B-152737, NOV. 14, 1963

B-152737, NOV. 14, 1963

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

BY LETTER DATED OCTOBER 21, 1963, WITH ENCLOSURES, FILE 074B, THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, REQUESTED OUR DECISION RELATIVE TO MISTAKE IN BID ALLEGED TO HAVE BEEN MADE BY MODEL DAIRY IN RESPONDING TO INVITATION FOR BIDS NO. 64-8, ISSUED ON MAY 27, 1963, BY THE VETERANS ADMINISTRATION HOSPITAL, CHILLICOTHE, OHIO, UPON WHICH CONTRACT V5097P-933 WAS BASED.

THE INVITATION REQUESTED BIDS FOR FURNISHING CERTAIN DAIRY PRODUCTS DURING THE FISCAL YEAR 1964 "IN ACCORDANCE WITH VA PAMPHLET 10-19 REVISED, VETERANS ADMINISTRATION STANDARD SPECIFICATIONS FOR PACKING AND DAIRY PRODUCTS (JANUARY 1959 EDITION, AS AMENDED) WHICH IS MADE A PART OF THIS INVITATION.' BIDDERS WERE ADVISED THAT AWARD WOULD BE MADE IN THE AGGREGATE ONLY FOR THE 13 ITEMS OF CREAM, BUTTER, MILK, ETC., LISTED IN THE SCHEDULE. MODEL DAIRY SUBMITTED THE LOWEST AGGREGATE BID IN THE AMOUNT OF $94,583.88. OTHER AGGREGATE BIDS RANGED FROM $101,313.28 TO $157,535.22. THE LOW AGGREGATE BID OF MODEL DAIRY WAS ACCEPTED ON JUNE 27, 1963, AS SUBMITTED, WITHOUT VERIFICATION OF THE AGGREGATE BID PRICE. ON JUNE 29, 1963, MODEL DAIRY ALLEGED MISTAKE IN BID WITH RESPECT TO ITEM 178, ICE CREAM MIX, IN THAT IT ASSUMED THAT THE MIX WAS TO BE OF 6 PERCENT BUTTERFAT REQUIREMENT INSTEAD OF THE 12 PERCENT REQUIREMENT PRESCRIBED IN VA PAMPHLET 10-19 REVISED. MODEL DAIRY ADVISED THAT IT NEGLECTED TO OBTAIN THE VA PAMPHLET AND THAT ITS IMPORTANCE WAS COMPLETELY OVERLOOKED. HAD THE 12 PERCENT REQUIREMENT NOT BEEN OVERLOOKED BY MODEL DAIRY, ITS BID FOR ITEM 178 WOULD HAVE BEEN AT LEAST $1.25 PER GALLON RATHER THAN THE ?95 AS BID. OTHER BIDS ON ITEM 178 RANGED AS FOLLOWS: $1.10, $1.20, AND $1.25 PER GALLON

IT IS REPORTED THAT MODEL DAIRY HAD NO INTENTION TO BID ON A MIX WITH A 12 PERCENT BUTTERFAT REQUIREMENT AND THAT NO EVIDENCE CAN BE PRESENTED TO ESTABLISH THE BID PRICE FOR ITEM 178 BUT FOR THE MISTAKE.

THE RECORD INDICATES THAT THE CONTRACTING OFFICER WAS AWARE, A FEW DAYS PRIOR TO ACCEPTANCE OF MODEL DAIRY'S BID, THAT ITS BID ON ITEM 178 WAS BASED ERRONEOUSLY ON AN ICE CREAM MIX OF 6 PERCENT, RATHER THAN 12 PERCENT, BUTTERFAT REQUIREMENT. HENCE, NOTWITHSTANDING THAT MODEL DIARY BID WAS IN AN AGGREGATE AMOUNT AND THAT THE MISTAKE WAS NOT ALLEGED UNTIL TWO DAYS AFTER ACCEPTANCE, THE ACTION OF THE CONTRACTING OFFICER IN MAKING THE AWARD ON A SUSPECT BID WITHOUT ALLOWING A REASONABLE TIME FOR CONFIRMATION OR EXPLANATION BY MODEL DAIRY OF ITS MISTAKE DID NOT CONSUMMATE A VALID AND BINDING CONTRACT. 37 COMP. GEN. 706, AND B-124321 DATED JUNE 24, 1955.

ACCORDINGLY, AND AS RECOMMENDED BY THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, THE PER GALLON PRICE OF ITEM 178 MAY BE INCREASED FROM ?95 TO $1.25 FOR QUANTITIES DELIVERED OR TO BE DELIVERED THROUGH JUNE 30, 1964. WE UNDERSTAND THAT THE $1.25 PRICE IS THE SAME AS THAT BID BY THE NEXT LOWEST AGGREGATE BIDDER. ALSO, IT APPEARS THAT SUCH INCREASE, COMPUTED ON THE BASIS OF THE ESTIMATED QUANTITY OF ICE CREAM MIX, WILL NOT CAUSE MODEL DAIRY'S BID PRICE AS CORRECTED TO EXCEED THE NEXT LOWEST AGGREGATE BID.