A-91685, FEBRUARY 1, 1938, 17 COMP. GEN. 619

A-91685: Feb 1, 1938

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - DAMAGES - ACTUAL - DELAYS - AWARDS BASED ON EARLY DELIVERY WHERE THE ADVERTISED INVITATION FOR BIDS ADVISED THAT DELIVERY WAS DESIRED "IMMEDIATELY" AND A HIGHER BID WAS ACCEPTED BECAUSE IT OFFERED DELIVERY WITHIN A SHORTER TIME THAN THE LOW BIDDER. DELIVERY WAS DELAYED EVEN BEYOND THE TIME SPECIFIED BY THE LOW BIDDER. THE CONTRACTOR IS NOT ENTITLED TO PAYMENT IN EXCESS OF THE LOW BID PRICE. THE MEASURE OF ACTUAL DAMAGES TO THE GOVERNMENT BY REASON OF THE DELAY BEING THE INCREASE IT HAD AGREED TO PAY TO OBTAIN THE EARLIER DELIVERY WHICH WAS NOT MADE. 1938: REFERENCE IS MADE TO YOUR REQUEST OF SETTLEMENT NO. 0140073. THE INVITATION ADVISED BIDDERS THAT THE LUMBER WAS DESIRED IMMEDIATELY.

A-91685, FEBRUARY 1, 1938, 17 COMP. GEN. 619

CONTRACTS - DAMAGES - ACTUAL - DELAYS - AWARDS BASED ON EARLY DELIVERY WHERE THE ADVERTISED INVITATION FOR BIDS ADVISED THAT DELIVERY WAS DESIRED "IMMEDIATELY" AND A HIGHER BID WAS ACCEPTED BECAUSE IT OFFERED DELIVERY WITHIN A SHORTER TIME THAN THE LOW BIDDER, AND DELIVERY WAS DELAYED EVEN BEYOND THE TIME SPECIFIED BY THE LOW BIDDER, THE CONTRACTOR IS NOT ENTITLED TO PAYMENT IN EXCESS OF THE LOW BID PRICE, THE MEASURE OF ACTUAL DAMAGES TO THE GOVERNMENT BY REASON OF THE DELAY BEING THE INCREASE IT HAD AGREED TO PAY TO OBTAIN THE EARLIER DELIVERY WHICH WAS NOT MADE.

ACTING COMPTROLLER GENERAL ELLIOTT TO ATLANTIC CREOSOTING CO., INC., FEBRUARY 1, 1938:

REFERENCE IS MADE TO YOUR REQUEST OF SETTLEMENT NO. 0140073, DATED OCTOBER 14, 1937, WHICH DISALLOWED YOUR CLAIM FOR $37.87, REPRESENTING THE BALANCE ALLEGED TO BE DUE FOR CERTAIN LUMBER FURNISHED THE WORKS PROGRESS ADMINISTRATION AT MILLEDGEVILLE, GA., UNDER YOUR BID OF APRIL 29, 1936, AND ACCEPTANCE DATED MAY 7, 1936.

IT APPEARS THAT BY INVITATION NO. 2250, DATED APRIL 24, 1936, THE STATE PROCUREMENT OFFICE, TREASURY DEPARTMENT, ATLANTA, GA., ADVERTISED FOR BIDS ON, AMONG OTHER THINGS, 14 ITEMS OF LUMBER. THE INVITATION ADVISED BIDDERS THAT THE LUMBER WAS DESIRED IMMEDIATELY. BY YOUR BID DATED APRIL 29, 1936, IN THE AMOUNT OF $643.77 YOU OFFERED TO FURNISH AND DELIVER THE 14 ITEMS OF LUMBER AT MILLEDGEVILLE WITHIN 14 DAYS AFTER RECEIPT OF ORDER. ANOTHER BIDDER QUOTED A PRICE OF $605.90 BUT SPECIFIED TIME OF DELIVERY AS WITHIN 20 DAYS AFTER RECEIPT OF THE ORDER. DUE TO THE FACT THE LUMBER WAS SO URGENTLY NEEDED AND SINCE YOU OFFERED TO DELIVER WITHIN 14 DAYS, YOUR BID WAS ACCEPTED MAY 7, 1936. THE RECORD SHOWS THAT PURCHASE ORDER WAS RECEIVED BY YOU MAY 8, 1936, THUS ESTABLISHING FINAL DATE FOR DELIVERY AS MAY 22, 1936. THE LUMBER WAS NOT DELIVERED UNTIL MAY 29, 1936, OR 21 DAYS AFTER RECEIPT OF THE ORDER, AND SINCE THE TIME REQUIRED BY YOU FOR DELIVERY WAS IN EXCESS OF THE TIME OFFERED BY THE LOW BIDDER, PAYMENT WAS MADE TO YOU FOR THE LUMBER AT THE PRICE QUOTED BY SAID LOW BIDDER, OR $605.90, AND YOUR CLAIM FOR THE ADDITIONAL AMOUNT OF $37.87 WAS DISALLOWED IN THE SETTLEMENT OF OCTOBER 14, 1937.

BIDDERS IN THIS CASE WERE ADVISED IN THE INVITATION THAT THE LUMBER WAS REQUIRED IMMEDIATELY AND THE SOLE BASIS FOR AWARDING THE CONTRACT TO YOU WAS THE FACT THAT YOU OFFERED DELIVERY WITHIN A SHORTER PERIOD THAN THAT OFFERED BY THE LOW BIDDER. YOU BREACHED YOUR CONTRACT BY FAILING TO MAKE DELIVERY WITHIN THE TIME SPECIFIED IN YOUR ACCEPTED BID AND DELIVERY WAS NOT EVEN MADE WITHIN THE TIME OFFERED BY THE LOW BIDDER. THUS YOU DID NOT EARN THE INCREASED PRICE AND IT IS OBVIOUS THAT THE GOVERNMENT DID NOT GET THAT FOR WHICH IT AGREED TO PAY THE ADDITIONAL PRICE OF $37.87. THE CONTRACTING OFFICER WAS NOT AUTHORIZED TO OBLIGATE THE GOVERNMENT TO PAY MORE THAN $605.90 FOR THE LUMBER EXCEPT ON CONDITION THAT THE LUMBER BE DELIVERED WITHIN 14 DAYS AFTER RECEIPT OF THE ORDER. AS YOU DID NOT COMPLY WITH THAT CONDITION, PAYMENT OF THE EXCESS OF $37.87 IS NOT AUTHORIZED.

IN YOUR REQUEST FOR REVIEW YOU STATE THAT YOUR FAILURE TO DELIVER WITHIN THE TIME SPECIFIED WAS CAUSED BY AN EXPLOSION OF A BOILER AND THAT YOU CANNOT AGREE THAT "THIS EXPLOSION DID NOT FALL WITHIN THE USUALLY EXCEPTED CAUSES.' THE CIRCUMSTANCE THAT THE DELAY IN DELIVERY WAS DUE TO THE EXPLOSION OF A BOILER IN YOUR PLANT HAS NO BEARING ON THE MATTER SINCE THE CONTRACT IN THIS CASE MADE NO PROVISION FOR EXCUSING YOU FOR DELAYS IN DELIVERY FOR ANY CAUSES.

THE RULE IS WELL SETTLED THAT WHEN ONE PARTY BREACHES A CONTRACT BY FAILURE TO DELIVER WITHIN THE PERIOD SPECIFIED THEREIN, THE OTHER PARTY HAS THE OPTION OF ACCEPTING DELAYED DELIVERY AND RECOUPING THE ACTUAL DAMAGE SUSTAINED, OR OF BUYING IN THE OPEN MARKET WITHOUT WAITING FOR THE CONTRACTOR TO DELIVER AND CHARGING THE EXCESS TO THE DELINQUENT CONTRACTOR. IN THIS CASE THERE WOULD APPEAR TO BE NO ROOM FOR REASONABLE DOUBT AS TO THE MEASURE OF ACTUAL DAMAGE. IT IS THE DIFFERENCE BETWEEN THE LOW BID AND YOUR BID WHICH WAS ACCEPTED FOR THE SOLE REASON THAT YOU HAD PROMISED EARLIER DELIVERY. SINCE YOU DID NOT DELIVER ANY EARLIER THAN DELIVERY WAS PROMISED UNDER THE LOW BID, THE GOVERNMENT'S DAMAGE BY YOUR BREACH IS THE INCREASE IT HAD AGREED TO PAY TO OBTAIN EARLIER DELIVERY WHICH WAS NOT MADE. SEE 7 COMP. GEN. 444; 9 COMP. GEN. 65.