMPS AND NOT $263.99 EACH.

B-167721, SEP 11, 1969

BIDS - MISTAKES - EVIDENCE DECISION TO SECRETARY OF THE ARMY CONCERNING ACTION TO BE TAKEN CONCERNING MISTAKE IN BID ALLEGED BY GROBAN SUPPLY CO., INC., AFTER AWARD OF SURPLUS PROPERTY SALES CONTRACT. PURCHASER WHO AFTER AWARD ALLEGES MISTAKE ON ONE ITEM OF BID BUT WHO HAS NOT SUBMITTED EVIDENCE ESTABLISHING ERROR THAT WAS NOT APPARENT ON FACE OF BID MAY NOT HAVE PRICE REDUCED TO ACCOUNT FOR ALLEGED MISTAKE OR BE RELIEVED FROM OBLIGATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 13, 1969, WITH ENCLOSURES, FROM THE COUNSEL, OFFICE OF THE CHIEF OF SUPPORT SERVICES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING A MISTAKE IN BID ALLEGED BY THE GROBAN SUPPLY CO., INC., AFTER AWARD OF SALES CONTRACT NO. 92-557- 9083-007.

THE UNITED STATES ARMY DEPOT COMMAND, JAPAN, PROPERTY DISPOSAL DIVISION, SOLICITED BIDS UNDER SALES INVITATION NO. 92-557-9083 - OPENING DATE APRIL 15, 1969 - COVERING 50 ITEMS OF SURPLUS PROPERTY AS LISTED AND DESCRIBED THEREIN. ITEM 28 (THE ITEM UPON WHICH GROBAN SUPPLY CO. HAS ALLEGED ITS MISTAKE WAS MADE) WAS DESCRIBED AS FOLLOWS:

"ITEM NO. DESCRIPTION

"28 PUMPS: CONSISTING OF THE FOLLOWING

"6 EACH - PUMP: FUEL INJECTION, DIESEL

ENGINE. APPLICABLE TO CONSOLIDATED

DIESEL ELECTRIC COMPANY MODEL RD-14A,

300-KILOWATT, SKID-MOUNTED, GENERATOR

SET. FSN 2910-424-8517

"1 EACH - PUMP ASSEMBLY: FUEL INJECTION, WITH

GOVERNOR, DIESEL ENGINE. APPLICABLE TO

THEW SHOVEL MODEL L-820, 35-TON,

CRAWLER-MOUNTED CRANE-SHOVEL.

FSN 2910-371-5718.

"INSIDE - IN BOXES - PACKED - UNUSED - GOOD

CONDITION TOTAL ACQUISITION

COST: $3,474.00 ESTIMATED TOTAL

WEIGHT: 500 POUNDS

"PROPERTY LDST NO. 69-1682.

L/N 1620-69-WHSE K-27. (14)"

IN RESPONSE TO THE SALES INVITATION, GROBAN SUPPLY CO., INC. SUBMITTED A BID ON ITEM 28 WHICH WAS THE HIGHEST BID FOR THIS ITEM AT $263.99 (YEN EQUIVALENT 95,036.40). THE OTHER BIDS FOR ITEM 28 RANGED FROM 11,8880 YEN TO 2,000 YEN. THIS HIGH BID WAS FOUND TO BE ACCEPTABLE; HOWEVER, AWARD TO GROBAN WAS DELAYED PENDING THE BIDDER'S SIGNATURE OF AMENDMENT NO. 1. THE SIGNED AMENDMENT WHICH EFFECTED MINOR CHANGES TO THE STANDARD "DISPUTES" CLAUSE, WAS RECEIVED ON APRIL 29, 1969, AND AWARD OF THE ITEM WAS MADE TO GROBAN ON THAT DATE.

BY LETTER OF MAY 6, 1969, GROBAN NOTIFIED THE SALES CONTRACTING OFFICER THAT A MISTAKE IN BID HAD BEEN MADE IN THAT ITS BID FOR ITEM 28 SHOULD HAVE READ $263.99 FOR THE LOT OF SEVEN PUMPS AND NOT $263.99 EACH. THE CONTRACTING OFFICER STATES THAT VERIFICATION OF THE EXTENSIONS OF THE BID PRICES ENTERED ON THE BID HAD REVEALED NO ERRORS. THE PERCENTAGE OF RETURN FOR THE ITEM IS 53.2 PERCENT (TOTAL BID PRICE, $1,847.96] BY TOTAL ACQUISITION COST, $3,474). CONSEQUENTLY, GROBAN WAS REQUESTED TO FURNISH FURTHER INFORMATION AND DOCUMENTATION SUBSTANTIATING ITS ALLEGED MISTAKE IN BID.

GROBAN SUBMITTED A LETTER DATED MAY 20, 1969, ACCOMPANIED BY A PHOTOSTATIC COPY OF PAGE 22 OF THE BID WITH THE NOTATION "BID $263.99 LOT" INDICATED THEREON. IN ADDITION, A LETTER DATED JUNE 5, 1969, SIGNED BY MISS GLADYS MOLINA, SECRETARY TO MR. R.S. GROBAN, PRESIDENT OF THE FIRM AND SIGNER OF THE BID, WAS SUBMITTED. THIS LETTER INDICATED THAT THE ERROR WAS ON THE PART OF THE SECRETARY WHO IN PREPARING THE BID "PICKED UP THE QUANTITY AND EXTENDED BY THE LOT AMOUNT." THE COMPANY SUBMITTED THE ORIGINAL FILE COPY OF THE FIRM'S BID ON WHICH ENTRIES WERE MADE OF THE BID PRICES FOR ALL ITEMS BID ON, I.E., ITEMS 25, 26, 27 AND 28. ON THE LAST PAGE OF THE BID IS STAPLED ITS "WORKUP" (WORKSHEET). AS INDICATED IN THE LETTER, THESE ARE THE ONLY DOCUMENTS WHICH CAN BE FURNISHED BY GROBAN AS EVIDENCE IN ESTABLISHING THEIR MISTAKE. WE ARE ADVISED THAT THE MOST RELATIVE CONTRACT SALES EXPERIENCE, WHILE NOT RECENT, WAS 24.3 PERCENT OF THE ACQUISITION COST. THIS, WHEN EQUATED TO THE SUBJECT ITEM WOULD BE $120.60 EACH.

THE CONTRACTING OFFICER REPORTS THAT THERE WAS NO INDICATION OF A MISTAKE ON THE FACE OF THE BID AND THAT THE EXTENSION OF THE UNIT PRICE FOR ITEM 28 WAS CLEARLY INDICATED AND APPEARED CORRECT. SIMILARLY, THERE WAS NO ERROR IN THE GRAND TOTAL OF THE BIDS. THE BID FROM GROBAN FOR ITEM 28 WAS HIGH (53.2 PERCENT ACQUISITION COST), BUT THE SALES CONTRACTING OFFICER DID NOT CONSIDER IT AN UNUSUALLY HIGH BID IN VIEW OF PAST SALES EXPERIENCE, INCLUDING A 24.3 PERCENT RETURN FOR SIMILAR PUMPS. ALSO, WE ARE ADVISED THAT SOME OF THE LOCAL BIDS RECEIVED FOR THE ITEM WERE FOR ITS METAL CONTENT, WHILE THE BID FROM GROBAN AS EVIDENCED BY A STATEMENT WHICH ACCOMPANIED THE BID INDICATED THAT IT WAS PURCHASING THE PUMPS FOR RESALE.

THE SECRETARY OF THE FIRM, IN HER COMMENTS IN LETTER OF JUNE 5, 1969, STATED: "PICKED UP THE QUANTITY AND EXTENDED BY THE LOT AMOUNT"; HOWEVER, A LOT AMOUNT IS NEVER EXTENDED. ALSO, THE FACT THAT GROBAN'S WORKSHEET DID NOT REFLECT A DIFFERENCE IN THE VALUE OF THE PUMPS (6 EACH WITH AN ACQUISITION COST OF $2,790 AND 1 EACH WITH AN ACQUISITION COST OF $684), LENDS TO THE BELIEF THAT THERE WAS MISJUDGMENT ON THE PART OF THE CONTRACTOR AS TO THE VALUE OF THE PROPERTY OFFERED FOR SALE.

THE BASIC QUESTION FOR CONSIDERATION HERE IS NOT WHETHER GROBAN MADE A MISTAKE IN ITS BID INSOFAR AS ITEM 28 WAS CONCERNED, BUT WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. ANY ERROR WHICH MAY HAVE BEEN MADE WAS DUE SOLELY TO THE NEGLIGENCE OF THE BIDDER SINCE THE INVITATION WAS CLEAR AS TO THE MATERIALS COVERED BY THE VARIOUS ITEMS.

THE GENERAL PRINCIPLES APPLICABLE TO THIS CASE WERE SET OUT IN SALIGMAN V. UNITED STATES, 56 F. SUPP. 505, 507, WHERE IT WAS HELD THAT IF THERE WAS A UNILATERAL MISTAKE IN BID BY THE PURCHASER AND HE WAS AWARDED THE CONTRACT HE WOULD BE BOUND BY IT AND MUST BEAR THE CONSEQUENCES - UNLESS THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN, OF THE MISTAKE. THAT CASE, THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. KEMP UNITED STATES, 38 F. SUPP. 568; WENDER PRESSES, INC. V. UNITED STATES, 343 F.2D 961. SEE, B-164536, JULY 19, 1968; B-160226, NOVEMBER 3, 1966.

AS THIS WAS A SALE OF SURPLUS MATERIAL, KNOWLEDGE OF THE BID MISTAKE CANNOT BE IMPUTED TO THE CONTRACTING OFFICER BY COMPARING THE DIFFERENT BIDS AND NOTING THEIR RELATION TO EACH OTHER BECAUSE DIFFERENCES IN THE PRICES BID FOR SURPLUS PROPERTY DO NOT HAVE THE SAME IMPLICATION AS WOULD LIKE DIFFERENCES IN PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F. SUPP. 683, AFFIRMED 253 F.2D 956; 16 COMP. GEN. 596; 17 ID. 388; 601, 603; B- 164536, JULY 19, 1968.

IN THE INSTANT CASE, THE ALLEGED ERROR WAS NOT APPARENT ON THE FACE OF GROBAN'S BID, AND THE DIFFERENCES IN THE PRICES BID DID NOT CONSTITUTE A BASIS TO CHARGE THE CONTRACTING OFFICER WITH ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR. THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH AND NO ERROR WAS ALLEGED UNTIL AFTER AWARD OF THE CONTRACT. SUCH AWARD CONSUMMATED A VALID AND BINDING CONTRACT AND FIXED THE RIGHT AND OBLIGATIONS OF THE PARTIES. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY, V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, IT IS CONCLUDED THAT THERE IS NO LEGAL BASIS FOR REDUCING THE CONTRACT PRICE ON ACCOUNT OF THE ALLEGED MISTAKE IN BID OR FOR RELIEVING GROBAN FROM ITS OBLIGATION UNDER THE CONTRACT.

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