B-10712, JUNE 24, 1940, 19 COMP. GEN. 1021

B-10712: Jun 24, 1940

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CONTRACTS - AUTOMOBILE PURCHASES INVOLVING DISPOSITION OF USED VEHICLES WHERE A BIDDER OFFERED AN AUTOMOBILE TO THE GOVERNMENT AT A STATED CASH PRICE AND SUCH OFFER WAS NOT MADE CONTINGENT UPON ACCEPTANCE OF HIS INDEPENDENT OFFER OF A TRADE-IN ALLOWANCE ON THE GOVERNMENT'S USED CAR. ACCEPTANCE OF THE BID FOR FURNISHING THE NEW CAR FOR CASH RESULTED IN A BINDING CONTRACT ON THAT BASIS EVEN THOUGH THE USED CAR WAS SOLD FOR CASH TO ANOTHER BIDDER. THE CONTRACTOR IS LIABLE FOR THE EXCESS COST TO THE GOVERNMENT RESULTING FROM HIS REFUSAL TO PERFORM HIS CONTRACT. ARE REFERRED FOR DETERMINATION AS TO WHETHER THE MCLAIN NASH COMPANY. IS LIABLE FOR THE ADDITIONAL COSTS AMOUNTING TO $78.62 INCURRED DUE TO THE ACCEPTANCE OF THE BID OF GENERAL MOTORS CORPORATION.

B-10712, JUNE 24, 1940, 19 COMP. GEN. 1021

CONTRACTS - AUTOMOBILE PURCHASES INVOLVING DISPOSITION OF USED VEHICLES WHERE A BIDDER OFFERED AN AUTOMOBILE TO THE GOVERNMENT AT A STATED CASH PRICE AND SUCH OFFER WAS NOT MADE CONTINGENT UPON ACCEPTANCE OF HIS INDEPENDENT OFFER OF A TRADE-IN ALLOWANCE ON THE GOVERNMENT'S USED CAR, ACCEPTANCE OF THE BID FOR FURNISHING THE NEW CAR FOR CASH RESULTED IN A BINDING CONTRACT ON THAT BASIS EVEN THOUGH THE USED CAR WAS SOLD FOR CASH TO ANOTHER BIDDER, AND THE CONTRACTOR IS LIABLE FOR THE EXCESS COST TO THE GOVERNMENT RESULTING FROM HIS REFUSAL TO PERFORM HIS CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, JUNE 24, 1940:

THERE HAS BEEN RECEIVED FROM THE CHIEF OF ENGINEERS, A LETTER OF JUNE 6, 1940, WITH ENCLOSURES, AS FOLLOWS:

THE ACCOMPANYING LETTER FROM THE PRESIDENT, MISSISSIPPI RIVER COMMISSION, DATED MAY 1, 1940, TOGETHER WITH COPIES OF THE BIDS IN QUESTION, ARE REFERRED FOR DETERMINATION AS TO WHETHER THE MCLAIN NASH COMPANY, VICKSBURG, MISSISSIPPI, IS LIABLE FOR THE ADDITIONAL COSTS AMOUNTING TO $78.62 INCURRED DUE TO THE ACCEPTANCE OF THE BID OF GENERAL MOTORS CORPORATION. THIS IS THE DIFFERENCE BETWEEN THE PURCHASE PRICE UNDER THE BID OF GENERAL MOTORS CORPORATION ( BUICK DIVISION) AND THE AMOUNT SET FORTH IN THE LOWEST BID AS TO PRICE BY THE MCLAIN NASH COMPANY, 1709 WASHINGTON STREET, VICKSBURG, MISSISSIPPI.

THE RECORD SHOWS THAT THE AWARD OF CONTRACT WAS TENDERED TO THE MCLAIN NASH COMPANY AND THAT, UPON NOTICE THAT THE USED CAR WAS BEING SOLD TO CARROLL GRANGER FOR $278.50 CASH, THE MCLAIN NASH COMPANY REFUSED TO PERFORM IN ACCORDANCE WITH ITS PROPOSAL. ATTENTION IS INVITED TO THE FACT THAT THE MCLAIN NASH COMPANY OFFERED $47 FOR THE USED 1938 BUICK AUTOMOBILE AS COMPARED WITH $275 TRADE-IN ALLOWANCE FROM GENERAL MOTORS AND CASH BIDS FROM THE CONTRACTORS EQUIPMENT COMPANY OF $277.77 AND CARROLL GRANGER, TO WHOM THE USED AUTOMOBILE WAS SOLD, IN THE AMOUNT OF $278.50. IT IS THE OPINION OF THIS OFFICE THAT THIS BID OF THE MCLAIN NASH COMPANY WAS NOT PROPER FOR ACCEPTANCE UNDER ANY CIRCUMSTANCES, IN VIEW OF THE DECISION OF THE COMPTROLLER GENERAL OF JANUARY 16, 1939, A- 92880, AND RELATED CORRESPONDENCE WITH RESPECT TO CONTRACT NO. W-1092-ENG- 6222 WITH THE BLUFF CITY BUICK COMPANY, MEMPHIS, TENNESSEE. IN THIS CASE THE BLUFF CITY BUICK COMPANY OFFERED TO FURNISH FIVE BUICK AUTOMOBILES AT $749 EACH WITH A TRADE-IN ALLOWANCE OF $25 FOR FIVE USED AUTOMOBILES. WAS STATED BY THE COMPTROLLER GENERAL THAT THE ACCEPTANCE OF THE BID OF THE BLUFF CITY BUICK COMPANY RESULTED IN THE GOVERNMENT PAYING TO THE CONTRACTOR APPROXIMATELY $200 IN EXCESS OF THE CONTRACT PRICE FOR THE NEW VEHICLE AND THAT THE RESTRICTIVE BID OF THE BLUFF CITY BUICK COMPANY SHOULD HAVE BEEN REJECTED IN THE INTEREST OF THE GOVERNMENT.

SINCE THE ENACTMENT OF THE ORIGINAL PRICE-LIMITING STATUTE MOST SUCCESSFUL BIDS FOR CARS OF THE CLASS HERE PURCHASED ARE SUBMITTED DIRECT BY FACTORIES. INDEPENDENT DEALERS RARELY SUBMIT BIDS LOW ENOUGH TO RECEIVE CONSIDERATION AND, THEREFORE, ARE NOT SUFFICIENTLY EXPERIENCED IN SUCH SPECIFICATIONS TO ENABLE THEM TO ANTICIPATE THE ACTION TO BE TAKEN UNDER INVITATIONS TO BID WHICH, AS IN THIS CASE, ARE NOT CLEAR ENOUGH TO PLACE ALL BIDDERS ON NOTICE OF CONDITIONS OF AWARD. THERE IS NO DEFINITE STATEMENT IN THE INVITATION FOR BIDS IN THIS CASE TO PLACE THE MCLAIN NASH COMPANY ON NOTICE THAT THE CAR MAY BE SOLD FOR CASH AND THE BID FOR PURCHASE OF THE NEW CAR ACCEPTED. THE WORDS IMMEDIATELY PRECEDING " ITEM 2" ON PAGE 3 OF THE INVITATION FOR BIDS, IN THE OPINION OF THIS OFFICE, ARE CONFUSING AS TO THE BASIS OF AWARD UNDER ITEM 1 (A) OR ITEM 1 (B) AND IT IS APPARENT, FROM THE ACCOMPANYING LETTER FROM THE MCLAIN NASH COMPANY AND THE PRICE QUOTED BY THIS DEALER ON A CAR RETAILING FOR $1,545, THAT THE INVITATION FOR BIDS WAS AMBIGUOUS TO THAT BIDDER.

UNDER THE BIDS RECEIVED IT IS CLEAR THAT THE USED 1938 BUICK AUTOMOBILE WAS WORTH FROM $275 UPWARDS AND THE ACCEPTANCE OF THE BID OF THE MCLAIN NASH COMPANY, CARRYING A TRADE-IN ALLOWANCE OF $47, WAS IMPROPER. IT IS, THEREFORE, RECOMMENDED THAT NO DEMAND BE MADE UPON THE MCLAIN NASH COMPANY FOR PAYMENT OF THE ALLEGED EXCESS COSTS IN THE SUM OF $78.62.

AN EXAMINATION OF THE BID OF THE MCLAIN NASH CO., FOR BREVITY HEREINAFTER REFERRED TO AS MCLAIN, WHO APPEARS AS THE OWNER OF THE CONCERN SHOWS THAT UNDER ITEM 1, CALLING FOR BIDS ON FURNISHING ONE NEW SEDAN AUTOMOBILE, FOUR-DOOR, FIVE-PASSENGER, HEAVY-WEIGHT CLASS, MCLAIN BID (A) PRICE DELIVERED ON CAR F.O.B. POINT OF SHIPMENT, PLACED ON CARS WITHIN 20 DAYS FROM DATE OF RECEIPT OF AWARD, $747, AND (B) DELIVERED IN VICKSBURG, MISSISSIPPI, WITHIN 1 DAY FROM DATE OF RECEIPT OF AWARD FOR $747. THESE BIDS APPEARED ON PAGE 1 OF THE INVITATION AND WERE ABSOLUTE AND WITHOUT QUALIFICATION. ON PAGE 3 OF THE INVITATION, TRADE IN ALLOWANCE OR CASH BID WAS SOLICITED ON A USED BUICK SEDAN. MCLAIN OFFERED A TRADE-IN ALLOWANCE OF $47 ON THIS VEHICLE, BUT MADE NO CASH OFFER. HE SUBTRACTED THIS $47 TRADE-IN ALLOWANCE OFFER FROM THE PRICE OF $747 ON THE NEW VEHICLE, LEAVING A BALANCE OF $700 CASH. THE BID WAS COMPLETE UPON ITS FACE, WITHOUT AMBIGUITY AND JUST SUCH A BID AS IS FREQUENTLY RECEIVED IN RESPONSE TO SOLICITATIONS INVOLVING THE TRADE-IN OF USED VEHICLES. THERE WAS NO WORD OR SUGGESTION, OR INDICATION ON THE FACE OR IN THE BODY OF THE BID THAT THE PRICE QUOTED ON THE NEW AUTOMOBILE WAS CONTINGENT UPON RECEIPT OF THE USED VEHICLE AT THE TRADE IN ALLOWANCE OFFERED. THE ONLY REASONABLE UNDERSTANDING WAS THAT THE BIDDER OFFERED THE NEW VEHICLE AT A FIXED FACTORY OR DELIVERED PRICE OF $747 WITHOUT REGARD TO ANY TRADE-IN, BUT WAS READY AND WILLING TO MAKE A TRADE-IN ALLOWANCE OF $47 FOR THE USED VEHICLE TO BE CREDITED ON THE PURCHASE PRICE OF THE NEW CAR IF THE GOVERNMENT SAW FIT TO ACCEPT THE TRADE-IN ALLOWANCE OFFERED. THUS, THE GOVERNMENT WAS LEFT FREE TO ACCEPT THE OFFER ON THE NEW VEHICLE AND REJECT THE TRADE-IN ALLOWANCE ON THE OLD ONE. CF. A-92880, JANUARY 16, 1939, TO YOU, IN WHICH IT WAS SAID THAT WHILE A BIDDER IS AT LIBERTY TO OFFER AS LITTLE BY WAY OF TRADE-IN ALLOWANCE AS HE MAY SEE FIT, THE GOVERNMENT MUST BE LEFT EQUALLY FREE TO REJECT SUCH OFFER IF IN ITS INTEREST TO DO SO. MCLAIN'S BID OF $747 FOR THE NEW AUTOMOBILE F.O.B. VICKSBURG, MISSISSIPPI, WAS ACCEPTED; HIS OFFER OF $47 TRADE-IN ALLOWANCE ON THE OLD CAR WAS REJECTED FOR THE REASON THAT A MUCH MORE SUBSTANTIAL AND ADVANTAGEOUS CASH OFFER FOR THE USED AUTOMOBILE WAS AVAILABLE. THERE IS NO SUGGESTION THAT THE CONTRACTING OFFICER ACTED IN OTHER THAN ENTIRE GOOD FAITH IN THE PREMISES, AND HIS ACTION NOT ONLY WAS CORRECT AND IN ACCORD WITH NUMEROUS DECISIONS OF THIS OFFICE AND IN THE BEST INTEREST OF THE GOVERNMENT, BUT WAS THE ONLY ACTION PROPER UNDER THE CONDITIONS.

WHEN MCLAIN'S BID WAS ACCEPTED FOR THE NEW AUTOMOBILE A CONTRACT WAS CONSUMMATED OBLIGATING THE CONTRACTOR TO FURNISH THE NEW SEDAN AT THE PRICE OF $747 F.O.B. VICKSBURG, MISSISSIPPI. WHEN HE REFUSED DELIVERY UNLESS THE OLD AUTOMOBILE WAS TURNED OVER TO HIM, THE RIGHT IMMEDIATELY ACCRUED TO THE GOVERNMENT UNDER CONDITION 4 OF THE CONTRACT TO PURCHASE ELSEWHERE AND CHARGE THE EXCESS COST, IF ANY, AGAINST THE DEFAULTING CONTRACTOR, HOLDING HIM LIABLE THEREFOR. WHEN THE PURCHASE WAS MADE AT AN EXCESS COST OF $78.62, THE AMOUNT OF MCLAIN'S INDEBTEDNESS TO THE GOVERNMENT BY REASON OF HIS BREACH OF CONTRACT WAS DEFINITELY FIXED.

THERE APPEARS IN THE RECORD NO SUPPORT FOR THE VIEW EXPRESSED IN THE ABOVE-QUOTED LETTER THAT THE "BID OF THE MCLAIN NASH COMPANY WAS NOT PROPER FOR ACCEPTANCE UNDER ANY CIRCUMSTANCES.' THE CASE IS IMMEDIATELY DISTINGUISHABLE FROM THAT CONSIDERED IN A-92880, JANUARY 16, 1939, CITED IN SAID LETTER. IN THAT CASE THE BIDDER OFFERED A TRADE-IN ALLOWANCE ON THE USED VEHICLE INVOLVED SO UNCONSCIONABLY LOW AS TO SHOCK THE CONSCIENCE, AND MADE ACCEPTANCE OF ITS OFFER FOR SAID USED VEHICLE A CONDITION PRECEDENT TO ACCEPTANCE OF ITS BID ON THE NEW ONE. IN THIS CASE, WHILE THE TRADE-IN ALLOWANCE OFFERED ON THE OLD AUTOMOBILE WAS VERY LOW WHEN COMPARED WITH OTHER BIDS RECEIVED, THE ACCEPTANCE OF THE LOW TRADE-IN ALLOWANCE WAS NOT MADE A CONDITION PRECEDENT TO THE SALE OF THE NEW AUTOMOBILE, AND THERE WAS NO VALID REASON WHY THE BID OF MCLAIN WAS NOT FOR ACCEPTANCE ON EXACTLY THE BASIS UPON WHICH IT WAS ACCEPTED. SAID ABOVE, NO OTHER COURSE WOULD HAVE BEEN AUTHORIZED, SINCE THE PURCHASE OF THE NEW AUTOMOBILE FROM MCLAIN AND THE SALE OF THE USED CAR TO THE HIGHEST CASH BIDDER RESULTED IN SUPPLYING THE NEEDS OF THE GOVERNMENT AT THE MOST REASONABLE PRICE OBTAINABLE. MCLAIN'S BID WAS NOT ACCEPTED "CARRYING A TRADE-IN ALLOWANCE OF $47" AS SUGGESTED IN THE FINAL PARAGRAPH OF THE LETTER OF JUNE 6, 1940, BUT WAS ACCEPTED FOR THE NEW CAR INDEPENDENTLY OF THE TRADE-IN ALLOWANCE OFFERED FOR THE OLD.

IT WAS NOT UNTIL AFTER HIS BID FOR THE NEW AUTOMOBILE HAD BEEN ACCEPTED-- - THUS CONSTITUTING A CONTRACT--- THAT MCLAIN CONTENDED THAT HIS OFFERED PRICE OF $747 WAS "PROVIDING OUR BID OF $47.00 WAS ACCEPTED ON THE BUICK SEDAN, U.S. NO. 5798, MOTOR NO. 43529327," AND REFUSED TO DELIVER ON THE BASIS OF HIS CONTRACT.

IT IS A RULE SO OFTEN REPEATED AND SO WELL ESTABLISHED AS TO BE NOT NOW OPEN TO ARGUMENT THAT THE FORMULATION, PREPARATION, AND SUBMISSION OF A BID FOR GOVERNMENT CONTRACTS IS SOLELY THE RESPONSIBILITY OF THE BIDDER; THAT IN THE ABSENCE OF ERROR OR MISTAKE APPARENT UPON THE FACE OF THE BID, OR OF SUCH GROSS DISCREPANCY BETWEEN PRICES OFFERED BY THE LOW BIDDER AND THOSE OF OTHERS AS TO PUT A CONTRACTING OFFICER UPON INQUIRY, ACCEPTANCE OF THE LOW BID AS MADE CREATES A VALID CONTRACT, AND THAT IF, THEREAFTER, IT DEVELOPS THAT A BIDDER, THROUGH INADVERTENCE, NEGLIGENCE, OR OTHERWISE, HAS OMITTED FROM OR INCLUDED IN HIS BID SOME PROVISION TO HIS DETRIMENT, THE CONSEQUENCE THEREOF MUST BE BORNE BY HIM. IF IT ACTUALLY WAS MCLAIN'S INTENTION THAT THE PRICE QUOTED ON THE NEW AUTOMOBILE SHOULD BE CONTINGENT UPON ACCEPTANCE OF THE TRADE-IN ALLOWANCE OFFERED BY HIM ON THE USED CAR, THE FACT SHOULD HAVE BEEN SHOWN AFFIRMATIVELY ON HIS BID WHEN SUBMITTED. FAILURE TO MAKE SUCH A SHOWING WAS, AT MOST, A UNILATERAL MISTAKE ON THE PART OF MCLAIN, ATTRIBUTABLE TO HIS OWN NEGLIGENCE IN THE PREPARATION OF HIS BID, FOR WHICH NO RELIEF FROM THE OBLIGATION OF THE CONTRACT MAY BE GIVEN, AND IS FATAL TO ANY CLAIM FOR RELIEF FROM THE CONSEQUENCE OF HIS BREACH. 18 COMP. GEN. 465, AND CITATIONS; 16 ID. 1021; ID. 1054.

REFERRING TO THE OPINION EXPRESSED IN THE PENULTIMATE PARAGRAPH OF THE ABOVE-QUOTED LETTER THAT THE INVITATION IN THIS CASE WAS NOT CLEAR ENOUGH TO PLACE ALL BIDDERS ON NOTICE OF CONDITIONS OF AWARD, AND THAT IT WAS CONFUSING AND AMBIGUOUS, IT MAY BE CONCEDED THAT THE INVITATION LEFT SOMETHING TO BE DESIRED BY WAY OF CLARITY. BUT SUCH LACK OF CLARITY AS THERE MAY HAVE BEEN IN THE INSTANT INVITATION WOULD NOT APPEAR SUFFICIENTLY SERIOUS TO MISLEAD OR CONFUSE AN AVERAGE BUSINESSMAN. MOREOVER, THE INVITATION WAS ISSUED MARCH 8, 1940, FROM THE ENGINEER'S OFFICE, VICKSBURG, MISSISSIPPI. MR. MCLAIN'S BUSINESS IS LOCATED IN VICKSBURG. HIS BID WAS DATED AND THE BIDS WERE OPENED APRIL 2, 1940. ASSUMING THAT MCLAIN RECEIVED A COPY OF THE INVITATION WITHIN A REASONABLE TIME AFTER IT WAS ISSUED, HE HAD AMPLE TIME TO MAKE INQUIRY OF THE ENGINEER'S OFFICE FOR THE CLARIFICATION OF ANY AMBIGUITY OR CONFUSING LANGUAGE THEREIN HAD HE CONSIDERED IT NECESSARY OR DESIRABLE.

THE FACT THAT MCLAIN OFFERED TO SELL TO THE GOVERNMENT FOR $747 A VEHICLE SAID TO RETAIL FOR $1,545 IS NOT FOR CONSIDERATION. THE CORRESPONDENCE SHOWS CONCLUSIVELY THAT $747 WAS THE PRICE HE INTENDED TO QUOTE. LETTER OF MAY 3, 1940, TO THE CHIEF OF ENGINEERS, MCLAIN STATED THAT "THE REASON FOR THE LOW TRADE-IN AMOUNT ON THE USED BUICK WAS DUE TO THE FACT THAT WE BROUGHT THE PRICE OF OUR NEW CAR DOWN, IN ORDER TO GET IT WITHIN THE $750.00 LIMITATION.'

IT APPEARS FROM THE REPORT OF MAY 1, 1940, FROM THE ENGINEER'S OFFICE, VICKSBURG, MISSISSIPPI, TO THE CHIEF OF ENGINEERS, THAT MCLAIN REPEATEDLY PROMISED TO PAY TO THE GOVERNMENT THE AMOUNT OF EXCESS COST OCCASIONED BY THE BREACH OF CONTRACT, AND THAT IT WAS NOT UNTIL APRIL 30, 1940, THAT HE INFORMED THE CONTRACTING OFFICER THAT HE HAD DECIDED NOT TO SEND THE CHECK AND WOULD "LET THE MATTER WORK ITSELF OUT IN WHATEVER WAY THE GOVERNMENT DECIDED TO HANDLE THE MATTER.' IT WAS AFTER THAT ( MAY 3) THAT HE WROTE THE CHIEF OF ENGINEERS REQUESTING HIS "INTERPRETATION OF THE PROPOSAL AS SUBMITTED IN THIS INSTANCE.' IN THAT LETTER MCLAIN STATED:

INASMUCH AS I ONLY OFFERED A TRADE-IN BID ON THE USED CAR, AND NO CASH BID WAS OFFERED BY ME, I CANNOT UNDERSTAND HOW THE OFFICE HERE CAN CONSTRUE A BID TO MEAN THAT A NEW CAR IS OFFERED AT SUCH A PRICE WITHOUT TRADE-IN; WHEN NO CASH BID WAS OFFERED BY ME.

OF COURSE, THE FACT THAT MCLAIN MADE NO CASH OFFER ON THE OLD CAR WAS A MATTER OF NO MOMENT AND HAD NO BEARING UPON THE EVALUATION OF THE BID. IS SAFE TO ESTIMATE THAT 90 PERCENT OF BIDDERS ON NEW VEHICLES WHERE TRADE -IN OF USED AUTOMOBILES IS INVOLVED DO NOT MAKE CASH OFFERS FOR THE PURCHASE OF THE OLD CARS INDEPENDENTLY OF A SALE OF NEW CARS TO THE GOVERNMENT, SUCH OFFERS BEING THE EXCEPTION RATHER THAN THE RULE SO FAR AS REGULAR DEALERS IN NEW AUTOMOBILES ARE CONCERNED.

UPON THE FACTS, AND IN CONFORMITY WITH ESTABLISHED LEGAL PRINCIPLES APPLICABLE, THERE IS NO LEGAL BASIS FOR RELIEVING THE CONTRACTOR FROM ITS OBLIGATION TO THE GOVERNMENT FOR THE EXCESS COST OCCASIONED BY THE DEFAULT UNDER THE CONTRACT, AND THE AMOUNT IS FOR COLLECTION IN FULL. THERE IS NOTED MCLAIN'S STATEMENT IN LETTER OF MAY 3, 1940, TO THE CHIEF OF ENGINEERS THAT IT IS NOT THE CONTRACTOR'S INTENTION "TO BE PLACED IN THE POSITION OF A DEFAULTING CONTRACTOR FOR THE MERE SUM OF $78.62," WHICH STATEMENT SUGGESTS THE PROBABILITY THAT IT WILL REMIT THE AMOUNT OF THE INDEBTEDNESS WITHOUT FURTHER DELAY UPON DEMAND THEREFOR. THE PAPERS ARE RETURNED HEREWITH AND IT IS REQUESTED THAT THIS OFFICE BE INFORMED WHEN COLLECTION SHALL HAVE BEEN MADE.