B-103842, SEPTEMBER 6, 1951, 31 COMP. GEN. 76

B-103842, SEPTEMBER 6, 1951, 31 COMP. GEN. 76

BIDS - OFFER AND ACCEPTANCE - FAILURE TO EXECUTE FORMAL CONTRACT ACCEPTANCE BY THE GOVERNMENT OF A BID BY A CONTRACTOR WHO FAILED TO EXECUTE A FORMAL CONTRACT RESULTED IN A VALID AND BINDING CONTRACT AND ACCEPTANCE, AFTER READVERTISING, OF A SECOND BID FROM THE SAME CONTRACTOR AT A HIGHER COST FOR PERFORMING THE WORK IT WAS ALREADY OBLIGATED TO PERFORM UNDER THE ORIGINAL CONTRACT WAS TANTAMOUNT TO AN UNAUTHORIZED MODIFICATION OF THE FIRST CONTRACT AND THEREFORE, PAYMENT FOR THE WORK PERFORMED MAY NOT BE MADE IN EXCESS OF THE PRICE SPECIFIED IN THE FIRST CONTRACT.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE ARMY, SEPTEMBER 6, 1951:

REFERENCE IS MADE TO LETTER OF MAY 29, 1951, WITH ENCLOSURES, FROM THE UNDER SECRETARY OF THE ARMY, REQUESTING A DECISION AS TO WHETHER, UNDER THE CIRCUMSTANCES REPORTED THEREIN, BLUM ELECTRIC, INCORPORATED, OR THE GLOBE INDEMNITY COMPANY, SHOULD BE HELD LIABLE IN THE AMOUNT OF THE BID BOND FURNISHED IN CONNECTION WITH A BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 33-023-51-14, DATED NOVEMBER 24, 1950.

IT APPEARS FROM THE LETTER AND ITS ENCLOSURES THAT THE OHIO MILITARY DISTRICT, BY INVITATION NO. 33-023-51-14, REQUESTED BIDS FOR INSTALLATION OF ELECTRICAL EQUIPMENT AT FORT HAYES, COLUMBUS, OHIO. THE SPECIFICATIONS FOR THE FLUORESCENT LIGHTING FIXTURES TO BE FURNISHED APPARENTLY WERE DRAWN AROUND A " MILLER" FIXTURE ALTHOUGH THE DRAWING COVERING THE PROPOSED WORK CALLED FOR THE FURNISHING OF A FIXTURE " EQUAL TO CSB2T8MILLER.' IN RESPONSE TO THE INVITATION, BLUM ELECTRIC, INCORPORATED, SUBMITTED A BID OF $26,200, WHICH WAS THE LOWEST OF NINE BIDS RECEIVED, ACCOMPANIED BY A BID BOND OF $3,000, EXECUTED BY GLOBE INDEMNITY COMPANY. THEREAFTER, THE PRESIDENT OF THE COMPANY ADVISED THAT ALTHOUGH HIS BID WAS NOT BASED ON FURNISHING A " MILLER" FIXTURE IF IT DEVELOPED THAT THE FIXTURE HE PROPOSED TO FURNISH DID NOT MEET WITH THE APPROVAL OF THE GOVERNMENT HE WOULD USE A " MILLER" FIXTURE. UNDER THE CIRCUMSTANCES, THE CONTRACT WAS AWARDED TO BLUM ELECTRIC, INCORPORATED. HOWEVER, THE CORPORATION FAILED TO SIGN THE FORMAL CONTRACT. THEREAFTER, THE PROJECT WAS READVERTISED AND AS A RESULT OF THE READVERTISING, CONTRACT NO. DA-33-023-AII-401, WAS AWARDED TO BLUM ELECTRIC, INCORPORATED, THE LOW BIDDER, IN THE AMOUNT OF $29,762. UNDER THIS CONTRACT, BLUM ELECTRIC, INCORPORATED, PROPOSES TO FURNISH A " MILLER" FIXTURE.

IN VIEW OF THE FACTS THUS PRESENTED, DECISION IS REQUESTED AS TO WHETHER BLUM ELECTRIC, INCORPORATED, OR THE GLOBE INDEMNITY COMPANY, TO THE EXTENT OF ITS BID BOND OF $3,000, SHOULD BE HELD LIABLE FOR THE INCREASED COST TO THE GOVERNMENT RESULTING FROM THE CORPORATION'S NONPERFORMANCE UNDER ITS ORIGINAL BID.

THE ACCEPTANCE OF THE BID OF BLUM ELECTRIC, INCORPORATED, SUBMITTED IN RESPONSE TO THE ORIGINAL INVITATION FOR BIDS RESULTED IN A VALID AND BINDING CONTRACT AND FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP COMPANY, 239 U.S. 88; UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

CONSEQUENTLY, THE ACCEPTANCE OF THE CORPORATION'S SECOND BID OF $29,762 FOR PERFORMING THE WORK IT WAS ALREADY OBLIGATED TO PERFORM UNDER THE ORIGINAL CONTRACT WAS TANTAMOUNT TO A MODIFICATION OF THE FIRST CONTRACT TO PROVIDE FOR AN INCREASE IN THE PRICE SPECIFIED THEREIN AND, AS SUCH, WAS UNAUTHORIZED AND VOID AS LACKING ANY CONSIDERATION MOVING TO THE GOVERNMENT. SEE 27 COMP. GEN. 343 AND CASES THEREIN CITED.

ACCORDINGLY, PAYMENT LEGALLY MAY NOT BE MADE TO THE CORPORATION FOR THE WORK INVOLVED IN AN AMOUNT IN EXCESS OF THE PRICE SPECIFIED IN THE FIRST CONTRACT. IN THE EVENT PAYMENT HAS BEEN MADE IN EXCESS THEREOF, ACTION SHOULD BE TAKEN TO EFFECT COLLECTION OF THE OVERPAYMENT.