B-150902, MAR. 12, 1963

B-150902: Mar 12, 1963

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EDUCATION AND WELFARE: REFERENCE IS MADE TO A LETTER DATED FEBRUARY 21. AS TO WHICH THE BID WAS $21 PER UNIT. THE ENTIRE BID WAS ACCEPTED AND UNDER DATE OF DECEMBER 19. A CONTRACT WAS AWARDED TO CENTRAL BLOOD SERVICES. IT WAS STATED IN THE LETTER OF FEBRUARY 21. THAT THE CONTRACT IN THIS CASE WAS AWARDED ON THE BASIS OF SOLE SOURCE OF SUPPLY UNDER THE AUTHORITY OF SECTION 302 (C) (10) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. WHETHER OR NOT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF MISTAKE BEFORE AWARD. HE FAILED TO TAKE INTO CONSIDERATION THE FACT THAT THE SPECIFICATIONS HAD BEEN CHANGED TO PROVIDE THAT THE CONTRACTOR WAS NOW EXPECTED TO SUPPLY THE BLOOD CONTAINERS AT $3.17 EACH.

B-150902, MAR. 12, 1963

TO THE SECRETARY OF HEALTH, EDUCATION AND WELFARE:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 21, 1963, WITH ENCLOSURES, FROM MR. KELLY T. MCCRACKEN, CHIEF, PROCUREMENT AND SUPPLY MANAGEMENT BRANCH, RELATING TO A MISTAKE IN BID ALLEGED BY CENTRAL BLOOD SERVICES, INC., 508 SOUTH BROADWAY, BALTIMORE, MARYLAND, AFTER THE AWARD OF NEGOTIATED CONTRACT NO. PH43-63-693, DATED DECEMBER 19, 1962.

THE RECORD SHOWS THAT UNDER DATE OF NOVEMBER 20, 1962, THE NATIONAL INSTITUTES OF HEALTH, UNITED STATES PUBLIC HEALTH SERVICE, ISSUED PROPOSAL NO. CC-A-75-63 TO CENTRAL BLOOD SERVICES, C., REQUESTING BIDS FOR THE FURNISHING OF WHOLE HUMAN BLOOD AND RELATED SERVICES ON A CONTINUING BASIS, AS REQUIRED, DURING THE PERIOD JANUARY 1 THROUGH DECEMBER 31, 1963. IN RESPONSE TO THE PROPOSAL, CENTRAL BLOOD SERVICES, INC., SUBMITTED A BID UNDER DATE OF DECEMBER 12, 1962, FOR THE ITEMS INVOLVED, INCLUDING ITEM 1 COVERING AN ESTIMATED QUANTITY OF 6,000 UNITS OF BLOOD (480 MILLILITERS PLUS OR MINUS 20 MILLILITERS PER UNIT), AS TO WHICH THE BID WAS $21 PER UNIT. THE ENTIRE BID WAS ACCEPTED AND UNDER DATE OF DECEMBER 19, 1962, A CONTRACT WAS AWARDED TO CENTRAL BLOOD SERVICES, INC.

IT WAS STATED IN THE LETTER OF FEBRUARY 21, 1963, THAT THE CONTRACT IN THIS CASE WAS AWARDED ON THE BASIS OF SOLE SOURCE OF SUPPLY UNDER THE AUTHORITY OF SECTION 302 (C) (10) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, 394, THERE BEING ENCLOSED WITH THE LETTER A MEMORANDUM DATED JANUARY 29, 1963, BY THE CHIEF, SUPPLY MANAGEMENT NATIONAL INSTITUTES OF HEALTH, SHOWING THE JUSTIFICATION FOR HAVING USED THE INDICATED AUTHORITY.

UNDER DATE OF DECEMBER 28, 1962, THE EXECUTIVE DIRECTOR OF THE CONTRACTOR TELEPHONED THE SUPPLY MANAGEMENT BRANCH TO REPORT HIS FAILURE TO NOTE, WHEN SUBMITTING THE BID, THAT THE BID SPECIFICATIONS REQUIRED THE CONTRACTOR TO FURNISH THE BLOOD CONTAINERS FOR ITEM 1. HE STATED THAT AS A RESULT OF THE OVERSIGHT HIS FIRM STOOD TO LOSE CONSIDERABLE MONEY IN FULFILLING THE TERMS OF THE CONTRACT, AND HE, THEREFORE, REQUESTED THAT EITHER THE CONTRACTOR BE ALLOWED TO ADD A CHARGE OF $3.17 FOR EACH UNIT OF ITEM 1 TO COVER THE COST OF THE CONTAINERS, OR THAT THE CONTAINERS BE FURNISHED BY THE NATIONAL INSTITUTES OF HEALTH.

RESPECTING THE UNIT PRICE OF WHOLE HUMAN BLOOD PROVIDED UNDER PREVIOUS CONTRACTS WITH CENTRAL BLOOD SERVICES, INC., CONTAINER PRICES, AND WHETHER OR NOT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF MISTAKE BEFORE AWARD, THE CHIEF OF THE SUPPLY MANAGEMENT BRANCH MADE THE FOLLOWING STATEMENT:

"THE CONTRACTOR STATES THAT, DUE TO AN OVERSIGHT, HE FAILED TO TAKE INTO CONSIDERATION THE FACT THAT THE SPECIFICATIONS HAD BEEN CHANGED TO PROVIDE THAT THE CONTRACTOR WAS NOW EXPECTED TO SUPPLY THE BLOOD CONTAINERS AT $3.17 EACH, WHICH IN THE PAST WERE SUPPLIED BY NIH. IN ADDITION TO THE $21.00 UNIT PRICE FOR ITEM 1, THE CONTRACTOR, BY REASON OF THE ERROR, REQUEST THE SUM OF $3.17 TO COVER A BLOOD CONTAINER FOR EACH UNIT OF BLOOD FURNISHED TO NIH, OR REVERT TO THE PREVIOUS CONTRACT PROVISION WHEREBY THE GOVERNMENT FURNISHED THE CONTAINERS. AS EVIDENCE TO SUBSTANTIATE THE INCREASE IN PRICE, THE CONTRACTOR CLAIMS THAT THE COST FOR THIS CONTAINER IS $3.17 EACH WHICH IS WELL IN EXCESS OF THE POTENTIAL MARK UP ON THIS ITEM SHOWN ON THE COST BREAKDOWN. IN THIS CONNECTION, THE CONTRACTOR HAS MAINTAINED THE PRICE LEVEL OF $21.00 PER UNIT UNDER THREE PREVIOUS CONTRACTS (COPIES ATTACHED) WHEREIN THE GOVERNMENT, IN EACH INSTANCE, FURNISHED THE CONTAINERS.'

IT WAS STATED FURTHER IN THE LETTER OF FEBRUARY 21, 1963, THAT A REVIEW OF THIS CASE DISCLOSES CLEAR AND CONVINCING EVIDENCE THAT A MISTAKE IN BID WAS MADE, AND THAT ALTHOUGH THE MISTAKE WAS UNILATERALLY THAT OF THE CONTRACTOR IT WAS SO APPARENT AS TO HAVE CHARGED THE CONTRACTING OFFICER WITH NOTICE OF THE PROBABILITY OF MISTAKE. IT WAS THEN STATED TO BE SATISFACTORY TO YOUR DEPARTMENT THAT THE CONTRACT PRICE BE REFORMED TO PERMIT PAYMENT OF $24.17 PER UNIT FOR ITEM 1.

TAKING INTO CONSIDERATION ALL OF THE FACTS AND CIRCUMSTANCES IN THIS CASE, IT IS APPARENT THAT THE CONTRACTOR MADE A MISTAKE IN SUBMITTING ITS BID. IN VIEW OF THE EXPLANATION CONTAINED IN THE LETTER OF FEBRUARY 21, 1963, WE AGREE THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR AND THAT THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE BIDDER TO VERIFY ITS BID.

ACCORDINGLY, THE CONTRACT MAY BE AMENDED SO AS TO INCREASE THE PRICE ON ITEM 1 TO $24.17 PER UNIT, THE ADJUSTMENT TO COVER THE DELIVERIES ALREADY MADE.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO BE ATTACHED TO THE CONTRACT.