B-140618, OCT. 22, 1959

B-140618: Oct 22, 1959

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO A REPORT DATED OCTOBER 6. WERE ISSUED OCTOBER 9. CONTRACTS WERE TO BE CONSUMMATED UNDER THAT SCHEDULE ON A NEGOTIATED MULTIPLE AWARD LIST PRICE BASIS. CONTAINING THE OFFER TRANSMITTED A PRICE LIST AND CONTAINED THE FOLLOWING STATEMENT: "* * * THE DISCOUNT GIVEN TO THE GENERAL SERVICES ON THESE ITEMS IS AS FOLLOWS: "ALL "THORAZINE. NO OTHER CUSTOMER IS MORE FAVORED FOR LIKE QUANTITY. "ALL OTHER PRODUCTS OTHER THAN THE ABOVE ITEMS ARE PRICED TO STATE AND FEDERAL INSTITUTIONS AT LIST LESS 5 PERCENT.'. THE FIRM'S OFFER WAS ACCEPTED BY AWARD OF CONTRACT NO. IS SHOWN AS FOLLOWS: "SMITH KLINE AND FRENCH. LESS 5 PERCENT DISCOUNT" THE CONTRACTOR APPARENTLY WAS NOT AWARE OF THE FACT THAT THE WORDING IN THE SCHEDULE CONTEMPLATED THE TAKING OF A TRADE DISCOUNT FROM THE SUBMITTED PRICE LIST UNTIL THERE HAD BEEN SEVERAL REJECTIONS OF INVOICES BY THE USING AGENCIES.

B-140618, OCT. 22, 1959

TO HONORABLE FRANKLIN FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A REPORT DATED OCTOBER 6, 1959, FROM THE COMMISSIONER, FEDERAL SUPPLY SERVICE, IN REPLY TO OUR REQUEST DATED SEPTEMBER 14, 1959, IN REGARD TO THE ALLEGATION BY SMITH KLINE AND FRENCH LABORATORIES THAT YOUR AGENCY MADE A MISTAKE IN SHOWING THE PRICES TO BE PAID FOR ITEM NO. 42-2/116) OF THE FEDERAL SUPPLY SCHEDULE COVERING THE CALENDAR YEAR 1959.

SOLICITATIONS FOR OFFERS UNDER FSC GROUP 68, CHEMICAL AND CHEMICAL PRODUCTS, PART I, SECTION B, WERE ISSUED OCTOBER 9, 1958. CONTRACTS WERE TO BE CONSUMMATED UNDER THAT SCHEDULE ON A NEGOTIATED MULTIPLE AWARD LIST PRICE BASIS. IN RESPONSE TO THE SOLICITATION, SMITH KLINE AND FRENCH LABORATORIES SUBMITTED AN OFFER FOR ITEM NO. 42-2 (PHARMACEUTICAL PREPARATIONS, SPECIALTIES AND BIOLOGICALS), DATED OCTOBER 21, 1958. THE FIRM'S LETTER OF OCTOBER 22, 1958, CONTAINING THE OFFER TRANSMITTED A PRICE LIST AND CONTAINED THE FOLLOWING STATEMENT:

"* * * THE DISCOUNT GIVEN TO THE GENERAL SERVICES ON THESE ITEMS IS AS FOLLOWS:

"ALL "THORAZINE," "THORA-DEX," "COMPAZINE" AND "STELAZINE" - LIST LESS 15 PERCENT.

"IN ADDITION, WE OFFER YOU A QUANTITY DISCOUNT AND TERMS IN ACCORDANCE WITH THE ATTACHED SCHEDULE ON THE ABOVE ITEMS. THIS SCHEDULE APPLIES TO ALL STATE AND FEDERAL INSTITUTIONS. NO OTHER CUSTOMER IS MORE FAVORED FOR LIKE QUANTITY.

"ALL OTHER PRODUCTS OTHER THAN THE ABOVE ITEMS ARE PRICED TO STATE AND FEDERAL INSTITUTIONS AT LIST LESS 5 PERCENT.'

THE FIRM'S OFFER WAS ACCEPTED BY AWARD OF CONTRACT NO. GS-005-21410, DATED DECEMBER 31, 1958.

AS A RESULT OF THE AWARD, ITEM NO. 42-2/116) OF THE FEDERAL SUPPLY SCHEDULE, FSC GROUP 68, IS SHOWN AS FOLLOWS:

"SMITH KLINE AND FRENCH; PRICE LIST OF SPECIALTIES; LESS 15 PERCENT DISCOUNT ON ITEMS OF COMPAZINE, STELAZINE, THORAZINE, AND THORA-DEX; ALL OTHER ITEMS, LESS 5 PERCENT DISCOUNT"

THE CONTRACTOR APPARENTLY WAS NOT AWARE OF THE FACT THAT THE WORDING IN THE SCHEDULE CONTEMPLATED THE TAKING OF A TRADE DISCOUNT FROM THE SUBMITTED PRICE LIST UNTIL THERE HAD BEEN SEVERAL REJECTIONS OF INVOICES BY THE USING AGENCIES, ALTHOUGH THE CONTRACTOR IN ITS OFFER INTENDED TO APPRISE YOUR OFFICE THAT IN LISTING THE PRICES ON ITS PRICE LIST SUBMITTED WITH THE BID IT HAD GIVEN DISCOUNTS OF 15 PERCENT AND 5 PERCENT FROM ITS COMMERCIAL LIST PRICES. IN ITS LETTER OF APRIL 3, 1959, THE CONTRACTOR REQUESTED YOUR OFFICE TO REVISE THE LISTING IN THE SCHEDULE TO READ AS FOLLOWS:

"/116) SMITH KLINE AND FRENCH; AUTHORIZED PRICE LIST FOR GENERAL SERVICES ADMINISTRATION.'

ALSO, THE CONTRACTOR HAS SUBMITTED EVIDENCE WHICH TENDS TO SHOW THAT THE PRICES ON THE SUBMITTED PRICE LIST REPRESENTED, AS TO SOME ITEMS, A 5 PERCENT DISCOUNT AND, AS TO OTHER ITEMS, A 15 PERCENT DISCOUNT FROM ITS COMMERCIAL PRICES. IT IS ADMITTED, IN EFFECT, IN THE LETTER OF OCTOBER 6 FROM THE COMMISSIONER, FEDERAL SUPPLY SERVICE, THAT THE LANGUAGE EMPLOYED BY THE CONTRACTOR COULD BE INTERPRETED TO MEAN THAT A DISCOUNT WAS BEING GIVEN IN SHOWING ITS PRICES ON THE SUBMITTED LIST OR THAT IT SHOULD BE TAKEN FROM ITS COMMERCIAL LIST PRICES.

SINCE IT APPEARS THAT YOUR OFFICE WOULD HAVE BEEN WILLING TO ENTER INTO A CONTRACT ON THE BASIS INTENDED BY THE CONTRACTOR, THE CONTRACT MAY BE AMENDED TO ESTABLISH CLEARLY THAT DISCOUNTS ARE TO BE TAKEN FROM THE CONTRACTOR'S COMMERCIAL LIST, RATHER THAN FROM THE LIST AS SUBMITTED ON OCTOBER 21, 1958, AS SUGGESTED IN THE LAST PARAGRAPH OF THE AFORESAID LETTER OF OCTOBER 6, 1959, OR, AS A MATTER OF CONVENIENCE, THE LISTING IN THE SCHEDULE MAY BE REVISED IN THE MANNER SUGGESTED BY THE CONTRACTOR IN ITS LETTER OF APRIL 3, 1959.