B-155482, FEB. 24, 1965

B-155482: Feb 24, 1965

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WELFARE: REFERENCE IS MADE TO A LETTER DATED OCTOBER 26. REQUESTING A DECISION ON WHETHER AN UPWARD ADJUSTMENT IN PRICE MAY BE ALLOWED THE PLYMOUTH POULTRY COMPANY AS THE RESULT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. PH76-64-92 IS BASED. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ALL ITEMS BID UPON AND AND ON JUNE 9. A PURCHASE ORDER WAS ISSUED REQUESTING DELIVERY OF THE COMMODITIES. TWO OTHER CONTRACTS COVERING DIFFERENT ITEMS WERE AWARDED AT THE SAME TIME. THE SUPPLIES HAVE BEEN DELIVERED AND PAID FOR AT THE CONTRACT PRICE. SINCE THE ERROR WAS FIRST ALLEGED AFTER AWARD. THE PRIMARY QUESTION INVOLVED IS NOT WHETHER A BONA FIDE MISTAKE IN THE BID WAS MADE BUT RATHER WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE.

B-155482, FEB. 24, 1965

TO THE HONORABLE SECRETARY OF HEALTH, EDUCATION, AND WELFARE:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 26, 1964, WITH ENCLOSURES, SIGNED BY THE CHIEF, PROCUREMENT AND SUPPLY MANAGEMENT BRANCH, REQUESTING A DECISION ON WHETHER AN UPWARD ADJUSTMENT IN PRICE MAY BE ALLOWED THE PLYMOUTH POULTRY COMPANY AS THE RESULT OF AN ERROR ALLEGED TO HAVE BEEN MADE IN ITS BID ON WHICH CONTRACT NO. PH76-64-92 IS BASED.

THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, PUBLIC HEALTH SERVICE, BY INVITATION NO. INV-ANC-127-64 SOLICITED BIDS FOR FURNISHING THIRTY- THREE ITEMS OF POULTRY, MEATS AND DAIRY PRODUCTS FOR DELIVERY F.O.B. THE ALASKA NATIVE HOSPITAL, ANCHORAGE, ALASKA, BETWEEN THE 25TH AND 30TH OF JUNE 1964. IN RESPONSE, PLYMOUTH POULTRY COMPANY OF SEATTLE, WASHINGTON, SUBMITTED A BID ON VARIOUS ITEMS AS FOLLOWS: ITEM 8 (400 LBS. OF CHICKEN BREASTS/--- $ .4330 PER LB.; ITEM 9 (400 LBS. OF CHICKEN THIGHS/--- $ .4330 PER LB.; ITEM 10 (450 LBS. OF ROASTERS/--- $ .3430 PER LB.; ITEM 23 (450 LBS. OF FROZEN RABBITS/--- $ .4930 PER LB.; ITEM 27 (1,000 LBS. OF TURKEYS/--- $ .3520 PER LB.; ITEM 29 (120 LBS. OF CHEESE/--- $ .4740 PER LB.; ITEM 32 (1,800 LBS. OF OLEOMARGARINE/--- $ .16 PER LB. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ALL ITEMS BID UPON AND AND ON JUNE 9, 1964, A PURCHASE ORDER WAS ISSUED REQUESTING DELIVERY OF THE COMMODITIES. TWO OTHER CONTRACTS COVERING DIFFERENT ITEMS WERE AWARDED AT THE SAME TIME.

ON JUNE 15, 1964, THE PURCHASING OFFICER RECEIVED A TELEGRAM FROM PLYMOUTH POULTRY COMPANY ANNOUNCING THAT PLYMOUTH, IN COMPUTING ITS BID, HAD OMITTED THE COST OF FREIGHT CHARGES WITH RESPECT TO EACH ITEM, AND REQUESTING PERMISSION TO BILL THE GOVERNMENT AN ADDITIONAL EIGHT CENTS A POUND ACROSS-THE-BOARD. A SUBSEQUENT LETTER FROM THE CONTRACTOR ENCLOSED COPIES OF SUPPLIERS' INVOICES, THE IMPORT OF WHICH TENDED TO SUPPORT THE ALLEGATION OF MISTAKE, AND A FILE COPY OF THE BID.

THE SUPPLIES HAVE BEEN DELIVERED AND PAID FOR AT THE CONTRACT PRICE.

SINCE THE ERROR WAS FIRST ALLEGED AFTER AWARD, THE PRIMARY QUESTION INVOLVED IS NOT WHETHER A BONA FIDE MISTAKE IN THE BID WAS MADE BUT RATHER WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY ITS ACCEPTANCE. THE CONTRACTING OFFICER BELIEVES THE EVIDENCE ESTABLISHES THAT THE UNIT PRICES FAILED TO INCLUDE AN ALLOWANCE FOR FREIGHT COSTS BUT STATES, NONETHELESS, THAT HE DID NOT HAVE ACTUAL KNOWLEDGE OR REASON TO KNOW OF THE ERROR'S EXISTENCE WHEN HE ISSUED THE ORDER. THE DIFFERENCE IN PRICES BETWEEN THE LOWEST AND SECOND LOWEST BIDS FOR THE SEVEN ITEMS BID UPON RANGED FROM A MINIMUM OF THREE CENTS TO A MAXIMUM OF NINE CENTS PER POUND. THE THIRD LOWEST BIDS ON THE ITEMS EXCEEDED THE SECOND LOWEST BY A MARGIN OF FROM LESS THAN ONE CENT TO EIGHTEEN CENTS. THE AVERAGE OF ALL ACCEPTABLE BIDS EXCEPT CONTRACTOR'S BIDS FOR EACH OF THE SEVEN ITEMS COVERED BY THE CONTRACT DID NOT EXCEED 1.46 TIMES, AND GENERALLY WAS LESS THAN 1.27 TIMES, THE CONTRACTOR'S BID. VARIATIONS IN THE MAGNITUDE OF BIDS ON ITEMS OTHER THAN THOSE COVERED BY THE CONTRACT IN POINT WERE NO LESS AND THE AVERAGE OF ALL ACCEPTABLE BIDS EXCEPT THE LOWEST DID NOT EXCEED 1.48 TIMES THE AMOUNTS OF THE LOWEST BIDS. WERE THE RELIEF REQUESTED TO BE GRANTED THE ADJUSTED BID OF PLYMOUTH WOULD EXCEED THE NEXT LOWEST ACCEPTABLE BID ON THREE OF THE SEVEN ITEMS.

SINCE THE PRICE DIFFERENTIAL BETWEEN CONTRACTOR'S QUOTATIONS AND THE SECOND LOWEST QUOTATIONS ON THE SEVEN ITEMS WERE NO GREATER THAN THOSE WHICH OCCURRED WITH RESPECT TO THE TWO LOWEST BIDS ON THE OTHER ITEMS OF THE INVITATION, WE AGREE THAT THE CONTRACTING OFFICER WAS NOT ON NOTICE OF ERROR AND ACCEPTED THE PLYMOUTH BID IN GOOD FAITH. THE ACCEPTANCE OF THE BID, UNDER THESE CIRCUMSTANCES, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. UNITED STATES V. NEW YORK AND PUERTO RICO STEAMSHIP COMPANY, 239 U.S. 88 (1915); UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313 (1919); AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75 (1922); RUMLEY V. UNITED STATES, 285 F.2D 773 (1961); OGDEN AND DOUGHERTY V. UNITED STATES, 102 CT.CL. 249 (1944), SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505 (1944).

THE RESPONSIBILITY FOR THE PREPARATION OF A BID SUBMITTED IN RESPONSE TO AN INVITATION TO BID IS UPON THE BIDDER. FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 CT.CL. 120 (1943). ANY ERROR MADE HERE IS UNILATERAL AND SOLELY ATTRIBUTABLE TO NEGLIGENCE BY THE CONTRACTOR. THE ERROR NOT BEING MUTUAL, AND THE CONTRACTING OFFICER NOT BEING CHARGEABLE WITH NOTICE THEREOF AS OF THE TIME OF AWARD, RELIEF MUST BE DENIED. COMP. GEN. 326; 26 ID. 415; B-152953 DATED DECEMBER 13, 1963; 5 WILLISTON ON CONTRACTS, REVISED EDITION, SECTION 1578; 3 CORBIN ON CONTRACTS, SECTIONS 610, 614.

ACCORDINGLY, ON THE PRESENT RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR MODIFYING THE PRICE SPECIFIED IN CONTRACT NO. PH-76-64-92, AS REQUESTED BY THE PLYMOUTH POULTRY COMPANY.