A-81620, NOVEMBER 14, 1936, 16 COMP. GEN. 493

A-81620: Nov 14, 1936

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THESE BIDS WERE AS FOLLOWS: TABLE BIDDER AMOUNT TIME CHECK 1. MCDORMAN WAS NOT ACCOMPANIED BY THE BID GUARANTEE REQUIRED BY PARAGRAPH 8 OF THE STANDARD GENERAL CONDITIONS FOR WORK OF THIS CHARACTER. "WILL FURNISH GUARANTEE CHECK IF BID IS LOW. STATED: "YOU WILL NOTE THAT WE HAVE AGAIN STATED ON OUR BID THAT "GUARANTEE CHECK WILL BE FURNISHED IF BID IS LOW.'. THIS IS IN ACCORDANCE WITH MANY RULINGS OF THE COMPTROLLER GENERAL OF THE UNITED STATES. OUR BID IS STRICTLY LEGAL IN THIS RESPECT. AS WILL BE DETERMINED BY THE DEPARTMENT WHEN THE BIDS ARE TRANSMITTED TO THEM FOR ACTION.'. ARE ATTACHED. EACH CASE THE BID GUARANTEE WAS NOT FURNISHED UNTIL AFTER THE OPENING AND AFTER MR. MCDORMAN HAD LEARNED THAT HIS BID WAS LOW.

A-81620, NOVEMBER 14, 1936, 16 COMP. GEN. 493

BONDS - BIDDER'S FAILURE TO FURNISH WITH BID THE HABITUAL FAILURE OF A BIDDER TO FURNISH WITH HIS BID A BOND OR CERTIFIED CHECK IN LIEU THEREOF, AS REQUIRED BY THE SPECIFICATIONS, MAY NOT BE DISREGARDED IN MAKING AWARD, NOTWITHSTANDING A FAILURE IN A PARTICULAR CASE MAY BE TREATED AS AN INFORMALITY WHERE DUE TO LACK OF TIME OR OTHERWISE, NOT INVOLVING LACK OF FINANCIAL STANDING.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, NOVEMBER 14, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF NOVEMBER 7, 1936, AS FOLLOWS:

UNDER DATE OF SEPTEMBER 8, 1936, THE DISTRICT ENGINEER, THIRD DISTRICT, FORWARDED TO THE PROCUREMENT DIVISION THREE BIDS SUBMITTED IN RESPONSE TO INVITATION DATED AUGUST 21, 1936, FOR FURNISHING AND INSTALLING TWO ELECTRIC WATER COOLERS AND ONE REMOTE BUBBLER AT THE NEW PITTSBURGH, PENNSYLVANIA, POST OFFICE. THESE BIDS WERE AS FOLLOWS:

TABLE

BIDDER AMOUNT TIME CHECK 1. L. K. MCDORMAN ------------------------ $1,420.00 60 DAYS NONE 2. PITTSBURGH REFRIGERATION CO., INC. --- 1,594.00 90 DAYS $160.00 3. DANFORTH COMPANY ---------------------- 1,610.20 30 DAYS 161.02

AS INDICATED ABOVE, THE BID OF MR. MCDORMAN WAS NOT ACCOMPANIED BY THE BID GUARANTEE REQUIRED BY PARAGRAPH 8 OF THE STANDARD GENERAL CONDITIONS FOR WORK OF THIS CHARACTER. IN LIEU THEREOF, THE BID CONTAINED THE STATEMENT,"WILL FURNISH GUARANTEE CHECK IF BID IS LOW," AND MR. MCDORMAN'S LETTER OF AUGUST 27, 1936, ADDRESSED TO THE CUSTODIAN, STATED:

"YOU WILL NOTE THAT WE HAVE AGAIN STATED ON OUR BID THAT "GUARANTEE CHECK WILL BE FURNISHED IF BID IS LOW.' THIS IS IN ACCORDANCE WITH MANY RULINGS OF THE COMPTROLLER GENERAL OF THE UNITED STATES, AND OUR BID IS STRICTLY LEGAL IN THIS RESPECT, AS WILL BE DETERMINED BY THE DEPARTMENT WHEN THE BIDS ARE TRANSMITTED TO THEM FOR ACTION.'

MR. MCDORMAN HAD PREVIOUSLY SUBMITTED A NUMBER OF BIDS WITHOUT THE REQUIRED GUARANTEE, BOTH IN HIS OWN NAME AND ON BEHALF OF VARIOUS MANUFACTURING CONCERNS WHICH HE REPRESENTS. PHOTOSTATIC COPIES OF TWO OF THESE BIDS FOR FURNISHING AND INSTALLING WATER COOLERS AT THE POST OFFICE BUILDINGS AT AUSTIN, TEXAS, AND KLAMATH FALLS, OREGON, ARE ATTACHED. EACH CASE THE BID GUARANTEE WAS NOT FURNISHED UNTIL AFTER THE OPENING AND AFTER MR. MCDORMAN HAD LEARNED THAT HIS BID WAS LOW.

ALTHOUGH THE BIDS FOR WATER COOLERS, ETC., AT THE PITTSBURGH, PENNSYLVANIA, POST OFFICE WERE ALL REJECTED UNDER DATE OF OCTOBER 12, 1936, BECAUSE THE TIME FOR ACCEPTANCE HAD EXPIRED, A LOW BID SIMILARLY SUBMITTED WITHOUT GUARANTEE FOR FURNISHING AND INSTALLING THREE ELECTRIC WATER COOLERS AT THE POST OFFICE AND COURT HOUSE, SHERMAN, TEXAS, IS NOW UNDER CONSIDERATION IN THE PROCUREMENT DIVISION. THE FOUR BIDS RECEIVED FOR THIS WORK ARE AS FOLLOWS:

TABLE

BIDDER AMOUNT TIME CHECK 1. L. K. MCDORMAN ------------------------- $592.00 30 DAYS NONE 2. KELVINATOR CORPORATION ----------------- 635.50 60 DAYS NONE 3. FRIGIDAIRE CORPORATION ----------------- 727.92 45 DAYS $72.79 4. WM. F. KAUN AND SON -------------------- 793.00 30 DAYS 79.00

THE ABOVE BIDS WERE OPENED SEPTEMBER 10, 1936, AND MR. MCDORMAN'S BID GUARANTEE IN THE AMOUNT OF $60 WAS NOT FURNISHED UNTIL OCTOBER 1ST. LETTER OF OCTOBER 24, 1936, COPY OF WHICH IS ATTACHED, MR. MCDORMAN EXTENDED THE TIME FOR ACCEPTANCE OF THIS BID FOR SUCH PERIOD AS MIGHT BE NECESSARY IN VIEW OF THIS SUBMISSION. HE FURTHER STATED IN THIS LETTER THAT HE HAD BELIEVED HIS PRACTICE OF SUBMITTING BIDS WITHOUT GUARANTEES TO BE WITHIN HIS RIGHTS, BUT THAT IN THE FUTURE, SINCE HE UNDERSTANDS THE PRACTICE IS NOT ACCEPTABLE TO THE DEPARTMENT, HE WILL FURNISH THE NECESSARY GUARANTEE WITH HIS BID IRRESPECTIVE OF THE DECISION WHICH MAY BE REACHED IN THIS CASE.

IN VIEW OF MR. MCDORMAN'S LETTER OF OCTOBER 24TH, IT IS BELIEVED THAT CONSIDERATION SHOULD BE GIVEN THE NECESSITY OF WAIVING THE INFORMALITY IN THE SUBMISSION OF HIS BID FOR WATER COOLERS AT THE SHERMAN, TEXAS, POST OFFICE AND COURT HOUSE, IN ACCORDANCE WITH YOUR DECISIONS. MR. MCDORMAN IS A FREQUENT BIDDER, HOWEVER, AND IT IS CONSIDERED HIGHLY UNDESIRABLE THAT THE NOTION SHOULD BE PERMITTED TO BECOME CURRENT THAT THE PROCUREMENT DIVISION'S REQUIREMENTS AS TO BID GUARANTEES AND BID BONDS MAY BE DISREGARDED WITH IMPUNITY, UNLESS BIDDERS SHOULD SEE FIT TO ACCOMMODATE THE DEPARTMENT BY VOLUNTARILY CONFORMING TO UNENFORCEABLE PROVISIONS. IS FOR THIS REASON THAT A DECISION IN THE MATTER IS DESIRED, REGARDLESS OF THE ACTION WHICH MAY BE NECESSARY WITH RESPECT TO THE ONLY BID NOW UNDER CONSIDERATION.

THE DEPARTMENT DESIRES TO INFORM MR. MCDORMAN THAT ANY BIDS WHICH HE MAY SUBMIT IN FUTURE WITHOUT THE REQUIRED GUARANTEE WILL BE REJECTED. HE HAS CLEARLY MISINTERPRETED YOUR DECISIONS ON THE SUBJECT OF WAIVING, AS AN INFORMALITY, THE FAILURE TO SUBMIT SUCH GUARANTEES; FOR HIS POSITION IN THE MATTER AMOUNTS TO A CONTENTION THAT THERE IS A LEGAL RIGHT TO DISREGARD THE BID GUARANTEE REQUIREMENT, AND THAT THE EXISTENCE OF SUCH RIGHT IS ESTABLISHED BY YOUR DECISIONS. IT IS TRUE, AS 14 COMP. GEN. 559 BEARS OUT IN PARTICULAR, THAT THERE MAY BE INSTANCES IN WHICH THE CIRCUMSTANCES WILL BE SUCH AS TO REQUIRE THE REJECTION OF ALL BIDS AND READVERTISEMENT IN THE PUBLIC INTEREST; BUT IN OTHER CASES THE ADDITIONAL EXPENDITURE INVOLVED IN ACCEPTING THE SECOND BID WILL CLEARLY BE SO SLIGHT THAT THE STRONG PUBLIC INTEREST IN MAINTAINING THE OBSERVANCE OF THE GUARANTEE REQUIREMENT WILL NECESSITATE THE REJECTION OF THE LOW BID AND ACCEPTANCE OF THE SECOND. YOU ARE AWARE OF THE MANY CONSIDERATIONS WHICH, FROM AN ADMINISTRATIVE STANDPOINT, HAVE LONG RENDERED THE BID GUARANTEE REQUIREMENT INDISPENSABLE FOR THE PROTECTION OF THE GOVERNMENT'S INTERESTS IN THE SOLICITATION OF COMPETITIVE BIDS, AND IT WOULD SERVE NO USEFUL PURPOSE TO REVIEW THEM. (SEE THE WAR DEPARTMENT'S LETTER OF DECEMBER 28, 1934, QUOTED IN 14 COMP. GEN. AT PAGES 560-562, FOR A THOROUGH REVIEW OF THE QUESTION.) IF THE CONTENTION ADVANCED IN THIS CASE WERE SUSTAINED, THE RESULT WOULD BE THE EVENTUAL NULLIFICATION OF THAT REQUIREMENT.

THE DEPARTMENT ACCORDINGLY PROPOSES TO ANNOUNCE AND TO ADOPT THE POSITION ABOVE OUTLINED IF YOU DO NOT FIND IT LEGALLY OBJECTIONABLE. IN VIEW OF THE FACT THAT ADHERENCE TO THIS POSITION WOULD INVOLVE THE LEGALITY OF EXPENDITURES OF APPROPRIATED MONEYS, YOUR DECISION IN THE MATTER WILL BE APPRECIATED.

THERE IS, OF COURSE, NO ESTABLISHED PROCEDURE WHICH WOULD PERMIT A BIDDER HABITUALLY TO DISREGARD THE REQUIREMENTS STATED IN THE ADVERTISED SPECIFICATIONS FOR BID BOND OR CERTIFIED CHECK IN LIEU THEREOF. INSTANCES MAY ARISE WHERE SOME BIDDER IN A PARTICULAR CASE HAS BEEN UNABLE, DUE TO LACK OF TIME OR OTHERWISE--- NOT INVOLVING HIS OWN LACK OF FINANCIAL STANDING--- TO SECURE A BID BOND OR FURNISH A CERTIFIED CHECK WITH THE BID, SUCH BID BOND OR CERTIFIED CHECK BEING FURNISHED WITHIN A FEW HOURS OR A DAY OR TWO AFTER THE BIDS WERE OPENED AND WHICH WOULD JUSTIFY THE UNITED STATES IN DISREGARDING THE INFORMALITY IN FAILING TO ACCOMPANY THE BID WITH THE BID BOND OR CERTIFIED CHECK. HOWEVER, THE PRACTICE STATED BY YOU TO HAVE BEEN FOLLOWED BY MR. MCDORMAN DOES NOT COME WITHIN THAT EXCEPTIONAL RULE, BUT DUE TO HIS MISUNDERSTANDING AND APPARENT SUFFICIENT FINANCIAL RESOURCES HIS BIDS IN THESE CASES MAY BE ACCEPTED, AS PROPOSED, IF OTHERWISE CORRECT.