B-143138, JUN. 30, 1960

B-143138: Jun 30, 1960

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CONTRACTING OFFICER: REFERENCE IS MADE TO YOUR LETTER OF JUNE 6. BIDS WERE REQUESTED ON THE BASIS OF QUANTITIES FOR (1) THE PERIOD FROM JULY 1. THERE WAS INCLUDED IN THE INVITATION BY REFERENCE THERETO "VETERANS ADMINISTRATION STANDARD SPECIFICATIONS FOR PACKING HOUSE AND DAIRY PRODUCTS. OR THE TRANSACTIONS OR PROPERTY COVERED BY THIS CONTRACT ARE THEN EXEMPT.'. PARAGRAPH 5 (E) OF THE GENERAL CONDITIONS ALSO PROVIDES THAT IF THE CONTRACTOR IS REQUIRED TO PAY OR BEAR THE BURDEN OF AN INCREASE IN RATE OF ANY TAX OR DUTY. WHETHER OR NOT SUCH TAX OR DUTY WAS EXCLUDED FROM THE CONTRACT PRICE. SEVEN BIDS WERE RECEIVED. INSOFAR AS THE MATTER OF THE SOUTH CAROLINA SALES TAX OF 3 PERCENT IS CONCERNED AND WHICH YOU STATE IS A VENDOR-TYPE TAX TO BE PAID BY THE SELLER.

B-143138, JUN. 30, 1960

TO MR. O. U. WAINNER, CONTRACTING OFFICER:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 6, 1960, FILE 5123/134, REQUESTING A DECISION AS TO WHETHER CERTAIN BIDS FOR FURNISHING DAIRY PRODUCTS MAY BE CONSIDERED IN MAKING AN AWARD, IN VIEW OF THE FACTS REPORTED IN YOUR LETTER.

INVITATION NO. 61-2, ISSUED MAY 11, 1960, REQUESTED BIDS FOR FURNISHING VARIOUS ITEMS OF DAIRY PRODUCTS TO THE VETERANS ADMINISTRATION HOSPITAL, COLUMBIA, SOUTH CAROLINA. BIDS WERE REQUESTED ON THE BASIS OF QUANTITIES FOR (1) THE PERIOD FROM JULY 1, 1960, THROUGH SEPTEMBER 30, 1960; (2) THE PERIOD FROM JULY 1, 1960, THROUGH DECEMBER 31, 1960; (3) THE PERIOD FROM JULY 1, 1960, THROUGH MARCH 31, 1961; AND (4) THE PERIOD FROM JULY 1, 1960, THROUGH JUNE 30, 1961. THERE WAS INCLUDED IN THE INVITATION BY REFERENCE THERETO "VETERANS ADMINISTRATION STANDARD SPECIFICATIONS FOR PACKING HOUSE AND DAIRY PRODUCTS, VA PAMPHLET 10-19-REVISED" JANUARY 1959 EDITION. PARAGRAPH 5 (B) OF GENERAL CONDITIONS OF SAID SPECIFICATIONS PROVIDES IN PART AS FOLLOWS:

"EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT, THE CONTRACT PRICE INCLUDES ALL FEDERAL, STATE AND LOCAL TAXES AND DUTIES IN EFFECT AND APPLICABLE TO THIS CONTRACT ON THE TAX INCLUSIVE DATE, EXCEPT TAXES (OTHER THAN FEDERAL TRANSPORTATION TAXES) FROM WHICH THE GOVERNMENT, THE CONTRACTOR, OR THE TRANSACTIONS OR PROPERTY COVERED BY THIS CONTRACT ARE THEN EXEMPT.'

PARAGRAPH 5 (E) OF THE GENERAL CONDITIONS ALSO PROVIDES THAT IF THE CONTRACTOR IS REQUIRED TO PAY OR BEAR THE BURDEN OF AN INCREASE IN RATE OF ANY TAX OR DUTY, WHETHER OR NOT SUCH TAX OR DUTY WAS EXCLUDED FROM THE CONTRACT PRICE, THE CONTRACT PRICE SHALL BE INCREASED ACCORDINGLY.

SEVEN BIDS WERE RECEIVED. INSOFAR AS THE MATTER OF THE SOUTH CAROLINA SALES TAX OF 3 PERCENT IS CONCERNED AND WHICH YOU STATE IS A VENDOR-TYPE TAX TO BE PAID BY THE SELLER, THERE APPEARS TO HAVE BEEN ONE BIDDER (FOREMOST DAIRIES) WHO ACTUALLY INCLUDED THE SALES TAX IN THE CONTRACT PRICE. FOUR OTHER BIDDERS STATED THAT THE SOUTH CAROLINA SALES TAX WAS TO BE ADDED TO THEIR BID PRICES. THE BID OF THE BORDEN COMPANY MERELY SHOWED THAT THE SALES TAX WAS NOT INCLUDED. THE BID OF SEALTEST FOOD, DIVISION OF NATIONAL DAIRY PRODUCTS CORPORATION, DID NOT SHOW ANYTHING IN REGARD TO THE SALES TAX BUT A COMPARISON OF THE BIDS CLEARLY SHOWS THAT IT FAILED TO TAKE THE TAX INTO ACCOUNT.

YOUR FIRST QUESTION IN REGARD TO THE BIDS IS WHETHER ALL BIDS, EXCEPT THE ONE SUBMITTED BY FOREMOST DAIRIES, SHOULD BE CONSIDERED AS NONRESPONSIVE. THE ANSWER TO THAT QUESTION IS IN THE NEGATIVE. AS TO THE FOUR BIDDERS WHO STATED THAT THE TAX WAS TO BE ADDED TO THEIR BID PRICES, SINCE THIS MERELY INVOLVED AN ARITHMETICAL PROCESS AND IS DEFINITE OF ASCERTAINMENT, THESE BIDS MAY BE CONSIDERED IN MAKING AWARD. IF THE SALES TAX WERE INCREASED DURING THE LIFE OF THE CONTRACT, THOSE BIDS WOULD BE ON THE SAME BASIS AS THE BID OF FOREMOST DAIRIES WHICH INCLUDED THE 3 PERCENT TAX IN ITS PRICE ON THE CONTRACT PRICE OF FOREMOST DAIRIES WOULD BE INCREASED BY VIRTUE OF THE PROVISIONS OF PARAGRAPH 5 (C) OF GENERAL CONDITIONS.

AS TO YOUR SECOND QUESTION, THE STATEMENT ON THE BID OF THE BORDEN COMPANY MERELY RECITES THAT THE SALES TAX IS NOT INCLUDED IN THE AMOUNTS OF THE BID. HOWEVER, THE CLEAR IMPLICATION IS THAT THE TAX WILL BE BILLED AS A SEPARATE ITEM AND THEREFORE IT MAY BE CONSIDERED ON THAT BASIS. TO YOUR THIRD QUESTION, SINCE THE ERROR OF SEALTEST IN NOT INCLUDING THE SALES TAX IN ITS BID IS EVIDENT FROM THE COMPARISON OF BIDS AND SINCE IT WAS ALLEGED PROMPTLY AFTER OPENING OF BIDS, IT MAY BE CORRECTED AND CONSIDERED IN MAKING AWARD.

WITH RESPECT TO YOUR FOURTH QUESTION, WHICH CONCERNS THE BID OF THE BORDEN COMPANY ON ITEM 166 COVERING CREAM, HALF AND HALF, IN QUART CONTAINERS, IN THE AMOUNT OF $0.25 PER UNIT (QUART), IT APPEARS THAT ALL THE OTHER BIDS WERE $0.45 PER QUART, EXCLUSIVE OF SALES TAX. ITS BID MAY BE CORRECTED AND CONSIDERED ALONG WITH THE OTHER BIDS IN MAKING AWARD.

REGARDING THE DISCREPANCY IN THE BID OF SEALTEST FOOD ON ITEM 171 RESULTING FROM THE MISPLACEMENT OF THE DECIMAL POINT, FOR THE REASONS STATED BY YOU, WE AGREE THAT THE BID MAY BE CORRECTED AND CONSIDERED IN MAKING AWARD.