B-131791, MAY 27, 1957

B-131791, MAY 27, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED MAY 8, 1957, WITH ENCLOSURES, FROM ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, SUBMITTING FOR CONSIDERATION THE MATTER OF A MISTAKE ALLEGED BY DIESEL PARTS COMPANY, SEATTLE, WASHINGTON, TO HAVE BEEN MADE IN ITS BID ON WHICH SALES CONTRACT NO. N-614195-754 WAS AWARDED TO IT BY THE UNITED STATES NAVAL STATION, ORANGE, TEXAS. A DECISION IS REQUESTED AS TO WHETHER THE AWARD OF LOT NO. 39 OF THE CONTRACT PROPERLY MAY BE CANCELLED AND THE MATERIAL READVERTISED FOR SALE.

INVITATION NO. B-10-57-61419, ISSUED FEBRUARY 20, 1957, BY THE UNITED STATES NAVAL STATION, ORANGE, TEXAS, REQUESTED BIDS--- TO BE OPENED AT 2 P.M. (CST), MARCH 18, 1957--- FOR THE PURCHASE FROM THE GOVERNMENT OF 58 LOTS OF MISCELLANEOUS SURPLUS PROPERTY CONSISTING OF "SHIP'S REPAIR PARTS, INCLUDING MINOR PECULIAR EQUIPMENTS, COMPONENTS, REPAIR PARTS, AND ELECTRONIC ITEMS USED TO SUPPORT EQUIPMENTS OR SYSTEMS INSTALLED ON SURFACE VESSELS AND SPECIFICALLY DESIGNATED ITEMS COMMON TO BOTH SURFACE VESSELS AND SUBMARINES.' IN RESPONSE TO THE INVITATION DIESEL PARTS COMPANY OF SEATTLE, ON MARCH 7, 1957, SUBMITTED A BID WITH QUOTATIONS ON LOTS NOS. 1, 2, 5, 17, 39, AND 53, IN A TOTAL AMOUNT OF $682.80 FOR SIX LOTS, AND MADE A BID DEPOSIT OF $150. THE COMPANY'S BIDS ON LOTS NOS. 5, 17, AND 39 WERE ACCEPTED ON MARCH 21, 1957, AND BECAME THE BASIS OF CONTRACT NO. N-61419S-754.

AFTER AWARD OF THE CONTRACT, DIESEL PARTS COMPANY, IN LETTER OF MARCH 28, 1957, TO THE SUPPLY AND FISCAL OFFICER, UNITED STATES NAVAL STATION, ORANGE, TEXAS, CLAIMED THAT IT HAD MADE AN ERROR IN ITS BID IN THAT IT HAD INTENDED TO BID ON LOT NO. 29 INSTEAD OF LOT NO. 39 BUT HAD INADVERTENTLY PLACED ITS BID PRICE ON LOT NO. 39. THE COMPANY ALLEGED THAT THE MISTAKE WAS MADE BECAUSE OF THE INCONSISTENT MANNER OF PLACING THE LOT NUMBERS ON THE PAGES OF THE CATALOG. ITS LETTER READS---

"REGARDING SALE B-10-57-61419 WHICH WE WERE AWARDED LOTS 5 - 17 - 39, CONCERNING LOT 39 DUE TO THE WAY THE CATALOG WAS MADE UP LOT NUMBERS SHOWING ONE TIME ON THE BORDER OTHER TIMES IN CENTER OF PAGE WE HAVE PLACED THE WRONG VALUE ON THE LOT. WE CLASSED LOT 29 WHICH IS UNDER SAME PRINT AS 39 AND AT THE START OF THE NEXT PAGE FAILED TO READ THE NOTE REFERRING TO OTHER WHICH WAS THEN BEING CONTINUED.

"I WOULD PREFER TO LOSE THE DEPOSIT THAN TO PAY THAT PRICE FOR LOT 39.'

LOT NO. 29, LISTED ON PAGE 21 OF THE CATALOG, INDICATED THAT THE PROPERTY THEREUNDER CONSISTED OF TWO ITEMS, DESCRIBED AS---

"STRAINER, H 45-RA 1005 LH

UNUSED, ACQ, COST 418.00 EA.

"STRAINER, H 45-RA 1005 RH

UNUSED, ACQ. COST 418.00 EA.'

WITH A UNIT QUANTITY OF "1" EACH. THE ESTIMATED TOTAL ACQUISITION COST FOR THE TWO ITEMS WAS $836.

LOT NO. 39, LISTED ON PAGES 22-24, INCLUSIVE, CONSISTED OF 44 ITEMS OF MISCELLANEOUS MACHINERY PARTS IN VARIOUS UNIT QUANTITIES PER ITEM. FORTY OF THE ITEMS WERE DESCRIBED AS "UNUSED," THREE ITEMS WERE DESCRIBED AS "USED, POOR CONDITION, REPAIRS REQUIRED," AND THE CONDITION OF ONE ITEM WAS NOT GIVEN. THE ESTIMATED ACQUISITION COST OF EACH UNIT IN THE ITEMS RANGED FROM ?06 TO $451, WITH A TOTAL ACQUISITION COST FOR LOT NO. 39 OF $1,884.45--- $1,030.45 FOR THE FORTY "UNUSED" ITEMS AND $854 FOR THE OTHER FOUR ITEMS.

THE RESPONSIBILITY FOR PREPARING A BID SUBMITTED IN RESPONSE TO AN INVITATION IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. THE DESCRIPTIONS OF LOTS NOS. 29 AND 39 WERE CLEAR AND UNAMBIGUOUS AND LEFT NO ROOM FOR DOUBT AS TO WHAT WAS OFFERED FOR SALE UNDER EACH LOT. CONSEQUENTLY, IF DIESEL PARTS COMPANY INTENDED THE QUOTATION MADE ON LOT NO. 39 TO BE ON THE TWO "STRAINERS" LISTED UNDER LOT NO. 29--- WHICH WERE NOT LISTED ON THE SAME PAGES AS THE ITEMS COVERED BY LOT NO. 39--- SUCH ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT. ANY ERROR THAT WAS MADE IN THE BID WAS UNILATERAL, NOT MUTUAL. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

THE BASIC QUESTION FOR CONSIDERATION, HOWEVER, IS NOT WHETHER DIESEL PARTS COMPANY MADE A MISTAKE IN ITS BID ON LOT NO. 39, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID. IT IS WELL ESTABLISHED THAT THE ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING IT WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH.

THE PROPERTY COVERED BY LOT NO. 39 WAS OFFERED FOR SALE AS SURPLUS, THE MAJORITY OF THE ITEMS BEING DESCRIBED AS "UNUSED.' THE TOTAL BID PRICE OF $320 FOR THE LOT WAS BUT A FRACTION OF THE TOTAL ESTIMATED ACQUISITION COST OF $1,884.45. THE VARIANCE BETWEEN THE DIESEL PARTS COMPANY BID AND THE FOUR OTHER BIDS RECEIVED ON THE LOT (RANGING FROM $10 TO $29.75) WAS NOT SO GREAT AS TO PLACE THE CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR, AS BIDDERS MAY BE EXPECTED TO PLACE A WIDE RANGE OF VALUES ON SURPLUS PROPERTY BASED ON INDIVIDUAL NEEDS OR OPPORTUNITIES FOR RESALE. THERE WAS NOTHING ON THE FACE OF THE BID SUBMITTED BY DIESEL PARTS COMPANY TO INDICATE THAT THE $320 PRICE QUOTATION ON LOT NO. 39 WAS NOT INTENDED FOR THAT LOT, OR TO PUT THE CONTRACTING OFFICER OTHERWISE ON NOTICE OF POSSIBILITY OF ERROR IN THE BID. UNDER THE CIRCUMSTANCES TI WOULD NOT APPEAR THAT THE CONTRACTING OFFICER WAS REQUIRED TO REQUEST THE BIDDER TO VERIFY ITS BID. UNDER THE CIRCUMSTANCES IT WOULD NOT APPEAR THAT THE DID NOT ALLEGE ERROR IN ITS BID UNTIL AFTER AWARD TO IT OF THE CONTRACT. THUS, SO FAR AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE BID, BEING IN GOOD FAITH AND WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ANY ERROR, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES 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 CONTRACT VESTED IN THE GOVERNMENT THE RIGHT TO HAVE PERFORMANCE IN STRICT ACCORDANCE WITH THE TERMS OF THE ACCEPTED BID AND NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT OR ACQUIRED BY IT UNDER A CONTRACT. SEE UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, AND CERTIORARI DENIED, 28 U.S. 574; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584, 607, CERTIORARI DENIED, 292 U.S. 645; AND PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.CLS. 327, 335.

IN VIEW OF THE CIRCUMSTANCES, WE ARE UNABLE TO FIND ANY LEGAL BASIS FOR RELIEVING DIESEL PARTS COMPANY OF SEATTLE FROM ITS OBLIGATION WITH REGARD TO THE PURCHASE OF LOT NO. 39 UNDER CONTRACT NO. N-61419S-754. ACCORDINGLY, THE COMPANY SHOULD BE CALLED UPON TO MAKE PAYMENT OF THE PURCHASE PRICE AND TO REMOVE THE PROPERTY FROM THE GOVERNMENT SITE. IF IT DEFAULTS IN THIS RESPECT, THE GOVERNMENT'S RIGHT TO RETAIN LIQUIDATED DAMAGES AS PROVIDED IN PARAGRAPH 18 OF THE ADDITIONAL PROVISIONS OF THE GENERAL SALE TERMS AND CONDITIONS CONTAINED IN THE INVITATION SHOULD BE EXERCISED.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT OF FACTS AND ALLEGATIONS, ARE RETURNED.