A-83095, JANUARY 28, 1937, 16 COMP. GEN. 699

A-83095: Jan 28, 1937

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CONTRACTS - AWARD SUBSEQUENT TO BIDDER'S LIMITATION PERIOD - LIABILITY FOR INCREASED COSTS BECAUSE OF BIDDER'S DEFAULT THERE BEING NO BINDING CONTRACT WHERE AWARD IS MADE SUBSEQUENT TO THE EXPIRATION OF PERIOD FOR AWARD SPECIFIED IN THE BID. THERE IS NO LEGAL BASIS FOR CHARGING SAID BIDDER WITH EXCESS COST INCURRED IN OBTAINING THE SERVICES INVOLVED ELSEWHERE BECAUSE OF THE BIDDER'S FAILURE TO PERFORM. THAT WE WERE PREPARED TO MAKE AWARD TO THEIR ORGANIZATION FOR SERVICES IN CONNECTION WITH THE REMOVAL. SINCE THE PROPOSAL SUBMITTED BY THEM IN KEEPING WITH OUR INVITATION 209-A WAS THE LOWEST OF THE FIVE BIDS RECEIVED. TOGETHER WITH A SUMMARY OF ALL THE BIDS RECEIVED AND COPIES OF THE CORRESPONDENCE WE HAVE HAD WITH REGARD TO THE PENDING AWARD.

A-83095, JANUARY 28, 1937, 16 COMP. GEN. 699

CONTRACTS - AWARD SUBSEQUENT TO BIDDER'S LIMITATION PERIOD - LIABILITY FOR INCREASED COSTS BECAUSE OF BIDDER'S DEFAULT THERE BEING NO BINDING CONTRACT WHERE AWARD IS MADE SUBSEQUENT TO THE EXPIRATION OF PERIOD FOR AWARD SPECIFIED IN THE BID, THERE IS NO LEGAL BASIS FOR CHARGING SAID BIDDER WITH EXCESS COST INCURRED IN OBTAINING THE SERVICES INVOLVED ELSEWHERE BECAUSE OF THE BIDDER'S FAILURE TO PERFORM.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, FEDERAL HOUSING ADMINISTRATION, JANUARY 28, 1937:

THERE HAS BEEN RECEIVED A LETTER DATED JANUARY 16, 1937, FROM THE PURCHASING AND PROPERTY OFFICER, FEDERAL HOUSING ADMINISTRATION, AS FOLLOWS:

UNDER DATE OF NOVEMBER 24, 1936, WE INFORMED THE MAYFLOWER FIREPROOF WAREHOUSES OF 6131 NORTHWEST HIGHWAY, CHICAGO, ILLINOIS, THAT WE WERE PREPARED TO MAKE AWARD TO THEIR ORGANIZATION FOR SERVICES IN CONNECTION WITH THE REMOVAL, PICK-UP, HAULING AND STORAGE OF REPOSSESSED EQUIPMENT WITHIN THE CITY OF CHICAGO AND FIFTY-MILE RADIUS THEREOF, SINCE THE PROPOSAL SUBMITTED BY THEM IN KEEPING WITH OUR INVITATION 209-A WAS THE LOWEST OF THE FIVE BIDS RECEIVED. WE ATTACH HERETO ORIGINAL OF THE PROPOSAL SUBMITTED, TOGETHER WITH A SUMMARY OF ALL THE BIDS RECEIVED AND COPIES OF THE CORRESPONDENCE WE HAVE HAD WITH REGARD TO THE PENDING AWARD. NO RESPONSE HAS BEEN MADE TO OUR LETTERS AND TELEGRAMS.

THERE BEING AN URGENT NEED WITHIN THE AREA REFERRED TO FOR THE SERVICES OUTLINED IN THE CONTEMPLATED CONTRACT, WE WERE REQUIRED TO ENGAGE THE LINCOLN WAREHOUSE CORPORATION OF CHICAGO TO MAKE EMERGENCY PICK-UPS FOR US.WE ARE ENTERING INTO A FORMAL CONTRACT WITH THIS COMPANY WHICH WILL BE FORWARDED TO YOU AS SOON AS THE REQUIRED PERFORMANCE BOND FORMS ARE RECEIVED. THE CONTRACT WITH THE LINCOLN WAREHOUSE CORPORATION IS FOR SUPPLYING THE SERVICES REQUIRED FOR WHICH THE MAYFLOWER WAREHOUSES WERE IN DEFAULT.

THE PROPER PROCEDURE, IN THE EVENT A BIDDER ON SUCH CONTRACTS AS HERE INVOLVED FAILS, AFTER ACCEPTANCE OF ITS BID TO FURNISH THE REQUIRED BOND, IS TO ADVISE THE SUCCESSFUL BIDDER THAT, UNLESS THE BOND BE FURNISHED WITHIN A SPECIFIED NUMBER OF DAYS, THE SERVICES WILL BE OBTAINED FROM ANOTHER SOURCE AS THE INTERESTS OF THE GOVERNMENT MAY REQUIRE AND THAT ANY INCREASED COST INCURRED BECAUSE OF THE DEFAULT WILL BE CHARGED TO THE SAID DEFAULTING CONTRACTOR'S ACCOUNT. SEE 8 COMP. GEN. 588, 590. IT IS TO BE OBSERVED IN THIS CASE, HOWEVER, THAT THE BIDS WERE OPENED OCTOBER 15, 1936, AND THE BID OF THE MAYFLOWER FIREPROOF WAREHOUSES SPECIFICALLY PROVIDED THAT ACCEPTANCE MUST BE WITHIN 5 DAYS AFTER THE OPENING OF THE BIDS. THERE IS NOTHING IN THE RECORD BEFORE THIS OFFICE TO INDICATE THAT THE SAID BID WAS ACCEPTED WITHIN THE TIME LIMIT SO SPECIFIED, OR THAT IT WAS EVER ACCEPTED. IN THIS CONNECTION IT IS NOTED THAT THE PURCHASING AND PROPERTY OFFICER, BY LETTER DATED NOVEMBER 24, 1936--- 40 DAYS AFTER THE OPENING--- ADVISED THE BIDDER AS FOLLOWS:

WE ARE PREPARED TO MAKE AWARD TO YOUR ORGANIZATION FOR SERVICES IN CONNECTION WITH THE REMOVAL, PICK-UP, HAULING, AND STORAGE OF REPOSSESSED EQUIPMENT WITHIN THE CITY OF CHICAGO, AND 50 MILE AREA THEREOF FOR ALL ITEMS.

IN ACCORDANCE WITH THE SPECIFICATIONS SUBSCRIBED TO BY YOU, A PERFORMANCE BOND OF $1,000 IS TO BE POSTED IN FAVOR OF THE FEDERAL HOUSING ADMINISTRATION BEFORE CONTRACT WILL BECOME OPERATIVE AND WE INCLOSE HEREWITH A NUMBER OF OFFICIAL FORMS WHICH THE BONDING COMPANY IS TO USE IN EXECUTING THE FORMAL SURETY. THESE FORMS ARE TO BE RETURNED TO US IN TRIPLICATE.

IN THE ABSENCE OF ANY SHOWING THAT AN AWARD WAS MADE TO THE SAID BIDDER WITHIN THE 5-DAY PERIOD, THERE WOULD, OF COURSE, BE NO BINDING CONTRACT AND NO LEGAL BASIS FOR CHARGING THE SAID BIDDER WITH ANY EXCESS COST INCURRED BY REASON OF FAILURE TO PERFORM. ACCORDINGLY, ON THE BASIS OF THE RECORD NOW BEFORE THIS OFFICE, IT MUST BE HELD THAT BECAUSE OF THE APPARENTLY INEXCUSABLE DELAY IN ACCEPTANCE OF THE LOW BID, THERE IS NO LIABILITY ON THE PART OF THE SAID MAYFLOWER FIREPROOF WAREHOUSES TO THE UNITED STATES BY REASON OF SAID TRANSACTION.