B-142950, OCT. 13, 1960

B-142950, OCT. 13, 1960

TO OXYGEN EQUIPMENT AND SERVICE COMPANY:

REFERENCE IS MADE TO LETTER OF MAY 18, 1960, FROM YOUR ATTORNEYS, RELATIVE TO THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY WITH RESPECT TO YOUR FAILURE TO PERFORM CONTRACT NO. DA 36-049-MD-192, ENTERED INTO ON JUNE 28, 1954, WITH YOUR COMPANY, FOR THE FURNISHING AND INSTALLATION OF ALL PIPE FITTINGS AND EQUIPMENT NECESSARY FOR THE COMPLETION OF A CENTRAL OXYGEN AND VACUUM DISTRIBUTION SYSTEM AT THE VALLEY FORGE ARMY HOSPITAL, PHOENIXVILLE, PENNSYLVANIA.

YOU AGREED TO PERFORM THE CONTRACT FOR A FIXED PRICE OF $15,287, TO COMMENCE PERFORMANCE WITHIN 30 DAYS AFTER AWARD OF THE CONTRACT AND TO COMPLETE PERFORMANCE WITHIN 90 DAYS AFTER AWARD OF THE CONTRACT. WORK AT THE SITE WAS NEVER COMMENCED AND FOR SEVERAL MONTHS THE CONTRACTING OFFICER WAS UNSUCCESSFUL IN EFFORTS TO OBTAIN FROM YOU A SAMPLE STATION OUTLET WHICH MET THE REQUIREMENTS OF THE CONTRACT SPECIFICATIONS. THE CONTRACT WAS TERMINATED FOR DEFAULT BY NOTICE DATED APRIL 21, 1955. REPLACEMENT CONTRACT, NUMBERED DA 36-049-MD 199, WAS ENTERED INTO WITH THE AIR-A-THERM CORPORATION AND FINAL PAYMENT UNDER THAT CONTRACT WAS MADE ON MARCH 8, 1956. BY LETTER DATED APRIL 17, 1956, THE CONTRACTING OFFICER REQUESTED YOU TO REMIT THE SUM OF $4,577, REPRESENTING THE DIFFERENCE BETWEEN THE REPLACEMENT CONTRACT PRICE OF $19,864 AND YOUR CONTRACT PRICE OF $15,287. SINCE YOU FAILED TO COMPLY, THE SUM OF $4,577, PLUS INTEREST IN AN INDICATED AMOUNT OF $527.91, WAS COLLECTED BY SET-OFFS AGAINST AMOUNTS DUE YOUR COMPANY UNDER A NAVY CONTRACT AND AN ARMY CONTRACT.

IT APPEARS THAT YOU DID NOT FILE AN APPEAL FROM THE DEFAULT DETERMINATION NOTICE OR THE ASSESSMENT OF EXCESS COSTS UNTIL MAY 15, 1959. BY DECISION OF JANUARY 20, 1960, ASBCA NO. 5690, THE ARMED SERVICES BOARD OF CONTRACT APPEALS DISMISSED THE APPEAL AS UNTIMELY, CONSIDERING THAT, IF YOU WERE NOT REQUIRED TO PRESENT AN APPEAL WITHIN 30 DAYS AFTER THE RECEIPT OF THE NOTICE OF TERMINATION, AN APPEAL WAS CERTAINLY REQUIRED UNDER THE CONTRACT TERMS WITHIN 30 DAYS AFTER THE RECEIPT OF THE NOTICE OF ASSESSMENT OF EXCESS COSTS IN THE AMOUNT OF $4,577.

YOUR ATTORNEYS HAVE REQUESTED US TO RULE ON THE FOLLOWING ISSUES: (1) WHETHER THERE WAS IN FACT A MEETING OF THE MINDS OF THE PARTIES AND WHETHER A CONTRACT IN FACT CAME INTO BEING; (2) WHETHER THE CONTRACTING OFFICER'S REFUSAL TO ACCEPT YOUR STATION OUTLET WAS ARBITRARY OR CAPRICIOUS; (3) WHETHER THE CONTRACTING OFFICER'S REFUSAL TO CONSIDER YOUR BID FOR THE REPROCUREMENT WAS UNREASONABLE, ARBITRARY OR CAPRICIOUS; (4) WHETHER, IF IT IS CONCLUDED THAT A CONTRACT WAS IN EXISTENCE, THE DELAY IN PERFORMANCE WAS DUE TO EXCUSABLE CAUSES, THEREBY PERMITTING CONSIDERATION OF THE TERMINATION AS HAVING BEEN FOR THE CONVENIENCE OF THE GOVERNMENT; AND (5) WHETHER YOU ARE ENTITLED TO THE RETURN OF THE SUM OF $5,104.91 WITHHELD BY THE GOVERNMENT.

IN REGARD TO THE FIRST ISSUE, YOUR ATTORNEYS HAVE ATTEMPTED TO SHOW THAT YOUR BID DID NOT OFFER TO FURNISH STATION OUTLETS WHICH WOULD ADHERE STRICTLY TO THE ADVERTISED SPECIFICATIONS. ALTHOUGH THE REQUIRED STATION OUTLETS WERE DISCUSSED IN THE LETTER DATED JUNE 18, 1954, WHICH ACCOMPANIED YOUR BID, THE LETTER STATES WITHOUT QUALIFICATION THAT YOUR QUOTATION "IS MADE ON THE BASIS OF SPECIFICATIONS.' YOUR ATTORNEYS HAVE REFERRED TO THE STATEMENT IN THE LETTER WHICH ACCEPTED YOUR BID THAT "SPECIFICATIONS AS SET FORTH IN THE CONTRACT WILL BE STRICTLY ADHERED TO, IN PARTICULAR TECHNICAL PROVISIONS, ARTICLE 4, PAGE TP-4, REGARDING OUTLETS.' HOWEVER, WE CONSIDER SUCH STATEMENT AS A CLEAR INDICATION THAT, IN ACCEPTING THE BID, THE GOVERNMENT WAS RELYING UPON THE FACT THAT YOU MADE NO EXCEPTION TO THE SPECIFICATIONS IN SUBMITTING A BID AND ASSERTED THAT THE BID WAS MADE ON THE BASIS OF THE SPECIFICATIONS. THE QUOTED LANGUAGE OF THE ACCEPTANCE LETTER MERELY EMPHASIZES THAT POINT AND CANNOT BE CONSTRUED IN ANY WAY AS A COUNTER-OFFER WHICH REQUIRED YOUR FORMAL ACCEPTANCE IN ORDER TO CREATE A VALID AND BINDING CONTRACT.

THE SECOND AND FOURTH ISSUES CONCERN DISPUTES ON QUESTIONS OF FACT WHICH WERE PROPERLY FOR DECISION IN THE FIRST INSTANCE BY THE CONTRACTING OFFICER AND YOUR ONLY AVENUE OF RELIEF IN REGARD TO ANY SUCH DECISION WAS THE PRESENTING OF A TIMELY APPEAL TO THE SECRETARY OF THE ARMY. SEE, IN THAT CONNECTION, THE CASES OF SILAS MASON CO.INC., V. UNITED STATES, 90 CT.CL. 266; ID. 105 CT.CL. 27; UNITED STATES V. CALLAHAN WALKER CO., 317 U.S. 56, 61; UNITED STATES V. BLAIR, 321 U.S. 730, 735, 736; AND UNITED STATES V. HOLPUCH CO., 328 U.S. 234, 239, 240.

WITH RESPECT TO THE THIRD ISSUE, IT IS OUR OPINION THAT A CONTRACTOR IN DEFAULT IS NOT ENTITLED TO SUBMIT A BID ON A PROPOSED REPLACEMENT CONTRACT. SEE 27 COMP. GEN. 343; AND CONTI V. UNITED STATES, 158F.2D 581.

CONCERNING THE FIFTH ISSUE, OUR REVIEW OF THE RECORD DISCLOSES NO LEGAL BASIS UPON WHICH WE WOULD BE WARRANTED IN AUTHORIZING A REFUND OF THE SUM ASSESSED AGAINST YOUR COMPANY BECAUSE OF ITS DEFAULT UNDER CONTRACT NO. DA 36-049-MD-192.