B-174423, NOV 26, 1971

B-174423, NOV 26, 1971

CONTRACT - CANCELLATION - MISTAKE IN BID DECISION ALLOWING CANCELLATION WITHOUT LIABILITY OF A SALE CONTRACT LET TO N. ROLAND THOMPSON UNDER AN IFB ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, NEWPORT, R.I., FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS INCLUDING ITEM 34, ONE PONTOON RAMP. THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR SINCE THE BID PRICE, $1,369, WAS 93 PERCENT OF THE ACQUISITION COST, AND THE CURRENT MARKET APPRAISAL VALUE WAS $300. ACCORDINGLY, THE CONTRACT MAY BE CANCELLED.

TO GENERAL WALLACE H. ROBINSON:

REFERENCE IS MADE TO LETTER DSAH-G DATED OCTOBER 21, 1971, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY MR. N. ROLAND THOMPSON TO HAVE BEEN MADE IN HIS BID UPON WHICH SALES CONTRACT NO. 16-2017-187 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, NEWPORT, RHODE ISLAND, BY INVITATION NO. 16-2017 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS, INCLUDING ITEM 34 DESCRIBED AS ONE PONTOON RAMP (LANDING RAMP), UNUSED, IN FAIR CONDITION. PROSPECTIVE BIDDERS WERE ADVISED THAT THE ACQUISITION COST OF THE PONTOON RAMP WAS $1,470. IN RESPONSE MR. N. ROLAND THOMPSON SUBMITTED A BID DATED AUGUST 12, 1971, OFFERING TO PURCHASE, AMONG OTHER ITEMS, THE PONTOON RAMP OFFERED FOR SALE UNDER ITEM 34 AT A PRICE OF $1,369. THE BID OF MR. THOMPSON WAS ACCEPTED AS TO ITEM 34 ON AUGUST 18, 1971.

IT IS REPORTED THAT ON AUGUST 23, 1971, MR. THOMPSON TELEPHONED THE CONTRACTING OFFICER AND ALLEGED THAT HIS BID ON ITEM 34 WAS AN ERROR; THAT HE HAD INTENDED TO BID ON THE UTILITY BOAT OFFERED FOR SALE UNDER ITEM 28; AND THAT MR. THOMPSON STATED THAT MR. ZULICH, ANOTHER BIDDER UNDER THE SUBJECT SALES INVITATION, KNEW OF HIS INTENT TO BID ON THE 34 FOOT BOAT DESCRIBED UNDER ITEM 28. IN A LETTER DATED AUGUST 25, 1971, MR. THOMPSON REQUESTED THAT THE CONTRACT BE CANCELED WITHOUT LIABILITY TO HIM. SUPPORT OF HIS ALLEGATION OF ERROR, MR. THOMPSON SUBMITTED A COPY OF A LETTER DATED AUGUST 27, 1971, IN WHICH MR. GUSTAV C. ZULICH, A BIDDER UNDER THE SUBJECT SALES INVITATION, STATES THAT PRIOR TO THE BID OPENING, MR. THOMPSON TOLD HIM THAT HE WAS BIDDING ON THE 34 FOOT BOAT OFFERED FOR SALE UNDER ITEM 28. MR. ZULICH STATED THAT HE KNOWS OF THE FIVE LANDING RAMPS OFFERED FOR SALE UNDER ITEMS 32 THROUGH 36, INCLUSIVE, AND THAT IT IS OBVIOUS THAT A BIDDER, WHICH WAS BIDDING ON ONLY ONE OF THE RAMPS, WOULD NOT SELECT THE RAMP COVERED BY ITEM 34 BECAUSE THIS RAMP WAS THE WORST ONE OF THE LOT OF FIVE RAMPS.

THE ABSTRACT OF BIDS SHOWS THAT THE THREE OTHER BIDS ON ITEM 34 RANGED FROM $212 TO $37.99. THE CURRENT MARKET APPRAISAL VALUE, KNOWN TO THE CONTRACTING OFFICER PRIOR TO BID OPENING, WAS $300. IN HIS REPORT THE CONTRACTING OFFICER STATES THAT AN ERROR IN THE BID OF MR. THOMPSON AS TO ITEM 34 WAS NOT SUSPECTED PRIOR TO AWARD BECAUSE THE PRICE BID BY MR. THOMPSON WAS NOT IN EXCESS OF THE ACQUISITION COST OF THAT ITEM. IN THAT CONNECTION, THE DEFENSE LOGISTICS SERVICES CENTER STATES THAT THE CENTER IS OF THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF MR. THOMPSON'S BID BECAUSE OF THE FOLLOWING FACTORS. IS POINTED OUT THAT MR. THOMPSON'S BID PRICE ON ITEM 34 WAS APPROXIMATELY 93 PERCENT OF THE ACQUISITION COST OF THE PROPERTY COVERED BY THAT ITEM AND THAT THERE IS A SUBSTANTIAL DISPARITY BETWEEN MR. THOMPSON'S BID ON ITEM 34 AND THE NEXT HIGH BID AND THE CURRENT MARKET APPRAISAL OF THAT ITEM. IN SUPPORT OF ITS RECOMMENDATION THAT CONTRACT NO. 16-2017-187 BE CANCELED WITHOUT LIABILITY TO MR. THOMPSON, THE CENTER HAS CITED OUR DECISION B-157656, SEPTEMBER 23, 1965, WHEREIN OUR OFFICE OBSERVED THAT A BID MORE THAN 88 PERCENT OF THE ACQUISITION COST WAS SUFFICIENT TO PUT THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR.

IN THE CIRCUMSTANCES, WE AGREE WITH THE CENTER THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF A POSSIBLE ERROR WHICH SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD.

ACCORDINGLY, CONTRACT NO. 16-2017-187 MAY BE CANCELED WITHOUT LIABILITY TO MR. THOMPSON, AS ADMINISTRATIVELY RECOMMENDED.