B-128597, JUL. 19, 1956

B-128597, JUL. 19, 1956

TO THE SECRETARY OF HEALTH, EDUCATION AND WELFARE:

REFERENCE IS MADE TO A LETTER DATED JULY 10, 1956, FROM F. N. HEARN, FISCAL OFFICER (YOUR REFERENCE NO. FIN:MV), WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY BROWN SWISS MILK COMPANY TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO INVITATION NO. 176-5-24-56 ISSUED BY THE INDIAN HEALTH AREA OFFICE, U.S. PUBLIC HEALTH SERVICE, ABERDEEN, SOUTH DAKOTA, UNDER DATE OF MAY 10, 1956, FOR FURNISHING DAIRY PRODUCTS TO THE SIOUX SANATORIUM, RAPID CITY, SOUTH DAKOTA. THE BID WAS ACCEPTED AS TO ITEM NO. 4 AND BECAME THE BASIS OF CONTRACT NO. SA80PH-120 DATED MAY 31, 1956.

THE INVITATION REQUESTED BIDS ON SEVERAL ITEMS, INCLUDING HOMOGENIZED MILK IN QUART CONTAINERS IN THE ESTIMATED QUANTITY OF 6,840 UNITS (ITEM NO. 4). IN RESPONSE TO THE INVITATION, BROWN SWISS MILK COMPANY SUBMITTED A BID ON SEVERAL ITEMS, ITS BID ON ITEM NO. 4 BEING AT A UNIT PRICE OF $0.1185 AND A TOTAL PRICE OF $673.74 AS SHOWN BY THE BID AND CONTRACT ON FILE IN THE GENERAL ACCOUNTING OFFICE. THE TWO OTHER BIDS RECEIVED ON ITEM NO. 4 WERE AT UNIT PRICES OF $0.17 AND $0.1995.

IN A MEMORANDUM DATED JUNE 28, 1956, FROM THE INDIAN HEALTH AREA OFFICE, IT IS STATED THAT ON JUNE 6 UPON RECEIPT OF ADVICE OF AWARD BROWN SWISS MILK COMPANY TELEPHONED THAT OFFICE, STATING THAT ITS BID ON ITEM NO. 4 WAS $0.1885 PER QUART INSTEAD OF $0.1185 AS AWARDED. IN A LETTER OF JUNE 23, 1956, THE COMPANY STATED THAT ITS COPY OF THE BID SHOWS $0.1885 PER QUART AND THAT ITS SECRETARY TYPED EACH COPY OF THE BID INDIVIDUALLY, THUS EXPLAINING THE DIFFERENCE IN THE COPIES OF THE BID. ALSO, IT ENCLOSED A PHOTOSTATIC COPY OF ITS COPY OF THE BID SHOWING A UNIT PRICE OF $0.1885 FOR ITEM NO. 4, WITH NO INDICATION OF AN ERASURE OR ALTERATION. THE COMPANY STATES FURTHER THAT ITS COST FOR MILK IS $0.1621 PER QUART, NOT INCLUDING COST OF DELIVERY.

THE AMOUNT SHOWN AS THE TOTAL AMOUNT OF THE BID ON ITEM NO. 4 ($673.74) WAS ERRONEOUS IN ANY EVENT, NOT BEING CORRECT FOR A UNIT PRICE OF EITHER $0.1185 OR $0.1885.

IN VIEW OF THE FACTS AS REPORTED AND SHOWN IN THE FILE, IT MAY BE REGARDED AS SATISFACTORILY ESTABLISHED THAT BROWN SWISS MILK COMPANY MADE AN ERROR IN ITS BID, INTENDING TO BID $0.1885 PER QUART ON ITEM NO. 4. ALSO, BECAUSE OF THE DISPARITY BETWEEN ITS BID AND THE OTHER BIDS RECEIVED AND BECAUSE OF THE FACT--- AS STATED IN EFFECT IN THE REFERRED-TO MEMORANDUM OF JUNE 28, 1956--- THAT ITS BID ON ITEM NO. 4 WAS BELOW THE NORMAL PRICE LEVEL IN THE COMPETITIVE MILK SUPPLY INDUSTRY, THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION BEFORE MAKING THE AWARD. THIS CONCLUSION IS FURTHER SUPPORTED BY THE FACT THAT THE UNIT PRICE ON ITEM NO. 4 AS SUBMITTED BY THE BIDDER SHOWS THAT IT WAS CHANGED AFTER AN ERASURE AND THE REFERRED-TO FACT THAT THE TOTAL PRICE STATED IN THE BID ON ITEM 4 WAS CLEARLY ERRONEOUS.

ACCORDINGLY, THE CONTRACT MAY BE CANCELLED AND, IF THE NEXT-LOW BID REMAINS OPEN, AWARD MAY BE MADE TO THE NEXT-LOW BIDDER. TO THE EXTENT THE CONTRACT HAS BEEN PERFORMED PAYMENT FOR SUCH PART PERFORMANCE MAY BE MADE AT THE PRICE OF THE NEXT-LOW BID.