B-168856, MAR. 20, 1970

B-168856: Mar 20, 1970

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WHERE NEXT HIGH BID WAS ?3889. MAY HAVE CONTRACT REFORMED TO REFLECT ?4856 UNIT PRICE. PROVIDED NO OTHER BIDDER IS DISPLACED. TO GENERAL HEDLUND: REFERENCE IS MADE TO A LETTER (YOUR REFERENCE DASH-G) DATED FEBRUARY 18. WHICH WAS DESCRIBED IN THE INVITATION AS: "98. 000 POUNDS" THE FOLLOWING BIDS WERE RECORDED AT THE BID OPENING: UNIT PRICE ITEM 98 (PER POUND) TOTAL BID AMOUNT COLTON .9356 $32. AWARD FOR ITEM 98 WAS MADE TO COLTON AND ON DECEMBER 18. IT ALSO ADVISED THAT ITS TELEGRAPHIC MODIFICATION WAS INTENDED TO INCREASE THE BID BY ?3856 PER POUND OVER ITS INITIAL BID OF 10[ PER POUND. IF A BIDDER MAKES A UNILATERAL MISTAKE HE IS BOUND BY THE CONTRACT AWARDED UNLESS THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE AT THE TIME OF THE AWARD.

B-168856, MAR. 20, 1970

SALES--BIDS--MISTAKES--CORRECTION TO NEXT HIGHEST BIDDER IN GOVERNMENT SALE OF METAL SCRAP, WHERE NEXT HIGH BID WAS ?3889, PURCHASER WHO INTENDED TO INCREASE ?10 BID BY ?3856, DUE TO TRANSPOSITION OF FIRST TWO DIGITS IN TIMELY TELEGRAPHIC MODIFICATION, RECEIVED AWARD AT ?9356, MAY HAVE CONTRACT REFORMED TO REFLECT ?4856 UNIT PRICE, WHICH STILL EXCEEDS NEXT HIGH BID BY ?0965 AND GOVT.'S ESTIMATE BY ?0656, SINCE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF ERROR FROM WIDE RANGE OF BID PRICES, WHICH ORDINARILY FALL WITHIN NARROWER RANGE IN SCRAP METAL SALES. ALTHOUGH GENERALLY, UNILATERAL MISTAKE MAY BE SUFFICIENT FOR CONTRACT RESCISSION, BUT NOT REFORMATION, IF BIDDER ESTABLISHES MISTAKE, AND EXACT AMOUNT INTENDED TO BE BID, AND PROVIDED NO OTHER BIDDER IS DISPLACED, CONTRACT MAY BE REFORMED. SEE COMP. GEN. DECS. AND CT. CASES CITED.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER (YOUR REFERENCE DASH-G) DATED FEBRUARY 18, 1970, WITH ENCLOSURES, FROM YOUR ASSISTANT COUNSEL, SUBMITTING A REPORT CONCERNING THE REQUEST OF THE COLTON METALEX COMPANY (COLTON) FOR REFORMATION OR RESCISSION OF SALES CONTRACT 41 0060-015 BECAUSE OF A MISTAKE IN BID ALLEGED AFTER AWARD OF THE CONTRACT.

INVITATION FOR BIDS (IFB) 41-0060 OFFERED FOR SALE 107 ITEMS OF SURPLUS GOVERNMENT PROPERTY. COLTON'S REQUEST FOR REFORMATION OR RESCISSION CONCERNS ITEM 98, WHICH WAS DESCRIBED IN THE INVITATION AS:

"98. NICKEL AND COPPER BASE ALLOY SCRAP:

MONEL AND COPPER-NICKEL BORINGS AND TURNINGS WITH FOREIGN MATTER INCLUDING OTHER FERROUS AND NON-FERROUS METALS, MOISTURE, OIL AND DEBRIS.

OUTSIDE - BIN 14 35,000 POUNDS"

THE FOLLOWING BIDS WERE RECORDED AT THE BID OPENING:

UNIT PRICE

ITEM 98 (PER POUND) TOTAL BID AMOUNT

COLTON .9356 $32,746.00

BIDDER #2 .3889 13,611.50

BIDDER #3 .256899 8,991.47

ON DECEMBER 5, 1969, AWARD FOR ITEM 98 WAS MADE TO COLTON AND ON DECEMBER 18, 1969, COLTON ALLEGED ERROR AND EXPLAINED THAT IT HAD ORIGINALLY BID 10[ PER POUND. IT ALSO ADVISED THAT ITS TELEGRAPHIC MODIFICATION WAS INTENDED TO INCREASE THE BID BY ?3856 PER POUND OVER ITS INITIAL BID OF 10[ PER POUND, BUT THAT THE TELEGRAM HAD ACTUALLY INCREASED THE BID BY ?8356 PER POUND DUE TO A TRANSPOSITION OF THE INITIAL TWO DIGITS IN THE TELEGRAPHIC MODIFICATION. BY LETTER DATED DECEMBER 24, 1969, COLTON SUBMITTED ORIGINAL WORK PAPERS AND AN AFFIDAVIT STATING THAT A TRANSPOSITION HAD OCCURRED IN THE BID MODIFICATION AS TRANSMITTED BY THE TELEGRAPH COMPANY.

AS A GENERAL RULE, IF A BIDDER MAKES A UNILATERAL MISTAKE HE IS BOUND BY THE CONTRACT AWARDED UNLESS THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE MISTAKE AT THE TIME OF THE AWARD. SALIGMAN V. UNITED STATES, 56 F. SUPP. 505 (1944). HOWEVER, IF THE CONTRACTING OFFICER WAS ACTUALLY OR CONSTRUCTIVELY AWARE OF THE MISTAKE, THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. KEMP V. UNITED STATES, 38 F. SUPP. 568 (1941); WENDER PRESSES, INC. V. UNITED STATES, 343 F. 2D 961 (1965). ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS PROPERTY SALES IS NOT DEEMED TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE PROPERTY MAY BE PUT. B-160704, FEBRUARY 16, 1967. HOWEVER, WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METAL BECAUSE OF ITS LIMITED USES, AND VARIATIONS IN BID PRICES THEREFORE ARE GENERALLY LESS THAN A CENT OR A CENT AND ONE-HALF PER POUND. B-149660, SEPTEMBER 21, 1962.

ON ITEM 98 THE BIDS RANGED IN PRICE FROM ?256899 PER POUND TO ?9356 PER POUND. THE SALES CONTRACTING OFFICER NOW REPORTS THAT HE SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE MISTAKE IN BID PRIOR TO AWARD, AND HE RECOMMENDS THAT THE CONTRACT BE RESCINDED AND THE PROPERTY BE RE OFFERED ON ANOTHER INVITATION FOR BIDS. YOUR OFFICE RECOMMENDS THAT THE CONTRACT PRICE SHOULD BE REFORMED.

AS A GENERAL RULE, A UNILATERAL MISTAKE MAY BE A SUFFICIENT REASON FOR RESCISSION OF A CONTRACT, BUT NOT FOR REFORMING IT. HEARNE V. MARINE INSURANCE CO; 87 U.S. 488 (1874). HOWEVER, IF A BIDDER CAN SHOW NOT ONLY THAT HE MADE A MISTAKE, BUT ALSO THE EXACT AMOUNT THAT HE INTENDED TO BID, THE CONTRACT OR BID MAY BE REFORMED SUBJECT TO THE PROVISO THAT NO OTHER BIDDER IS DISPLACED. 18 COMP. GEN. 594 (1939); 15 COMP. GEN. 746 (1936). IN THE INSTANT CASE, THERE IS CONVINCING EVIDENCE SHOWING THE EXISTENCE OF THE ERROR, ITS NATURE, AND HOW IT OCCURRED AND WHAT COLTON ACTUALLY INTENDED TO BID. AS POINTED OUT IN YOUR REPORT, COLTON ALLEGED AN INTENTION TO BID ?4856 PER POUND WHICH EXCEEDS THE NEXT HIGH BID BY ?0965 PER POUND AND THE MAXIMUM ESTIMATED VALUE PLACED UPON THE PROPERTY BY THE GOVERNMENT BY ?0656 PER POUND. IN VIEW THEREOF, AND SINCE THE CORRECTED CONTRACT PRICE OF ?4856 PER POUND WILL BE GREATER THAN THE BID PRICE OF THE SECOND HIGH BIDDER, YOU ARE AUTHORIZED TO REFORM THE CONTRACT PRICE ACCORDINGLY. SEE B 158145, NOVEMBER 25, 1966.

A COPY OF THIS DECISION IS BEING FURNISHED TO COLTON.

THE FILE FORWARDED WITH YOUR ASSISTANT COUNSEL'S LETTER OF FEBRUARY 18 IS RETURNED.