B-144800, JAN. 23, 1961

B-144800: Jan 23, 1961

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ROBERT BRIMBURY: REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 9. TO HAVE BEEN MADE IN ITS BID SUBMITTED DECEMBER 16. A NUMBER OF BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION FOR BIDS. - THE ITEM AS TO WHICH THE ALLEGED ERROR WAS MADE. THE OTHER BIDDERS ON THIS ITEM WERE THE BORDEN COMPANY AT THE PRICE OF $1.32 PER GALLON LESS 11.6 PERCENT TRADE DISCOUNT. IT WAS REPORTED THAT NO AWARD AS TO ITEM NO. 178 WAS MADE AT THE BID OPENING DUE TO THE OBVIOUSLY LOW PRICE SUBMITTED BY MIDWEST DAIRY. V5234P-259 WAS AWARDED TO MIDWEST DAIRY. WITH YOUR LETTER THERE WERE ENCLOSED THE ORIGINAL BID OF THE MIDWEST DAIRY PRODUCTS CORPORATION AND A CERTIFICATION TO THE EFFECT THAT AT THE TIME OF THE BID OPENING THE CONTRACTING OFFICER SUSPECTED THAT AN ERROR HAD BEEN MADE BY MIDWEST DAIRY IN SUBMITTING ITS BID.

B-144800, JAN. 23, 1961

TO MR. ROBERT BRIMBURY:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 9, 1961 (5234/134C), WITH ENCLOSURES, RELATING TO A MISTAKE ALLEGED BY THE MIDWEST DAIRY PRODUCTS CORPORATION, 3324 FAIR PARK BOULEVARD, LITTLE ROCK, ARKANSAS, TO HAVE BEEN MADE IN ITS BID SUBMITTED DECEMBER 16, 1960, PURSUANT TO INVITATION FOR BIDS NO. 61-39, DATED DECEMBER 6, 1960, ISSUED BY THE SUPPLY OFFICER AT THE CONSOLIDATED VA HOSPITAL. YOUR LETTER, IN EFFECT, REQUESTS A DECISION BY OUR OFFICE AS TO THE ACTION TO BE TAKEN WITH RESPECT TO THE ALLEGED MISTAKE IN BID.

THE RECORD SHOWS THAT BY THE CITED INVITATION THE SUPPLY OFFICER REQUESTED BIDS--- TO BE OPENED AT 2 P.M. ON DECEMBER 16, 1960--- FOR FURNISHING CREAM, MILK, BUTTERMILK, COTTAGE CHEESE AND ICE CREAM MIX TO THE VETERANS ADMINISTRATION HOSPITAL. A NUMBER OF BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION FOR BIDS, THE LOWEST AS TO ITEM NO. 178 FOR THE FURNISHING OF ICE CREAM MIX--- THE ITEM AS TO WHICH THE ALLEGED ERROR WAS MADE--- BEING THAT SUBMITTED BY THE MIDWEST DAIRY PRODUCTS CORPORATION AT THE PRICE OF $0.96 PER GALLON LESS A TEN PERCENT TRADE DISCOUNT. THE OTHER BIDDERS ON THIS ITEM WERE THE BORDEN COMPANY AT THE PRICE OF $1.32 PER GALLON LESS 11.6 PERCENT TRADE DISCOUNT; THE COLEMAN DAIRY, INC., AT THE PRICE OF $1.32 PER GALLON LESS ONE PERCENT "10 DAYS TIME DISCOUNT; " AND THE SUGAR CREEK CREAMERY AT THE PRICE OF $1.32 PER GALLON NET.

IT WAS REPORTED THAT NO AWARD AS TO ITEM NO. 178 WAS MADE AT THE BID OPENING DUE TO THE OBVIOUSLY LOW PRICE SUBMITTED BY MIDWEST DAIRY, IT BEING STATED BY THE CHIEF OF THE PURCHASE AND CONTRACT SECTION THAT HE WOULD CONTACT THE LOW BIDDER TO VERIFY HIS BID. WITHIN APPROXIMATELY ONE HOUR AFTER THE BID OPENING, MR. FRANK WATSON, MANAGER OF MIDWEST DAIRY, VERBALLY ALLEGED ERROR. BY YOUR LETTER OF DECEMBER 20, 1960, TO MR. WATSON, YOU REQUESTED THE CORPORATION TO COMPLY WITH THE TERMS OF THE CONTRACT INASMUCH AS THE TIME ELEMENT DID NOT PERMIT ADJUDICATION OF THE CLAIM OF ERROR PRIOR TO THE BEGINNING OF THE CONTRACT PERIOD ON JANUARY 1, 1961. ON THE SAME DAY CONTRACT NO. V5234P-259 WAS AWARDED TO MIDWEST DAIRY, INCLUDING ITEM NO. 178 AT THE PRICE OF $0.96 PER GALLON LESS TEN PERCENT TRADE DISCOUNT, FOR THE FURNISHING OF 2,470 GALLONS OF ICE CREAM MIX DURING THE CONTRACT PERIOD FROM JANUARY 1 THROUGH JUNE 30, 1961.

WITH YOUR LETTER THERE WERE ENCLOSED THE ORIGINAL BID OF THE MIDWEST DAIRY PRODUCTS CORPORATION AND A CERTIFICATION TO THE EFFECT THAT AT THE TIME OF THE BID OPENING THE CONTRACTING OFFICER SUSPECTED THAT AN ERROR HAD BEEN MADE BY MIDWEST DAIRY IN SUBMITTING ITS BID. IT WAS STATED ALSO THAT A PERSONAL VISIT TO MIDWEST DAIRY LENDS CREDENCE TO MR. WATSON'S CLAIM OF ERROR IN BIDDING BASED ON A VERBAL CONVERSATION BETWEEN HIM AND HIS SECRETARY. IT WAS NOT UNTIL JANUARY 9, 1961, THAT WRITTEN EVIDENCE WAS RECEIVED RESPECTING THE ALLEGED ERROR. IT WAS YOUR RECOMMENDATION, IF ALL OTHER ASPECTS OF THE BID ARE IN ORDER, THAT THIS CLAIM OF ERROR BE TREATED AS AN HONEST MISTAKE OF THE BIDDER AND THAT MIDWEST DAIRY BE ALLOWED AN INCREASE IN PRICE FROM $0.96 PER GALLON TO THAT OF THE NEXT LOW BIDDER.

THE RESPONSIBILITY FOR THE PREPARATION OF A BID IS UPON THE BIDDER, WHO ORDINARILY MUST BEAR THE CONSEQUENCES OF AN ERROR IN THE BID UPON WHICH A CONTRACT IS BASED. HOWEVER, THAT RULE DOES NOT ENTITLE THE GOVERNMENT TO TAKE ADVANTAGE OF A BIDDER'S ERROR WHEN IT IS ALLEGED PRIOR TO AWARD AND SATISFACTORILY ESTABLISHED. THE GENERAL RULE IS THAT THE ACCEPTANCE OF A BID WITH KNOWLEDGE OF ERROR THEREIN DOES NOT CONSUMMATE A VALID AND BINDING CONTRACT. SEE NASON COAL COMPANY V. UNITED STATES, 64 CT.CL. 526; AND WILLISTON ON CONTRACTS, SECTION 1578. SEE ALSO MOFFETT, HODGKINS AND CLARKE COMPANY V. ROCHESTER, 178 U.S. 373; KEMP V. UNITED STATES, 38 F.SUPP. 568; AND 17 COMP. GEN. 575, 576. IN DECISION DATED NOVEMBER 29, 1956, TO THE SECRETARY OF THE ARMY--- PUBLISHED AT 36 COMP. GEN. 441--- IT WAS STATED THAT IN UNDERTAKING TO BIND A BIDDER BY ACCEPTANCE OF A BID AFTER NOTICE OF A CLAIM OF ERROR BY THE BIDDER, THE GOVERNMENT VIRTUALLY UNDERTAKES THE BURDEN OF PROVING EITHER THAT THERE WAS NO ERROR OR THAT THE BIDDER'S CLAIM OF ERROR WAS NOT MADE IN GOOD FAITH.

ON THE RECORD, THERE IS LITTLE DOUBT THAT THE COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. ACCORDINGLY, SINCE THE ERROR WAS ALLEGED AND EXPLAINED PRIOR TO AWARD--- WHICH WAS MADE BECAUSE OF THE URGENT NEED FOR THE SUPPLIES--- WE DO NOT REGARD THE AWARD AS HAVING RESULTED IN A BINDING CONTRACT.

ON THE BASIS OF THE FACTS REPORTED IN THIS CASE, IT IS OUR VIEW THAT THE CONTRACT AWARDED TO MIDWEST DAIRY SHOULD BE CANCELLED AS TO ITEM NO. 178 AND THAT THE REQUIREMENTS OF THE HOSPITAL FOR ICE CREAM MIX FOR THE BALANCE OF THE INDICATED PERIOD SHOULD BE READVERTISED. FOR SUCH DELIVERIES AS MAY BE MADE BY MIDWEST DAIRY PRIOR TO SUCH CANCELLATION, IT IS OUR VIEW THAT PAYMENT SHOULD BE MADE THEREFOR AT A PRICE NOT IN EXCESS OF THE NEXT LOW BID ON ITEM NO. 178.