B-175524, APR 14, 1972

B-175524: Apr 14, 1972

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SINCE THE FLORIDA SIP OFFER WAS THE ONLY ONE SUBMITTED AND WAS ACTUALLY GREATER THAN THE MARKET PRICE ESTABLISHED BY REFERENCE TO THE DECEMBER 4 ISSUE OF THE "REPORT ON FOOD MARKETS. " IT APPEARS THAT THE CONTRACTING OFFICER WAS NEITHER ON CONSTRUCTIVE NOR ACTUAL NOTICE OF THE ALLEGED ERROR. MUST CONCLUDE THAT THE CONTRACTOR'S ACCEPTANCE CONSTITUTED A VALID AND BINDING CONTRACT AND THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN PRICE. V797P-4987B IS BASED. DELIVERY OF THE ITEMS WAS TO BE F.O.B. BECAUSE NO OFFERS WERE RECEIVED FOR GRAPEFRUIT. ONE PACKER SAID THAT SINCE GRAPEFRUIT WAS IN SHORT SUPPLY IT HAD ONLY ENOUGH FOR ITS REGULAR COMMERCIAL CUSTOMERS. ALSO INFORMED THE CONTRACTING OFFICER THAT GRAPEFRUIT WAS IN SHORT SUPPLY.

B-175524, APR 14, 1972

CONTRACTS - ALLEGED ERROR IN BID - REQUEST FOR PRICE ADJUSTMENT DECISION DENYING A REQUEST OF FLORIDA SIP, INC., FOR AN UPWARD ADJUSTMENT IN PRICE DUE TO AN ALLEGED ERROR IN BID ON A CONTRACT WITH THE VETERANS ADMINISTRATION FOR A SUPPLY OF GRAPEFRUIT. SINCE THE FLORIDA SIP OFFER WAS THE ONLY ONE SUBMITTED AND WAS ACTUALLY GREATER THAN THE MARKET PRICE ESTABLISHED BY REFERENCE TO THE DECEMBER 4 ISSUE OF THE "REPORT ON FOOD MARKETS," IT APPEARS THAT THE CONTRACTING OFFICER WAS NEITHER ON CONSTRUCTIVE NOR ACTUAL NOTICE OF THE ALLEGED ERROR. ACCORDINGLY, THE COMP. GEN. MUST CONCLUDE THAT THE CONTRACTOR'S ACCEPTANCE CONSTITUTED A VALID AND BINDING CONTRACT AND THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN PRICE.

TO MR. DONALD E. JOHNSON:

WE REFER TO LETTER 134C OF MARCH 20, 1972, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN REGARDING AN ERROR FLORIDA SIP, INC., ALLEGES IT MADE IN ITS OFFER UPON WHICH CONTRACT NO. V797P-4987B IS BASED.

ON OCTOBER 29, 1971, THE VETERANS ADMINISTRATION MARKETING DIVISION FOR SUBSISTENCE, HINES, ILLINOIS, ADVERTISED UNDER SOLICITATION NO. M4 94-72 FOR THE ANNUAL REQUIREMENTS OF VARIOUS VA INSTALLATIONS THROUGHOUT THE COUNTRY FOR CITRUS FRUIT PRODUCTS. DELIVERY OF THE ITEMS WAS TO BE F.O.B. DESTINATION OR ORIGIN. BECAUSE NO OFFERS WERE RECEIVED FOR GRAPEFRUIT, THE CONTRACTING OFFICER CONTACTED TWO GRAPEFRUIT PACKERS TO ASCERTAIN WHY THEY HAD NOT SUBMITTED OFFERS. ONE PACKER SAID THAT SINCE GRAPEFRUIT WAS IN SHORT SUPPLY IT HAD ONLY ENOUGH FOR ITS REGULAR COMMERCIAL CUSTOMERS. FLORIDA SIP OF PLANT CITY, FLORIDA, ALSO INFORMED THE CONTRACTING OFFICER THAT GRAPEFRUIT WAS IN SHORT SUPPLY, BUT THAT IF THE VETERANS ADMINISTRATION WOULD RESOLICIT ITS NEEDS FLORIDA SIP WOULD PROBABLY MAKE AN OFFER TO SUPPLY AT LEAST A PART OF THE REQUIREMENT.

ACCORDINGLY, SOLICITATION NO. M4-Q106-72 WAS ISSUED. ON THE FIRST PAGE OF THE SOLICITATION IT WAS INDICATED THAT DELIVERY WAS TO BE F.O.B. DESTINATION. FLORIDA SIP SUBMITTED AN OFFER TO SUPPLY THE REQUIREMENTS OF ONLY ONE INSTALLATION AT A PRICE OF $5.65 PER CASE, OR A TOTAL OF $45,200 FOR 8,000 CASES. THIS WAS THE ONLY OFFER RECEIVED. THE CONTRACT WAS AWARDED TO FLORIDA SIP ON DECEMBER 23, 1971. ON DECEMBER 29 THE PROCUREMENT OFFICE WAS ADVISED THAT FLORIDA SIP HAD MADE AN ERROR IN DETERMINING ITS OFFERED PRICE. THAT FIRM HAD SUBMITTED ITS PRICE ON THE BASIS OF DELIVERY F.O.B. ORIGIN AND HAD NOT REALIZED THAT THE SOLICITATION REQUESTED A PRICE F.O.B. DESTINATION. FLORIDA SIP REQUESTED PERMISSION TO INCREASE THE CONTRACT PRICE BY $2,712.22, THE COST OF TRANSPORTATION.

WE NOTE THAT THE FLORIDA SIP OFFER WAS THE ONLY ONE SUBMITTED ON THIS PROCUREMENT AND FURTHER THAT THE DECEMBER 4, 1971, ISSUE OF THE "REPORT ON FOOD MARKETS," PUBLISHED BY THE AMERICAN INSTITUTE OF FOOD DISTRIBUTION, INC., THE MOST RECENT ISSUE OF THAT REPORT AVAILABLE TO THE CONTRACTING OFFICER AT THE TIME OF THE PROCUREMENT, INDICATED THE PRICE OF FANCY GRAPEFRUIT SECTIONS TO BE $5.50 PER CASE F.O.B. FLORIDA. WHILE THE SOLICITATION REQUESTED OFFERS ON CHOICE GRAPEFRUIT SECTIONS, WE ARE ADVISED THAT CANNERS OFTEN QUOTE THE SAME PRICE FOR BOTH THE CHOICE AND THE HIGHER QUALITY FANCY GRAPEFRUIT SECTIONS. FURTHER, THE CONTRACTING OFFICER HAS REPORTED THAT THE $5.65 DELIVERED PRICE DID NOT APPEAR TO BE OUT OF LINE, SINCE BID PRICES LESS THAN THAT SHOWN IN THE FOOD REPORT ARE RECEIVED OFTEN. VETERANS ADMINISTRATION OFFICIALS HAVE ADVISED THAT THEY WERE INFORMED ON MARCH 16, 1972, BY THE AMERICAN INSTITUTE OF FOOD DISTRIBUTORS, INC., THAT ON DECEMBER 13, 1971 - 1 DAY BEFORE FLORIDA SIP COMPUTED ITS OFFERED PRICE - TWO FLORIDA PACKERS QUOTED PRICES OF $5.55 AND $5.65 PER CASE, F.O.B. FLORIDA. THE CONTRACTING OFFICER WAS UNAWARE OF THIS FACT AT THE TIME OF CONTRACT AWARD.

WHILE IT MAY BE THAT FLORIDA SIP MADE AN ERROR IN ITS PRICE, THE QUESTION FOR CONSIDERATION IS WHETHER THE ACCEPTANCE OF THE FLORIDA SIP OFFER CREATED A VALID AND BINDING CONTRACT. WE CONCLUDE THAT THE EVIDENCE OF RECORD DOES NOT SUPPORT THE CONTRACTOR'S CLAIM FOR RELIEF. SINCE THE FLORIDA SIP OFFER WAS THE ONLY ONE SUBMITTED ON THIS PROCUREMENT AND WAS WITHIN THE RANGE OF, AND WAS ACTUALLY GREATER THAN, THE PRICE QUOTED IN THE DECEMBER 4 ISSUE OF THE "REPORT ON FOOD MARKETS," WE BELIEVE THAT THE CONTRACTING OFFICER WAS NEITHER ON CONSTRUCTIVE NOR ACTUAL NOTICE OF A MISTAKE IN THE FLORIDA SIP OFFER. IN THE ABSENCE OF THESE FACTORS, THERE IS NO JUSTIFICATION FOR ANY ADJUSTMENT IN THE CONTRACT PRICE. 40 COMP. GEN. 272 (1969).