B-143753, AUG. 25, 1960

B-143753: Aug 25, 1960

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TO ADMINISTRATOR VETERANS ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 12. TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. 61-1 ISSUED BY THE VETERANS ADMINISTRATION CENTER. INCLUDED THEREIN WAS ITEM 175 (F) WHICH CALLED FOR DELIVERY OF 2. SUBMITTED THE ONLY BID ON THE HALF YEARLY REQUIREMENT FOR ICE CREAM (4 ITEMS) AND ITS BID ON ITEM 175 (F) WAS $1 PER GALLON. ITS BID ON THIS ITEM WAS ACCEPTED ON JUNE 27. THE CONTRACTOR ALLEGED THAT ITS BID SHOULD HAVE BEEN $2.133 PER GALLON AND THAT THE BID PRICE OF $1 PER GALLON WAS FOR ONE DOZEN CUPS WHICH WAS THE MANNER IN WHICH 5 OZ. CUPS WERE USUALLY SOLD. MUST BE HELD UNTIL SUCH RE-BID AUTHORITY OR OTHER ACTION APPROVAL IS RECEIVED.

B-143753, AUG. 25, 1960

TO ADMINISTRATOR VETERANS ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 12, 1960, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH REGARD TO A MISTAKE ALLEGED BY FOREMOST DAIRIES, INC., TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. 61-1 ISSUED BY THE VETERANS ADMINISTRATION CENTER, BAY PINES, FLORIDA.

THE INVITATION SOLICITED BIDS--- TO BE OPENED MAY 18, 1960--- FOR FURNISHING VARIOUS QUANTITIES OF ICE CREAM FOR THE PERIOD FROM JULY 1 TO DECEMBER 31, 1960. INCLUDED THEREIN WAS ITEM 175 (F) WHICH CALLED FOR DELIVERY OF 2,150 GALLONS OF ICE CREAM, PACKAGED IN 5 OZ. WAXED CUPS, APPROXIMATELY 2 DOZEN CUPS PER GALLON. FOREMOST DAIRIES, INC., SUBMITTED THE ONLY BID ON THE HALF YEARLY REQUIREMENT FOR ICE CREAM (4 ITEMS) AND ITS BID ON ITEM 175 (F) WAS $1 PER GALLON. ITS BID ON THIS ITEM WAS ACCEPTED ON JUNE 27, 1960. ON JULY 8, 1960, THE CONTRACTOR ALLEGED THAT ITS BID SHOULD HAVE BEEN $2.133 PER GALLON AND THAT THE BID PRICE OF $1 PER GALLON WAS FOR ONE DOZEN CUPS WHICH WAS THE MANNER IN WHICH 5 OZ. CUPS WERE USUALLY SOLD. IN ITS LETTER OF JULY 8 THE CONTRACTOR REQUESTED APPROVAL OF AN INCREASE TO $2.133 PER GALLON. IN ITS SUBSEQUENT LETTER OF JULY 14 THE CONTRACTOR REPEATED ITS REQUEST BUT AGREED THAT IT WOULD BE PROPER FOR THE GOVERNMENT TO READVERTISE THE REQUIREMENT. IT CONCLUDES THAT IF, IN THE OPINION OF THE CONTRACTING OFFICER, "THE PRICES AS BID, THOUGH IN ERROR, MUST BE HELD UNTIL SUCH RE-BID AUTHORITY OR OTHER ACTION APPROVAL IS RECEIVED, SUCH BID PRICES WILL BE HONORED.'

PRIOR TO AWARD THE CONTRACTING OFFICER DID NOT CONSIDER THAT THE BID PRICE ON ITEM 175 (F) WAS IN ERROR. THE PROCURING OFFICE NOW CONSIDERS THAT THE PRICE OF THAT ITEM IS OUT OF LINE WITH OTHER PER GALLON PRICES ENTERED BY THE CONTRACTOR ON OTHER ITEMS. IT IS POINTED OUT, HOWEVER, THAT A PRICE OF $2.133 PER GALLON IN 5 OZ. CUPS IS HIGHER THAN THE QUOTED PRICE OF $1.96 PER GALLON IN 3 OZ. CUPS. IT IS INDICATED THAT THIS IS CONTRARY TO THE NORMAL TRADE PRACTICE OF OFFERING LOWER PRICES ON LARGER INDIVIDUAL CONTAINERS. THE PRICE OF $1 FOR ONE DOZEN OF 5 OZ. CUPS, OR $2.133 PER GALLON, IS CONSIDERED EXCESSIVE AND THE PROCURING OFFICE DOES NOT WANT TO CONTINUE UNDER A CONTRACT AT THAT PRICE.

SINCE THE RECORD INDICATES THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF A POSSIBLE MISTAKE IN THE BID, PRIOR TO AWARD, AND SINCE THE ALLEGED INTENDED PRICE IS CONSIDERED EXCESSIVE, THE CONTRACT MAY BE CANCELLED. AS TO THE PRICE TO BE PAID FOR THE ICE CREAM THAT HAS BEEN ORDERED UNDER THE CONTRACT, THE AMOUNT SHOULD BE LIMITED TO $1 PER GALLON OF 5 OZ. CUPS.

THE LETTERS OF JULY 14 AND 21, 1960, FROM THE CONTRACTOR AND PROCURING OFFICE, RESPECTIVELY, ARE RETURNED HEREWITH, AS REQUESTED.