B-144332, NOV. 23, 1960

B-144332, NOV. 23, 1960

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER (R11.2) DATED OCTOBER 25, 1960, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO WHETHER SALES CONTRACT NO. N63068S-47038 MAY BE CANCELED BECAUSE OF AN ERROR AS TO ITEM NO. 12 THE DURABLE PLYWOOD COMPANY, ARCATA, CALIFORNIA, ALLEGED AFTER AWARD IN ITS BID ON WHICH THE CONTRACT WAS BASED.

BY SALES INVITATION NO. 02-S-61-15, DATED AUGUST 16, 1960, U.S. NAVY CONSOLIDATED SURPLUS SALES OFFICE, U.S. NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, SOLICITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF A NUMBER OF ITEMS OF SURPLUS PROPERTY GENERALLY DESCRIBED ON THE FACE OF THE INVITATION AS "VEHICLES AND MATERIAL HANDLING REQUIREMENT.' IN RESPONSE TO THE INVITATION THE DURABLE PLYWOOD COMPANY SUBMITTED A BID DATED SEPTEMBER 1, 1960, WITH QUOTATIONS ON FIVE OF THE ADVERTISED ITEMS, INCLUDING A PRICE OF $1,201 ON ITEM NO. 12 WHICH WAS DESCRIBED AS FOLLOWS:

TABLE

"ITEM 12--- APA

TRACTOR, DESCRIPTION SAME AS ITEM 10 EXCEPT ENGINE NO. T116-66566,

1945, MFR. SERIAL NO. 45-488, USN NO. 11-00896. ACQUISITIONS:

$1,175.00

QUANTITY 1 EACH"

A DEPOSIT OF $520.20 WAS FORWARDED WITH THE COMPANY'S BID. SEVEN OTHER BIDS, RANGING FROM $401.98 TO $183.99, WERE RECEIVED ON ITEM NO. 12. THE BID OF DURABLE PLYWOOD COMPANY, BEING THE HIGHEST, WAS ACCEPTED BY THE CONTRACTING OFFICER ON SEPTEMBER 8, 1960, AND ITEM NO. 12 WAS AWARDED TO THE COMPANY ON SALES CONTRACT NO. N63068S-47038. UPON RECEIPT OF NOTICE OF AWARD, THE COMPANY TELEPHONED THE CONTRACTING OFFICER AND ALLEGED AN ERROR IN ITS BID AS TO ITEM NO. 12, AND BY LETTER DATED SEPTEMBER 12, 1960, CONFIRMED ITS ALLEGATION OF ERROR, STATING THAT IT WAS ITS INTENTION TO PLACE THE $1,201 BID ON ITEM NO. 13-APA (A COMPRESSOR) AND NOT ON ITEM NO. 12-APA (A TRACTOR) AS APPEARS ON ITS BID. IT WAS EXPLAINED THAT IN PREPARING THE BID FORM THE BID PRICE OF $1,201 WAS INADVERTENTLY TYPED ON THE BID SHEET OPPOSITE ITEM NO. 12-APA, INSTEAD OF ITEM NO. 13-APA AS INTENDED. IN SUPPORT OF ITS ALLEGATION OF ERROR THE COMPANY SUBMITTED ITS WORKSHEET, A COPY OF THE SALES INVITATION, ON WHICH THE DESCRIPTIONS OF ALL ITEMS BID UPON, EXCEPT ITEM NO. 12-APA, ARE CIRCLED AND MARKED WITH THE PRICE BID FOR EACH RESPECTIVE ITEM; NO BID PRICE OR OTHER NOTATION APPEARS ON ITEM NO. 12-APA, A TRACTOR, AND THE DESCRIPTION OF ITEM NO. 12- APA, A COMPRESSOR, IS CIRCLED AND MARKED WITH A PRICE OF $1,201. THE COMPANY REQUESTS THE RETURN OF ITS ENTIRE BID DEPOSIT OF $520.20.

THE RECORD SHOWS THAT A REFUND OF $280 OF THE $520.20 BID DEPOSIT WAS MADE TO THE COMPANY UNDER DATE OF SEPTEMBER 20, 1960, AND THAT ONLY $240.20 IS NOW BEING RETAINED PENDING DISPOSITION OF ITS CLAIM.

EXAMINATION OF ALL BIDS ON THE TWO ITEMS HERE IN QUESTION DISCLOSES THAT DURABLE PLYWOOD COMPANY'S BID OF $1,201 FOR ITEM NO. 12 IS $799.02 HIGHER THAN THE NEXT HIGHEST BID RECEIVED FOR THAT ITEM AND EXCEEDS THE ACQUISITION COST OF THE ITEM BY $26, AND THAT THE TWO HIGHEST BIDS ON ITEM NO. 13 ARE $1,476.17 AND $1,078.99, RESPECTIVELY, WHICH BIDS ARE COMPARABLE TO DURABLE PLYWOOD COMPANY'S ALLEGEDLY INTENDED BID OF $1,201 ON THAT ITEM.

THE CONTRACTING OFFICER STATES THAT IT IS HIS OPINION THAT, ON THE EVIDENCE SUBMITTED, IT IS CLEARLY AND CONVINCINGLY ESTABLISHED THAT DURABLE PLYWOOD COMPANY MADE AN ERROR, AS ALLEGED, AND THAT THE BIDDER HAS SATISFACTORILY EXPLAINED HOW THE ERROR OCCURRED; ALSO, THAT, AT THE TIME OF THE ACCEPTANCE OF THE BID AND MAKING OF THE AWARD, BECAUSE OF THE AMOUNT OF THE BID, WHEN COMPARED WITH THE ACQUISITION COST OF THE MATERIAL, HE SHOULD HAVE RECOGNIZED THE POSSIBILITY OF ERROR IN THE COMPANY'S BID. HE, THEREFORE, RECOMMENDS THAT RELIEF BE GRANTED, AND THAT HE BE AUTHORIZED TO REFUND TO DURABLE PLYWOOD COMPANY THE AMOUNT OF $240.20, THE BALANCE OF ITS TOTAL BID DEPOSIT RETAINED PENDING DISPOSITION OF THE COMPANY'S CLAIM.

IN CASES WHERE A WIDE VARIANCE IN BIDS ON A SALE ITEM IS COUPLED WITH THE FACT THAT THE HIGH BID EXCEEDS THE ESTIMATED ACQUISITION COST OF THE MATERIAL BEING SOLD, WE BELIEVE A CONTRACTING OFFICER SHOULD BE CHARGED WITH NOTICE OF THE PROBABILITY OF ERROR IN THE BID AND THAT HE SHOULD REQUEST THE BIDDER TO VERIFY ITS BID PRIOR TO ACCEPTANCE THEREOF.

SINCE THAT SITUATION EXISTED HERE IT IS CONCLUDED THAT THE CONTRACTING OFFICER IS CHARGEABLE WITH CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR IN THE BID OF DURABLE PLYWOOD COMPANY, AND THAT SINCE THE COMPANY WAS NOT REQUESTED TO VERIFY ITS BID PRIOR TO ACCEPTANCE, THE ACCEPTANCE OF THE BID IN THESE CIRCUMSTANCES DID NOT RESULT IN A VALID AND BINDING CONTRACT. ACCORDINGLY, SINCE THE ERROR HAS BEEN SUFFICIENTLY ESTABLISHED, CONTRACT NO. N63068S-47038 MAY BE CANCELED AND THE ..END :