B-151730, JUN. 26, 1963

B-151730, JUN. 26, 1963

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED JUNE 6, 1963 (DSAH-G) WITH ENCLOSURES, FROM MR. R. F. S. HOMANN, ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, SUBMITTING FOR OUR CONSIDERATION THE MATTER OF A MISTAKE IN BID ALLEGED BY MEDICO INDUSTRIES, INC., 11-13 TOMPKINS STREET, PITTSTON, PENNSYLVANIA, AFTER THE AWARD OF CONTRACT NO. DSA-15-S-860, DATED JANUARY 11, 1963, COVERING THE SALE OF CERTAIN GOVERNMENT-OWNED SURPLUS PROPERTY.

THE RECORD INDICATES THAT IN RESPONSE TO INVITATION FOR BIDS NO. 15 S-63- 42 THE CONTRACTOR SUBMITTED HIGH BIDS ON ITEMS 18 THROUGH 22 IN THE RESPECTIVE AMOUNTS OF $7,870, $1,175, $3,362, $3,065, AND $3,175, COVERING THE SALE OF MOTOR GENERATOR SETS. THE RECORD SHOWS THAT, AS ADVERTISED, ITEMS 18 AND 19 WERE OFFERED WITH CONTROL PANELS WHEREAS ITEMS 20, 21, AND 22 WERE OFFERED WITHOUT CONTROL PANELS.

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

IT IS IMPORTANT TO POINT OUT THAT THE DESCRIPTIVE INFORMATION FURNISHED PROSPECTIVE BIDDERS CONCERNING ITEMS 20, 21, AND 22 MADE NO REFERENCE WHATEVER TO CONTROL PANELS, WHILE THE DESCRIPTIONS OF ITEMS 18 AND 19 SPECIFICALLY REFERRED TO SUCH PANELS. THIS FACT ALONE NEGATES ANY JUSTIFICATION FOR A CLAIM OR EXPECTATION BY THE CONTRACTOR THAT CONTROL PANELS WERE TO BE INCLUDED, SINCE IN THE SALE OFFERING PROSPECTIVE BIDDERS WERE SPECIFICALLY WARNED THAT ORAL STATEMENTS OR REPRESENTATIONS MADE BY ANY REPRESENTATIVE OF THE GOVERNMENT WOULD CONFER NO RIGHTS UPON HIM. PARAGRAPH 12 OF THE GENERAL SALE TERMS AND CONDITIONS PROVIDES AS FOLLOWS:

"12. ORAL STATEMENTS AND MODIFICATIONS. ANY ORAL STATEMENT OR REPRESENTATION BY ANY REPRESENTATIVE OF THE GOVERNMENT, CHANGING OR SUPPLEMENTING THIS CONTRACT OR ANY CONDITION THEREOF, IS UNAUTHORIZED AND SHALL CONFER NO RIGHT UPON THE PURCHASER.'

UNDER THESE CIRCUMSTANCES, IT IS CLEAR THAT NO REPRESENTATIVE OF THE GOVERNMENT HAD ANY AUTHORITY WHATEVER TO MAKE ANY REPRESENTATIONS RESPECTING THE PROPERTY TO BE SOLD. SEE SACHS MERCANTILE COMPANY V. UNITED STATES, 78 CT.CL. 801; WHITESIDE, ET AL. V. UNITED STATES, 93 U.S. 247; AND ROYAL INDEMNITY COMPANY V. UNITED STATES, 313 U.S. 289.

ALTHOUGH THERE IS A WIDE VARIANCE BETWEEN THE BIDS SUBMITTED BY MEDICO INDUSTRIES, INC., AND THOSE SUBMITTED BY OTHER BIDDERS, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO JUSTIFY A CONCLUSION THAT THE CONTRACTING OFFICER WAS ON NOTICE OF THE PROBABILITY OF ERROR AND THEREFORE REQUIRED TO REQUEST VERIFICATION BEFORE AWARD. WE SAY THIS BECAUSE OF NUMEROUS DECISIONS BY OUR OFFICE TO THE EFFECT THAT IN VIEW OF THE WIDE RANGE IN PRICES ORDINARILY RECEIVED ON SALVAGE, WASTE, AND SURPLUS PROPERTY, A MERE PRICE DIFFERENCE DOES NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR, AS WOULD SIMILAR PRICE DIFFERENCES ON NEW EQUIPMENT OR SUPPLIES TO BE FURNISHED TO THE GOVERNMENT. THIS IS BASED UPON THE FACT THAT PRICES OFFERED TO THE GOVERNMENT FOR ITS PROPERTIES ARE BASED LARGELY UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF ANY RESALE THE BIDDER MAY WISH TO TAKE.

IN A DECISION DATED DECEMBER 16, 1936, A-82112, TO THE SECRETARY OF WAR-- - PUBLISHED AT 16 COMP. GEN. 596--- OUR OFFICE HAD UNDER CONSIDERATION AN ALLEGED MISTAKE IN BID SUBMITTED FOR THE PURCHASE OF WASTE MATERIAL AND SALVAGE PROPERTY SOLD "AS IS" AND "WHERE IS," AS DISTINGUISHED FROM BIDS FOR THE PERFORMANCE OF WORK OR THE FURNISHING OF SUPPLIES, EQUIPMENT, ETC. IN HOLDING THAT THE CONTRACTOR THERE INVOLVED WAS NOT ENTITLED TO RELIEF, THE FORMER ACTING COMPTROLLER GENERAL HELD THAT---

"* * * CONSEQUENTLY THERE MIGHT BE EXPECTED A WIDE RANGE IN THE BIDS WHICH WOULD BE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY WAS TO BE PUT BY THE PARTICULAR BIDDER OR THE CHANCE OF RESALE THEREOF. THE MERE DIFFERENCE IN THE PRICES BID FOR SUCH PROPERTY WOULD NOT NECESSARILY PUT THE CONTRACTING OFFICER ON NOTICE OF A MISTAKE AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED.'

SEE, ALSO, 17 COMP. GEN. 388; ID. 601; ID. 976; AND 28 ID. 550.

ON THE BASIS OF THE RECORD IN THIS CASE AND IN VIEW OF THE SEVERAL CITED DECISIONS OF OUR OFFICE, AND NOTWITHSTANDING THAT SOME HARDSHIP MAY BE IMPOSED UPON THE CONTRACTOR, WE CONCLUDE THAT THE ACCEPTANCE OF THE BID IN GOOD FAITH CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND OBLIGATIONS 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. SEE ALSO THE CASE OF UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, 253 F.2D. 956.

FROM THE FACTS REPORTED IN THIS CASE WE FIND NO LEGAL BASIS FOR GRANTING THE CONTRACTOR RELIEF FROM ITS ACCEPTED BID.