A-87506, JULY 23, 1937, 17 COMP. GEN. 53

A-87506: Jul 23, 1937

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PARTICULARLY WHERE AMOUNT OF LOW BID WAS CONTINGENT ON FREIGHT RATE AVAILABLE FOR A LIMITED TIME ONLY AND LOW BIDDER'S GUARANTEE AGAINST INCREASE OF THE RATE WAS RECEIVED BY NEGOTIATION AFTER THE AWARD. 1937: THERE WAS RECEIVED JULY 8. AS FOLLOWS: ON MAY 19 BIDS WERE OPENED AT THIS OFFICE FOR. WERE SPLIT AMONG FOUR BIDDERS. IT WAS PROPOSED UNDER THIS AWARD TO DISTRIBUTE FROM STOCKTON TO VARIOUS POINTS OF USE. IT WAS DISCOVERED THAT IN COMPUTING THE FREIGHT ON THE MURPHY BID. WHEREAS A SPECIAL 45 CENT RATE WAS LATER FOUND TO BE APPLICABLE UP TO AND INCLUDING JUNE 30. BUHL WAS 4.7 CENTS PER POUND. AT WHICH THE AWARD TO SINSHEIMER WAS MADE. THE 45 CENT RATE EXPIRES ON JUNE 30 AND IT WAS DOUBTFUL THAT THE PURCHASE ORDER COULD BE PLACED IN TIME TO PROVIDE FOR SHIPPING THE BEANS PRIOR TO THAT TIME.

A-87506, JULY 23, 1937, 17 COMP. GEN. 53

CONTRACTS - TERMINATION - AWARD TO OTHER THAN LOW BIDDER - ERROR IN BID EVALUATION AWARD TO OTHER THAN LOW BIDDER RESULTING SOLELY FROM CONTRACTING OFFICER'S ERROR IN EVALUATING BIDS, SHOULD NOT BE CANCELED IF OBJECTED TO BY SUCCESSFUL BIDDER, PARTICULARLY WHERE AMOUNT OF LOW BID WAS CONTINGENT ON FREIGHT RATE AVAILABLE FOR A LIMITED TIME ONLY AND LOW BIDDER'S GUARANTEE AGAINST INCREASE OF THE RATE WAS RECEIVED BY NEGOTIATION AFTER THE AWARD.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, JULY 23, 1937:

THERE WAS RECEIVED JULY 8, 1937, YOUR LETTER OF JULY 3, AS FOLLOWS:

ON MAY 19 BIDS WERE OPENED AT THIS OFFICE FOR, AMONG OTHER ITEMS, 164,775 POUNDS OF DRY RED BEANS FOR DELIVERY TO INDIAN SERVICE ACTIVITIES AT VARIOUS DESTINATIONS.

THE AWARDS, AS MADE BY THE PURCHASING OFFICER OF THE DEPARTMENT, WERE SPLIT AMONG FOUR BIDDERS, ONE OF THE AWARDS BEING FOR 96,000 POUNDS TO SINSHEIMER AND COMPANY AT 5.24 CENTS PER POUND F.O.B. STOCKTON, CALIFORNIA. IT WAS PROPOSED UNDER THIS AWARD TO DISTRIBUTE FROM STOCKTON TO VARIOUS POINTS OF USE. UPON RECEIPT OF A PROTEST FROM ANOTHER OF THE BIDDERS, RICHARD J. MURPHY, ON THIS PARTICULAR AWARD, IT WAS DISCOVERED THAT IN COMPUTING THE FREIGHT ON THE MURPHY BID, THE TRAFFIC BRANCH USED THE REGULAR 79 CENT FREIGHT RATE FROM BUHL, IDAHO, TO STOCKTON, CALIFORNIA, WHEREAS A SPECIAL 45 CENT RATE WAS LATER FOUND TO BE APPLICABLE UP TO AND INCLUDING JUNE 30, 1937. MURPHY'S BID PRICE F.O.B. BUHL WAS 4.7 CENTS PER POUND. THIS PRICE PLUS THE SPECIAL RATE OF 45 CENTS WOULD DELIVER THE BEANS AT STOCKTON FOR 5.15 CENTS PER POUND, OR 9/100 CENTS PER POUND LOWER THAN THE PRICE OF 5.24 CENTS PER POUND, AT WHICH THE AWARD TO SINSHEIMER WAS MADE. THE 45 CENT RATE EXPIRES ON JUNE 30 AND IT WAS DOUBTFUL THAT THE PURCHASE ORDER COULD BE PLACED IN TIME TO PROVIDE FOR SHIPPING THE BEANS PRIOR TO THAT TIME, DUE TO THE FACT THAT THE INTERIOR DEPARTMENT APPROPRIATION ACT FOR THE FISCAL YEAR 1938 HAS NOT YET BECOME LAW. MR. MURPHY'S REPRESENTATIVE, HOWEVER, HAS GUARANTEED TO PROTECT THE 45 CENT RATE REGARDLESS OF THE DATE ON WHICH THE PURCHASE ORDER IS PLACED. UPON RECEIPT OF THIS GUARANTEE THE PURCHASING OFFICER FOR THIS DEPARTMENT TELEGRAPHED SINSHEIMER AND COMPANY CANCELLING THE AWARD, BUT THAT COMPANY REFUSES TO ACCEPT CANCELLATION.

YOU ARE REQUESTED TO ADVISE WHETHER, IN THE CIRCUMSTANCES, THE AWARD TO SINSHEIMER SHOULD BE ALLOWED TO STAND OR WHETHER IT SHOULD BE CANCELLED AND THE AWARD MADE TO RICHARD J. MURPHY. FOR YOUR USE IN CONSIDERING THE CASE THERE ARE ENCLOSED THE ORIGINAL BIDS OF BOTH RICHARD J. MURPHY AND SINSHEIMER AND COMPANY, AN ABSTRACT OF ALL THE BIDS RECEIVED, AND OTHER PERTINENT PAPERS. AN EARLY DECISION, WITH THE RETURN OF THE ENCLOSURES, WILL BE APPRECIATED.

THE RECORDS SHOW THAT THE BID OF SINSHEIMER AND CO. WAS ACCEPTED AS INTENDED. THE FACT THAT A MISTAKE WAS MADE IN COMPUTING THE FREIGHT RATES WHICH, BUT FOR THE MISTAKE, WOULD HAVE RESULTED IN AWARDING THE CONTRACT TO THE ESTATE OF RICHARD J. MURPHY, DECEASED, DOES NOT NECESSARILY RENDER THE UNITED STATES IMMUNE FROM LIABILITY IF IT SHOULD INSIST UPON CANCELING THE ACCEPTANCE OF THE BID SUBMITTED BY 249 U.S. 313, AND LEVINSON V. UNITED STATES, 258 U.S. 198. WHILE THE UNITED STATES MIGHT TECHNICALLY ESCAPE LEGAL RESPONSIBILITY FOR SUCH CANCELATION DUE TO THE FACT THAT THE CONTRACT WAS NOT ENTERED INTO IN ACCORDANCE WITH SECTION 3744, REVISED STATUTES, ALSO SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88, YET THE FACT REMAINS THAT THE GOVERNMENT INSISTS UPON PERFORMANCE BY CONTRACTORS OF THEIR ACCEPTED BIDS OR THE PAYMENT TO THE GOVERNMENT OF ANY EXCESS COSTS OR DAMAGES RESULTING FROM DEFAULT IN PERFORMANCE.

THE MISTAKE IN COMPUTING THE FREIGHT RATE WAS THAT OF REPRESENTATIVES OF THE UNITED STATES--- FOR WHICH SINSHEIMER AND CO. WERE IN NO WAY RESPONSIBLE. OF COURSE, EVERY EFFORT SHOULD BE MADE TO AVOID SUCH MISTAKES, BUT THE GOVERNMENT CANNOT DECLARE A DIFFERENT RULE IN THIS MATTER THAN THAT WHICH IT ENFORCES IN ITS FAVOR AGAINST ACCEPTED BIDDERS.

ACCORDINGLY, YOU ARE ADVISED THAT UNDER THE CIRCUMSTANCES THE AWARD TO SINSHEIMER AND CO. SHOULD BE ALLOWED TO STAND.