B-140948, NOV. 18, 1959

B-140948, NOV. 18, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER (R11.2 L8/L8/NT4-3), DATED OCTOBER 7, 1959, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION CONCERNING A MISTAKE IN BID AS TO ITEM NO. 1046 FATTORE COMPANY, INC., CENTER LINE, MICHIGAN, ALLEGED AFTER AWARD OF SALES CONTRACT NO. N189S-30835A (S) BASED ON THE BID.

BY SALES INVITATION NO. B-15-59-189 THE NAVAL SUPPLY CENTER, U.S. NAVAL BASE, NORFOLK, VIRGINIA, SOLICITED BIDS--- OPENING DATE AUGUST 7, 1958--- FOR THE PURCHASE FROM THE GOVERNMENT OF CERTAIN ITEMS OF SURPLUS PROPERTY LISTED AND DESCRIBED IN THE INVITATION. THE INVITATION EXPRESSLY STIPULATED THAT THE PROPERTY WAS OFFERED FOR SALE "AS IS" WITHOUT ANY WARRANTY AS TO THE QUALITY, CHARACTER, DESCRIPTION, CONDITION OR FITNESS FOR USE. IN RESPONSE THERETO, FATTORE COMPANY, INC., SUBMITTED A BID DATED AUGUST 6, 1958, OFFERING TO PURCHASE FIVE OF THE LISTED ITEMS, NAMELY, ITEM NO. 1041 AT A PRICE OF $6,285.60, ITEM NO. 1042 FOR $2,115.50, ITEM NO. 1043 FOR $726.75, ITEM NO. 1046 FOR $2,185.50, AND ITEM NO. 1145 FOR $708.55. THE COMPANY'S BID ON ITEM NO. 1046, BEING THE HIGHEST, WAS ACCEPTED WITH ITEMS NOS. 1041, 1042, AND 1043 BY THE CONTRACTING OFFICER ON AUGUST 15, 1958, AND THE SALE OF THOSE ITEMS WAS AWARDED TO FATTORE COMPANY, INC., ON CONTRACT NO. N189S-30835A (S) FOR A TOTAL PRICE OF $11,313.35, AGAINST WHICH THE COMPANY'S BID DEPOSIT OF $3,000 WAS APPLIED, LEAVING A BALANCE DUE THE GOVERNMENT OF $8,313.35. THE PURCHASER PAID $6,127.85 OF THIS AMOUNT AND, WITH A LETTER DATED AUGUST 22, 1958, TO THE PROPERTY DISPOSAL OFFICER, FORWARDED A CHECK IN THE AMOUNT OF $437.10, UNDER PROTEST, AS ,FORFEITURE PAYMENT OF 20 PERCENT ON ITEM 1046 OF SALES INVITATION NO. B-15-59 CONTRACT NO. N189S-30835A (S) DATED 7 AUGUST 1958, BID NO. 206, APA (USABLE).'

THE COMPANY ADVANCED TWO REASONS FOR ITS PROTEST, FIRST, IT ALLEGED THAT IT MADE A MISTAKE IN ITS BID ON ITEM NO. 1046 IN THAT IT HAD INTENDED TO BID ONLY $708.55 FOR THAT ITEM AND $2,185.50 FOR ITEM NO. 1145, BUT THAT IN ENTERING THE FIGURES ON THE BID SHEET $2,185.50 WAS INADVERTENTLY PLACED OPPOSITE ITEM NO. 1046 AND 1708.55 OPPOSITE ITEM NO. 1145. THE SECOND GROUND PRESENTED BY THE COMPANY IS THAT IT CONTENDS THAT, IN CONTRAST TO THE DESCRIPTIONS GIVEN IN THE SALES INVITATION FOR SOME OTHER SALES ITEMS LISTED THEREIN BY SUCH WORDS AS "USED, REPAIRS REQUIRED, AND IN POOR CONDITION" WHICH APPRISED BIDDERS OF THE GENERAL CONDITION OF THOSE ITEMS, THE DESCRIPTION GIVEN FOR ITEM NO. 1046 WAS SILENT AS TO DEFECTS IN THE MACHINE LISTED THEREUNDER, OTHER THAN THE MENTION OF "BLADE BENT, RUSTY" AND OF "0153 HOURS" OF TIME ON ITS DIESEL ENGINE, WHICH INFERRED THAT THE MACHINE WAS IN GOOD CONDITION WHEREAS IT WAS ACTUALLY IN SUCH POOR CONDITION AS TO NEED EXTENSIVE REPAIRS APPROXIMATING $5,000 TO PUT IT IN WORKING CONDITION AND, THEREFORE, WAS NOT WORTH NEARLY WHAT WAS BID FOR IT. THE COMPANY STATED THAT IT CONSIDERED ITEM NO. 1046 IN DISPUTE AND REQUESTED A REVIEW IN ACCORDANCE WITH ARTICLE 15 OF THE GENERAL SALE TERMS AND CONDITIONS SUBJECT TO PROVISIONS OF P.L. 356, 83D CONGRESS, APPROVED MAY 11, 1954.

UPON CONSIDERATION OF THE REQUEST OF FATTORE COMPANY, INC., THAT ITEM NO. 1046 BE REVIEWED AS A MATTER OF DISPUTE, THE ARMED SERVICES BOARD OF CONTRACT APPEALS, BECAUSE IT FOUND THAT THE APPEAL DID NOT REFLECT A DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT BUT A LEGAL ONE INVOLVING RESCISSION OR POSSIBLY REFORMATION OF THE CONTRACT, DISMISSED THE COMPANY'S APPEAL FOR LACK OF JURISDICTION (ASBCA NO. 5554, AUGUST 10, 1959).

WHILE IT MAY BE THAT FATTORE COMPANY, INC., MADE A MISTAKE IN ITS BID, AS ALLEGED, THE QUESTION FOR CONSIDERATION HERE IS NOT WHETHER A MISTAKE WAS MADE IN THE BID BUT WHETHER THE ACCEPTANCE THEREOF CONSUMMATED A LEGAL AND BINDING SALE. ACCEPTANCE OF A BID, IN THE ABSENCE OF A MUTUAL MISTAKE OR OF THE CONTRACTING OFFICER ACCEPTING THE BID HAVING KNOWLEDGE--- ACTUAL OR CONSTRUCTIVE--- OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH, RESULTS IN A VALID AND BINDING CONTRACT.

THE MATERIAL COVERED BY ITEM NO. 1046 WAS DESCRIBED IN THE BID INVITATION (PAGE 13) AS FOLLOWS:

"BULL DOZER, CATERPILLER, 80.44 DBHP, MODEL NO. D-7. USN NO. 48 02360. ENGINE NO. D7-7M602. CHASIS NO. 7M602. 4 CYLINDER STRAIGHT DIESEL 0153 HOURS. BLADE BENT, RUSTY. 1 EACH.' THE RESPONSIBILITY FOR THE PREPARATION OF THE BID WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. CONSEQUENTLY, IF FATTORE COMPANY, INC., INTENDED THE QUOTATION MADE ON ITEM NO. 1046 TO BE ON ITEM NO. 1145 SUCH ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED BY THE GOVERNMENT. ANY ERROR THAT WAS MADE IN THE BID WAS UNILATERAL, NOT MUTUAL.

THE ABSTRACT OF BIDS SHOWS THAT IN ADDITION TO THE FATTORE BID EIGHT OTHER BIDS, RANGING FROM $1,189.30 TO $395, WERE RECEIVED ON ITEM NO. 1046. THE CONTRACTING OFFICER, IN HIS STATEMENT AND RECOMMENDATION DATED SEPTEMBER 10, 1958, REGARDING THE SALE, STATES THAT THE ACQUISITION COST OF THE MATERIAL IN ITEM NO. 1046 WAS $6,150 AND THAT, ALTHOUGH THE FATTORE COMPANY BID OF $2,185.50 WAS APPROXIMATELY $1,000 HIGHER THAN THE SECOND HIGH BID ON THAT ITEM, NO UNUSUAL SIGNIFICANCE WAS ATTACHED TO THIS DIFFERENCE BY HIM SINCE SUCH DIFFERENCES FREQUENTLY OCCUR ON HEAVY EQUIPMENT OF THIS NATURE AND THAT THIS IS PARTICULARLY TRUE IN INSTANCES WHERE, AS HERE, THE CONTRACTOR WHO IS BUYING THE EQUIPMENT FOR HIS OWN USE WILL BID SUBSTANTIALLY MORE FOR ITEMS THAN WILL A DEALER WHO IS BUYING FOR RESALE AND MUST ALLOW IN HIS BIDDING FOR A MEASURE OF PROFIT WHEN RESELLING. THE CONTRACTING OFFICER FURTHER STATES, AND WE AGREE, THAT THE DIFFERENCE BETWEEN THE HIGHEST BID AND THE NEXT HIGH BID WAS NOT SUFFICIENT TO BRING TO HIS MIND THE POSSIBILITY OF ERROR THUS REQUIRING HIM TO REQUEST FATTORE COMPANY, INC., TO VERIFY ITS BID PRIOR TO ACCEPTANCE AND MAKING AN AWARD. SEE 28 COMP. GEN. 550 AND DECISIONS CITED THEREIN.

INSOFAR AS CONCERNS THE CONDITION OF SURPLUS GOODS OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS WITHOUT WARRANTY OR GUARANTY OF ANY KIND, THE LAW IS CLEAR THAT A BIDDER WHO FAILS TO INSPECT CANNOT RECOVER ON THE GROUND THAT THE GOODS ARE OF AN INFERIOR QUALITY. 28 COMP. GEN. 306.

IN THE CIRCUMSTANCES, IT IS CONCLUDED THAT THE CONTRACTING OFFICER ACCEPTED THE BID OF FATTORE COMPANY, INC., IN GOOD FAITH AND THAT SUCH ACCEPTANCE RESULTED IN A LEGAL AND BINDING CONTRACT. CONSEQUENTLY, NO BASIS IS FOUND FOR GRANTING ANY RELIEF TO THE COMPANY, EITHER ON THE GROUND OF ERROR IN ITS BID OR THAT THE MATERIAL IN ITEM NO. 1046 WAS NOT AS DESCRIBED IN THE INVITATION AND DID NOT COME UP TO THE STANDARD EXPECTED BY THE PURCHASER. THEREFORE, IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 18 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT THE SUM OF $437.10 REPRESENTING 20 PERCENT OF THE PURCHASE PRICE OF ITEM NO. 1046 SHOULD BE RETAINED BY THE GOVERNMENT AS LIQUIDATED DAMAGES.

THE PAPERS TRANSMITTED WITH THE LETTER OF OCTOBER 7, 1959, ARE RETAINED.