B-146348, DEC. 8, 1961

B-146348, DEC. 8, 1961

TO WILKINSON MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 10, 1961, PROTESTING THE AWARD OF A CONTRACT TO THE R.E.D.M. CORPORATION UNDER INVITATION FOR BIDS NO. ORD-11-173-61-22.

THE INVITATION SOLICITED BIDS--- TO BE OPENED 2 P.M., C.D.S.T., JUNE 9, 1961--- FOR FURNISHING 239,700 FIN ASSEMBLIES. BIDS WERE REQUESTED ON AN F.O.B. ORIGIN BASIS AS WELL AS ON AN F.O.B. DESTINATION BASIS (LONE STAR ORDNANCE PLANT, DEFENSE, TEXAS). THE DELIVERY SCHEDULE IN THE INVITATION PROVIDED FOR DELIVERY IN MONTHLY INSTALLMENTS DURING THE PERIOD FROM MARCH 1, 1962, THROUGH JULY 31, 1962. PARAGRAPH G, PAGE 4 OF THE INVITATION, PROVIDED THAT A PREPRODUCTION SAMPLE WOULD BE REQUIRED IF THE PRODUCER HAD NOT PRODUCED THE ITEM WITHIN 90 DAYS PRIOR TO INITIATION OF PRODUCTION UNDER THE CONTRACT. THE R.E.D.M. CORPORATION, HEREINAFTER REFERRED TO AS REDM, QUOTED A UNIT PRICE OF $1.07, F.O.B. ORIGIN, OR A TOTAL OF $256.479, AND YOU QUOTED A UNIT PRICE OF $1.174, F.O.B. ORIGIN, OR A TOTAL OF $281,407.80. AT THE BID OPENING MR. HOWARD KLAIR REPRESENTED REDM AND MR. FRED ARKOOSH REPRESENTED YOUR COMPANY. UPON COMPLETION OF THE BID OPENING MR. ARKOOSH ASKED PERMISSION TO SEE THE BID FORMS PRESENTED BY REDM. JUNE 12, 1961, MR. ARKOOSH PHONED THE CONTRACTING OFFICE AND STATED THAT THE REDM BID SHOULD BE CONSIDERED NONRESPONSIVE. THE PROTEST THEREAFTER SUBMITTED IN WRITING TO THE CONTRACTING OFFICER CONTAINED FOUR POINTS WHICH HE RESOLVED ADVERSELY TO YOUR COMPANY IN A MEMORANDUM DATED JUNE 28, 1961. A CONTRACT FOR THE REQUIREMENTS WAS APPROVED BY THE ORDNANCE AMMUNITION COMMAND (OAC), BOARD OF AWARDS ON JUNE 28, 1961, AND WAS AWARDED TO REDM ON JUNE 29, 1961. THE FOUR POINTS IN THE FORMAL PROTEST WERE AS FOLLOWS. THE FIRST POINT OR ALLEGATION WAS THAT MR. KLAIR, REDM REPRESENTATIVE, PREPARED HIS PROPOSAL IN THE RECEPTION LOBBY WHILE CONVERSING WITH AND SITTING NEXT TO AN EMPLOYEE OF THE OAC BETWEEN 1:30 AND 1:50 P.M., C.D.S.T., ON JUNE 9, 1961, AND THAT THE PROPOSAL WAS SUBMITTED APPROXIMATELY 10 MINUTES PRIOR TO THE 2 P.M. DEADLINE. AS TO THIS POINT THE CONTRACTING OFFICER HAS FOUND THAT MR. KLAIR RECEIVED NO ASSISTANCE FROM ANY EMPLOYEE OF THE OAC IN PREPARING THE BID FORM. ALSO HE FOUND THAT MR. KLAIR ENTERED THE BID PRICE ON THE BID FORM AFTER TALKING ON THE TELEPHONE WITH MR. FRED KANN OF REDM PRIOR TO BID OPENING. MR. KLAIR HAD COME TO THE OAC CARRYING A BID FORM WITH THE PRICING DATA BLANK. SINCE THE PROTEST ON THIS POINT DOES NOT ESTABLISH ANYTHING IMPROPER IN THIS PROCEDURE, THERE IS NO BASIS FOR OBJECTING TO THE AWARD IN REGARD TO THIS MATTER. THE SECOND POINT OF THE PROTEST--- DEALING WITH THE MATTER OF MR. KLAIR SIGNING THE NAME OF FRED KANN, EXECUTIVE VICE PRESIDENT, AS THE PERSON AUTHORIZED TO SUBMIT BIDS FOR REDM--- WILL BE DISCUSSED AT THE CONCLUSION HEREOF.

THE THIRD POINT OF THE PROTEST WAS TO THE EFFECT THAT ONLY THE FIRST PAGE OF EACH OF THE THREE COPIES OF THE REDM BID IDENTIFIED THE REDM CORPORATION, AND THAT ALL OTHER PAGES SPECIFYING IDENTIFICATION IN ACCORDANCE WITH THE PROCUREMENT REGULATIONS WERE LEFT BLANK, MAKING THE REDM BID NONRESPONSIVE. ON THIS POINT THE CONTRACTING OFFICER HAS FOUND THAT IT WAS NOTED DURING THE BID OPENING THAT SOME OF THE PAGES OF THE REDM BID DID NOT IDENTIFY THE REDM CORPORATION BUT ALL PAGES OF THE INVITATION WERE STAPLED TOGETHER, WERE ALL IN PLACE AND CONTAINED ALL THE TERMS, CONDITIONS AND PROVISIONS OF THE INVITATION. SINCE THE SIGNATURE PAGE CONTAINED THE NAME OF THE CORPORATION THE CONTRACTING OFFICER DETERMINED THAT WAIVER OF THE IRREGULARITY WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. WE AGREE THAT THIS WAS A MINOR IRREGULARITY AND WE FIND NO OBJECTION TO THIS DETERMINATION.

AS TO THE FOURTH POINT WILKINSON ALLEGED THAT REDM DID NOT HAVE THE PLANT FACILITIES OR EQUIPMENT TO PERFORM OR MEET THE SCHEDULE SPECIFIED IN THE INVITATION. THE CONTRACTING OFFICER REPORTED THAT THE NEW YORK ORDNANCE DISTRICT EXECUTED A COMPLETE PREAWARD SURVEY OF REDM AND UNQUALIFIEDLY STATED THAT REDM WAS FULLY ABLE, FROM A TECHNICAL AS WELL AS A FINANCIAL STANDPOINT, TO PERFORM THE CONTRACT. IN VIEW OF THIS REPORT WE FEEL THAT THE CONTRACTING OFFICER COULD NOT PROPERLY HAVE REFUSED TO AWARD THE CONTRACT TO REDM BECAUSE OF ANY QUESTION AS TO ITS ABILITY TO PERFORM. ANY EVENT THIS IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY.

AS TO THE MATTER OF WHETHER THE BID OF REDM SHOULD HAVE BEEN CONSIDERED NONRESPONSIVE BY REASON OF THE FACT THAT MR. KLAIR SIGNED THE NAME OF FRED KANN AS THE PERSON AUTHORIZED TO SIGN THE BID FOR REDM, THE CONTRACTING OFFICER HAS MADE THE FOLLOWING DETERMINATION IN A MEMORANDUM DATED JUNE 23, 1961, AS FOLLOWS:

"1. SUBJECT BID FORMS PRESENTED IN THE NAME OF R.E.D.M. CORPORATION WERE DELIVERED TO THE BID OPENING BY MR. HOWARD KLAIR, ASSISTANT TO THE EXECUTIVE VICE PRESIDENT OF R.E.D.M. CORPORATION. THE BID PRICE WAS ENTERED ON THE BID, IN INK, BY MR. KLAIR PRIOR TO THE BID OPENING, AND MR. KLAIR SIGNED THE NAME FRED KANN ON THE BID FORMS, PRIOR TO THE BID OPENING.

"2. THE BID SUBMITTED BY R.E.D.M. CORPORATION WAS THE LOW BID OF $1.07 EACH.

"3. THE SECOND LOW BID OF $1.174 EACH WAS PRESENTED BY THE WILKINSON MANUFACTURING COMPANY AND WAS SIGNED BY MR. FRED ARKOOSH, VICE PRESIDENT AND GENERAL MANAGER, WHO PERSONALLY PRESENTED THE BID AT THE BID OPENING.

"4. BOTH THE R.E.D.M. BID AND THE WILKINSON BID APPEARED TO BE RESPONSIVE IN ALL REGARDS, AND THE R.E.D.M. BID WAS $24,928.80 LOWER THAN THE WILKINSON BID.

"5. AFTER THE OPENING OF BIDS MR. FRED ARKOOSH OF WILKINSON MANUFACTURING COMPANY SUBMITTED A TELEGRAPHIC PROTEST DATED 12 JUNE 1961, ALLEGING THAT SINCE THE SIGNATURE ON THE R.E.D.M. PROPOSAL WAS NOT THAT OF FRED KANN, THE R.E.D.M. PROPOSAL SHOULD BE CONSIDERED NONRESPONSIVE.

"6.IN ACCORDANCE WITH APP 30-202D,"THE AMOUNT AND TYPE OF EVIDENCE TO BE REQUIRED TO DETERMINE THE AUTHORITY OF A PARTICULAR CORPORATE OFFICER TO BIND A CORPORATION IS FOR ADMINISTRATIVE DETERMINATION BY THE CONTRACTING OFFICER, SUBJECT TO THE LIMITATION THAT THE INTEREST OF THE GOVERNMENT SHALL BE PROTECTED. THE CONTRACTING OFFICER NEED NOT REQUIRE THAT CORPORATIONS EXECUTE A CERTIFICATE PROVIDED HE OBTAINS OTHER EVIDENCE WHICH SATISFACTORILY SHOWS THAT THE AGENT IS EMPOWERED TO BIND THE CORPORATION.'

"7. IN AN EFFORT TO DETERMINE WHETHER THE R.E.D.M. BID WAS, AT THE TIME OF SUBMISSION, A VALID IRREVOCABLE OFFER, I HAVE DISCUSSED THIS MATTER WITH MR. FRED KANN ON 12 JUNE 1961 AND HAVE OBTAINED A SWORN AFFIDAVIT FROM MR. FRED KANN. I HAVE DISCUSSED THIS MATTER IN TELEPHONE CONVERSATION ON 22 JUNE 1961 WITH JUDGE HARRISON, CHAIRMAN, BOARD OF DIRECTORS, R.E.D.M. CORPORATION, AND HAVE RECEIVED CONFIRMING STATEMENTS IN THE FORM OF A TELEGRAM FROM MR. SETH HARRISON, DATED 22 JUNE 1961.

"8. ON THE BASIS OF THE STATEMENTS WHICH HAVE BEEN MADE TO ME AND THE DOCUMENTARY EVIDENCE AVAILABLE TO ME, I AM SATISFIED THAT THE FOLLOWING FACTS ARE PRESENT:

"A. THE STANDARD FORM 129 AND DD 558-1 DATED 29 DECEMBER 1959 SHOW MR. FRED KANN TO BE A PERSON AUTHORIZED TO SIGN BIDS AND CONTRACTS PRESENTED TO THIS COMMAND.

"B. MR. FRED KANN HAS SIGNED MANY BIDS AND PROPOSALS SUBMITTED TO THIS COMMAND IN CONNECTION WITH ORDNANCE PROCUREMENTS, AND HAS SIGNED CONTRACTS ENTERED INTO WITH THE GOVERNMENT.

"C. THE R.E.D.M. CORPORATION IS A RECOGNIZED PRODUCER OF AMMUNITION ITEMS AND IS CURRENTLY PERFORMING ON AMMUNITION CONTRACTS. MR. HOWARD KLAIR IS AN EMPLOYEE OF R.E.D.M. CORPORATION AT AN EXECUTIVE LEVEL, FILLING THE POST OF ASSISTANT TO THE EXECUTIVE VICE PRESIDENT, AND IS THE DIRECTOR OF ORDNANCE PRODUCTS.

"D. THAT MR. HOWARD KLAIR IN FULFILLING HIS DUTIES AS ASSISTANT TO THE EXECUTIVE VICE PRESIDENT, ROUTINELY HAS THE AUTHORITY TO BIND THE COMPANY AND HAS, IN THE PAST, SIGNED LETTER QUOTATIONS CITING PRICES AND DELIVERY SCHEDULES WHICH THE R.E.D.M. CORPORATION WOULD MEET.

"E. THAT IN CONNECTION WITH THE BID IN QUESTION, MR. HOWARD KLAIR IN AFFIXING THE SIGNATURE OF MR. FRED KANN WAS SPECIFICALLY DIRECTED TO DO SO BY MR. FRED KANN, HAD THE AUTHORITY TO DO SO, AND THE R.E.D.M. CORPORATION RECOGNIZES MR. KLAIR AS HAVING THE AUTHORITY TO AFFIX MR. FRED KANN'S SIGNATURE ON THE R.E.D.M. BID, AND THAT THE CORPORATION INTENDED THAT IT BE BOUND BY THIS ACT.

"F. THERE IS NO QUESTION THAT R.E.D.M. CORPORATION INTENDED TO BID ON THIS PROCUREMENT. THEY REQUESTED AND RECEIVED FROM NEW YORK ORDNANCE DISTRICT A COPY OF THE BID IN ADVANCE OF THE BID OPENING. THEY SENT THEIR REPRESENTATIVE, MR. KLAIR, TO THIS HEADQUARTERS FOR THE EXPRESS PURPOSE OF PRESENTING A BID, AND THE BID WAS PRESENTED AT THE BID OPENING AS A BID FROM R.E.D.M. CORPORATION.

"G. THAT PRIOR TO THE BID OPENING MR. KLAIR TELEPHONED MR. FRED KANN FROM THE TELEPHONE BOOTH IN THE OAC LOBBY FOR THE PURPOSE OF OBTAINING FROM MR. FRED KANN THE BID PRICE WHICH R.E.D.M. CORPORATION DESIRED TO PRESENT, AND MR. KLAIR THEN WROTE THIS PRICE ON THE BID FORM, IN INK, AND SIGNED THE NAME FRED KANN TO THE BID, IN ACCORDANCE WITH THE AUTHORITY AND INSTRUCTIONS GIVEN TO HIM BY MR. FRED KANN, THE OPERATING HEAD OF R.E.D.M. CORPORATION.

"H. THE CHAIRMAN OF THE BOARD OF DIRECTORS, R.E.D.M. CORPORATION, AFFIRMS THAT THE FRED KANN SIGNATURE ON BID IFB ORD-11-173-61-22 WAS A CORPORATE SIGNATURE PROPERLY AFFIXED BY MR. HOWARD KLAIR AND CITES WHITE ON CORPORATIONS 9TH EDITION, PAGE 728, THAT ACT DONE BY EXECUTIVE OFFICERS OF A CORPORATION WITHIN THE APPARENT SCOPE OF THEIR AUTHORITY IN REGARD TO THE REGULAR BUSINESS ARE PRESUMED TO BE THE ACTS OF A CORPORATION AND BINDING UPON IT AND THE PERSONS DEALING WITH SUCH OFFICES ARE NOT REQUIRED TO PROVE SPECIFIC AUTHORITY OF THE BOARD OF DIRECTORS.

"9. IN CONSIDERATION OF THE FOREGOING IT IS MY DETERMINATION AS CONTRACTING OFFICER, UNDER THE AUTHORITY CONTAINED IN APP 30-202D, THAT THE BID ORD-11-173-61-22 PRESENTED BY MR. HOWARD KLAIR AT THE BID OPENING AT 2:00 P.M. CDST, ON 9 JUNE 1961, REPRESENTED, AT THAT MOMENT, A VALID AND IRREVOCABLE BID FROM THE R.E.D.M. CORPORATION, AND THAT THE INTERESTS OF THE GOVERNMENT WILL BE SERVED BY THE ACCEPTANCE OF THIS BID.'

THE RECORD CONTAINS AFFIDAVITS FROM VARIOUS PARTIES, SIGNED LETTERS, TELEGRAMS AND OTHER MATERIAL WHICH CONTAIN CONFLICTING STATEMENTS. DOES NOT SEEM TO BE SERIOUSLY DISPUTED THAT MR. FRED KANN HAD AUTHORITY TO SIGN BIDS FOR REDM AND FOR ALL INTENTS AND PURPOSES, IT MAY BE ADMITTED THAT THE RECORDS OF REDM SHOW THIS AUTHORITY. IN FACT THE CONTRACTING OFFICER'S STATEMENT THAT MR. KANN PREVIOUSLY SIGNED MANY BIDS AND PROPOSALS SUBMITTED TO THE GOVERNMENT IN CONNECTION WITH ORDNANCE PROCUREMENTS AND SIGNED CONTRACTS ENTERED INTO WITH THE GOVERNMENT WOULD MAKE THE BID A VALID AND IRREVOCABLE ONE FROM REDM IF HE HAD ACTUALLY SIGNED THE BID. THE QUESTION THEN ARISES AS TO WHETHER A BID PREPARED BY MR. KLAIR WAS IRREVOCABLE WHEN THE GOVERNMENT ACCEPTED IT.

THE STATEMENT BY THE CONTRACTING OFFICER THAT MR. KLAIR IN FULFILLING HIS DUTIES AS ASSISTANT TO THE EXECUTIVE VICE PRESIDENT, MR. KANN, ROUTINELY HAD THE AUTHORITY TO BIND THE COMPANY, AND THAT HE HAS, IN THE PAST, SIGNED LETTER QUOTATIONS CITING PRICES AND DELIVERY SCHEDULES WHICH REDM WOULD MEET APPEARS TO STEM FROM THE FACT THAT MR. KANN SUBMITTED PHOTOSTATS ON JUNE 16, 1961, OF QUOTATIONS AND PROPOSALS BY MR. KLAIR WHICH REDM BECAME CONTRACTUALLY BOUND TO HONOR. THREE INSTANCES INVOLVED GOVERNMENT CONTRACTS AS TO WHICH REDM WAS A SUBCONTRACTOR. ONE CASE, HOWEVER, INVOLVED CONTRACT NO. DA-30-069-ORD 3140 WITH REDM AS TO WHICH MR. KLAIR SUBMITTED A PROPOSAL DATED AUGUST 11, 1960, WHICH WAS ACCEPTED BY THE CONTRACTING OFFICE AND INCORPORATED INTO THE CONTRACT ON NOVEMBER 1, 1960, AS MODIFICATION NO. 2. IN CONNECTION WITH THIS MATTER YOU HAVE STATED THAT MR. KLAIR "IS AN AGENT AND NOT AN EMPLOYEE OR OFFICER OF THE REDM CORPORATION.' AND YOU STATE THAT HE REGISTERED ON JUNE 9, 1961, AT THE OAC AS A REPRESENTATIVE OF "TECH-REPS.' YOUR ALLEGATION THAT MR. KLAIR WAS NOT ASSOCIATED WITH REDM IS INCONSISTENT WITH THE RESULTS OF AN INVESTIGATION OF REDM'S RECORD MADE BY THE ORDNANCE PROVOST MARSHAL SUBMITTED TO OUR OFFICE ON OCTOBER 12, 1961. THAT INVESTIGATION SHOWED THAT MR. KLAIR WAS EMPLOYED BY REDM AT A FIXED SALARY FROM MAY 1, 1960, TO AUGUST 19, 1961. THE PAY RECORDS DURING THE GREATER PART OF THE YEAR 1961 WERE EXAMINED AND NO IRREGULARITY WAS FOUND. INFORMATION WAS OBTAINED FROM A COLLATERAL SOURCE THAT MR. KLAIR IS AN "HONORARY" VICE PRESIDENT OF TECH-REPS, INC., DRAWING NO SALARY OR OTHER BENEFITS AND THAT HE WAS ACCEPTED AS A STOCKHOLDER FOR PURPOSES OF COMPLYING WITH THE STATUTORY REQUIREMENTS FOR INCORPORATION.

THE FACTS IN THIS CASE, EVEN DISREGARDING ANY STATEMENTS OBTAINED AFTER SUBMISSION OF BIDS, SHOW THAT MR. KLAIR WAS SENT TO THE CONTRACTING OFFICE WITH A COPY OF THE BID FORM WHICH REDM HAD PROCURED FROM THAT OFFICE AND THAT THE SOLE PURPOSE OF THAT VISIT WAS TO PRESENT A BID FOR THAT COMPANY AND THAT HE HAD REPRESENTED IT IN PRIOR NEGOTIATIONS WITH THE GOVERNMENT AND GOVERNMENT CONTRACTORS. A CORPORATION, WHICH BY ITS VOLUNTARY ACT, PLACES AN OFFICER OR AGENT IN SUCH A POSITION OR SITUATION THAT PERSONS OF ORDINARY PRUDENCE, CONVERSANT WITH BUSINESS USAGES, ARE JUSTIFIED IN ASSUMING THAT HE HAS AUTHORITY TO PERFORM THE ACT IN QUESTION AND DEAL WITH HIM UPON THAT ASSUMPTION, IS ESTOPPED AS AGAINST SUCH PERSONS FROM DENYING THE OFFICER'S OR AGENT'S AUTHORITY. 13 AM.JUR. 890. ALSO, IT HAS BEEN HELD THAT DEVIATION FROM EXACT REQUIREMENTS OF AN INVITATION IN REGARD TO THE SIGNING OF A BID WOULD NOT REQUIRE REJECTION OF THE BID AND IT WOULD BE IMPROPER TO REJECT IF THE INTENTION OF THE CORPORATION BIDDER IS SHOWN. DALY V. O-BRIEN, ET ., 112 N.Y.S. 304. IT ALSO HAS BEEN HELD THAT AN AGENT AUTHORIZED TO SIGN THE NAME OF HIS PRINCIPAL EFFECTUALLY BINDS HIM BY SIMPLY FIXING TO THE INSTRUMENT THE NAME OF HIS PRINCIPAL. THE PARTICULAR FORM OF THE EXECUTION IS NOT MATERIAL, IF IT BE DONE IN THE NAME OF THE PRINCIPAL, AND BY ONE HAVING AUTHORITY IN FACT TO EXECUTE THE INSTRUMENT. SEE INDEPENDENCE INDEMNITY CO. V. GRANTS PASS AND JOSEPHINE BANK, 29 F./2D) 83. IN THE CIRCUMSTANCES IT WOULD HAVE BEEN IMPROPER TO REJECT REDM'S BID SINCE REDM WOULD BE ESTOPPED TO DENY THAT MR. KLAIR HAD THE AUTHORITY TO BIND THE COMPANY. THE FACT THAT MR. KLAIR SUBMITTED THE BID BY USING MR. KANN'S NAME WOULD NOT, IN OUR OPINION, RENDER THE BID REVOCABLE.

WE THEREFORE CONCLUDE THAT THERE IS NO LEGAL BASIS FOR QUESTIONING THE AWARD MADE IN THIS CASE.