B-156617, JUL. 28, 1965

B-156617, JUL. 28, 1965

TO CLARK SCREW MACHINE PRODUCTS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1965, WITH ENCLOSURES, CONCERNING THE VALIDITY OF AN AWARD TO YOUR FIRM FOR ITEM 84 OF SALES INVITATION NO. 27-S-64-50, WHICH IS THE BASIS FOR SALES CONTRACT NO. DSA-27-S-3703.

THE SUBJECT INVITATION WAS ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO, AND IT ANNOUNCED THE AUCTION SALE OF CERTAIN SURPLUS EQUIPMENT LOCATED AT THE LORDSTOWN MILITARY RESERVATION, WARREN, OHIO, TO BE HELD ON MARCH 26, 1964. THE AUCTION WAS LISTED AS A "WALK-AROUND STYLE" AND THE ITEMS FOR SALE WERE LOCATED WHERE THE BIDDERS COULD STAND BY THEM. TO PARTICIPATE IN THE BIDDING, EACH PROSPECTIVE BIDDER HAD TO REGISTER AND WAS ASSIGNED A NUMBER, TOGETHER WITH A PADDLE BEARING THAT NUMBER. THE PADDLE WAS TO IDENTIFY THE BIDDER TO THE AUCTIONEER. THE TERMS OF SALE STATED THAT: "THE AUCTIONEER'S ACKNOWLEDGEMENT OF THE HIGHEST BIDDER WILL CONSTITUTE AN AWARD.' WRITTEN CONFIRMATION OF THE AWARD WAS TO FOLLOW.

THE SALE WAS CONDUCTED AS SCHEDULED WITH THE AUCTIONEER ANNOUNCING EACH ITEM AS SET FORTH IN THE INVITATION AND RECEIVING BIDS ON EACH ITEM IN THE ORDER IN WHICH LISTED IN THE INVITATION. ITEM NO. 84 ON PAGE 16 OF THE INVITATION IS DESCRIBED AS "GRINDING MACHINE - THREAD, EXTERNAL, * * * TOTAL COST: $10,000.00.' IT IS REPORTED THAT THE HIGH BID OF $3,000 WAS SUBMITTED BY YOUR FIRM AND THAT YOUR REPRESENTATIVE, MR. ALBERT REDDICK, WAS ASSIGNED REGISTRATION (PADDLE) NUMBER 2.

IT APPEARS THAT AFTER THE SALE, YOUR REPRESENTATIVE, MR. REDDICK, APPROACHED THE CASHIER AND INDICATED THAT HE WOULD LIKE TO MAKE A DEPOSIT ON ITEM 85; THAT THE CASHIER INFORMED MR. REDDICK THAT THE OFFICIAL SALES RECORDS INDICATED THAT ITEM 85 HAD BEEN AWARDED TO BIDDER NO. 75, CIRCLE PRECISION GRINDING COMPANY, AT A PRICE OF $4,000, AND THAT SUCH BIDDER HAD MADE A DEPOSIT ON THAT ITEM; THAT THE CASHIER INFORMED MR. REDDICK THAT THE RECORDS ALSO INDICATED THAT HE, AS REPRESENTATIVE OF YOUR FIRM, HAD BEEN AWARDED ITEM 84; AND THAT MR. REDDICK DENIED THAT HE HAD BID ON ITEM 84. IT ALSO IS REPORTED THAT IMMEDIATELY AFTER THE SALE A TAPE RECORDING OF THE SALE WAS PLAYED IN THE PRESENCE OF MR. REDDICK AND THAT SUCH TAPE RECORDING INDICATED THAT ITEM 84 WAS AWARDED TO BIDDER NO. 2, REGISTERED AS CLARK SCREW MACHINE PRODUCTS, INC. CONFIRMATION OF THE AWARD OF ITEM 84 TO YOUR FIRM WAS MADE BY COVERING LETTER DATED MARCH 27, 1964, AND IN SUCH LETTER YOUR ATTENTION WAS INVITED TO THE FACT THAT YOUR FIRM HAD NOT MADE A PARTIAL PAYMENT ON THAT ITEM AS REQUIRED BY ARTICLE "M" OF THE SPECIAL CONDITIONS OF THE INVITATION.

IN A LETTER DATED MARCH 30, 1964, MR. REDDICK, YOUR REPRESENTATIVE AT THE AUCTION SALE, ALLEGED THAT WHEN BIDDING COMMENCED ON ITEM 85, AN EXTERNAL CENTERLESS GRINDER, HE HAD HIS FOOT ON THE MACHINE; THAT THE AUCTIONEER'S ASSISTANT WAS HOLDING A FLASHLIGHT ON IT; THAT HE WAS BIDDING AGAINST ANOTHER MAN STANDING NEXT TO HIM; AND THAT NEITHER HE NOR THE OTHER BIDDER WAS INTERESTED IN ITEM 84, A THREAD GRINDING MACHINE. MR. REDDICK ALSO STATED THAT HE COULD NOT BE MISTAKEN THAT ITEM 85 WAS BEING BID ON, THAT HE WAS THE HIGHEST BIDDER ON ITEM 85 AT $3,000, AND THAT THE AUCTIONEER HAD AWARDED THAT ITEM TO HIM.

BY LETTER DATED APRIL 1, 1964, THE CONTRACTING OFFICER ADVISED YOUR FIRM THAT THE RECORDS OF HIS OFFICE INDICATED THAT YOUR FIRM, THROUGH MR. REDDICK, DID BID ON AND WAS AWARDED ITEM 84 AND THAT IF YOU WISHED TO ALLEGE THAT A MISTAKE WAS MADE IN YOUR BID, YOUR FIRM SHOULD FORWARD SUCH REQUEST WITH ANY EVIDENCE TO SUPPORT SUCH ALLEGATION. IN A LETTER DATED APRIL 29, 1964, THE CONTRACTING OFFICER NOTIFIED YOUR FIRM THAT YOU WERE IN DEFAULT ON CONTRACT NO. DSA-27-S-3703 BECAUSE YOU HAD FAILED TO PAY FOR AND REMOVE ITEM 84. ON MAY 14, 1964, THE CONTRACTING OFFICER NOTIFIED YOUR FIRM THAT AS OF THAT DATE YOU LOST ALL RIGHT, TITLE AND INTEREST IN ITEM 84 AND THAT A SUM EQUAL TO 20 PERCENT OF THE PURCHASE PRICE OF THE ITEM, $600, AS TO WHICH THE DEFAULT HAD OCCURRED WAS DUE AND PAYABLE TO THE GOVERNMENT AS LIQUIDATED DAMAGES.

BY LETTER DATED MAY 18, 1964, YOU ADVISED THE CONTRACTING OFFICER THAT YOU WISHED TO APPEAL THAT PART OF HIS DECISION PERTAINING TO THE ASSESSMENT OF LIQUIDATED DAMAGES IN THE AMOUNT OF $600. THE RECORD SHOWS THAT YOUR APPEAL WAS FORWARDED BY THE CONTRACTING OFFICE TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS FOR CONSIDERATION AND THAT BY DECISION DATED NOVEMBER 30, 1964, ASBCA NO. 10040, THE BOARD FOUND THAT A BINDING CONTRACT CAME INTO EXISTENCE WITH THE AWARD OF ITEM 84 TO YOUR FIRM AND THAT UPON YOUR FIRM'S DEFAULT LIQUIDATED DAMAGES WERE PROPERLY ASSESSED BY THE CONTRACTING OFFICER.

IN A LETTER DATED APRIL 20, 1965, TO OUR OFFICE, YOU REQUESTED THAT THE DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS BE REVIEWED. YOU QUESTION THE VALIDITY OF THE SALE OF ITEM 84 ON THE GROUND THAT MR. REDDICK DID NOT IN FACT BID ON THIS ITEM. YOU CONTEND THAT MR. REDDICK WAS AWARDED THE CENTERLESS GRINDER COVERED BY ITEM 85 BY THE AUCTIONEER AND THAT, THEREFORE, YOU ARE ENTITLED TO DELIVERY OF THAT GRINDER.

GENERALLY, A SALE BY AUCTION IS COMPLETE WHEN THE AUCTIONEER ANNOUNCES ITS COMPLETION, AND TITLE TO THE SUBJECT MATTER OF THE SALE PASSES TO THE SUCCESSFUL BIDDER AT THAT TIME UNLESS THE PARTIES INTEND TO THE CONTRARY. 7 C.J.S., AUCTIONS AND AUCTIONEERS, SECTION 8; 1 WILLISTON ON CONTRACTS (3RD ED.), SECTION 29. THE INVITATION HERE PROVIDED UNDER SUBPARAGRAPH (3) OF ARTICLE ,N" OF THE SPECIAL CONDITIONS THAT ONCE AN ITEM IS "KNOCKED DOWN," THE PURCHASER MAY NOT WITHDRAW THE BID. BASED UPON SUCH PROVISION A VALID AND BINDING CONTRACT WAS FORMED AS TO ITEM 84 WHEN THIS ITEM WAS KNOCKED DOWN TO YOUR FIRM BY THE AUCTIONEER. ALTHOUGH MR. REDDICK DISPUTES THE FACT THAT ITEM 84 WAS AWARDED TO HIM BY THE AUCTIONEER AND CONTENDS THAT ITEM 85 WAS THE ITEM THAT WAS ACTUALLY AWARDED TO HIM, IT APPEARS THAT HE IS MISTAKEN. A TAPE RECORDING OF THE SALE HAS BEEN FURNISHED TO OUR OFFICE BY THE DISPOSAL AGENCY. ALTHOUGH PARTS OF THE TAPE RECORDING REVEAL ON PLAYBACK A RAPID, HUMMING, AUCTIONEER'S CHANT, FROM WHICH IT IS DIFFICULT TO DIFFERENTIATE WHAT ITEM NUMBER WAS AWARDED TO WHAT BIDDER NUMBER, THE PART PERTAINING TO THE ITEMS IN QUESTION, NOS. 84 AND 85, REVEALS THAT ITEM 85 WAS AWARDED TO BIDDER NO. 75 AND THAT THE PRECEDING ITEM, NO. 84, WAS AWARDED TO BIDDER NO. 2, WHICH THE RECORD INDICATES WAS YOUR FIRM. ALSO, IT IS REPORTED THAT THE SUCCESSFUL BIDDER AND THE AMOUNT OF THE HIGH BID ON EACH ITEM WERE RECORDED IMMEDIATELY AFTER AWARD ON SEPARATE FORMS BY TWO EMPLOYEES ACTING INDEPENDENTLY; THAT ONE EMPLOYEE ENTERED THE RECORD OF EACH AWARD ON AN ITEM BID CARD; AND THAT THE OTHER EMPLOYEE KEPT A CUMULATIVE RECORD OF THE SALE IN THE FORM OF AN ABSTRACT OF BIDS. WE ARE OF THE OPINION THAT THE FOREGOING ESTABLISHES THAT ITEM NO. 84 WAS AWARDED TO YOUR FIRM AND THAT ITEM NO. 85 WAS AWARDED TO BIDDER NO. 75. THEREFORE, THE AUCTION SALE WAS COMPLETE AND BINDING UPON YOUR FIRM AT THE TIME THE ERROR WAS FIRST ALLEGED BY MR. REDDICK. THERE IS NOTHING IN THE RECORD WHICH COULD HAVE INDICATED THAT AN ERROR HAD BEEN MADE BY MR. REDDICK ON ITEM NO. 84 OR ANY INDICATION THAT THE CONTRACTING OFFICER EITHER KNEW OR SHOULD HAVE HAD CONSTRUCTIVE NOTICE OF THE MISTAKE.

UNDER THESE CIRCUMSTANCES, THIS OFFICE WOULD NOT BE JUSTIFIED IN RELIEVING YOUR FIRM FROM LIABILITY FOR LIQUIDATED DAMAGES IN THE AMOUNT OF $600 ASSESSED AGAINST YOU BY THE DISPOSAL AGENCY.