B-146236, JUL. 6, 1961

B-146236: Jul 6, 1961

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VETERANS ADMINISTRATION: REFERENCE IS MADE TO A LETTER DATED JUNE 23. ON WHICH PURCHASE ORDER NO. 5184 WAS BASED. WERE RECEIVED IN RESPONSE TO THE INVITATION. WAS AWARDED THAT ITEM ON PURCHASE ORDER NO. 5184. CHOICE" GRADE CALLED FOR UNDER THE INVITATION AS IT DID NOT HAVE IT IN STOCK. LATER HE ADVISED THE CONTRACTING OFFICER THAT THE COMPANY WAS UNABLE TO PROCURE THE "CHOICE" GRADE VEAL FOR DELIVERY. EXPLAINED THAT ALTHOUGH "CHOICE" HAD BEEN DELETED AND "GOOD ONLY" SUBSTITUTED ON THE WORK SHEETS HE HAD FAILED TO MAKE THIS CHANGE ON THE BID THAT WAS SUBMITTED. THE CONTRACTOR WAS ADVISED BY THE CONTRACTING OFFICER THAT SINCE IT COULD NOT FURNISH THE MEAT SPECIFICALLY CALLED FOR UNDER ITEM NO. 53 HE WOULD HAVE TO BUY AGAINST THE CONTRACTOR.

B-146236, JUL. 6, 1961

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED JUNE 23, 1961, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, RELATIVE TO AN ERROR WHICH ARMOUR AND COMPANY, LITTLE ROCK, ARKANSAS, HAS ALLEGED IT MADE CONCERNING ITS BID ON ITEM NO. 53 SUBMITTED PURSUANT TO INVITATION NO. 61-54 ISSUED MAY 3, 1961, BY THE CONSOLIDATED VA HOSPITAL AT LITTLE ROCK, ARKANSAS, ON WHICH PURCHASE ORDER NO. 5184 WAS BASED.

THE INVITATION SOLICITED BIDS FOR FURNISHING TO THE HOSPITAL CERTAIN "PACKING HOUSE AND DAIRY PRODUCTS" IN ACCORDANCE WITH THE SPECIFICATIONS, IN THE QUANTITIES AND AT THE TIMES INDICATED IN THE INVITATION. THE ABSTRACT OF BIDS SHOWS THAT FIVE BIDS ON ITEM NO. 53, HERE IN QUESTION, WERE RECEIVED IN RESPONSE TO THE INVITATION, AS FOLLOWS:

TABLE

BIDDER UNIT PRICE

ARMOUR AND COMPANY $0.6594 PER POUND

MAR MEAT COMPANY, INC. 0.80 PER POUND

ST. LOUIS INDEPENDENT PACKAGING CO. 0.83 PER POUND

PFAELZER BROS. 0.8345 PER POUND

OAKLAND MEAT COMPANY, INC. 0.761 PER POUND

(NOT RESPONSIVE DUE TO 500 LB.

MINIMUM SHIPMENT REQUIREMENT)

ITEM NO. 53 CALLED FOR 1,285 POUNDS OF "VEAL OR CALF LEGS, UNTRIMMED, FRESH, CHILLED, CHOICE GRADE, SINGLE, 77-100 LBS. FOR 2 LEGS.' ARMOUR AND COMPANY, BEING THE LOW BIDDER ON ITEM NO. 53, WAS AWARDED THAT ITEM ON PURCHASE ORDER NO. 5184, DATED MAY 16, 1961.

UNDER DATE OF MAY 17, 1961, MR. HOWARD OF ARMOUR AND COMPANY ADVISED THE CHIEF, PURCHASING AND CONTRACT SECTION, BY TELEPHONE THAT WHEN PREPARING THE ORDER HE DISCOVERED THAT THEY HAD BID ,CHOICE" INSTEAD OF "GOOD" GRADE ON ITEM NO. 53, AND THAT THE COMPANY COULD NOT FURNISH THE ,CHOICE" GRADE CALLED FOR UNDER THE INVITATION AS IT DID NOT HAVE IT IN STOCK. HE STATED THAT HIS ERROR HAD NOT BEEN IN THE PRICE BID, BUT IN AGREEING TO DELIVER THE "CHOICE" GRADE. LATER HE ADVISED THE CONTRACTING OFFICER THAT THE COMPANY WAS UNABLE TO PROCURE THE "CHOICE" GRADE VEAL FOR DELIVERY. EXPLAINED THAT ALTHOUGH "CHOICE" HAD BEEN DELETED AND "GOOD ONLY" SUBSTITUTED ON THE WORK SHEETS HE HAD FAILED TO MAKE THIS CHANGE ON THE BID THAT WAS SUBMITTED.

IN A LATER TELEPHONE CONVERSATION ON MAY 18, 1961, THE CONTRACTOR WAS ADVISED BY THE CONTRACTING OFFICER THAT SINCE IT COULD NOT FURNISH THE MEAT SPECIFICALLY CALLED FOR UNDER ITEM NO. 53 HE WOULD HAVE TO BUY AGAINST THE CONTRACTOR, AND THAT IT COULD FILE CLAIM IN THE USUAL MANNER SUBSTANTIATING HOW THE ERROR WAS MADE, FURNISHING WORK PAPERS AND ITS EXPLANATION OF HOW THE ERROR WAS MADE, ALL PAPERS BEING NOTARIZED. THE PURCHASE OF ITEM NO. 53 THEN WAS REISSUED ON PURCHASE ORDER NO. 5236 TO MAR MEAT COMPANY, WHO HAD SUBMITTED THE NEXT LOW RESPONSIVE BID OF $0.80 ON THAT ITEM.

WHILE IT MAY BE THAT ARMOUR AND COMPANY MADE AN ERROR IN SUBMITTING ITS BID, AS ALLEGED, THE BASIC QUESTION FOR CONSIDERATION IS NOT WHETHER THE COMPANY MADE A MISTAKE IN ITS BID BUT WHETHER THE ACCEPTANCE OF THE BID BY THE CONTRACTING OFFICER CONSUMMATED A VALID AND BINDING CONTRACT. ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICER ACCEPTING THE BID WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. COMP. GEN. 36.

THE ARMOUR AND COMPANY DID NOT ALLEGE ERROR IN ITS BID UNTIL AFTER AWARD TO IT OF THE PURCHASE ORDER, AND IT AGREES THAT THERE WAS NOTHING ON THE BID WHICH SHOULD HAVE MADE THE CONTRACTING OFFICER AWARE OF ANY ERROR BECAUSE CIRCUMSTANCES AND UNUSUAL CASES OF OVER SUPPLY CAN OFTEN CAUSE A PACKER TO BID CONSIDERABLY LOWER. THE COMPANY'S AGENT STATED THAT "PRICE IS NOT MY ERROR AT ALL - I SHOULD HAVE CHANGED THE GRADE TO REAL GOOD INSTEAD OF CHOICE. WE CANNOT FURNISH THE CHOICE AT ALL.' ACCORDINGLY, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF THE BID OF THE ARMOUR AND COMPANY WAS MADE IN GOOD FAITH.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR RELEASING ARMOUR AND COMPANY FROM ITS OBLIGATION AS TO ITEM NO. 53 ON PURCHASE ORDER NO. 5184 FOR THE EXCESS COST TO THE GOVERNMENT ARISING FROM THE COMPANY'S DEFAULT THEREUNDER.

THE PAPERS FORWARDED WITH THE LETTER OF JUNE 23, 1961, ARE RETURNED, AS REQUESTED.