B-160069, SEP. 29, 1966

B-160069: Sep 29, 1966

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VETERANS ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 15. AWARD OF CONTRACT WAS MADE ON JUNE 14. BEATRICE NOTIFIED THE PURCHASING ACTIVITY THAT WHEN IT SUBMITTED ITS BID AN ERROR WAS MADE ON ITEM NO. 7 IN THAT ITS PRICE OF $0.50 PER GALLON FOR THAT ITEM WAS COMPUTED ON USING METAL DISPENSER CANS INSTEAD OF SINGLE SERVICE BULK CONTAINERS. THE CONTRACTOR FURTHER ADVISED THAT THE HIGH COST OF THE SINGLE SERVICE CONTAINERS WOULD HAVE MADE IT NECESSARY FOR IT TO SUBMIT A BID OF $0.78 PER GALLON AND SUBSTANTIALLY INCREASE THE COST OF THE MILK. IT IS ADMINISTRATIVELY REPORTED AS FOLLOWS: "* * * FIRST. TWO BIDS WERE RECEIVED. WHICH INCIDENTALLY ARE THE TWO ITEMS THAT MAKE UP THE BULK OF THE CONTRACT.

B-160069, SEP. 29, 1966

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 15, 1966, WITH ENCLOSURES, REQUESTING OUR DECISION RELATIVE TO A MISTAKE IN BID ALLEGED BY BEATRICE FOODS CO. AFTER AWARD OF CONTRACT NO. V5091P-919, WITH THE VETERANS ADMINISTRATION HOSPITAL, TUSKEGEE, ALABAMA.

THE RECORD SHOWS THAT PURSUANT TO ITS BID ON INVITATION NO. 67-1, ISSUED JUNE 6, 1966, AWARD OF CONTRACT WAS MADE ON JUNE 14, 1966, TO BEATRICE FOR CERTAIN SPECIFIED DAIRY PRODUCTS TO BE FURNISHED DURING THE PERIOD JULY 1, 1966, THROUGH JUNE 30, 1967. THEREAFTER, BY LETTER DATED AUGUST 1, 1966, BEATRICE NOTIFIED THE PURCHASING ACTIVITY THAT WHEN IT SUBMITTED ITS BID AN ERROR WAS MADE ON ITEM NO. 7 IN THAT ITS PRICE OF $0.50 PER GALLON FOR THAT ITEM WAS COMPUTED ON USING METAL DISPENSER CANS INSTEAD OF SINGLE SERVICE BULK CONTAINERS. THE CONTRACTOR FURTHER ADVISED THAT THE HIGH COST OF THE SINGLE SERVICE CONTAINERS WOULD HAVE MADE IT NECESSARY FOR IT TO SUBMIT A BID OF $0.78 PER GALLON AND SUBSTANTIALLY INCREASE THE COST OF THE MILK.

RESPECTING THE CONTRACTOR'S ALLEGATION OF ERROR, IT IS ADMINISTRATIVELY REPORTED AS FOLLOWS:

"* * * FIRST, THE SPECIFICATION FOR A BULK MILK CONTAINER STATES, IN PART,"THE BULK MILK DISPENSER CONTAINER SHALL BE THE SINGLE SERVICE OR MULTISERVICE TYPE. INVITATION TO BID TO SPECIFY TYPE AND SIZE DESIRED.' UP TO THIS PRESENT INVITATION, THE STATION HAS NEVER SPECIFIED THE SINGLE SERVICE TYPE DISPENSER CONTAINER. SECOND, BEATRICE FOODS COMPANY, THE SOLE BIDDER FOR FISCAL YEAR 1965 DAIRY REQUIREMENTS, BID $0.45 PER GALLON FOR BULK MILK AND $0.73 PER GALLON IN HALF PINT CONTAINERS. IN FISCAL YEAR 1966, TWO BIDS WERE RECEIVED. BEATRICE BID $0.48 PER GALLON FOR BULK MILK AND $0.75 PER GALLON IN HALF PINT CONTAINERS, WHICH INCIDENTALLY ARE THE TWO ITEMS THAT MAKE UP THE BULK OF THE CONTRACT, WHILE FOREMOST DAIRIES BID $0.96 AND $1.32. NO DOUBT THAT WHEN BEATRICE SUBMITTED THEIR BID ON THE PRESENT INVITATION THEY COULD HAVE JACKED UP THEIR PRICES WITHOUT FEAR OF LOSING THE CONTRACT; THEY CHOSE NOT TO DO SO. FINALLY, COMPETITION FOR DAIRY PRODUCTS AT THE TUSKEGEE HOSPITAL HAS BEEN VERY LIMITED. THIS IS DUE TO THE LOCATION OF THE HOSPITAL AND THE REQUIREMENT THAT SUPPLIERS MUST HAVE RECEIVED A PASTEURIZED MILK RATING OF 90 PERCENT OR MORE ON THE BASIS OF U.S. PUBLIC HEALTH SERVICE MILK ORDINANCE AND CODE.'

MOREOVER, THE CONTRACTING OFFICER POINTS OUT THAT THE NEXT LOW, AND ONLY, BID RECEIVED WAS $0.80 PER GALLON ON THE ITEM IN QUESTION AND THE CONTRACTING OFFICER, APPEARING TO HAVE MADE ONLY A CURSORY VERIFICATION OF BEATRICE'S TOTAL BID ON BID OPENING DAY, NOW FEELS THAT THE CONTRACTOR MADE AN ERROR IN ITS BID AND WAS HONEST IN ITS STATEMENTS. BASED ON THE FOREGOING, IT IS STATED THAT IT WOULD BE UNREASONABLE TO COMPEL THE CONTRACTOR TO FURNISH THE MILK IN SINGLE SERVICE, DISPOSABLE-TYPE CONTAINERS AT $0.50 PER GALLON, AND YOU CONCUR IN THE CONTRACTING OFFICER'S RECOMMENDATION THAT, IN LIEU OF AN INCREASE IN THE PRICE, THE SPECIFICATIONS BE AMENDED TO AD,"METAL, MULTISERVICE CONTAINERS," IN ORDER TO LIMIT ANY INCREASE IN ADMINISTRATIVE EXPENDITURES.

IN THE CIRCUMSTANCES, OUR OFFICE WILL NOT BE REQUIRED TO OBJECT TO EFFECTING THE AMENDMENT TO THE SPECIFICATION IN QUESTION WITHOUT ANY CHANGE IN THE CONTRACT PRICE SINCE SUCH ACTION, DUE TO THE VERY LOW AGGREGATE BID OF BEATRICE, WOULD NOT APPEAR TO PREJUDICE ANY RIGHTS WHICH THE OTHER BIDDER MIGHT HAVE IN THE MATTER. A REFERENCE TO THIS DECISION SHOULD BE MADE ON CONTRACT NO. V5015P-919 AND ON THE VOUCHERS COVERING PAYMENT THEREUNDER. THE FILE FORWARDED WITH YOUR LETTER IS RETURNED HEREWITH AS REQUESTED.