B-181967, AUG 20, 1974

B-181967: Aug 20, 1974

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WHERE A CONTRACTING OFFICER IS PLACED ON CONSTRUCTIVE NOTICE OF ERROR IN BID PRIOR TO AWARD. THE NEXT HIGH BID OF $.041 PER POUND AND THE NARROW RANGE OF THE NEXT FIVE BIDS SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE KNOWLEDGE OF A POSSIBLE MISTAKE. THAT "THE TEST IS ONE OF REASONABLENESS. WHETHER UNDER THE FACTS *** THERE WERE ANY FACTORS WHICH REASONABLY COULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER.". WE BELIEVE THAT THE PRICE DISPARTIES NOTED IN THE PRECEEDING PARAGRAPH TOGETHER WITH THE FACT THAT ACME'S BID PRICE WAS APPROXIMATELY 28 PERCENT ABOVE THE CURRENT MARKET APPRAISAL OF $.09 PER POUND. SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE ERROR.

B-181967, AUG 20, 1974

1. IN A SALE BY THE GOVERNMENT OF SURPLUS SCRAP METAL, DIFFERENCE BETWEEN SUCCESSFUL BID OF $.115 PER POUND, CURRENT MARKET APPRAISAL OF $.09 PER POUND, AND SUCCESSIVE BIDS RANGING FROM $.041 PER POUND TO $$.025 PER POUND PLACED CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF A POSSIBLE ERROR IN THE BID. 2. WHERE A CONTRACTING OFFICER IS PLACED ON CONSTRUCTIVE NOTICE OF ERROR IN BID PRIOR TO AWARD, CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO BIDDER IN THE ABSENCE OF BID VERIFICATION PRIOR TO AWARD.

ACME REFINDING-SMELTING COMPANY:

BY LETTER DSAH-G DATED AUGUST 1, 1974, THE ACTING ASSISTANT GENERAL COUNSEL, HEADQUARTERS, DEFENSE SUPPLY AGENCY (DSA), IN CONCURRENCE WITH THE DEFENSE PROPERTY DISPOSAL SERVICE (DPDS) RECOMMENDED THE RECISSION OF SALES CONTRACT NO. 27-5004-80, AWARDED TO THE ACME REFINING-SMELTING COMPANY FOR COPPER-BEARING SCRAP METAL UNDER SALES INVITATION FOR BIDS 27- 5004. BECAUSE BIDS ON SCRAP METAL DO NOT VARY GREATLY, DSA AND DPDS CONCLUDE THAT THE SUBSTANTIAL DISPARITY IN THIS CASE AMONG THE SUCCESSFUL BID OF $.115 PER POUND, THE NEXT HIGH BID OF $.041 PER POUND AND THE NARROW RANGE OF THE NEXT FIVE BIDS SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE KNOWLEDGE OF A POSSIBLE MISTAKE. THE THIRD THROUGH SIXTH BIDS RANGED FROM $.035 PER POUND TO $.025 PER POUND.

AS TO WHEN A CONTRACTING OFFICER SHOULD DETECT ERRORS IN BIDS, WE STATED IN B-179956, FEBRUARY 21, 1971, THAT "THE TEST IS ONE OF REASONABLENESS; WHETHER UNDER THE FACTS *** THERE WERE ANY FACTORS WHICH REASONABLY COULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER." AS NOTED ABOVE, BIDS ON A SALE OF SCRAP METAL GENERALLY DO NOT VARY AS MUCH AS BIDS ON USABLE PROPERTY. B 180128, JANUARY 29, 1974. FOR THIS REASON, WE BELIEVE THAT THE PRICE DISPARTIES NOTED IN THE PRECEEDING PARAGRAPH TOGETHER WITH THE FACT THAT ACME'S BID PRICE WAS APPROXIMATELY 28 PERCENT ABOVE THE CURRENT MARKET APPRAISAL OF $.09 PER POUND, SHOULD HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE ERROR. IN THESE CIRCUMSTANCES, WE BELIEVE THE CONTRACTING OFFICER SHOULD HAVE REQUESTED ACME TO VERIFY ITS BID PRIOR TO AWARD. 49 COMP. GEN. 199 (1969).

ACCORDINGLY, CONTRACT NO. 27-5004-80 MAY BE CANCELED WITHOUT LIABILITY TO ACME AS ADMINISTRATIVELY RECOMMENDED.