B-182960, APR 10, 1975

B-182960: Apr 10, 1975

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HIGH BIDS (SUBMITTED BY BIDDER WITH INTENTION OF BIDDING TOTAL PRICE PER LOT RATHER THAN PER TIRE AS REQUIRED UNDER SURPLUS SALES INVITATION) WHICH WERE RESPECTIVELY 37.5 PERCENT AND 55 PERCENT OF THE ACQUISITION COST SHOULD HAVE PUT CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR. ITEM 354 WAS ADVERTISED AS: "TIRE. AN ALMOST IDENTICAL DESCRIPTION WAS GIVEN FOR ITEM 355 EXCEPT THAT THE TERM "EARTH-MOVING" WAS USED IN THE DESCRIPTION IN LIEU OF "EARTH MOVER.". STOCKER'S HIGH BIDS WERE ACCEPTED FOR ITEM 354 IN THE AMOUNT OF $375 EACH AND FOR ITEM 355 AT $550 EACH. WAS ISSUED FOR THE ITEMS IN THE TOTAL AMOUNT. WHILE THE AUCTION WAS STILL IN PROGRESS. STOCKER INFORMED THE SALES CONTRACTING OFFICER THAT THE AWARDED PRICE WAS IN ERROR SINCE ITS BID HAD BEEN SUBMITTED AS THE TOTAL PRICE FOR THE "LOT" AS REQUESTED BY THE AUCTIONEER.

B-182960, APR 10, 1975

AFTER AUCTIONEER REQUESTED BIDS BY THE "LOT" FOR TWO ITEMS CONTAINING TIRES IN POOR CONDITION, HIGH BIDS (SUBMITTED BY BIDDER WITH INTENTION OF BIDDING TOTAL PRICE PER LOT RATHER THAN PER TIRE AS REQUIRED UNDER SURPLUS SALES INVITATION) WHICH WERE RESPECTIVELY 37.5 PERCENT AND 55 PERCENT OF THE ACQUISITION COST SHOULD HAVE PUT CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR, AND CONTRACT AWARDED WITHOUT BID VERIFICATION SHOULD BE RESCINDED AS RECOMMENDED BY CONTRACTING AGENCY.

STOCKER TIRE SERVICE:

STOCKER TIRE SERVICE (STOCKER) HAS REQUESTED RESCISSION OF ITS CONTRACT FOR ITEMS 354 AND 355 AWARDED UNDER SURPLUS SALES INVITATION FOR BIDS (IFB) 41-5170, ISSUED BY THE DEFENSE SUPPLY AGENCY (DSA), DEFENSE PROPERTY DISPOSAL REGION OFFICE, OGDEN, UTAH.

ITEM 354 WAS ADVERTISED AS:

"TIRE, PNEUMATIC, EARTH-MOVER: TUBELESS TYPE,

29.5 X 29, NYLON, 28 PLY RATING. VARIOUS MFRS. AND

TREAD DESIGN. FSN 2610-554-6222.

OUTSIDE - LOT 1111, AREA H, ROW 21 - UNPACKED -

USED - POOR CONDITION

TOTAL COST: $4000

EST. TOTAL WT: 7750 LBS. 4 EACH

ARTICLE BB: MILITARY/MUNITIONS LIST ITEMS APPLIES."

AN ALMOST IDENTICAL DESCRIPTION WAS GIVEN FOR ITEM 355 EXCEPT THAT THE TERM "EARTH-MOVING" WAS USED IN THE DESCRIPTION IN LIEU OF "EARTH MOVER."

STOCKER'S HIGH BIDS WERE ACCEPTED FOR ITEM 354 IN THE AMOUNT OF $375 EACH AND FOR ITEM 355 AT $550 EACH. IMMEDIATELY UPON ACCEPTANCE, A NOTICE OF AWARD, STATEMENT, AND RELEASE DOCUMENT (CONTRACT NUMBER 41 5170-262), DATED NOVEMBER 7, 1974, WAS ISSUED FOR THE ITEMS IN THE TOTAL AMOUNT, RESPECTIVELY, OF $1,500 AND $2,200. WHILE THE AUCTION WAS STILL IN PROGRESS, STOCKER INFORMED THE SALES CONTRACTING OFFICER THAT THE AWARDED PRICE WAS IN ERROR SINCE ITS BID HAD BEEN SUBMITTED AS THE TOTAL PRICE FOR THE "LOT" AS REQUESTED BY THE AUCTIONEER, AND NOT PER UNIT PRICE AS INDICATED. THE IFB SPECIFICALLY CALLED FOR ITEMS 354 AND 355 TO BE SOLD BY THE UNIT (EACH); HOWEVER, A TAPE RECORDING OF THE SALE VERIFIED THAT BEFORE REQUESTING BIDS ON ITEM 354, THE AUCTIONEER MADE THE FOLLOWING STATEMENT:

"ITEM 354, PNEUMATIC TIRES AND THERE YOU ARE, WE HAVE FOUR IN THE LOT, AND HERE YOU ARE BOYS, BID 'EM BY THE PIECE."

THE ADMINISTRATIVE REPORT NOTES THAT ITEM 235, AUCTIONED EARLIER, CONSISTING OF SIX SIMILAR TIRES HAD BEEN ADVERTISED AS "1 LOT," AND BROUGHT A RETURN OF $800, NOTWITHSTANDING ITS CURRENT MARKET APPRAISAL OF $900. THIS RESULTED IN AN AVERAGE PRICE OF $133.33 PER TIRE. THE CONTRACTING OFFICER'S REPORT STATED THAT PRIOR TO THAT TIME, PROPERTY WITH THE SAME FEDERAL STOCK NUMBER HAD RESULTED IN RECEIPT OF BIDS AT $155, $479, AND $128 EACH. CURRENT MARKET APPRAISAL FOR THE TIRES IN ITEMS 354 AND 355 WAS ESTABLISHED AT $200 EACH. IF SUBMITTED AS THE TOTAL PRICE PER LOT, STOCKER'S BID PER TIRE WOULD HAVE BEEN $93.75 ($375 TOTAL FOR ITEM 354) AND $137.50 ($550 TOTAL FOR ITEM 355).

THE PRIMARY ISSUE FOR CONSIDERATION 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. UNDER SUCH CIRCUMSTANCES THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. COMP. GEN. 199, 201 (1969). IN DETERMINING WHETHER THE CONTRACTING OFFICER SHOULD HAVE KNOWN OF THE ERROR OR HAD "CONSTRUCTIVE" NOTICE THEREOF WE MUST CONSIDER: (1) THE COMPARISON OF THE HIGH BID AND CURRENT MARKET APPRAISAL OF THE PROPERTY; (2) THE POSSIBLE EFFECT OF THE AUCTIONEER'S STATEMENT UNDER THE CIRCUMSTANCES; AND (3) THE NATURE OF THE PROPERTY BEING SOLD.

THE AWARD PRICE FOR THE PROPERTY DESCRIBED AS BEING IN POOR CONDITION WAS 37.5 PERCENT OF THE ACQUISITION COST OF ITEM 354, AND 55 PERCENT OF THE ACQUISITION COST FOR ITEM 355. MOREOVER, SINCE SIMILAR TIRES AT THE SAME SALE HAD BEEN SOLD BY "LOT," IT WAS LOGICAL FOR A BIDDER TO ASSUME THAT THE ITEMS IN QUESTION WERE ALSO BEING SOLD BY THE LOT IN VIEW OF THE AUCTIONEER'S SPECIFIC COMMENT (SUPRA). UNDER THESE CIRCUMSTANCES, DSA CONCLUDED THAT THE CONTRACTING OFFICER SHOULD BE CHARGED WITH CONSTRUCTIVE NOTICE OF A POSSIBLE MISTAKE IN BID.

WE AGREE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ALERTED TO THE POSSIBILITY OF A MISTAKE AND SINCE THE BID WAS NOT VERIFIED BEFORE AWARD, WE CONCUR WITH DSA'S RECOMMENDATION THAT THE CONTRACT BE RESCINDED WITHOUT LIABILITY TO STOCKER. SEE MATTER OF MICHAEL VITAL, SR., B-182360, NOVEMBER 8, 1974; MATTER OF ORVAL N. GARTNER, B-180673, APRIL 2, 1974, AND CASES CITED THEREIN.