B-172285, APR 23, 1971

B-172285, APR 23, 1971

CONTRACTS - MISTAKE IN BID - RESCISSION REGARDING REQUEST FOR RELIEF BY ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, FOR MICHAEL SCHIAVONE & SONS DUE TO MISTAKE IN BID ALLEGED AFTER AWARD OF SALES CONTRACT FOR VARIOUS TYPES OF SCRAP METAL. SCHIAVONE CONTENDS THAT IT INTENDED TO BID ON ITEMS NINE AND THIRTEEN BUT THROUGH ERROR BID ON NUMBERS EIGHT AND THIRTEEN. AS A SUBSTANTIVE DIFFERENCE EXISTS BETWEEN SCHIAVONE'S HIGH BID AND BOTH SECOND HIGH BID AND CURRENT MARKET APPRAISAL FOR ITEM EIGHT, CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR PRIOR TO AWARD. CONTRACT MAY BE RESCINDED WITHOUT LIABILITY.

TO GENERAL HEDLUND:

WE REFER TO LETTER DSAH-G DATED MARCH 19, 1971, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, RECOMMENDING THAT RELIEF BE GRANTED TO MICHAEL SCHIAVONE & SONS, INC. (SCHIAVONE), BECAUSE OF A MISTAKE IN BID ALLEGED AFTER THE AWARD OF SALES CONTRACT NO. 11-1147-112 UNDER INVITATION FOR BIDS NO. 11-1147, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA.

THE INVITATION OFFERED FOR SALE VARIOUS TYPES OF SCRAP METAL. SCHIAVONE WAS AWARDED A CONTRACT FOR ITEMS 8 AND 13 ON WHICH IT BID ON AN "ALL OR NONE" BASIS AT PRICES AS FOLLOWS:

ITEM NO. UNIT PRICE BID TOTAL PRICE BID

8 $.2711 $2,711.80

13 .4309 5,170.80 ARTICLE AD OF THE SALE TERMS AND CONDITIONS PERMITTED THE SUBMISSION OF "ALL-OR NONE" BIDS.

UPON RECEIPT OF A NOTICE OF AWARD, SCHIAVONE ALLEGED THAT IT MADE AN ERROR IN BID IN THAT IT HAD INTENDED TO BID ON ITEMS 9 AND 13 AND NOT ON ITEM 8. IN SUPPORT OF THE ALLEGATION, SCHIAVONE SUBMITTED A WORKSHEET AND A STATEMENT FROM THE EMPLOYEE-BUYER TO SHOW THAT THE $0.2711 PER POUND BID WAS INTENDED FOR ITEM 9.

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. 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. 49 COMP. GEN. 199, 201, 202 (1969); B-171981, MARCH 10, 1971.

THE FINDINGS OF THE SALES CONTRACTING OFFICER REVEAL THAT THE OTHER BIDS RECEIVED FOR ITEM 8 RANGED FROM $0.191998 TO $0.1611 PER POUND, AND THAT THE CURRENT MARKET APPRAISAL WAS $0.16 PER POUND. AS INDICATED ABOVE, SCHIAVONE'S BID WAS $0.2711 PER POUND. THE BIDS RECEIVED FOR ITEM 9 REVEAL A RANGE OF FROM $0.297899 TO $0.2424 PER POUND. THEREFORE, ALTHOUGH THE UNIT PRICE BID SUBMITTED BY SCHIAVONE WAS NOT COMPATIBLE WITH BIDS RECEIVED FOR ITEM 8, IT WAS IN LINE WITH THE BIDS RECEIVED FOR ITEM 9. IN FACT, THE TOTAL BID PRICE FOR ITEM 8 WAS THE PRODUCT OF THE UNIT PRICE MULTIPLIED BY 10,000 POUNDS, WHICH WAS THE WEIGHT STATED IN THE ITEM DESCRIPTION FOR ITEM 9. IN ADDITION, THE SALES CONTRACTING OFFICER REPORTS THAT:

"A REVIEW OF THE PURCHASER'S ORIGINAL BID INDICATED THE SALES CONTRACTING OFFICER MADE AN INCORRECT AWARD AS PURCHASER'S BID OF $.2711 FOR ITEM 8 TIMES THE QUANTITY OF 6500 POUNDS SHOWED AN INCORRECT TOTAL BID. THIS THE SALES CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF AND THE BID WOULD HAVE BEEN PROCESSED ACCORDINGLY PRIOR TO AWARD.

"IT IS THE OPINION OF THE SALES CONTRACTING OFFICER THAT PURCHASER SUBMITTED CLEAR AND CONVINCING EVIDENCE OF THEIR ALLEGED ERROR AND IT IS RECOMMENDED THAT THEY BE ALLOWED TO WITHDRAW THEIR BID FOR ITEMS 8 AND 13."

IN VIEW OF THIS STATEMENT AND THE SUBSTANTIAL DIFFERENCE BETWEEN SCHIAVONE'S HIGH BID AND BOTH THE SECOND HIGH BID AND THE CURRENT MARKET APPRAISAL FOR ITEM 8, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO SCHIAVONE, AS ADMINISTRATIVELY RECOMMENDED.