B-130644, FEB. 19, 1957

B-130644, FEB. 19, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 5, 1957, WITH ENCLOSURES, FROM THE CHIEF OF NAVAL MATERIAL, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE FRED MUSHROOM PRODUCTS COMPANY, LEBANON, OHIO, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. N189- 34332A WAS AWARDED.

THE NAVY PURCHASING OFFICE, NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA, BY INVITATION NO. IFB-189548-57, REQUESTED BIDS--- TO BE OPENED DECEMBER 26, 1956--- FOR FURNISHING, AMONG OTHER ITEMS, AN ESTIMATED QUANTITY OF 37,000 POUNDS OF SLICED WHITE MUSHROOMS, TYPE II, STYLE (B), GRADE A FANCY, SIZE 3, TO BE PACKED IN ONE-POUND CANS FOR DOMESTIC SHIPMENT, BID "A" OF ITEM 11. IN RESPONSE, THE FRED MUSHROOM PRODUCTS COMPANY SUBMITTED A BID DATED DECEMBER 17, 1956, OFFERING TO FURNISH THE MUSHROOMS DESCRIBED UNDER BID "A" OF ITEM 11 AT A PRICE OF $0.83 PER POUND. THE THREE OTHER BIDDERS ON ITEM 11 (BID "A") SPECIFIED PRICES OF $0.955, $1.07, AND $1.39 PER POUND.

IN A STATEMENT DATED JANUARY 10, 1957, FROM THE CONTRACTING OFFICER, IT WAS STATED THAT WHEN THE BIDS ON ITEM 11 WERE EXAMINED, IT WAS NOTED THAT THE BID OF THE FRED MUSHROOM PRODUCTS COMPANY WAS CONSIDERABLY LOWER THAN THE OTHER BIDS RECEIVED ON THAT ITEM, AND ALSO SUBSTANTIALLY LESS THAN THE PRICE PAID ON THE LAST PRIOR PROCUREMENT. BY TELEGRAM DATED DECEMBER 27, 1956, THE COMPANY WAS REQUESTED TO VERIFY ITS BID PRICE ON ITEM 11; THAT BY TELEGRAM DATED DECEMBER 28, 1956, THE COMPANY REQUESTED THAT ITS BID ON ITEM 11 BE CANCELED; AND THAT ON THE SAME DAY, THE COMPANY WAS REQUESTED BY TELEPHONE TO SUBMIT A WRITTEN STATEMENT BY AIR MAIL AS TO WHY IT WISHED ITS BID CANCELED. BY LETTER DATED JANUARY 2, 1957, THE CONTRACTING OFFICER REQUESTED THE FRED MUSHROOM PRODUCTS COMPANY TO SUBMIT A WRITTEN STATEMENT IN SUPPORT OF ITS ALLEGATION OF ERROR AND EVIDENCE IN SUPPORT THEREOF. ALSO, THE COMPANY WAS REQUESTED TO EXTEND THE PERIOD FOR ACCEPTANCE OF ITS BID TO JANUARY 22, 1957.

IN HIS STATEMENT THE CONTRACTING OFFICER STATES FURTHER THAT THE EXPIRATION DATE FOR ACCEPTANCE OF THE BID SUBMITTED BY THE FRED MUSHROOM PRODUCTS COMPANY WAS SATURDAY, JANUARY 5, 1957; THAT BECAUSE HE HAD NOT RECEIVED FROM THE COMPANY WRITTEN EVIDENCE OF A MISTAKE IN ITS BID, WHICH HAD BEEN REQUESTED BY TELEPHONE ON DECEMBER 28, 1956, AND BY LETTER DATED JANUARY 2, 1957, ITEM 11 WAS AWARDED TO THE COMPANY BY TELEGRAM DATED JANUARY 4, 1957. UPON RECEIPT OF SUCH TELEGRAM, THE COMPANY ADVISED BY TELEPHONE THAT BY SPECIAL DELIVERY AIR MAIL LETTER DATED DECEMBER 28, 1956, IT HAD EXPLAINED THE ERROR IN ITS BID AND HAD REQUESTED PERMISSION TO WITHDRAW ITS BID ON ITEM 11. IT WAS ALSO STATED THAT A SEARCH FOR THE LETTER OF DECEMBER 28, 1956, WAS CONDUCTED AND THAT IT WAS LOCATED IN A QUANTITY OF LATE BIDS RECEIVED AFTER OPENING DEADLINE TIMES SPECIFIED IN VARIOUS INVITATIONS FOR BIDS; AND THAT THE REASON WHY THE LETTER HAD BEEN PLACED WITH THE LATE BIDS WAS BECAUSE THE COMPANY HAD MARKED THE ENVELOPE WITH THE BID INVITATION NUMBER.

IN ITS LETTER OF DECEMBER 28, 1956, WHICH WAS RECEIVED BY THE NAVY PURCHASING OFFICE ON DECEMBER 31, 1956, THE FRED MUSHROOM PRODUCTS COMPANY STATED---

"PLEASE EXTEND THE ACCEPTANCE DATE TO JANUARY 22, 1957.

"IN CHECKING OVER OUR QUOTATION I FIND THAT WE MIS-READ YOUR SPECIFICATIONS IN THAT THE WRITER MISSED THE ITEM "SIZE 3.'

"WE GROW ALL THE MUSHROOMS THAT ARE USED IN OUR CANNERY. THERE ARE NO OTHER GROWERS IN OUR AREA, THEREFORE IT IS IMPOSSIBLE FOR US TO PURCHASE ANY MUSHROOMS.

"ABOUT 90 PERCENT OF OUR MUSHROOMS ARE OF THE LARGE (NO. 4) AND EXTRA LARGE (NO. 5) SIZES. IT WOULD BE IMPRACTICAL AND NEARLY IMPOSSIBLE FOR US TO SUPPLY THE NO. 3 SIZE.

"THEREFORE, I WOULD APPRECIATE VERY MUCH YOUR WITHDRAWING OUR BID.'

BY LETTER DATED JANUARY 7, 1957, THE COMPANY ADVISED THAT IT COULD NOT FURNISH A WORKSHEET AS NONE WAS USED IN ARRIVING AT ITS BID PRICE AND THAT IT WAS THE COMPANY'S PRACTICE TO NOT USE WORKSHEETS BECAUSE IT GREW ALL ITS MUSHROOMS AND HAD TO SELL ON A COMPETITIVE RATHER THAN A COST-PLUS BASIS.

THE RECORD INDICATES THAT THE CONTRACTING OFFICER SUSPECTED THE POSSIBILITY OF AN ERROR IN THE COMPANY'S BID AND REQUESTED IT TO CONFIRM ITS BID PRICE ON ITEM 11; THAT BY TELEGRAM DATED DECEMBER 28, 1956, THE COMPANY REQUESTED THAT ITS BID ON ITEM 11 BE CANCELED; THAT BECAUSE THE COMPANY'S REQUEST WAS NOT SUPPORTED BY ANY EXPLANATION, IT WAS REQUESTED BY TELEPHONE ON DECEMBER 28, 1956, TO SUBMIT A WRITTEN STATEMENT EXPLAINING HOW THE ERROR IN ITS BID OCCURRED; THAT THE COMPANY'S LETTER OF DECEMBER 28, 1956, WHICH EXPLAINED HOW THE ERROR IN ITS BID OCCURRED, WAS MISFILED IN THE ADMINISTRATIVE OFFICE; AND THAT THE CONTRACTING OFFICER, UNAWARE OF THE EXISTENCE OF THE COMPANY'S LETTER OF DECEMBER 28, 1956, MADE THE AWARD TO THE COMPANY BECAUSE THE PERIOD FOR THE ACCEPTANCE OF ITS BID WAS ABOUT TO EXPIRE.

IN UNDERTAKING TO BIND A BIDDER BY ACCEPTANCE OF A BID AFTER NOTICE OF A CLAIM OF ERROR BY THE BIDDER, THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S CLAIM WAS NOT MADE IN GOOD FAITH. THE DEGREE OF PROOF REQUIRED TO JUSTIFY WITHDRAWAL OF A BID BEFORE AWARD IS IN NO WAY COMPARABLE TO THAT NECESSARY TO ALLOW CORRECTION OF AN ERRONEOUS BID. SINCE THE COMPANY REQUESTED WITHDRAWAL RATHER THAN CORRECTION OF ITS BID AND IN ITS LETTER OF DECEMBER 28, 1956, SATISFACTORILY EXPLAINED HOW THE ERROR IN ITS BID OCCURRED, IT UNDOUBTEDLY WOULD HAVE BEEN PERMITTED TO WITHDRAW ITS BID ON ITEM 11 HAD NOT SUCH LETTER BEEN MISFILED IN THE ADMINISTRATIVE OFFICE. ACCORDINGLY, IN THE CIRCUMSTANCES, THE CONTRACT INVOLVED MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY, AS RECOMMENDED BY THE CONTRACTING OFFICER.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S STATEMENT DATED JANUARY 10, 1957, ARE RETURNED.