B-181206, MAY 23, 1974

B-181206: May 23, 1974

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WHERE HIGH BIDDER FOR SCRAP METAL ALLEGED ERROR IN BID AFTER AWARD AND BID WAS 5 TIMES THE AMOUNT OF THE OTHER BID RECEIVED AND 2 1/2 TIMES THE AMOUNT OF THE GOVERNMENT'S CURRENT MARKET APPRAISAL. THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR AND REQUESTED BID VERIFICATION AND THEREFORE THE CONTRACT MAY BE RESCINDED. BIDS WERE OPENED UNDER SALE NO. 31-4134 ISSUED BY THE DEFENSE PROPERTY DISPOSAL SERVICE. 750 GROSS TONS OF SCRAP ARTILLERY CARTRIDGE CASES WAS RICHELSON IRON AND METAL COMPANY (RICHELSON) WITH A BID OF $52.57 PER TON. AWARD WAS MADE TO RICHELSON FOR ITEM 1 AT ITS BID PRICE OF $39. RICHELSON NOTIFIED THE AGENCY THAT IT HAD MADE A MISTAKE IN ITS BID CAUSED BY A FAILURE TO READ THE CONDITIONS OF SALE RELATING TO THE REQUIREMENT FOR DEMILITARIZATION ON GOVERNMENT PREMISES AND REQUESTED THAT ITS CONTRACT BE RESCINDED AS ITS BID WAS BASED ON BEING ALLOWED TO REMOVE THE ITEM FROM THE GOVERNMENT SITE AS SOLD.

B-181206, MAY 23, 1974

WHERE HIGH BIDDER FOR SCRAP METAL ALLEGED ERROR IN BID AFTER AWARD AND BID WAS 5 TIMES THE AMOUNT OF THE OTHER BID RECEIVED AND 2 1/2 TIMES THE AMOUNT OF THE GOVERNMENT'S CURRENT MARKET APPRAISAL, THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR AND REQUESTED BID VERIFICATION AND THEREFORE THE CONTRACT MAY BE RESCINDED.

TO RICHELSON IRON AND METAL COMPANY:

ON DECEMBER 11, 1973, BIDS WERE OPENED UNDER SALE NO. 31-4134 ISSUED BY THE DEFENSE PROPERTY DISPOSAL SERVICE, MEMPHIS, TENNESSEE. THE HIGH BIDDER FOR ITEM 1, 750 GROSS TONS OF SCRAP ARTILLERY CARTRIDGE CASES WAS RICHELSON IRON AND METAL COMPANY (RICHELSON) WITH A BID OF $52.57 PER TON. ON DECEMBER 12, 1973, AWARD WAS MADE TO RICHELSON FOR ITEM 1 AT ITS BID PRICE OF $39,427.50.

ON DECEMBER 13, RICHELSON NOTIFIED THE AGENCY THAT IT HAD MADE A MISTAKE IN ITS BID CAUSED BY A FAILURE TO READ THE CONDITIONS OF SALE RELATING TO THE REQUIREMENT FOR DEMILITARIZATION ON GOVERNMENT PREMISES AND REQUESTED THAT ITS CONTRACT BE RESCINDED AS ITS BID WAS BASED ON BEING ALLOWED TO REMOVE THE ITEM FROM THE GOVERNMENT SITE AS SOLD.

A REVIEW OF THE ABSTRACT OF BIDS RECEIVED SHOWS THAT ONE OTHER BID WAS RECEIVED FOR ITEM 1, IN THE AMOUNT OF $10.50 PER TON. THE GOVERNMENT'S CURRENT MARKET APPRAISAL (CMA) FOR THE ITEM WAS $20.00 PER TON.

BASED ON THE FACT THAT THE BID OF RICHELSON WAS FIVE TIMES HIGHER THAN THE OTHER BID RECEIVED AND TWO AND ONE HALF TIMES AS MUCH AS THE CMA, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF AN ERROR IN THE BID OF RICHELSON. SINCE BID VERIFICATION WAS NOT REQUESTED PRIOR TO AWARD, THE CONTRACT MAY BE RESCINDED AS ADMINISTRATIVELY RECOMMENDED.