B-140214, AUG. 5, 1959

B-140214, AUG. 5, 1959

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JULY 13, 1959, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATING TO A MISTAKE IN BID ALLEGED BY THE A AND B SURPLUS COMPANY, 465 WEST BROADWAY, NEW YORK 12, NEW YORK, AFTER THE AWARD OF A CONTRACT PURSUANT TO INVITATION FOR BIDS NO. 15-010-S-59-14, DATED APRIL 15, 1959--- A SPOT BID SALE. OUR DECISION IS REQUESTED AS TO WHETHER THE CONTRACTOR MAY BE RELIEVED OF THE AWARD OF ITEMS 38 AND 39 COVERED BY THE INVITATION.

THE RECORD SHOWS THAT BY THE CITED INVITATION THE LEXINGTON SIGNAL DEPOT, LEXINGTON, KENTUCKY, OFFERED FOR SALE VARIOUS ITEMS OF GOVERNMENT-OWNED SURPLUS PROPERTY, THE BIDS TO BE OPENED AT 1 P.M. ON APRIL 15, 1959. RESPONSE TO THE INVITATION, THE A AND B SURPLUS COMPANY SUBMITTED THE FOLLOWING BIDS: ITEM 38, 20,000 SUPPRESSORS AT THE PRICE OF $0.0636 EACH, AND ITEM 39, 50,000 SUPPRESSORS AT THE PRICE OF $0.0686 EACH. AWARD WAS MADE ACCORDINGLY. FIVE OTHER BIDS WERE RECEIVED AS TO EACH OF THESE ITEMS, THE BIDS AS TO ITEM 38 RANGING FROM $0.0022 EACH TO $0.023 EACH, AND AS TO ITEM 39 FROM $0.002 EACH TO $0.025 EACH.

IT IS REPORTED THAT ON APRIL 16, 1959, THE DAY FOLLOWING THE BID OPENING MR. SAFFAR OF THE A AND B SURPLUS COMPANY CALLED THE PROPERTY DISPOSAL OFFICE FOR THE RESULTS OF THE SALE AND WAS ADVISED THAT HIS FIRM HAD BEEN AWARDED ITEMS 38 AND 39 AT THE ABOVE-STATED PRICES. THEREUPON MR. SAFFAR STATED HE HAD EVIDENTLY MADE AN ERROR IN PLACING THE DECIMAL POINT SINCE HE HAD INTENDED TO BID ONLY $0.00636 EACH FOR ITEM 38 AND $0.00686 EACH FOR ITEM 39. THE NEXT DAY, APRIL 17, 1959, THE PROPERTY DISPOSAL OFFICER RECEIVED A LETTER FROM THE CONTRACTOR CONFIRMING THE INFORMATION GIVEN OVER THE TELEPHONE AND COMPLAINING FURTHER THE ERROR WHICH HAD BEEN MADE IN SUBMITTING ITS BID, IT BEING POINTED OUT THAT THE FIRM HAD SUBMITTED A BID OF ONLY $0.00383 EACH FOR A QUANTITY OF 144,588 SUPPRESSORS WHICH WERE OFFERED FOR SALE AT ANOTHER INSTALLATION. WITH LETTER OF APRIL 20, 1959, THE CONTRACTOR SUBMITTED AS FURTHER EVIDENCE OF ITS ERROR INFORMATION SHOWING THAT A QUANTITY OF 31,300 SUPPRESSORS--- THE SAME ITEM AS HERE INVOLVED--- HAD BEEN SOLD BY THE DEPARTMENT OF THE NAVY AT BAYONNE, NEW JERSEY, AT THE PRICE OF $0.0137 EACH. BY A FURTHER LETTER DATED JUNE 9, 1959, THE CONTRACTOR SUBMITTED ITS COPY OF THE SALES INVITATION ON WHICH ITEMS 38 AND 39 WERE SHOWN AS IN THE AMOUNTS OF $127.20 AND $343, RESPECTIVELY.

IN HIS FINDINGS AND RECOMMENDATION IN THIS CASE, THE CONTRACTING OFFICER STATED THAT IN OCTOBER 1958, AN EQUAL QUANTITY OF SUPPRESSORS, VERY SIMILAR TO THOSE HERE INVOLVED, WERE SOLD AT HIS INSTALLATION AT THE PRICE OF $0.0161 EACH, AND THAT THE AVERAGE BID RECEIVED WAS $0.00794. IT WAS THE OPINION OF THE CONTRACTING OFFICER THAT AN HONEST ERROR WAS MADE BY THE BIDDER AND HE RECOMMENDED THAT THE CONTRACTOR BE RELIEVED OF LIABILITY AND THAT THE ITEMS BE AWARDED AT THE NEXT HIGHEST BID, PROVIDED THE NEXT HIGHEST BIDDER IS WILLING TO ACCEPT THE AWARD AT THE TIME OF THE RECEIPT OF A FINAL DECISION IN THE MATTER. BY A SUPPLEMENTAL STATEMENT DATED JUNE 11, 1959, THE CONTRACTING OFFICER REPORTED THAT THE BIDS OF THE A AND B SURPLUS COMPANY FOR ITEMS 38 AND 39 WERE UNUSUALLY HIGH COMPARED TO THE OTHER BIDS RECEIVED, BUT THAT THEY WERE NOT SO UNUSUALLY HIGH THAT AN ERROR SHOULD HAVE BEEN SUSPECTED AT THE TIME THE SALE WAS BEING CONDUCTED; THAT WIDE VARIANCES IN BIDDING FOR SURPLUS PROPERTY ARE COMMON OCCURRENCES; AND THAT SINCE AWARDS ON SPOT BID SALES ARE MADE "ON THE SPOT" AT THE TIME OF SALE THERE IS NOT SUFFICIENT TIME FOR A CLOSE ANALYSIS OF EACH BID RECEIVED.

BY SECOND ENDORSEMENT DATED MAY 26, 1959, THE U.S. ARMY DISPOSAL CENTER, CAMERON STATION, ALEXANDRIA, VIRGINIA, RECOMMENDED THAT THE AWARDS ON ITEMS 38 AND 39 BE CANCELLED; THAT THE CONTRACTOR BE GRANTED RELIEF; AND THAT THE PROPERTY ON ITEMS 38 AND 39 BE READVERTISED ON A SUBSEQUENT SALE. IN A REPORT DATED JUNE 26, 1959, THE OFFICE OF THE QUARTERMASTER GENERAL RECOMMENDED THAT NO RELIEF BE ALLOWED IN THIS CASE, IT BEING STATED THAT THE VARIATION IN BIDS WAS NOT SO UNUSUAL AS TO INDICATE ERROR AND THAT THE ALLEGED INTENDED EXTENSION WAS NOT SHOWN ON THE SPOT BID CARD.

IT HAS BEEN HELD IN NUMEROUS DECISIONS OF OUR OFFICE THAT IN VIEW OF WIDE RANGE OF PRICES ORDINARILY RECEIVED ON SALVAGE, WASTE AND SURPLUS PROPERTY, A MERE PRICE DIFFERENCE WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR, AS WOULD SIMILAR PRICE DIFFERENCES ON NEW EQUIPMENT OR SUPPLIES TO BE FURNISHED THE GOVERNMENT. THE REASON FOR SUCH HOLDINGS IS THAT THE PRICES OFFERED TO THE GOVERNMENT FOR ITS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE THE BIDDER MIGHT WISH TO TAKE.

IT IS TO BE NOTED THAT IN THE INSTANT MATTER THE CONTRACTING OFFICER REPORTED THAT WHILE THE BIDS OF THE A AND B SURPLUS COMPANY WERE UNUSUALLY HIGH COMPARED TO THE OTHER BIDS RECEIVED, THEY WERE NOT SO UNUSUALLY HIGH THAT AN ERROR SHOULD HAVE BEEN SUSPECTED AT THE TIME THE SALE WAS BEING CONDUCTED. INSOFAR AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE BID IN THIS CASE WAS IN GOOD FAITH, NO ERROR HAVING BEEN ALLEGED UNTIL AFTER AWARD. ACCORDINGLY, THE ACCEPTANCE OF THE BIDS CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313, AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID, AS ALLEGED, IT PROPERLY MAY BE ATTRIBUTED TO THE CONTRACTOR'S NEGLIGENCE AND SINCE THE ERROR WAS UNILATERAL--- NOT MUTUAL--- THE CONTRACTOR IS NOT ENTITLED TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259, AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. ACCORDINGLY, THERE APPEARS TO BE NO LEGAL BASIS WHEREBY THE CONTRACTOR MAY BE RELIEVED FROM ITS OBLIGATIONS UNDER THE CONTRACT.