B-164178, MAY 3, 1968

B-164178: May 3, 1968

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SECRETARY: REFERENCE IS MADE TO LETTER OF APRIL 30. THE PRICES BID FOR THE ITEMS WERE $8.60 PER CWT. THE LATTER BID WAS THE LOWEST RECEIVED FOR ITEMS 34 AND 70. PUERTO RICO AND THE VIRGIN ISLANDS WERE NAMED AS THE ULTIMATE DESTINATIONS OF THE ITEMS. IT WAS FOUND THAT THE COST OF OCEAN FREIGHT FROM PORTLAND/SEATTLE TO PUERTO RICO PLUS THE BID PRICE FOR DELIVERY TO PORTLAND/SEATTLE RESULTED IN A TOTAL COST TO THE GOVERNMENT WHICH WAS LESS THAN THE COST REPRESENTED BY THE BID PRICE FOR DELIVERY TO NEW ORLEANS AND OCEAN FREIGHT THEREFROM TO PUERTO RICO. A TELEGRAM WAS SENT TO ALLEN V. VESSEL PORTLAND/SEATTLE WAS ACCEPTED AT ITS BID PRICE OF $7.83 PER CWT. IT HAS NOW BECOME APPARENT THAT SHIPPING FROM THE WEST COAST IS IMPOSSIBLE BECAUSE OF PRIORITIES ON OTHER SHIPPING.

B-164178, MAY 3, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER OF APRIL 30, 1968, FROM THE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO THE ACTION THAT SHOULD BE TAKEN WITH RESPECT TO CONTRACT 12-25-010-15153 WITH ALLEN V. SMITH, INC., AS A RESULT OF A DETERMINATION MADE AFTER AWARD TO CHANGE THE SHIPPING PORT FOR ITEMS 34 AND 70 (DRY EDIBLE GREEN SPLIT PEAS) FROM PORTLAND/SEATTLE TO NEW ORLEANS BECAUSE OF THE IMPOSSIBILITY TO OBTAIN SHIPPING FROM THE WEST COAST BECAUSE OF PRIORITY DEFENSE SHIPPING.

PURSUANT TO THE ANNOUNCEMENT FOR OFFERS, SUPPLEMENT NO. 2, ALLEN V. SMITH, INC., NAMED GREELEY, COLORADO, AS ITS MILLING POINT AND NEW ORLEANS AND PORTLAND/SEATTLE AS ALTERNATIVE PORTS FOR DELIVERY OF THE PEAS. THE PRICES BID FOR THE ITEMS WERE $8.60 PER CWT. F.A.S. VESSEL, NEW ORLEANS, AND $7.83 PER CWT. F.A.S. VESSEL, PORTLAND/SEATTLE. THE LATTER BID WAS THE LOWEST RECEIVED FOR ITEMS 34 AND 70. PUERTO RICO AND THE VIRGIN ISLANDS WERE NAMED AS THE ULTIMATE DESTINATIONS OF THE ITEMS. AS TO THESE ALTERNATE BIDS, IT WAS FOUND THAT THE COST OF OCEAN FREIGHT FROM PORTLAND/SEATTLE TO PUERTO RICO PLUS THE BID PRICE FOR DELIVERY TO PORTLAND/SEATTLE RESULTED IN A TOTAL COST TO THE GOVERNMENT WHICH WAS LESS THAN THE COST REPRESENTED BY THE BID PRICE FOR DELIVERY TO NEW ORLEANS AND OCEAN FREIGHT THEREFROM TO PUERTO RICO. THUS, A TELEGRAM WAS SENT TO ALLEN V. SMITH, INC., ADVISING THAT, SUBJECT TO THE TERMS AND CONDITIONS OF THE ANNOUNCEMENT, THE SUPPLEMENT AND DOCUMENT GR-1, ITS OFFER FOR ITEMS 34 AND 70, AMONG OTHERS, F.A.S. VESSEL PORTLAND/SEATTLE WAS ACCEPTED AT ITS BID PRICE OF $7.83 PER CWT.

IT HAS NOW BECOME APPARENT THAT SHIPPING FROM THE WEST COAST IS IMPOSSIBLE BECAUSE OF PRIORITIES ON OTHER SHIPPING. THEREFORE, YOUR AGENCY PROPOSES TO USE OCEAN SHIPPING FROM NEW ORLEANS TO PUERTO RICO. THAT CONNECTION, IT IS POINTED OUT THAT ARTICLE 23 (E) OF DOCUMENT GR-1 PROVIDES: "USDA MAY ORDER SHIPMENT OF THE COMMODITY TO DESTINATIONS OTHER THAN THOSE STATED IN THE SUPPLEMENT TO THE ANNOUNCEMENT FOR OFFERS, IN WHICH EVENT ANY ADDITIONAL FREIGHT WILL BE FOR THE ACCOUNT OF USDA, IF BILLED ON A SEPARATE INVOICE FOR FREIGHT ADJUSTMENTS, AND ANY SAVINGS WILL ACCRUE TO USDA.'

IT IS STATED THAT THE INLAND FREIGHT RATE FROM GREELEY, COLORADO, TO PORTLAND/SEATTLE IS $1.98 PER CWT. AND FROM GREELEY TO NEW ORLEANS $0.74 PER CWT., SO THAT A CHANGE IN DELIVERY POINT WOULD RESULT IN AN ADDITIONAL COST TO THE CONTRACTOR OF $1.24 PER CWT. OR ABOUT $13,890 FOR THE 11,202 CWT. INVOLVED.

THE CONTRACTOR HAS CONTENDED THAT IT MADE AN ERROR IN ITS BID IN FAILING TO STATE THAT GARFIELD, WASHINGTON, WAS TO BE THE MILLING POINT FOR SHIPMENTS TO PORTLAND/SEATTLE. IT HAS STATED THAT IT INTENDED THE MILLING POINT TO BE GREELEY, COLORADO, ONLY FOR SHIPMENTS TO NEW ORLEANS. THE CONTRACTING OFFICER IS OF THE OPINION THAT THE CONTRACTOR MADE A BONA FIDE MISTAKE AND THAT HE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF THE ERROR SINCE THE QUOTATION OF A LOWER PRICE FOR DELIVERY FROM GREELEY TO PORTLAND/SEATTLE THAN THAT QUOTED FROM GREELEY TO NEW ORLEANS WAS INCONSISTENT WITH THE FACT THAT FREIGHT RATES ARE HIGHER TO THE WEST COAST.

IN THE CIRCUMSTANCES, IT IS QUESTIONED WHETHER THE CONTRACT SHOULD BE REFORMED TO SUBSTITUTE GARFIELD, WASHINGTON, AS THE MILLING POINT FOR DELIVERY TO PORTLAND/SEATTLE, OR WHETHER THE ALTERNATE $8.60 BID FOR DELIVERY TO NEW ORLEANS SHOULD BE SUBSTITUTED. IF THE CONTRACT IS REFORMED TO CHANGE THE MILLING POINT TO GARFIELD, WASHINGTON, AND THE DESTINATION IS THEN CHANGED TO NEW ORLEANS, THE FREIGHT RATE ADJUSTMENT WILL RESULT IN THE COST TO THE GOVERNMENT OF $8.64 PER CWT.

THE QUESTION IS NOT WHETHER THE CONTRACT SHOULD BE REFORMED BECAUSE OF THE ERROR MADE IN STATING A MILLING POINT IN THE BID, BUT RATHER WHETHER THE CONTRACT CAN BE AMENDED TO PROVIDE FOR NEW ORLEANS AS THE DELIVERY POINT WITHOUT REQUIRING AN ADJUSTMENT IN FREIGHT RATES. ARTICLE 23 (E) OF DOCUMENT GR-1 PROVIDES FOR AN ADJUSTMENT IN THE FREIGHT RATES IF USDA ORDERS SHIPMENTS TO DESTINATIONS OTHER THAN THOSE STATED IN THE SUPPLEMENT TO THE ANNOUNCEMENT FOR OFFERS. THEREFORE, THE ARTICLE CONTEMPLATES THE POSSIBILITY OF CHANGE IN DESTINATIONS AND A FREIGHT COST ADJUSTMENT IN THE EVENT DESTINATIONS ARE CHANGED FROM THOSE STATED IN THE SUPPLEMENT. THIS CASE, NOT ONLY IS THE BID PRICE FOR THE PORTLAND/SEATTLE DESTINATION CONTAINED IN THE SUPPLEMENT EXECUTED BY THE CONTRACTOR, THERE IS ALSO OFFERED THEREIN THE NEW ORLEANS DESTINATION AND A BID PRICE FOR DELIVERY TO SUCH DESTINATION. ACCORDINGLY, OUR OFFICE WOULD HAVE NO OBJECTION IF THE CONTRACT IS AMENDED TO CHANGE THE DESTINATION OF ITEMS 34 AND 70 TO NEW ORLEANS AT THE SUPPLEMENT WITHOUT ANY FURTHER PRICE ADJUSTMENT.