B-173981, DEC 9, 1971

B-173981, DEC 9, 1971

SALES CONTRACTS - MISTAKE IN BID - RELIEF DECISION ALLOWING RELIEF OF INGE SURPLUS AND SALVAGE COMPANY FOR MISTAKE IN BID ON SURPLUS SALES CONTRACT WITH THE DEFENSE SURPLUS SALES OFFICE, FLEET STATION, SAN DIEGO, CALIF. THE CONTRACTING OFFICER BROUGHT TO THE ATTENTION OF THE BIDDER THE POSSIBILITY OF MISTAKE AS TO ONE ITEM (NO. 26), BUT REQUESTED VERIFICATION ON ALL ITEMS WITHOUT SPECIFYING THE POSSIBILITY OF ANY OTHER ERROR. AFTER ACCEPTANCE BY THE GOVERNMENT, THE BIDDER ALLEGED THAT ITS BID ON ITEM NUMBER 20 (8,000 POUNDS OF SCRAP CANVAS) WAS INTENDED FOR ITEM NUMBER 19 (8,000 POUNDS OF SCRAP COPPER). AS THE INGE BID ON ITEM 20 WAS CONSIDERABLY HIGHER THAN OTHER BIDS ON THIS ITEM AND AS INGE WAS KNOWN AS A CONSISTENT BIDDER ONLY ON METAL ITEMS, THE CONTRACTING OFFICER IS TO BE CONSIDERED ON NOTICE OF THE MISTAKE. AS THE CONTRACTING OFFICER WAS UNDER A DUTY TO INFORM THE BIDDER OF THE NATURE AND EXTENT OF ANY POSSIBLE ERRORS, THE VERIFICATION OF ITEM 20 WAS WITHOUT EFFECT AND RELIEF MAY BE GRANTED.

TO GENERAL WALLACE H. ROBINSON:

REFERENCE IS MADE TO A LETTER DATED AUGUST 26, 1971, FILE REFERENCE DSAH- G, WITH ENCLOSURE, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, SUBMITTING FOR OUR DECISION A REQUEST BY INGE SURPLUS AND SALVAGE COMPANY FOR RELIEF FROM A MISTAKE IN BID ALLEGED AFTER AWARD OF SURPLUS SALES CONTRACT NO. 46-1141-009.

THE DEFENSE SURPLUS SALES OFFICE, FLEET STATION, SAN DIEGO, CALIFORNIA, BY INVITATION NO. 46-1141, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 26 ITEMS OF SCRAP MATERIALS AND IN RESPONSE, INGE SURPLUS AND SALVAGE SUBMITTED BIDS ON 5 ITEMS. AFTER THE BIDS WERE OPENED ON JUNE 10, 1971, IT WAS NOTED THAT THERE WAS A DISCREPANCY IN INGE'S BID AS TO ITEM 26, AND THE SALES CONTRACTING OFFICER TELEPHONED MR. INGE ON JUNE 11, 1971, AND ASKED HIM TO VERIFY HIS BID AS TO ITEM 26. MR. INGE ACKNOWLEDGED THAT A TYPOGRAPHICAL ERROR HAD BEEN MADE IN THE PLACING OF A DECIMAL POINT, RESULTING IN A DISCREPANCY BETWEEN THE UNIT PRICE AND THE TOTAL BID PRICE ON ITEM 26. AT THAT TIME THE SALES CONTRACTING OFFICER ASKED MR. INGE TO VERIFY HIS BIDS ON THE OTHER ITEMS, AND READ TO HIM THE ITEM NUMBER, THE UNIT PRICE BIDS, AND THE TOTAL PRICE EXTENSIONS FROM THE BID SHEETS, BUT DID NOT IDENTIFY THE PROPERTY TO WHICH EACH BID APPLIED. THE SALES CONTRACTING OFFICER STATES THAT THE STRESS DURING THE TELEPHONE CONVERSATION WAS ON PRICES BECAUSE OF THE OBVIOUS PRICE ERROR ON ITEM 26. MR. INGE IS REPORTED TO HAVE REPLIED IN THE AFFIRMATIVE AS EACH BID WAS READ TO HIM. INGE'S BIDS WERE ACCEPTED AS TO FOUR ITEMS ON JUNE 14, 1971, INCLUDING A UNIT PRICE BID OF $0.223 PER POUND FOR ITEM 20, DESCRIBED IN THE IFB AS "CANVAS, SCRAP, 8,000 LBS."

BY LETTER DATED JUNE 21, 1971, MR. INGE INFORMED THE SALES CONTRACTING OFFICER THAT A TYPOGRAPHICAL ERROR HAD BEEN MADE AND THAT HIS BID OF $0.223 ON ITEM 20 WAS INTENDED FOR ITEM 19, DESCRIBED AS "BRASS AND COPPER, MIXED, SCRAP, 8,000 LBS." HE STATED THAT IN COMPUTING THE AMOUNT OF HIS BID, HE SCRATCHED OUT HIS ORIGINAL BID FOR ITEM 19 AND WROTE HIS NEW BID IN THE SPACE BELOW NEXT TO ITEM 20. WHEN THE BID WAS TYPED, IT WAS LISTED AS BEING FOR ITEM 20. MR. INGE ASKED THAT ITEM 20 BE DELETED FROM THE CONTRACT AND IN SUPPORT OF HIS REQUEST HE SUBMITTED HIS WORKSHEET, A MARKED UP COPY OF THE IFB.

THE BIDS RECEIVED ON ITEMS 19 AND 20 WERE AS FOLLOWS:

ITEM 19 ITEM 20

BIDDER BID PRICE BIDDER BID PRICE

006 $0.01 001 $0.04

007 0.103 007 0.013

020 0.18 009 (INGE) 0.223

029 0.1368

036 0.161

THE CURRENT MARKET APPRAISALS WERE $0.28 FOR ITEM 19 AND $0.05 FOR ITEM 20. THE SALES CONTRACTING OFFICER NOTES THAT INGE IS A CONSISTENT BUYER OF SCRAP METALS WITH NO HISTORY OF BIDDING ON CLOTH, CANVAS OR SIMILAR ITEMS. ACCORDINGLY, SINCE THE BID ON ITEM 20 IS OBVIOUSLY OUT OF LINE WITH THE OTHER BIDS AND THE CURRENT MARKET APPRAISAL ON THAT ITEM, AND MORE IN LINE WITH THE OTHER BIDS RECEIVED ON ITEM 19, THE CONTRACTING OFFICER RECOMMENDS THAT THE PURCHASER'S REQUEST FOR THE DELETION OF ITEM 20 FROM HIS CONTRACT BE GRANTED. BOTH YOUR ASSISTANT COUNSEL AND THE DEFENSE LOGISTICS SERVICE CENTER CONCUR IN THIS RECOMMENDATION.

AS A GENERAL RULE, IF A BIDDER MAKES A UNILATERAL MISTAKE, HE IS BOUND BY THE CONTRACT AWARDED UNLESS THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN, OF THE MISTAKE AT THE TIME OF AWARD. IN THE INSTANT CASE, THE CONTRACTING OFFICER NOTED THE POSSIBILITY OF A MISTAKE IN REGARD TO INGE'S BID ON ITEM 26 AND IN CHECKING THAT, ASKED MR. INGE TO VERIFY HIS OTHER BIDS. SHE DID NOT DESCRIBE THE INDIVIDUAL ITEMS OR MENTION THE POSSIBILITY OF AN ERROR ON ITEM 20. WE HAVE PREVIOUSLY HELD THAT ALTHOUGH GENERALLY IN A SALE OF SURPLUS PROPERTY A WIDE DISPARITY BETWEEN THE BID OF A PURCHASER AND A SECOND HIGH BID WOULD NOT NECESSARILY BE SUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF A MISTAKE, WHERE THE SALE INVOLVES SCRAP METALS, THERE IS NOT TO BE EXPECTED AS LARGE A BID DISCREPANCY BECAUSE OF THE LIMITED USES TO WHICH THE SCRAP MAY BE PUT, AND A SIGNIFICANT DIFFERENCE SHOULD THEREFORE PUT THE SALES CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF A MISTAKE. SEE 49 COMP. GEN. 199 (1969), AND DECISIONS CITED THEREIN. THE CONTRACTING OFFICER DID ASK MR. INGE TO VERIFY HIS BIDS AND GENERALLY THE AWARD OF A CONTRACT PREDICATED UPON A VERIFICATION OF THE BID BY THE CONTRACTING OFFICER RESULTS IN A BINDING CONTRACT. HOWEVER, WE HAVE CONSISTENTLY HELD THAT THE BIDDER MUST BE PLACED ON NOTICE OF THE NATURE AND EXTENT OF THE MISTAKE WHICH IS SUSPECTED BY THE CONTRACTING OFFICER. 44 COMP. GEN. 383 (1965); 48 COMP. GEN. 672 (1969).

IT IS OUR VIEW THAT THE SIGNIFICANT DIFFERENCE BETWEEN INGE'S BID AND THE OTHER BIDS RECEIVED ON ITEM 20 WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR AND THEREFORE NECESSITATE SPECIFIC CONFIRMATION OF THE HIGH BID BEFORE AWARD, WHICH WAS NOT DONE.

ACCORDINGLY, ITEM 20 OF SALES CONTRACT NO. 46-1141-009 MAY BE CANCELLED WITHOUT LIABILITY TO INGE.