B-182163, SEP 30, 1974

B-182163: Sep 30, 1974

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PURCHASER WHOSE BID FOR SCRAP CARDBOARD PACKING BOXES WAS 12.5 TIMES AS HIGH AS ONLY OTHER BID SUBMITTED AND 3.5 TIMES AS GREAT AS GOVERNMENT'S ESTIMATE MAY HAVE SALES CONTRACT RESCINDED SINCE SUBSTANTIAL DIFFERENCE BETWEEN PURCHASER'S BID AND NEXT HIGH BID AND GOVERNMENT'S ESTIMATE SHOULD HAVE PUT THE CONTRACTING OFFICER ON NOTICE OF POSSIBILITY OF ERROR IN BID. BIDS WERE OPENED ON JULY 18. AWARD OF ITEM 1 WAS MADE TO SOUTHERN AS HIGH BIDDER ON JULY 22. THE NEXT DAY SOUTHERN WAS CONTACTED BY THE SALES CONTRACTING OFFICER (SCO) IN ORDER TO INFORM IT OF THE AWARD. THE ADMINISTRATIVE REPORT INDICATES THAT THE ONLY OTHER BID FOR ITEM 1 WAS 7 PERCENT OF THE SPECIFIED MARKET PRICE WHILE THE GOVERNMENT'S ESTIMATE WAS 25 PERCENT OF THE MARKET PRICE.

B-182163, SEP 30, 1974

PURCHASER WHOSE BID FOR SCRAP CARDBOARD PACKING BOXES WAS 12.5 TIMES AS HIGH AS ONLY OTHER BID SUBMITTED AND 3.5 TIMES AS GREAT AS GOVERNMENT'S ESTIMATE MAY HAVE SALES CONTRACT RESCINDED SINCE SUBSTANTIAL DIFFERENCE BETWEEN PURCHASER'S BID AND NEXT HIGH BID AND GOVERNMENT'S ESTIMATE SHOULD HAVE PUT THE CONTRACTING OFFICER ON NOTICE OF POSSIBILITY OF ERROR IN BID, CALLING FOR VERIFICATION BEFORE ACCEPTANCE.

SOUTHERN PAPER STOCK COMPANY:

SALES INVITATION NO. 31-5049, ISSUED BY THE DEFENSE PROPERTY DISPOSAL REGION OFFICE, DEFENSE SUPPLY AGENCY, MEMPHIS, TENNESSEE, REQUESTED BIDS FOR THE PURCHASE OVER A ONE-YEAR PERIOD FROM THE GOVERNMENT OF TWO ITEMS OF SCRAP CARDBOARD PACKING BOXES. IN RESPONSE, SOUTHERN PAPER STOCK COMPANY (SOUTHERN) SUBMITTED A BID OF 88.125 PERCENT OF THE APPLICABLE MARKET PRICE FOR ITEM 1, WHICH ALSO REQUIRED THE PURCHASER TO INSTALL BAILERS AND FURNISH VEHICLES FOR STORAGE PURPOSES. BIDS WERE OPENED ON JULY 18, 1974, AND AWARD OF ITEM 1 WAS MADE TO SOUTHERN AS HIGH BIDDER ON JULY 22, 1974.

THE NEXT DAY SOUTHERN WAS CONTACTED BY THE SALES CONTRACTING OFFICER (SCO) IN ORDER TO INFORM IT OF THE AWARD. SHORTLY THEREAFTER, SOUTHERN'S SECRETARY CALLED THE SCO TO NOTIFY HER THAT THEIR BID HAD BEEN INTENDED FOR ITEM 2 NOT ITEM 1, AS SHOWN ON THE BID SHEET. IN ITS LETTER TO THE SCO, SOUTHERN EXPLAINED THAT THE MISTAKE IN ITS BID HAD RESULTED FROM A TYPING ERROR AND REQUESTED THAT THEIR BID EITHER BE CORRECTED OR WITHDRAWN. IN A FOLLOW UP LETTER SOUTHER FURTHER ALLEGED THAT SINCE ITEM 1 REQUIRED THE INSTALLATION OF A HORIZONTAL BAILER AND SINCE IT COULD NOT POSSIBLY DO THIS, ITEM 1 HAD NEVER BEEN CONSIDERED BY SOUTHERN FOR PURCHASE.

THE ADMINISTRATIVE REPORT INDICATES THAT THE ONLY OTHER BID FOR ITEM 1 WAS 7 PERCENT OF THE SPECIFIED MARKET PRICE WHILE THE GOVERNMENT'S ESTIMATE WAS 25 PERCENT OF THE MARKET PRICE. MOREOVER, FOR CURRENT CONTRACTS IN THE MEMPHIS AREA COVERING THE SALE OF UNBAILED SCRAP PAPER AND CARDBOARD, THE RECORD REVEALS THAT NO BID HAD EVER EXCEEDED 30 PERCENT OF THE PUBLISHED MARKET PRICE.

THE CONTROLLING QUESTION FOR RESOLUTION WHEN A MISTAKE IN BID IS ALLEGED AFTER AWARD IS WHETHER THE CONTRACTING OFFICER HAD NOTICE, OR SHOULD HAVE HAD NOTICE, OF THE POSSIBILITY OF AN ERROR PRIOR TO AWARD. 49 COMP. GEN. 199, 201 (1969). IN THIS CONNECTION WE NOTE THAT SOUTHERN'S BID OF 88.125 PERCENT FOR ITEM 1 WAS APPROXIMATELY 12.5 TIMES AS GREAT AS THE ONLY OTHER BID SUBMITTED AND IS IN EXCESS OF 3.5 TIMES THE GOVERNMENT'S ESTIMATE. HAVE LONG RECOGNIZED THAT WHERE, AS HERE, THE PROPERTY FOR SALE IS SCRAP OF SUCH KIND AS TO HAVE A FAIRLY WELL-ESTABLISHED AND ASCERTAINABLE MARKET VALUE, A BID SUBSTANTIALLY IN EXCESS OF SUCH MARKET VALUE SHOULD NOT BE ACCEPTED WITHOUT VERIFICATION.

B-163374, FEBRUARY 15, 1968, AND CASES CITED THEREIN. SINCE THER IS A SUBSTANTIAL DISPARITY BETWEEN SOUTHERN'S BID AND BOTH THE GOVERNMENT'S ESTIMATE AND THE ONLY OTHER BID SUBMITTED, WE BELIEVE THAT THE CONTRACTING OFFICER SHOULD BE CHARGED WITH CONSTRUCTIVE NOTICE OF THE ERROR AND THAT THE BID SHOULD HAVE BEEN VERIFIED BEFORE AWARD. B 180128, JANUARY 28, 1974. BID SHOULD HAVE BEEN VERIFIED BEFORE AWARD. B-180128, JANUARY 29, 1974.

ACCORDINGLY, WE AGREE WITH THE ADMINISTRATIVE RECOMMENDATION THAT CONTRACT NO. 31-5049-003 MAY BE CANCELED WITHOUT LIABILITY TO SOUTHERN.