B-169254, MAR. 25, 1970

B-169254: Mar 25, 1970

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BID PRICE ON WRONG ITEM WHILE WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT ORDINARILY DEEMED CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF NUMEROUS USES TO WHICH SURPLUS ITEMS MAY BE PUT BUT WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN SCRAP METAL'S SALES BECAUSE OF LIMITED USES. PRICES RANGING FROM LOW OF $15.15 TO HIGH OF $36.60 AND CONTRACTING OFFICER ADMITTING HE SHOULD HAVE BEEN AWARE OF PROBABILITY OF ERROR AND BID CONFIRMATION REQUESTED PRIOR TO AWARD. MAY HAVE CONTRACT CANCELED WITHOUT LIABILITY. TO GENERAL HEDLUND: REFERENCE IS MADE TO A LETTER DATED MARCH 6. TO HAVE BEEN MADE IN ITS BID UPON WHICH SALES CONTRACT NO. 37-0084-020 IS BASED. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 189 ON JANUARY 23.

B-169254, MAR. 25, 1970

SALES--BIDS--MISTAKES--CONTRACT CANCELLATION--BID PRICE ON WRONG ITEM WHILE WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT ORDINARILY DEEMED CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF NUMEROUS USES TO WHICH SURPLUS ITEMS MAY BE PUT BUT WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN SCRAP METAL'S SALES BECAUSE OF LIMITED USES, CONTRACTOR WHO ALLEGED ERROR IN BID FOR ITEM 189, PRICES RANGING FROM LOW OF $15.15 TO HIGH OF $36.60 AND CONTRACTING OFFICER ADMITTING HE SHOULD HAVE BEEN AWARE OF PROBABILITY OF ERROR AND BID CONFIRMATION REQUESTED PRIOR TO AWARD, MAY HAVE CONTRACT CANCELED WITHOUT LIABILITY. SEE COMP. GEN. DECS. CITED.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER DATED MARCH 6, 1970, FILE REFERENCE DSAH-G, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY APPLEBAUM IRON & METALS INC. TO HAVE BEEN MADE IN ITS BID UPON WHICH SALES CONTRACT NO. 37-0084-020 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS, BY INVITATION NO. 37 -0084 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS, INCLUDING ITEM 188 DESCRIBED AS 45 GROSS TONS OF NO. 2 HEAVY MELTING SCRAP STEEL AND ITEM 189 DESCRIBED AS 45 GROSS TONS OF STEEL BUSHELING SCRAP. IN RESPONSE, APPLEBAUM IRON & METALS SUBMITTED A BID DATED JANUARY 15, 1970, OFFERING TO PURCHASE THE SCRAP STEEL UNDER ITEM 188 AT A UNIT PRICE OF $19.55 PER GROSS TON AND THE STEEL BUSHELING SCRAP UNDER ITEM 189 AT A UNIT PRICE OF $36.60 PER GROSS TON. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 189 ON JANUARY 23, 1970.

IT IS REPORTED THAT ON JANUARY 29, 1970, THE PRESIDENT OF THE CORPORATION TELEPHONED THE CONTRACTING OFFICER AND ALLEGED THAT AN ERROR HAD BEEN MADE IN THE CORPORATION'S BID ON ITEMS 188 AND 189. IN A LETTER DATED JANUARY 29, 1970, THE PRESIDENT OF THE CORPORATION STATED THAT IN ENTERING THE CORPORATION'S BID PRICES ON THE BID FORM, HE REVERSED THE PRICES INTENDED FOR ITEMS 188 AND 189; THAT HE INTENDED TO QUOTE A PRICE OF $36.60 PER GROSS TON FOR ITEM 188 AND A PRICE OF $19.55 PER GROSS TON FOR ITEM 189; AND THAT THE CORPORATION HAS PREVIOUSLY PURCHASED UNDER ANOTHER INVITATION STEEL BUSHELING IDENTICAL TO THAT OFFERED UNDER ITEM 189 OF THE SUBJECT INVITATION AT A PRICE OF $18.55 PER GROSS TON. THE PRESIDENT OF THE CORPORATION REQUESTED THAT SALES CONTRACT NO. 37-0084-020 BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.

THE ABSTRACT OF BIDS SHOWS THAT THE FOUR BIDS ON ITEM 189, THE ITEM IN QUESTION, RANGED FROM A LOW OF $15.15 PER GROSS TON TO A SECOND HIGH BID OF $20.20 PER GROSS TON, AND THE HIGH BID OF $36.60 PER GROSS TON SUBMITTED BY APPLEBAUM. THE CURRENT MARKET APPRAISAL VALUE, KNOWN TO THE CONTRACTING OFFICER PRIOR TO BID OPENING, WAS $15 PER GROSS TON.

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. CONVERSELY, WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METALS BECAUSE OF THE LIMITED USES TO WHICH IT MAY BE PUT. SEE B-158334, JANUARY 21, 1966; AND B-149660, SEPTEMBER 21, 1962, WHERE IT WAS STATED THAT IN SCRAP METAL SALES VARIATIONS IN BID PRICES ARE GENERALLY LESS THAN A CENT OR A CENT AND ONE-HALF PER POUND. SEE ALSO B- 160704, FEBRUARY 16, 1967.

THE DIFFERENCE BETWEEN THE SECOND HIGH BID AND THE HIGHEST BID ON ITEM 189 WAS $16.40 PER GROSS TON AND THE DIFFERENCE BETWEEN SUCH HIGH BID AND THE CURRENT MARKET APPRAISAL VALUE WAS $21.60 PER GROSS TON. THE CONTRACTING OFFICER ADMITS THAT BECAUSE OF THESE CIRCUMSTANCES, HE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF THE CORPORATION AND THAT BID CONFIRMATION SHOULD HAVE BEEN REQUESTED PRIOR TO AWARD.

ACCORDINGLY, CONTRACT NO. 37-0084-020 MAY BE CANCELED WITHOUT LIABILITY TO THE CORPORATION AS ADMINISTRATIVELY RECOMMENDED.