B-154095, MAY 25, 1964

B-154095, MAY 25, 1964

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER WITH ENCLOSURES, DATED MAY 4, 1964, FROM YOUR ASSISTANT COUNSEL , SUBMITTING FOR CONSIDERATION AND DECISION BY OUR OFFICE A REQUEST FOR RELIEF FROM AN ALLEGED MISTAKE IN BID BY FRANKEL COMPANY, INC., OF DETROIT, MICHIGAN. FRANKEL SPECIFICALLY ASKS THAT ITEM NO. 43 BE DELETED FROM CONTRACT NO. DSA-15-S-2536.

ON SEPTEMBER 13, 1963, THE DEFENSE SURPLUS SALES OFFICE, FORT HOLABIRD, BALTIMORE, MARYLAND, ISSUED INVITATION FOR BIDS NO. 15-S-64 21, ANNOUNCING THE SALE OF SUNDRY ITEMS OF SCRAP MATERIAL. ON PAGE 17 OF THE ABOVE INVITATION, ITEM NO. 43 WAS DESCRIBED AS FOLLOWS:

CHART

DESCRIPTION AND ALLOCATION QUANTITY UNIT OF ITEM NO. OF PROPERTY (NO. OF UNITS) MEASURE

43 AIRCRAFT SCRAP

CONSISTING OF AFTERBURNER

ASSEMBLIES CONTAINING HIGH 17,850 POUNDS

TEMPERATURE ALLOYS.

THE RECORD SHOWS ONLY TWO BIDS RECEIVED FOR ITEM 43. SINCE THE BID SUBMITTED BY FRANKEL ($0.36363) WAS SIGNIFICANTLY HIGHER THAN BOTH THE MARKET APPRAISAL VALUE ($0.05) AND THAT SUBMITTED BY PENN HARRIS METALS CORP. ($0.0436), THE SALES CONTRACTING OFFICER TELEPHONED THE FRANKEL COMPANY AND REQUESTED VERIFICATION OF BIDS SUBMITTED ON ITEMS 19, 20, 31 AND 43. ON OCTOBER 10, 1963, AWARD WAS MADE TO FRANKEL ONLY AFTER A REPRESENTATIVE OF THAT COMPANY CONFIRMED THE INDIVIDUAL BIDS SUBMITTED ON EACH OF THE ABOVE ITEMS.

ON OCTOBER 17, 1963, MR. LARRY J. OETTINGER, PURCHASING AGENT FOR THE FRANKEL COMPANY, DISPATCHED THE FOLLOWING CORRESPONDENCE TO THE DEFENSE SURPLUS SALES OFFICE:

"GENTLEMEN:

"WE ARE IN RECEIPT OF YOUR NOTICE OF AWARD DATED OCTOBER 10TH REFERRING TO THE ABOVE CAPTIONED CONTRACT AND COVERING ITEMS 19, 20, 31 AND 43.

"WE ARE ATTACHING HERETO OUR CERTIFIED CHECK NO. 67432 IN THE AMOUNT OF $13,415.84 WHICH, TOGETHER WITH OUR DEPOSIT IN THE AMOUNT OF $4,585.95, FULLY DISCHARGES PAYMENT FOR THIS CONTRACT.

"THIS IS YOUR AUTHORITY TO RELEASE THE MATERIAL STATED ABOVE TO THE UNDERSIGNED AS AGENT FOR FRANKEL COMPANY, AND/OR JONES MOTOR COMPANY.

"WE WOULD VERY MUCH APPRECIATE YOUR EXPEDITING THIS RELEASE TO THE HOLDING ACTIVITY, MARIETTA AIR FORCE STATION, MARIETTA, PENNSYLVANIA SO THAT THE MATERIAL MAY BE SPEEDILY REMOVED.

"THANK YOU FOR YOUR COOPERATION.'

AFTER AWARD AND WHILE ARRANGING FOR THE REMOVAL OF THE PROPERTY, MR. OETTINGER IN THE PRESENCE OF A PROPERTY DISPOSAL EMPLOYEE STATED THAT ITEM NO. 43 WAS NOT WORTH ?36 PER POUND--- THE AMOUNT BID. IT IS REPORTED THAT IMMEDIATELY THEREAFTER HE TELEPHONED THE SURPLUS SALES OFFICE AND ALLEGED THAT THE COMPANY ACTUALLY INTENDED TO BID ?036363 PER POUND FOR ITEM NO. 43 RATHER THAN $0.36363 PER POUND. THIS SAME ALLEGATION WAS RECEIVED IN WRITING BY LETTER DATED OCTOBER 28, 1963.

IN RECOMMENDING THAT THE ITEM BE DELETED FROM THE CONTRACT AS REQUESTED, COUNSEL FOR THE DEFENSE LOGISTICS SERVICES CENTER STATES:

"IT IS THE OPINION OF THIS CENTER THAT THIS CASE COMES WITHIN THE DOCTRINE ENUNCIATED BY THE COURT IN UNITED STATES VS. METRO NOVELTY MANUFACTURING CO., 125 F.SUPP. 713. IN THIS CASE IT WAS HELD THAT THE ACCEPTANCE OF A BID WHICH THE CONTRACTING OFFICER SUSPECTED TO BE ERRONEOUS DID NOT RESULT IN A VALID AND BINDING CONTRACT ALTHOUGH THE BID PRICE HAD BEEN VERIFIED BY THE BIDDER, BECAUSE THE CONTRACTING OFFICER SUSPECTED THE MANNER IN WHICH THE ERROR WAS MADE AND DID NOT CALL IT TO THE ATTENTION OF THE BIDDER WHEN REQUESTING VERIFICATION. SEE ALSO COMPTROLLER GENERAL DECISIONS 35 C.G. 136, B-144252, 20 OCTOBER 1960 AND B -149282, 7 AUGUST 1962.'

IT IS WELL ESTABLISHED THAT IF A PARTY RECEIVING A BID KNOWS OF OR HAS REASON TO KNOW THAT THE BIDDER HAS MADE A MISTAKE, WHETHER SUCH MISTAKE WAS DUE TO THE AMOUNT OF THE BID OR OTHERWISE, THE CONTRACT BECOMES VOIDABLE AT THE OPTION OF THE BIDDER. UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956. NOR IS AN OFFER THAT CONTAINS AN OBVIOUS MISTAKE SUSCEPTIBLE OF ACCEPTANCE. NOLANDCOMPANY V. GRAVER TANK AND MANUFACTURING COMPANY, 301 F.2D 43. GENERALLY SPEAKING HOWEVER, ONCE VERIFICATION HAS BEEN OBTAINED, THE CONTRACTING OFFICER IS NO LONGER UNDER ANY DUTY TO MAKE FURTHER INQUIRY. 27 COMP. GEN. 17.

IN THE INSTANT CASE WHILE THE CONTRACTING OFFICER DID IN FACT OBTAIN VERIFICATION PRIOR TO AWARD, IT DOES NOT APPEAR THAT THE REQUEST FOR CONFIRMATION WAS SUCH SO AS TO DIRECT FRANKEL'S ATTENTION TO THE SPECIFIC ERROR SUSPECTED. UNDER THESE CIRCUMSTANCES WE THINK THERE IS A REAL QUESTION WHETHER THE BARE CONFIRMATION OF THE VARIOUS INDIVIDUAL BIDS WAS SUFFICIENT TO PLACE THE BIDDER ON NOTICE OF THE ERROR SUSPECTED AS REQUIRED BY THE METRO CASE, SUPRA. IN OTHER WORDS, IT APPEARS THAT THE ENTIRE FACTUAL SITUATION WAS NOT BROUGHT TO THE BIDDER'S ATTENTION AND THEREFORE THE BIDDER WAS NOT GIVEN AN OPPORTUNITY IN A "COMPLETE SENSE" TO VERIFY ITS BID. 35 COMP. GEN. 136; 36 COMP. GEN. 254; AND 37 COMP. GEN. 786.

FOR THE REASONS ABOVE-STATED, WE OFFER NO OBJECTION TO REFORMATION OF THE CONTRACT SO AS TO PROVIDE FOR ELIMINATION OF ITEM NO. 43 THEREFROM.