B-133713, OCT. 7, 1957

B-133713, OCT. 7, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 6, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH OLD DUTCH FOODS, INC., BLASDELL, NEW YORK, ALLEGES WAS MADE IN ITS BID ON WHICH CONTRACT NO. DA 11-027-QM/MSS/74048 WAS AWARDED.

BY NOTICE OF INTENT TO PURCHASE NO. CHI 1430-57 DATED APRIL 29, 1957, THE CHICAGO MILITARY SUBSISTENCE MARKET CENTER, CHICAGO, ILLINOIS, REQUESTED INFORMAL QUOTATIONS--- TO BE RECEIVED NO LATER THAN 12:00 NOON, MAY 10, 1957--- ON VARIOUS SUBSISTENCE ITEMS INCLUDING 120,462 CANS OF SALAD DRESSING, TYPE II IN NO. 10 CANS, ITEM 7. PROSPECTIVE BIDDERS WERE ADVISED IN THE INVITATION THAT THE SALAD DRESSING WAS TO BE IN ACCORDANCE WITH FEDERAL SPECIFICATION RE-M-131 DATED APRIL 23, 1951, AND AMENDMENT-1 DATED SEPTEMBER 24, 1953, WHICH PROVIDED, AMONG OTHER THINGS, THAT THE SALAD DRESSING CONTAIN NOT LESS THAN FIVE PERCENT EGG YOLK BY WEIGHT AND THAT IT BE PROCESSED WITH EDIBLE COTTONSEED, AND/OR CORN OIL. THE NOTICE OF INTENT TO PURCHASE CONTAINED A CLAUSE RELATING TO IDENTITY OF OIL COMPONENT, WHICH REFERENCED COTTONSEED AND CORN OIL. IN RESPONSE OLD DUTCH FOODS, INC., SUBMITTED A LETTER QUOTATION DATED MAY 9, 1957, OFFERING TO FURNISH THE SALAD DRESSING REQUIRED UNDER ITEM 7 AT A PRICE OF $0.935 PER CAN.

THE RECORD INDICATES THAT A PRE-AWARD SURVEY OF THE PLANT FACILITIES OF OLD DUTCH FOODS, INC., WAS CONDUCTED ON MAY 15, 1957; THAT THE SURVEY INDICATED THAT THE CORPORATION HAD ALL COMPONENTS ON HAND OR IMMEDIATELY AVAILABLE; THAT AT THE TIME OF THE SURVEY, EMPLOYEES OF THE CORPORATION INDICATED THAT THEY WERE AWARE OF THE FACT THAT THE SALAD DRESSING WAS TO BE MADE FROM COTTONSEED OR CORN OIL OR A COMBINATION OF THE TWO; AND THAT ON THE BASIS OF SUCH SURVEY, NOTICE OF AWARD WAS ISSUED TO THE CORPORATION ON MAY 16, 1957.

IT IS REPORTED THAT ON MAY 27, 1957, MR. J. L. WEIGAND, PRESIDENT OF OLD DUTCH FOODS, INC., TELEPHONED ALLEGING THAT THE CORPORATION'SBID PRICE OF $0.935 PER CAN FOR THE SALAD DRESSING COVERED BY ITEM 7 WAS ERRONEOUS IN THAT IT WAS BASED ON THE ASSUMPTION THAT THE SPECIFICATIONS CALLED FOR FOUR PERCENT EGG CONTENT AND THAT SOYA OIL WAS PERMITTED IN PROCESSING THE SALAD DRESSING; THAT MR. WEIGAND STATED THAT, AT THE TIME HE COMPUTED THE CORPORATION'S BID PRICE, HE DID NOT HAVE A COPY OF THE SPECIFICATIONS AND THAT HE HAD TRIED TO OBTAIN A COPY OF THE SPECIFICATIONS FROM THE CONTRACTING OFFICE BUT WITHOUT SUCCESS; AND THAT IT WAS NOT UNTIL MAY 22, 1957, WHEN HE RECEIVED A COPY OF THE SPECIFICATIONS FROM THE GENERAL SERVICES ADMINISTRATION, THAT HE WAS ABLE TO DETERMINE FROM THE SPECIFICATIONS THAT A FIVE PERCENT EGG CONTENT WAS REQUIRED AND THAT ONLY CORN AND/OR COTTONSEED OIL WERE PERMITTED TO BE USED IN PROCESSING THE SALAD DRESSING.

IN A CONFIRMING LETTER DATED MAY 27, 1957, THE PRESIDENT OF THE CORPORATION STATED THAT IT WOULD COST THE CORPORATION APPROXIMATELY $9,000 MORE TO PROCESS THE SALAD DRESSING IN ACCORDANCE WITH THE REQUIREMENTS OF THE SPECIFICATIONS AND HE REQUESTED THAT THE CORPORATION BE GRANTED SOME RELIEF UNDER THE CONTRACT TO COMPENSATE IT FOR THE ADDITIONAL EXPENSE. LETTER DATED MAY 28, 1957, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT HE WAS WITHOUT AUTHORITY TO INCREASE THE CONTRACT PRICE OF THE SALAD DRESSING.

BY LETTER DATED MAY 29, 1957, THE PRESIDENT OF THE CORPORATION ADVISED THE CONTRACTING OFFICER THAT, SINCE HE WAS UNABLE TO PROCURE A COPY OF THE SPECIFICATIONS FROM HIS OFFICE PRIOR TO THE COMPUTATION OF THE CORPORATION'S BID PRICE, HE ASSUMED THAT THE FEDERAL SPECIFICATIONS WERE THE SAME AS THE FEDERAL FOOD AND DRUG SPECIFICATIONS, AND THAT HAVING DELIVERED TO THE ARMED FORCES IN HIS AREA SALAD DRESSING MADE OF SOYA OIL AND CONTAINING A FOUR PERCENT EGG YOLK CONTENT, HE FELT SAFE IN USING A FOUR PERCENT EGG YOLK CONTENT AND SOYA OIL AS INGREDIENTS IN THE COMPUTATION OF THE CORPORATION'S BID PRICE. THE PRESIDENT ALSO STATED THAT THE CORPORATION HAD SOLD THE SOYA OIL IT HAD ON HAND AND THAT IT HAD PURCHASED CORN OIL AT A COST OF $0.023 MORE PER POUND AND THAT IT WAS PREPARED TO FULFILL THE CONTRACT. WITH THE LETTER THE CORPORATION SUBMITTED A TYPEWRITTEN SHEET SHOWING A BREAKDOWN OF ITS COSTS OF ITS ORIGINAL OFFER BASED ON A FOUR PERCENT EGG CONTENT AND ON THE USE OF SOYA OIL AND A BREAKDOWN OF ITS COSTS BASED ON A FIVE PERCENT EGG CONTENT AND ON THE USE OF COTTONSEED OIL OR CORN OIL AS REQUIRED BY THE SPECIFICATIONS. THE BREAKDOWN INDICATES THAT THE CORPORATION'S ADDITIONAL COSTS WOULD AMOUNT TO $10,287.30.

IN A LETTER DATED JUNE 14, 1957, THE CORPORATION REQUESTED THAT THE UNIT PRICE OF ITEM 7 BE INCREASED TO $0.985 PER CAN, MAKING A TOTAL INCREASE OF $6,023,10 IN THE CONTRACT PRICE OF THE SALAD DRESSING AND THAT ITS REQUEST FOR RELIEF BE REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR CONSIDERATION. THE CORPORATION STATED THAT WHILE THE AMOUNT OF $6,023.10 WOULD NOT COVER THE ENTIRE DIFFERENCE IN THE CONTRACT, IT WOULD ENABLE IT TO COMPLETE THE CONTRACT WITHOUT HARDSHIP. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED PHOTOSTATIC COPIES OF ITS ORIGINAL WORKSHEET AND REVISED WORKSHEET.

THERE WAS NOTHING ON THE FACE OF THE QUOTATION SUBMITTED BY THE CORPORATION TO INDICATE THAT THE PRICE QUOTED FOR ITEM 7 WAS BASED ON FURNISHING SALAD DRESSING MADE FROM SOYA OIL AND CONTAINING A FOUR PERCENT EGG YOLK CONTENT. THE FIVE OTHER BIDS ON ITEM 7 SPECIFIED PRICES RANGING FROM $0.965 TO $1.023 PER CAN, AND IT IS REPORTED THAT THE SALAD DRESSING WAS PREVIOUSLY PROCURED ON DIFFERENT OCCASIONS AT PRICES RANGING FROM $0.914 TO $0.9775 PER CAN. THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT AWARE OF THE POSSIBILITY OF ERROR PRIOR TO AWARD, AND IN VIEW OF THE DIFFERENCE BETWEEN THE BIDS, WE FIND NO BASIS TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF ERROR. 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 NOTICE OF INTENT TO PURCHASE ISSUED BY THE CHICAGO MILITARY SUBSISTENCE MARKET CENTER DID NOT NAME THE INGREDIENTS FROM WHICH THE SALAD DRESSING WAS TO BE PREPARED BUT REFERRED PROSPECTIVE BIDDERS TO CERTAIN SPECIFICATIONS FOR SUCH DETAILS. CONSEQUENTLY, IN ORDER TO HAVE MADE A PROPER BID ON THE SALAD DRESSING IT WAS ESSENTIAL THAT APPLICABLE SPECIFICATIONS BE EXAMINED PRIOR TO SUBMITTING A BID. OLD DUTCH FOODS, INC., HOWEVER, ELECTED TO SUBMIT A QUOTATION WITHOUT OBTAINING A COPY OF THE SPECIFICATIONS. ALTHOUGH THE CORPORATION CONTENDS THAT ITS QUOTATION WAS SUBMITTED ON THE BASIS OF FURNISHING SALAD DRESSING MADE FROM SOYA OIL AND CONTAINING A FOUR PERCENT EGG YOLK CONTENT, THERE WAS NOTHING IN ITS QUOTATION TO INDICATE SUCH AN INTENTION. IN REGARD TO THE CORPORATION'S ASSUMPTION THAT THE FEDERAL SPECIFICATIONS IN QUESTION WERE THE SAME AS THE FEDERAL FOOD AND DRUG SPECIFICATIONS, THERE APPEARS NO BASIS FOR SUCH ASSUMPTION, SINCE IT IS REPORTED THAT THE CORPORATION HAD A PREVIOUS CONTRACT FOR SUPPLYING MAYONNAISE WHICH IS PRODUCED UNDER THE SAME FEDERAL SPECIFICATIONS INVOLVED. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE NOTICE OF INTENT TO PURCHASE WAS UPON THE BIDDER. IN THIS CONNECTION SEE THE CASE OF FRAZIER-DAVIS CONSTRUCTION CO. V. UNITED STATES, 100 C.CLS. 120, 163, WHEREIN THE COURT SAID:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

IF, AS ALLEGED, THE CORPORATION ERRONEOUSLY ASSUMED THAT THE FEDERAL FOOD AND DRUG SPECIFICATIONS WERE THE SAME AS THE FEDERAL SPECIFICATION INVOLVED, IT IS CLEAR THAT SUCH ERROR WAS DUE SOLELY TO ITS NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SEE GRYMES V. SANDERS ET AL., 93 U.S. 55, 61. SUCH ERROR AS MAY HAVE BEEN MADE IN THE BID WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, AFFORDS NO BASIS FOR GRANTING RELIEF TO THE CORPORATION. SEE SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507; OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, 259; 20 COMP. GEN. 652; AND 30 ID. 509.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD, THERE APPEARS TO NO LEGAL BASIS FOR INCREASING THE CONSIDERATION SPECIFIED IN CONTRACT NO. DA 11-027-QM/MSS/74048.

A DUPLICATE SET OF THE PAPERS IN THE CASE IS BEING RETAINED. THE OTHER PAPERS IN THE CASE ARE BEING RETURNED.