B-176123, JUL 3, 1972

B-176123: Jul 3, 1972

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SINCE THE SALINGER BID WAS NEARLY TRIPLE THAT OF THE NEXT HIGH BIDDER AND EXCEEDED THE ORIGINAL ACQUISITION COST OF THE ITEMS. THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR. MAY BE RELIEVED OF ITS OBLIGATION TO PERFORM UNDER CONTRACT NO. 27-2120-034 BECAUSE OF AN ERROR ALLEGEDLY MADE IN COMPUTING ITS BID PRICE UPON WHICH THE CONTRACT IS BASED. AWARD WAS MADE TO SALINGER AS THE HIGHEST BIDDER ON ITEM 164. THE CONTRACTING OFFICER STATES THAT HE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR IN BID AND THAT THE CONTRACT FOR ITEM 164 SHOULD THEREFORE BE RESCINDED. THE LISTED ACQUISITION COST OF THE 27 SWITCHES WAS $1. THE CURRENT MARKET APPRAISAL WAS $54 PER SWITCH.

B-176123, JUL 3, 1972

CONTRACTS - RECISSION - MISTAKE IN BID DECISION ALLOWING THE SALINGER ELECTRIC COMPANY, INC., TO BE RELIEVED FROM ITS OBLIGATION TO PERFORM UNDER CONTRACT NO. 27-2120-034, LET BY THE DEFENSE SUPPLY AGENCY, BECAUSE OF AN ALLEGED MISTAKE IN BID. SINCE THE SALINGER BID WAS NEARLY TRIPLE THAT OF THE NEXT HIGH BIDDER AND EXCEEDED THE ORIGINAL ACQUISITION COST OF THE ITEMS, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR. ACCORDINGLY, THE CONTRACT MAY BE RESCINDED WITHOUT LIABILITY TO SALINGER.

TO GENERAL WALLACE H ROBINSON:

WE REFER TO LETTER DSAH-G OF MAY 30, 1972, FROM THE ASSISTANT COUNSEL, REQUESTING A DECISION AS TO WHETHER SALINGER ELECTRIC COMPANY, INC., (SALINGER), MAY BE RELIEVED OF ITS OBLIGATION TO PERFORM UNDER CONTRACT NO. 27-2120-034 BECAUSE OF AN ERROR ALLEGEDLY MADE IN COMPUTING ITS BID PRICE UPON WHICH THE CONTRACT IS BASED.

INVITATION FOR BIDS NO. 27-2120 REQUESTED BIDS FOR THE PURCHASING OF ALL OR ANY OF THE SURPLUS GOVERNMENT PROPERTY LISTED IN THE ACCOMPANYING SCHEDULE. SALINGER SUBMITTED A PER UNIT BID PRICE OF $55 ON ITEM 164, OR $1,485 FOR THE TOTAL 27 SWITCH BOXES COMPRISING THAT ITEM. THE HIGHEST BIDDER ON ITEM 164 HAD BEEN ALLOWED TO WITHDRAW ITS UNIT BID PRICE OF $157 BECAUSE OF OBVIOUS ERROR IN THE UNIT AND EXTENDED PRICES. AWARD WAS MADE TO SALINGER AS THE HIGHEST BIDDER ON ITEM 164. THEREAFTER, SALINGER ADVISED THE DEFENSE SURPLUS SALES OFFICE THAT IT HAD MADE A TYPOGRAPHICAL ERROR IN ITS BID ON ITEM 164 AND THAT IT COULD OBTAIN THE SAME SWITCHES DIRECTLY FROM THE FACTORY FOR $50.27 PER UNIT. CONSEQUENTLY, IT REQUESTED THAT IT BE EXCUSED FROM THE CONTRACT OBLIGATION.

THE CONTRACTING OFFICER STATES THAT HE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR IN BID AND THAT THE CONTRACT FOR ITEM 164 SHOULD THEREFORE BE RESCINDED. THE LISTED ACQUISITION COST OF THE 27 SWITCHES WAS $1,285, $200 LESS THAN THE SALINGER BID. THE CURRENT MARKET APPRAISAL WAS $54 PER SWITCH. FURTHER, THE OTHER 17 BIDS ON THIS ITEM RANGED FROM $21.30 TO $2.00 PER UNIT.

ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS SALES DOES NOT CONSTITUTE CONSTRUCTIVE NOTICE OF ERROR IN BID. HOWEVER, WE NOTE HERE THAT THE SALINGER BID PRICE WAS ALMOST TRIPLE THAT OF THE NEXT HIGH BIDDER AND SUBSTANTIALLY IN EXCESS OF THE SWITCHES' ORIGINAL ACQUISITION COST.

ACCORDINGLY, WE ARE OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR AND THAT THE BID SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. B-166566, APRIL 8, 1969. WE AGREE, THEREFORE, WITH THE ADMINISTRATIVE RECOMMENDATION THAT THE CONTRACT AWARDED TO SALINGER ELECTRIC COMPANY, INC., ON ITEM 164 BE RESCINDED WITHOUT LIABILITY TO THAT FIRM.