Skip to main content

B-127917, SEPTEMBER 14, 1956, 36 COMP. GEN. 213

B-127917 Sep 14, 1956
Jump To:
Skip to Highlights

Highlights

WHICH HAVE NOT BEEN SPECIFICALLY CLASSIFIED FOR FREIGHT RATE PURPOSES BY THE INTERSTATE COMMERCE COMMISSION OR THE COURTS. RATHER THAN THE RATE FOR LIFT VANS WAS PROPER AND AN AWARD MADE ON SUCH BASIS CONSUMMATED A LEGALLY BINDING CONTRACT. 1956: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN REJECTING YOUR BID TO FURNISH 10. THE PROTEST WAS THE SUBJECT OF OUR DECISION OF JULY 17. WHEREIN IT WAS STATED THAT WE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE AWARD AS MADE DID NOT CONSUMMATE A LEGALLY BINDING CONTRACT. SUCH A REQUEST IN THE FORM OF A BRIEF WAS RECEIVED HERE ON JULY 31. ON PAGE 4 OF THIS BRIEF IT IS STATED THAT YOUR "PROTEST IS BASED ON THE INCONTROVERTIBLE FACT THAT IN EVALUATING BIDS THE CONTRACTING OFFICER FAILED TO USE THE PROPER AND LAWFUL RATE IN DETERMINING FREIGHT COSTS.'.

View Decision

B-127917, SEPTEMBER 14, 1956, 36 COMP. GEN. 213

BIDS - EVALUATION - FREIGHT RATES - INDEFINITE COMMODITY CLASSIFICATIONS IN THE EVALUATION OF COMPARATIVE DELIVERED COSTS UNDER BIDS FOR FURNISHING METAL SHIPPING BOXES, WHICH HAVE NOT BEEN SPECIFICALLY CLASSIFIED FOR FREIGHT RATE PURPOSES BY THE INTERSTATE COMMERCE COMMISSION OR THE COURTS, THE USE OF THE COMMODITY RATE APPLICABLE TO IRON OR STEEL BOXES, NOT OTHERWISE INDEXED BY NAME, RATHER THAN THE RATE FOR LIFT VANS WAS PROPER AND AN AWARD MADE ON SUCH BASIS CONSUMMATED A LEGALLY BINDING CONTRACT.

TO EATON METAL PRODUCTS COMPANY, SEPTEMBER 14, 1956:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN REJECTING YOUR BID TO FURNISH 10,000 METAL SHIPPING BOXES AND AWARDING A CONTRACT TO JETA METAL FABRICATORS, INC., FOR FURNISHING 21,127 SUCH BOXES PURSUANT TO INVITATION NO. TCSMC-23 204- 56-8, ISSUED JANUARY 20, 1956, BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, HEADQUARTERS, TRANSPORTATION SUPPLY AND MAINTENANCE COMMAND, DEPARTMENT OF THE ARMY. THE PROTEST WAS THE SUBJECT OF OUR DECISION OF JULY 17, 1956, TO YOU, WHEREIN IT WAS STATED THAT WE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE AWARD AS MADE DID NOT CONSUMMATE A LEGALLY BINDING CONTRACT.

IN YOUR LETTER OF JULY 23, 1956, YOU ACKNOWLEDGED RECEIPT OF THE DECISION BUT STATED THAT BECAUSE CERTAIN NEW AND UNEXPLORED FACTORS--- EXTREMELY VITAL TO A PROPER DETERMINATION OF YOUR RIGHTS--- HAD COME TO YOUR ATTENTION AND THAT BECAUSE THE DECISION FAILED TO PASS UPON MANY MERITORIOUS ARGUMENTS SUPPORTING YOUR PROTEST, YOU PLANNED TO SUBMIT A FORMAL REQUEST FOR RECONSIDERATION OF THE DECISION. SUCH A REQUEST IN THE FORM OF A BRIEF WAS RECEIVED HERE ON JULY 31, 1956. ON PAGE 4 OF THIS BRIEF IT IS STATED THAT YOUR "PROTEST IS BASED ON THE INCONTROVERTIBLE FACT THAT IN EVALUATING BIDS THE CONTRACTING OFFICER FAILED TO USE THE PROPER AND LAWFUL RATE IN DETERMINING FREIGHT COSTS.' IT IS CONTENDED, AS YOU HAVE CLAIMED FROM THE OUTSET, THAT THE BOXES COVERED BY THE ADVERTISED SPECIFICATIONS ARE RATABLE AS " CARRIERS, SHIPPING; VAN, LIFT OR OTHER THAN LIFT," IN ACCORDANCE WITH THE PROVISIONS OF ITEM 9585 OF CONSOLIDATED FREIGHT CLASSIFICATION NO. 3, I.C.C. NO. A-3. YOU STATE THAT IN EVALUATING THE BIDS THE CONTRACTING OFFICER ERRONEOUSLY AND WITH UNJUSTIFIED PREJUDICE TO YOU DETERMINED THE FREIGHT COST ON THE 10,000 BOXES (REFERRED TO BY YOU AS LIFT VANS) WHICH YOU OFFERED TO FURNISH, FROM YONKERS, NEW YORK, TO THE UTAH GENERAL DEPOT ON THE BASIS OF THE COMMODITY RATE ON " BOXES N.O.I.B.N.' COVERED BY ITEM NO. 6520 OF TRANS- 1CONTINENTAL FREIGHT BUREAU TARIFF NO. 1-E, AGENT W. J. PRUETER'S I.C.C. NO. 1573, AND AWARDED THE CONTRACT TO JETA METAL FABRICATORS, INC., AT A LOSS TO THE GOVERNMENT OF SOME $315,595 WHICH COULD HAVE BEEN SAVED HAD THE BIDS BEEN EVALUATED ON THE BASIS OF THE CORRECT FREIGHT RATE. SUPPORT OF THE PROTEST YOU RESTATE AND EXTEND YOUR PRIOR CONTENTIONS AND SET FORTH AT CONSIDERABLE LENGTH THE ARGUMENTS AND REASONS WHY YOU FEEL THAT OUR DECISION CONSTITUTED PREJUDICIAL ERROR. ALSO, ON PAGES 31 AND 32 YOU SET FORTH CERTAIN EXTRANEOUS FACTORS, WHICH YOU CLAIM SHOULD HAVE NO BEARING ON THE ACTION TAKEN BY OUR OFFICE IN THE MATTER. THESE FACTORS ARE STATED TO BE FEAR OF SUIT BY JETA, DIFFERENCE BETWEEN YOUR BASIC BID AND THAT OF JETA, FEAR OF ESTABLISHING AN UNFAVORABLE PRECEDENT BY MAKING AN AWARD TO YOUR COMPANY AND THE FACT THAT THE GOVERNMENT MAY NOT REQUIRE A MAJOR PORTION OF THE 10,000 UNITS AT OGDEN, UTAH, THE POINT USED FOR EVALUATION PURPOSES.

THERE HAS ALSO BEEN RECEIVED YOUR LETTER OF AUGUST 20, 1956, ENCLOSING A PHOTOSTATIC "COPY OF THE CLASSIFICATION COMMITTEE'S ACTION ON THE ARMY'S REQUEST FOR A SPECIFIC CLASSIFICATION ( DOCKET 174, SUBJECT 73) OF THE SUBJECT ITEM * * * .'

IN THE FINAL ANALYSIS, THE BASIC AND CONTROLLING QUESTION IS WHETHER THE AWARD MADE TO JETA CONSUMMATED A LEGALLY BINDING CONTRACT WITH THAT COMPANY. A CAREFUL CONSIDERATION OF YOUR BRIEF AND VARIOUS LETTERS DISCLOSES THAT THEY CONTAIN NO NEW OR MATERIAL EVIDENCE SUFFICIENT TO JUSTIFY OR WARRANT ANY CHANGE IN THE CONCLUSION HERETOFORE REACHED BY US IN THIS MATTER. AS STATED IN OUR PRIOR DECISION, THE POSITION OF THE DEPARTMENT OF THE ARMY IS THAT THE CLASSIFICATION AND RATE USED IN EVALUATING THE BIDS RECEIVED ON THIS PROCUREMENT ARE PROPER IN THAT THE CLASSIFICATION FOR VANS, LIFT OR OTHER THAN LIFT, DID NOT ADEQUATELY DESCRIBE THE CONTAINERS AND THAT, UNTIL SUCH TIME AS A SPECIFIC CLASSIFICATION IS ESTABLISHED OR THE DIFFERENCE OF OPINION RESOLVED BY COMPETENT AUTHORITY, THE TRANSPORTATION CORPS IS CORRECT IN THE VIEW THAT THE CONTAINER MORE NEARLY CONFORMS TO THE CLASSIFICATION DESCRIBED FOR " SHEET IRON OR STEEL BOXES N.O.I.B.N.' THAN TO THE CLASSIFICATION FOR " LIFT VANS.' THIS DETERMINATION DOES NOT REQUIRE RESORT TO THE RULE OF ANALOGY AS CONTENDED BY YOU ON PAGE 14 OF THE BRIEF. THAT CONTENTION WOULD APPEAR TO BE ADEQUATELY ANSWERED ON PAGE 3 OF OUR PRIOR DECISION. NOR DOES THE VIEW OF THE TRANSPORTATION CORPS APPEAR TO BE UNREASONABLE WHEN IT IS CONSIDERED THAT SHIPMENTS OF THE CONTAINERS WERE AT FIRST DESCRIBED ON BILLS OF LADING EXECUTED BY THE CARRIERS THEMSELVES AS "CONTAINERS, STEEL, SU., VIZ. BOXES, NOIBN" OR AS "BOXES, IRON OR SHEET STEEL, SU. LIQUID CAPACITY EXCEEDING 15 GALLONS, SIDES MADE WHOLLY OF 16 GA. OR THICKER. (CARGO TRANSPORTERS.)" IN OTHER WORDS OUR RECORDS INDICATE THAT THE CONTAINERS WERE REGARDED AS BOXES NOIBN AND WERE TREATED BY THE CARRIERS AND THE ARMY FOR 5 YEARS OR MORE AS JUSTIFYING THE APPLICATION OF THE RATING PRESCRIBED FOR CONTAINERS, BOXES NOIBN, UNTIL THE CONSOLIDATED CLASSIFICATION COMMITTEE, IN DENYING IN DECEMBER 1954 AN APPLICATION MADE BY THE ARMY FOR INCLUSION IN THE CLASSIFICATION OF A RATING FOR THE CONTAINERS, STATED THAT THEY WERE PROPERLY FOR CLASSIFICATION AS "VANS, LIFT OR OTHER THAN LIFT.' IT IS UNDERSTOOD THAT SINCE DECEMBER 1954 A NUMBER OF THE CARRIERS HAVE ADOPTED THE PRACTICE OF CLAIMING FREIGHT CHARGES ON THE BASIS OF THE LIFT VAN RATES. THIS RESULTED FROM A LETTER OF DECEMBER 27, 1954, DENYING THE REQUEST OF THE DEPARTMENT OF THE ARMY FOR A SPECIAL ENTRY SPECIFICALLY DESCRIBING THESE CONTAINERS. IN THE LETTER THE OFFICIAL CLASSIFICATION COMMITTEE STATED THAT IT WAS ITS OPINION THAT THERE WAS NO NEED FOR SUCH A SPECIFIC ENTRY BECAUSE THE CONTAINERS WERE COVERED BY THE LIFT VAN CLASSIFICATION. MAY BE TRUE AS POINTED OUT IN YOUR BRIEF THAT CONSIDERABLE WEIGHT IS GIVEN TO THE OPINIONS OF THE OFFICIAL CLASSIFICATION COMMITTEE BY THE INTERSTATE COMMERCE COMMISSION IN ITS CONSIDERATION OF MATTERS FORMALLY PRESENTED TO IT. IT IS ALSO TRUE, HOWEVER, AS STATED IN OUR DECISION, THAT THE COMMISSION HAS HELD THAT THE CLASSIFICATION COMMITTEES WHO PREPARE CLASSIFICATIONS HAVE NO MORE AUTHORITY IN THE CONSTRUCTION AND INTERPRETATION OF TARIFFS THAN ANYONE ELSE AND THAT THEY MUST LEAVE THE TARIFFS TO SPEAK FOR THEMSELVES. THEREFORE, THE OPINION OF THE CLASSIFICATION COMMITTEES THAT THESE CONTAINERS SHOULD BE RATED AS LIFT VANS IS NOT ENTITLED TO THAT DEGREE OF WEIGHT WHICH ORDINARILY WOULD BE ACCORDED A FINAL DETERMINATION BY THE INTERSTATE COMMERCE COMMISSION OR A COURT OF COMPETENT JURISDICTION, ARRIVED AT AFTER OBSERVING ALL OF THE PROCEDURAL REQUIREMENTS OF DUE PROCESS. IT SIMPLY REPRESENTS AN ATTEMPT ON THE PART OF THE CLASSIFICATION COMMITTEES TO CONSTRUE OR INTERPRET THE EXISTING TARIFF PROVISIONS, AND IS ENTITLED TO BE CONSIDERED ALONG WITH ALL OF THE OTHER FACTS PRESENTED TO US FOR OUR CONSIDERATION IN THE DISPOSITION OF YOUR PROTEST. THIS HAS BEEN DONE.

IN ARRIVING AT THE CONCLUSION REACHED IN OUR DECISION, WE CONSIDERED MOST CAREFULLY THE FACT THAT THE DIRECTOR, BUREAU OF RATES, TARIFFS AND INFORMAL CASES, HAD EXPRESSED AN OPINION IN LETTER OF MAY 21, 1956, ADDRESSED TO THE PRESIDENT OF YOUR CONCERN, THAT THE CONTAINERS PROPERLY SHOULD BE RATED AS VANS, LIFT OR OTHER THAN LIFT, RATHER THAN AS CONTAINERS, BOXES, NOIBN. THE OPINION OF THE DIRECTOR, HOWEVER, WAS RENDERED ON THE BASIS OF A PURELY EX PARTE PRESENTATION BY YOUR COMPANY AND HE WAS CAREFUL TO STATE IN NO UNCERTAIN TERMS THAT THE VIEWS EXPRESSED IN THE OPINION WERE NOT THOSE OF THE INTERSTATE COMMERCE COMMISSION BUT WERE THE INFORMAL VIEWS OF HIS OFFICE MADE WITHOUT PREJUDICE TO ANY DIFFERENT CONCLUSION THE COMMISSION MIGHT REACH IN A FORMAL PROCEEDING AND THAT THEY WERE NOT BINDING UPON THE CARRIERS OR THE SHIPPERS. IT IS ONLY REASONABLE TO ASSUME THAT IF AND WHEN THE COMMISSION DISPOSES OF THE MATTER ON A FORMAL PRESENTATION IT WILL HAVE BEFORE IT A MORE COMPLETE RECORD THAN WAS BEFORE THE DIRECTOR AT THE TIME HE RENDERED HIS INFORMAL OPINION.

THE PHOTOSTATIC COPY OF THE CLASSIFICATION COMMITTEE'S ACTION ON THE ARMY'S REQUEST FOR A SPECIFIC CLASSIFICATION FOR THESE CONTAINERS IS NOTHING MORE THAN A RECOMMENDATION TO THE CARRIERS--- MADE SEVERAL MONTHS AFTER THE AWARD TO JETA--- THAT A NEW ENTRY BE ADDED TO UNIFORM FREIGHT CLASSIFICATION NO. 3 AND CONSOLIDATED FREIGHT CLASSIFICATION NO. 21 TO DESCRIBE THE CONTAINERS. SO FAR AS WE ARE AWARE THIS RECOMMENDATION HAS NOT BEEN ADOPTED BY THE CARRIERS AND, EVEN IF THE RECOMMENDATION IS SUBSEQUENTLY ADOPTED, SUCH ACTION WOULD NOT RELATE BACK TO THE DATE OF THE AWARD SO AS TO FORM THE BASIS FOR A HOLDING THAT THE ACTION OF THE CONTRACTING OFFICIALS TAKEN IN GOOD FAITH ON A REASONABLE BASIS AND IN THE BELIEF THAT IT WAS CLEARLY IN THE INTEREST OF THE GOVERNMENT WAS ILLEGAL. AT THIS POINT WE SHOULD POINT OUT ALSO THAT THE OPINION OF THE OFFICIAL OF THE INTERSTATE COMMERCE COMMISSION ON WHICH YOU SO HEAVILY RELY, IN ADDITION TO BEING AN INFORMAL OPINION, WAS NOT RENDERED UNTIL AFTER THE QUESTIONED EVALUATION HAD BEEN MADE AND THE CONTRACT HAD BEEN AWARDED.

AS STATED IN OUR PRIOR DECISION, THE FUNCTION OF MAKING AWARDS UPON BIDS IS AN ADMINISTRATIVE RESPONSIBILITY. IT IS NO PART OF THE DUTY OF OUR OFFICE TO QUESTION AN AWARD OF A CONTRACT WHEN WE ARE NOT IN A POSITION TO SAY DEFINITELY AND WITHOUT QUALIFICATION THAT THE DETERMINATION MADE BY THE CONTRACTING OFFICIALS WAS SO ERRONEOUS AT THE TIME IT WAS MADE THAT IT VIOLATED THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT ACT, 41 U.S.C. 151, WHICH REQUIRE AWARD TO THE MOST ADVANTAGEOUS RESPONSIBLE BIDDER.

THE LAW REGARDS THE SANCTITY OF CONTRACTS AND, ALTHOUGH EITHER PARTY TO A VALID CONTRACT MAY TERMINATE THE AGREEMENT WITHOUT THE CONSENT OF THE OTHER PARTY, SUBJECT TO WHATEVER LIABILITY MAY RESULT FROM SUCH ACTION, THE INTERESTS OF THE GOVERNMENT REQUIRE THAT THE PRIVILEGE OF TERMINATION SHOULD NOT BE EXERCISED EXCEPT FOR THE MOST COMPELLING REASONS. IF THE INTEGRITY OF THE GOVERNMENT IS TO BE PRESERVED AND MAINTAINED, THIS PRINCIPLE SHOULD BE FOLLOWED TO THE GREATEST POSSIBLE EXTENT IN THE ADMINISTRATION OF ITS CONTRACTS AND TRANSACTIONS WITH THOSE DEALING WITH IT. THE GOVERNMENT EXPECTS ITS CONTRACTORS TO FULFILL THEIR OBLIGATIONS AND CONTRACTORS HAVE A RIGHT TO EXPECT THAT THE GOVERNMENT WILL DO LIKEWISE. THESE ARE FUNDAMENTAL RULES GOVERNING THE ADMINISTRATION OF PUBLIC CONTRACTS AWARDED ON A COMPETITIVE BASIS. THE STRICT MAINTENANCE OF SUCH PROCEDURES, REQUIRED BY LAW, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING WHAT MIGHT EVENTUALLY BE A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF SUCH RULES.

ACCORDINGLY, UPON FURTHER CONSIDERATION OF YOUR PROTEST, WE STILL FEEL THAT THE AWARD TO JETA RESULTED IN A VALID AND BINDING CONTRACT AND THAT, THEREFORE, THERE IS NO LEGAL BASIS FOR HOLDING THAT THE CONTRACT AS AWARDED CAN BE CANCELED IN WHOLE OR IN PART.

GAO Contacts

Office of Public Affairs