B-170024, JUN. 23, 1970

B-170024: Jun 23, 1970

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WHICH WHEN CONSTRUCTED WAS ABOUT 2- 1/2 CENTS HIGHER PER POUND THAN NEXT HIGH BID. MAY HAVE ITEM 43 CANCELED FROM CONTRACT SINCE BIDS ON SCRAP METAL GENERALLY VARY LESS THAN 1-1/2 CENTS PER POUND. MAY BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR BECAUSE OF AN ALLEGED ERROR IN ITS BID UPON WHICH THE CONTRACT IS BASED. WHEREAS THE NEXT HIGH BID WAS SUBMITTED ON A UNIT PRICE OF $0.1411 FOR A TOTAL ITEM PRICE OF $352.75. ITEM 43 WAS INCLUDED IN THE AWARD MADE TO YAFFE AT THE CONSTRUCTED UNIT PRICE EXTENDED FOR 2. IT WAS NOTED THAT THE BIDDER HAD SUBMITTED BIDS ON A NUMBER OF ITEMS AND ON ALL ITEMS IT HAD ENTERED A UNIT BID PRICE AS REQUIRED EXCEPT FOR ITEM 43 WHICH HAD ONLY A TOTAL (LOT) BID PRICE ENTERED.

B-170024, JUN. 23, 1970

BIDS--MISTAKES--CONTRACTING OFFICER'S ERROR DETECTION DUTY--UNIT V. LUMP SUM PRICES ON CONTRACT FOR SCRAP METAL DISPOSAL BIDDER, WHO IN TRANSFERRING FIGURES FROM WORKSHEET, ERRONEOUSLY ENTERED LOT PRICE INTENDED FOR ITEM 44 (SOLE LOT ITEM IN SALE) UNDER UNIT ITEM 43, WHICH WHEN CONSTRUCTED WAS ABOUT 2- 1/2 CENTS HIGHER PER POUND THAN NEXT HIGH BID, MAY HAVE ITEM 43 CANCELED FROM CONTRACT SINCE BIDS ON SCRAP METAL GENERALLY VARY LESS THAN 1-1/2 CENTS PER POUND, WHICH FACT WHEN TAKEN WITH LOT BID ON UNIT ITEM, SHOULD PLACE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF PROBABLE ERROR WITH DUTY TO REQUEST VERIFICATION. SEE COMP. GEN. DECS. CITED.

TO GENERAL HEDLUND:

BY LETTER DATED JUNE 9, 1970, WITH ENCLOSURE, YOUR REFERENCE DSAH-G, MISS SARAH F. WILLIAMS, YOUR ASSISTANT COUNSEL, REQUESTED OUR DECISION WHETHER ITEM 43 IN SALES CONTRACT NO. 37-0123-043 AWARDED TO YAFFE IRON & METAL COMPANY, INC; MAY BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR BECAUSE OF AN ALLEGED ERROR IN ITS BID UPON WHICH THE CONTRACT IS BASED.

ITEM 43 OF THE SUBJECT CONTRACT CONSISTED OF 2,500 POUNDS OF HIGH TEMPERATURE ALLOY SCRAP. YAFFE BID THE AMOUNT OF $1,020.90 AS A TOTAL BID PRICE. THE SALES CONTRACTING OFFICER CONVERTED THE TOTAL PRICE BID TO A UNIT BID PRICE OF $0.40836, WHEREAS THE NEXT HIGH BID WAS SUBMITTED ON A UNIT PRICE OF $0.1411 FOR A TOTAL ITEM PRICE OF $352.75. OTHER BID UNIT PRICES FOR THE ITEM RANGED DOWNWARD FROM $0.1259 TO $0.0513. ITEM 43 WAS INCLUDED IN THE AWARD MADE TO YAFFE AT THE CONSTRUCTED UNIT PRICE EXTENDED FOR 2,500 POUNDS.

SUBSEQUENT TO THE AWARD, THE SALES CONTRACTING OFFICER RECEIVED A TELEPHONE CALL FROM YAFFE ALLEGING THAT THEY MADE A TYPOGRAPHICAL ERROR IN THEIR BID ON ITEM 43 IN THAT THEY HAD INTENDED TO BID $1,020.90 FOR ITEM 44. UPON REVIEW OF THE BID, IT WAS NOTED THAT THE BIDDER HAD SUBMITTED BIDS ON A NUMBER OF ITEMS AND ON ALL ITEMS IT HAD ENTERED A UNIT BID PRICE AS REQUIRED EXCEPT FOR ITEM 43 WHICH HAD ONLY A TOTAL (LOT) BID PRICE ENTERED. ITEM 43 WAS OFFERED FOR SALE BY THE POUND WHEREAS ITEM 44 WAS OFFERED FOR SALE BY THE LOT. A REVIEW OF THE INVITATION REVEALED THAT ITEM 44 WAS THE ONLY ITEM OFFERED BY THE LOT. IN THIS REGARD, THE SALES INVITATION PROVIDED THAT WHEN BIDS ARE SOLICITED BY LOT, ONLY A TOTAL PRICE FOR THE LOT SHOULD BE ENTERED BY THE BIDDER.

YAFFE'S WORK COPY OF THE INVITATION PAGE WITH NOTIATIONS THEREON OF ITS INTENDED BID PRICES CONTAINS NO PRICE NOTATION FOR ITEM 43 BUT ITS BID PRICE NOTED FOR ITEM 44 WAS THE SAME AS THE BID PRICE IT SUBMITTED FOR ITEM 43. THE MISTAKE IS SAID TO HAVE OCCURRED BY INADVERTENCE WHEN THE BID WAS BEING TYPED BY THE FIRM'S SECRETARY-TREASURER FROM THE WORKSHEET PREPARED BY THE FIRM'S PRESIDENT.

THE SALES CONTRACTING OFFICER AND YOUR ASSISTANT COUNSEL RECOMMEND THAT ITEM 43 BE CANCELED FROM THE CONTRACT, AND THAT A REFUND OF THE PURCHASE PRICE OF $1,020.90 BE MADE TO YAFFE. THE SALES CONTRACTING OFFICER CONCEDES THAT HE SHOULD HAVE BEEN ON NOTICE OF THE ERROR AND SHOULD HAVE REQUESTED VERIFICATION PRIOR TO AWARD SINCE THE DISPARITY BETWEEN YAFFE'S BID ON ITEM 43 AND THE NEXT HIGH BID ON THE ITEM WAS VERY SUBSTANTIAL. IS ALSO CONCEDED THAT HE WAS ON NOTICE OF PROBABLE ERROR BY REASON OF THE LOT BID ON AN ITEM OFFERED FOR SALE BY THE UNIT AND FROM THE FACT THAT THE HIGH BIDS RECEIVED ON SIMILAR TYPE ITEMS OF HIGH TEMPERATURE ALLOY SCRAP WERE $0.049 FOR ITEM NO. 41 AND $0.1259 ON ITEM NO. 42.

WHILE A WIDE RANGE OF BID PRICES IN SURPLUS SALES ORDINARILY IS NOT ENOUGH TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF AN ERROR BECAUSE OF THE VARIETY OF USES TO WHICH THE SURPLUS MAY BE PUT (SEE B- 147427, NOVEMBER 6, 1961, AND B-149302, JULY 13, 1962), IT IS ALSO AN ACCEPTED FACT THAT BIDS ON SCRAP METAL GENERALLY DO NOT VARY AS GREATLY AS DO BIDS ON USABLE SURPLUS PROPERTY 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. WE FEEL THAT THE FACTS SET OUT ABOVE ARE SUFFICIENT TO SUPPORT A FINDING THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE THAT AN ERROR HAD BEEN MADE AND THAT THE RECORD SHOWS THAT AN ERROR WAS MADE AND OF WHAT IT CONSISTED.

ACCORDINGLY, ITEM 43 MAY BE CANCELED FROM THE CONTRACT WITHOUT LIABILITY TO YAFFE IRON & METAL COMPANY, INC; AS ADMINISTRATIVELY RECOMMENDED.