B-161525, JUN. 27, 1967

B-161525, JUN. 27, 1967

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED MAY 11, 1967, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING OUR DECISION AS TO WHETHER ITEMS 8 AND 9 OF PURCHASE ORDER NO. 67-MC-40861 MAY BE CANCELED.

THE VETERANS ADMINISTRATION MARKETING DIVISION, HINES, ILLINOIS, BY INVITATION NO. M4-238-67 REQUESTED BIDS--- TO BE OPENED ON APRIL 11, 1967- -- FOR FURNISHING FROZEN FISH AND SCALLOPS TO BE DELIVERED TO THE VARIOUS DESTINATIONS LISTED UNDER ITEMS 1 TO 23, INCLUSIVE. UNDER EACH GROUP OF ITEMS BIDDERS WERE REQUESTED TO INDICATE WHETHER THEY WERE FURNISHING A DOMESTIC OR FOREIGN PRODUCT. IN RESPONSE 40-FATHOM SEAFOODS, INC., SUBMITTED A BID DATED MARCH 22, 1967, WHEREIN IT OFFERED TO DELIVER 14,292 POUNDS AND 15,300 POUNDS OF FROZEN DOMESTIC FLOUNDER TO THE DESTINATIONS SET FORTH OPPOSITE ITEMS 8 AND 9 AT A UNIT PRICE OF $0.3349 PER POUND. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEMS 8, 9, 21 AND 22 ON APRIL 12, 1967, AND ON APRIL 17 A PURCHASE ORDER WAS ISSUED REQUESTING DELIVERY OF THE FISH.

IT IS REPORTED THAT ON APRIL 24, 1967, MR. CARRIGAN OF VIKING SEAFOODS, INC., ONE OF THE OTHER BIDDERS, TELEPHONED THE CONTRACTING OFFICER AND ADVISED THAT HE WAS OF THE OPINION THAT 40-FATHOM COULD NOT FURNISH DOMESTIC FLOUNDER AT ITS BID PRICE AND THAT 40-FATHOM MOST LIKELY WAS FURNISHING FISH PORTIONS CUT FROM FOREIGN FISH BLOCKS. IT ALSO IS REPORTED THAT ON THE FOLLOWING DAY, MR. BRACKETT OF 40-FATHOM CALLED THE CONTRACTING OFFICER TO INQUIRE WHETHER FISH BLOCKS RECEIVED FROM CANADA AND CUT IN THE UNITED STATES COULD BE CONSIDERED AS DOMESTIC FISH PORTIONS. MR. BRACKET WAS ADVISED THAT UNDER THE BUY AMERICAN ACT, 41 U.S.C. 10-AD, SUCH FISH PORTIONS COULD NOT QUALIFY AS A DOMESTIC END PRODUCT.

IN A LETTER DATED MAY 1, 1967, 40-FATHOM ADVISED THE CONTRACTING OFFICER THAT IT HAD MISTAKENLY BID DOMESTIC RATHER THAN FOREIGN PRODUCT; THAT IT HAD ERRONEOUSLY ASSUMED THAT AS LONG AS THE ACTUAL CUTTING OF THE FISH PORTIONS WERE PERFORMED IN THE UNITED STATES, THE END PRODUCT WOULD BE CLASSIFIED AS DOMESTIC. THE BIDDER REQUESTED THAT IT BE PERMITTED TO FURNISH FISH PORTIONS CUT FROM FOREIGN FISH BLOCKS AT A PRICE EQUAL TO THE PRICE QUOTED BY THE LOWEST BIDDER OFFERING A FOREIGN PRODUCT, OR IN THE ALTERNATIVE, IT BE PERMITTED TO WITHDRAWN ITS BID ON ITEMS 8 AND 9. LETTER DATED MAY 5, 1967, 40 FATHOM SUBMITTED A COPY OF A QUOTATION DATED MAY 4, 1967, RECEIVED FROM VIKING SEAFOODS, INC., ONE OF THE OTHER BIDDERS, IN WHICH 40 FATHOM WAS ADVISED THAT IT COULD BE SUPPLIED WITH "A 4 OZ. UNBREADED DOMESTIC FLOUNDER PORTION AT .45-1/2 FOB BOSTON.' THE BIDDER ALSO SUBMITTED A COPY OF UNITED STATES DEPARTMENT OF INTERIOR MARKET NEWS SERVICE REPORT FOR FROZEN FISHERY PRODUCT PRICES TO PRIMARY WHOLESALERS ON IMPORTED FISH BLOCKS WHICH INDICATES A PRICE IN CENTS PER POUND OF $0.26-$0.27 FOR IMPORTED FLOUNDER FILLETS IN BLOCKS.

THE ABSTRACT OF BIDS SHOWS THAT 40-FATHOM QUOTED A PER POUND PRICE OF $0.3349 FOR ITEMS 8 AND 9 AND THAT IT WAS THE ONLY FIRM THAT SPECIFICALLY STATED IN ITS BID THAT DOMESTIC PRODUCTS WOULD BE FURNISHED. THE BID OF 40-FATHOM INDICATES THAT IT IS A SUBSIDIARY OF NATIONAL SEA PRODUCTS, LTD., A CANADIAN CORPORATION. THE SIX OTHER BIDS OFFERING FOREIGN PRODUCTS, BEFORE APPLICATION OF THE 12-PERCENT BUY AMERICAN ACT DIFFERENTIAL, WERE AS FOLLOWS ON A PER POUND BASIS: ITEM 8: $0.3237; $0.3314; $0.332; $0.385; $0.399; $0.3995

ITEM 9: $0.31; $0.3237; $0.332; $0.37; $0.394; $0.3995 IT IS NOTED THAT THE BID OF 40-FATHOM IN THE AMOUNT OF $0.3349 PER POUND FOR FURNISHING A DOMESTIC PRODUCT IS IN LINE WITH THE THREE OTHER BIDS ALSO OFFERING A FOREIGN PRODUCT. IN HIS REPORT OF MAY 9, 1967, IN WHICH HE RECOMMENDED THAT ITEMS 8 AND 9 OF THE PURCHASE ORDER BE CANCELED, THE CONTRACTING OFFICER STATES THAT IN VIEW OF THE FACT THAT 40-FATHOM SUBMITTED THE ONLY DOMESTIC BID AND THE FACT THAT ITS DOMESTIC BID WAS LOWER THAN SOME OF THE BIDS OFFERING A FOREIGN PRODUCT, HE SHOULD HAVE BEEN PLACED ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF 40-FATHOM AND, THEREFORE, HE SHOULD HAVE REQUESTED VERIFICATION THEREOF.

IN VIEW OF THE FOREGOING, THE DIRECTOR, SUPPLY SERVICE, RECOMMENDS CANCELLATION OF ITEMS 8 AND 9 FROM PURCHASE ORDER NO. 67-MC-40861. CONCUR IN THIS RECOMMENDATION. IN THE CIRCUMSTANCES, THE BID SHOULD NOT HAVE BEEN ACCEPTED WITHOUT VERIFICATION ACCORDINGLY, THE ITEMS 8 AND 9 MAY BE CANCELED AS RECOMMENDED BY THE DIRECTOR, SUPPLY SERVICE.