B-171981, MAR 10, 1971

B-171981: Mar 10, 1971

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A MISTAKE RESULTING IN A BID OF $0.9009 PER POUND INSTEAD OF $0.09009 WAS OF SUCH MAGNITUDE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE ERROR PRIOR TO AWARD. ALTHOUGH A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT ORDINARILY CONSIDERED CONSTRUCTIVE NOTICE OF ERROR (THE NEXT HIGHEST BID IN THIS CASE WAS $0.2711 PER POUND). WIDE VARIATIONS ARE NOT ENCOUNTERED IN THE SALE OF SCRAP METALS. WAS MADE ON FEBRUARY 3. HWANG DELIVERED A LETTER INFORMING THE SALES CONTRACTING OFFICER THAT HE HAD MADE AN ERROR IN BID IN THAT HIS BID ON ITEM 134 SHOULD HAVE BEEN $180.00 PER TON. WE ARE ADVISED THAT MR. OUR OFFICE WILL GRANT APPROPRIATE RELIEF. IF THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. 37 COMP.

B-171981, MAR 10, 1971

CONTRACTS - MISTAKE IN BID - RESCISSION ALLOWING RESCISSION OF A SALES CONTRACT FOR VARIOUS TYPES OF SCRAP METAL AWARDED TO MR. DAVID C. HWANG HIGH BIDDER ON BASIS OF A MISTAKE IN BID. A MISTAKE RESULTING IN A BID OF $0.9009 PER POUND INSTEAD OF $0.09009 WAS OF SUCH MAGNITUDE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE ERROR PRIOR TO AWARD. ALTHOUGH A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT ORDINARILY CONSIDERED CONSTRUCTIVE NOTICE OF ERROR (THE NEXT HIGHEST BID IN THIS CASE WAS $0.2711 PER POUND), WIDE VARIATIONS ARE NOT ENCOUNTERED IN THE SALE OF SCRAP METALS.

TO GENERAL HEDLUND:

WE REFER TO A LETTER DATED FEBRUARY 18, 1971, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, ALEXANDRIA, VIRGINIA, RECOMMENDING RESCISSION OF CONTRACT NO. 46-1059-167 AWARDED TO MR. DAVID C. HWANG UNDER INVITATION FOR BIDS NO. 46-1059, BY THE DEFENSE SURPLUS SALES OFFICE, FLEET STATION, SAN DIEGO, CALIFORNIA.

THE INVITATION COVERED THE SALE OF VARIOUS TYPES OF SCRAP METALS. AWARD OF ITEM 134 OF THE INVITATION, 4,000 POUNDS (2 TONS) OF COPPER CABLE, INSULATED, SCRAP, WAS MADE ON FEBRUARY 3, 1971, TO MR. HWANG AS HIGH BIDDER AT A PRICE OF $0.90009 PER POUND, FOR A TOTAL CONTRACT PRICE OF $3,600.36. ON FEBRUARY 4, 1971, MR. HWANG DELIVERED A LETTER INFORMING THE SALES CONTRACTING OFFICER THAT HE HAD MADE AN ERROR IN BID IN THAT HIS BID ON ITEM 134 SHOULD HAVE BEEN $180.00 PER TON, OR $0.09009 PER POUND FOR A TOTAL CONTRACT PRICE OF $360.36 RATHER THAN $3,600.36. WE ARE ADVISED THAT MR. HWANG HAS REMUNERATED THE FULL CONTRACT PRICE OF $3,600.36 TO THE CONTRACTING AGENCY.

MR. HWANG SUBMITTED A WORKSHEET WHICH CLEARLY DISCLOSED HIS ACTUAL INTENTION TO BID $0.09009 PER POUND AND SUBSTANTIATED THE FACT THAT THE MISTAKE RESULTED FROM AN ERROR IN MULTIPLICATION.

OUR OFFICE WILL GRANT APPROPRIATE RELIEF, SUCH AS RESCISSION WITHOUT LIABILITY TO A CONTRACTOR, WHERE A MISTAKE HAS BEEN ALLEGED, SUBSEQUENT TO THE AWARD OF THE CONTRACT, IF THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR PRIOR TO AWARD. 37 COMP. GEN. 685, 686 (1958); B-169853, MAY 27, 1970. ALTHOUGH A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT ORDINARILY CONSIDERED TO BE CONSTRUCTIVE NOTICE OF ERROR, WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METALS DUE TO THE LIMITED USES TO WHICH IT MAY BE PUT. SEE B- 169254, MARCH 25, 1970, AND CASES CITED THEREIN.

THE FINDINGS OF THE SALES CONTRACTING OFFICER REVEAL THAT THE PRICES OF THE OTHER BIDS RECEIVED FOR ITEM 134 RANGED FROM $0.27111 TO $0.03 PER POUND, AND THAT THE CURRENT MARKET APPRAISAL ESTABLISHED PRIOR TO THE SALE OF SIMILAR MATERIAL WAS $0.18 PER POUND. IN ADDITION, THE SALES CONTRACTING OFFICER REPORTS THAT:

"A. THE UNDERSIGNED SCO CONDUCTED THE BID OPENING ON THE SALE. WHEN THE BID WAS READ A BIDDER IN ATTENDANCE REMARKED ABOUT THE BID PRICE BEING SO HIGH. HOWEVER, ANOTHER BIDDER CONTENDED THAT THERE WAS USABLE POWER CABLES IN THE ITEM AND THAT THE BIDDER PROBABLY HAD A USE FOR THEM AND KNEW WHAT HE WAS BIDDING. ON EVALUATION OF THE BIDS THE CONTRACT CLERK ALSO QUESTIONED THE BID DUE TO THE DISPARITY FROM THE NEXT BID. THE BID WAS AGAIN EXAMINED BY THE UNDERSIGNED AND DUE TO THE BID BEING EXTENDED CORRECTLY AND THE REMARKS OF THE BIDDERS IN THE BID ROOM IT WAS BELIEVED THAT THE BID WAS INTENDED AS .90009 PER POUND AND NO VERIFICATION WAS REQUESTED PRIOR TO AWARD. HOWEVER, IT IS NOW REALIZED THAT THE BID SHOULD HAVE BEEN VERIFIED DUE TO THE BID BEING CONSIDERABLY HIGHER THAN THE CMA AND OTHER BIDS RECEIVED ON THE ITEM. THE PRICE OF .09009 WOULD BE MORE IN LINE WITH THE CMA AND OTHER BIDS RECEIVED. THE UNDERSIGNED SCO ADMITS HE WAS ON NOTICE OF POSSIBLE ERROR IN BID AND DUE TO THE CIRCUMSTANCES FAILED TO OBTAIN VERIFICATION PRIOR TO AWARD."

IN VIEW OF THIS STATEMENT AND THE SUBSTANTIAL DIFFERENCE BETWEEN MR. HWANG'S HIGH BID AND BOTH THE SECOND HIGH BID AND THE CURRENT MARKET APPRAISAL FOR THE ITEM, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO MR. HWANG, AS ADMINISTRATIVELY RECOMMENDED.