B-169774, JUN. 1, 1970

B-169774: Jun 1, 1970

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

B-169774, JUN. 1, 1970

SALES--BIDS--MISTAKES--PRICE RANGE HIGH BIDDER ALLEGING AFTER AWARD THAT HE BID ON WRONG ITEM AND FURNISHING SUBSTANTIATING EVIDENCE MAY HAVE CONTRACT CANCELED. ALTHOUGH WIDE RANGE OF PRICES RECEIVED ON PURCHASE OF GOVERNMENT PROPERTY DOES NOT OF ITSELF PLACE CONTRACTING OFFICER ON NOTICE OF PROBABLE ERROR (AS IT MAY ON GOVERNMENT PURCHASES), BECAUSE BUYER'S PARTICULAR NEEDS ESTABLISH PRICE OFFERED, SINCE BIDDER'S HIGH BID HERE WAS 4-1/2 TIMES BID, 3 TIMES THAT OF UPSET PRICE AND IN LINE WITH BIDS ON DIFFERENT ITEM CONTRACTING OFFICER WAS PLACED ON NOTICE OF ERROR, WITH DUTY TO VERIFY BID. SEE COMP. GEN. DECS. CITED.

TO MR. KUNZIG:

REFERENCE IS MADE TO LETTER DATED MAY 8, 1970, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, CONCERNING THE REQUEST OF MR. PHILLIP ROSENFIELD OF THE ROMAC SUPPLY COMPANY, (ROMAC), HUNTINGTON PARK, CALIFORNIA, FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD UNDER INVITATION NO. 8DPS 70-120 FOR THE SALE OF 96 ITEMS OF MISCELLANEOUS MACHINERY ISSUED BY YOUR DENVER REGIONAL OFFICE.

ITEM 26 OF THE INVITATION WAS DESCRIBED AS A "CHUCKING & TURNING MACHINE, POTTER & JOHNSON, 1952 - 1 EA." NINE BIDS WERE RECEIVED ON THIS ITEM RANGING FROM $51 TO THE HIGH BID OF $3,667.67 BY ROMAC. NOTICE OF AWARD WAS ISSUED ON MARCH 19, 1970. ON MARCH 24, 1970, THE CONTRACTING OFFICE RECEIVED A TELEPHONE CALL FROM THE SECRETARY TO ROMAC'S PRESIDENT WHO ALLEGED THAT SHE HAD INADVERTENTLY ENTERED THE AMOUNT OF $3,666.67 OPPOSITE ITEM 26 WHEN SHE HAD INTENDED TO PLACE IT OPPOSITE ITEM 25, PRESS, FORGING NATIONAL, 1952. A FOLLOW-UP LETTER OF THE SAME DATE FROM ROMAC WAS RECEIVED BY THE CONTRACTING OFFICER CONFIRMING THE TELEPHONE CONVERSATION, SUBMITTING WORKSHEETS ALLEGEDLY VERIFYING THE MISTAKE, AND REQUESTING RELIEF FROM THE CONTRACT.

AFTER REVIEWING THE MATTER THE CONTRACTING OFFICER NOTED THAT ROMAC'S BID OF $3,667.67 ON ITEM 26 WAS CONSIDERABLY HIGHER THAN THE NEXT HIGH BID OF $800, AND THE UPSET PRICE OF $1200. IN VIEW OF THE DISPARITY IN BIDS AND PURSUANT TO GSA HANDBOOK PMD P 4055.1, CHANGE 3 DATED AUGUST 21, 1968, CHAPTER 4, PARAGRAPH 6(D), THE CONTRACTING OFFICER MADE FINDINGS, AND DETERMINED " *** THERE IS CLEAR AND CONVINCING EVIDENCE THAT THE BIDDER MADE A MISTAKE IN SUBMITTING A BID ON THE WRONG ITEM AND THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF A MISTAKE IN BID. THEREFORE IT IS RECOMMENDED THAT THE CONTRACT BE RESCINDED IN ITS ENTIRETY." THE RECOMMENDATION OF THE CONTRACTING OFFICER IS CONCURRED IN BY YOUR GENERAL COUNSEL, WHO ALSO POINTS OUT THAT ROMAC'S "BID WAS OVER FOUR AND A HALF TIMES GREATER ON ITEM 26 THAN THE NEXT HIGHEST BID AND THREE TIMES THE UPSET PRICE, AND MORE IN LINE WITH THE BIDS RECEIVED ON ITEM 25 *** ." IN THIS LATTER RESPECT, 14 BIDS ON ITEM 25 EXCEEDED $3,667.67 AND 10 BIDS WERE LESS THAN THAT AMOUNT.

AS INDICATED IN YOUR GENERAL COUNSEL'S LETTER, OUR OFFICE HAS GENERALLY TAKEN THE VIEW THAT A WIDE RANGE OF PRICES RECEIVED FOR THE PURCHASE OF GOVERNMENT SURPLUS PROPERTY DOES NOT, IN AND OF ITSELF, PLACE A CONTRACTING OFFICER ON NOTICE AS TO THE PROBABILITY OF ERROR, AS MAY BE TRUE WHEN THE GOVERNMENT IS ATTEMPTING TO OBTAIN NEW EQUIPMENT OR SUPPLIES. THE RATIONALE BEHIND THIS IS THAT PRICES OFFERED FOR SURPLUS PROPERTY ARE GENERALLY BASED, MORE OR LESS, UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE THE BIDDER MIGHT WISH TO TAKE. SEE 16 COMP. GEN. 596; 17 ID. 388; 28 ID. 261, AND ID. 550.

HOWEVER, WE AGREE THAT THE GREAT DISPARITY BETWEEN ROMAC'S HIGH BID AND THE ESTABLISHED UPSET PRICE, AS WELL AS THE SUBSTANTIAL DIFFERENCE BETWEEN THE HIGH BID OF ROMAC AND THE NEXT HIGH BID, SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR. THAT BEING THE CASE, THE CONTRACTING OFFICER PROPERLY SHOULD HAVE REQUESTED VERIFICATION OF THE BID BEFORE ACCEPTANCE. ACCORDINGLY, AND SINCE THERE IS NO DOUBT THAT AN ERROR WAS, IN FACT, MADE IN THE BID, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY.