B-152753, JUN. 3, 1964

B-152753, JUN. 3, 1964

TO THE SECRETARY OF HEALTH, EDUCATION AND WELFARE:

WE HAVE A REPORT FROM CHIEF, PROCUREMENT AND SUPPLY MANAGEMENT BRANCH, DATED MAY 12, 1964, AND SUBMITTED IN RESPONSE TO A REQUEST BY DAVID REICH, ATTORNEY, FOR RECONSIDERATION OF OUR DECISION B-152753, DATED NOVEMBER 6, 1963, WHICH CONCLUDED ON FACTS THEN OF RECORD THAT THE ALLEGEDLY ERRONEOUS DISCOUNT OFFERED IN THE BID OF BERRY'S WHOLESALE FRUIT AND PRODUCE DID NOT RESULT IN AN ERROR IN BID SO APPARENT AS TO CONSTITUTE CONSTRUCTIVE NOTICE BY THE CONTRACTING OFFICER FOR NATIONAL INSTITUTE OF HEALTH OF THE PROBABILITY OF ERROR.

THE FACTS AND APPLICABLE GENERAL PROPOSITIONS OF LAW ARE SET FORTH IN THE CITED DECISION. SUFFICE IT TO SAY THAT OUR CONCLUSION WAS BASED ON THE UNDERSTANDING THAT WHILE BERRY'S NET PRICE WAS CONSIDERABLY LOWER THAN THOSE OF OTHER BIDDERS, AND WHILE ITS DISCOUNT OF 30 PERCENT WAS INORDINATELY HIGH, ITS NET PRICE WAS NOT UNREASONABLY OUT OF LINE WITH OTHER OFFERED PRICES AND ITS DISCOUNT WAS NOT EVEN AS GREAT AS TWO OTHERS WHICH HAD BEEN RECEIVED AND ACCEPTED IN PAST BIDS ON "OTHER SUBSISTENCE ITEMS" UNDER NATIONAL INSTITUTE OF HEALTH INVITATIONS.

IT IS NOW REPORTED TO US THAT WHILE DISCOUNTS OF 32 PERCENT AND 34 PERCENT HAVE BEEN INCLUDED IN OFFERS TO SUPPLY BREAD AND BAKERY PRODUCTS, THE FRESH PRODUCE TRADE GENERALLY OFFERS NO DISCOUNTS WHATEVER, AND IN THE FEW PROCUREMENTS IN WHICH DISCOUNTS HAVE BEEN OFFERED THEY HAVE NEVER EXCEEDED ONE PERCENT. IN VIEW OF THIS LATER INFORMATION RELATIVE TO THE RATES AT WHICH DISCOUNTS HAVE BEEN OFFERED FOR DIFFERENT TYPES OF SUBSISTENCE ITEMS, AND THE ENORMOUS DISPARITY BETWEEN THE SUBJECT DISCOUNT AND THOSE OFFERED IN THE PAST FOR FRESH FRUIT AND VEGETABLES, WE THINK THE CONTRACTING OFFICER MUST BE CHARGED WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR. ACCEPTANCE OF A BID CONTAINING AN ERROR WHICH SHOULD HAVE BEEN SUSPECTED BY THE CONTRACTING OFFICER DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. CF. 39 COMP. GEN. 706 AND 786. WHILE IT FOLLOWS THAT COMPENSATION FOR BERRY'S FULL PERFORMANCE UNDER THE UNENFORCEABLE AGREEMENT SHOULD BE MADE ON THE BASIS OF QUANTUM VALEBANT, THE REASONABLE VALUE TO THE GOVERNMENT OF SUCH PERFORMANCE CANNOT BE SAID TO EXCEED THE PRICE AT WHICH THE GOVERNMENT COULD HAVE EXACTED PERFORMANCE UNDER TERMS IDENTICAL TO THOSE TO WHICH BERRY COMMITTED ITSELF. ACCORDINGLY, TOTAL COMPENSATION TO BERRY'S SHALL NOT EXCEED THE CORRECT BID OF THE LOWEST BIDDER WHO WAS RESPONSIVE TO THE INVITATION FOR BIDS USED IN THIS PROCUREMENT. 37 COMP. GEN. 685.