B-171828, MAR 17, 1971

B-171828: Mar 17, 1971

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MISTAKE IN BID - CONSTRUCTIVE NOTICE DECISION HOLDING THAT CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR IN BID BY BEN'S TRUCK PARTS & EQUIPMENT. THE ITEM ON WHICH THE ERROR WAS MADE SHOULD BE CANCELED WITHOUT LIABILITY TO THE CORPORATION. SINCE PROSPECTIVE BIDDERS WERE ADVISED THAT THE ACQUISITION COST OF 64 RING GEAR THRUST WASHERS WAS $553 A BID PRICE OF $20 EACH. 280 AND 22 TIMES THE AMOUNT OF THE NEXT HIGHEST BID PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR AND THE BID SHOULD HAVE BEEN VERIFIED BEFORE AWARD. TO GENERAL HEDLUND: REFERENCE IS MADE TO LETTER DATED JANUARY 28. TO HAVE BEEN MADE IN ITS BID UPON WHICH SALES CONTRACT NO. 11-1064-228 IS BASED. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ACQUISITION COST OF THE WASHERS WAS $553.

B-171828, MAR 17, 1971

MISTAKE IN BID - CONSTRUCTIVE NOTICE DECISION HOLDING THAT CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR IN BID BY BEN'S TRUCK PARTS & EQUIPMENT, INC., AND THE ITEM ON WHICH THE ERROR WAS MADE SHOULD BE CANCELED WITHOUT LIABILITY TO THE CORPORATION. SINCE PROSPECTIVE BIDDERS WERE ADVISED THAT THE ACQUISITION COST OF 64 RING GEAR THRUST WASHERS WAS $553 A BID PRICE OF $20 EACH, TOTALING $1,280 AND 22 TIMES THE AMOUNT OF THE NEXT HIGHEST BID PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF ERROR AND THE BID SHOULD HAVE BEEN VERIFIED BEFORE AWARD. THEREFORE, THE COMP. GEN. HOLDS THAT THIS ITEM SHOULD BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO LETTER DATED JANUARY 28, 1971, 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 BEN'S TRUCK PARTS & EQUIPMENT, INC., TO HAVE BEEN MADE IN ITS BID UPON WHICH SALES CONTRACT NO. 11-1064-228 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, BY INVITATION NO. 11-1064, REQUESTED BIDS FOR THE PURCHASE OF VARIOUS ITEMS OF SURPLUS PROPERTY, INCLUDING ITEM 67 DESCRIBED AS 64 RING GEAR THRUST WASHERS. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ACQUISITION COST OF THE WASHERS WAS $553. IN RESPONSE, BEN'S TRUCK PARTS & EQUIPMENT, INC., SUBMITTED A BID DATED NOVEMBER 25, 1970, WHICH WAS AMENDED BY TELEGRAM OF DECEMBER 2, 1970, OFFERING TO PURCHASE THE RING GEAR THRUST WASHERS UNDER ITEM 67 AT A PRICE OF $20 EACH OR FOR A TOTAL PRICE OF $1,280. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 67 ($1,280) AND OTHER ITEMS ($5,066.20) ON DECEMBER 11, 1970.

IT IS REPORTED THAT ON DECEMBER 14, 1970, A REPRESENTATIVE OF THE CORPORATION TELEPHONED THE CONTRACTING OFFICER AND ALLEGED THAT WESTERN UNION HAD MADE AN ERROR IN TRANSMITTING ITS TELEGRAPHIC BID MODIFICATION IN THAT THE $20 BID RELATED TO ITEM 167 AND NOT TO ITEM 67 AS INDICATED ON THE TELEGRAM. BY WESTERN UNION TELEGRAM DATED DECEMBER 14, 1970, THE DECEMBER 2, 1970, TELEGRAM WAS CORRECTED TO REFLECT THE $20 BID AS RELATING TO ITEM 167 AND NOT ITEM 67.

IN A LETTER DATED DECEMBER 15, 1970, THE CORPORATION REQUESTED THAT ITEM 67 OF ITS CONTRACT BE CANCELED. THE CORPORATION STATED THAT IF THE TELEGRAM WAS EXAMINED, IT WOULD BE NOTED THAT EACH ITEM IS HANDLED IN NUMERICAL ORDER AND THAT ITEM 67 IS ENTIRELY OUT OF PLACE. AN EXAMINATION OF THE TELEGRAM IN QUESTION INDICATES THAT THE CORPORATION CANCELED CERTAIN ITEMS, INCREASED THE BID PRICE FOR CERTAIN ITEMS, AND ADDED NEW ITEMS INCLUDING ITEM 67 TO ITS ORIGINAL BID. EACH OF THE ITEMS, OTHER THAN ITEM 67, IS TREATED IN THE TELEGRAM IN NUMERICAL ORDER, AS ALLEGED BY THE CORPORATION.

THE ABSTRACT OF BIDS SHOWS THAT THE SEVEN OTHER BIDS ON ITEM 67 RANGED FROM $0.91 TO $0.21 EACH. THE CURRENT MARKET APPRAISAL VALUE, KNOWN TO THE CONTRACTING OFFICER PRIOR TO BID OPENING, WAS $1 EACH. IN HIS REPORT, IN WHICH HE RECOMMENDED THAT ITEM 67 OF THE CONTRACT BE DELETED, THE CONTRACTING OFFICER STATED THAT IN VIEW OF THE FACT THAT THE BID OF BEN'S TRUCK PARTS ON ITEM 67 WAS MORE THAN TWICE THE ACQUISITION COST OF THE PROPERTY COVERED BY THAT ITEM, HE SHOULD HAVE BEEN ON NOTICE OF THE POSSIBILITY OF A MISTAKE AND THAT HE SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO MAKING AN AWARD.

NORMALLY, A WIDE RANGE OF BID PRICES IN RESPONSE TO A SURPLUS SALE IS NOT SUFFICIENT TO PLACE A CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR BECAUSE THE PRICES OFFERED DEPEND TO A GREAT EXTENT UPON THE USES TO WHICH THE PROPERTY WILL BE PUT, OR UPON THE RISK OF RESALE WHICH THE BIDDER MAY BE WILLING TO TAKE. SEE B-151079, MARCH 28, 1963. ALSO, SEE UNITED STATES V SABIN METAL CORPORATION, 151 F. SUPP. 683 (1957); AFFIRMED 253 F. 2D 956 (1958); AND WENDER PRESSES, INC. V UNITED STATES, 343 F. 2D 961 (1965). HOWEVER, IN THIS CASE, THE BID PRICE OF BEN'S TRUCK PARTS ON ITEM 67 WAS ALMOST 22 TIMES THE AMOUNT OF THE NEXT HIGHEST BID PRICE ON THAT ITEM AND 20 TIMES THE CURRENT MARKET APPRAISAL OF $1. MOREOVER, THE CORPORATION'S BID PRICE WAS MORE THAN TWICE THE ACQUISITION COST OF THE ITEM DESCRIBED IN ITEM 67.

ACCORDINGLY, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR AND THAT THE BID SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. WE CONCUR IN THE RECOMMENDATION THAT ITEM 67 OF CONTRACT NO. 11-1064-228 SHOULD BE CANCELED WITHOUT LIABILITY TO THE CORPORATION.