B-167747, SEP 15, 1969

B-167747, SEP 15, 1969

CONTRACTS - MISTAKES - EVIDENCE DECISION TO ADMINISTRATOR OF VETERANS' ADMINISTRATION AUTHORIZING CANCELLATION OF CONTRACT WITH L & P FOOD SERVICE EQUIPMENT CO. FOR A MISTAKE IN BID FOR FURNISHING DISHWASHING MACHINE. WHERE SECOND AND THIRD LOW BIDS WERE 8.3 PERCENT AND 13.7 PERCENT HIGHER THAN LOW BID AND LOW BID IS 17.5 PERCENT LOWER THAN GOVERNMENT ESTIMATE, EVIDENCE SUPPORTS FACT THAT LOW BIDDER MADE MISTAKE AND THEREFORE CONTRACT MAY BE CANCELED WITHOUT LIABILITY. VA SHOULD BEFORE AWARD TO THIRD LOW BIDDER REQUEST VERIFICATION.

MR. JOHNSON:

REFERENCE IS MADE TO LETTER DATED AUGUST 18,1969, FILE NO. 134G, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED THE L & P FOOD SERVICE EQUIPMENT CO. FOR A MISTAKE IN BID.

SOLICITATION NO. M3-107-69 WAS ISSUED ON MAY 26, 1969, REQUESTING BIDS FOR FURNISHING UNDER ITEM 1 A RACKLESS CONVEYOR TYPE DISHWASHING MACHINE TO THE VETERANS ADMINISTRATION HOSPITAL AT ALTOONA, PENNSYLVANIA. THIS WAS A RESOLICITATION OF ITEM 1 UNDER SOLICITATION M3-90-69. FIVE BIDS WERE RECEIVED AND OPENED ON JUME 13, 1969. L & P FOOD SERVICE EQUIPMENT CO. SUBMITTED A BID OF $6,143.97 LESS 3-PERCENT PROMPT PAYMENT DISCOUNT OR $5,959.65 FOR ITEM 1. THE PRICES QUOTED BY THE FOUR REMAINING BIDDERS, AFTER SUBTRACTING THE PROMPT PAYMENT DISCOUNTS, WHERE APPLICABLE, WERE $6,453.83, $6,777, $7,387 AND $9,317.71. THE GOVERNMENT ESTIMATE WAS $7,000.

L&P FOOD SERVICE EQUIPMENT CO. WAS AWARDED AN UNNUMBERED CONTRACT AT ITS BID PRICE AND PURCHASE ORDER NO. 69-MC-304-5 WAS ISSUED TO IT. UPON RECEIPT OF THE PURCHASE ORDER THE CONTRACTOR IMMEDIATELY INFORMED THE CONTRACTING OFFICER THAT AN ERROR OF $1,000 WAS MADE IN ITS BID ON ITEM 1. IN SUPPORT OF ITS ALLEGATION OF ERROR THE CONTRACTOR BY LETTER OF JUNE 28, 1969, SUBMITTED A TELEGRAM QUOTATION FROM ITS SUPPLIER AND A WORKSHEET USED IN PREPARING ITS BID WHICH THE CONTRACTOR STATES SHOWS THE "OBVIOUS" ERROR IN ADDITION. THE SUPPLIER'S TELEGRAM SHOWS A QUOTE ON ITEM 1, A BLAKESLEE MODEL F2-M, 17-FOOT 10-INCH LONG DISHWASHER MEETING SPECIFICATIONS, LESS DISH RACKS AND SILVER BASKETS AS "NET FOB CHICAGO ILL $6,667.50" AND AN ADDITIONAL AMOUNT OF APPROXIMATELY $88 FOR FREIGHT TO ALTOONA, PENNSYLVANIA. THE WORKSHEET SHOWS THAT IN ADDING $6,929.94 TO $214.03 THE CONTRACTOR ARRIVED AT THE SUM OF $6,143.97, THE EXACT AMOUNT OF ITS BID, IN LIEU OF $7,143.97.

THE DIRECTOR STATES IN HIS LETTER OF AUGUST 18 THAT, IN COMPARING THE GOVERNMENT ESTIMATE AND THE SECOND AND THIRD LOW BIDS WITH THE CONTRACTOR'S BID, HE FINDS THAT THE GOVERNMENT ESTIMATE IS ABOUT 17.5 PERCENT HIGHER, THE SECOND LOW BID 8.3 PERCENT HIGHER AND THE THIRD LOW BID 13.7 PERCENT HIGHER THAN THE CONTRACTOR'S BID. BASED ON THESE COMPARISONS THE CONTRACTING OFFICER STATES THAT PERHAPS HE SHOULD HAVE BEEN ON CONSTRUCTIVE NOTICE OF ERROR SINCE THE OTHER BIDDERS WERE BIDDING ON THE SAME BLAKESLEE MODEL. THE DIRECTOR SAYS HE WOULD AGREE WITH THIS BUT FOR THE FACT THAT THE CONTRACTING OFFICER STATED ON AUGUST 11 THAT NO AWARD WAS MADE ON ITEM 1 APPEARING ON SOLICITATION M3 90-69, THE PREVIOUS SOLICITATION, BECAUSE THE QUANTITY AND STYLE OF PLASTIC RACKS WERE NOT SPECIFIED IN THE INVITATION FOR THE DISHWASHING MACHINE. IN RESPONSE TO THIS INVITATION, L & P FOOD SERVICE EQUIPMENT CO. QUOTED $7,780 OR $1,161.25 MORE THAN ITS BID HERE INVOLVED; THE SECOND LOW BIDDER QUOTED $1,310 MORE THAN ITS RECENT BID; AND THE THIRD LOW BIDDER QUOTED $17 LESS THAN ITS MORE RECENT BID EVEN THOUGH PLASTIC RACKS WERE NOT CALLED FOR IN SOLICITATION M3-107-69. IN ADDITION, THE DIRECTOR POINTS OUT THAT IN THE PRICE LIST, EFFECTIVE NOVEMBER 1967, OF G.S. BLAKESLEE AND CO. THE F2-M DISHWASHING MACHING LESS DISH RACKS AND SILVER BASKETS IS LISTED AT $8,610 F.O.B. CHICAGO, ILLINOIS. IT IS FURTHER STATED THAT THE SECOND LOW BIDDER BY LETTER OF JULY 31, 1969, RECONFIRMED ITS BID PRICE OF $6,470 FOR ITEM 1 AND HAS EXTENDED ITS ACCEPTANCE TIME TO SEPTEMBER 29, 1969.

WE AGREE WITH THE CONTRACTING OFFICER THAT, IN THE LIGHT OF THE GOVERNMENT'S ESTIMATE AND THE BIDS OF THE SECOND AND THIRD LOW BIDDERS, THE BID OF L & P FOOD SERVICE EQUIPMENT CO. WAS SUFFICIENTLY OUT OF LINE AS TO SUGGEST THE PROBABILITY OF ERROR. CONSEQUENTLY, THE COMPANY SHOULD HAVE BEEN REQUESTED TO VERIFY ITS BID PRIOR TO THE ACCEPTANCE THEREOF. WHILE, AS INDICATED BY THE DIRECTOR, THE BID OF THE THIRD LOW BIDDER UNDER SOLICITATION M3-9-69 FOR FURNISHING A DISHWASHING MACHINE WHICH INCLUDED RACKS WAX $17 LOWER THAN ITS BID UNDER THE INSTANT INVITATION WHICH DID NOT REQUIRE RACKS TO BE FURNISHED, WE DO NOT BELIEVE THAT FACT WOULD JUSTIFY THE CONTRACTING OFFICER TO CONCLUDE THAT THE BID OF L & P FOOD SERVICE EQUIPMENT CO. UNDER THE SUBJECT INVITATION WAS NOT OUT OF LINE. THIS IS PARTICULARLY TRUE WHEN CONSIDERATION IS GIVEN TO THE FACT THAT THE CONTRACTOR AND SECOND LOW BIDDER QUOTED A CONSIDERABLY HIGHER AMOUNT FOR FURNISHING A DISHWASHING MACHINE WITH RACKS. RATHER, IT WOULD APPEAR THAT THE THIRD LOW BIDDER MAY HAVE MADE AN ERROR IN ITS BID ON SOLICITATION M3- 90-69. ACCORDINGLY, THE AWARD MADE TO L & P FOOD SERVICE EQUIPMENT CO. MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY.

INASMUCH AS THE DIRECTOR INDICATES THAT THE BLAKESLEE COMPANY PRICE LIST SHOWS A PRICE FOR THE F2-M DISHWASHING MACHINE, LESS RACKS AND SILVER BASKETS, OF $8,610 F.O.B. CHICAGO, PLUS THE FACT THAT BLAKESLEE QUOTED A PRICE OF $6,667.50 TO L & P FOOD SERVICE EQUIPMENT CO. UNDER THE SAME INVITATION, WE SUGGEST THAT, BEFORE MAKING AWARD TO THE KESSEL KITCHEN EQUIPMENT CO., INC., AT THE PRICE OF $6,470, IT BE ADVISED OF THE FACTS AND VERIFICATION OF ITS BID AGAIN BE REQUESTED.

THE FILE FORWARDED WITH THE DIRECTOR'S LETTER OF AUGUST 18 IS RETURNED HEREWITH AS REQUESTED.