B-168598, JAN. 20, 1970

B-168598, JAN. 20, 1970

CONTRACTS--SURPLUS SALES--MISTAKES DECISION TO SECRETARY OF THE ARMY CONCERNING ERROR MADE BY MR. DU KHE OF CHOLON, VIETNAM, IN BID UPON WHICH SALES CONTRACT FOR PURCHASE OF SCRAP METAL. A PURCHASER WHOSE BID WAS CORRECTED TO SHOW THAT HE WAS BIDDING ON GROSS TONS RATHER THAN SHORT TONS WHEN INVITATION REQUIRED GROSS TONS THEREBY CHANGING PRICES AND TOTAL QUANTITY HAD SUBMITTED A NONRESPONSIVE BID AND THEREFORE CORRECTION WAS NOT PERMISSIBLE.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 11, 1969, WITH ENCLOSURES, FROM THE COUNSEL, OFFICE OF THE CHIEF OF SUPPORT SERVICES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY MR. DU-KHE OF CHOLON, REPUBLIC OF VIETNAM, TO HAVE BEEN MADE IN HIS BID UPON WHICH SALES CONTRACT NO. 92-112-0015-9 IS BASED.

THE FOREIGN EXCESS SALES OFFICE, VIETNAM, HEADQUARTERS, 1ST LOGISTICAL COMMAND, BY SALES INVITATION NO. 92-112-0015 REQUESTED BIDS ON A GROSS TON UNIT PRICE BASIS UNDER ITEMS 8 AND 10 FOR THE PURCHASE AND REMOVAL OF SCRAP METAL GENERATED AT THE HO-NAIPROPERTY DISPOSAL YARD, VIETNAM, DURING THE PERIOD BEGINNING OCTOBER 19, 1969, AND ENDING APRIL 18, 1971. RESPONSE MR. DU-KHE SUBMITTED A BID, IN PART, AS FOLLOWS:

"IRON AND STEEL HEAVY

UNPREPARED SCRAP:

CONSISTING OF STRUCTUAL

STEEL PLATES, PIPE, STEEL

FRAMES, TRACKS, BLADES,

ENGINE PARTS AND WITH

FERROUS AND NON-FERROUS,

ATTACHMENTS AND FOREIGN

MATTERS.

"SALE FOR: IMPORT OR

EXPORT

EST. QUANTITY ON

HAND: 0

EST. MONTHLY

GENERATIONS: 300 G/T

EST. GENERATIONS FOR

CONTRACT PERIOD: 5,400 G/T 5,400 G/T US$81.-437,400.-US$

(OR 5400 SH/T

"REFRIGERATION EQUIPMENT

RESIDUE SCRAP:

CONSISTING OF AIR

CONDITIONERS, WINDOW AND

FLOOR TYPE, REFRIGERATORS,

HOUSEHOLD AND WALK IN TYPE

FREEZER, ICE MACHINE, ETC;

"SALE FOR: IMPORT OR

EXPORT

EST. QUANTITY ON

HAND: 100 G/T

EST. MONTHLY

GENERATIONS: 15 G/T

EST. GENERATIONS FOR PER SH/T

CONTRACT PERIOD: 370 G/T 370 G/TUS$35.-12,950.-US$

(OR 370 SH/T)

IN HIS REPORT THE CONTRACTING OFFICER STATES THAT AFTER THE BID OPENING HE ANALYZED THE BID OF MR. DU-KHE AND FORMED THE OPINION THAT EITHER MR. DU-KHE'S BID WAS NONRESPONSIVE IN THAT HE HAD BID A SHORT TON UNIT PRICE INSTEAD OF THE SPECIFIED GROSS TON UNIT PRICE ON ITEMS 8 AND 10 OR THAT SOME IRREGULARITY EXISTED, AND THAT MR. DU-KHE WAS THEREFORE REQUESTED TO VISIT THE CONTRACTING OFFICE FOR THE PURPOSE OF DISCUSSING HIS BID. THE CONTRACTING OFFICER ALSO STATES THAT PRIOR TO THE VISIT OF MR. DU-KHE, HE WAS INSTRUCTED BY THE CHIEF, SALES AND DISPOSAL DIVISION, TO CONVERT MR. DU-KHE'S SHORT TON BID TO A GROSS TON BID. IT IS REPORTED THAT AT A MEETING HELD ON OCTOBER 15, 1969, IT WAS EXPLAINED AND DEPICTED ON PAPER IN GREAT DETAIL TO MR. DU-KHE THAT HIS SHORT TON BID WOULD BE CONVERTED TO GROSS TONS AS FOLLOWS:

"ITEM 8 CONVERTING 5400 ST TO 5400 GT REPRESENTS AN

OVERALL 578 GT INCREASE. CONVERTING $81.00

PER S/T PRICE TO G/T EQUATES TO $90.72 PER

GT (INCREASE $9.72 PER GT)

"ITEM 10 CONVERTING 370 ST TO 370 GT REPRESENTS AN

OVERALL 40 GT INCREASE. CONVERTING $35.00

PER S/T PRICE TO G/T EQUATES TO $39.20 PER GT

(INCREASE $4.20 PER GT)

"TOTAL CONTRACT $504,392 G/T CONVERSION

450,350 S/T AS BID

$ 54,042 CONTRACT INCREASE"

THE CONTRACTING OFFICER STATES THAT AT THE MEETING MR. DU-KHE MADE NO OBJECTION TO THE CONVERSION NOR DID HE GIVE ANY INDICATION THAT HE HAD MADE A MISTAKE IN HIS BID. ON OCTOBER 15, 1969, THE BID OF MR. DU KHE, AS CONVERTED FROM A SHORT TON TO A GROSS TON UNIT BASIS, WAS ACCEPTED AS TO ITEMS 8 AND 10. AS A RESULT OF THE CONVERSION FROM A SHORT TON TO A GROSS TON UNIT BASIS, MR. DU-KHE'S BID PRICES FOR ITEMS 8 AND 10 WERE UNILATERALLY INCREASED FROM $81 AND $35 TO $90.72 AND $39.20, RESPECTIVELY.

IN SUPPORT OF ITS ACTION IN CORRECTING MR. DU-KHE'S BID ON ITEMS 8 AND 10 FROM A SHORT TON TO A GROSS TON UNIT BASIS, THE LEGAL ADVISOR FOR THE SALES CONTRACTING OFFICE CITED OUR DECISION REPORTED AT 37 COMP. GEN. 190 (1957). IN THAT DECISION, OUR OFFICE HELD THAT WHERE A HIGH BIDDER ENTERED HIS BID ON A GROSS TON RATHER THAN A POUND UNIT BASIS AS SPECIFICALLY REQUIRED BY THE INVITATION -- WHICH BID COULD EASILY BE CONVERTED TO A PER POUND BASIS -- THE DEVIATION DID NOT AFFECT THE PRICE OR SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO THE OTHER BIDDERS AND THAT THEREFORE THE TECHNICAL DEVIATION SHOULD HAVE BEEN WAIVED.

BY LETTERS DATED OCTOBER 17, 1969, MR. DU-KHE ADVISED THE SALES CONTRACTING OFFICER THAT AN ERROR HAD BEEN MADE IN QUOTING ON ITEMS 8 AND 10 OF THE INVITATION; THAT HE HAD BASED HIS UNIT PRICE ON A GROSS TON IN ACCORDANCE WITH THE UNIT SPECIFIED IN THE INVITATION; AND THAT HIS CLERK MADE A MISTAKE IN TYPING BY INSERTING S/T (SHORT TON) INSTEAD OF G/T (GROSS OR LONG TON) BESIDE THE UNIT PRICES. MR. DU-KHE STATED THAT THERE WAS NO REASON FOR HIM TO BID IN SHORT TONS WHEN THE UNIT IS GROSS TONS UNDER THE INVITATION; AND THAT HE IS CHINESE AND DOES NOT KNOW THE ENGLISH LANGUAGE AND THEREFORE WROTE THE LETTER "G" TO LOOK LIKE THE LETTER "S." IN A LETTER DATED OCTOBER 20, 1969, MR. DU-KHE REQUESTED THAT SALES CONTRACT NO. 92-112-0015-9 BE AMENDED TO PROVIDE FOR A PRICE OF $81 PER GROSS TON FOR ITEM 8.

THE PRIMARY QUESTION FOR CONSIDERATION IS NOT WHETHER AN ERROR WAS MADE IN THE BID, BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE THEREOF. PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SALES INVITATION PROVIDES, IN PART, AS FOLLOWS: "HOWEVER, UNLESS THE INVITATION OTHERWISE PROVIDES, A BID COVERING ANY LISTED ITEM MUST BE SUBMITTED ON THE BASIS OF THE UNIT SPECIFIED FOR THAT ITEM AND MUST COVER THE TOTAL NUMBER OF UNITS DESIGNATED FOR THAT ITEM." THE SUBJECT INVITATION DID NOT PROVIDE OTHERWISE. THE UNIT OF MEASURE FOR ITEM 8 IS SHOWN IN THE SALES INVITATION AS BEING A "G/T" AND THE ESTIMATED TOTAL QUANTITY FOR THAT ITEM IS SHOWN AS BEING 5,400 "G/T." THE RECORD INDICATES THAT IN MR. DU-KHE'S BID IN THE RESPECTIVE "QUANTITY" AND "UNIT OF MEASURE" COLUMNS DIRECTLY BELOW "5,400" AND "G/T," HIS CLERK INSERTED THE PHRASE "OR 5400 SH/T." WE BELIEVE THAT THE CLERK MADE SUCH ENTRY UNDER THE MISTAKEN ASSUMPTION THAT 5,400 GROSS TONS WERE EQUIVALENT TO 5,400 SHORT TONS. A GROSS TON IS EQUIVALENT TO 2,240 POUNDS WHEREAS A SHORT TON IS EQUIVALENT TO 2,000 POUNDS. THE DIFFERENCE BETWEEN 5,400 SHORT TONS AND 5,400 GROSS TONS IS 1,296,000 POUNDS. SINCE MR. DU-KHE INDICATED IN HIS BID UNDER ITEM 8 THEREOF THAT HE WAS BIDDING ON 5,400 SHORT TONS OF SCRAP METAL, IT SEEMS CLEAR THAT THE BID OF MR. DU-KHE IS NONRESPONSIVE TO THE SALES INVITATION, WHICH REQUIRED A BID ON THE LARGER QUANTITY OF 5,400 GROSS TONS.

OUR DECISION AT 37 COMP. GEN. 190, UPON WHICH THE LEGAL ADVISOR FOR THE CONTRACTING OFFICER RELIED IN DIRECTING THAT MR. DU-KHE'S BID ON ITEMS 8 AND 10 SHOULD BE CHANGED FROM A SHORT TON UNIT BASIS TO A GROSS TON UNIT BASIS, INVOLVED A SALE OF SURPLUS SCRAP IN WHICH THE HIGH BIDDER ENTERED HIS BID ON A GROSS TON RATHER THAN A POUND UNIT BASIS AS SPECIFICALLY REQUIRED BY THE INVITATION. IN THAT DECISION, WE HELD THAT THIS DEVIATION DID NOT AFFECT THE PRICE OR SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO THE OTHER BIDDERS AND SHOULD, THEREFORE, BE WAIVED. IT IS OUR OPINION THAT THE SITUATION IN THE PRIOR CASE REFERRED TO AND THE SITUATION IN THIS CASE ARE DISSIMILAR AND REQUIRE DIFFERENT RESOLUTIONS. IN THE PRESENT CASE, THE ACTION OF THE CONTRACTING OFFICER IN CONVERTING MR. DU-KHE'S BID FROM A SHORT TON TO A GROSS TON UNIT BASIS RESULTED IN CHANGING THE PRICES QUOTED BY MR. DU-KHE FOR ITEMS 8 AND 10 AND, ALSO, THE TOTAL QUANTITY UPON WHICH HIS BID PRICES WERE BASED. HENCE, THE PRIOR CASE REFERRED TO IS CLEARLY DISTINGUISHABLE SINCE THE ACTION IN CORRECTING THE DEVIATION IN THAT CASE DID NOT AFFECT PRICE OR QUANTITY.

THE STATUTORY AUTHORITY PURSUANT TO WHICH THE SALE WAS ADVERTISED IS 40 U.S.C. 484, AND UNDER THIS STATUTE, A LEGAL AWARD OF A CONTRACT FOR SURPLUS PROPERTY OFFERED FOR SALE BY FORMAL SALES INVITATION CAN BE MADE ONLY TO A RESPONSIVE BIDDER, THAT IS, ONE WHO HAS SUBMITTED A BID IN CONFORMANCE WITH THE ADVERTISED TERMS AND CONDITIONS. A BID WHICH DEVIATES IN ANY MATERIAL RESPECT FROM THOSE TERMS AND CONDITIONS MAY NOT PROPERLY BE CONSIDERED FOR AWARD SINCE, IN LEGAL EFFECT, SUCH A BID IS A COUNTEROFFER WHICH THE GOVERNMENT MAY NOT ACCEPT.

WE HAVE HELD THAT A NONRESPONSIVE BID, SUCH AS WAS SUBMITTED HERE, MAY NOT BE ACCEPTED BUT MUST BE REGARDED AS CONTRARY TO THE CONDITIONS OF THE SALES INVITATION WHICH REQUIRED THAT A BID COVERING ANY LISTED ITEM MUST BE SUBMITTED ON THE BASES OF THE UNIT SPECIFIED, IN THIS CASE, A GROSS TON. CF. B-140335, AUGUST 17, 1959; B-161894, SEPTEMBER 1, 1967; AND B- 166766, OCTOBER 15, 1969, 49 COMP. GEN. (1969). WE THEREFORE CONCLUDE THAT SINCE THE BID OF MR. DU-KHE WAS NONRESPONSIVE TO THE SALES INVITATION, NO VALID CONTRACT WAS AWARDED TO MR. DU-KHE. FURTHERMORE, THE RULE IS WELL SETTLED THAT A NONRESPONSIVE BID MAY NOT BE CORRECTED TO MAKE THE BID RESPONSIVE TO THE INVITATION. SEE 38 COMP. GEN. 819, 821 (1959); 40 ID. 432, 435 (1961).

IT IS REPORTED THAT MR. DU-KHE HAS NOT COMMENCED REMOVAL OF ANY OF THE SCRAP METAL COVERED BY ITEMS 8 AND 10 OF THE CONTRACT. ACCORDINGLY, SALES CONTRACT NO. 92-112-0015-9 SHOULD BE CANCELED WITHOUT LIABILITY TO MR. DU- KHE.