B-126470, JAN. 16, 1956

B-126470, JAN. 16, 1956

TO THE HONORABLE SECRETARY OF COMMERCE:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 23, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO AN ERROR ALLEGED BY KENNETH LUM KING, 903 SEVENTH AVENUE, HONOLULU, T.H., TO HAVE BEEN MADE IN QUOTING ON LOT 13 OF HIS BID.

BY SALES INVITATION 6-56-61 DATED OCTOBER 18, 1955, THE REGIONAL OFFICE OF THE CIVIL AERONAUTICS ADMINISTRATION, HONOLULU, T.H. REQUESTED BIDS--- TO BE OPENED NOVEMBER 7, 1955--- FOR THE SALE OF A NUMBER OF LOTS OF SURPLUS PROPERTY. IN RESPONSE TO THE INVITATION, MR. LUM-KING SUBMITTED A BID DATED NOVEMBER 7, 1955, WHEREIN HE OFFERED TO PURCHASE, AMONG OTHERS, LOT 13 DESCRIBED AS "VF TERMINAL EQUIPMENT: CABINET NO. 3 CHANNELS 7 TO 9 (5 EA.), CABINET NO. 4 CHANNELS 10 TO 12 (7 EA.)," AT A PRICE OF $5,326.83. SEVEN BIDS WERE RECEIVED AND THE TWO NEXT HIGHEST BIDDERS OFFERED $488.08 AND $300 FOR LOT 13. BY LETTER DATED NOVEMBER 8, 1955, MR. LUM-KING WAS NOTIFIED THAT HIS BID AS TO LOT 13 HAD BEEN ACCEPTED. WRITTEN NOTICE OF AWARD WAS MADE BY LETTER MAILED ON NOVEMBER 10, 1955.

BY LETTER DATED NOVEMBER 8, 1955, WHICH WAS PRIOR TO AWARD, THE BIDDER CONFIRMED A TELEPHONIC ALLEGATION OF ERROR IN HIS BID IN THAT A HURRIED INSPECTION HAD RESULTED IN HIS BELIEF THAT THE EQUIPMENT WAS TELEPHONE TERMINAL EQUIPMENT, WHEREAS IT WAS IN FACT TELEGRAPH TERMINAL EQUIPMENT, AND REQUESTED THAT HIS BID BE WITHDRAWN.

IN A LETTER DATED NOVEMBER 28, 1955, FROM THE CHIEF, PROCUREMENT BRANCH, REGION SIX, IT IS REPORTED THAT THE DESCRIPTION OF THE EQUIPMENT WAS SKETCHY IN THAT THE SIGNAL CATALOG DESCRIBES THE EQUIPMENT MORE FULLY AND THAT THE DESIGNATION "TG," WHICH WAS NOT SHOWN IN THE INVITATION, INDICATES THAT THE EQUIPMENT IS ACTUALLY USABLE ONLY FOR TELEGRAPHIC PURPOSES. IT IS FURTHER REPORTED THAT THE AMOUNT BID WAS FAR IN EXCESS OF THE VALUE OF THE PROPERTY.

IT IS AN ESTABLISHED RULE THAT THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF AN ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE NASON COAL COMPANY V. UNITED STATES, 64 C.CLS. 526; RESTATEMENT OF THE LAW OF CONTRACTS, SECTION 503; AND WILLISTON ON CONTRACTS, SECTION 1578. ALSO, SEE MOFFETT, HODGKINS AND CLARK COMPANY V. ROCHESTER, 178 U.S. 373; KEMP V. UNITED STATES, 38 F.SUPP. 568; ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.CLS. 466; AND 17 COMP. GEN. 575. THEREFORE, SINCE THE GOVERNMENT WAS IN RECEIPT OF AN ALLEGATION OF ERROR PRIOR TO THE ACCEPTANCE OF THE BID, THE QUESTION FOR DETERMINATION HERE IS WHETHER THE FACTS AND CIRCUMSTANCES ARE SUFFICIENT TO ESTABLISH THAT AN ERROR, IN FACT, WAS MADE. IN THAT CONNECTION IT IS NOTED THAT THE BID OF MR. LUM-KING OF $5,326.83 FOR LOT 13 WAS ALMOST ELEVEN TIMES THE AMOUNT OF THE NEXT HIGH BID AND IN THE REPORT OF NOVEMBER 28, 1955, FROM THE CHIEF, PROCUREMENT BRANCH, IT IS STATED THAT THE BID WAS FAR IN EXCESS OF THE VALUE OF THE PROPERTY. HENCE, TO RETAIN THE BID DEPOSIT AND TRY TO FORCE THE EQUIPMENT UPON THE BIDDER AT THE PRICE SPECIFIED IN ITS BID WOULD BE UNCONSCIONABLE AND TANTAMOUNT TO BAD FAITH ON THE PART OF THE GOVERNMENT.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD, THERE WOULD APPEAR TO BE LITTLE, IF ANY, DOUBT THAT AN ERROR WAS MADE BY THE COMPANY, AS ALLEGED SO THAT THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY AND THE DEPOSIT RETURNED TO THE BIDDER.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT DATED NOVEMBER 10, 1955, ARE RETURNED.