A-13831, APRIL 16, 1926, 5 COMP. GEN. 829

A-13831: Apr 16, 1926

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THAT THERE WOULD BE NO OBJECTION ON HIS PART IF THE CONTRACT WAS AWARDED TO ANOTHER BIDDER MAY NOT BE CONSTRUED AS A WITHDRAWAL OF THE OFFER OR EVEN AS AN ATTEMPT TO WITHDRAW. 1926: I HAVE YOUR LETTER OF APRIL 3. REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO RETURN TO MILEY AND FOX A CERTIFIED CHECK IN THE SUM OF $8. WHICH WAS DEPOSITED WITH THE DISTRICT ENGINEER IN PORTLAND. THAT OF THE BIDS SUBMITTED THE THREE LOWEST WERE THE FOLLOWING: TABLE MILEY AND FOX. 369.00 IT ALSO APPEARS THAT AFTER THE BIDS WERE OPENED THERE WAS SOME QUESTION AS TO THE EXPERIENCE. CONFIDENTIAL INQUIRIES WERE MADE WITH REFERENCE THERETO. THAT UNFAVORABLE REPORTS WERE RECEIVED. THE BIDDER (MILEY AND FOX) ADVISED THE ENGINEER THAT THERE WOULD BE NO OBJECTION ON ITS PART IF THE CONTRACT WAS AWARDED TO ANOTHER BIDDER.

A-13831, APRIL 16, 1926, 5 COMP. GEN. 829

ADVERTISING - WITHDRAWAL OF BIDS WHERE THE ADVERTISEMENT FOR BIDS CALLING FOR THE CONSTRUCTION OF A ROAD FOR THE GOVERNMENT PROVIDED THAT NO PROPOSAL WOULD BE CONSIDERED UNLESS ACCOMPANIED BY CASH OR A CERTIFIED CHECK AND IN CASE OF FAILURE ON THE PART OF THE ACCEPTED BIDDER TO ENTER INTO A CONTRACT AND FURNISH A BOND AS REQUIRED THE DEPOSIT WOULD BE RETAINED BY THE UNITED STATES AS LIQUIDATED DAMAGES, THE REFUSAL OF A BIDDER TO EXECUTE A FORMAL CONTRACT AND BOND AFTER ACCEPTANCE OF HIS PROPOSAL VESTS THE RIGHT TO THE AMOUNT DEPOSITED AS A GUARANTY IN THE UNITED STATES, AND SAID DEFAULTING BIDDER MAY NOT BE REFUNDED THE AMOUNT ON THE GROUND THAT IN SUBMITTING HIS PROPOSAL HE HAD OVERLOOKED CERTAIN PROVISIONS OF THE SPECIFICATIONS, THERE BEING NO MISTAKE APPARENT ON THE FACE OF HIS BID. THE MERE STATEMENT OF THE LOWEST BIDDER, BEFORE ACCEPTANCE OF HIS BID BY THE UNITED STATES, THAT THERE WOULD BE NO OBJECTION ON HIS PART IF THE CONTRACT WAS AWARDED TO ANOTHER BIDDER MAY NOT BE CONSTRUED AS A WITHDRAWAL OF THE OFFER OR EVEN AS AN ATTEMPT TO WITHDRAW.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, APRIL 16, 1926:

I HAVE YOUR LETTER OF APRIL 3, 1926, REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO RETURN TO MILEY AND FOX A CERTIFIED CHECK IN THE SUM OF $8,000 WHICH ACCOMPANIED THEIR PROPOSAL FOR THE CONSTRUCTION OF THE LONGMIRE SECTION OF THE NISQUALLY ROAD PROJECT IN THE MOUNT RAINIER NATIONAL PARK, WASH., AND WHICH WAS DEPOSITED WITH THE DISTRICT ENGINEER IN PORTLAND, OREG.

THE FACTS IN THE MATTER AS STATED IN YOUR LETTER, BRIEFLY SUMMARIZED, APPEAR TO BE THAT THE DIRECTOR OF THE NATIONAL PARK SERVICE ADVERTISED FOR BIDS FOR THE CONSTRUCTION OF A CERTAIN PORTION OF A ROAD, LONGMIRE SECTION, NISQUALLY ROAD, MOUNT RAINIER NATIONAL PARK, WASH.; THAT OF THE BIDS SUBMITTED THE THREE LOWEST WERE THE FOLLOWING:

TABLE MILEY AND FOX, EVERETT, WASHINGTON ----------------------- $153,501.00 JAMES F. CLARKSON, PORTLAND, OREGON ---------------------- 169,022.50 PHILBRICK AND NICKELSON, TACOMA, WASHINGTON -------------- 173,369.00

IT ALSO APPEARS THAT AFTER THE BIDS WERE OPENED THERE WAS SOME QUESTION AS TO THE EXPERIENCE, ABILITY, AND GENERAL FITNESS OF THE LOW BIDDER FOR UNDERTAKING THE WORK, AND ON JANUARY 21, 1926, CONFIDENTIAL INQUIRIES WERE MADE WITH REFERENCE THERETO; THAT UNFAVORABLE REPORTS WERE RECEIVED; THAT ON JANUARY 25, 1926, THE BIDDER (MILEY AND FOX) ADVISED THE ENGINEER THAT THERE WOULD BE NO OBJECTION ON ITS PART IF THE CONTRACT WAS AWARDED TO ANOTHER BIDDER; THAT ON FEBRUARY 6, 1926, AFTER CONSIDERABLE CORRESPONDENCE BETWEEN THE ACTING CHIEF OF PUBLIC ROADS AND THE DIRECTOR OF NATIONAL PARKS, MILEY AND FOX WERE NOTIFIED BY TELEGRAM AND LETTER THAT THEIR PROPOSAL HAD BEEN ACCEPTED AND THAT THE CONTRACT AND BOND WERE FORWARDED FOR EXECUTION; THAT THEREAFTER THE SAID FIRM OF MILEY AND FOX RETURNED THE CONTRACT AND BOND UNEXECUTED WITH A LETTER WHEREIN IT WAS STATED: "WE THINK IT IS ADVISABLE NOT TO PERFORM THIS WORK; " AND THAT AWARD OF THE CONTRACT WAS THEN MADE TO JAMES F. CLARKSON, THE NEXT LOWEST BIDDER. THE SPECIFICATIONS MADE A PART OF THE REQUEST FOR BIDS ADVISED PROSPECTIVE BIDDERS THAT NO PROPOSAL WOULD BE CONSIDERED UNLESS ACCOMPANIED BY CASH OR CERTIFIED CHECK OF THE CHARACTER AND AMOUNT INDICATED IN THE PROPOSAL FORM, MADE PAYABLE TO THE SECRETARY OF THE INTERIOR, AND IN CASE OF FAILURE ON THE PART OF THE CONTRACTOR TO ENTER INTO A CONTRACT AND FURNISH BOND AS REQUIRED THE GUARANTY ACCOMPANYING ITS PROPOSAL WOULD BE PAID INTO THE UNITED STATES TREASURY AND RETAINED BY THE UNITED STATES AS LIQUIDATED DAMAGES, AND THAT AWARD MIGHT THEN BE MADE TO THE NEXT LOWEST RESPONSIBLE BIDDER OR THE WORK READVERTISED OR CONSTRUCTED BY DAY LABOR, AS THE SECRETARY OF THE INTERIOR MAY DECIDE.

AS INDICATED, SUPRA, THE BID OF MILEY AND FOX WAS THE LOWEST BID RECEIVED, AND, IN ACCORDANCE WITH THE STIPULATED CONDITIONS, THE SAID FIRM HAD DEPOSITED A CERTIFIED CHECK IN THE SUM OF $8,000 WITH THE DISTRICT ENGINEER AT PORTLAND, OREG.

THE FACTS OF RECORD DISCLOSE THAT THE BIDDER DID NOT WITHDRAW NOR REQUEST PERMISSION TO WITHDRAW THE OFFER PRIOR TO ITS ACCEPTANCE BY THE UNITED STATES, BUT AFTER ACCEPTANCE REFUSED TO EXECUTE A FORMAL CONTRACT AND FURNISH BOND AS REQUIRED UNDER THE TERMS OF THE STIPULATIONS ON THE BASIS OF WHICH THE BID WAS SUBMITTED. THE MERE STATEMENT OF THE LOW BIDDER (MILEY AND FOX) THAT THERE WOULD BE NO OBJECTION ON ITS PART IF THE CONTRACT WAS AWARDED TO ANOTHER BIDDER IS NOT TO BE CONSTRUED AS A WITHDRAWAL OF THE OFFER OR EVEN AS AN ATTEMPT TO DO SO. THE PURPOSE OF REQUIRING A DEPOSIT TO ACCOMPANY PROPOSALS WAS OBVIOUSLY TO MEET JUST SUCH A SITUATION AS HERE PRESENTED.

IN CONSIDERING A SIMILAR QUESTION AS HERE INVOLVED, THE COURT OF CLAIMS IN THE CASE OF W. A. SCOTT V. UNITED STATES, 44 CT.CLS. 524 AT 531, SAID IN PART:

* * * WHEN A GOVERNMENT OFFICIAL HAS PROCEEDED IN A REGULAR AND ESTABLISHED WAY IN THE RECEPTION OF BIDS AND THE AWARDING OF CONTRACTS, DEFAULTING BIDDERS, WITHIN REASONABLE LIMITS, SHOULD BE HELD STRICTLY LIABLE FOR THE FORFEITURE OF PENALTIES. IF THIS IS NOT REQUIRED, THE GOVERNMENT MIGHT BE PLACED AT THE MERCY OF THOSE WHO, BY COOPERATING TOGETHER, COULD RENDER PROPOSALS FOR CONTRACTS A MERE FARCE.

IN THE PRESENT CASE THE DEPOSIT OF $8,000 WAS MADE ON THE EXPRESS CONDITION THAT IN THE CASE OF FAILURE ON THE PART OF THE CONTRACTOR TO ENTER INTO A CONTRACT AND FURNISH BOND THE AMOUNT WOULD BE RETAINED BY THE UNITED STATES AS LIQUIDATED DAMAGES. IT MAY BE NOTED IN THIS CONNECTION THAT THE DIFFERENCE BETWEEN THE AMOUNT WHICH THE GOVERNMENT WILL NOW HAVE TO PAY FOR THE WORK AND THE AMOUNT FOR WHICH THE LOW BIDDER HAD OFFERED TO PERFORM SAID WORK IS CONSIDERABLY MORE THAN $8,000.

IT MAY BE STATED WITH REFERENCE TO THE PETITION OF MILEY AND FOX FOR THE REFUND OF THE AMOUNT OF THE SAID DEPOSIT, WHEREIN THEY URGED THAT THEY UNDERESTIMATED THE COST OF SAID WORK IN THAT THEY OVERLOOKED THE PROVISION OF THE SAID CONTRACT ON PAGE 7 OF THE SPECIFICATIONS REQUIRING THE CONTRACTOR BETWEEN JUNE 15 AND SEPTEMBER 15 TO KEEP THE ROAD OPEN TO TRAFFIC AT ALL TIMES DURING REGULAR TRAFFIC HOURS AND THAT FOR THIS REASON THE AMOUNT OF THE DEPOSIT SHOULD BE RETURNED, THAT THE GENERAL RULE IS THAT WHERE THERE HAS BEEN A MISTAKE IN THE SUBMISSION OF BIDS THE BIDDER MUST BEAR THE CONSEQUENCES THEREOF. AN EXCEPTION TO THIS RULE EXISTS WHERE THE MISTAKE IS SO APPARENT AS TO RAISE AN IMPLICATION THAT THE OFFER WAS ACCEPTED BY THE GOVERNMENT CONTRACTING OFFICER WITH KNOWLEDGE OF THE MISTAKE AND WITH THE INTENTION OF TAKING ADVANTAGE THEREOF. THIS CASE DOES NOT COME WITHIN THE EXCEPTION. 20 COMP. DEC. 304; 25 ID. 37; 1 COMP. GEN. 189.

YOU ALSO SUGGEST THE QUESTION AS TO WHETHER OR NOT THE RETURN OF THE CHECK INVOLVES ADMINISTRATIVE DISCRETION. THERE CAN BE NO ADMINISTRATIVE DISCRETION IN SUCH MATTERS AS HERE PRESENTED, FOR THE REASON THAT UPON RECEIPT OF THE OFFER ACCOMPANIED BY THE REQUIRED DEPOSIT AND THE ACCEPTANCE THEREOF BY THE UNITED STATES AND THE REFUSAL OF THE BIDDER TO EXECUTE A FORMAL CONTRACT THE RIGHT TO THE AMOUNT SO DEPOSITED UNDER THE PLAIN TERMS AND CONDITIONS ON WHICH IT WAS DEPOSITED BECAME VESTED IN THE UNITED STATES. THEREFORE, IT IS NOT WITHIN THE POWER OR DISCRETION OF ANY ADMINISTRATIVE OFFICER OF THE GOVERNMENT TO WAIVE SUCH RIGHT BY RETURNING TO THE BIDDER THE AMOUNT DEPOSITED.

FOR THE REASONS HEREIN STATED, THE RETURN OF THE CHECK IN QUESTION TO THE DEFAULTING BIDDER IS NOT AUTHORIZED, BUT THE SAME FORTHWITH SHOULD BE DEPOSITED AND THE AMOUNT THEREOF COVERED INTO THE TREASURY OF THE UNITED STATES.