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B-192592, NOVEMBER 16, 1978

B-192592 Nov 16, 1978
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AWARD IS UNAUTHORIZED AND MUST BE SET ASIDE SINCE AWARD MUST BE MADE TO BIDDER SUBMITTING HIGHEST BID. BIDS WERE OPENED WITH GARRETT THE SECOND HIGH BIDDER FOR ITEM 153. (NORTHWEST) WAS THE HIGH BIDDER AT $6. DPDS REJECTED NORTHWEST'S BID AS NONRESPONSIVE ON THE BASIS THAT THE FIRM WAS ON THE "DISHONORED CHECK LIST. AWARD WAS MADE TO GARRETT. DPDS LEARNED THAT NORTHWEST SHOULD NOT HAVE BEEN ON THE DISHONORED CHECK LIST. THAT ITS BID WAS ERRONEOUSLY REJECTED. GARRETT WAS NOTIFIED THAT THE AWARD TO HIM WAS CANCELED AND THAT AWARD WOULD BE MADE TO NORTHWEST. GARRETT CLAIMS THAT HE HAS A VALID CONTRACT PURSUANT TO THE TERMS OF THE IFB AND THAT CANCELLATION OF THE CONTRACT IS IMPROPER. DPDS BELIEVES GARRETT'S CONTRACT MUST BE SET ASIDE BECAUSE THE AWARD WAS MADE AS A RESULT OF AN ADMINISTRATIVE ERROR.

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B-192592, NOVEMBER 16, 1978

DIGEST: WHERE GOVERNMENT ADMINISTRATIVE ERROR IN SALE OF SURPLUS PROPERTY RESULTS IN NOTIFICATION OF AWARD BEING SENT TO SECOND HIGH BIDDER, AWARD IS UNAUTHORIZED AND MUST BE SET ASIDE SINCE AWARD MUST BE MADE TO BIDDER SUBMITTING HIGHEST BID.

WILLIAM D. GARRETT:

WILLIAM D. GARRETT (GARRETT) PROTESTS THE CANCELLATION OF A CONTRACT AWARDED TO HIM UNDER DEFENSE PROPERTY DISPOSAL SERVICE (DPDS), DEFENSE LOGISTICS AGENCY, SALES INVITATION FOR BIDS 41-8266.

ON JUNE 14, 1978, BIDS WERE OPENED WITH GARRETT THE SECOND HIGH BIDDER FOR ITEM 153, A FORKLIFT, AT $3,015. NORTHWEST EQUIPMENT, INC. (NORTHWEST) WAS THE HIGH BIDDER AT $6,329. NORTHWEST SUBMITTED A COMPANY CHECK IN THE AMOUNT OF $6,000 AS A BID DEPOSIT. DPDS REJECTED NORTHWEST'S BID AS NONRESPONSIVE ON THE BASIS THAT THE FIRM WAS ON THE "DISHONORED CHECK LIST," THEREBY REQUIRING IT TO SUBMIT A CERTIFIED CHECK AS A BID DEPOSIT.

ON JUNE 21, 1978, AWARD WAS MADE TO GARRETT. SUBSEQUENTLY, DPDS LEARNED THAT NORTHWEST SHOULD NOT HAVE BEEN ON THE DISHONORED CHECK LIST, AND THAT ITS BID WAS ERRONEOUSLY REJECTED. ON JULY 5, 1978, AFTER GARRETT PAID THE BALANCE OF THE PURCHASE PRICE, BUT BEFORE HE TOOK POSSESSION OF THE FORKLIFT, GARRETT WAS NOTIFIED THAT THE AWARD TO HIM WAS CANCELED AND THAT AWARD WOULD BE MADE TO NORTHWEST.

GARRETT CLAIMS THAT HE HAS A VALID CONTRACT PURSUANT TO THE TERMS OF THE IFB AND THAT CANCELLATION OF THE CONTRACT IS IMPROPER. DPDS BELIEVES GARRETT'S CONTRACT MUST BE SET ASIDE BECAUSE THE AWARD WAS MADE AS A RESULT OF AN ADMINISTRATIVE ERROR. IN SUPPORT OF ITS POSITION, GARRETT RELIES ON DPDS PAMPHLET, "SALES BY REFERENCE, JANUARY 1978," WHICH PROVIDES THE TERMS AND CONDITIONS APPLICABLE TO THE SALE AND WAS INCORPORATED INTO THE IFB. PART 3, PARAGRAPH D, OF THE PAMPHLET PROVIDES:

"THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE PROVIDED IN THE INVITATION SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT ANY FURTHER ACTION BY EITHER PARTY."

AS GARRETT RECEIVED A WRITTEN AWARD, HE MAINTAINS THAT A BINDING CONTRACT RESULTED, AND THAT THE GOVERNMENT MUST HONOR THE CONTRACT.

THE STATUTE GOVERNING THE DISPOSITION OF SURPLUS GOVERNMENT PROPERTY (40 U.S.C. 484 (1976)) REQUIRES ADVERTSIEMENTS FOR BIDS TO BE MADE THROUGH SUCH METHODS, AND ON SUCH TERMS, AS SHALL PERMIT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY, AND THAT AWARD BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE IFB, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. AS NOTED ABOVE, THIS REQUIREMENT FOR AWARD ON THE BASIS OF THE MOST ADVANTAGEOUS BID WAS ALSO SET FORTH IN PART 3, PARAGRAPH D, OF THE TERMS AND CONDITIONS OF THE SALE. WE HAVE HELD THAT WHERE THE HIGHEST BID FOR THE PURCHASE OF GOVERNMENT SURPLUS SOLD UNDER COMPETITIVE BIDDING PROCEDURES IS SOLICITED, BUT THROUGH AN ADMINISTRATIVE ERROR, AWARD HAS BEEN MADE TO THE SECOND HIGHEST BIDDER, THE INTERESTS OF THE UNITED STATES, AS WELL AS THE DUTY OF THE CONTRACTING OFFICER TO AWARD SUCH CONTRACTS TO THE HIGHEST BIDDER, REQUIRE THAT SUCH UNAUTHORIZED AWARD BE SET ASIDE AND AWARD MADE TO THE HIGHEST BIDDER. 36 COMP.GEN. 94 (1956), ROGERS TRADING COMPANY, INC. B-182380, FEBRUARY 19, 1975, 75-1 CPD 102.

WE REACH THE SAME CONCLUSION HERE. WHILE GARRETT PAID THE BALANCE DUE ON THE FORKLIFT, THE STATUTE DOES NOT PERMIT THE CONTRACTING AGENCY TO AWARD A CONTRACT TO THE SECOND HIGH BIDDER. 40 U.S.C. 484, SUPRA. ON THE CONTRARY, AS NOTED ABOVE, AWARD MUST BE MADE TO THE HIGHEST BIDDER AND THE ERRONEOUS AWARD SET ASIDE.

ACCORDINGLY, THE PROTEST IS DENIED.

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