B-171704, FEB 3, 1971

B-171704: Feb 3, 1971

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DEPARTMENT OF MEDICINE AND SURGERY IS THE ONLY RELIEF THAT SHOULD BE GRANTED TO THE CONTRACTOR. WHERE CONTRACTOR ALLEGED THAT AN ERROR IN BID HAD BEEN MADE IN THAT ITS PRICE WAS BASED UPON FOUR CONTAINERS TO THE CASE. THIS IS SUBSTANTIATED BY ITS WORKSHEET AND THE QUOTATION FROM ITS SUPPLIER AND THE RECORD INDICATES THAT THE BID PRICE OF THE CONTRACTOR-SUPPLIER IS LOWER THAN THE BID PRICE OF THE MANUFACTURER ON AN ITEM. THE CONTRACTING OFFICER IS ON NOTICE OF THE PROBABILITY OF AN ERROR IN BID. THE CONTRACTOR'S BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT POINTING OUT THE DISCREPANCY AND REQUESTING A VERIFICATION. JOHNSON: REFERENCE IS MADE TO LETTER 134G OF JANUARY 13. REQUESTING A DECISION AS TO THE ACTION THAT SHOULD BE TAKEN WITH RESPECT TO AN ERROR ALLEGED TO HAVE BEEN MADE BY HOLLEB & COMPANY IN ITS BID UPON WHICH PURCHASE ORDER 71-MC-40413 WAS BASED.

B-171704, FEB 3, 1971

REQUEST FOR RELIEF - MISTAKE IN BID DECISION HOLDING THAT THE CANCELLATION OF THE CONTRACT BETWEEN HOLLEB & COMPANY AND THE VETERANS ADMINISTRATION SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY IS THE ONLY RELIEF THAT SHOULD BE GRANTED TO THE CONTRACTOR. WHERE CONTRACTOR ALLEGED THAT AN ERROR IN BID HAD BEEN MADE IN THAT ITS PRICE WAS BASED UPON FOUR CONTAINERS TO THE CASE, RATHER THAN SIX, AND UPON GLASS JARS INSTEAD OF CANS, AND THIS IS SUBSTANTIATED BY ITS WORKSHEET AND THE QUOTATION FROM ITS SUPPLIER AND THE RECORD INDICATES THAT THE BID PRICE OF THE CONTRACTOR-SUPPLIER IS LOWER THAN THE BID PRICE OF THE MANUFACTURER ON AN ITEM, THE CONTRACTING OFFICER IS ON NOTICE OF THE PROBABILITY OF AN ERROR IN BID, AND THE CONTRACTOR'S BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT POINTING OUT THE DISCREPANCY AND REQUESTING A VERIFICATION. UNDER THESE CIRCUMSTANCES, THE CONTRACT SHOULD BE CANCELLED.

TO MR. JOHNSON:

REFERENCE IS MADE TO LETTER 134G OF JANUARY 13, 1971, WITH ENCLOSURES, FROM THE SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION THAT SHOULD BE TAKEN WITH RESPECT TO AN ERROR ALLEGED TO HAVE BEEN MADE BY HOLLEB & COMPANY IN ITS BID UPON WHICH PURCHASE ORDER 71-MC-40413 WAS BASED.

THE INVITATION FOR BIDS SOLICITED ALTERNATE PRICES FOR FURNISHING GHERKIN PICKLES F.O.B. DESTINATION. ITEM 3 WAS THE ALTERNATE FOR ITEM 1. ITEM 4 WAS THE ALTERNATE FOR ITEM 2. ITEMS 1 AND 3 WERE IDENTICAL IN THAT EACH PROVIDED FOR DELIVERY OF 270 CASES OF PICKLES, 6 CANS TO A CASE, TO HINES, ILLINOIS. ITEMS 2 AND 4 WERE IDENTICAL IN THAT EACH PROVIDED FOR DELIVERY OF 140 CASES OF PICKLES, 6 CANS TO THE CASE, TO SOMERVILLE, NEW JERSEY. THE ONLY DIFFERENCE IN EACH ALTERNATE IS THE CAN SIZE. ITEMS 1 AND 2 PROVIDED FOR NO. 12 CANS AND ITEMS 3 AND 4 FOR NO. 10 CANS.

THREE BIDS WERE RECEIVED UNDER THE INVITATION. GREEN BAY FOOD COMPANY OF GREEN BAY, WISCONSIN, BID ON ITEM 3 ONLY. THE BID PRICE WAS $11 A CASE. PERFECT PACKED PRODUCTS CO., INC., OF YONKERS, NEW YORK, BID ON ITEM 2 ONLY. THE BID PRICE WAS $14.95 A CASE. THE ONLY OTHER BIDDER WAS HOLLEB & COMPANY OF CHICAGO, ILLINOIS. HOLLEB BID $9.79 A CASE ON ITEM 1 AND ON ITEM 3 STATED "SAME AS ABOVE ITEM." HOLLEB WAS QUERIED AS TO THE MEANING OF THE LATTER STATEMENT. A COMPANY REPRESENTATIVE REPLIED THAT THE COMPANY HAD INTENDED TO BID ON THE NO. 12 SIZE ONLY AND HAD THOUGHT THAT ITEMS 1 AND 3 REQUIRED THAT SIZE. IN ANY EVENT, HOLLEB'S BID ON THE LARGER NO. 12 CAN SIZE WAS EVALUATED AT LESS THAN THE BID OF GREEN BAY ON THE SMALLER NO. 10 CAN SIZE AND AWARD WAS ACCORDINGLY MADE TO HOLLEB FOR ITEM 1.

AFTER THE AWARD, HOLLEB ALLEGED THAT AN ERROR IN BID HAD BEEN MADE IN THAT ITS PRICE WAS BASED UPON FOUR CONTAINERS TO THE CASE AND UPON GLASS JARS INSTEAD OF CANS. HOLLEB FURNISHED ITS WORKSHEET AND THE QUOTATION FROM ITS SUPPLIER UPON WHICH ITS PRICE WAS BASED. BOTH SHOW THAT THE BID ON ITEM 1 WAS COMPUTED AS ALLEGED. FURTHER, THE WORKSHEET STATES "NO BID" FOR ITEM 3. HOLLEB REQUESTED TO BE RELIEVED OF THE AWARD OR IN THE ALTERNATIVE TO BE ALLOWED TO DELIVER NO. 10 CANS AT $10.95 A CASE.

BOTH THE SUPPLY SERVICE AND THE CONTRACTING OFFICER RECOMMEND RELIEF FOR THE CONTRACTOR. THE FORMER RECOMMENDS THAT THE CONTRACTOR BE RELIEVED OF ITS OBLIGATION TO PERFORM. THE LATTER RECOMMENDS THAT THE CONTRACTOR BE PERMITTED TO FURNISH THE NO. 10 CANS AT $10.95 A CASE.

THE SUPPLY SERVICE LETTER OF JANUARY 13 REPORTS THAT THE LAST PURCHASES OF ITEMS 1 AND 2 WERE IN OCTOBER 1969 AND JANUARY 1970 AT $11.20 A CASE FROM THE COMPANY THAT NOW HAS BID $14.95 A CASE ON ITEM 2. THE REPORT IS SILENT AS TO THE QUANTITIES THAT WERE PURCHASED UNDER THE PRIOR PROCUREMENTS AND WE DO NOT KNOW WHETHER ANY PART OF THE $14.95 PRICE ON ITEM 2 COULD BE ATTRIBUTED TO THE QUANTITY IN THE ITEM. CHANGING MARKET CONDITIONS COULD HAVE HAD AN EFFECT ON PRICE SINCE HOLLEB HAS STATED THAT THE MARKET PRICE ON THE PICKLES HAS INCREASED. HOWEVER THAT MAY BE, WE DEEM IT OF IMPORTANCE THAT, IN RESPONSE TO THE REQUIREMENT IN THE INVITATION FOR BIDS FOR THE NAME AND ADDRESS OF THE PLANT WHERE THE PICKLES WOULD BE PROCESSED, HOLLEB INSERTED THE NAME AND ADDRESS OF THE BIDDER ON ITEM 3 - GREEN BAY - WHO BID A HIGHER PRICE FOR THE SAME QUANTITY DELIVERED IN SMALLER CANS TO THE SAME DESTINATION. THUS, HOLLEB, THE SUPPLIER OF THE ITEM, INDICATED BY ITS BID THAT IT WOULD BE ABLE TO FURNISH LARGER CANS OF PICKLES AT A LOWER PRICE THAN THE MANUFACTURER WOULD BE ABLE TO DELIVER THE SAME NUMBER OF SMALLER CANS OF PICKLES TO THE SAME DESTINATION. OUR OFFICE HAS INDICATED THAT WHERE A BID PRICE IS SUBMITTED ON AN ITEM BY A SUPPLIER WHICH IS LOWER THAN THE BID PRICE OF THE MANUFACTURER OF THAT ITEM, THE CONTRACTING OFFICER IS ON NOTICE OF THE PROBABILITY OF ERROR IN BID. B-162770, NOVEMBER 21, 1967; B-152430, DECEMBER 9, 1963; B-149228, AUGUST 1, 1962; B-145192, MARCH 16, 1961; AND B-143942, SEPTEMBER 20, 1960. ALTHOUGH THE ITEMS IN THE IMMEDIATE CASE ARE NOT IDENTICAL IN THAT THE CAN SIZES ARE DIFFERENT, WE ARE OF THE VIEW THAT THE DISPARITY BETWEEN THE SUPPLIER'S AND MANUFACTURER'S BIDS WAS SUCH THAT THE HOLLEB BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT FIRST POINTING OUT THE DISCREPANCY IN PRICE TO THE BIDDER AND REQUESTING VERIFICATION.

IT IS CLEAR FROM THE HOLLEB WORKSHEET THAT IT DID NOT INTEND TO BID ON ITEM 3. TO REQUIRE IT TO DELIVER ITEM 3 AT $10.95 A CASE NOW WOULD BE TO ACCEPT A BID THAT WAS NOT ORIGINALLY INTENDED AND IS UNACCEPTABLE. COMP. GEN. 183 (1951).

ACCORDINGLY, CANCELLATION OF THE CONTRACT IS THE ONLY RELIEF THAT SHOULD BE GRANTED TO THE CONTRACTOR IN THE CIRCUMSTANCES.

THE ENCLOSURES ACCOMPANYING THE JANUARY 13 LETTER ARE RETURNED AS REQUESTED.