B-145816, MAY 26, 1961

B-145816, MAY 26, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER (R11.4) DATED MAY 9, 1961, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, CONCERNING A MISTAKE ELECTRO SALES CO., INC., BOSTON, MASSACHUSETTS, ALLEGED IT MADE IN ITS BID ON WHICH ITEM NO. 105 OF SALES CONTRACT NO. N63066S-802 WAS BASED. A DECISION IS REQUESTED AS TO WHETHER RELIEF PROPERLY MAY BE GRANTED.

BY SALES INVITATION NO. B-38-61-63066 CONSOLIDATED SURPLUS SALES OFFICE, NEWPORT, RHODE ISLAND, SOLICITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 156 ITEMS OF SURPLUS PROPERTY LISTED AND DESCRIBED THEREIN.

IN SUBMITTING ITS BID IN RESPONSE TO THE INVITATION, ELECTRO SALES CO., INC., AGREED TO PURCHASE, SUBJECT TO ALL THE TERMS AND CONDITIONS SET FORTH IN THE INVITATION, CERTAIN OF THE ADVERTISED PROPERTY INCLUDING ITEM NO. 105 HERE IN QUESTION. THE COMPANY'S BID SHOWED A UNIT PRICE OF $2.67 WITH AN EXTENDED TOTAL OF $451.23 FOR THE LOT OF 169 UNITS IN ITEM NO. 105. ONE OTHER BID OF $0.005 WAS RECEIVED ON THAT ITEM. THE BID OF ELECTRO SALES CO., INC., BEING THE HIGHEST OF THE TWO BIDS RECEIVED, WAS ACCEPTED BY THE CONTRACTING OFFICER ON MARCH 24, 1961, AND AWARD OF THAT ITEM, WITH OTHERS, WAS MADE TO THE COMPANY ON CONTRACT NO. N63066S-802.

BY LETTER DATED MARCH 27, 1961, THE PURCHASER ACKNOWLEDGED RECEIPT OF THE NOTICE OF AWARD AND FORWARDED A CERTIFIED CHECK IN THE AMOUNT OF $409.62 REPRESENTING PAYMENT IN FULL OF THE BALANCE DUE THE GOVERNMENT ON THE CONTRACT. THEREAFTER, ON APRIL 3, 1961, MR. ALBERT L. BERG, PRESIDENT OF ELECTRO SALES CO., INC., TELEPHONED CONSOLIDATED SURPLUS SALES OFFICE AND REQUESTED BID INFORMATION. UPON LEARNING THE AMOUNT OF THE SECOND HIGH BID ON ITEM NO. 105, MR. BERG CLAIMED THAT HE HAD MADE AN ERROR IN HIS COMPANY'S BID, EXPLAINING THAT THE BID WAS INTENDED FOR ITEM NO. 104 AND NOT NO. 105. BY LETTER DATED APRIL 3, 1961, MR. BERG CONFIRMED THE ALLEGATION OF ERROR IN HIS COMPANY'S BID ON ITEM NO. 105, AND REQUESTED CANCELLATION OF THE AWARD OF THAT ITEM. IN SUPPORT OF THE ALLEGATION OF ERROR, HE FORWARDED HIS COMPANY'S DESCRIPTIVE TALLY SHEET OF THE INFORMATION GATHERED DURING INSPECTION OF THE ADVERTISED MATERIAL, AND CALLED ATTENTION TO THE FACT THAT AN "X" HAD BEEN PLACED ON THAT SHEET OPPOSITE ITEM NO. 105 AS WELL AS OTHER ITEMS ON WHICH THE COMPANY HAD NO INTEREST AND DID NOT INTEND TO BID.

IN THE STATEMENT OF FACTS CONCERNING THE SALES TRANSACTION, THE CONTRACTING OFFICER REPORTS THAT IN EVALUATING THE BIDS, IT WAS NOTED THAT THE BID SUBMITTED BY ELECTRO SALES CO., INC., WAS CONSIDERABLY HIGHER THAN THE ONLY OTHER BID RECEIVED. HOWEVER, IT WAS ASSUMED THAT ELECTRO SALES CO., INC., BEING IN THE ELECTRONICS BUSINESS HAD AN INDIVIDUAL NEED FOR THE ITEM, AND THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT THE BID ON ITEM NO. 105 WAS NOT AS INTENDED. HE STATES THAT ON THE BASIS OF THE FACTS OF THE CASE AND THE TERMS AND CONDITIONS OF THE SALES CONTRACT, IT IS HIS OPINION THAT THE CLAIMANT IS NOT ENTITLED TO RELIEF BECAUSE OF THE ERROR, AS ALLEGED.

WHILE IT MAY BE THAT ELECTRO SALES CO., INC., MADE AN ERROR IN ITS BID, AS ALLEGED, THE BASIC QUESTION FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. COMP. GEN. 36.

ELECTRO SALES CO. INC., DID NOT ALLEGE ERROR IN ITS BID UNTIL AFTER AWARD OF THE CONTRACT, AND THERE IS NOTHING IN ITS BID TO SUGGEST THAT THE BID ON ITEM NO. 115 WAS NOT AS INTENDED NOR DOES THE RECORD INDICATE THAT THE CONTRACTING OFFICER OTHERWISE SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID. ALTHOUGH THE PURCHASER'S BID WAS CONSIDERABLY HIGHER THAN THE NEXT HIGH BID RECEIVED ON ITEM NO. 105, THAT FACT ALONE WOULD NOT BE SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH NOTICE OF ERROR IN ITS BID SINCE THIS WAS A SALE OF GOVERNMENT SURPLUS PROPERTY. UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 689. NOR WOULD A BID OF $451.23 SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS FOR SUCH MATERIAL DESCRIBED AS ,UNUSED, APPARENTLY EXCELLENT" CONDITION, WITH AN ACQUISITION COST OF $676.00.

CONSEQUENTLY, IT MUST BE HELD THAT THE CONTRACTING OFFICER WAS WITHOUT ACTUAL OR CONSTRUCTIVE NOTICE OF ANY ERROR AND THAT HIS ACCEPTANCE OF THE BID OF ELECTRO SALES CO., INC., WAS IN GOOD FAITH. SUCH ACCEPTANCE, THEREFORE, RESULTED IN A VALID AND BINDING CONTRACT AND VESTED IN THE GOVERNMENT RIGHTS WHICH NO OFFICER OR AGENT OF THE GOVERNMENT IS AUTHORIZED TO WAIVE. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

IN THESE CIRCUMSTANCES, THERE IS NO LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED BY ELECTRO SALES CO., INC., UNDER SALES CONTRACT NO. N63066S- 802.

THE ENCLOSURES, EXCEPT THE CONTRACTING OFFICER'S STATEMENT OF FACTS, FORWARDED WITH THE LETTER OF MAY 9, 1961, ARE RETURNED.