B-149689, SEP. 6, 1962

B-149689, SEP. 6, 1962

TO THE SECRETARY OF THE NAVY:

WE REFER TO THE REQUEST OF THE COMPTROLLER OF THE NAVY DATED AUGUST 10, 1962, FOR A DECISION AS TO WHETHER THE RELIEF SOUGHT BY J. G. HEDGES AND ASSOCIATES, LOS ANGELES, CALIFORNIA, UNDER SALES CONTRACT NO. N62777S-1921 MAY BE GRANTED.

THE INSPECTOR OF NAVAL MATERIAL, PROPERTY DISPOSAL DIVISION, CHICAGO, ILLINOIS, BY INVITATION NO. B-28-62-N62777S REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, ONE USED EXTERNAL THREAD GRINDER MANUFACTURED BY EX-CELL-O CORPORATION, THE ORIGINAL ACQUISITION COST OF WHICH IS REPORTED TO HAVE BEEN $11,583. IN RESPONSE J. G. HEDGES AND ASSOCIATES SUBMITTED A BID DATED APRIL 8, 1962, OFFERING TO PURCHASE THE THREAD GRINDER COVERED BY ITEM 22 AT A PRICE OF $3,861.61. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 22 ON APRIL 12, 1962.

BY LETTER DATED APRIL 16, 1962, J. G. HEDGES AND ASSOCIATES ADVISED THAT IT HAD MADE AN ERROR IN ITS BID IN THAT IT HAD INTENDED TO BID ON ITEM 23, COVERING A SCREW MACHINE, INSTEAD OF ITEM 22. THE COMPANY, IN EFFECT, REQUESTED CANCELLATION OF THE AWARD AND RETURN OF ITS BID DEPOSIT.

THE BASIS 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. IT IS REPORTED THAT THE SEVEN OTHER BIDS ON ITEM 22 RANGED FROM $686.50 TO $210. ON THE RECORD BEFORE US WE CANNOT CONCLUDE THAT THERE EXISTED ANY BASIS FOR CHARGING THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN THE HIGH BID OF $3,861.61 WHICH J. G. HEDGES AND ASSOCIATES SUBMITTED FOR THE THREAD GRINDER COVERED BY ITEM 22. WHILE THERE IS A SUBSTANTIAL DISPARITY BETWEEN HEDGES' BID OF $3,861.61 FOR ITEM 22 AND THE SEVEN OTHER BIDS RECEIVED FOR THE ITEM, SUCH DIFFERENCE, WITHOUT MORE, DOES NOT PROVIDE A BASIS FOR ESTABLISHING NOTICE OF PROBABLE ERROR IN VIEW OF THE WIDE VARIANCE IN BIDS GENERALLY RECEIVED IN SALES OF GOVERNMENT SURPLUS PROPERTY. IT SHOULD BE NOTED IN THIS CONNECTION THAT THE ACQUISITION COST OF THE THREAD GRINDER, DESCRIBED AS "USED-USABLE WITHOUT REPAIRS, GOOD," WAS $11,583. A BID OF $3,861.61 WOULD NOT SEEM UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS UNLESS, PERHAPS, IT CAN BE SAID THAT THE THREAD GRINDER HAD NO VALUE EXCEPT AS SCRAP. FROM THE RECORD SUBMITTED THIS OBVIOUSLY IS NOT THE CASE. PRICES OFFERED TO THE GOVERNMENT FOR ITS SURPLUS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE WHICH THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORP., 151 F.SUPP. 683, 689, CITING WITH APPROVAL 16 COMP. GEN. 596; 17 ID. 388; AND ID. 601. IN THE SABIN CASE, SUPRA, THE PRICE DISPARITY ON THE BIDS RECEIVED FOR THE SALE OF SURPLUS PROPERTY RANGED FROM A LOW OF $337.28 TO A HIGH OF $9,351.30. THE COURT, AT P. 688, SAID:

"THIS BEING A SALE OF SURPLUS ENGINE PARTS, THE CONTRACTING OFFICER HAD NO METHOD OF KNOWING THAT THERE WAS AN ERROR IN THE DEFENDANT'S BID. THE GOVERNMENT WAS INTERESTED ONLY IN GETTING THE HIGHEST POSSIBLE PRICE FOR THE MATERIAL TO BE SOLD; IT WAS NOT IN THE METAL TRADE. THERE IS NO REASON WHY THE SPREAD IN BIDS SHOULD HAVE APPEARED PALPABLE TO THE GOVERNMENT. THE ADMINISTRATIVE AGENCY WAS NOT REQUIRED TO EMPLOY OR UTILIZE EXPERTS FOR THE BENEFIT OF THE DEFENDANT, NOR TO ASSUME THE BURDEN OF EXAMINING EVERY LOW BID FOR POSSIBLE ERROR BY THE BIDDER.'

IN VIEW OF THE FOREGOING AND AS NO ERROR WAS ALLEGED UNTIL AFTER AWARD AND THE BID WAS CLEAR AND UNAMBIGUOUS, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF THE BID OF J. G. HEDGES AND ASSOCIATES WAS MADE IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION CO. V. UNITED STATES, 100 CT.CL. 120, 163. ANY ERROR THAT WAS MADE IN THE BID OF THE COMPANY WAS UNILATERAL--- NOT MUTUAL --- AND DOES NOT ENTITLE THE COMPANY TO RELIEF FROM ITS OBLIGATION UNDER THE CONTRACT. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249; AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. ..END :