B-124431, JUNE 30, 1955, 34 COMP. GEN. 721

B-124431: Jun 30, 1955

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1955: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 23. THAT THE BID SUBMITTED BY THE ZARPAS FIRM WAS THE LOWEST RECEIVED ONLY IF CASH DISCOUNT ATTEMPTED TO BE OFFERED BY THE EISEN-MAGERS CONSTRUCTION COMPANY. DETERMINATION OF THE ACCEPTABLE LOW BID AND ENTITLEMENT TO THE AWARD IS DEPENDENT SOLELY UPON DETERMINATION OF THE LEGAL VALIDITY OF THE DISCOUNT OFFER MADE IN THE EISEN-MAGERS BID. - PERCENT WILL BE ALLOWED FOR PAYMENT WITHIN . WHICHEVER IS LATER. THE EISEN-MAGERS BID WAS OPENED BEFORE THE ZARPAS BID. - * * * WHEN OPENING THE EISEN-MAGERS BID I HAD FOUND THAT A DISCOUNT OF 1/10 OF 1 PERCENT HAD BEEN OFFERED BUT THE NUMBER OF DAYS TO TAKE THE DISCOUNT HAD BEEN LEFT BLANK AND I * * * ASKED IF THEY WOULD CARE TO STATE THE NUMBER OF DAYS THE DISCOUNT WAS GOOD FOR.

B-124431, JUNE 30, 1955, 34 COMP. GEN. 721

BIDS - PROMPT PAYMENT DISCOUNT PROVISIONS THE OMISSION IN A BID OF A SPECIFIED PERIOD WITHIN WHICH A CASH DISCOUNT FOR PROMPT PAYMENT MAY BE TAKEN DOES NOT INVALIDATE THE OFFER AND BY ACCEPTANCE THE GOVERNMENT ACQUIRES A RIGHT TO DEDUCT THE DISCOUNT FROM ANY PAYMENTS MADE WITHIN A REASONABLE TIME.

COMPTROLLER GENERAL CAMPBELL TO MARVIN P. SADUR, JUNE 30, 1955:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 23, 1955, ON BEHALF OF SAMUEL N. ZARPAS, INC., PROTESTING AWARD OF A CONTRACT FOR REPAIRS TO THE OFFICER'S CLUB AT ANDREWS AIR FORCE BASE, WASHINGTON, D.C., UNDER INVITATION FOR BIDS NO. 49-608-55-102, DATED JUNE 1, 1955, TO ANY OTHER BIDDER.

IT APPEARS, AND YOU CONCEDE, THAT THE BID SUBMITTED BY THE ZARPAS FIRM WAS THE LOWEST RECEIVED ONLY IF CASH DISCOUNT ATTEMPTED TO BE OFFERED BY THE EISEN-MAGERS CONSTRUCTION COMPANY, INC., ANOTHER BIDDER, MAY NOT PROPERLY BE TAKEN INTO CONSIDERATION IN THE EVALUATION OF BIDS. CONSEQUENTLY, BOTH BIDDERS BEING QUALIFIED OTHERWISE, DETERMINATION OF THE ACCEPTABLE LOW BID AND ENTITLEMENT TO THE AWARD IS DEPENDENT SOLELY UPON DETERMINATION OF THE LEGAL VALIDITY OF THE DISCOUNT OFFER MADE IN THE EISEN-MAGERS BID.

THE OFFICIAL RECORD SHOWS THAT THE INVITATION CONTAINED A CLAUSE WITH TWO BLANK SPACES, AS FOLLOWS: DISCOUNT: A CASH DISCOUNT OF ----- PERCENT WILL BE ALLOWED FOR PAYMENT WITHIN ----- CALENDAR DAYS AFTER RECEIPT BY THE GOVERNMENT OF PROPERLY CERTIFIED INVOICES, OR ACCEPTANCE OF THE WORK PERFORMED, WHICHEVER IS LATER.

THE EISEN-MAGERS BID WAS OPENED BEFORE THE ZARPAS BID, AND THE CONTRACTING OFFICER REPORTS, IN PART, THAT---

* * * WHEN OPENING THE EISEN-MAGERS BID I HAD FOUND THAT A DISCOUNT OF 1/10 OF 1 PERCENT HAD BEEN OFFERED BUT THE NUMBER OF DAYS TO TAKE THE DISCOUNT HAD BEEN LEFT BLANK AND I * * * ASKED IF THEY WOULD CARE TO STATE THE NUMBER OF DAYS THE DISCOUNT WAS GOOD FOR. MR. EISEN SAID THAT ABOUT 10 DAYS AND I REMARKED ABOUT 20 DAYS WOULD BE A MORE REALISTIC FIGURE AND HANDED THE BID TO MR. EISEN AND HE PUT IN 20 DAYS.

YOUR POSITION IN THE MATTER SEEMS TO BE THAT FAILURE TO SPECIFY A NUMBER OF DAYS IN THE SECOND BLANK SPACE RESULTED IN THE OMISSION OF A MATERIAL TERM, MAKING THE OFFER OF DISCOUNT INCOMPLETE AND INVALID; THAT SUCH TERM WAS SUPPLIED ONLY BY A MODIFICATION OF THE BID AFTER OPENING; AND THAT, CONSEQUENTLY, FAIR AND ORDERLY COMPETITIVE BIDDING PROCEDURES WOULD BE DISREGARDED IF THE DISCOUNT OFFER AS CHANGED DURING THE OPENING OF BIDS WERE TO BE ACCEPTED.

IN CONSIDERING WHETHER THE OMISSION OF A SPECIFIC PERIOD WAS AN INFORMALITY WITHIN THE MEANING OF SECTION 11 (B) OF INSTRUCTIONS TO BIDDERS, WHICH ACCOMPANIED THE INVITATION AND WHICH PROVIDED THAT "THE GOVERNMENT RESERVES THE RIGHT TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHEN SUCH WAIVER IS IN THE INTEREST OF THE GOVERNMENT," IT SHOULD BE NOTED THAT NO QUESTION CONCERNING THE DETAILS OF WORK TO BE PERFORMED OR THE PRICES QUOTED FOR SUCH WORK IS INVOLVED.

THE CASH DISCOUNT CLAUSE COVERS ONLY AN ALLOWANCE FOR PROMPT PAYMENT OF SUCH PRICES. THE STIPULATION OF A SPECIFIC PERCENTAGE MADE IT CLEAR THAT SUCH AN ALLOWANCE WAS INTENDED, AND THE INCOMPLETENESS CAUSED BY THE OMISSION OF A SPECIFIC PERIOD WITHIN WHICH PAYMENT MUST BE MADE IS SUBJECT TO CURE BY APPLICATION OF THE STANDARDS ORDINARILY APPLIED TO SUPPLY DEFICIENCIES IN AGREEMENTS WHEN THIS CAN BE DONE WITHOUT CHANGING BASIC INTENT OR MATERIAL TERMS. WHERE TIME FOR PERFORMANCE IS STATED ONLY IN GENERAL AND INDEFINITE TERMS, AS IN THE CASE OF "PROMPT" PAYMENT TO OBTAIN A CASH DISCOUNT, THE COURTS HOLD THAT A REASONABLE TIME IS NECESSARILY IMPLIED. 17 C.J.S. 503, AND CASES CITED. MOREOVER, THE INTERESTS OF THE GOVERNMENT AS WELL AS THE INTERESTS OF BIDDERS REQUIRE EVALUATION OF BIDS ON THE BASIS OF THE BEST OFFER WHICH THERE IS A SOUND REASON TO BELIEVE WILL BE OBTAINABLE. SEE 19 COMP. GEN. 233. HENCE, IT IS CONCLUDED THAT THE OMISSION, WHETHER INADVERTENT OR OTHERWISE, DID NOT INVALIDATE THE OFFER OF A DEFINITE CASH DISCOUNT FOR PROMPT PAYMENT AND THAT THE GOVERNMENT BY ACCEPTANCE OF SUCH OFFER WOULD ACQUIRE AN ENFORCEABLE RIGHT TO DEDUCT THE SAME FROM ANY PAYMENTS OTHERWISE DUE WHEN MADE WITHIN A REASONABLE TIME. OUR CONCLUSION WOULD BE THE SAME IF THE BIDDER HAD ASSERTED THAT NO DISCOUNT WAS INTENDED TO BE OFFERED.

THIS VIEW IS NOT AFFECTED BY THE DISCUSSION OR NEGOTIATIONS BETWEEN THE BIDDER AND THE CONTRACTING OFFICER DURING THE OPENING OF BIDS, WHICH MAY BE VIEWED MERELY AS RESULTING IN AGREEMENT OF THE INDIVIDUALS CONCERNED AS TO WHAT CONSTITUTES A REASONABLE TIME FOR EARNING THE DISCOUNT PROVIDED.

THERE IS PERCEIVED NO WAY IN WHICH THE OMISSION, SO LONG AS IT DID NOT RESULT IN INVALIDATING THE DISCOUNT OFFER, COULD HAVE PREJUDICED IN ANY WAY THE ZARPAS BID UNDER FAIR COMPETITIVE BIDDING PROCEDURES. FOR THE PURPOSES OF THIS DISCUSSION, THE EISEN-MAGERS BID HAS BEEN CONSIDERED IN THE FORM RECEIVED WITHOUT MODIFICATION.

AFTER CAREFUL STUDY OF YOUR PROTEST, THEREFORE, WE FIND NO PROPER BASIS FOR REJECTING THE DISCOUNT OFFER OF THE EISEN-MAGERS CONSTRUCTION COMPANY, INC., OR FOR A POSITION THAT SUCH FIRM WAS NOT THE LOWEST BIDDER AND, AS SUCH, ENTITLED TO RECEIVE THE AWARD.