B-143514, SEP. 1, 1960

B-143514, SEP. 1, 1960

TO FILDEW, DEGREE, FLEMING AND GILBRIDE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 20, 1960, WITH REGARD TO INVITATION FOR BIDS NO. ENG-20-064-60-50 ISSUED JUNE 7, 1960.

THE INVITATION REQUESTED BIDS--- TO BE OPENED JUNE 24, 1960--- FOR THE FURNISHING AND INSTALLATION OF AIR-CONDITIONING SYSTEMS FOR THE DETROIT ARSENAL AT CENTERLINE, MICHIGAN. THE WORK WAS DIVIDED INTO THREE SCHEDULES. SCHEDULE NO. 4 CONSISTED OF THE WORK COVERED BY SCHEDULES NOS. 1, 2 AND 3. AWARD WAS TO BE MADE BY SCHEDULE OR SCHEDULES TO ONE OR MORE BIDDERS OR AS A WHOLE TO ONE BIDDER, AT THE OPTION OF THE GOVERNMENT. PARAGRAPH 30 OF GENERAL PROVISIONS PROVIDED THAT EXCEPT AS MIGHT BE OTHERWISE PROVIDED IN THE CONTRACT, THE CONTRACT PRICE INCLUDED ALL FEDERAL, STATE AND LOCAL TAXES AND DUTIES IN EFFECT AND APPLICABLE TO THIS CONTRACT ON THE TAX INCLUSIVE DATE, EXCEPT TAXES FROM WHICH THE GOVERNMENT, THE CONTRACTOR, OR THE TRANSACTIONS OR PROPERTY COVERED BY THE CONTRACT ARE THEN EXEMPT.

THE LOW BIDDER ON SCHEDULE NO. 3, W. J. REWOLDT CO., ALLEGED AN ERROR IN ITS BID AND REQUESTED PERMISSION TO WITHDRAW ITS BID. IT PRODUCED SATISFACTORY EVIDENCE THAT IT MADE A MISTAKE AND THE CONTRACTING OFFICER ELIMINATED THIS BID FROM CONSIDERATION FOR AWARD. AN ANALYSIS OF THE BIDS SHOWS THAT THE BID OF MECHANICAL HEAT AND COLD, INC., ON SCHEDULE NO. 4, WHICH WAS IN THE AMOUNT OF $217,900, WAS QUALIFIED BY A STATEMENT THAT "PRICES QUOTED ARE FOR GOVERNMENT CONTRACT FOR GOVERNMENT USES EXEMPT FROM MICHIGAN STATE SALES AND/OR USE TAX.' IT IS ADMINISTRATIVELY REPORTED THAT THE STATE USE TAX IS APPLICABLE HERE AND SINCE THE CONTRACT PROVISIONS MAKE THE CONTRACTOR RESPONSIBLE FOR PAYMENT OF APPLICABLE TAXES, THE QUALIFICATION RENDERED THE BID NONRESPONSIVE. THE BID ON SCHEDULE NO. 4 SUBMITTED BY JAMES AND ROACH, INC., WAS IN THE AMOUNT OF $217,700 WITH A STATEMENT ON THE SCHEDULE "TAX IF APPLICABLE--- 2450.00.' IN CONSIDERING THIS BID, THE CONTRACTING OFFICE STATES THAT---

"IT IS CONSIDERED THAT THE BID OF JAMES AND ROACH IS NOT SUSCEPTIBLE TO EVALUATION AND SHOULD BE DECLARED NONRESPONSIVE FOR THE FOLLOWING REASONS:

"A. THE STATEMENT "TAX IF APPLICABLE" DOES NOT ESTABLISH THE IDENTITY OF THE TAX IN QUESTION, REQUIRING SURMISE ON OUR PART THAT STATE USE TAX IS MEANT.

"B. IT IS THE RESPONSIBILITY OF THE BIDDER TO DETERMINE FOR HIMSELF WHAT TAXES ARE APPLICABLE.

"C. THERE IS NO INDICATION THAT THE AMOUNTS ARE ADDITIVE, ALTHOUGH THIS COULD LOGICALLY BE ASSUMED.

"D. A QUESTION WOULD EXIST, IF SUCH A BID WERE ACCEPTED, AS TO THE DEGREE OF COMMITMENT TO THESE AMOUNTS ON THE PART OF THE GOVERNMENT IN THE EVENT THE USE TAX ISSUE SHOULD LATER BECOME A CONTRACTUAL ISSUE, EITHER THROUGH THE CONTRACTOR'S FINDING HIMSELF WITH A GREATER TAX THAN ANTICIPATED OR THROUGH THE GOVERNMENT'S DESIRE TO RECOVER THE TAX IN CASE THE APPLICATION OF THE USE TAX SHOULD BE NEGATED BY THE COURTS.'

THE BID OF JAMES AND ROACH, INC., THEREFORE WAS DISREGARDED.

WHILE YOU STATE THAT THE BID OF MECHANICAL HEAT AND COLD, INC., IN THE AMOUNT OF $217,900 WAS THE LOWEST RECEIVED AND THAT ITS STATEMENT WITH REGARD TO APPLICABILITY OF THE MICHIGAN USE TAX TO THIS CONTRACT WAS MERELY INFORMATIVE, THE IMPORT OF THE STATEMENT IS BY NO MEANS CLEAR. IF, AS YOU ALLEGE, THE STATEMENT WAS MERELY INFORMATIVE, AND DID NOT IMPLY THAT THE GOVERNMENT WOULD BE OBLIGATED TO PAY AN ADDITIONAL AMOUNT TO COVER THE AMOUNT OF THE TAX, IF APPLICABLE, THEN IT IS NOT UNDERSTOOD WHY SUCH INFORMATION WAS PLACED ON THE BID FORM SINCE UNDER THE TERMS OF THE INVITATION AND RESULTING CONTRACT THE CONTRACTOR WAS TO INCLUDE ALL APPLICABLE TAXES, FEDERAL, STATE AND LOCAL, IN ITS BID PRICE. SINCE THE ADMINISTRATIVE OFFICE HAS CONSIDERED THIS BID QUALIFIED--- AND IT IS NOT UNREASONABLE TO SO REGARD IT--- WE CANNOT CONSIDER THAT THE ACTION TAKEN IN DISREGARDING THIS BID WAS IMPROPER.

WITH REGARD TO THE BID OF JAMES AND ROACH, INC., YOU CONTEND THAT ITS BID WAS IN THE AMOUNT OF $219,900 ($217,300 PLUS $2,600 FOR TAX). THIS DOES NOT AGREE WITH THE ACTUAL AMOUNT SHOWN IN THE BID WHICH IS $217,700, PLUS "TAX IF APPLICABLE--- 2450.00.' AS STATED HEREINABOVE, THE STATEMENT "TAX IF APPLICABLE" DOES NOT ESTABLISH THE IDENTITY OF THE TAX AND REQUIRES A SURMISE THAT THE STATE USE TAX IS MEANT. IT WAS THE RESPONSIBILITY OF THE BIDDER TO DETERMINE FOR HIMSELF WHAT TAXES WERE APPLICABLE TO THE CONTRACT AND TO INCLUDE THE AMOUNTS THEREOF IN THE BID PRICE. THE AMOUNTS OF THE BIDS SHOULD HAVE BEEN DEFINITE AND WITHOUT ANY QUALIFICATION. WHILE THE REASONS ASSIGNED FOR REJECTION OF THIS BID ARE NOT AS CONVINCING AS FOR REJECTION OF THE BID OF MECHANICAL HEAT AND COLD, INC., NEVERTHELESS SINCE THE BIDDER USED LANGUAGE WHICH IS NOT CLEAR AS TO WHAT WAS INTENDED WE DO NOT FEEL THAT IT WAS IMPROPER TO DISREGARD THIS BID ALSO.