B-162770, NOV. 21, 1967

B-162770: Nov 21, 1967

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WHERE A LOW BID WAS SUBSTANTIALLY LESS THAN THAT OF THE MANUFACTURER OF THE ITEM (THE ONLY OTHER BIDDER) AND WAS LESS THAN THE GOVERNMENT ESTIMATE. THE LOW BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. DRIVER: REFERENCE IS MADE TO LETTER 134G OF OCTOBER 18. THE PURCHASE DESCRIPTION FOR ITEM 10 WAS AS FOLLOWS: "NITROGEN METER. MO. 63103: " TWO BIDS WERE RECEIVED ON THIS ITEM. THE GOVERNMENT ESTIMATE WAS $3. THE GOVERNMENT ESTIMATE PREPARED BY THE REQUISITIONING OFFICE WAS BASED UPON A PRICE LIST WHICH WAS 2 1/2 YEARS OLD. AN AWARD FOR ITEM 10 WAS MADE TO COLLINS. COLLINS ADVISED THAT ITS BID WAS IN ERROR IN THE AMOUNT OF $1. HE FURNISHED COPIES OF THE MANUFACTURER'S LATEST PRICE LIST AND A LETTER FROM THE MANUFACTURER DATED AFTER AWARD SHOWING THAT THE PRICE OF THE 305 AR NITRALYZER IS $2.

B-162770, NOV. 21, 1967

BIDS - MISTAKES - RECESSION DECISION TO VETERANS ADMINISTRATION CONCERNING CLAIM BY WARREN E. COLLINS, INC. FOR RELIEF FOR ERROR IN BID, ALLEGED AFTER AWARD, FOR NITROGEN METER. WHERE A LOW BID WAS SUBSTANTIALLY LESS THAN THAT OF THE MANUFACTURER OF THE ITEM (THE ONLY OTHER BIDDER) AND WAS LESS THAN THE GOVERNMENT ESTIMATE, THE LOW BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION. THEREFORE SINCE EVIDENCE SHOWS ERROR BUT DOES NOT ESTABLISH INTENDED PRICE CONTRACT SHOULD BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR.

TO MR. DRIVER:

REFERENCE IS MADE TO LETTER 134G OF OCTOBER 18, 1967, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, SUBMITTING FOR CONSIDERATION A CLAIM FOR RELIEF BY WARREN E. COLLINS, INC., FOR AN ERROR IN BID ALLEGED AFTER THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS 67-34.

THE INVITATION SOLICITED BIDS ON 15 ITEMS OF LABORATORY AND MEDICAL EQUIPMENT. THE PURCHASE DESCRIPTION FOR ITEM 10 WAS AS FOLLOWS: "NITROGEN METER, MODEL 305 AR, OR EQUAL, WITH NO. 1406H PUMP, NO. NV-1 NEEDLE VALVE AND REMOTE SAMPLING HEAD WITH NITRALYZER DELTA MODEL 106, OR EQUAL, FOR USE WITH NITROGEN METER, MODEL 305 AR, AS MANUFACTURED BY MEDICAL SCIENCE ELECTRONICS, 2647 LOCUST ST., ST. LOUIS, MO. 63103: " TWO BIDS WERE RECEIVED ON THIS ITEM. WARREN E. COLLINS BID $2,500 LESS 2-PERCENT DISCOUNT FOR 30-DAY PROMPT PAYMENT. THE MANUFACTURER OF THE EQUIPMENT, MED-SCIENCE ELECTRONICS, INC., BID $3,814. THE GOVERNMENT ESTIMATE WAS $3,150. UNKNOWN TO THE CONTRACTING OFFICER, THE GOVERNMENT ESTIMATE PREPARED BY THE REQUISITIONING OFFICE WAS BASED UPON A PRICE LIST WHICH WAS 2 1/2 YEARS OLD. AN AWARD FOR ITEM 10 WAS MADE TO COLLINS.

SUBSEQUENTLY, COLLINS ADVISED THAT ITS BID WAS IN ERROR IN THE AMOUNT OF $1,295 BECAUSE IT NEGLECTED TO INCLUDE ANYTHING IN THE PRICE FOR THE NITRALYZER DELTA MODEL 106. COLLINS' SALES MANAGER STATED THAT HE DID NOT USE ANY WORKSHEETS TO PREPARE THE BID AND ENTERED THE PRICE IN THE BID "FROM THE TOP OF HIS HEAD.' HOWEVER, HE FURNISHED COPIES OF THE MANUFACTURER'S LATEST PRICE LIST AND A LETTER FROM THE MANUFACTURER DATED AFTER AWARD SHOWING THAT THE PRICE OF THE 305 AR NITRALYZER IS $2,500 AND THE NITRALYZER DELTA MODEL 106 AN ADDITIONAL $1,295 ON WHICH PRICES THE MANUFACTURER PROVIDES A 15-PERCENT DISCOUNT.

THE CONTRACTING OFFICER HAS STATED THAT IN VIEW OF THE GOVERNMENT'S ESTIMATE, THE PRACTICE OF SOME MANUFACTURERS TO PROTECT THEIR DISTRIBUTORS, AND EXPERIENCE IN RECEIVING BIDS OFTEN 30 PERCENT LESS THAN LIST, HE DOES NOT CONSIDER THAT HE WAS ON NOTICE THAT THE LOW BIDDER HAD MADE AN ERROR IN ITS BID. THEREFORE, HE RECOMMENDS THAT COLLINS BE REQUIRED TO FURNISH THE ITEM AT THE $2,500 BID PRICE. THE DIRECTOR OF THE SUPPLY SERVICE RECOMMENDS RELIEF IN VIEW OF THE GOVERNMENT'S ESTIMATE AND THE MANUFACTURER'S BID PRICE.

THE PRIMARY QUESTION IN THIS CASE IS NOT WHETHER A MISTAKE IN BID WAS MADE, AS ALLEGED, BUT WHETHER A VALID AND SUBSISTING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF THE BID.

THE ESTABLISHED RULE IS THAT WHERE A BIDDER HAS MADE A MISTAKE IN THE SUBMISSION OF A BID AND THE BID HAS BEEN ACCEPTED, IT MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR WAS SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE THEREOF. SEE 20 COMP. GEN. 652, 657, AND CASES CITED THEREIN. FURTHER, IT HAS BEEN HELD THAT NO FAIR COMPARISON WITH OTHER BIDS CAN BE MADE WHERE ONLY TWO WIDELY VARIANT BIDS ARE RECEIVED, THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH. 20 COMP. GEN. 286. HOWEVER, ALTHOUGH THE CONTRACTING OFFICER HAS STATED THAT HE DOES NOT CONSIDER THAT HE WAS ON NOTICE OF ERROR BECAUSE OF THE GOVERNMENT ESTIMATE, THE PRACTICE OF SOME MANUFACTURERS TO PROTECT THEIR DISTRIBUTORS AND EXPERIENCE IN RECEIVING BIDS 30 PERCENT BELOW LIST, HE DOES NOT STATE THAT IN HIS EXPERIENCE HE HAS FOUND IT TO BE THE PRACTICE OF THE SUBJECT MANUFACTURER TO PROTECT ITS DISTRIBUTORS NOR IS IT STATED THAT IN HIS EXPERIENCE HE HAS RECEIVED QUOTATIONS FROM DISTRIBUTORS OF EQUIPMENT OF THE SAME MANUFACTURER AT PRICES SUBSTANTIALLY BELOW THE LIST PRICE. MOREOVER, IT WAS HELD IN B- 152430, DECEMBER 9, 1963, THAT WHILE PRICE DIFFERENCES WERE NOT SO GREAT AS TO INDICATE THAT THE LOW BID MUST HAVE BEEN ERRONEOUS, THE FACT THAT THE LOW BID OF A SUPPLIER WAS SUBSTANTIALLY LESS THAN THAT OF THE MANUFACTURER WHO ALSO BID SHOULD HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN BID. THEREFORE, THE LOW BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION FROM COLLINS.

WHILE COLLINS HAS ESTABLISHED THAT AN ERROR WAS MADE IN ITS BID ON ITEM 10, IT HAS NOT CONCLUSIVELY ESTABLISHED ITS INTENDED BID PRICE FOR THE ITEM. ACCORDINGLY, AND SINCE ADVICE HAS BEEN FURNISHED INFORMALLY THAT SHIPMENT IS BEING HELD IN ABEYANCE PENDING A DECISION BY OUR OFFICE, ITEM 10 IN THE CONTRACT SHOULD BE CANCELED WITHOUT LIABILITY TO THE CONTRACTOR.

THE ENCLOSURES SUBMITTED WITH THE OCTOBER 18 LETTER ARE RETURNED AS REQUESTED.