B-155217, OCT. 5, 1964

B-155217, OCT. 5, 1964

TO THE HONORABLE JOHN S. GLEASON, JR., ADMINISTRATOR, VETERANS ADMINISTRATION:

WE REFER TO LETTER OF SEPTEMBER 17, 1964, FILE 174B, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, RELATIVE TO A MISTAKE IN BID ALLEGED AFTER AWARD BY THE LUTHERAN CHURCH SUPPLY STORES, PHILADELPHIA, PENNSYLVANIA, UNDER INVITATION FOR BIDS NO. 64-48, ISSUED BY THE VETERANS ADMINISTRATION (VA) HOSPITAL, TOMAH, WISCONSIN.

THE INVITATION SOLICITED BIDS FOR 17 ITEMS OF EQUIPMENT FOR USE IN THE CHAPEL AT THE VA HOSPITAL AT TOMAH, WISCONSIN. BIDS WERE OPENED ON JUNE 24, 1964, AND LUTHERAN WAS AWARDED THE CONTRACT FOR ITEMS 2, 6, 7 AND 11, UNDER PURCHASE ORDER NO. 2291, DATED JUNE 29, 1964.

BY LETTERS DATED JULY 8 AND 22, 1964, LUTHERAN INFORMED THE HOSPITAL THAT AN ERROR WAS MADE IN ITS PROPOSAL INVOLVING AN INCORRECT QUOTATION ON ITEM 6, A COMMUNION SET. LUTHERAN FORWARDED A WORKSHEET AND PAGE 49 OF ITS PRICE LIST TO THE HOSPITAL AND ADVISED:

"* * * INSTEAD OF QUOTING ON THE THOMAS SELF-COLLECTING TRAYS IN SILVERPLATE, WE QUOTED ON THE IDEAL TYPE OF TRAYS WHICH IS SMALLER IN DIAMETER AND DOES NOT HAVE THE SELF-COLLECTING CUSHIONED HOLES AT THE OUTER EDGE OF THE TRAY. ACTUALLY, OUR QUOTATION WOULD BE $280.50 FOR THE FOUR TRAYS WITH 44 GLASSES, THE COVER AND BASE.

"* * * FROM THE FIGURES ON THE ATTACHED WORK SHEET AND THE PRICES PRINTED IN OUR CATALOG YOU WILL NOTICE THAT WE BASED OUR QUOTATION ON THE SILVER PLATED, 44 GLASS TRAY, NXW909 IN PLACE OF THE SILVER PLATED, 44 GLASS TRAY, NXW921.

"WE TRUST THAT THE ENCLOSED INFORMATION WILL ENABLE YOU TO FIND IN OUR FAVOR CONCERNING THIS CLAIM AND ENABLE US TO FILL YOUR ORDER AT THE CORRECT PRICE OF $280.50 FOR THIS ITEM.'

ONLY THREE RESPONSIVE BIDS WERE RECEIVED ON ITEM 6 AS FOLLOWS:

CHART

TIME OF

BIDDER ACCEPTANCE DISCOUNT DELIVERY PRICE LUTHERN CHURCH SUPPLY

STORES 2900 QUEEN LANE PHILADELPHIA, PA. 19129 60 DAYS NET 60 DAYS $214.50 T. H. STEMPER COMPANY 1125 E. POTTIER AVENUE MILWAUKEE, WISCONSIN 60 DAYS 2 PERCENT, 30 45 DAYS $278 AUGSBURG PUBLISHING HOUSE 426 SOUTH 5TH STREET MINNEAPOLIS 15, MINNESOTA 60 DAYS

NET 30 DAYS $278

THE RECORD SHOWS THAT THE LOWEST RESPONSIVE BID FOR ITEM 6 WAS APPROXIMATELY 69 PERCENT HIGHER THAN THE GOVERNMENT'S ESTIMATED COST. BUT IT IS REPORTED THAT THIS ESTIMATE WAS NOT BASED ON CURRENT PRICES FROM THE TRADE. FURTHERMORE, LUTHERAN'S BID WAS APPROXIMATELY 23 PERCENT LOWER THAN THE NEXT TWO LOW BIDS.

AS A GENERAL RULE, WHEN A UNILATERAL ERROR IS ALLEGED AFTER AWARD, THE CONTRACT IS NOT SUBJECT TO REFORMATION SINCE A BINDING AND ENFORCEABLE CONTRACT ARISES UPON ACCEPTANCE. SALIGMAN V. UNITED STATES, 56 F.SUPP. 505, AND CASES CITED THEREIN. THIS GENERAL RULE,HOWEVER, IS NOT FOR APPLICATION WHERE THE CIRCUMSTANCES ARE SUCH THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR PRIOR TO AWARD. IN SUCH CASES, ACCEPTANCE BY THE CONTRACTING OFFICER DOES NOT RESULT IN A BINDING CONTRACT AND EITHER OUR OFFICE OR THE COURTS WILL ALLOW APPROPRIATE RELIEF. 37 COMP. GEN. 685; 17 COMP. GEN. 575. COURSE, ANY SUCH ADJUSTMENT MAY NOT RESULT IN THE TOTAL CORRECTED PRICES EXCEEDING THE PRICE QUOTED IN THE NEXT LOW ACCEPTABLE BID. 37 COMP. GEN. 398; ID. 685. IN THE INSTANT CASE WE BELIEVE THAT THE RECORD CLEARLY SHOWS NOT ONLY THE EXISTENCE OF THE ALLEGED ERROR, BUT THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN PLACED ON NOTICE OF THE POSSIBILITY OF ERROR AND THEREFORE SHOULD NOT HAVE ACCEPTED THE BID SUBMITTED BY LUTHERAN WITHOUT FIRST OBTAINING VERIFICATION.

HOWEVER, IT IS NOTED THAT THE CONTRACTOR'S CORRECTED BID FOR ITEM 6 WOULD EXCEED THE NEXT LOWEST BID OF $278, LESS A PROMPT PAYMENT DISCOUNT OF 2 PERCENT, 30 DAYS, BY $8.06. THEREFORE, THE PRICE ADJUSTMENT SHOULD BE LIMITED TO AN AMOUNT WHICH WILL NOT EXCEED THE NEXT LOWEST BID. 37 COMP. GEN. 398.

A COPY OF THIS DECISION SHOULD BE ATTACHED TO THE AMENDED PURCHASE ORDER.