B-171573, MAY 11, 1971

B-171573, MAY 11, 1971

BID PROTEST - SURPLUS SALES CONTRACT DECISION DENYING PROTEST AGAINST DETERMINATION MADE PURSUANT TO DOD MANUAL 4160.21-M, PART 3, CHAPTER X WHICH ALLOWED AN ERRONEOUS BID SUBMITTED BY STAINLESS ALLOY & METAL CORP., TO BE WITHDRAWN, AND AN ERRONEOUS BID SUBMITTED BY ASSOCIATED ALLOYS, INC., TO BE CORRECTED, ON A SEALED BID SALE OF SURPLUS MINESWEEPING CABLE AND OTHER ITEMS BY THE DEFENSE SURPLUS SALES OFFICE. BECAUSE BIDS ON SCRAP METAL GENERALLY DO NOT VARY GREATLY, THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE OF A MISTAKE IN THE STAINLESS BID WHICH WAS 2.3 TIMES HIGHER THAN THE NEXT HIGH BID SUBMITTED BY PROTESTANT; WITHDRAWAL OF THIS BID WAS THEREFORE PROPER. FURTHER, ALTHOUGH THE WORKSHEETS SUBMITTED BY ASSOCIATED DO NOT ESTABLISH THE INTENDED PRICE, THEY CLEARLY AND CONVINCINGLY ESTABLISH THAT EITHER $48,122.52 OR $47,106.68 WAS INTENDED. BECAUSE ASSOCIATED'S BID CORRECTED TO EITHER PRICE WOULD STILL BE THE HIGHEST AND NOT DISPLACE ANY OTHER BIDDER, THE CORRECTION WAS PROPERLY ALLOWED. ALSO, PARAGRAPHS 20(A)(1) AND 20(A)(3) OF THE GENERAL SALES TERMS AND CONDITIONS WERE NOT VIOLATED BY THE PARTICIPATION OF ONE INDIVIDUAL IN THE BIDS OF BOTH STAINLESS AND ASSOCIATED BECAUSE THESE PROVISIONS DO NOT RELATE TO BIDS SUBMITTED BY AFFILIATED COMPANIES. ACCORDINGLY, THE PROTEST IS DENIED.

TO HOOF, SHUCKLIN & HARRIS

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 30, 1970, ON BEHALF OF YOUR CLIENT, LEONARD A. STRANDLEY, PROTESTING THE PROPOSED SALE TO ASSOCIATED ALLOYS, INC., OF ITEM 80 PURSUANT TO SEALED BID SALE 44-1060 BY THE DEFENSE SURPLUS SALES OFFICE, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA.

BY WAY OF FACTUAL BACKGROUND, THIS PROTEST ENSUED FROM DETERMINATIONS MADE PURSUANT TO DOD MANUAL 4160.21-M, PART 3, CHAPTER X (SET OUT BELOW), THAT AN ERRONEOUS BID SUBMITTED BY STAINLESS ALLOY & METAL CORPORATION (STAINLESS) COULD BE WITHDRAWN, AND AN ERRONEOUS BID SUBMITTED BY ASSOCIATED ALLOYS, INC. (ASSOCIATED) COULD BE CORRECTED.

STAINLESS SUBMITTED A BID ON ITEM 80, SURPLUS MINESWEEPING CABLE CONTAINING COPPER AND ALUMINUM WIRE, IN THE AMOUNT OF $48,122.52 WHICH WAS APPROXIMATELY 2.3 TIMES HIGHER THAN THE NEXT HIGH BID OF $20,664.00 SUBMITTED BY YOUR CLIENT, MR. STRANDLEY.

THE "ALL OR NONE BID" OF ASSOCIATED FOR ITEMS 70, 71, 72, 74, 80 AND 81 WAS $78,788.88 COMPARED TO SECOND HIGH INDIVIDUAL BIDS FOR SUCH PROPERTY WHICH TOTALLED $45,266.03.

IMMEDIATELY UPON THE CONTRACTING OFFICER'S ANNOUNCEMENT THAT THE OPENING OF BIDS HAD BEEN COMPLETED, REPRESENTATIVES OF STAINLESS AND ASSOCIATED ALLEGED THAT ERRORS HAD BEEN MADE AND THAT THEY WERE COMPLEX AND WOULD BE EXPLAINED SUBSEQUENTLY IN WRITING.

BY LETTER DATED OCTOBER 29, 1970, TWO DAYS FOLLOWING THE BID OPENING, MR. WELTMAN STATED THAT THE STAINLESS BID HAD BEEN SUBMITTED IN ERROR IN THAT NO BID WAS INTENDED IN THAT NAME; THAT THE ERROR WAS DISCOVERED JUST MOMENTS PRIOR TO THE BID OPENING; AND CONSEQUENTLY A BID WAS THEN SUBMITTED IN THE NAME OF ASSOCIATED (IN WHICH NAME HE HAD INTENDED TO BID) BUT THAT THAT BID ALSO WAS ERRONEOUS AS TO THE AMOUNT.

MR. WELTMAN'S LETTER RELATED THAT THE SUM OF $48,122.52 BID BY STAINLESS ON ITEM 80 WAS THE TOTAL ALL OR NONE AMOUNT WHICH HE AND HIS COLLEAGUES INTENDED TO BID FOR ALL OF THE ITEMS, I.E., 70, 71, 72, 74, 80 AND 81. EXPLAINED THAT THE ORIGINAL INTENTION WAS TO BID THESE ITEMS ON STAINLESS, ASSOCIATED'S MONTREAL AFFILIATE, BUT AFTER PARTIALLY FILLING IN THE BID HE REMEMBERED THAT AN EXPORT PERMIT WAS REQUIRED TO SEND THIS MERCHANDISE OUT OF THE UNITED STATES AND THE PERMIT WAS IN ASSOCIATED'S NAME. THIS IS ALLEGED TO BE WHY ONLY ITEM 80 WAS LISTED ON THIS BID INSTEAD OF ITEMS 70, 71, 72, 74, 80 AND 81 ON AN ALL OR NONE BASIS. HE THEREUPON PUT THE STAINLESS BID ASIDE AND PREPARED THE ASSOCIATED BID.

DUE TO THE PRESSURES OF TIME, MR. WELTMAN ADVISES THAT HE AND HIS COLLEAGUE COMMITTED ERRORS IN TRANSPOSING FIGURES FROM THEIR WORKSHEETS AND PUT THE PRICE OF $78,788.88, INSTEAD OF $48,122.52, AS THE ALL OR NONE BID BY ASSOCIATED. THE FIGURE OF $78,788.88 INCLUDED $48,122.52 PLUS ADDITIONAL AMOUNTS SHOWN ON THE WORKSHEET FOR FREIGHT AND ANTICIPATED PROFIT.

IT WAS UPON THIS BASIS THAT HE REQUESTED PERMISSION, PURSUANT TO CHAPTER X, AS QUOTED BELOW, TO WITHDRAW THE STAINLESS BID AND MODIFY THE ASSOCIATED BID FROM $78,788.88 TO THE $48,122.52 APPEARING ON HIS WORKSHEETS AS THE INTENDED BID ON ASSOCIATED. THESE WORKSHEETS WERE SUBMITTED UPON THE REQUEST OF THE CONTRACTING OFFICER.

IN TWO LETTERS DATED DECEMBER 9, 1970, THE ASSISTANT COUNSEL, TO WHOM AUTHORITY WAS DELEGATED (BY CHAPTER X, SUBSECTION 3(B)) TO MAKE SUCH DETERMINATIONS, DECLARED THAT HAVING FOUND:

(1) CLEAR AND CONVINCING EVIDENCE OF MISTAKE IN THE STAINLESS BID ON ITEM 80, HE DETERMINED THAT IT MAY BE WITHDRAWN.

(2) CLEAR AND CONVINCING EVIDENCE, REGARDING THE ASSOCIATED BID, BOTH AS TO THE EXISTENCE OF THE ERROR AND THE BID INTENDED, HE DETERMINED THAT THE ALL OR NONE BID OF ASSOCIATED MIGHT BE CORRECTED TO $48,122.52.

THE DETERMINATION TO CORRECT THE LATTER BID WAS MADE WITH REGARD TO CHAPTER X, SUBSECTION 3(A)(2), WHICH PERMITS CORRECTION AS OPPOSED TO WITHDRAWAL IF THE BID, BOTH AS CORRECTED AND UNCORRECTED, IS THE HIGHEST RECEIVED. SINCE THE SECOND HIGH INDIVIDUAL BIDS TOTALED $45,266.03, CORRECTION OF THE ASSOCIATED BID DID NOT DISPLACE ANY OTHERWISE HIGHER BIDDERS.

YOU CONTEND THAT THE DECISION TO PERMIT CORRECTION OF THE BID OF ASSOCIATED AND WITHDRAWAL OF THE BID OF STAINLESS VIOLATES SEVERAL OF THE GENERAL SALES TERMS AND CONDITIONS, BEGINNING WITH PARAGRAPH 3, BY WHICH THE GOVERNMENT RESERVES THE RIGHT TO REJECT THOSE BIDS UNDER WHICH A BIDDER MIGHT TAKE ADVANTAGE OF THE GOVERNMENT OR OTHER BIDDERS.

YOU FURTHER ALLEGE THAT PARAGRAPH 16, PROVIDING THAT ORAL STATEMENTS OF GOVERNMENT REPRESENTATIVES WHICH CHANGE THE INVITATION CONFER NO RIGHTS UPON BIDDERS, WAS VIOLATED WHEN THE INDIVIDUAL REPRESENTING BOTH ASSOCIATED AND STAINLESS INTERRUPTED THE READING OF HIS BIDS TO ADVISE THE SALES CONTRACTING OFFICER'S REPRESENTATIVE OF A MISTAKE IN HIS BIDS AND WAS INSTRUCTED TO SEE THE SALES CONTRACTING OFFICER WHO REQUESTED THAT HE FURNISH A LETTER EXPLAINING THE PURPORTED MISTAKE.

ADDITIONALLY, YOU CLAIM THAT PARAGRAPHS 20(A)(1) AND 20(A)(3), STIPULATING THAT BID PRICES SHALL BE INDEPENDENTLY COMPUTED SO AS TO NEGATE ANY PURPOSE OF RESTRICTING COMPETITION, AND THAT NO ATTEMPT SHALL BE MADE BY A BIDDER TO INDUCE ANOTHER FIRM TO SUBMIT OR WITHHOLD A PROPOSAL FOR THE PURPOSE OF RESTRICTING COMPETITION, WERE TRANSGRESSED SINCE MR. JULIUS WELTMAN WHO REPRESENTED BOTH ASSOCIATED AND STAINLESS, AND WHO WAS PRESIDENT OF ONE AND VICE-PRESIDENT OF THE OTHER, SIGNED BOTH BIDS AND DECLARED AN ERROR IN EACH BID AT THE BID OPENING.

FINALLY, YOU ALLEGE VIOLATION OF ARTICLES AB AND AC OF THE SPECIAL SEALED BID CONDITIONS PROHIBITING MODIFICATION OR WITHDRAWAL OF BIDS SUBSEQUENT TO THE TIME SET FOR BID OPENING. CONSEQUENTLY, YOU SUBMIT, THE PROPOSED SALE TO ASSOCIATED SHOULD BE CANCELLED WITH THE AWARD OF ITEM 80 TO YOUR CLIENT AS THE NEXT RESPONSIBLE BIDDER.

WITH RESPECT TO YOUR CONTENTION THAT PERMISSION TO WITHDRAW THE STAINLESS BID AND TO CORRECT THE ASSOCIATED BID VIOLATED PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS, IT IS OUR OPINION THAT THIS PROVISION OF THE SOLICITATION APPLIES ONLY TO BIDS WHICH WOULD OTHERWISE BE PROPERLY FOR ACCEPTANCE, RATHER THAN TO BIDS ON WHICH ERROR IS ALLEGED AND CAN BE SHOWN. ADDITIONALLY, IT SHOULD BE NOTED THAT REJECTION OF BIDS UNDER PARAGRAPH 3 IS WITHIN THE SOUND DISCRETION OF THE CONTRACTING OFFICER, AND NO MANDATORY OBLIGATION IS IMPOSED THEREBY TO REJECT A BID EVEN IF IT SHOULD FALL WITHIN THE PURVIEW OF PARAGRAPH 3. WE THEREFORE SEE NO BASIS FOR CONCLUDING THAT THE PROVISIONS OF PARAGRAPH 3 WERE VIOLATED BY THE PERMISSION TO WITHDRAW AND TO CORRECT IN THE INSTANT CASE.

CONCERNING YOUR BELIEF THAT PARAGRAPH 16 WAS VIOLATED WHEN THE SALES CONTRACTING OFFICER ADVISED THE REPRESENTATIVE OF ASSOCIATED AND OF STAINLESS TO SUBMIT A LETTER EXPLAINING THE ERRORS IN THESE BIDS, WE ARE UNABLE TO FIND ANY PROVISION OF THE INVITATION RELATING TO PROCEDURES TO BE FOLLOWED IN PROCESSING ALLEGATIONS OF MISTAKES IN BIDS. IN VIEW THEREOF, AND SINCE THE REQUEST FOR SUBMISSION OF A LETTER EXPLAINING THE ERROR IS CONSISTENT WITH THE PROVISIONS OF THE REGULATIONS APPLICABLE TO MISTAKES IN BIDS, AS SET OUT BELOW, WE FIND NO MERIT IN THIS PORTION OF YOUR PROTEST.

WITH RESPECT TO YOUR CONTENTION THAT PARAGRAPHS 20(A)(1) AND (3) WERE VIOLATED BY MR. WELTMAN'S PARTICIPATION IN THE BIDS OF BOTH STAINLESS AND ASSOCIATED, WE DO NOT CONSTRUE THOSE PROVISIONS AS RELATING TO BIDS SUBMITTED BY AFFILIATED COMPANIES. FURTHER, WE ARE INCLINED TO ACCEPT THE EXPLANATION, AS SET OUT ABOVE, THAT THE BID OF STAINLESS WAS SUBMITTED IN ERROR. IN VIEW THEREOF, AND OF THE IMMEDIATE ALLEGATION OF ERROR UPON BID OPENING, WE MUST REJECT YOUR CONTENTION THAT ANY INTENT TO RESTRICT COMPETITION CAN BE READ INTO THE PREPARATION OF BOTH BIDS BY MR. WELTMAN, OR INTO HIS SUBSEQUENT REQUEST FOR WITHDRAWAL OF THE STAINLESS BID.

CONCERNING YOUR ALLEGATION THAT ARTICLES AB AND AC OF THE SPECIAL SEALED BID CONDITIONS HAVE BEEN VIOLATED, YOUR ATTENTION IS DIRECTED TO DOD MANUAL 4160.21-M, PART 3, CHAPTER X, SUBSECTION 3A, WHICH IS APPLICABLE TO MISTAKES IN BIDS, AND WOULD THEREFORE BE FOR CONSIDERATION INSTEAD OF ARTICLES AB AND AC, WHICH RELATE TO MODIFICATIONS AND WITHDRAWALS OF BIDS. SUBSECTION 3A READS, IN PERTINENT PART, AS FOLLOWS:

"3. OTHER MISTAKES.

"A. THE DEFENSE SUPPLY AGENCY (DSA) AND THE MILITARY DEPARTMENTS ARE AUTHORIZED TO MAKE THE FOLLOWING ADMINISTRATIVE DETERMINATIONS IN CONNECTION WITH MISTAKES IN BIDS, OTHER THAN APPARENT CLERICAL MISTAKES, ALLEGED AFTER OPENING OF BIDS AND PRIOR TO AWARD:

"(1) WHERE THE BIDDER REQUESTS PERMISSION TO WITHDRAW A BID AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES THE EXISTENCE OF A MISTAKE, A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID.

"(2) IF THE EVIDENCE IS CLEAR AND CONVINCING BOTH AS TO THE EXISTENCE OF THE MISTAKE AND AS TO THE BID ACTUALLY INTENDED, AND IF THE BID, BOTH AS CORRECTED AND AS UNCORRECTED, IS THE HIGHEST RECEIVED, A DETERMINATION MAY BE MADE TO CORRECT THE BID AND NOT PERMIT ITS WITHDRAWAL.

"(3) WHERE THE BIDDER REQUESTS PERMISSION TO CORRECT A MISTAKE IN HIS BID AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES BOTH THE EXISTENCE OF A MISTAKE AND THE BID ACTUALLY INTENDED, A DETERMINATION PERMITTING THE BIDDER TO CORRECT THE MISTAKE; PROVIDED THAT, IN THE EVENT CORRECTION WOULD RESULT IN DISPLACING ONE OR MORE HIGHER BIDS, THE DETERMINATION WILL NOT BE MADE UNLESS THE EXISTENCE OF THE MISTAKE AND BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. IF THE EVIDENCE IS CLEAR AND CONVINCING ONLY AS TO THE MISTAKE, BUT NOT AS TO THE INTENDED BID, A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID."

THE PROCURING ACTIVITY HAS VENTURED ITS OPINION THAT OBVIOUS ERRORS EXISTED IN BOTH THE STAINLESS AND ASSOCIATED BIDS SINCE ALL OF THE ITEMS CONSISTED OF SCRAP. IN B-170024, JUNE 23, 1970, OUR OFFICE ACKNOWLEDGED THAT BIDS ON SCRAP METAL GENERALLY DO NOT VARY GREATLY AND THUS A UNIT BID PRICE OF $0.40836, CONSIDERED BESIDE THE NEXT HIGH BID OF $0.1411, CONSTITUTED SUCH A SUBSTANTIAL DISPARITY AS TO PLACE A CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF A MISTAKE IN BID. IT WAS LIKEWISE NOTED IN B- 149660, SEPTEMBER 21, 1962, THAT A BID FOR SCRAP WHICH WAS EXCESSIVE WHEN COMPARED TO OTHER BIDS RECEIVED, WAS SUFFICIENT TO ESTABLISH A MISTAKE.

IT WAS FURTHER FOUND BY A DEFENSE LOGISTICS SERVICES CENTER SPECIALIST, THROUGH AN INDEPENDENT ANALYSIS THAT THE ESTIMATED VALUE OF THE ITEMS INCLUDED IN THE ALL OR NONE BID WAS $46,729.70.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER WAS CHARGEABLE WITH NOTICE OF A MISTAKE IN THE STAINLESS BID; THAT SUCH NOTICE PRECLUDED HIM FROM MAKING A BINDING AWARD TO STAINLESS; AND THAT HE WAS THEREFORE JUSTIFIED IN PERMITTING WITHDRAWAL OF THE STAINLESS BID.

THERE REMAINS ONLY THE QUESTION OF WHETHER THE BID SUBMITTED BY ASSOCIATED MAY BE CORRECTED FROM $78,788.88 TO $48,122.52, AS REQUESTED BY THE BIDDER. AS INDICATED BY SUBSECTION 3A(3), QUOTED ABOVE, A BID MAY BE CORRECTED IF THE BIDDER SUBMITS CLEAR AND CONVINCING EVIDENCE WHICH ESTABLISHES THAT A MISTAKE HAS BEEN MADE AND THE BID ACTUALLY INTENDED. THE WORKSHEETS SUBMITTED BY ASSOCIATED SHOW VARIOUS PRICE COMPUTATIONS ON AN INDIVIDUAL ITEM BASIS FOR ITEMS 70, 71, 72, 74, 80 AND 81. WHAT APPEAR TO BE THE FINAL COMPUTATIONS ON EACH ITEM WERE THEN TOTALED TO THE SUM OF $47,106.68.

THE WORKSHEETS ALSO CONTAIN VARIOUS COMPUTATIONS REFLECTING UNIT PRICES MULTIPLIED BY THE 82 UNITS IN ITEM 80, WHICH CULMINATE IN A UNIT PRICE OF $586.86 MULTIPLIED BY 82 FOR A TOTAL OF $48,122.52, TOGETHER WITH A NOTATION "TO INCLUDE ALL THE 70-71-72-74-80-81." THESE ARE THE UNIT AND TOTAL PRICES INCLUDED IN THE BID SUBMITTED BY STAINLESS.

FINALLY, THE WORKSHEETS SHOW A COMPUTATION WHICH BEGINS WITH THE FIGURE $48,122.52, ADDS VARIOUS AMOUNTS FOR WORK, FREIGHT AND ESTIMATED PROFIT, AND RESULTS IN A TOTAL AMOUNT OF $78,788.88, WHICH IS LABELED "OUR VALUE" AND IS THE AMOUNT OF THE BID SUBMITTED BY ASSOCIATED.

FROM OUR ANALYSIS OF THESE WORKSHEETS, WE ARE UNABLE TO SAY THAT THEY CLEARLY AND CONVINCINGLY ESTABLISH THAT ASSOCIATED INTENDED TO BID $48,122.52 AS CLAIMED. WE DO BELIEVE, HOWEVER, THAT THE WORKSHEETS ESTABLISH THAT $78,788.88 WAS NOT THE INTENDED BID PRICE, AND THAT THEY CLEARLY AND CONVINCINGLY ESTABLISH THAT ASSOCIATED INTENDED TO BID EITHER $48,122.52 OR $47,106.68. SINCE THE BID SUBMITTED BY STAINLESS WAS IN THE AMOUNT OF $48,122.52, AND SINCE ASSOCIATED'S BID CORRECTED TO EITHER PRICE WOULD STILL BE THE HIGHEST BID AND WOULD THEREFORE NOT DISPLACE ANY OTHER BIDDER, IT IS OUR OPINION THAT THE BID MAY BE CORRECTED TO $48,122.52 AND CONSIDERED FOR AWARD ON THAT BASIS.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.