B-170941, DEC. 15, 1970

B-170941, DEC. 15, 1970

CONTRACTS - MISTAKE - RECISSION DECISION ALLOWING RECISSION OF A CONTRACT FOR CANNED LOW SODIUM GREEN BEAN PUREE AWARDED TO KRIER PRESERVING COMPANY ON GROUNDS THAT FIRM MISTAKENLY BID ON AN ITEM IT DOES NOT PRODUCE. WHERE CONTRACTING OFFICER STATES THAT HE SHOULD HAVE CONTACTED KRIER BEFORE MAKING THE AWARD, ACCEPTANCE OF BID DID NOT RESULT IN A VALID CONTRACT AND THEREFORE RECISSION IS ALLOWED.

TO MR. JOHNSON:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 30, 1970, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE KRIER PRESERVING COMPANY TO HAVE BEEN MADE IN ITS BID UPON WHICH PURCHASE ORDER NO. 71-MC-40133 DATED AUGUST 26, 1970, WAS BASED.

THE VETERANS ADMINISTRATION, MARKETING DIVISION FOR SUBSISTENCE, HINES, ILLINOIS, BY INVITATION FOR BIDS NO. M4-38-71, REQUESTED BIDS FOR FURNISHING SPECIFIED QUANTITIES OF VARIOUS TYPES OF CANNED BEANS TO BE DELIVERED TO THE DESTINATIONS SET FORTH THEREIN. IN RESPONSE, THE KRIER PRESERVING COMPANY SUBMITTED A BID DATED AUGUST 18, 1970, OFFERING TO FURNISH THE CANNED LOW SODIUM GREEN BEAN PUREE UNDER ITEM 5 AT A PRICE OF $3.28 PER CASE. THE ONLY OTHER BID ON ITEM 5 IN THE AMOUNT OF $3.72 PER CASE WAS SUBMITTED BY THE LARSEN COMPANY. THE BID OF KRIER AS TO ITEM 5 WAS ACCEPTED ON AUGUST 26, 1970.

IT IS REPORTED THAT ON SEPTEMBER 1, 1970, A REPRESENTATIVE OF THE LARSEN COMPANY TELEPHONED THE CONTRACTING OFFICE TO INQUIRE ABOUT THE AWARD ON ITEM 5 SINCE IT HAD RECEIVED AN AWARD NOTICE ON ITEMS 4 AND 6 WHICH COVERED THE DELIVERY OF CANNED GREEN BEAN PUREE TO DIFFERENT DESTINATIONS. IT ALSO IS REPORTED THAT WHEN KRIER'S REPRESENTATIVE WAS INFORMED THAT ITEM 5 HAD BEEN AWARDED TO THE KRIER PRESERVING COMPANY, THE REPRESENTATIVE STATED THAT THE AWARD OF ITEM 5 TO KRIER WAS A MISTAKE BECAUSE THE COMPANY DID NOT PACK GREEN BEAN PUREE. ON SEPTEMBER 1, 1970, THE CONTRACTING OFFICER CONTACTED KRIER BY TELEPHONE AND HE WAS INFORMED THAT THE COMPANY DID NOT PACK GREEN BEAN PUREE.

BY LETTER DATED SEPTEMBER 4, 1970, KRIER ADVISED THAT AN ERROR HAD BEEN MADE BY THE COMPANY IN QUOTING ON ITEM 5 IN THAT IT DID NOT NOTICE THE WORD "PUREE" IN THE DESCRIPTION OF THAT ITEM. THE COMPANY STATED THAT IT THOUGHT IT WAS BIDDING ON DIETETIC CUT GREEN BEANS. KRIER REQUESTED THAT IT BE RELIEVED OF THE OBLIGATION OF FURNISHING ITEM 5 SINCE IT DOES NOT HAVE THE EQUIPMENT TO PACK THE PUREE.

THE RECORD INDICATES THAT KRIER RETURNED THE PURCHASE ORDER WITH A STATEMENT THAT IN VIEW OF THE ERROR IN ITS BID IT COULD NOT PURCHASE THE CANNED GREEN BEAN PUREE FROM ANOTHER SOURCE. IT ALSO INDICATES THAT ON SEPTEMBER 23, 1970, THE CONTRACTING OFFICER ISSUED A PURCHASE ORDER TO THE LARSEN COMPANY FOR CANNED GREEN BEAN PUREE AT ITS BID PRICE OF $3.72 PER CASE.

IN HIS REPORT OF SEPTEMBER 10, 1970, IN WHICH HE RECOMMENDED THAT KRIER BE RELIEVED OF ALL OBLIGATIONS ARISING UNDER THE CONTRACT, THE CONTRACTING OFFICER STATES THAT WHILE HE DID NOT SUSPECT PRIOR TO AWARD AN ERROR IN KRIER'S BID ON ITEM 5 BECAUSE THE PRICE PREVIOUSLY PAID FOR THIS ITEM IN 1969 WAS $3.59 PER CASE, HE IS NOW OF THE OPINION THAT AN AWARD TO KRIER SHOULD NOT HAVE BEEN MADE WITHOUT FURTHER CONSULTATION WITH THE COMPANY. IN HIS LETTER OF SEPTEMBER 30, 1970, IN WHICH HE RECOMMENDED THAT THE PURCHASE ORDER ISSUED TO KRIER BE CANCELED, THE DIRECTOR, SUPPLY SERVICE, STATES THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN FROM AVAILABLE HISTORY FILES AND THE SOLICITATION THAT KRIER HAS NEVER BID ON GREEN BEAN PUREE IN THE PAST, THAT THE PREVIOUS PURCHASE OF GREEN BEAN PUREE WAS MADE AT A PRICE WHICH IS 9.5 PERCENT LOWER THAN THE PRICE QUOTED BY KRIER, AND THAT THE ONLY BID RECEIVED ON ITEM 5 WAS 11 PERCENT HIGHER THAN THAT SUBMITTED BY KRIER.

SINCE THE CONTRACTING OFFICER ADMITS THAT HE SHOULD HAVE CONTACTED KRIER BEFORE MAKING AN AWARD TO THAT COMPANY, WE ARE OF THE OPINION THAT THE ACCEPTANCE OF THE BID OF KRIER DID NOT RESULT IN A VALID AND BINDING CONTRACT. ACCORDINGLY, NO LEGAL BASIS EXISTS FOR HOLDING KRIER LIABLE FOR ANY EXCESS COSTS RESULTING FROM THE AWARD OF THE CONTRACT TO THE LARSEN COMPANY, THE REPLACEMENT CONTRACTOR.