B-159371, JUN. 28, 1966

B-159371, JUN. 28, 1966

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

REFERENCE IS MADE TO A LETTER DATED JUNE 6, 1966, FILE DSAH-G, FROM THE ASSISTANT COUNSEL SUBMITTING PAGE AIRCRAFT INDUSTRIES' REQUEST TO RESCIND CONTRACT NO. 46-6041-181, AWARDED MARCH 1, 1966, TO OUR OFFICE FOR CONSIDERATION. THE REQUEST IS PREDICATED UPON ALLEGED MISTAKES IN THE BIDS PAGE SUBMITTED IN RESPONSE TO ITEMS NOS. 93 THROUGH 96 OF INVITATION FOR BIDS NO. 46-6041.

THE ITEMS WERE DESCRIBED AS FOLLOWS:

"ENGINE, AIRCRAFT. PRATT-WHITNEY AIRCRAFT. MODEL R1830-94, 14 CYLINDER, TWO ROW, RADIAL AIR COOLED, RECIPROCATING ENGINE.

"ACQUISITION COST - $10,000.00"

EACH ENGINE DESCRIBED APPEARED TO BE IN POOR CONDITION BUT THE CURRENT MARKET APPRAISAL WAS NOT AVAILABLE. PAGE SUBMITTED A HIGH BID OF $2,711 ON EACH ITEM AND THE SECOND HIGH BIDS ON THE FOUR ITEMS WERE, RESPECTIVELY, $1,555.55; $1,700; $1,900; AND $2,100. THERE WERE 10 TO 14 OTHER BIDS SUBMITTED ON EACH ITEM WHICH RANGED DOWNWARDS TO A LOW OF $24.10. THE AVERAGE BID WAS APPROXIMATELY $660.

AFTER THE AWARD PAGE ALLEGED THAT IT HAD INTENDED TO BID $677.75 ON EACH OF THE FOUR ITEMS, WHICH WOULD HAVE TOTALED $2,711, HOWEVER, THE TYPIST IN PREPARING THE BID ERRONEOUSLY INSERTED $2,711 FOR EACH ITEM, MAKING A GRAND TOTAL OF $10,844.

THE GENERAL PRINCIPLES APPLICABLE TO THIS CASE ARE SET OUT IN SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, 507, WHERE IT WAS HELD THAT IF THE PURCHASER MADE A UNILATERAL MISTAKE IN BID, AND WAS SUBSEQUENTLY AWARDED THE CONTRACT, HE WOULD BE BOUND BY IT AND MUST BEAR THE CONSEQUENCES--- UNLESS THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE NOTICE OF THE ERROR. IN THAT CASE THE CONTRACT IS VOIDABLE AT THE PURCHASER'S OPTION. SEE 5 WILLISTON, CONTRACTS, SEC. 1598; 23 COMP. GEN. 596; KEMP V. UNITED STATES, 38 F.SUPP. 568; WENDER PRESSES, INC. V. UNITED STATES, 343 F.2D. 961.

IN THE INSTANT CASE THE FILE REVEALS THAT THE CONTRACTING OFFICER KNEW, AT THE TIME OF THE AWARD, THAT WHEN THE SAME ITEMS HAD BEEN AWARDED TO ANOTHER HIGH BIDDER ON A PRIOR SALE, THE EARLIER PURCHASER HAD ALLEGED THAT THE ENGINES WERE NOT WORTH THE $1,533.33 EACH, WHICH HE HAD PAID FOR THEM, AND HAD CHOSEN TO DEFAULT UNDER HIS CONTRACT RATHER THAN PERFORM. PAGE'S BID WAS $1,177.67 HIGHER FOR EACH ENGINE, THAN THE PRIOR PRICE. FURTHERMORE, THE CONTRACTING OFFICER ADMITS THAT HE RECOGNIZED THE ABOVE- STATED DISPARITY IN BID PRICES BUT HE ATTRIBUTED IT TO THE CURRENT VIET NAM CRISIS.

WHILE THE GENERAL RULE IS THAT A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT INDICATIVE OF A MISTAKE BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE ITEMS MAY BE PUT, IT IS OUR OPINION THAT THE FACTS IN THIS CASE JUSTIFY AN EXCEPTION TO THE RULE. FOR THE ABOVE-STATED REASONS, IT MAY BE CONCLUDED THAT THE CONTRACTING OFFICER WAS PLACED ON CONSTRUCTIVE NOTICE OF THE ERROR, AND THAT THE BID SHOULD HAVE BEEN VERIFIED. WE ACCORDINGLY CONCUR WITH YOUR RECOMMENDATION THAT THE SUBJECT CONTRACT SHOULD BE RESCINDED.