B-175613, JUN 1, 1972

B-175613, JUN 1, 1972

BID PROTEST - ALLEGED ERROR IN BID - REQUEST FOR REVISION OR CANCELLATION CONCERNING THE PROPER ACTION TO BE TAKEN ON A CONTRACT AWARDED TO NOBEL, INC; BY THE VETERANS ADMINISTRATION DUE TO AN ALLEGED ERROR IN BID. IT APPEARS THAT THE GOVERNMENT, BY ISSUING AN ACCEPTABLE DEPARTMENT OF AGRICULTURE INSPECTION CERTIFICATE, CONTRIBUTED TO THE CONTRACTOR'S MISUNDERSTANDING. ACCORDINGLY, WHILE A RECOMPUTATION OF THE BID WOULD BE INAPPROPRIATE, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO NOBEL.

TO MR. DONALD E. JOHNSON:

REFERENCE IS MADE TO LETTER 134C DATED MARCH 29, 1972, 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 NOBEL, INC; TO HAVE BEEN MADE IN ITS BID UPON WHICH CONTRACT NO. V797P-4011C WAS BASED.

THE MARKETING DIVISION FOR SUBSISTENCE, HINES, ILLINOIS, BY INVITATION FOR BIDS NO. M4-120-72 REQUESTED BIDS FOR FURNISHING "8905 491748 FOWL, CHICKEN OR TURKEY, BONELESS CANNED, SHALL BE BONED, DICED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-C-1058D DATED 11/17/64 AND AMENDMENT NO. DATED 6/29/67."

IN RESPONSE NOBEL, INC; SUBMITTED A BID DATED JANUARY 5, 1972, OFFERING TO DELIVER CANNED, BONELESS, DICED CHICKEN OR TURKEY TO THE DESTINATIONS SET FORTH OPPOSITE ITEMS 1, 2, AND 3 AT PRICES OF $28, $26.48, AND $27.09 PER CASE, RESPECTIVELY. NOBEL INDICATED IN ITS BID THAT IT WOULD FURNISH A PRODUCT PACKED BY SUTER'S FOODS, INC. THE BID WAS ACCEPTED AS TO ITEMS 1, 2, AND 3 ON JANUARY 14, 1972, AND PURCHASE ORDER NO. 72-MC-40477 WAS ISSUED TO NOBEL ON THE SAME DAY.

ON JANUARY 31, 1972, THE CONTRACTING OFFICER LEARNED FROM THE VA HOSPITAL AT MARION, INDIANA, THAT THE PREVIOUS PURCHASE OF THE CHICKEN PRODUCT FROM ANOTHER FIRM, BUT FROM THE SAME CANNER, SUTER'S FOODS, INC; CONTAINED SKIN. MILITARY SPECIFICATION MIL-C-1058D, AS AMENDED BY AMENDMENT NO. 3 DATED JUNE 29, 1967, PROVIDES UNDER TABLE 1, ITEM 1, THAT "SKIN SHALL NOT BE USED IN FORMULATION." FURTHER, THE DESCRIPTION FOR FEDERAL STOCK NUMBER (FSN) 8905-491748, CITED IN THE IFB, PROVIDES THAT THE CANNED BONELESS CHICKEN OR TURKEY SHALL BE "WITHOUT SKIN." ALSO, THE RECORD INDICATES THAT THE CANNER, SUTER'S FOODS, INC; HAS AGREED TO ACCEPT THE RETURN OF THE CANS OF BONELESS CHICKEN WITH SKIN WHICH WERE PREVIOUSLY SOLD TO THE VA EARLY IN 1972.

IN A LETTER DATED FEBRUARY 10, 1972, NOBEL ADVISED THAT SUTER HAD INCREASED THE PRICE ON THE BONED DICED CHICKEN BY $5 TO $6 PER CASE BECAUSE OF AN ERROR IN ITS ORIGINAL QUOTATION. THE ERROR BY THE SUPPLIER WAS STATED TO HAVE BEEN CAUSED BY BASING ITS PRICE ON FURNISHING BONED DICED CHICKEN WITH SKIN RATHER THAN WITHOUT SKIN AS REQUIRED BY THE MILITARY SPECIFICATION. NOBEL STATED THAT IF IT IS REQUIRED TO FURNISH BONED DICED CHICKEN WITHOUT SKIN, IT WOULD LOSE ABOUT $5,600. NOBEL REQUESTED THAT IT BE PERMITTED TO WITHDRAW ITS BID ON THE BONED DICED CHICKEN. BY LETTER DATED FEBRUARY 23, 1972, NOBEL ADVISED THAT THE CORRECT PRICES FOR ITEMS 1, 2 AND 3 SHOULD BE $33.20, $31.18, AND $33.14 PER CASE, RESPECTIVELY. IN SUPPORT OF ITS ALLEGATION OF ERROR, NOBEL SUBMITTED A COPY OF THE LETTER IT HAD RECEIVED FROM SUTER, ITS SUPPLIER.

THE ABSTRACT OF BIDS SHOWS THAT SIX BIDS WERE RECEIVED ON THE BONED DICED CHICKEN FOR DELIVERY TO THE THREE DESTINATIONS SET FORTH OPPOSITE ITEMS 1, 2 AND 3, AND THAT THE SIX BIDS FALL INTO TWO PRICE-RANGE GROUPS. THE LOW PRICE-RANGE GROUP CONSISTS OF THE BIDS OF NOBEL, SUTER'S FOODS, INC; AND WESTMAN COMMISSION CO; WHICH ARE IN THE AMOUNTS OF $28, $28.02, AND $28.05 FOR ITEM 1, RESPECTIVELY. SUTER'S FOODS IS A CANNER AND IT PROPOSED TO FURNISH ITS OWN PRODUCT. NOBEL AND WESTMAN COMMISSION PROPOSED TO FURNISH THE PRODUCT OF SUTER'S FOODS, WHICH THE RECORD INDICATES WOULD BE BONED DICED CHICKEN WITH SKIN. THE HIGHER PRICE-RANGE GROUP CONSISTS OF THE BIDS OF DENNIS FOODS, DOUGLAS FOODS, AND C. W. STOFFERS, WHICH ARE IN THE AMOUNTS OF $32.91, $36.95, AND $37.65 PER CASE FOR ITEM 1, RESPECTIVELY. THE RECORD INDICATES THAT DENNIS FOODS AND C. W. STOFFERS PROPOSED TO FURNISH THEIR OWN PRODUCTS WHICH ARE BONED DICED CHICKEN WITHOUT SKIN, AND THAT DOUGLAS FOODS PROPOSED TO FURNISH THE PRODUCT OF C. W. STOFFERS. A MEMORANDUM DATED FEBRUARY 29, 1972, THE CONTRACTING OFFICER STATES THAT THE PREVIOUS PURCHASE OF BONED DICED CHICKEN WAS MADE FROM THE WESTMAN COMMISSION COMPANY; THAT IT NOW APPEARS THAT WESTMAN'S BID PRICE WAS ERRONEOUSLY BASED ON FURNISHING BONED DICED CHICKEN WITH SKIN; AND THAT PRIOR TO THE PURCHASE FROM WESTMAN, BONED DICED CHICKEN WITHOUT SKIN WAS PROCURED FROM DENNIS FOODS OR DOUGLAS FOODS AT PRICES RANGING FROM $33.45 TO $35.95 PER CASE, THE PRICE DIFFERENTIATION BEING ATTRIBUTED TO FREIGHT COSTS. THE CONTRACTING OFFICER HAS RECOMMENDED THAT NOBEL BE PERMITTED TO FURNISH BONED DICED CHICKEN WITHOUT SKIN AT AN INCREASED PRICE OR THAT IT BE RELIEVED OF THE OBLIGATION OF FURNISHING THE PRODUCT AT ITS BID PRICES.

THE CONTRACTS FOR THE CHICKEN HAVE PROVIDED UNDER THE "INSPECTION" CLAUSE FOR THE INSPECTION OF THE PRODUCT BY THE DEPARTMENT OF AGRICULTURE (USDA) AND FOR THE ISSUANCE OF AN ACCEPTABLE USDA INSPECTION CERTIFICATE INDICATING THAT THE "PRODUCT MEETS CONTRACT REQUIREMENTS." IN THIS CONNECTION, IT IS OUR UNDERSTANDING THAT THE USDA INSPECTED AND PASSED THE SUTER'S FOODS PRODUCT FURNISHED TO THE VA UNDER THE PREVIOUS 1972 CONTRACT WITH THE WESTMAN COMMISSION CO. IT THUS APPEARS THAT SUTER'S FOODS WAS INDUCED BY THE GOVERNMENT INTO BELIEVING THAT THE PRODUCT FURNISHED UNDER THE PRIOR CONTRACT WOULD BE SATISFACTORY FOR THE IMMEDIATE CONTRACT WHICH WAS BID BY NOBEL, AND AS INDICATED ABOVE, THE BID OF NOBEL WAS BASED UPON A PRICE QUOTATION BY SUTER.

IN THE CIRCUMSTANCES, THE GOVERNMENT MAY BE VIEWED AS CONTRIBUTING TO THE MISTAKE, AND CONTRACT NO. V797P-4011C MAY BE CANCELED WITHOUT LIABILITY TO NOBEL, INC. IT WOULD NOT BE APPROPRIATE TO PERMIT NOBEL TO ADJUST THE CONTRACT PRICE AND PERFORM ON THAT BASIS, SINCE NOBEL, IN EFFECT, WOULD