B-160279, DEC. 1, 1966

B-160279, DEC. 1, 1966

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION:

WE REFER TO A LETTER DATED OCTOBER 18, 1966 (YOUR REFERENCE 134C), FROM THE DIRECTOR, SUPPLY SERVICE, REQUESTING OUR DECISION AS TO WHETHER A CONTRACT FOR MILK PRODUCTS, AWARDED TO D. M. WATT AND SONS PURSUANT TO INVITATION NO. 67-11 ISSUED JUNE 6, 1966, MAY BE PERMITTED TO STAND DESPITE MISTAKEN UTILIZATION OF A 5 PERCENT - 10 DAY DISCOUNT IN BID EVALUATION AND AWARD.

IN RESPONSE TO THE INVITATION THREE BIDS WERE RECEIVED AND OPENED ON JUNE 21, 1966. THE TWO LOWEST BIDS RECEIVED, AND THE ONLY ONES THAT NEED BE CONSIDERED, WERE SUBMITTED BY (1) D. M. WATT AND AND SONS, WHICH QUOTED A TOTAL PRICE OF $17,950, LESS DISCOUNT OF 5 PERCENT - 10 DAYS, OR A NET PRICE OF $17,052.50, AND (2) GARELICK BROTHERS FARMS, WHICH QUOTED A TOTAL OF $17,835 LESS DISCOUNT OF 2 PERCENT - 20 DAYS, OR A NET OF $17,478.30. DESPITE THE PROVISIONS OF PARAGRAPH 7 (A) OF THE BIDDING INSTRUCTIONS, TERMS AND CONDITIONS, (STANDARD FORM 33-A) WHICH ADVISED THAT ,PROMPT PAYMENT DISCOUNTS OFFERED FOR PAYMENT WITHIN LESS THAN TWENTY (20) CALENDAR DAYS WILL NOT BE CONSIDERED IN EVALUATING BIDS FOR AWARD," THE CONTRACTING OFFICER INADVERTENTLY APPLIED THE 10-DAY DISCOUNT OFFERED BY D. M. WATT AND SONS. ITS BID LESS DISCOUNT WAS EVALUATED AS THE LOWEST AT $17,052.50. SUPPLY CONTRACT V5145P-452, DATED JUNE 27, 1966, WAS AWARDED TO D. M. WATT AND SONS. PERFORMANCE BEGAN JULY 1, 1966, AND IS SCHEDULED TO CONTINUE THROUGH JUNE 30, 1967.

THE PROVISIONS OF PARAGRAPH 7 (A) OF STANDARD FORM 33-A ARE IN ACCORD WITH FPR SEC. 1-2.407-3 (C), WHICH PROHIBITS EVALUATION OF PROMPT PAYMENT DISCOUNTS FOR TIME PERIODS LESS THAN THAT SPECIFIED IN THE INVITATION FOR BIDS. THESE PROVISIONS ARE IN ACCORD WITH THE LONG STANDING RULE OF COMPETITIVE BIDDING THAT BIDS MUST BE EVALUATED ON THE BASIS PRESCRIBED IN THE INVITATION. 40 COMP. GEN. 160, 161, CITING 10 ID. 261 AND 38 ID. 550. OTHERWISE, BIDDERS COULD NOT COMPETE ON AN EQUAL BASIS AS REQUIRED BY LAW SINCE THEY WOULD NOT KNOW THE BASIS ON WHICH THEIR BIDS WOULD BE EVALUATED. B-150786, MARCH 29, 1963.

ORDINARILY, IN CASES INVOLVING AWARDS MADE IN VIOLATION OF APPLICABLE PROCUREMENT LAWS AND REGULATIONS WE HAVE REQUIRED CANCELLATION OF THE RESULTING CONTRACTS. SEE, FOR EXAMPLE, 37 COMP. GEN. 550, 40 ID. 160, 38 ID. 190, B-149466, JULY 27, 1962. IN SOME INSTANCES CANCELLATION HAS NOT BEEN REQUIRED, HOWEVER, BECAUSE SUCH ACTION WAS NOT DEEMED TO BE IN THE INTEREST OF THE GOVERNMENT. SEE, B 155929, FEBRUARY 12, 1965, 43 COMP. GEN. 481, 44 ID. 204.

IN THE PRESENT CASE D. M. WATT AND SONS HAS PERFORMED THIS CONTRACT FOR MORE THAN FOUR MONTHS OF THE TWELVE MONTH PERIOD OF ITS OBLIGATION. ADDITION THE DIRECTOR HAS EXPRESSED THE BELIEF THAT PROCUREMENT COSTS WILL BE INCREASED IF THE CONTRACT IS READVERTISED FOR THE BALANCE OF THE YEAR. MOREOVER, THE DIRECTOR ADVISES THAT, SINCE THE DISCOUNT OFFERED BY D. M. WATT AND SONS IS BEING UTILIZED, SAVINGS OF APPROXIMATELY $425.80 OVER THE 2 PERCENT - 20 DAY DISCOUNT BID PRICE OF GARELICH BROTHERS MAY BE REALIZED. CONSIDERING THESE FACTORS IT WOULD NOT APPEAR THAT CANCELLATION OF THE CONTRACT WOULD SERVE THE GOVERNMENT'S INTEREST, AND THE CONTRACTOR SHOULD THEREFORE BE PERMITTED TO COMPLETE PERFORMANCE IN ACCORDANCE WITH THE TERMS OF THE CONTRACT.

HOWEVER, IN FUTURE PROCUREMENTS OF THIS NATURE IT IS RECOMMENDED THAT SUCH ACTION BE TAKEN AS MAY BE NECESSARY TO INSURE THAT INVITATIONS DO NOT PRECLUDE EVALUATION OF BIDS ON THE BASIS OF 10-DAY PROMPT PAYMENT DISCOUNTS WHERE, AS IN THIS CASE, YOUR ADMINISTRATION'S PAYMENT PROCEDURES WILL PERMIT PAYMENTS TO BE MADE WITHIN 10 DAYS.