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B-160226, NOV. 3, 1966

B-160226 Nov 03, 1966
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DEFENSE SUPPLY AGENCY: REFERENCE IS MADE TO THE LETTER (DSAH-G) DATED OCTOBER 5. THE CONTRACT WAS AWARDED JULY 20. THE INVITATION WAS ISSUED JUNE 28. ITEMS 1 TO 13 WERE BASED ON THE DESCRIPTION FOR ITEM NO. 1 WHICH IS AS FOLLOWS: "PARTS KIT. THE BIDS RECEIVED WERE OPENED AND UNIT PRICES RANGED FROM A LOW OF $ .129. WHICH WAS BID ON EACH ITEM. FOR ITEMS 9 THROUGH 13 THE HIGHEST BID RECEIVED WAS THAT OF GENERAL PRODUCTS. THE ONLY OTHER BID RECEIVED FOR THE SAME ITEMS (9 TO 13) WAS AT $ .129 PER UNIT. BIDS FOR ITEMS 1 TO 8 WERE AT UNIT PRICES OF $ .129 FOR ALL OF THE ITEMS AND AT UNIT PRICES OF $ .37. $ .33 AND $ .17 WERE SUBMITTED BY THE SAME BIDDER BASED UPON ITS UNIT BID PRICE OF $3.032.

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B-160226, NOV. 3, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO THE LETTER (DSAH-G) DATED OCTOBER 5, 1966, WITH FILE, FROM YOUR ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION CONCERNING THE REQUEST OF GENERAL PRODUCTS, INC., PITTSBURGH, PENNSYLVANIA, FOR RESCISSION OF SALES CONTRACT NO. 41-7006-031.

THE CONTRACT WAS AWARDED JULY 20, 1966, BY THE DEFENSE SURPLUS SALES OFFICE, OGDEN, UTAH, BASED UPON THE PROVISIONS OF INVITATION FOR BIDS (IFB) 41-7006. THE INVITATION WAS ISSUED JUNE 28, 1966, FOR THE SALE OF FORTY-SIX ITEMS OF GOVERNMENT SURPLUS PROPERTY CLASSIFIED AS GENERAL MERCHANDISE. THE ITEMS PERTINENT TO THIS CASE, NUMBERED 1 TO 13, INCLUSIVE, CONTAINED THE SAME BASIC DESCRIPTION, EXCEPT FOR SOME ITEMS WHICH CONTAINED DIFFERENT QUANTITIES AND DIFFERENT GOVERNMENT OPINIONS AS TO THE TOTAL COST AND ESTIMATED WEIGHT. EXCLUSIVE OF THOSE EXCEPTIONS, ITEMS 1 TO 13 WERE BASED ON THE DESCRIPTION FOR ITEM NO. 1 WHICH IS AS FOLLOWS:

"PARTS KIT, FOR YUKON M-1950 HEATER, SPACE, TAYLOR METAL PRODUCTS P/N 65- H-2755, CONSISTING OF VENT TUBE, HOSE, CAP, BURNER, WRENCHES, WICK AND DEFLECTOR. FSN: 4520-555-8382 (LOC: OUTSIDE, SOUTH END OF DISPOSAL YARD - PACKED - UNUSED)

GOVERNMENT'S OPINION AS TO:

CONDITION: APPEARS TO BE GOOD

TOT COST: $1,083.00

EST WT: 1,512 LBS. 144 EACH"

ON THE BID OPENING DATE, JULY 19, 1966, THE BIDS RECEIVED WERE OPENED AND UNIT PRICES RANGED FROM A LOW OF $ .129, WHICH WAS BID ON EACH ITEM, TO A HIGH OF $3.032. FOR ITEMS 9 THROUGH 13 THE HIGHEST BID RECEIVED WAS THAT OF GENERAL PRODUCTS, INC., AT $3.032 PER UNIT OR $13,025.48 FOR THE FIVE ITEMS. THE ONLY OTHER BID RECEIVED FOR THE SAME ITEMS (9 TO 13) WAS AT $ .129 PER UNIT. BIDS FOR ITEMS 1 TO 8 WERE AT UNIT PRICES OF $ .129 FOR ALL OF THE ITEMS AND AT UNIT PRICES OF $ .37, $ .33, $ .17 AND $1.1024 FOR INDIVIDUAL ITEMS. THE BIDS OF $ .37, $ .33 AND $ .17 WERE SUBMITTED BY THE SAME BIDDER BASED UPON ITS UNIT BID PRICE OF $3.032, AWARD OF A CONTRACT WAS MADE TO GENERAL PRODUCTS FOR ITEMS 9, 10, 11, 12 AND 13 ON JULY 20, 1966. THE THEN CURRENT MARKET APPRAISAL FOR THE ITEMS WAS $ .50 PER UNIT.

MR. BERGER, PRESIDENT OF GENERAL PRODUCTS, INC., INFORMED THE CONTRACTING OFFICER ON JULY 26 THAT AN ERROR HAD BEEN MADE IN BIDDING BY HIS OFFICE MANAGER. THE CORRECT UNIT PRICE, IT WAS ALLEGED, SHOULD HAVE BEEN $ .032 INSTEAD OF THE $3.032 ACTUALLY BID. BY LETTER OF AUGUST 10, 1966, MR. BERGER, FURTHER EXPLAINED THE ERROR BY STATING:

"1. IT WAS OUR INTENTION TO BID $ .032 EACH FOR ALL OF THE UNITS UNDER THE FIVE ITEM NUMBERS. MISS GENEVIEVE MACKEY, WHO IS OUR OFFICE MANAGER AND IS AUTHORIZED TO FILL OUT OUR BID AND SIGN CHECKS, TOOK MY QUOTATION IN SHORTHAND, AND INSTEAD OF BIDDING $ .032 PER UNIT, SHE BID $3.032 EACH.

"I NEVER SAW THE BID IN ITS FINAL FORM, NOR THE CHECK WHICH ACCOMPANIED IT.

"WE RESPECTFULLY REQUEST THAT THE SALE BE RESCINDED AND THAT OUR BID BOND BE RETURNED IN ADDITION TO THE DEPOSIT OF $625.00 WHICH ACCOMPANIED OUR BID.

"WE ALSO ENCLOSE AN AFFIDAVIT FROM MISS MACKEY AND A COPY OF THE WORK SHEET FROM WHICH THE ERROR WAS MADE.'

THERE IS NOTHING IN THE RECORD TO REFUTE THE ASSERTION AND EVIDENCE INDICATING THAT A MISTAKE WAS IN FACT MADE BY GENERAL PRODUCTS IN PREPARING ITS BID. WE MUST, THEREFORE, CONCLUDE THAT A MISTAKE IN THE BID WAS MADE. HOWEVER, THE ESTABLISHMENT BY A BIDDER OF A MISTAKE IN PREPARING HIS BID, AFTER AN AWARD HAS BEEN MADE THEREON, DOES NOT IN AND BY ITSELF ENTITLE THAT CONTRACTOR TO A RESCISSION OF ITS CONTRACT. THE ESTABLISHED RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED AND AWARD OF A CONTRACT MADE, SUCH BIDDER MUST BEAR THE CONSEQUENCES OF THE ERROR UNLESS THE MISTAKE WAS MUTUAL OR THE CONTRACTING OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. B 146524, AUGUST 29, 1961.

FROM THE EVIDENCE PRESENTED, IT IS CLEAR THAT A MUTUAL MISTAKE DID NOT TAKE PLACE, NOR HAD THE CONTRACTING OFFICER RECEIVED ACTUAL NOTICE OF A UNILATERAL MISTAKE. IN ORDER FOR RELIEF TO BE GRANTED, IT FOLLOWS THAT THE CIRCUMSTANCES MUST BE SUCH THAT THE CONTRACTING OFFICER CAN BE SAID TO HAVE HAD CONSTRUCTIVE NOTICE OF THE MISTAKE IN THE BID.

IN HIS LETTER OF OCTOBER 5 TO OUR OFFICE YOUR ASSISTANT COUNSEL CITED B- 158507, AUGUST 1, 1966, AS BEING SIMILAR IN SOME RESPECTS TO THIS CASE. WE AGREE THAT THE FACTS SURROUNDING THE OCCURRENCE OF BOTH MISTAKES WERE SOMEWHAT SIMILAR IN THAT THE SIGNERS OF THE BID FORMS IN BOTH CASES DID NOT PREPARE THE BIDS, AND THAT ACTUAL MISTAKES WERE MADE BY THE PREPARERS OF THE BIDS. HOWEVER, WITHOUT GOING INTO A DETAILED ANALYSIS OF B-158507, WE BELIEVE ONE MAJOR FACTOR CLEARLY DISTINGUISHES THAT CASE FROM THIS CASE. IN OUR EARLIER DECISION FIFTEEN BIDS WERE RECEIVED FOR THE SURPLUS PROPERTY IN QUESTION, WITH THE BIDS FALLING INTO DEFINITE GROUPINGS WITH THE HIGHEST GROUP (GREATLY BELOW THE HIGHEST BID) APPROXIMATING THE GOVERNMENT ESTIMATE FOR END OR MOST VALUABLE USE, WHEREAS IN THE PRESENT CASE ONLY SIX DIFFERENT BID PRICES WERE RECEIVED FOR ITEMS 1 THROUGH 13 WITH NO DEFINITE GROUPING OF BIDDERS UNDER THE HIGH BID.

WE HAVE LONG RECOGNIZED THE FACT THAT A WIDE RANGE OF PRICES IS GENERALLY RECEIVED ON GOVERNMENT SALES OF SURPLUS PROPERTY, PARTICULARLY WHERE, AS HERE, THE PROPERTY IS UNUSED AND IN GOOD CONDITION. THE RATIONALE, AS EXPRESSED IN UNITED STATES V. SABIN METAL CORP., 151 F.SUPP. 683, CITING WITH APPROVAL 16 COMP. GEN. 596; 17 ID. 388; AND ID. 601, IS THAT PRICES ON SURPLUS PROPERTY ARE BASED MORE OR LESS UPON THE ACTUAL 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. FOR UNUSED PROPERTY A SUBSTANTIAL BID MIGHT REASONABLY INDICATE THAT THE BIDDER HAS FOUND A USE FOR THE ITEM AS ORIGINALLY INTENDED, WHEREAS THE VALUE OF THE ITEM AS REFLECTED IN LOWER BIDS MIGHT BE BASED UPON A USE FOR ONLY VARIOUS COMPONENTS OF THE ITEM, OR AS SCRAP, OR IN THE HOPE OF A WINDFALL. THUS, A MERE DIFFERENCE IN THE PRICES BID HAS BEEN CONSISTENTLY VIEWED AS NOT PLACING THE CONTRACTING OFFICER ON NOTICE OF ERROR.

REGARDING THE SUBJECT SALE, THE SALES CONTRACTING OFFICER HAS REPORTED:

"THE BID OF GENERAL PRODUCTS INC. WAS CLOSELY SCRUTINIZED BEFORE AWARD TO DETERMINE IF THERE WAS POSSIBLY AN ERROR IN BID. THE SF 114 A SHOWS THAT THE BID APPEARS ON PAGE 20; THE TOTAL AMOUNT BID IS CORRECT; THE BID DEPOSIT BOND AND ADDITIONAL CHECK TOTAL THE REQUIRED BID DEPOSIT AND THE BID IS PROPERLY SIGNED BY MR. BERGER. THE ITEM BID-PAGE (DLSC FORM 071 TEST) WAS CHECKED VERY CAREFULLY AND WAS FOUND TO BE IN ORDER. IT WAS RECOGNIZED THAT THE UNIT-BID PRICE OF $3.032 WAS ALMOST THREE TIMES THE NEXT HIGHEST BID FOR ITEM NUMBER 6, HOWEVER, SINCE THE BID WAS IN PERFECT ORDER, THERE WAS NO REASON TO SUSPECT THAT A MISTAKE MIGHT HAVE BEEN MADE. THE ITEM DESCRIPTION IN THE IFB WAS REVIEWED, AND IT WAS DETERMINED THAT THE HIGH-BID PRICE WAS APPROXIMATELY 40 PERCENT OF THE ACQUISITION COST. HOWEVER, SINCE THE MATERIAL WAS DESCRIBED AS ,UNUSED," IT WAS CONSIDERED THAT POSSIBLY GENERAL PRODUCTS INC. HAD AN OUTLET WHICH JUSTIFIED THEIR BID PRICE. THE BID OF GENERAL PRODUCTS INC. WAS THEREFORE ACCEPTED AND THE HIGH BIDS ON ITEMS 1 THRU 8 WERE REJECTED AS NOT REPRESENTING A FAIR PRICE.'

CONSIDERING THE ABSENCE OF A GROUPING OF BIDS AND THE UNUSED AND GOOD CONDITION OF THE KITS WHICH WERE SOLD TO GENERAL PRODUCTS AT APPROXIMATELY 40 PERCENT OF THE ACQUISITION COST, WE ARE UNABLE TO SAY THAT THE CIRCUMSTANCES OF THIS CASE WERE SUCH AS TO PUT THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF A MISTAKE.

THE ACCEPTANCE OF GENERAL PRODUCT'S BID THEREFORE CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS OF THE PARTIES. IT IS WELL ESTABLISHED THAT THE RIGHTS OF THE UNITED STATES AS FIXED BY THE CONTRACT CANNOT BE CHANGED BY ANY ACTION OF GOVERNMENT OFFICERS EXCEPT FOR ITS OWN BENEFIT OR UPON SOME NEW AND VALUABLE CONSIDERATION PASSING TO THE GOVERNMENT. SEE B-150435, JANUARY 30, 1963, CITING PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 CT.CL. 327, 335.

BASED UPON THE FOREGOING WE FIND NO LEGAL BASIS FOR GRANTING THE CONTRACTOR THE REQUESTED ..END :

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