A-21846, APRIL 9, 1928, 7 COMP. GEN. 639

A-21846: Apr 9, 1928

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ADVERTISING - BIDS - MISTAKE - WITHDRAWAL AFTER BIDS SUBMITTED IN RESPONSE TO AN ADVERTISEMENT FOR THE FURNISHING OF SUPPLIES HAVE BEEN OPENED. WAS PERMITTED TO WITHDRAW ITS BID AFTER THE BIDS HAD BEEN OPENED. SHORTLY THEREAFTER A PURCHASE ORDER WAS ISSUED TO IT FOR THE DESIRED SUPPLIES AT AN INCREASED PRICE. THE UNITED STATES IS NOT OBLIGATED THEREBY TO PAY ANY AMOUNT IN EXCESS OF THE ORIGINAL LOW BID PRICE. UPON WHICH PURCHASE ORDER THERE IS THE FOLLOWING STATEMENT: NOTE. - THE ABOVE ITEM WAS ADVERTISED ON CIRCULAR PROPOSAL BUT ALL BIDS WERE REJECTED FOR THE REASON THAT THE ARTICLE COULD BE PURCHASED IN OPEN MARKET AT A LOWER PRICE THAN COULD BE OBTAINED ON CIRCULAR PROPOSAL. THERE WERE RECEIVED PROPOSALS FROM FOUR BIDDERS.

A-21846, APRIL 9, 1928, 7 COMP. GEN. 639

ADVERTISING - BIDS - MISTAKE - WITHDRAWAL AFTER BIDS SUBMITTED IN RESPONSE TO AN ADVERTISEMENT FOR THE FURNISHING OF SUPPLIES HAVE BEEN OPENED, A BIDDER MAY NOT WITHDRAW ITS BID EXCEPT UPON THE BASIS OF MUTUAL MISTAKE OR A MISTAKE SO APPARENT ON THE FACE OF THE BID THAT THE AGENTS OF THE GOVERNMENT WOULD BE CHARGEABLE WITH NOTICE THEREOF. WHERE THE LOW BIDDER, FOR NO APPARENT REASON, WAS PERMITTED TO WITHDRAW ITS BID AFTER THE BIDS HAD BEEN OPENED, AND SHORTLY THEREAFTER A PURCHASE ORDER WAS ISSUED TO IT FOR THE DESIRED SUPPLIES AT AN INCREASED PRICE, THE UNITED STATES IS NOT OBLIGATED THEREBY TO PAY ANY AMOUNT IN EXCESS OF THE ORIGINAL LOW BID PRICE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, APRIL 9, 1928:

THERE HAS BEEN BROUGHT TO MY ATTENTION THE FOLLOWING FACTS IN CONNECTION WITH PURCHASE ORDER NO. 28-245, DATED JANUARY 23, 1928, ISSUED BY DAY JEWELL, FIRST LIEUTENANT QUARTERMASTER CORPS, QUARTERMASTER AT FORT MONMOUTH, N.J., TO ARMOUR AND CO., FOR THE DELIVERY OF 3,000 DOZEN FRESH EGGS DURING THE MONTH OF FEBRUARY, 1928, AT $0.3898 PER DOZEN, UPON WHICH PURCHASE ORDER THERE IS THE FOLLOWING STATEMENT:

NOTE.--- THE ABOVE ITEM WAS ADVERTISED ON CIRCULAR PROPOSAL BUT ALL BIDS WERE REJECTED FOR THE REASON THAT THE ARTICLE COULD BE PURCHASED IN OPEN MARKET AT A LOWER PRICE THAN COULD BE OBTAINED ON CIRCULAR PROPOSAL.

IT APPEARS THAT IN RESPONSE TO CIRCULAR REQUEST FOR BIDS FOR FURNISHING CERTAIN SUPPLIES AT FORT MONMOUTH, N.J., DURING THE MONTH OF FEBRUARY, 1928, THERE WERE RECEIVED PROPOSALS FROM FOUR BIDDERS, ONE BEING THAT OF ARMOUR AND CO., WHO, ON JANUARY 17, 1928, SUBMITTED A BID TO FURNISH 3,000 DOZEN EGGS AT $0.3598 PER DOZEN FOR DELIVERY DURING THE MONTH OF FEBRUARY, 1928. THE OTHER BIDDERS SUBMITTED PRICES OF $0.404, $0.45, AND $0.48 PER DOZEN, RESPECTIVELY. THE BIDS WERE DULY OPENED ON JANUARY 20, 1928, WHEREUPON ARMOUR AND CO. FOR APPARENTLY NO REASON WAS PERMITTED TO WITHDRAW ITS BID, THE OTHER BIDS WERE REJECTED BY THE CONTRACTING OFFICER, AND THREE DAYS LATER, ON JANUARY 23, 1928, ARMOUR AND CO. WAS ISSUED A PURCHASE ORDER FOR THE EGGS AT $0.3898 PER DOZEN, AN INCREASE IN PRICE OF $0.03 PER DOZEN OVER THE BID WHICH THE SAME COMPANY HAD BEEN ALLOWED TO WITHDRAW, WHICH ON THE QUANTITY OF EGGS REQUIRED, WOULD AMOUNT TO AN INCREASE OF $90 OVER THE ORIGINAL BID PRICE OF SUCH COMPANY.

BY LETTER DATED JANUARY 27, 1928, THE MATTER WAS BROUGHT TO THE ATTENTION OF THE QUARTERMASTER GENERAL, WAR DEPARTMENT, WHO WAS REQUESTED TO FORWARD TO THIS OFFICE ALL BIDS RECEIVED UNDER THE CIRCULAR PROPOSAL AND TO GIVE THE NUMBER OF THE VOUCHER COVERING PAYMENT.

IN REPLY THERETO THERE WAS RECEIVED FROM THE QUARTERMASTER, FORT MONMOUTH, N.J., BY SECOND INDORSEMENT DATED FEBRUARY 3, 1928, THROUGH OFFICE OF THE QUARTERMASTER GENERAL, WASHINGTON, D.C., THE FOLLOWING STATEMENT:

1. PURCHASE ORDER REFERRED TO IN BASIC LETTER COVERS EGGS TO BE DELIVERED DURING MONTH OF FEBRUARY, 1928, AND PAYMENT WILL NOT BE MADE UNTIL THE END OF THE MONTH.

2. IN CONNECTION WITH THE CONTRACT FOR FEBRUARY'S EGGS FOR THIS STATION, THE MATTER HAPPENED AS FOLLOWS:

ARMOUR AND CO.'S REPRESENTATIVE ANNOUNCED, AFTER THE BIDS WERE OPENED AND BEFORE THE BID WAS ACCEPTED, THAT THEY WOULD WITHDRAW THEIR BID. THEY WERE ALLOWED TO DO SO. (MAYER V. U.S., 51 CT.CLS. 317 (1869) ( AS A PRECEDENT THEREFOR. WHEN THE REMAINING BIDS WERE CONSIDERED, TWO OF THE REMAINING THREE BIDDERS HAD NO MEANS TO SUPPLY OUR DEMAND AS CALLED FOR. AS THERE ARE NO STORAGE FACILITIES FOR PERISHABLE PRODUCTS--- EXCEPT IN VERY SMALL QUANTITIES--- IT WAS NOT PRACTICABLE FOR AUSTIN NICHOLS AND CO. OR MARACHURR BROS. TO FURNISH US EGGS WITHIN 24 HOURS' NOTICE. THAT LEFT ONLY ONE BID TO BE SERIOUSLY CONSIDERED--- THAT OF SWIFT AND CO. THEIR BID WAS $0.45. AFTER DUE CONSIDERATION, ALL BIDS WERE REJECTED AND WE BEGAN TO NEGOTIATE FOR BETTER PRICES. THEREUPON, ARMOUR AND CO. SUBMITTED THE LOWEST OFFICER. AS THESE SUPPLIES WERE REQUIRED BEGINNING FEBRUARY 1, THERE WAS NOT TIME TO READVERTISE. INASMUCH AS THE BID ACCEPTED WAS $0.06 PER DOZEN LOWER THAN THE ONLY OTHER ORIGINAL BIDDER WHO WAS IN A POSITION TO MEET OUR NEEDS AS TO DELIVERIES, HIS BID WAS ACCEPTED IN THE INTERESTS OF ECONOMY, THERE BEING A SAVINGS TO THE UNITED STATES OF $180.60 IN THE TRANSACTION AND A DIFFERENCE OF $45.60 ON THE TRANSACTION THAT COULD HAVE BEEN MADE WITH AUSTIN NICHOLS AND CO.

3. COPIES OF BIDS ON EGGS INCLOSED.

THE CASE RELIED UPON BY THE QUARTERMASTER AT FORT MONMOUTH, N.J., AS AUTHORITY FOR HIS ACTION IN PERMITTING ARMOUR AND CO. TO WITHDRAW ITS BID IS THE CASE OF MAYER V. UNITED STATES, 5 CT.CLS. 317 (NOT 51 CT.CLS. CITED BY THE QUARTERMASTER), DECIDED IN 1869. IN THAT CASE IT APPEARED THAT A SUTLER HAD ERECTED A BUILDING ON THE GOVERNMENT RESERVATION AT FORT RILEY AND THE QUARTERMASTER GENERAL RECOMMENDED THAT THE BUILDING BE PURCHASED BY THE GOVERNMENT AT AN APPRAISED VALUE. THE BUILDING WAS APPRAISED BY A BOARD OF OFFICERS, BUT BEFORE PURCHASE WAS MADE A THIRD PARTY INTERPOSED A CLAIM, FOUNDED ON A PRIOR MORTGAGE. THE GOVERNMENT REFUSED TO BUY UNTIL BOTH THE ALLEGED OWNERS FURNISHED A DEED OF THEIR RESPECTIVE TITLES. THE FURNISHING OF THE DEEDS WAS DELAYED, THE ORDER FOR THE PURCHASE OF THE BUILDING WAS RESCINDED, AND THE CLAIMANTS WERE DULY ADVISED OF SUCH ACTION. THE SUIT WHICH WAS BROUGHT AGAINST THE UNITED STATES FOR THE APPRAISED VALUE OF THE PROPERTY WAS DISMISSED BY THE COURT OF CLAIMS. ALTHOUGH IN DISCUSSING THE CASE THE COURT MADE THE STATEMENT THAT "THE RIGHT OF ONE CONTRACTING PARTY, PENDING NEGOTIATIONS, TO WITHDRAW ANY PROPOSITION MADE TO THE OTHER BEFORE IT IS ACCEPTED, CAN NOT BE QUESTIONED," THE CASE DID NOT INVOLVE THE REQUIREMENTS FOR COMPETITIVE BIDDING FOR FURNISHING SUPPLIES TO THE UNITED STATES UNDER STATUTES PERTAINING THERETO, AND THEREFORE HAD NO APPLICABILITY TO THE SITUATION INVOLVED IN THE PRESENT MATTER.

IN THE CASE OF W. A. SCOTT V. UNITED STATES, 44 CT.CLS. 524, IT WAS HELD THAT A BIDDER COULD NOT RECOVER THE AMOUNT OF A CHECK FOR $500 WHICH ACCOMPANIED HIS BID WHERE THE BID WAS WITHDRAWN BEFORE ACCEPTANCE AND THE BIDDER REFUSED TO ENTER INTO A CONTRACT UPON THE GROUND THAT A MISTAKE HAD BEEN MADE IN SUBMITTING THE BID. THE COURT, ON PAGE 527, AFTER STATING THE ORDINARY RULE THAT AN OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE ACCEPTANCE, MADE THE FOLLOWING STATEMENT RELATIVE TO GOVERNMENT CONTRACTS:

II. THE OTHER QUESTION INVOLVED IN THIS CASE IS MORE DIFFICULT OF DETERMINATION, VIZ: WHAT ARE THE RIGHTS OF BIDDERS AS TO THE WITHDRAWAL OF THEIR BIDS AFTER THEY HAVE BEEN OPENED AND THEY HAVE BEEN INFORMED THEREOF, BUT BEFORE THEY HAVE BEEN ACCEPTED?

THE AGENTS OF THE GOVERNMENT STAND UPON A DIFFERENT FOOTING FROM PRIVATE INDIVIDUALS IN THE MATTER OF ADVERTISING FOR THE LETTING OF CONTRACTS IN BEHALF OF THE UNITED STATES. THEY HAVE NO DISCRETION. THEY MUST ACCEPT THE LOWEST OR THE HIGHEST RESPONSIBLE BID OR REJECT ALL AND READVERTISE. PRIVATE INDIVIDUALS ARE NOT REQUIRED THUS TO ACT. HENCE IT IS APPARENT THAT GOVERNMENT AGENTS SHOULD BE ALLOWED A REASONABLE TIME AFTER THE OPENING OF BIDS BEFORE THEY ARE ALLOWED TO BE WITHDRAWN, SO THEY CAN BE AFFORDED OPPORTUNITIES TO ASCERTAIN WHETHER COLLUSION OR FRAUD HAD BEEN PERPETRATED AGAINST THE UNITED STATES BY THE PARTIES ENGAGED IN THE BIDDING. IT IS ALSO APPARENT THAT IF THE RULE OF ALLOWING IMMEDIATE WITHDRAWALS AFTER THE RESULTS OF THE BIDDING ARE MADE KNOWN, FRAUDS INNUMERABLE COULD BE PERPETRATED AGAINST THE UNITED STATES, AND THUS PUBLIC JUSTICE WOULD BE GREATLY HAMPERED. EXPERIENCE IN ADVERTISING FOR PROPOSALS FOR CONTRACTS HAS RENDERED IT NECESSARY FOR THE DIFFERENT DEPARTMENTS OF THE GOVERNMENT TO REQUIRE A DEPOSIT OF 5 TO 10 PERCENT OF THE APPROXIMATE AMOUNT INVOLVED AS AN EVIDENCE OF GOOD FAITH AND HONEST DEALING ON THE PART OF THE BIDDERS, SAID DEPOSIT TO BE FORFEITED IF THE RULES OF THE DEPARTMENTS ARE NOT COMPLIED WITH; OTHERWISE SUCH DEPOSITS WILL BE RETURNED TO THE BIDDERS. IT IS AN EASY MATTER FOR A BIDDER TO SHUN RESPONSIBILITY IF HE HAS UNDERESTIMATED OR OVERESTIMATED IN HIS PROPOSAL, PROVIDED HE IS ALLOWED TO WITHDRAW HIS BID AND WITH IT RECOVER THE AMOUNT OF HIS DEPOSIT.

IT HAS BEEN HELD REPEATEDLY THAT UNDER THE STATUTES REQUIRING COMPETITIVE BIDDING AND THE ACCEPTANCE OF THE LOWEST BID FOR FURNISHING SUPPLIES AND SERVICES TO THE UNITED STATES, THE GOVERNMENT HAS A REASONABLE TIME AFTER THE OPENING OF THE BIDS TO MAKE AN AWARD AND THAT DURING SUCH TIME A BID MAY NOT BE WITHDRAWN EXCEPT UPON THE BASIS OF MUTUAL MISTAKE OR A MISTAKE SO APPARENT ON THE FACE OF THE BID THAT THE AGENTS OF THE GOVERNMENT WOULD BE CHARGEABLE WITH NOTICE THEREOF. 24 COMP. DEC. 534; 4 COMP. GEN. 911; 6 ID. 504; ID. 786; 7 ID. 514; W. A. SCOTT V. UNITED STATES, 44 CT.CLS. 524; 21 OP.ATTY.GEN. 56; 30 ID. 56.

AS NO CIRCUMSTANCES APPEAR, OR ARE EVEN ALLEGED, THAT WOULD HAVE AUTHORIZED THE WITHDRAWAL OF ARMOUR AND CO.'S BID, IT MUST BE HELD THAT THE QUARTERMASTER HAD NO AUTHORITY TO PERMIT THE WITHDRAWAL OF SUCH BID AFTER THE BIDS WERE OPENED, AND THAT THE ISSUANCE OF THE PURCHASE ORDER TO THAT COMPANY AT AN INCREASED PRICE, ESPECIALLY WITHOUT READVERTISING, WAS WITHOUT EFFECT TO OBLIGATE THE UNITED STATES TO PAY ANY AMOUNT IN EXCESS OF THAT COMPANY'S ORIGINAL BID PRICE. SEE 6 COMP. GEN. 158. ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT FOR THE EGGS DELIVERED UNDER THE PURCHASE ORDER IN EXCESS OF THE RATE OF $0.3598 PER DOZEN WILL NOT BE APPROVED BY THIS OFFICE UNDER THE CIRCUMSTANCES NOW APPEARING.