B-180882, APR 25, 1974

B-180882: Apr 25, 1974

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CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR IN LOW BID WHERE SECOND LOW BID WAS 63 PERCENT HIGHER IN PRICE AND LOW BID INDICATED THAT BIDDER SUBMITTING SECOND LOW BID WOULD BE SUPPLIER FOR LOW BIDDER. THE SUBJECT CONTRACT WAS AWARDED DECEMBER 21. WHILE A BID OF $.55 WAS INTENDED FOR ITEMS 6 AND 7. WAS EXPLAINED THAT THE BID PRICES WERE TRANSMITTED BY TELEPHONE (INTERNALLY WITHIN SHERWOOD'S ORGANIZATION). THE PRICES WERE REVERSED FOR THE TWO SETS OF ITEMS WITH THE CONSEQUENCE THAT THE QUOTATION FOR ITEMS 6 AND 7 WAS FAR BELOW COST. THE ABSTRACT OF BIDS REVEALS THAT THE SECOND LOW BID FOR ITEMS 6 AND 7 WAS SUBMITTED BY BEMIS HEALTH CARE. THE THIRD LOW BID WAS $.49 PER UNIT FOR THESE ITEMS.

B-180882, APR 25, 1974

CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF ERROR IN LOW BID WHERE SECOND LOW BID WAS 63 PERCENT HIGHER IN PRICE AND LOW BID INDICATED THAT BIDDER SUBMITTING SECOND LOW BID WOULD BE SUPPLIER FOR LOW BIDDER. THEREFORE CONTRACT AWARDED TO LOW BIDDER MAY BE RESCINDED.

TO VETERANS ADMINISTRATION:

THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, VETERANS ADMINISTRATION (VA), REQUESTS A DECISION PURSUANT TO FEDERAL PROCUREMENT REGULATIONS 1-2.406-4(I) AS TO THE PROPRIETY OF THE PROPOSED RESCISSION OF PURCHASE ORDER NO. 74-MC-10291 WITH SHERWOOD MEDICAL INDUSTRIES, INC., ST. LOUIS, MISSOURI.

THE SUBJECT CONTRACT WAS AWARDED DECEMBER 21, 1973, BY THE VA MARKETING DIVISION, MEDICAL-DENTAL-SCIENTIFIC SUPPLIES, HINES, ILLINOIS, FOR THE SUPPLY OF ADULT BEDPANS TO THE BELL, CALIFORNIA AND SOMERVILLE, NEW JERSEY, FACILITIES IN QUANTITIES OF 8,424 AND 5,976, RESPECTIVELY, AT $.27 EACH. THESE CONSTITUTED ITEMS 6 AND 7 OF SOLICITATION M1-112-74, WHICH CALLED FOR BIDS ON VARIOUS ITEMS OF HOSPITAL WARE.

BY LETTERS OF JANUARY 2 AND 14, 1974, SHERWOOD REQUESTED RESCISSION OF THE CONTRACT ON THE BASIS OF AN ALLEGED MISTAKE IN THE SUBMISSION OF ITS BID. SHERWOOD STATED THAT IT INTENDED TO SUBMIT A UNIT PRICE OF $.27 FOR ITEMS 3, 4, AND 5, WHILE A BID OF $.55 WAS INTENDED FOR ITEMS 6 AND 7. WAS EXPLAINED THAT THE BID PRICES WERE TRANSMITTED BY TELEPHONE (INTERNALLY WITHIN SHERWOOD'S ORGANIZATION), AND IN WRITING UP THE WORKSHEETS (INCLUDED IN THE RECORD), THE PRICES WERE REVERSED FOR THE TWO SETS OF ITEMS WITH THE CONSEQUENCE THAT THE QUOTATION FOR ITEMS 6 AND 7 WAS FAR BELOW COST.

THE ABSTRACT OF BIDS REVEALS THAT THE SECOND LOW BID FOR ITEMS 6 AND 7 WAS SUBMITTED BY BEMIS HEALTH CARE, INC., AT $.44 PER UNIT, AND THE THIRD LOW BID WAS $.49 PER UNIT FOR THESE ITEMS. ALSO THE CONTRACTING OFFICER NOTES THAT ON PAGE 7 OF SHERWOOD'S BID THE BIDDER STATED THAT THE INSPECTION LOCATION FOR THE ITEMS WOULD BE THE BEMIS FACILITY IN SHEBOYGAN FALLS, WISCONSIN, THEREBY INDICATING THAT BEMIS, WHICH BID $.44 FOR THE SAME ITEMS, WOULD BE SHERWOOD'S SUPPLIER. ON THE BASIS OF THIS FACT, THE CONTRACTING OFFICER HAS STATED THAT A BONA FIDE MISTAKE WAS ESTABLISHED, AND THAT HE SHOULD HAVE BEEN PLACED ON NOTICE OF THE MISTAKE BEFORE AWARD. ACCORDINGLY, RESCISSION OF THE CONTRACT IS RECOMMENDED.

AS A GENERAL RULE, IF A BIDDER MAKES A UNILATERAL MISTAKE IN BID, THE BIDDER IS BOUND BY THE CONTRACT AWARDED UNLESS THE CONTRACTING OFFICER KNEW, OR SHOULD HAVE KNOWN, OF THE MISTAKE AT THE TIME OF AWARD. IF THE CONTRACTING OFFICER WAS ACTUALLY OR CONSTRUCTIVELY ON NOTICE OF THE MISTAKE, THE CONTRACT MAY BE RESCINDED. 49 COMP. GEN. 199 (1969) AND THE CASES CITED.

IN VIEW OF THE FACT THAT THE SECOND LOW BIDDER QUOTED A PRICE WHICH WAS 63 PERCENT HIGHER THAN SHERWOOD'S CONTRACT PRICE, AND IT WAS EVIDENT FROM THE LOW BID THAT THE NEXT HIGHER BIDDER WOULD BE SHERWOOD'S ACTUAL SUPPLIER FOR THE ITEMS, IT IS OUR CONCLUSION THAT THE EVIDENCE IN THE RECORD ADEQUATELY ESTABLISHES AN ERROR IN SHERWOOD'S BID AND THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE MISTAKE PRIOR TO AWARD. 36 COMP. GEN. 585 (1957) AND B-177446, JANUARY 23, 1973.

ACCORDINGLY, GAO WILL NOT OBJECT TO THE PROPOSED RESCISSION OF THE AWARD.