B-134787, APR. 8, 1958

B-134787, APR. 8, 1958

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTERS DATED JANUARY 2 AND MARCH 3, 1958, WITH ENCLOSURE, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION RELATIVE TO AN ERROR HANDY AND HARMAN, OF NEW YORK, NEW YORK, ALLEGE THEY MADE IN THEIR BID ON WHICH SALES CONTRACT NO. N298S-7805 WAS BASED.

BY SALES INVITATION NO. B-12-58-298, ISSUED OCTOBER 30, 1957, THE U.S. NAVAL SUPPLY DEPOT, NEWPORT, RHODE ISLAND, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF THREE ITEMS OF SCRAP SILVER CELL BATTERIES. UNDER DATE OF NOVEMBER 19, 1957, IN RESPONSE TO THE INVITATION, HANDY AND HARMAN SUBMITTED A BID IN A TOTAL AMOUNT OF $38,356.44 ON THE THREE ITEMS, AND FORWARDED A BID DEPOSIT OF $7,671.29. THE BIDDER QUOTED A UNIT PRICE OF "$77.27 EACH" FOR ITEM NO. 1, "$1.23 PER POUND" FOR ITEM NO. 2, AND "$4.16 PER POUND" FOR ITEM NO. 3. ONLY ITEMS NOS. 2 AND 3 ARE IN ISSUE HERE. THE SCRAP MATERIAL LISTED UNDER THESE ITEMS WAS DESCRIBED IN THE INVITATION, AS FOLLOWS:

ITEM NO.DESCRIPTION QUANTITY UNIT OF

(NUMBER OF UNITS) MEASURE

2. BATTERIES, SCRAP SILVER CELL; 5742 LBS

ENCLOSED IN PLASTIC CASES,

AVERAGE SIZE 15 INCHES BY 13

INCHES BY 6 INCHES. WEIGHT

INCLUDING CASES APPROXIMATELY

71 LBS. EA.

3. BATTERIES, SCRAP SILVER CELL; 3399 LBS

PLATES CONTAINED IN PLASTIC CELLS

OF VARIOUS SIZES. WEIGHT INCLUDES

PLASTIC CELLS AND ELECTROLYTE"

SIX OTHER BIDS WERE RECEIVED ON ITEM NO. 2, WITH UNIT PRICE QUOTATIONS RANGING FROM $0.30 TO $4.28 PER POUND; AND EIGHT OTHER BIDS WERE RECEIVED ON ITEM NO. 3 AT UNIT PRICES RANGING FROM $0.30 TO $2.21 PER POUND.

THE BID OF HANDY AND HARMAN OF $4.16 PER POUND ON ITEM NO. 3, BEING THE HIGHEST RECEIVED FOR THAT ITEM, WAS ACCEPTED ON NOVEMBER 22, 1957, AND SALES CONTRACT NO. N298S-7805 WAS AWARDED IN A TOTAL AMOUNT OF $14,139.84. THEIR TOTAL BID DEPOSIT OF $7,671.29 WAS APPLIED AGAINST THE SALE PRICE OF THAT ITEM, LEAVING A BALANCE DUE THE GOVERNMENT OF $6,468.55. THIS AMOUNT WAS RECEIVED BY THE NAVAL SUPPLY DEPOT ON NOVEMBER 27, 1957.

THE RECORD SHOWS THAT ON THAT DATE MR. HARMAN ADVISED THE DISPOSAL DEPOT, BY TELEPHONE, THAT AN ERROR HAS BEEN MADE IN HIS FIRM'S BID ON ITEMS NOS. 2 AND 3, ALLEGING THAT THEIR BID PRICES ON THESE ITEMS WERE NOT AS INTENDED, BUT WERE REVERSED. IN LETTER DATED DECEMBER 5, 1957, TO THE SALES AND DISPOSAL OFFICER OF THE DISPOSAL DEPOT, THE FIRM'S ALLEGATION OF ERROR WAS CONFIRMED, AND HANDY AND HARMAN REQUESTED THAT THEY BE PERMITTED TO WITHDRAW THEIR BID AS TO ITEM NO. 3, OR BE PERMITTED TO CORRECT THE BID BY REVERSING THEIR QUOTATIONS ON ITEMS NOS. 2 AND 3, THAT IS, $4.16 PER POUND ON ITEM NO. 2 AND $1.23 PER POUND ON ITEM NO. 3. IN THAT LETTER IT WAS ALSO STATED THAT ON NOVEMBER 22, THE DATE THEY WERE NOTIFIED THAT THEY WERE THE SUCCESSFUL BIDDER ON ITEM NO. 3, THEY LEARNED OF THEIR MISTAKE THROUGH INFORMATION VOLUNTEERED TO THEM BY ONE OF THE OTHER BIDDERS (SABIN METAL CORP., BROOKLYN, NEW YORK).

HANDY AND HARMAN CONTEND THAT THE ERROR MADE BECAUSE, ON NOVEMBER 12 WHEN THE MATERIALS WERE INSPECTED BY THEIR REPRESENTATIVES AT THE NEWPORT DEPOT STORAGE AREA PRIOR TO SUBMITTING THEIR BID, AND BINS CONTAINING THE MATERIALS WERE NOT IDENTIFIED BY MARKINGS AS TO INVITATION ITEM NUMBER; THAT MR. E. J. GIACOBBE, THE REPRESENTATIVE OF THE NAVAL BASE WHO ACCOMPANIED THEIR REPRESENTATIVES ON THE INSPECTION, IDENTIFIED THE 222 COMPLETE BATTERIES AS BID ITEM NO. 1, CONTAINED IN BIN NO. 1, AND THAT THEIR REPRESENTATIVES HAD THE UNDERSTANDING THAT THE FOLLOWING BINS, NO. 2 AND NO. 3, CONTAINED BIN NO. 2 CONSISTED OF MISCELLANEOUS SIZED CELLS REMOVED FROM BATTERIES AS WELL AS COMPLETE BATTERIES BROKEN AND WITHOUT THE OUTER CASES; AND THAT THE MATERIAL IN BIN NO. 3 CONSISTED OF SILVER CHLORIDE MAGNESIUM SHEETS, PLATES, ETC., WHICH WERE BROKEN UP.

IT IS ALLEGED THAT THE DESCRIPTIONS AS GIVEN IN THE BID INVITATION ARE OF A GENERAL NATURE AND NOT "PRECISELY DEFINITE.' IT IS STATED THAT HANDY AND HARMAN, HOWEVER, HAD NO REASON TO BELIEVE THAT THE MATERIALS WHICH THEIR INSPECTORS SAW AND SAMPLED AND UNDERSTOOD TO BE ITEMS NO. 2 AND NO. 3 WERE NOT PROPERLY FITTED TO THE BID DESCRIPTIONS; ON THE CONTRARY, THEIR UNDERSTANDING SEEMED TO BE FURTHER SUBSTANTIATED AS CORRECT. IT IS FURTHER CONTENDED THAT THE BINS CONTAINING THE MATERIAL WERE IN REVERSE ORDER, A FACT THAT THE FIRM'S REPRESENTATIVES DID NOT NOTICE AT THE TIME OF INSPECTION; AND THAT THEIR BID PRICE OF $1.23 PER POUND FOR ITEM NO. 2 WAS BASED ON AN ANALYSIS OF THE SAMPLE OF MATERIAL TAKEN FROM THE BIN IN THE NO. 2 POSITION AND THEIR PRICE OF $4.16 FOR ITEM NO. 3 WAS BASED ON AN ANALYSIS OF THE SAMPLE TAKEN FROM THE BIN IN THE NO. 3 POSITION.

IN SUPPORT OF THEIR CLAIM, THE PURCHASER TRANSMITTED "TRUE COPIES" OF THE WORKSHEETS USED IN THE PREPARATION OF THEIR BID, SHOWING THEIR ANALYSES AS TO THE SILVER CONTENT OF THE SAMPLES OF MATERIAL TAKEN FROM THE THREE BINS BY THEIR INSPECTORS AT THE TIME OF INSPECTION. THE WORKSHEETS CONTAIN IDENTIFICATION NOTATIONS, AS FOLLOWS:

CHART

"A TRIAL SAMPLE OF PLASTIC BATTERY CELL (STEEL, BOLTS, WATER)

SAMPLE NO. 1 - BIN NO. 1"

"A TRIAL SAMPLE OF PLASTIC BATTERY CELL (STEEL, BOLTS, WATER)

SAMPLE NO. 2 - BIN NO. 2"

"A TRIAL SAMPLE OF 1 AG CHLORIDE MAGNESIUM SHEET SAMPLE NO. 3 - BIN

NO. 3"

AT A CONFERENCE IN OUR OFFICE ON JANUARY 20, 1958, AND IN A LETTER DATED JANUARY 27, MR. RAYMOND HAPPEL, THE PURCHASER'S MANAGER OF SALES SERVICE, STATES THAT HE AND THE TWO INSPECTORS UPON VISITING THE DISPOSAL DEPOT ON JANUARY 14, AFTER AWARD OF THE CONTRACT, FOR THE PURPOSE OF RE-EXAMINING ITEM NO. 3 AND ITS CONTAINER--- THE WOODEN CRATE AND THE PALLET WHICH COMPRISED THE ,BIN"--- FOUND NOT ONLY "TWO VERY CLEAR APPARENTLY NEW IDENTIFICATION LABELS ON OPPOSITE SIDES OF THE BIN OR BOX, BUT ALSO CLEAR AND PRECISE INFORMATION WRITTEN IN LARGE CRAYON LETTERING ON ONE SIDE, TIEING IN THIS MATERIAL WITH THE PROPER ITEM NUMBER ON THE INVITATION.'

MR. HAPPEL ALSO STATES THAT THEY HAVE AN UNSWORN STATEMENT FROM MR. SABIN, OF SABIN METAL ORP., ONE OF THE BIDDERS ON ALL THREE ITEMS, THAT ON NOVEMBER 18, 1957, WHEN HE INSPECTED THE MATERIALS OFFERED FOR SALE IN INVITATION NO. B-12-58-298, HE "SAW NO MARKS, SIGNS OR LABELS WHATSOEVER TO SERVE AS IDENTIFICATION OF THESE BINS WITH THE NUMBERED ITEMS ON THE INVITATION; " AND A STATEMENT FROM MR. JACK KAPLAN, OF SPIRAL METAL CO., HOPELAWN, NEW JERSEY, ANOTHER BIDDER ON THESE ITEMS, THAT HIS RECOLLECTION IS SUBSTANTIALLY THE SAME AND THAT THERE WAS REASON FOR CONFUSION WITH REFERENCE TO THE ITEMS.

MR. HAPPEL STATES FURTHER THAT HIS FIRM'S CLAIM IS THAT THERE IS A DEFINITE RESPONSIBILITY ON THE PART OF THE NAVAL SUPPLY DEPOT WHICH CONTRIBUTED TOWARD THE ERROR RESULTING IN THEIR REVERSAL OF BIDS ON ITEMS NOS. 2 AND 3. HE INVITES ATTENTION TO PARAGRAPH 23 OF THE ADDITIONAL PROVISIONS, PAGE 4 OF THE BID INVITATION, WHICH PROVIDES THAT ANY DISPUTE ON A QUESTION OF FACT ARISING UNDER THE CONTRACT AND NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER. IN VIEW OF THIS PROVISION AND SINCE THE CONTRACTING OFFICER HAS RECOMMENDED THAT THEIR APPEAL BE GRANTED AS REQUESTED, AND FURTHER SINCE THE MATERIAL IN QUESTION IS STILL AT THE NAVAL SUPPLY DEPOT, MR. HAPPEL REQUESTS A FAVORABLE DECISION IN THE MATTER.

THE RECORD SHOWS THAT, AS OF JANUARY 21, 1958, A REFUND OF $11,311,87 HAD BEEN MADE TO HANDY AND HARMAN AND, PENDING DECISION ON THEIR CLAIM, THE NAVAL SUPPLY DEPOT IS HOLDING $2,827.97--- 20 PERCENT OF THE TOTAL PURCHASE PRICE OF $14,139.84--- THE AMOUNT THE GOVERNMENT MAY RETAIN AS LIQUIDATED DAMAGES IN THE EVENT OF DEFAULT UNDER THE CONTRACT. THE PROPERTY IN QUESTION IS STILL AT THE NAVAL SUPPLY DEPOT, NEVER HAVING BEEN REMOVED BY THE PURCHASER.

THE CONTRACTING OFFICER IN HER STATEMENT OF FACTS IN THE MATTER REPORTS THAT EACH OF THE THREE LOTS OF SCRAP SILVER CELL BATTERIES WAS CLEARLY LABELED AND MARKED ACCORDING TO THE SALES INVITATION ITEM NUMBER, BUT THAT THE LOTS WERE NOT IN CONSECUTIVE ORDER BUT WERE PLACED IN THE SEQUENCE, ITEM NO. 1, ITEM NO. 3, ITEM NO. 2. THESE FACTS ARE CONFIRMED IN STATEMENTS BY THE ASSISTANT DEPOT CONTRACTING OFFICER WHO HAD INSPECTED THE ITEMS PRIOR TO ADVERTISEMENT AND HAD IDENTIFIED THE LABELS AND MARKINGS ON EACH LOT ACCORDING TO THE ADVERTISEMENT; AND BY THREE EMPLOYEES OF THE U.S. NAVAL UNDERWATER ORDNANCE STATION--- INCLUDING MR. GIACOBBE WHO ACCOMPANIED HANDY AND HARMAN'S REPRESENTATIVES ON THEIR FIRST INSPECTION TRIP PRIOR TO THE SUBMISSION OF THEIR BID--- WHO ALSO STATE THAT AT NO TIME SUBSEQUENT TO OCTOBER 30, 1957, WERE THESE LABELS OR MARKINGS TAMPERED WITH OR WERE ANY ADDITIONAL MARKINGS OR LABELS ADDED OR AFFIXED, AND FURTHER THAT A REPRESENTATIVE OF THE STATION ESCORTED EACH BIDDER IN THE INSPECTION AREA AND POINTED OUT EACH LOT. IN RECOMMENDING RELIEF FOR THE PURCHASER, THE CONTRACTING OFFICER STATES THAT IS IS HER OPINION THAT AN ERROR MAY HAVE BEEN MADE BY HANDY AND HARMAN IN THEIR BID, PROBABLY BECAUSE OF THE PHYSICAL ARRANGEMENT OF THE ITEMS BUT NOT BECAUSE THE BINS LACKED MARKINGS AS TO ITEM NUMBERS.

AS TO WHETHER THE THREE BINS CONTAINING THE MATERIAL ADVERTISED FOR SALE WERE MARKED AND LABELED AS TO THE BID INVITATION ITEM NUMBERS AT THE TIME THE PURCHASER'S REPRESENTATIVES INSPECTED THE MATERIAL ON NOVEMBER 12, 1957, PRIOR TO SUBMISSION OF BIDS, THERE IS A DIRECT CONFLICT BETWEEN THE STATEMENTS OF THE PURCHASER AND OTHER BIDDERS AND THOSE OF EMPLOYEES OF THE DISPOSAL AGENCY AND THE CONTRACTING OFFICER.

THE ABSTRACT OF BIDS SHOWS THE FOLLOWING BIDS WERE RECEIVED ON ITEMS NOS. 2 AND 3 IN RESPONSE TO THE INVITATION:

TABLE

ITEM NO. 2 ITEM NO. 3

BIDDER LB. LB. U.S. DENTAL SCRAP SERV.

$0.30 $0.30 D. AND H. RECLAIMING CO. 2.025 0.825 EMPIRE SMELTING AND REF. CO. 0.51 1.02 ACE EQUIP. CO.

---- 1.51 SPIRAL METAL CO., INC. ----

1.6123 SABIN METAL CORP. 4.28 1.72 HUDSON SMELT. AND REF. CO. 4.092 2.182 PEASE AND CURRAN, INC. 2.68

2.21 HANDY AND HARMAN 1.23 4.16

THE STATEMENTS OF MR. SABIN, OF SABIN METAL CORP., AND OF MR. KAPLAN, OF SPIRAL METAL CO., THAT THE BINS WERE NOT MARKED OR LABELED AS TO ITEM NUMBER AT THE TIME OF THEIR INSPECTION OF THE MATERIAL PRIOR TO BIDDING ARE NOT SUPPORTED BY THE ABSTRACT OF BIDS, SINCE UPON A COMPARISON OF THE BIDS IT IS APPARENT THAT MR. SABIN WAS ABLE TO IDENTIFY ITEMS NOS. 2 AND 3, AND ALTHOUGH SPIRAL METAL CO. DID NOT BID ON ITEM NO. 2 THEIR BID ON ITEM NO. 3 WAS NOT OUT OF LINE WITH OTHER BIDS.

WHEN THERE IS A COMPLETE DISAGREEMENT, AS HERE, BETWEEN THE FACTS AS ADMINISTRATIVELY REPORTED AND THOSE STATED BY A CLAIMANT, IT IS THE ESTABLISHED RULE OF OUR OFFICE TO ACCEPT THE FACTS ADMINISTRATIVELY REPORTED AS CONTROLLING THE DISPOSITION OF THE CLAIM, IN THE ABSENCE OF EVIDENCE LEGALLY SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTNESS. SEE 16 COMP. GEN. 325; 18 ID. 799, 800; 31 ID. 288; 34 ID. 565, 568. CONSEQUENTLY, WE HAVE NO ALTERNATIVE BUT TO ACCEPT THE CONTRACTING OFFICER'S FINDINGS OF FACT THAT THE BINS WERE APPROPRIATELY MARKED AS TO ITEM NUMBERS AT THE TIME HANDY AND HARMAN'S REPRESENTATIVES INSPECTED THE MATERIAL PRIOR TO SUBMISSION OF THEIR BID.

THE RESPONSIBILITY FOR PREPARATION OF A BID IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. ANY ERROR THAT HANDY AND HARMAN MAY HAVE MADE IN THEIR BID AS TO ITEMS NOS. 2 AND 3 MAY BE ATTRIBUTED SOLELY TO THEIR NEGLIGENCE AND OVERSIGHT IN NOT OBSERVING THE MARKINGS ON THE BINS IDENTIFYING THE MATERIAL THEREIN BY ITEM NUMBER, AND NOT TO THE PHYSICAL ARRANGEMENT OF THE BINS. SUCH AN ERROR WAS UNILATERAL--- NOT MUTUAL--- AND WOULD NOT ENTITLE THE PURCHASER TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259; AND SALIGMAN, ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507.

THE MATERIALS ADVERTISED FOR SALE WERE PROPERLY DESCRIBED IN THE INVITATION. HANDY AND HARMAN'S BID PRICE OF $4.16 PER POUND, WHEN COMPARED WITH THE NEXT HIGH BID OF $2.21 PER POUND AND THE OTHER BIDS ON ITEM NO. 3, COULD NOT BE CONSIDERED SO HIGH OR OUT OF LINE AS TO BE AN UNCONSCIONABLE PRICE FOR THE MATERIAL, CONSIDERING THE FACT THAT THE MATERIAL WAS SURPLUS SCRAP. BIDDERS GENERALLY CAN BE EXPECTED TO PLACE DIFFERENT VALUES ON SUCH PROPERTY DEPENDING ON THEIR INDIVIDUAL NEEDS OR THEIR CHANCES FOR RESALE. SEE 28 COMP. GEN. 550, 551. THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THAT HANDY AND HARMAN'S QUOTATIONS AS TO ITEMS NOS. 2 AND 3 WERE NOT AS INTENDED, PARTICULARLY IN VIEW OF THE FACT THAT THE CONTRACTING OFFICER, PRIOR TO AWARD OF THE CONTRACT, ESTABLISHED THAT TWO REPRESENTATIVES OF THE BIDDER HAD SPENT CONSIDERABLE TIME INSPECTING THE MATERIALS OFFERED FOR SALE AND HAD TAKEN SAMPLES FROM EACH OF THE THREE LOTS FOR ANALYSIS OF SILVER CONTENT. IN VIEW OF THE FOREGOING AND SINCE THE MISTAKE WAS NOT ALLEGED UNTIL AFTER AWARD OF THE CONTRACT, IT MUST BE CONCLUDED THAT THE BID OF HANDY AND HARMAN WAS ACCEPTED IN GOOD FAITH, WITHOUT KNOWLEDGE OF ERROR THEREIN. THE ACCEPTANCE OF THE BID AS SUBMITTED CONSUMMATED A VALID AND BINDING CONTRACT AND FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, ON THE RECORD BEFORE US, WE FIND NO LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED.

CONSEQUENTLY, AND SINCE HANDY AND HARMAN HAVE NOT REMOVED THE PROPERTY FROM THE GOVERNMENT SITE AND HAVE ELECTED TO DEFAULT ON THEIR CONTRACT, THE ACTION OF THE DISPOSAL AGENCY, IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, IN EXERCISING THE GOVERNMENT'S RIGHT TO RETAIN LIQUIDATED DAMAGES--- 20 PERCENT OF THE PURCHASE PRICE--- WAS PROPER.

INASMUCH AS HANDY AND HARMAN HAVE BEEN IN CONFERENCE AND HAVE CORRESPONDED WITH OUR OFFICE REGARDING THEIR CLAIM, A COPY OF THIS DECISION IS BEING FORWARDED TO THEM.