B-181121, MAY 28, 1974

B-181121, MAY 28, 1974

WHERE BIDDER SUBMITTED BID OF $660 EACH FOR FIVE REFRIGERATORS UNDER SALES INVITATION FOR BIDS WHEN ACTUALLY BIDDER INTENDED TOTAL BID PRICE RATHER THAN UNIT BID PRICE AND BID WAS ELEVEN TIMES NEXT HIGH BID, OF $60 EACH, SALES CONTRACT MAY BE REFORMED SINCE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR AND CORRECTION DOES NOT DISPLACE ANY HIGHER BIDDER ON SAID ITEM.

TO MR. A. SPIERINGS:

BY LETTER DATED APRIL 17, 1974, WITH ENCLOSURES, THE ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, REQUESTED A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY A. SPIERINGS TO HAVE BEEN MADE IN HIS BID UPON WHICH SALES CONTRACT NO. 50-4019-022 IS BASED.

THE DEFENSE PROPERTY DISPOSAL REGION, EUROPE, BY INVITATION NO. 50 4019, REQUESTED BIDS FOR THE PURCHASE OF VARIOUS ITEMS OF SURPLUS PROPERTY, INCLUDING ITEM 233 WHICH CONSISTED OF FIVE REFRIGERATORS. A. SPIERINGS SUBMITTED A BID ON SEPTEMBER 13, 1973, OFFERING TO PURCHASE THE FIVE REFRIGERATORS UNDER ITEM 233 AT A PRICE OF $660 EACH. THE SUBJECT BID WAS ACCEPTED ON SEPTEMBER 18, 1973.

IN A LETTER DATED SEPTEMBER 22, 1973, MR. SPIERINGS ADVISED THE CONTRACTING OFFICER HE HAD MADE AN ERROR IN THAT HE INTENDED THE BID OF $660 AS A TOTAL PRICE RATHER THAN A UNIT BID PRICE FOR THE FIVE REFRIGERATORS COVERED BY ITEM 233. MR. SPIERINGS REQUESTED THAT HIS UNIT BID PRICE OF $660 BE CONSIDERED AS A TOTAL PRICE FOR ITEM 233, OR $132.00 PER REFRIGERATOR.

THE ADMINISTRATIVE FILE INDICATES THAT SPIERINGS' UNIT BID PRICE OF $660 FOR ITEM 233 WAS ELEVEN TIMES THE BID PRICE SUBMITTED BY THE SECOND HIGH BIDDER ($60), REPRESENTS OVER 60 PERCENT OF THE ACQUISITION COST FOR THIS PROPERTY WHICH WAS DESCRIBED AS BEING IN POOR CONDITION, AND REPRESENTS 660 PERCENT OF THE AVERAGE RETURN FOR SIMILAR PROPERTY PREVIOUSLY SOLD.

NORMALLY, A WIDE RANGE OF BID PRICES IN RESPONSE TO A SURPLUS SALE IS NOT SUFFICIENT TO PLACE A CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF THE POSSIBILITY OF ERROR BECAUSE THE PRICES OFFERED DEPEND TO A GREAT EXTENT UPON THE USES TO WHICH THE PROPERTY WILL BE PUT, OR UPON THE RISK OF RESALE WHICH THE BIDDER MAY BE WILLING TO TAKE. B-171229, FEBRUARY 17, 1971. HOWEVER, IN THIS CASE, AFTER REVIEWING THE ADMINISTRATIVE FILE AND ON THE BASIS OF THE INFORMATION CONTAINED THEREIN, WE AGREE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF POSSIBLE ERROR IN SPIERINGS' BID AND SHOULD HAVE REQUESTED VERIFICATION OF THE BID PRIOR TO AWARD. B-171229, SUPRA; B-180824, APRIL 12, 1974. SEE CHERNICK V. UNITED STATES, 372 F.2D 492, 496 (1967), 178 CT. CL. 498, 504, IN WHICH THE COURT OF CLAIMS STATED:

"*** THE TEST OF WHAT AN OFFICIAL IN CHARGE OF ACCEPTING BIDS 'SHOULD' HAVE KNOWN MUST BE THAT OF REASONABLENESS, I.E., WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THERE WERE ANY FACTORS WHICH REASONABLY SHOULD HAVE RAISED THE PRESUMPTION OF ERROR IN THE MIND OF THE CONTRACTING OFFICER; AMONG SUCH FACTORS OBVIOUS WIDE RANGE OF BIDS, AND GROSS DISPARITY BETWEEN THE PRICE BID AND THE VALUE OF THE ARTICLE WHICH WAS THE SUBJECT OF THE BID. ***"

IF A BIDDER CAN SHOW NOT ONLY THAT HE MADE A MISTAKE, BUT ALSO THE AMOUNT HE INTENDED TO BID, THE CONTRACT MAY BE REFORMED IN THE EVENT NO OTHER BIDDER IS DISPLACED. B-177176, NOVEMBER 7, 1972. IN THE INSTANT CASE, THE NEXT HIGH BIDDER WOULD NOT BE DISPLACED IN THE EVENT THAT SPIERINGS' INTENDED UNIT BID PRICE OF $132 WAS ACCEPTED.

ACCORDINGLY, SINCE ACCEPTANCE OF A BID WITH KNOWLEDGE, EITHER ACTUAL OR CONSTRUCTIVE, OF ERROR DOES NOT CREATE A BINDING AND VALID CONTRACT, AND INASMUCH AS NO OTHER BIDDER WOULD BE DISPLACED, WE CONCUR IN THE RECOMMENDATION THAT SALES CONTRACT NO. 50-4019-022 BE REFORMED TO REFLECT A UNIT BID OF $132 EACH FOR ITEM 233, OR A TOTAL BID PRICE OF $660 FOR THAT ITEM.