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B-162631, OCT. 30, 1967

B-162631 Oct 30, 1967
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ALLEGES THAT BECAUSE BID WAS $350 LESS THAN PRICE QUOTED BY THE MANUFACTURER AND BECAUSE OF FAILURE TO INCLUDE COMPONENT REQUIRED HAS NOT PRESENTED CASE WHICH WOULD HAVE PLACED CONTRACTING OFFICER ON NOTICE OF ERROR SINCE THE OTHER THREE BIDS RANGED FROM $1. 050 AND GOVERNMENT ESTIMATE WAS $1. DRIVER: REFERENCE IS MADE TO A LETTER DATED OCTOBER 4. ALLEGES IT MADE IN ITS BID UPON WHICH PURCHASE ORDER NO. 1200 IS BASED. WE NOTE THAT THE ANDERSON LOW BID WAS TIED WITH THE BID OF A LARGE BUSINESS CONCERN. THE TIE WAS RESOLVED IN FAVOR OF ANDERSON. THE BID OF ANDERSON WAS ACCEPTED. THAT IT (ANDERSON) WAS NOT A DISTRIBUTOR FOR THE MODEL 3-PV POST OPERATIVE VENTILATOR AND THAT THE VENTILATOR IS SOLD ONLY ON A DIRECT BASIS TO THE HOSPITALS BY THE MANUFACTURER.

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B-162631, OCT. 30, 1967

BIDS - MISTAKES - CONTRACTING OFFICER ERROR - DETECTION DECISION TO VA CONCERNING ERROR MADE BY ANDERSON SURGICAL SUPPLY CO. IN BID FOR VENTILATORS WITH BREATHING ATTACHMENT FOR VA HOSPITAL IN GAINESVILLE, FLORIDA. LOW BIDDER WHO, AFTER ACCEPTANCE, ALLEGES THAT BECAUSE BID WAS $350 LESS THAN PRICE QUOTED BY THE MANUFACTURER AND BECAUSE OF FAILURE TO INCLUDE COMPONENT REQUIRED HAS NOT PRESENTED CASE WHICH WOULD HAVE PLACED CONTRACTING OFFICER ON NOTICE OF ERROR SINCE THE OTHER THREE BIDS RANGED FROM $1,700, $2,025, AND $2,050 AND GOVERNMENT ESTIMATE WAS $1,800 THEREFORE, ACCEPTANCE CONSTITUTED VALID CONTRACT AND CONTRACTOR MUST PERFORM OR IF EQUIPMENT PROCURED FROM ANOTHER SOURCE THE CONTRACTOR WOULD BE LIABLE FOR EXCESS COSTS.

TO MR. DRIVER:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 4, 1967, WITH ENCLOSURES, FILE REFERENCE 134G, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE ANDERSON SURGICAL SUPPLY COMPANY, TAMPA, FLORIDA, ALLEGES IT MADE IN ITS BID UPON WHICH PURCHASE ORDER NO. 1200 IS BASED.

THE VETERANS ADMINISTRATION HOSPITAL, GAINESVILLE, FLORIDA, BY SOLICITATION NO. 67-26, REQUESTED BIDS UNDER ITEM 19 COVERING FOUR VENTILATORS, MODEL 3-PV, POST OPERATIVE, WITH ACCESSORIES AND DEEP BREATHING ATTACHMENT, MODEL 3-V-DA, AS MANUFACTURED BY J.H. EMERSON CO., OR EQUAL, AS LISTED ON EMERSON FORM NO. 3-PV. IN RESPONSE THERETO, THE ANDERSON SURGICAL SUPPLY COMPANY SUBMITTED A BID OFFERING TO FURNISH THE VENTILATORS COMPLETE WITH SPECIFIED ACCESSORIES AND DEEP-BREATHING ATTACHMENTS AT THE LOW UNIT PRICE OF $1,700. WE NOTE THAT THE ANDERSON LOW BID WAS TIED WITH THE BID OF A LARGE BUSINESS CONCERN. UNDER FPR SEC. 1-2.407-6/A), THE TIE WAS RESOLVED IN FAVOR OF ANDERSON, A SMALL BUSINESS CONCERN. ACCORDINGLY, ON JUNE 15, 1967, THE BID OF ANDERSON WAS ACCEPTED.

IN A LETTER DATED AUGUST 3, 1967, IN WHICH IT CONFIRMED ITS TELEPHONE CONVERSATION OF THAT DAY AND REQUESTED THAT THE PURCHASE ORDER BE CANCELED, ANDERSON STATED THAT IT HAD BEEN ADVISED BY THE MANUFACTURER OF THE VENTILATORS, J.H. EMERSON COMPANY, THAT IT (ANDERSON) WAS NOT A DISTRIBUTOR FOR THE MODEL 3-PV POST OPERATIVE VENTILATOR AND THAT THE VENTILATOR IS SOLD ONLY ON A DIRECT BASIS TO THE HOSPITALS BY THE MANUFACTURER. IT IS REPORTED THAT AT THE TIME OF THE TELEPHONE CONVERSATION ON AUGUST 3, 1967, ANDERSON WAS ADVISED THAT ITS COMMITMENT TO FURNISH THE VENTILATORS TO THE HOSPITAL UNDER THE PURCHASE ORDER WAS BINDING AND THAT IF ANDERSON WAS CLAIMING AN ERROR IN ITS BID, IT SHOULD SUBMIT EVIDENCE IN SUPPORT THEREOF.

BY LETTER DATED AUGUST 24, 1967, ANDERSON CONTENDED THAT THE DIFFERENCE OF $350 BETWEEN ITS BID PRICE AND THE PRICE QUOTED BY THE MANUFACTURER, J.H. EMERSON COMPANY, INDICATES THAT AN ERROR HAD BEEN MADE IN ITS BID. IN LETTERS DATED SEPTEMBER 6 AND 11, 1967, AND ERSONALLEGED THAT IT HAD FAILED TO INCLUDE THE COST OF THE ACCESSORIES AND THE DEEP-BREATHING ATTACHMENT IN ITS BID PRICE. IN SUPPORT OF ITS ALLEGATION OF ERROR, ANDERSON SUBMITTED THE PRICE LIST OF THE MANUFACTURER OF THE EQUIPMENT, J.H. EMERSON COMPANY, WHICH INDICATES THAT THE PRICE OF A MODEL 3-PV EMERSON VOLUME-CONTROLLED VENTILATOR, BASIC UNIT, IS $1,700 AND THAT THE PRICE OF A MODEL 3-V-DA DEEP-BREATHING ATTACHMENT IS $325.

THE PRIMARY QUESTION INVOLVED IS NOT WHETHER AN ERROR WAS MADE IN THE BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE. THE ABSTRACT OF BIDS SHOWS THAT THE THREE OTHER BIDS ON THE ITEM WERE IN THE AMOUNTS OF $1,700, $2,025 AND $2,050, THE LATTER PRICE HAVING BEEN QUOTED BY THE MANUFACTURER, J.H. EMERSON COMPANY. THE CONTRACTING OFFICER HAS REPORTED THAT HE HAD NO REASON TO SUSPECT AN ERROR IN THE COMPANY'S BID BECAUSE THE PRICE QUOTED BY ANDERSON WAS THE SAME AS THE PRICE QUOTED BY ANOTHER BIDDER, ALSO A DISTRIBUTOR, AND SLIGHTLY LOWER THAN THE GOVERNMENT'S ESTIMATE OF $1,800. THE CONTRACTING OFFICER ALSO STATED THAT IT IS NOT UNUSUAL FOR A DISTRIBUTOR TO UNDERBID THE MANUFACTURER OF THE ITEM BEING PROCURED. AT THE TIME OF ACCEPTANCE, THE CONTRACTING OFFICER HAD RECEIVED NO NOTICE OR CLAIM OF ERROR, AND WE AGREE WITH THE ADMINISTRATIVE VIEW THAT THE CIRCUMSTANCES PRESENT IN THIS CASE ARE NOT SUCH AS TO HAVE PLACED THE CONTRACTING OFFICER ON CONSTRUCTIVE NOTICE OF AN ERROR IN THE BID OF ANDERSON. SO FAR AS THE PRESENT RECORD SHOWS, THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH--- NO ERROR HAVING BEEN ALLEGED BY THE COMPANY UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, UNDER THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE EDWIN DOUGHERTY AND M. H. OGDEN V. UNITED STATES, 102 CT. CL. 249, 259; AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507; 39 COMP. GEN. 36; ID. 405.

MOREOVER, THE INVITATION ISSUED IN THE PRESENT CASE WAS CLEAR AND UNAMBIGUOUS AND THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE THERETO IS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT. CL. 120, 163. ANY ERROR IN THE BID WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. THEREFORE, SUCH ERROR AS WAS MADE IN THE BID WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE THE COMPANY TO RELIEF. SEE 40 COMP. GEN. 326, 332.

ACCORDINGLY, PURCHASE ORDER NO. 1200 MAY NOT BE CANCELED WITHOUT LIABILITY TO THE ANDERSON SURGICAL SUPPLY COMPANY. THEREFORE, IF THE CONTRACTOR FAILS TO DELIVER THE EQUIPMENT COVERED BY THE PURCHASE ORDER AT THE PRICE SPECIFIED THEREIN AND THE EQUIPMENT IS PROCURED FROM ANOTHER SOURCE, THE EXCESS COST, IF ANY, SHOULD BE CHARGED AGAINST THE CONTRACTOR.

THE PAPERS SUBMITTED WITH THE DIRECTOR'S LETTER OF OCTOBER 4, 1967, ARE RETURNED, AS REQUESTED.

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