B-128546, APR. 16, 1957

B-128546: Apr 16, 1957

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ESQUIRES: REFERENCE IS MADE TO YOUR LETTER OF MARCH 6. IN SUPPORT OF YOUR CONTENTION YOU STATE THAT IT IS FUNDAMENTAL IN THE LAW OF CONTRACTS THAT AN OFFER SUCH AS IS HERE INVOLVED MAY BE WITHDRAWN PRIOR TO THE TIME LIMITED FOR ACCEPTANCE. THAT HIS PRINCIPLE IS GROUNDED UPON THE FACT THAT A PROMISE TO HOLD A BID OPEN. IS AN INDEPENDENT CONTRACT WHICH MAY BE ENFORCED ONLY IF IT IS SUPPORTED BY A CONSIDERATION THE SAME AS ANY OTHER CONTRACT. IT IS NOTED THAT YOU DID NOT CITE ANY DECISIONS OF THE COURTS IN SUPPORT OF YOUR CONTENTION. YOU ARE ADVISED THAT IN OUR REVIEW OF THE MATTERS INVOLVED HEREIN CONSIDERATION WILL BE GIVEN TO ALL THE FACTS OF RECORD AS REPORTED HERE BY THE ADMINISTRATIVE OFFICE.

B-128546, APR. 16, 1957

TO SMITH AND JONES, ESQUIRES:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 6, 1957, REQUESTING RECONSIDERATION OF THE ACTION TAKEN IN SETTLEMENT DATED FEBRUARY 13, 1957, BY WHICH OUR CLAIMS DIVISION DISALLOWED THE CLAIM OF THE ESSE RADIO COMPANY FOR REFUND OF A BID DEPOSIT IN THE AMOUNT OF $1,244.20, UNDER CONTRACT NO. 38-101-S-DA-AIII-3, DATED NOVEMBER 30, 1954, COVERING THE SALE OF CERTAIN SURPLUS PROPERTY. BRIEFLY STATED, YOUR CONTENTION APPEARS TO BE THAT BY REASON OF A LETTER DATED DECEMBER 17, 1954, FROM THE CONTRACTOR, STATING THAT THEY REFUSED TO ACCEPT THE BOAT COVERED BY ITEM 45-/59) OF THE CONTRACT, THAT THIS CONSTITUTED A WITHDRAWAL OR RETRACTION OF THE OFFER TO PURCHASE PRIOR TO THE DATE YOU CONSIDER THE OFFER AS BEING ACCEPTED, OR DECEMBER 20, 1954, AND, THEREFORE, NO CONTRACTUAL RIGHTS OR DUTIES CAN ARISE FROM AN ACCEPTANCE OF SUCH OFFER SUBSEQUENT TO THE REFUSAL TO ACCEPT THE BOAT.

IN SUPPORT OF YOUR CONTENTION YOU STATE THAT IT IS FUNDAMENTAL IN THE LAW OF CONTRACTS THAT AN OFFER SUCH AS IS HERE INVOLVED MAY BE WITHDRAWN PRIOR TO THE TIME LIMITED FOR ACCEPTANCE, EVEN THOUGH THE OFFER BY ITS EXPRESS TERMS PROVIDES THAT IT CANNOT BE WITHDRAWN; THAT HIS PRINCIPLE IS GROUNDED UPON THE FACT THAT A PROMISE TO HOLD A BID OPEN, OR AN OPTION, IS AN INDEPENDENT CONTRACT WHICH MAY BE ENFORCED ONLY IF IT IS SUPPORTED BY A CONSIDERATION THE SAME AS ANY OTHER CONTRACT. IT IS NOTED THAT YOU DID NOT CITE ANY DECISIONS OF THE COURTS IN SUPPORT OF YOUR CONTENTION. CERTAIN NUMBERED PARAGRAPHS AT THE END OF YOUR LETTER YOU MAKE SPECIFIC INQUIRIES IN THIS CASE.

YOU ARE ADVISED THAT IN OUR REVIEW OF THE MATTERS INVOLVED HEREIN CONSIDERATION WILL BE GIVEN TO ALL THE FACTS OF RECORD AS REPORTED HERE BY THE ADMINISTRATIVE OFFICE, AND THE LAW APPLICABLE TO SUCH FACTS WILL BE APPLIED IN OUR DISPOSITION OF THE PENDING CLAIM. THIS DECISION, HOWEVER, WILL BE LIMITED TO THE QUESTION WHETHER YOUR CLIENT COULD LEGALLY WITHDRAW ITS OFFER AT ANY TIME PRIOR TO THE ADMINISTRATIVE APPROVAL, SINCE YOU INDICATE--- AND IT SO APPEARS--- THAT IT BECOMES UNNECESSARY TO ANSWER THE OTHER INQUIRIES IN YOUR LETTER.

THE RECORD SHOWS THAT BY INVITATION NO. 38-101-S-55-5, DATED NOVEMBER 8, 1954, THE PROPERTY DISPOSAL OFFICER, CHARLESTON TRANSPORTATION DEPOT AT NORTH CHARLESTON, SOUTH CAROLINA, OFFERED FOR SALE CERTAIN SURPLUS PROPERTY, THE BIDS TO BE OPENED AT 2:00 P.M. ON NOVEMBER 30, 1954. UNDER DATE OF NOVEMBER 24, 1954, THE ESSE RADIO COMPANY SUBMITTED BIDS FOR A NUMBER OF THE ITEMS COVERED BY THE INVITATION, HOWEVER, THIS DECISION HAS REFERENCE ONLY TO ONE BOAT COVERED BY ITEM 45-/59) OF THE CONTRACT, ON WHICH THE ESSE COMPANY ORIGINALLY BID THE SUM OF $2,777, THE BID BEING INCREASED TO THE AMOUNT OF $6,221 PRIOR TO THE OPENING DATE. THE BIDS WERE OPENED AT THE APPOINTED TIME AND ESSE'S BID BEING THE HIGHEST AS TO ITEM 45-/59) AWARD WAS MADE ACCORDINGLY ON THAT DAY.

BY LETTER OF DECEMBER 17, 1954, ESSE ADVISED THE CHARLESTON TRANSPORTATION DEPOT OF ITS REFUSAL TO ACCEPT THE BOAT, IT BEING ALLEGED, AMONG OTHER THINGS, THAT THE ADVERTISEMENT WAS MISLEADING. AFTER CONSIDERABLE CORRESPONDENCE BETWEEN THE PARTIES, INCLUDING APPEALS TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS, AND FOLLOWING THE DEFINITE REFUSAL OF ESSE TO ACCEPT THE PROPERTY--- LETTER OF OCTOBER 16, 1956--- THE BOAT WAS RESOLD AT THE PRICE OF $5,050. BY REASON OF ESSE'S DEFAULT UNDER THE CONTRACT THE UNITED STATES SUSTAINED A LOSS OF $1,457.41, INCLUDING FIREWATCH AND PUMPING CHARGES AMOUNTING TO $153, AND THE COST OF READVERTISING AMOUNTING TO $133.41. SUBTRACTING THE BID DEPOSIT OF $1,244.20 LEAVES A BALANCE OF $213.21 WHICH WAS COLLECTED BY OUR OFFICE THROUGH SET-OFF OF AN AMOUNT FOUND TO BE REFUNDABLE TO ESSE UNDER INVITATION TO BID NO. 11-019-S-57 9.

THAT THE ESSE COMPANY HAD KNOWLEDGE OF THE AWARD ON NOVEMBER 30, 1954, IS CLEARLY INDICATED IN ITS LETTER OF DECEMBER 17, 1954, IT BEING STATED THEREIN,"WE WERE AWARDED THE Q-609"--- THE REFERENCE BEING TO ITEM 45-/59) OF THE CONTRACT. ALSO, RESPECTING THE MATTER OF NOTICE, THE ARMED SERVICES BOARD OF CONTRACT APPEALS MADE THE FOLLOWING FINDING IN ITS OPINION OF AUGUST 26, 1955:

"THE BIDS WERE OPENED AS SCHEDULED ON 30 NOVEMBER 1954, AND, APPELLANT'S BID BEING THE HIGHEST RECEIVED FOR ITEM 45-/59), THE AWARD WAS MADE THAT DAY AND APPELLANT SO NOTIFIED. * * *"

IT IS A WELL-ESTABLISHED RULE OF LAW THAT AFTER BIDS HAVE BEEN OPENED THE BIDDER CANNOT WITHDRAW HIS BID UNLESS HE CAN PROVE THAT THE DESIRE TO WITHDRAW IS DUE SOLELY TO AN HONEST MISTAKE AND THAT NO FRAUD IS INVOLVED. SEE THE DECISION RENDERED FEBRUARY 8, 1955, BY THE COURT OF CLAIMS IN THE CASE OF RHODE ISLAND TOOL COMPANY V. UNITED STATES, 128 F.SUPP. 417, AND THE CASES THERE CITED. IN THIS CONNECTION, IT IS TO BE NOTED THAT IN THE BID INVITATION YOUR CLIENT AGREED TO PURCHASE THE PROPERTY AT THE PRICES INDICATED IF SUCH BID WAS ACCEPTED WITHIN THIRTY DAYS AFTER THE DATE OF THE OPENING. IT IS CLEAR THAT THE TERMS OF THIS CONDITION WERE MET BY THE GOVERNMENT CONTRACTING AUTHORITIES SINCE THE BID WAS ACCEPTED WITHIN SUCH PERIOD AND FORMAL NOTICE GIVEN.

SECTION 2.303 OF THE ARMED SERVICES PROCUREMENT REGULATIONS, EFFECTIVE MAY 19, 1948, PROVIDES, IN PART, AS FOLLOWS:

"2.303 MODIFICATION OR WITHDRAWAL OF BIDS.

"BIDS MAY BE MODIFIED OR WITHDRAWN, AT ANY TIME PRIOR TO THE TIME FIXED FOR OPENING THEREOF, BY WRITTEN OR TELEGRAPHIC NOTICE RECEIVED PRIOR TO THE TIME FOR OPENING. AFTER THE OPENING OF BIDS, NO BID MAY BE MODIFIED * * * OR WITHDRAWN UNLESS SUCH MODIFICATION OR WITHDRAWAL IS RECEIVED BEFORE THE AWARD HAS BEEN MADE AND EITHER (A) FAILURE OF THE MODIFICATION OR WITHDRAWAL TO ARRIVE PRIOR TO THE TIME FIXED FOR OPENING AS DUE SOLELY TO A DELAY IN THE MAILS FOR WHICH THE BIDDER WAS NOT RESPONSIBLE OR (B) MODIFICATION IS IN THE INTEREST OF THE GOVERNMENT AND NOT PREJUDICED TO OTHER BIDDERS.'

AS TO THE EFFECT OF SUCH REGULATIONS SEE THE HOLDING IN THE CASE OF REFINING ASSOCIATES, INC. V. UNITED STATES, 109 F.SUPP. 259.

WITH RESPECT TO THE REQUIREMENT THAT THE CONTRACT SHOULD NOT BE BINDING UNTIL APPROVED IN WRITING BY THE ARMY COMMANDER OR THE HEAD OF THE TECHNICAL SERVICE HAVING JURISDICTION, SEE THE CASE OF SINGLETON, ET AL. V. DISTRICT OF COLUMBIA, 198 F.2D 945.

EVEN IF IT WERE TO BE CONCEDED THAT BY REASON OF THE CONDITIONS OF SALE WITH REGARD TO APPROVAL OF THE CONTRACT BY HIGHER AUTHORITY, NO BINDING CONTRACT AROSE UNTIL SUCH APPROVAL WAS GIVEN ON DECEMBER 20, 1954, YOUR CLIENT AGREED IN ITS BID TO ACCEPT AWARD OF A CONTRACT IF MADE WITHIN 30 DAYS AFTER DATE OF OPENING OF BIDS WHICH WAS NOVEMBER 30, 1954. AS TO THE BINDING EFFECT OF SUCH A STIPULATION IN PUBLIC CONTRACTS, SEE SCOTT V. UNITED STATES, 44 C.CLS. 524, AND THE SINGLETON CASE, SUPRA.

UNDER THE FACTS OF THIS CASE WE ARE FORCED TO CONCLUDE THAT A VALID AND BINDING CONTRACT WAS ENTERED INTO BETWEEN THE PARTIES; THAT THE ATTEMPTED WITHDRAWAL OR RETRACTION OF THE BID WAS WITHOUT LEGAL EFFECT; THAT THE ESSE COMPANY FAILED TO COMPLY WITH THE TERMS OF THE CONTRACT AND THAT THE UNITED STATES IS ENTITLED TO RECOVER THE LOSSES INCURRED. ACCORDINGLY, THE ACTION TAKEN IN THIS CASE APPEARS TO HAVE BEEN CORRECT AND THE SAME IS HEREBY AFFIRMED.