B-174689, DEC 29, 1971

B-174689, DEC 29, 1971

CONTRACTS - MISTAKE IN BID - REQUEST FOR WAIVER DECISION DENYING REQUEST BY CHALLENGE FOODS CO. FOR CANCELLATION OF A PURCHASE ORDER FOR CANS OF EVAPORATED MILK AWARDED BY THE DEPARTMENT OF MEDICINE AND SURGERY OF THE VETERANS ADMINISTRATION. THERE IS NO BASIS FOR RELIEVING CHALLENGE OF ITS CONTRACTUAL OBLIGATION SINCE THE CONTRACTING OFFICER HAD NO CONSTRUCTIVE KNOWLEDGE OF A POSSIBLE ERROR IN THE BID.

TO MR. DONALD E. JOHNSON:

WE REFER TO LETTER 134G OF DECEMBER 3, 1971, FROM THE DIRECTOR OF SUPPLY SERVICE OF THE DEPARTMENT OF MEDICINE AND SURGERY OF VETERANS ADMINISTRATION (VA), SUBMITTING FOR OUR CONSIDERATION THE REQUEST OF CHALLENGE FOODS CO. (CHALLENGE) FOR CANCELLATION OF PURCHASE ORDER NO. 72- MC-40334, AWARDED ON NOVEMBER 5, 1971, FOR 600 CASES OF SIX EACH 6 3/4- POUND CANS UNDER INVITATION FOR BIDS (IFB) NO. M4-76-72.

IN A LETTER OF NOVEMBER 18, 1971, CHALLENGE ADVISED THAT IT WOULD BE UNABLE TO PERFORM UNDER THE PURCHASE ORDER BECAUSE IT DOES NOT PRODUCE EVAPORATED MILK IN 6-3/4-POUND CANS. FOR THAT REASON IT REQUESTS THAT THE PURCHASE ORDER BE CANCELED ON THE BASIS OF AN ERROR IN BID. IN SUPPORT THEREOF, CHALLENGE SUBMITTED ITS PRICE LIST FOR EVAPORATED MILK WHICH DOES NOT LIST 6-3/4-POUND CANS OF EVAPORATED MILK.

OF THE THREE BIDS SUBMITTED IN RESPONSE TO THE IFB, CHALLENGE'S BID WAS LOWEST AT $8.10 PER CASE. THE REMAINING TWO BIDS WERE IN THE AMOUNTS OF $8.47 AND $8.48 PER CASE. THERE IS NO EVIDENCE OF RECORD THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE NOTICE OF THE ERROR IN CHALLENGE'S BID WHICH WAS APPROXIMATELY 1 PERCENT GREATER THAN THE PRICE PAID BY THE SAME VA OFFICE IN ITS PREVIOUS PURCHASE OF EVAPORATED MILK PACKAGED IN THE SAME MANNER AND WHICH WAS ALSO IN LINE WITH THE OTHER TWO BIDS RECEIVED UNDER THE IFB. CHALLENGE AT ONE TIME PRODUCED EVAPORATED MILK IN 6-3/4-POUND CONTAINERS BUT HAD NOT BID ON VA REQUIREMENTS FOR EVAPORATED MILK FOR 3 YEARS PRIOR TO THIS SOLICITATION. EVEN ASSUMING THAT CHALLENGE MAY HAVE MADE A BONA FIDE MISTAKE IN ITS BID, THE CONTRACTING OFFICER WAS NOT ON ACTUAL OR CONSTRUCTIVE NOTICE OF POSSIBLE ERROR IN THE BID NOR WAS THERE ANY MUTUAL MISTAKE IN FORMATION OF THE CONTRACT. THEREFORE, A BINDING CONTRACT RESULTED FROM ACCEPTANCE OF CHALLENGE'S BID. SEE 50 COMP. GEN. 39 (1970); B-168285, DECEMBER 9, 1969. THE CONTRACTING OFFICER HAS SUGGESTED THAT THE CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO THOSE IN OUR DECISION B-170941, DECEMBER 15, 1970. HOWEVER, WE CONCLUDED IN THAT DECISION, CONTRARY TO OUR CONCLUSION HERE, THAT THE CONTRACTING OFFICER HAD CONSTRUCTIVE KNOWLEDGE BASED ON HIS OWN FILES THAT THE LOW BIDDER COULD NOT HAVE FURNISHED THE ADVERTISED ITEMS.

THEREFORE, WE CONCLUDE THAT NO BASIS EXISTS TO RELIEVE CHALLENGE OF ITS OBLIGATION UNDER THE CONTRACT TO DELIVER 600 CASES OF SIX EACH 6 3/4-POUND CANS OF EVAPORATED MILK AT ITS BID PRICE.