B-158235, JAN. 27, 1966

B-158235, JAN. 27, 1966

TO HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR OF VETERANS AFFAIRS, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO A LETTER (YOUR REFERENCE 074B) DATED DECEMBER 23, 1965, FROM MR. CLYDE C. COOK, DIRECTOR, SUPPLY MANAGEMENT SERVICE, REQUESTING OUR DECISION AS TO THE LEGALITY OF CANCELLING PURCHASE ORDER NO. 66-HI-10300.

MR. A. G. HAMENT, PRESIDENT OF THE HYPO SURGICAL SUPPLY CORPORATION, IN RESPONSE TO ITEMS NO. 49, 50, AND 51 OF INVITATION FOR BIDS NO. MI 45-66, DATED SEPTEMBER 15, 1965, OFFERED TO SUPPLY A TOTAL QUANTITY OF 2,016 LUER INTERCHANGEABLE, 10 CC, SIZE 3, GLASS SYRINGES TO THREE VETERANS ADMINISTRATION SUPPLY DEPOTS AT A COST OF $2.15 EACH, WHICH WAS THE LOW BID ON EACH OF THE ITEMS. IMMEDIATELY UPON AWARD OF THE CONTRACT THE CONTRACTOR ALLEGED THAT THE BID WAS INCORRECT IN THAT IT SHOULD HAVE BEEN $2.8605 FOR EACH UNIT; AND HE ASKED THAT THE AWARD ON THOSE ITEMS BE RESCINDED.

THE GENERAL RULE IS WHEN A BIDDER HAS MADE A MISTAKE AND THE BID HAS BEEN ACCEPTED HE MUST BEAR THE CONSEQUENCES THEREOF UNLESS THE MISTAKE WAS MUTUAL, OR SO APPARENT THAT THE CONTRACTING OFFICER MUST HAVE KNOWN OF IT. SEE 23 COMP. GEN. 596.

THE CONTRACTING OFFICER STATED IN HIS REPORT THAT PRIOR TO THE AWARD HE REVIEWED THE BIDS ON TWO PREVIOUS CONTRACTS FOR THE SAME ITEM, AND CLAIMED THAT BECAUSE THERE HAS BEEN A PROGRESSIVE REDUCTION IN BID PRICES THERE WAS NO CONSTRUCTIVE NOTICE OF THE ALLEGED ERROR, AND HE WAS UNDER NO DUTY TO VERIFY THE BID.

HOWEVER, AN ABSTRACT OF THE BIDS WILL SHOW THAT THIS IS NOT SO. THE BID HISTORY FOR THIS ITEM IS:

CHART

BECTON, EAST HYPO

"DATE OF IFB QUANTITY DICKINSON RUTHERFORD SURGICAL

1. OCTOBER 1964 864 -- 5.00 (A)6.10

2. MARCH 1965 2016 3.201 (A) 2.45 (*) 4.00

3. SEPTEMBER 1965 2016 -- 3.03 2.15 (A)

AWARDED TO OTHER THAN LOW BIDDER, SMALL BUSINESS ADMINISTRATION

REFUSED TO ISSUE COC ON CASE NO. DA-COC-III-706. COC WAS ISSUED ON LATER

BID.'

FIRST, IT IS TO BE NOTED THAT THE FIRST PROCUREMENT WAS FOR 864 ITEMS, WHEREAS THE TWO SUBSEQUENT PROCUREMENTS WERE FOR 2,016. THE CONTRACTOR'S $4.00 PER UNIT BID ON THE SECOND PROCUREMENT IS 34 PERCENT LESS THAN THE FIRST BID, AND THE SECOND CONTRACT PRICE OF $3.201 PER UNIT IS 36 PERCENT LESS THAN THE FIRST CONTRACT PRICE. THIS CAN BE EXPLAINED BY THE FACT THAT THE SECOND PROCUREMENT WAS FOR MORE THAN 2 1/3 TIMES AS MANY UNITS AS THE FIRST. OTHER THAN THE CONTRACTOR-S, THE ONLY BID ON THE THIRD PROCUREMENT WAS $3.03, OR 5.5 PERCENT LESS THAN THE SECOND CONTRACT PRICE, WHEREAS THE CONTRACTOR'S BID OF $2.15 WAS 33 PERCENT LESS THAN THE SECOND CONTRACT PRICE, AND THERE IS NO DIFFERENCE IN THE SIZE OF THE PRESENT PROCUREMENT, WHICH COULD EXPLAIN SUCH A LARGE REDUCTION.

IN NOTING ERROR A FAIR COMPARISON CANNOT BE MADE WHEN ONLY TWO BIDS ARE RECEIVED BECAUSE THERE IS NO MORE REASON TO SUSPECT THAT ONE IS TOO LOW, THAN THE OTHER IS TOO HIGH. SEE 20 COMP. GEN. 286. HOWEVER WHERE, AS HERE, THE CONTRACTING OFFICER HAS INVESTIGATED FURTHER, BY COMPILING A HISTORY OF BIDS FOR THE SAME ITEM, HE WILL BE BOUND BY WHAT HE FINDS.

IT IS THE OPINION OF THIS OFFICE THAT THE PROGRESSIVE BID REDUCTIONS, VIEWED IN CONJUNCTION WITH THE SIZE OF THE PROCUREMENT, AS COMPILED IN AN EASY-TO-READ TABLE BY THE CONTRACTING OFFICER, IS SUFFICIENT TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE ERROR. ACCORDINGLY THE PURCHASE ORDER SHOULD BE CANCELLED.