B-140214, NOV. 26, 1962

B-140214, NOV. 26, 1962

TO A AND B SURPLUS COMPANY:

FURTHER REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 11, 1962, FROM THE ABOVE ATTORNEY REQUESTING, IN YOUR BEHALF, A FURTHER REVIEW OF THE MATTER OF YOUR INDEBTEDNESS TO THE UNITED STATES IN THE REVISED AMOUNT OF $3,656 RESULTING FROM YOUR DEFAULT UNDER A CONTRACT WITH THE DEPARTMENT OF THE ARMY WHEREBY YOU AGREED TO PURCHASE TWO ITEMS OF GOVERNMENT SURPLUS PROPERTY--- COVERING A TOTAL OF 70,000 SUPPRESSORS-- FOR A TOTAL AMOUNT OF $4,702 UNDER SPOT BID SALE INVITATION NO. 15 010-S-59-14, ISSUED ON APRIL 15, 1959, BY THE LEXINGTON SIGNAL DEPOT, LEXINGTON, KENTUCKY.

WHILE NUMEROUS CONTENTIONS AND ARGUMENTS ARE SET FORTH IN MR. ROSENTHAL'S LETTER OF SEPTEMBER 11, 1962, IT APPEARS THAT HIS BASIC CONTENTIONS ARE THAT AN ERROR ACTUALLY HAD BEEN MADE IN ITEMS NOS. 38 AND 39 OF YOUR BID AND THAT THE ERRORS WERE OF SUCH PROPORTIONS THAT THE GOVERNMENT CONTRACTING OFFICER SHOULD HAVE SUSPECTED THE PROBABILITY OF THE ERRORS PRIOR TO THE ACCEPTANCE OF YOUR BID.

THIS MATTER WAS THE SUBJECT OF OUR DECISION DATED AUGUST 5, 1959, TO THE SECRETARY OF THE ARMY WHEREIN, FOR THE REASONS SET FORTH, WE HELD THAT THERE WAS NO LEGAL BASIS TO RELIEVE YOU OF YOUR OBLIGATIONS UNDER THE CONTRACT. WE AFFIRMED THIS DECISION BY LETTER TO YOU DATED SEPTEMBER 12, 1960. IN ADDITION, BY DECISION DATED OCTOBER 23, 1961, THE ARMED SERVICES BOARD OF CONTRACT APPEALS SUSTAINED AN APPEAL BY YOU OF THIS MATTER TO THE EXTENT OF $365.60 OF THE ORIGINAL AMOUNT OF THE INDEBTEDNESS FOR ADMINISTRATIVE AND CLERICAL COSTS INCURRED BY THE GOVERNMENT IN READVERTISING AFTER YOUR DEFAULT. THIS RESULTED IN THE REVISED AND CURRENT AMOUNT OF YOUR INDEBTEDNESS OF $3,656.

IN VIEW OF THE PREVIOUS CONSIDERATIONS GIVEN TO THIS MATTER WE FEEL IT IS ONLY NECESSARY HERE TO REITERATE THE PRINCIPLES APPLICABLE TO THE BASIC ISSUE INVOLVED. IN A CASE INVOLVING THE SALE OF GOVERNMENT SURPLUS PROPERTY, IT IS NOT PERTINENT WHETHER THE RECORD ESTABLISHES THAT AN ERROR WAS, IN FACT, MADE IN YOUR BID, BUT RATHER THE SOLE QUESTION FOR DETERMINATION IS WHETHER THE GOVERNMENT CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF A PROBABLE ERROR IN THE BID PRIOR TO ITS ACCEPTANCE. IN THIS CASE THE GOVERNMENT HAD NO ACTUAL NOTICE OF ERROR AND INSOFAR AS CONSTRUCTIVE NOTICE IS CONCERNED OUR OFFICE CONSISTENTLY HAS HELD THAT A COMPARISON OF THE BID PRICES GENERALLY USED AS AN EVALUATION FACTOR IN DETERMINING WHETHER A PROBABLE ERROR HAS BEEN MADE IN A BID COVERING A GOVERNMENT PURCHASE, IS OF LITTLE, IF ANY, USE FOR SUCH A DETERMINATION IN A GOVERNMENT SALE OF SURPLUS PROPERTY. WE HAVE LONG RECOGNIZED THE FACT THAT A WIDE RANGE OF PRICES ORDINARILY ARE RECEIVED ON GOVERNMENT SALES OF WASTE, SALVAGE, AND SURPLUS PROPERTY AND, THEREFORE, A MERE DIFFERENCE IN THE PRICES BID BY PROSPECTIVE PURCHASERS MAY NOT BE ACCEPTED AS PLACING A GOVERNMENT CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN A BID FOR THE PURCHASE OF SUCH PROPERTY FROM THE GOVERNMENT AS DOES A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ET CETERA, TO BE FURNISHED TO THE GOVERNMENT. THUS, THE FACT THAT YOUR BID FOR ITEMS NOS. 38 AND 39 MAY HAVE BEEN SUBSTANTIALLY HIGHER THAN ANY OF THE OTHER BIDS RECEIVED FOR THESE ITEMS OR THE FACT THAT YOU MAY HAVE QUOTED MUCH LOWER PRICES FOR SIMILAR TYPE OF SUPPLIES IN PREVIOUS BIDS WAS INSUFFICIENT TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF AN ERROR IN YOUR BID. THE VALUE OF PARTICULAR EQUIPMENT OR SUPPLIES TO A PROSPECTIVE PURCHASER MIGHT VERY WELL DEPEND UPON THE AMOUNT OF SUCH STOCK ON HAND, THE DEMAND THAT THE PARTICULAR PURCHASER OR DEALER HAS FOR SUCH MATERIAL AT THE TIME OF THE SALE OR UPON SUCH OTHER URGENT UTILIZATION THE PURCHASER MIGHT HAVE FOR IT AT THAT SPECIFIC TIME. SUCH CONSIDERATIONS MUST BE GIVEN BY GOVERNMENT CONTRACTING OFFICERS IN ALL TYPES OF SALES INVOLVING THE DISPOSAL OF GOVERNMENT SURPLUS PROPERTY AND THEY ARE PARTICULARLY APPLICABLE TO THE SPOT BID SALE TYPE OF CASE, SUCH AS HERE, WHICH, OF COURSE, LIMITS THE CONTRACTING OFFICER'S TIME FOR MORE DETAILED EVALUATION OF THE BIDS IN VIEW OF THE NECESSITY FOR MAKING IMMEDIATE AWARDS ON THE BASIS OF THE HIGHEST BIDS RECEIVED. MOREOVER, CONSIDERING THE TOTAL ACQUISITION COST OF $0.50 EACH FOR THE SUPPRESSORS COVERED BY ITEMS NOS. 38 AND 39, WHICH WERE DESCRIBED AS "UNUSED," YOUR BIDS OF $0.0636 AND $0.0686 EACH,RESPECTIVELY, FOR THESE ITEMS MAY NOT BE HELD TO BE EXCESSIVE AND, THEREFORE, SUCH UNIT PRICES ALSO WOULD FORM NO BASIS FOR CHARGING THE GOVERNMENT CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR IN YOUR BID ON THESE ITEMS.

ACCORDINGLY, THE PREVIOUS DECISIONS OF OUR OFFICE DATED AUGUST 5, 1959, AND SEPTEMBER 12, 1960, ARE AFFIRMED.