B-182334, DEC 16, 1974

B-182334: Dec 16, 1974

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PURCHASER WHOSE BID PRICE OF $.3569 PER POUND FOR ELECTRONICS SCRAP WAS SUBSTANTIALLY HIGHER THAN NEXT HIGH BID OF $.0606 PER POUND. OTHER BIDS RANGING FROM $.0379 TO $.0301 PER POUND AND CURRENT MARKET APPRAISAL OF $.06 PER POUND MAY HAVE SALES CONTRACT RESCINDED SINCE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF MISTAKE IN BID BECAUSE OF WIDE PRICE VARIATIONS WHICH ARE NORMALLY NOT ENCOUNTERED IN SALE OF SCRAP. SHOULD HAVE REQUESTED VERIFICATION OF BID BEFORE ACCEPTANCE. SITKIN WAS AWARDED THE PURCHASE CONTRACT ON JULY 24. THE NEXT HIGH BID FOR THE SCRAP WAS $.0606 PER POUND AND ITS CURRENT MARKET APPRAISAL WAS $.06 PER POUND. WE HAVE CONSISTENTLY RULED THAT WHERE A MISTAKE IN BID IS ALLEGED ON THE SALE OF GOVERNMENT SCRAP.

B-182334, DEC 16, 1974

PURCHASER WHOSE BID PRICE OF $.3569 PER POUND FOR ELECTRONICS SCRAP WAS SUBSTANTIALLY HIGHER THAN NEXT HIGH BID OF $.0606 PER POUND, AND OTHER BIDS RANGING FROM $.0379 TO $.0301 PER POUND AND CURRENT MARKET APPRAISAL OF $.06 PER POUND MAY HAVE SALES CONTRACT RESCINDED SINCE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBILITY OF MISTAKE IN BID BECAUSE OF WIDE PRICE VARIATIONS WHICH ARE NORMALLY NOT ENCOUNTERED IN SALE OF SCRAP, AND SHOULD HAVE REQUESTED VERIFICATION OF BID BEFORE ACCEPTANCE.

SITKIN SMELTING AND REFINING, INC.:

BY LETTER OF OCTOBER 1, 1974, THE ACTING ASSISTANT COUNSEL FOR THE DEFENSE SUPPLY AGENCY RECOMMENDED TO OUR OFFICE THAT SALES CONTRACT NO. 27 -5004-138, AWARDED TO SITKIN SMELTING AND REFINING, INC. (SITKIN), ON ITEM 254 OF SALE NO. 27-5004, BE RESCINDED.

ITEM 254 CONSISTS OF 50,000 POUNDS OF ELECTICAL SCRAP. SITKIN WAS AWARDED THE PURCHASE CONTRACT ON JULY 24, 1974, AT ITS HIGH BID PRICE OF $.3569 PER POUND.

ON AUGUST 7, 1974, SITKIN NOTIFIED THE DEFENSE PROPERTY DISPOSAL REGION OFFICE THAT IT HAD MADE AN ERROR WHEN SUBMITTING ITS BID FOR THE SCRAP. SITKIN ALLEGED THAT IT HAD MEANT TO BID $.03569 PER POUND INSTEAD OF $.3569 AND REQUESTED THAT IT BE RELIEVED OF THE AWARD TO IT.

THE NEXT HIGH BID FOR THE SCRAP WAS $.0606 PER POUND AND ITS CURRENT MARKET APPRAISAL WAS $.06 PER POUND. THE OTHER FIVE BIDS FOR THE SCRAP RANGED FROM $0379 TO $.0301 PER POUND.

WE HAVE CONSISTENTLY RULED THAT WHERE A MISTAKE IN BID IS ALLEGED ON THE SALE OF GOVERNMENT SCRAP, AND WHERE THERE ARE SUBSTANTIAL DISPARITIES BETWEEN THE HIGH BID AND THE NEXT HIGH BID, AND THE HIGH BID AND THE CURRENT MARKET APPRAISAL, AND ESPECIALLY WHERE THERE IS ALSO A COMPARATIVELY NARROW RANGE AMONG THE LOWER BIDS, THE SALES CONTRACTING OFFICER IS ON CONSTRUCTIVE NOTICE OF A POSSIBLE MISTAKE IN THE HIGH BID AND SHOULD REQUEST VERIFICATION OF THE BID PRIOR TO AWARD. MATTER OF ACME REFINING-SMELTING COMPANY, B-181967, AUGUST 20, 1974; MATTER OF M & M METALS, INC., B-180128, JANUARY 29, 1974; B 174900, MARCH 7, 1972. ONE OF THE REASONS FOR THIS RULE IS THAT

"*** WIDE PRICE VARIATIONS NORMALLY ARE NOT ENCOUNTERED IN THE SALE OF SCRAP *** BECAUSE OF THE ESTABLISHED MARKET FOR THIS MATERIAL AND THE LIMITED USES TO WHICH IT MAY BE PUT." 49 COMP. GEN. 199, 202 (1969).

IN THE INSTANT CASE THE SALES CONTRACTING OFFICER HAS VERIFIED THAT THE ITEM IN QUESTION CONSISTS SOLELY OF SCRAP. THE HIGH BID WAS ALMOST SIX TIMES BOTH THE NEXT HIGH BID AND THE CURRENT MARKET APPRAISAL. THESE DISPARITIES ARE EVEN MORE SIGNIFICANT THAN THOSE IN THE PREVIOUSLY CITED CASES WHEREIN WE FOUND THAT THE CONTRACTING OFFICERS INVOLVED WERE ON CONSTRUCTIVE NOTICE OF POSSIBLE MISTAKE DUE TO DISPARITIES AMONG BIDS AND BETWEEN THE HIGH BID AND THE CURRENT MARKET APPRAISAL. THEREFORE, THE SALES CONTRACTING OFFICER INVOLVED IN THE INSTANT CASE WAS ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF A MISTAKE IN THE BID BY SITKIN AND SHOULD HAVE REQUESTED SITKIN TO VERIFY ITS BID.

ACCORDINGLY, SALES CONTRACT NO. 27-5004-138 MAY BE RESCINDED WITHOUT LIABILITY TO SITKIN AS ADMINISTRATIVELY RECOMMENDED.