B-157273, AUG. 17, 1965

B-157273, AUG. 17, 1965

TO THE HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED JULY 19, 1965, WITH ENCLOSURES, FILE REFERENCE 074B, FROM THE DIRECTOR, SUPPLY MANAGEMENT SERVICE, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR MATHESON SCIENTIFIC, INC., LOS ANGELES, CALIFORNIA, ALLEGES IT MADE IN ITS BID UPON WHICH PURCHASE ORDER NO. 5783C IS BASED.

THE VETERANS ADMINISTRATION HOSPITAL, LONG BEACH, CALIFORNIA, BY INVITATION NO. 65-80, REQUESTED BIDS FOR FURNISHING ONE SPECTROPHOTOMETER WITH CERTAIN ACCESSORIES, COLEMAN AUTOSET MODEL 30, CATALOG NO. 30-001 OR EQUAL, ITEM 1. IN RESPONSE MATHESON SCIENTIFIC, INC., SUBMITTED A BID OFFERING TO FURNISH UNDER ITEM 1 THE SPECTROPHOTOMETER WITH THE SPECIFIED ACCESSORIES FOR THE LUMP SUM OF $2,196.25. ON JUNE 3, 1965, THE BID OF THE CORPORATION WAS ACCEPTED.

BY TELEGRAM AND LETTER DATED JUNE 4, 1965, MATHESON SCIENTIFIC, INC., ADVISED THE CONTRACTING OFFICER THAT IT WISHED TO WITHDRAW ITS BID ON ITEM 1 BECAUSE THE PRICE OF THE SPECTROPHOTOMETER AND ACCESSORIES HAD BEEN INCORRECTLY QUOTED AND THE BID WAS SIGNED BY A NEW QUOTATION CLERK WHOSE SIGNATURE ON CORPORATION BIDS WAS NOT AT THAT TIME AUTHORIZED. REGARDING THE SIGNATURE IT APPEARS THAT IN A TELEPHONE CONVERSATION ON JUNE 2, 1965, THE VICE PRESIDENT OF THE CORPORATION STATED THAT THE EMPLOYEE WAS AUTHORIZED TO SIGN BIDS ON BEHALF OF THE CORPORATION. THE CORPORATION ALSO STATED THAT THE MANUFACTURER OF THE EQUIPMENT, COLEMAN INSTRUMENTS, INC., HAD ADVISED IT BY TELEPHONE THAT ALL LOW BIDDERS INCLUDING THE CORPORATION WOULD HAVE TO WITHDRAW THEIR BIDS ON THE EQUIPMENT BECAUSE THE QUOTED PRICES WERE NOT IN ACCORDANCE WITH FRANCHISE AND FAIR TRADE AGREEMENTS WITH THE MANUFACTURER, COLEMAN INSTRUMENTS, INC.

SINCE PRIOR TO AWARD OF THE CONTRACT AN OFFICIAL OF THE CORPORATION ACKNOWLEDGED ORALLY TO THE CONTRACTING OFFICER THAT THE BID WAS SIGNED BY AN AUTHORIZED EMPLOYEE, WE SEE NO LEGAL BASIS FOR RELIEVING THE CORPORATION OF ITS CONTRACT OBLIGATIONS ON THE GROUND THAT THE EMPLOYEE DID NOT HAVE SUCH AUTHORITY WHEN HE ACTUALLY SIGNED THE BID. IN SUPPORT OF ITS ALLEGATION OF ERROR, MATHESON SCIENTIFIC, INC., SUBMITTED ITS WORKSHEET, MANUFACTURER'S PRICE LIST AND COPIES OF ITS FRANCHISE AND FAIR TRADE AGREEMENT WITH THE MANUFACTURER, COLEMAN INSTRUMENTS, INC.

IN HIS REPORT OF JUNE 15, 1965, THE CONTRACTING OFFICER STATES AS FOLLOWS:

"WE BELIEVE A BONA FIDE MISTAKE IN BID WAS MADE, WHICH MIGHT HAVE BEEN PRECLUDED THROUGH CAREFUL ANALYSIS OF OUR BID SPECIFICATIONS, BASED ON THE FOLLOWING:

"A. COLEMAN AUTOSTAT MODEL 30 (CATALOG NO. 30-001) IS SUPPLIED WITH ACCESSORIES SHOWN ON THE PRICE LIST ATTACHED TO MATHESON SCIENTIFIC LETTER OF JUNE 4, 1965, AT A LIST PRICE OF $2,175. OUR RESEARCH DEPARTMENT REQUESTED THESE ACCESSORIES (EXCEPT FOR CATALOG ITEM 30 718) PLUS FIVE ADDITIONAL ACCESSORIES (30-702, 30-215, 30-704, 30-100 AND 6-100). THESE VARIANCES COULD HAVE BEEN MISSED IN HURRIEDLY REVIEWING OUR INVITATION.

"B. BOTH MR. SCHERING AND MR. PAVELKO (OF ALOE SCIENTIFIC) TOLD US THAT THE MISTAKE IN BID WAS CALLED TO THEIR ATTENTION BY MR. STANTON, THE COLEMAN INSTRUMENT AREA REPRESENTATIVE, AND THAT MR. STANTON HAD RECEIVED THE INFORMATION FROM OTHER COMPANY REPRESENTATIVES ATTENDING THE BID OPENING. THE THREE FIRMS ALLEGING MISTAKE IN BID WERE NOT REPRESENTED AT THE OPENING, NOR WAS ANY COMMENT MADE ABOUT THE FAIR TRADE AGREEMENT.

"C. WE MADE REPEATED ATTEMPTS TO CONTACT MR. STANTON, WITHOUT SUCCESS, SINCE LAPINE SCIENTIFIC REQUESTED WITHDRAWAL OF THEIR $2,252.50 BID, THE REVISED PRICE SUBMITTED BY MATHESON SCIENTIFIC. MRS. F. MOST OF COLEMAN INSTRUMENTS, CHICAGO OFFICE, WAS CONTACTED BY PHONE AT 12:07 PM, JUNE 11, TO DETERMINE WHAT THEIR FRANCHISE DEALERS SHOULD HAVE BID. MRS. MOST SAID THERE APPEARED TO BE AN ERROR IN THEIR PRICE LIST OR THEY HAD ALSO BID IN ERROR; THAT SPECIAL AUTHORITY HAD TO BE GIVEN DEALERS TO ENABLE THEM TO FURNISH THE SPECTROPHOTOMETER WITH A 30-702 SLIT EXIT IN LIEU OF THE 30- 718, EVEN THOUGH PRICES ARE THE SAME; AND THAT SHE WOULD CHECK FURTHER AND CALL US BACK.

"AT 1:22 PM, JUNE 11, 1965, MRS. MOST CALLED BACK AND GAVE THE FOLLOWING INFORMATION:

"/1) THEIR BID PRICE WAS CORRECT AS SUBMITTED

"/2) THEIR CURRENT PRICE LIST IS IN ERROR, SINCE ITEM 30-215 IS FURNISHED WITH THE BASIC UNIT (WITHOUT ADDITIONAL CHARGE) EVEN THOUGH IT IS NOT SHOWN AS A STANDARD ACCESSORY IN THEIR PRICE LIST.

"/3) ITEM 30-718 IS AUTOMATICALLY SUPPLIED WITH THE BASIC UNIT WHETHER ORDERED OR NOT, AND THEY WILL NOT SELL THE SPECTROPHOTOMETER WITHOUT THIS EXIT SLIT. FRANCHISE DEALERS OFFERING THE COMPLETE UNIT AT LESS THAN $2,261.50 WERE OBVIOUSLY ALLOWING A NO CHARGE ON ITEM 30 215 AND/OR A $7.00 DEDUCTION FOR NOT SUPPLYING THE 30-718. THE $7.00 DEDUCTION IS IN ERROR UNLESS SPECIFICALLY AUTHORIZED BY THE MANUFACTURER.

"/4) THEIR QUOTATION SHOULD HAVE BEEN MODIFIED TO SHOW THE CONDITIONS NOTED IN PARAGRAPHS (2) AND (3) ABOVE, WITH A STATEMENT THAT ITEM 30-718 WAS SUPPLIED AS A PART OF THE STANDARD UNIT. THE STANDARD UNIT FORMERLY INCLUDED THE 30-702 SLIT.

"/5) AGREED WITH US THAT THE PRICE LIST AND FAIR TRADE AGREEMENT FURNISHED THEIR DEALERS WAS MISLEADING, MAKING IT DIFFICULT TO SUBMIT AN ACCURATE BID (SEE ATTACHMENT D "STATEMENT OF POLICY," PAGE 2, SECTION II).

"D. THE PRICE LIST SUBMITTED WITH MATHESON SCIENTIFIC LETTER OF JUNE 4, WAS INCOMPLETE (DID NOT SHOW CATALOG NOS. 30-702 AND 30-704). MR. SCHERING WAS CALLED ON JUNE 7 CONCERNING THIS OMISSION AND READILY AGREED TO SEND THE SUPPLEMENTAL PRICE LIST, STATING IT WAS INADVERTENTLY OMITTED. THIS LIST WAS RECEIVED WITH HIS LETTER (INCORRECTLY DATED MAY 8, 1965). IN THE SAME LETTER MR. SCHERING INFORMED US OF THEIR INABILITY TO DETERMINE HOW THE MISTAKE WAS MADE. WE FEEL ANY FRANCHISE DEALER COULD MAKE A MISTAKE IN BID, UNDER THE CIRCUMSTANCES SHOWN IN PARAGRAPH C ABOVE.'

IT IS REPORTED THAT ALTERNATE BIDS IN THE AMOUNTS OF $2,737 AND $2,930 WERE RECEIVED ON ITEM 1 FROM TWO BIDDERS AND THAT THE SIX OTHER BIDDERS WHO BID ON THE BRAND NAME SPECIFIED, COLEMAN AUTOSET MODEL 30 001 SPECTROPHOTOMETER, QUOTED PRICES OF $2,247.50, $2,252.50, $2,254.50, $2,261.50 (COLEMAN INSTRUMENTS, INC.), $2,277 AND $2,747.50. IT ALSO IS REPORTED THAT IN ADDITION TO THE SECOND AND THIRD LOWEST BIDDERS, THE FOURTH LOWEST BIDDER HAS ALSO MADE A MISTAKE IN HIS BID BY NOT QUOTING IN ACCORDANCE WITH THE TERMS OF THE FAIR TRADE AGREEMENT WITH THE MANUFACTURER OF THE EQUIPMENT, WHO QUOTED THE FIFTH LOWEST BID PRICE THEREON.

ALTHOUGH IT APPEARS FROM THE FOREGOING THAT THE SPECTROPHOTOMETER WITH ITS SPECIAL ACCESSORIES IS FAIR TRADED AT A PRICE OF $2,261.50--- THE PRICE QUOTED BY THE MANUFACTURER OF THE EQUIPMENT--- WE HAVE HELD THAT CONTRACTING OFFICERS OF THE GOVERNMENT HAVE NO DUTY TO DETERMINE WHETHER PRICES QUOTED BY BIDDERS ARE IN CONFORMITY WITH THE REQUIREMENTS OF ANY FAIR TRADE AGREEMENTS BETWEEN MANUFACTURERS AND SUPPLIERS. SEE 28 COMP. GEN. 527. THE PRESENT RECORD INDICATES THAT THE ACCEPTANCE OF THE BID OF MATHESON SCIENTIFIC, INC., WAS MADE IN GOOD FAITH, THERE BEING NOTHING ON THE FACE OF THE BID TO INDICATE THE EXISTENCE OF A MISTAKE AND NO ERROR HAVING BEEN ALLEGED BY THE CORPORATION UNTIL AFTER AWARD. CONSEQUENTLY, THERE WOULD APPEAR TO BE NO BASIS ON WHICH IT COULD BE HELD THAT THE ACCEPTANCE OF THE BID DID NOT CONSUMMATE A VALID AND BINDING CONTRACT.

ACCORDINGLY, PURCHASE ORDER NO. 5783C MAY NOT BE CANCELED WITHOUT LIABILITY TO MATHESON SCIENTIFIC, INC. THEREFORE, IF THE CORPORATION FAILS TO DELIVER THE EQUIPMENT COVERED BY THE PURCHASE ORDER AT THE PRICE SPECIFIED THEREIN AND THE EQUIPMENT IS PROCURED FROM ANOTHER SOURCE, THE EXCESS COST, IF ANY, SHOULD BE CHARGED TO THE CORPORATION.

THE PAPERS SUBMITTED WITH THE DIRECTOR'S LETTER OF JULY 19, 1965, ARE RETURNED, AS REQUESTED.