B-143041, JUN. 9, 1960

B-143041: Jun 9, 1960

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TO THE NATIONAL SUGAR REFINING COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED MAY 12. YOUR BID WAS ACCEPTED ON SEPTEMBER 10. IT APPEARS THAT YOUR CLAIM NOW IS BASED ON RECOVERY OF THE FULL FREIGHT RATE OF $0.242 CWT. ON AN AMOUNT FOR FREIGHT THAT WILL BE SLIGHTLY LESS THAN THE TOTAL PRICE OF THE NEXT LOW BID FOR ITEM NO. 3. IN YOUR REQUEST FOR REVIEW OF OUR SETTLEMENT YOU CONTEND THAT SINCE THE SUGAR BUSINESS IS CONDUCTED ON A LOW PROFIT MARGIN. THERE WERE RECEIVED ONE OTHER BID OF $8.627 A SACK FOR ITEM NO. 1. IN THIS CONNECTION THERE ALSO IS FOR CONSIDERATION THE CONTRACTING OFFICER'S STATEMENT THAT "BID INVITATIONS FOR SUGAR IN THE PAST HAVE HAD PRICE RANGES SIMILAR TO M4-86-60.'.

B-143041, JUN. 9, 1960

TO THE NATIONAL SUGAR REFINING COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 12, 1960, WITH ENCLOSURE, REQUESTING REVIEW OF OUR SETTLEMENT OF APRIL 5, 1960, DISALLOWING YOUR CLAIM--- APPARENTLY FOR $6,472.90--- UNDER CONTRACT NO. V7018P-4546, DATED SEPTEMBER 10, 1959.

IN REPLY TO INVITATION NO. M4-86-60, ISSUED ON AUGUST 11, 1959, BY THE MARKETING DIVISION FOR SUBSISTENCE, VETERANS ADMINISTRATION SUPPLY DEPOT, HINES, ILLINOIS, YOU SUBMITTED A BID OFFERING TO FURNISH ITEM NO. 1, COVERING 5,450 SACKS--- 100 POUNDS TO THE SACK--- OF GRANULATED SUGAR AT $8.317 A SACK, F.O.B. SOMERVILLE, NEW JERSEY, AND ITEM NO. 3, COVERING 6,000 SACKS AT $8.119 A SACK, F.O.B. HINES, ILLINOIS. YOUR BID WAS ACCEPTED ON SEPTEMBER 10, 1959, AS TO ITEMS NOS. 1 AND 3 IN THE TOTAL AMOUNT OF $94,041.65. SUBSEQUENT TO THE AWARD YOU ADVISED THE SUPPLY DEPOT THAT AN ERROR HAD BEEN MADE IN YOUR BID, IN THAT FREIGHT RATES OF $0.242 AND $0.859 PER CWT. HAD BEEN OMITTED FROM YOUR BID FOR ITEMS NO. 1 AND 3, RESPECTIVELY. IT APPEARS THAT YOUR CLAIM NOW IS BASED ON RECOVERY OF THE FULL FREIGHT RATE OF $0.242 CWT. FOR ITEM NO. 1, AND ON AN AMOUNT FOR FREIGHT THAT WILL BE SLIGHTLY LESS THAN THE TOTAL PRICE OF THE NEXT LOW BID FOR ITEM NO. 3, ON ALL QUANTITIES SHIPPED TO THE F.O.B. DESTINATION SPECIFIED.

IN YOUR REQUEST FOR REVIEW OF OUR SETTLEMENT YOU CONTEND THAT SINCE THE SUGAR BUSINESS IS CONDUCTED ON A LOW PROFIT MARGIN, PARTICULARLY ON SALES TO THE GOVERNMENT, THAT ANY VARIATION IN EXCESS OF $0.001 OR $0.002 A POUND WOULD BE CAUSE FOR THE PURCHASER TO SUSPECT THAT AN ERROR HAD BEEN MADE IN THE BID.

IN ADDITION TO YOUR BID OF $8.317 AND $8.119 A SACK FOR ITEMS NOS. 1 AND 3, THERE WERE RECEIVED ONE OTHER BID OF $8.627 A SACK FOR ITEM NO. 1, AND FIVE OTHER BIDS FOR ITEM NO. 3, RANGING FROM $8.75 TO $9.24 A SACK. HENCE, NOTWITHSTANDING THE LOW PROFIT MARGIN THAT YOU ALLEGE PREVAILS IN THE SUGAR MARKET, THERE EXISTS HERE A DIFFERENCE OF ONLY $0.31 PER 100 POUNDS BETWEEN YOUR BID AND THAT OF THE ONLY OTHER BID RECEIVED FOR ITEM NO. 1, AND A DIFFERENCE OF $0.631 PER 100 POUNDS BETWEEN YOUR BID AND THE NEXT LOW BID FOR ITEM NO. 3. IN THIS CONNECTION THERE ALSO IS FOR CONSIDERATION THE CONTRACTING OFFICER'S STATEMENT THAT "BID INVITATIONS FOR SUGAR IN THE PAST HAVE HAD PRICE RANGES SIMILAR TO M4-86-60.' MOREOVER, IT IS IMPORTANT TO NOTE THAT THE DIFFERENCE BETWEEN THE SECOND LOW BID OF $8.75 PER CWT., AND THE HIGH BID OF $9.24 PER CWT., ON ITEM NO. 3 FAR EXCEEDS THE VARIATION OF $0.001 OR $0.002 A POUND, WHICH YOU REFER TO. UNDER THESE CIRCUMSTANCES, SUCH A DIFFERENTIAL MAY NOT BE ACCEPTED BY OUR OFFICE AS ANY MAXIMUM OR STANDARD UPON WHICH TO CHARGE THE CONTRACTING OFFICER WITH PROBABLE NOTICE OF ERROR IN BIDS FOR THE PROCUREMENT OF SUGAR. IN VIEW OF THE FOREGOING, WE DO NOT BELIEVE THERE IS ANY JUSTIFIABLE BASIS FOR CONCLUDING THAT THERE EXISTED CONSTRUCTIVE NOTICE OF PROBABLE ERROR IN YOUR BID PRIOR TO AWARD. THE ACCEPTANCE OF YOUR BID UNDER THE CIRCUMSTANCES CONSUMMATED A VALID CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES AND NEITHER OUR OFFICE NOR ANY OFFICER OF THE GOVERNMENT IS AUTHORIZED TO WAIVE OR RELINQUISH THE RIGHTS WHICH VESTED IN THE GOVERNMENT UNDER SUCH CONTRACTS.