B-133413, SEP. 6, 1957

B-133413, SEP. 6, 1957

TO THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO LETTERS DATED AUGUST 9 AND 19, 1957, WITH ENCLOSURES, FROM MR. JOSEPH A. HORN, STATE ADMINISTRATIVE OFFICER, AGRICULTURAL STABILIZATION AND CONSERVATION COMMITTEE, DURHAM, NEW HAMPSHIRE, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE LEE LIME CORPORATION, LEE, MASSACHUSETTS, ALLEGES WAS MADE IN ITS BID ON WHICH CONTRACT NO. 12-33-012-34 IS BASED.

SINCE AN AWARD HAS BEEN MADE IN THE PRESENT CASE, THE DECISION WILL BE ADDRESSED TO YOU. SEE 26 COMP. GEN. 993 AND 28 ID. 401.

THE NEW HAMPSHIRE STATE AGRICULTURAL STABILIZATION AND CONSERVATION OFFICE, DURHAM, NEW HAMPSHIRE, BY INVITATION NO. NG-ACP-1-57, REQUESTED BIDS--- TO BE OPENED OCTOBER 8, 1956--- FOR FURNISHING AGRICULTURAL STANDARD GROUND LIMESTONE AND MAGNESIUM LIME TO FARMERS IN VARIOUS COUNTIES IN THE STATE OF NEW HAMPSHIRE DURING THE PERIOD BEGINNING WITH THE DATE OF THE AWARD AND ENDING DECEMBER 31, 1957, UNLESS SOONER TERMINATED BY EITHER PARTY UNDER THE PROVISIONS OF THE CONTRACT. THE INVITATION REQUESTED BIDS ON THE BASIS OF A PRICE PER TON, BULK OR BAGGED, F.O.B. PLANT AND, ALSO, PRICES PER TON, DELIVERED TO FARM YARDS BAGGED AND DELIVERED AND SPREAD ON FIELDS. PROSPECTIVE BIDDERS WERE ADVISED THAT NO DEFINITE VOLUME OF BUSINESS WAS GUARANTEED. PARAGRAPH 9 OF THE SUPPLEMENTAL CONDITIONS PROVIDES AS FOLLOWS:

"9. ACCEPTED PRICE--- NO REIMBURSEMENT WILL BE MADE FOR ADDITIONAL EXPENSE OF ANY KIND ABOVE THE CONTRACT PRICE, EXCEPT THAT IN THE EVENT ANY ADDITIONAL RAIL OR TRUCK FREIGHT CHARGES APPLICABLE TO LIMING MATERIALS ARE MADE EFFECTIVE UNDER THE GENERAL ORDER OF ANY PUBLIC REGULATORY BODY HAVING JURISDICTION AFTER THE DATE OF THE BID OPENING, ANY RESULTANT AWARD SHALL BE REGARDED AS AMENDED AS OF THE EFFECTIVE DATE OF THE INCREASE OR THE DATE OF RECEIPT BY THE CONTRACTING OFFICER OF NOTICE FROM THE SUCCESSFUL BIDDER OF HIS INTENTION TO REQUIRE AN INCREASE IN PRICES TO THE EXTENT OF THE APPLICABLE RAIL OR TRUCK FREIGHT RATE INCREASES, WHICHEVER IS THE LATER. IN THE EVENT THAT SUCH NOTICE IS RECEIVED FROM THE BIDDER PRIOR TO AWARD, THE EFFECTIVE DATE OF THE AMENDMENT WILL BE THE DATE OF AWARD OR THE EFFECTIVE DATE OF THE INCREASE, WHICHEVER IS THE LATER. THE INCREASES IN PRICES WILL APPLY ONLY TO SHIPMENTS MADE BY THE CONTRACTOR PURSUANT TO THE REQUIREMENTS OF THE CONTRACT ON AND AFTER THE EFFECTIVE DATE OF EACH AMENDMENT.

"IN THE EVENT THAT A GENERAL ORDER OF ANY PUBLIC REGULATORY BODY PRESCRIBES A LOWER RAIL OR TRUCK FREIGHT RATE THAN THAT IN EFFECT ON THE DATE OF THE CONTRACTOR'S OFFER, OR THE FEDERAL TRANSPORTATION TAX IS REDUCED OR REPEALED, ALL PRICES QUOTED WHICH ARE AFFECTED WILL BE REDUCED CORRESPONDINGLY ON ALL DELIVERIES MADE ON AND AFTER THE EFFECTIVE DATE OF SUCH ACTION.

"SUCH INCREASES OR DECREASES SHALL APPLY ONLY TO SUCH DELIVERIES AS ARE AFFECTED BY THE INCREASED OR DECREASED RATES AND ONLY TO THE EXTENT OF THE INCREASES OR DECREASES ON THE SHIPMENTS AFFECTED.'

IN RESPONSE TO THE INVITATION, THE LEE LIME CORPORATION SUBMITTED A BID DATED OCTOBER 5, 1956, OFFERING TO FURNISH THE LIMING MATERIALS AT THE PRICES SPECIFIED THEREIN. ON NOVEMBER 27, 1956, A CONTRACT WAS AWARDED TO THE CORPORATION AS A PRIMARY SOURCE AND AS A SECONDARY SOURCE FOR THE REQUIRED MATERIALS.

BY LETTER DATED JANUARY 17, 1957, THE LEE LIME CORPORATION ADVISED AS FOLLOWS:

"WITH REFERENCE TO OUR BID PRICE ON SPREAD LIMESTONE IN STRAFFORD COUNTY, NEW HAMPSHIRE, UNDER INVITATION NO. NH-ACP-1-57 DATED SEPTEMBER 24, 1956, WE HEREBY MAKE FORMAL REQUEST TO INCREASE OUR BID IN THE AMOUNT OF 26 CENTS PER TON TO A TOTAL OF $12.01 PER TON.

"THE REASON FOR THIS REQUEST IS THAT WHEN WE SUBMITTED OUR BID FOR THE 1957 PROGRAM, WE BASED THIS BID UPON THE $11.75 PRICE WHICH WAS IN EFFECT FOR PART OF 1956. IN 1956 A FREIGHT INCREASE WAS GRANTED BY THE ICC ON LIMESTONE AND OUR BID WAS THEN REVISED TO REFLECT THIS INCREASE IN THE AMOUNT OF 26 CENTS. WE INTENDED TO BID EXACTLY THE SAME PRICE FOR 1957, SUBJECT TO FREIGHT RATE INCREASES, AS WE DID IN 1956. THE ERROR THAT WE MADE WAS IN REFERRING TO OUR CONTRACT FROM THE STATE OF NEW HAMPSHIRE COVERING THE YEAR 1956. THIS PRICE DID NOT REFLECT THE 26 CENTS ADJUSTMENT WHICH WE WERE ALLOWED ON MAY 2, 1956.

"WE WOULD APPRECIATE VERY MUCH YOUR FAVORABLE CONSIDERATION OF THIS REQUEST.'

IN A MEMORANDUM DATED JANUARY 22, 1957, FROM THE STATE ADMINISTRATIVE OFFICER (THE CONTRACTING OFFICER) TO THE ADMINISTRATOR, AGRICULTURAL CONSERVATION PROGRAM SERVICE, IT WAS STATED---

"THE FOLLOWING EVENTS APPARENTLY LED UP TO THE ERROR. THE ORIGINAL BID UNDER THE 1956 ACP WAS $11.75 NET PER TON. A 26 CENT PER TON INCREASE FOR FREIGHT RATE INCREASE WAS APPROVED IN MARCH 1956, MAKING A TOTAL OF $12.01. WHEN LEE PREPARED ITS BID UNDER THE 1957 ACP, THEY REFERRED TO THE $11.75 RATHER THAN $12.01, AND SUBMITTED A BID FOR $11.75. THE ONLY OTHER BID RECEIVED FOR THIS TYPE OF MATERIAL AND DELIVERY IN STRAFFORD COUNTY FOR 1957 WAS FROM JOHN MADIGAN, HARVARD, MASSACHUSETTS, AT A PRICE OF $12.50. AN AWARD WAS MADE LEE FOR $11.75.

"IN ADDITION TO THE ABOVE, LEE HAS REQUESTED ANOTHER 26 CENTS PER TON INCREASE TO COVER THE DECEMBER 28, 1956, FREIGHT RATE INCREASE. THESE TWO INCREASES OF 26 CENTS EACH WOULD CHANGE THE PRICE TO $12.27, WHICH WOULD NOT ALTER THE POSITION OF THE PRIMARY AND SECONDARY BIDDERS. THERE IS APPROXIMATELY 300 OR 400 TONS OF MATERIAL INVOLVED.'

ON THE RECORD, THERE IS NO ROOM FOR DOUBT THAT THE CORPORATION MADE AN ERROR IN ITS BID, AS ALLEGED. ALSO, THERE IS AN INDICATION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF THE CORPORATION, SINCE, IN HIS MEMORANDUM OF JANUARY 22, 1957, IT IS STATED THAT THE PREVIOUS YEAR'S CONTRACT WITH THE CORPORATION FOR THE SAME TYPE OF ITEM ORIGINALLY PROVIDED FOR A PRICE OF $11.75 PER NET TON AND THAT SUCH PRICE WAS LATER INCREASED TO $12.01 PER NET TON--- THE CORPORATION'S ALLEGED INTENDED BID PRICE FOR DELIVERY OF SPREAD MAGNESIUM LIMESTONE IN STRAFFORD COUNTY--- TO COVER THE FREIGHT RATE INCREASE APPROVED IN MARCH 1956. ACCORDINGLY CONTRACT NO. 12-33-012-34 MAY BE AMENDED TO PROVIDE FOR A PRICE OF $12.01 PER NET TON FOR THE SPREAD MAGNESIUM LIMESTONE DELIVERED TO FARMYARDS IN STRAFFORD COUNTY PRIOR TO DECEMBER 28, 1956--- THE EFFECTIVE DATE OF THE SECOND FREIGHT RATE INCREASE MENTIONED IN THE STATE ADMINISTRATIVE OFFICER'S MEMORANDUM OF JANUARY 22, 1957--- AND TO PROVIDE FOR A PRICE OF $12.27 PER NET TON FOR SPREAD MAGNESIUM LIMESTONE DELIVERED TO STRAFFORD COUNTY ON AND AFTER THAT DATE.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHERS COVERING PAYMENTS IN ADDITION TO THE ORIGINAL CONTRACT PRICE OF $11.75 PER NET TON FOR SPREAD MAGNESIUM LIMESTONE DELIVERED TO STRAFFORD COUNTY.