B-125763, NOV. 7, 1955

B-125763, NOV. 7, 1955

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 11, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER ANY EXCESS COST IS CHARGEABLE TO SUN- RA FROZEN FOODS, INC. BY REASON OF ITS DEFAULT IN THE PERFORMANCE OF UNNUMBERED CONTRACT (PURCHASE ORDER NO. KC 8956-55) DATED FEBRUARY 9, 1955.

BY NOTICE OF INTENT TO PURCHASE NO. KC 388-55 DATED FEBRUARY 3, 1955, THE KANSAS CITY QUARTERMASTER MARKET CENTER, KANSAS CITY, MISSOURI, REQUESTED INFORMAL QUOTATIONS ON VARIOUS SUBSISTENCE ITEMS INCLUDING 5,000 POUNDS OF FROZEN SALMON STEAKS TO BE DELIVERED TO BEATRICE COLD STORAGE, DENVER, COLORADO, ON MARCH 2, 1955. PROSPECTIVE BIDDERS WERE ADVISED IN THE INVITATION THAT THE SALMON WAS TO BE OF THE VARIETY SPECIFIED IN FEDERAL SPECIFICATION PP-F-381C DATED FEBRUARY 1, 1952, AND THAT THE CLOSING TIME FOR RECEIPT OF QUOTATIONS ON THE SALMON WAS 11:00 A.M. ON FEBRUARY 9, 1955. THE RECORD SHOWS THAT IN RESPONSE, AT 10:00 A.M. OF THE MORNING OF THE CLOSING DATE, SUN-RA FROZEN FOODS, INC. OFFERED BY TELEPHONE TO FURNISH THE SALMON STEAKS AT A PRICE OF $0.46 PER POUND; THAT IMMEDIATELY AFTER THE CLOSING HOUR FOR RECEIPT OF BIDS, THE CORPORATION WAS NOTIFIED THAT ITS ORAL BID FOR FURNISHING THE SALMON STEAKS HAD BEEN ACCEPTED AND THAT A CONFIRMING PURCHASE ORDER WOULD BE MAILED TO THE CORPORATION; AND THAT AT THE TIME OF THE ORAL AWARD, A REPRESENTATIVE OF THE CORPORATION REPLIED IN THE AFFIRMATIVE WHEN ASKED IF THE SALMON PROPOSED TO BE FURNISHED WOULD CONFORM TO THE SPECIFICATIONS.

IN AN AFFIDAVIT DATED APRIL 18, 1955, THE PURCHASING AGENT STATED THAT ON FEBRUARY 10, 1955--- THE DAY AFTER THE DATE OF THE ORALAWARD--- A REPRESENTATIVE OF THE CORPORATION ADVISED HIM BY TELEPHONE THAT AN ERROR HAD BEEN MADE IN THE CORPORATION'S BID IN THAT IT WAS BASED ON FURNISHING RED FALL SALMON RATHER THAN SILVER OR KING CHINOOK SALMON AS REQUIRED BY THE SPECIFICATIONS, A COPY OF WHICH THE CORPORATION STATED IT DID NOT POSSESS AT THE TIME OF THE SUBMISSION OF ITS BID. THE PURCHASING AGENT STATED FURTHER THAT WHEN THE CORPORATION WAS ADVISED BY TELEPHONE THAT SILVER OR KING CHINOOK SLAMON WOULD BE REQUIRED, A REPRESENTATIVE OF THE CORPORATION REPLIED THAT THE SALMON SHOULD BE PURCHASED FROM THE NEXT- LOWEST BIDDER. THE RECORD INDICATES THAT BY NOTICE OF TERMINATION FOR DEFAULT DATED FEBRUARY 17, 1955, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT PURSUANT TO CLAUSE 11 OF THE CONTRACT ITS RIGHT TO PROCEED WITH THE PERFORMANCE OF THE CONTRACT WAS TERMINATED; AND THAT SUBSEQUENTLY A REPLACEMENT CONTRACT FOR THE SALMON STEAKS WAS ENTERED INTO WITH THE NEXT-LOWEST BIDDER AT AN EXCESS COST OF $195 TO THE GOVERNMENT.

IN LETTERS DATED FEBRUARY 14 AND MARCH 9, 1955, THE CORPORATION CONFIRMED ITS VERBAL ALLEGATION OF ERROR AND STATED THAT AT THE TIME OF THE SUBMISSION OF ITS ORAL BID IT ASSUMED THAT RED FALL SALMON WAS REQUIRED; THAT ON FEBRUARY 11, 1955, ITS SUPPLIER TELEPHONED STATING THAT ITS SEATTLE OFFICE HAD QUESTIONED THE VARIETY OF SALMON REQUIRED UNDER THE ORDER AS IT WAS ITS UNDERSTANDING THAT THE ARMY USUALLY REQUIRED EITHER KING CHINOOK OR SILVER SALMON WHICH, IT STATED, COSTS APPROXIMATELY TEN CENTS A POUND MORE THAN RED FALL SALMON; AND THAT IT THEN TELEPHONED THE PURCHASING AGENT AND LEARNED FROM HIM THAT THE SPECIFICATIONS REQUIRED EITHER KING CHINOOK OR SILVER SALMON. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED THE PRINTED PRICE LIST OF ITS SUPPLIER FOR THE PERIOD FEBRUARY 7 TO 11, 1955, INCLUSIVE, AND A COPY OF A LETTER DATED FEBRUARY 10, 1955, ADDRESSED TO ITS SUPPLIER, IN WHICH THE CORPORATION CONFIRMED ITS TELEPHONIC ORDER FOR SALMON STEAKS CONFORMING TO FEDERAL SPECIFICATIONS PP-F-381C.

THE TWO OTHER BIDDERS ON THE SALMON STEAKS QUOTED PRICES OF$0.499 AND $0.5398 PER POUND, RESPECTIVELY. ALTHOUGH THE BID OF SUN-RA FROZEN FOODS, INC. WAS SOMEWHAT LOWER THAN THE OTHER BIDS RECEIVED ON THE SALMON STEAKS, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO HAVE PLACED A CONTRACTING OFFICER ON NOTICE OF PROBABILITY OF ERROR IN THE BID OF THE CORPORATION. IN THAT CONNECTION, THE CONTRACTING OFFICER STATED IN A REPORT DATED APRIL 8, 1955, THAT AT THE TIME OF THE AWARD, HE DID NOT CONSIDER THE CORPORATION'S BID OF $0.46 PER POUND FOR THE SALMON STEAKS OUT OF LINE WITH THE OTHER BIDS, PARTICULARLY SINCE ONE MONTH PRIOR TO THE DATE OF PURCHASE IN QUESTION, HE HAD PROCURED SALMON AT A PRICE OF $0.44 PER POUND--- TWO CENTS PER POUND LOWER THAN THE CORPORATION'S BID PRICE. SO FAR AS THE PRESENT RECORD SHOWS THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH--- NO ERROR HAVING BEEN ALLEGED BY THE CORPORATION UNTIL AFTER AWARD. ALTHOUGH, AFTER AWARD, THE CORPORATION FURNISHED CERTAIN DATA IN SUPPORT OF ITS ALLEGATION OF ERROR, IT DOES NOT APPEAR THAT, PRIOR TO AWARD, THE CONTRACTING OFFICER HAD KNOWLEDGE OF THE FACTORS USED BY THE CORPORATION IN COMPUTING ITS BID PRICE. THE ACCEPTANCE OF THE BID, IN THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; AND AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S 75.

THE INVITATION ISSUED BY THE KANSAS CITY QUARTERMASTER MARKET CENTER DID NOT NAME THE VARIETY OF SALMON REQUIRED BY THE GOVERNMENT BUT REFERRED PROSPECTIVE BIDDERS TO CERTAIN SPECIFICATIONS FOR SUCH DETAILS. CONSEQUENTLY, IN ORDER TO HAVE MADE A PROPER BID ON THE SALMON STEAKS IT WAS ESSENTIAL THAT THE APPLICABLE SPECIFICATIONS BE EXAMINED PRIOR TO SUBMITTING A BID. SUN-RA FOODS, INC., HOWEVER, ELECTED TO SUBMIT AN ORAL BID WITHOUT OBTAINING A COPY OF THE SPECIFICATIONS. ALTHOUGH THE CORPORATION CONTENDS THAT ITS ORAL BID WAS SUBMITTED ON THE BASIS OF FURNISHING RED FALL SALMON, NOTHING WAS SAID AT THE TIME IT SUBMITTED ITS ORAL BID TO INDICATE SUCH AN INTENTION. IN FACT, A CONTRARY INTENTION WAS INDICATED BY THE CORPORATION AT THE TIME OF THE ORAL AWARD WHEN IT STATED THAT THE SALMON IT PROPOSED TO FURNISH WOULD CONFORM TO THE SPECIFICATIONS, WHICH CALLED FOR KING CHINOOK OR SILVER SALMON. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. IF THE PRICE QUOTED BY THE CORPORATION WAS FOR RED FALL SALMON, AS ALLEGED, SUCH ERROR WAS DUE SOLELY TO LACK OF PROPER CARE ON THE PART OF THE CORPORATION AND NOT TO ANY FAILURE OF THE GOVERNMENT TO FURNISH SUFFICIENT INFORMATION AS TO THE SALMON REQUIRED. SEE GRYMES V. SANDERS ET AL., 93 U.S. 55, 61. ANY ERROR THAT WAS MADE IN THE BID WAS UNILATERAL--- NOT MUTUAL--- AND THEREFORE DOES NOT ENTITLE THE CORPORATION TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249; SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505; 20 COMP. GEN. 652; AND 26 ID. 415.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD AND THE LAW APPLICABLE THERETO, THERE APPEARS TO BE NO LEGAL BASIS FOR RELEASING SUN-RA FOODS, INC. FROM ITS OBLIGATION UNDER THE CONTRACT AND, THEREFORE, THE CORPORATION IS LIABLE FOR THE EXCESS COSTS INCURRED BY THE GOVERNMENT IN PROCURING THE SALMON STEAKS FROM THE NEXT-LOWEST BIDDER.

A DUPLICATE COPY OF A LETTER DATED MARCH 15, 1955, FROM THE COMMANDING OFFICER, KANSAS CITY QUARTERMASTER MARKET, TO THE QUARTERMASTER GENERAL, AND DUPLICATE COPIES OF THE ENCLOSURES TO SUCH LETTER ARE BEING RETAINED. THE OTHER PAPERS ARE RETURNED.