B-129021, JANUARY 25, 1957, 36 COMP. GEN. 532

B-129021: Jan 25, 1957

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CONTRACTS - AWARDS TO DEBARRED BIDDERS - RESPONSIBILITY OF BIDDER - LIABILITY ON CANCELLATION A CONTRACT AWARD INADVERTENTLY MADE BY THE DEPARTMENT OF THE ARMY TO A DEBARRED BIDDER WHO HAD ACTUAL NOTICE OF ADMINISTRATIVE DEBARMENT WHICH WAS EFFECTIVE THROUGHOUT THE DEPARTMENT OF DEFENSE AND WHO FAILED TO FIND OUT WHETHER AN EXCEPTION HAD BEEN MADE UNDER THE PUBLIC INTEREST PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATIONS IS VOIDABLE AT THE OPTION OF THE GOVERNMENT. THE CONTRACTOR IS NOT ENTITLED TO PAYMENT OF ANY EXPENSES IN CONNECTION WITH THE CONTRACT. 1957: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16. YOU CONTEND THAT THE ORDER FOR THE SUPPLIES WHICH YOU ACCEPTED IN GOOD FAITH WAS CANCELED BY THE GOVERNMENT AFTER YOU HAD INCURRED CERTAIN COSTS INCIDENT TO THE FULFILLMENT OF THE ORDER.

B-129021, JANUARY 25, 1957, 36 COMP. GEN. 532

CONTRACTS - AWARDS TO DEBARRED BIDDERS - RESPONSIBILITY OF BIDDER - LIABILITY ON CANCELLATION A CONTRACT AWARD INADVERTENTLY MADE BY THE DEPARTMENT OF THE ARMY TO A DEBARRED BIDDER WHO HAD ACTUAL NOTICE OF ADMINISTRATIVE DEBARMENT WHICH WAS EFFECTIVE THROUGHOUT THE DEPARTMENT OF DEFENSE AND WHO FAILED TO FIND OUT WHETHER AN EXCEPTION HAD BEEN MADE UNDER THE PUBLIC INTEREST PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATIONS IS VOIDABLE AT THE OPTION OF THE GOVERNMENT, AND, SINCE THE GOVERNMENT CANCELED THE AWARD ON DISCOVERY OF THE DEBARMENT, THE CONTRACTOR IS NOT ENTITLED TO PAYMENT OF ANY EXPENSES IN CONNECTION WITH THE CONTRACT.

TO MANHATTAN LIGHTING EQUIPMENT CO., INC., JANUARY 25, 1957:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 16, 1956, AND RELATED CORRESPONDENCE CONCERNING YOUR DEBARMENT BY THE DEPARTMENT OF THE AIR FORCE FOR A PERIOD BEGINNING MAY 14, 1956, AND TO THE CONSEQUENT CANCELLATION OF AN AWARD MADE UNDER ORDER NO. 10.I. 953, ISSUED JUNE 27, 1956, BY THE PURCHASING OFFICER AT FORT SILL, OKLAHOMA, FOR CERTAIN LIGHTING FIXTURES. YOU CONTEND THAT THE ORDER FOR THE SUPPLIES WHICH YOU ACCEPTED IN GOOD FAITH WAS CANCELED BY THE GOVERNMENT AFTER YOU HAD INCURRED CERTAIN COSTS INCIDENT TO THE FULFILLMENT OF THE ORDER. YOU CONCLUDE, THEREFORE, THAT YOU ARE LEGALLY ENTITLED EITHER TO REINSTATEMENT OF THE ORDER OR REIMBURSEMENT FOR COSTS INCURRED IN THE PERFORMANCE THEREOF PRIOR TO ITS CANCELLATION BY ADMINISTRATIVE NOTICE ISSUED JULY 25, 1956.

THE RECORD DISCLOSES THAT BY LETTER OF MAY 14, 1956, WHICH WE ARE INFORMALLY ADVISED BY THE DEPARTMENT OF THE AIR FORCE WAS SENT BY REGISTERED MAIL, YOU WERE ADVISED THAT THE DEPARTMENT OF THE AIR FORCE HAD DETERMINED PURSUANT TO SECTION I, PARAGRAPH 1.604 OF THE ARMED SERVICES PROCUREMENT REGULATION TO DEBAR YOUR COMPANY FROM ENTERING INTO CONTRACTUAL RELATIONSHIP FOR A PERIOD OF THREE YEARS FROM THE DATE OF THE NOTICE. THE LETTER FURTHER STATED " THIS DEBARMENT SHALL BE EFFECTIVE THROUGHOUT THE DEPARTMENT OF DEFENSE. IN ACCORDANCE WITH THIS DETERMINATION, CONTRACTS WILL NOT BE AWARDED TO, AND BIDS OR PROPOSALS WILL NOT BE SOLICITED FROM, MANHATTAN LIGHTING EQUIPMENT CO., INC., DURING THE PERIOD OF DEBARMENT.'

NOTWITHSTANDING THE DEBARMENT NOTICE, YOU SUBMITTED A BID UNDER INVITATION FOR BIDS NO. E34-031-56-86 ISSUED JUNE 8, 1956, BY THE PURCHASING AND CONTRACTING OFFICER, MCNAIR HALL, FORT SILL, OKLAHOMA. THROUGH ADMINISTRATIVE OVERSIGHT OR IGNORANCE OF THE FACT OF YOUR DEBARMENT, AN AWARD WAS MADE TO YOU AS LOW BIDDER FOR CERTAIN OF THE ITEMS LISTED IN THE INVITATION. THE RECORD FURTHER SHOWS THAT IMMEDIATELY UPON DISCOVERING THAT YOU HAD BEEN DEBARRED BY THE AIR FORCE, THE CONTRACTING OFFICER NOTIFIED YOU BY LETTER OF JULY 25, 1956, THAT YOUR CONTRACT WAS RESCINDED AND DECLARED VOID AND THAT NO DELIVERIES WOULD BE ACCEPTED UNDER THE CONTRACT. YOU CONTEND IN YOUR LETTER OF JULY 30, 1956, TO THE CONTRACTING OFFICER AND IN YOUR LETTER OF AUGUST 16 TO US, THAT YOU HAD NO MEANS OF KNOWING THAT THE DEBARMENT BY THE AIR FORCE IN ANY WAY AFFECTED YOUR RELATIONSHIP WITH THE DEPARTMENT OF THE ARMY. IT IS NOT UNDERSTOOD HOW YOU COULD REASONABLY INTERPRET THE DEBARMENT NOTICE TO BE SO LIMITED IN VIEW OF ITS CLEAR LANGUAGE AS QUOTED ABOVE.

THE NOTICE OF DEBARMENT WAS ISSUED BY THE DEPARTMENT OF THE AIR FORCE PURSUANT TO THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, PERTINENT POSITIONS OF WHICH ARE QUOTED BELOW:

1-602 BASIS FOR ADDITION OF FIRMS AND INDIVIDUALS ON LIST. THE NAMES OF FIRMS OR INDIVIDUALS SHALL BE INCLUDED ON THE LIST IN THE FOLLOWING CATEGORIES:

(C) THOSE WHICH THE SECRETARY OF A DEPARTMENT OR HIS AUTHORIZED REPRESENTATIVE DETERMINES TO DEBAR ADMINISTRATIVELY FOR ANY OF THE CAUSES AND UNDER ALL OF THE CONDITIONS SET FORTH IN ASPR 1-604.

1-603 TREATMENT TO BE ACCORDED FIRMS OR INDIVIDUALS IN DEBARRED OR INELIGIBLE STATUS.

1-603.1 TOTAL RESTRICTIONS.

(A) CONTRACTS SHALL NOT BE AWARDED TO, NOR SHALL BIDS OR PROPOSALS BE SOLICITED FROM, FIRMS OR INDIVIDUALS WHICH ARE LISTED ON THE FOLLOWING BASES:

(III) DEBARMENT BY THE SECRETARY OF THE DEPARTMENT CONSIDERING THE PROPOSED PROCUREMENT (SEE ASPRI-602 (C) ). HOWEVER, WITH RESPECT TO (III) ABOVE, WHEN IT IS DETERMINED TO BE ESSENTIAL IN THE PUBLIC INTEREST BY THE SECRETARY OF A DEPARTMENT, OR HIS AUTHORIZED REPRESENTATIVE, AN EXCEPTION MAY BE MADE WITH RESPECT TO A PARTICULAR PROCUREMENT ACTION.

SECTION 1-604 LISTS CAUSES FOR WHICH THE SECRETARY OF THE DEPARTMENT OR HIS AUTHORIZED REPRESENTATIVE IS AUTHORIZED TO DEBAR BIDDERS AND PROVIDES THAT," DEBARMENT OF A FIRM OR INDIVIDUAL BY THE SECRETARY OF A DEPARTMENT OR HIS AUTHORIZED REPRESENTATIVE SHALL OPERATE TO DEBAR SUCH FIRM OR INDIVIDUAL THROUGHOUT THE DEPARTMENT OF DEFENSE.'

THE QUOTED REGULATIONS ARE IMPLEMENTED SO FAR AS CONCERNS THE DEPARTMENT OF THE ARMY BY THE ARMY PROCUREMENT PROCEDURE, PERTINENT POSITIONS OF WHICH ARE QUOTED BELOW:

1-600.50 AUTHORITY. AN ASSISTANT JUDGE ADVOCATE GENERAL HAS BEEN DESIGNATED AS THE AUTHORIZED REPRESENTATIVE OF THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS AND RESEARCH AND DEVELOPMENT) FOR PURPOSES OF ADMINISTERING THE PROVISIONS OF PART 6, SECTION I, ASPR AND THIS PROCEDURE

1-603 TREATMENT TO BE ACCORDED FIRMS OR INDIVIDUALS IN DEBARRED OR INELIGIBLE STATUS.

1-603.1 TOTAL RESTRICTIONS.

A. DEBARRED CONTRACTORS WILL NOT BE CARRIED ON ANY BIDDERS' MAILING LIST AND BIDS WILL NOT BE INVITED FROM THEM.

B. IN THE EVENT THAT A BID IS RENDERED BY A DEBARRED CONTRACTOR, IT SHALL BE RECEIVED AND RECORDED. IF THE BID IS LOW, IT WILL THEN BE REJECTED * *

C. NO AWARDS WILL BE MADE TO ANY DEBARRED CONTRACTOR DURING THE PERIODS SPECIFIED FOR DEBARMENT; HOWEVER, WHERE AN AWARD TO A DEBARRED BIDDER IS DEEMED TO BE ESSENTIAL IN THE PUBLIC INTEREST THE PROCURING ACTIVITY DESIRING TO MAKE SUCH AWARD WILL FURNISH A COMPLETE REPORT OF THE CONTEMPLATED PROCUREMENT TOGETHER WITH THE REASONS REQUIRING SUCH AWARD, IN ACCORDANCE WITH APP 1-604B.

1-604B REPORTING PROCEDURES.

REPORTS REQUESTING DEBARMENT WILL BE SUBMITTED IN TRIPLICATE TO THE OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS AND RESEARCH AND DEVELOPMENT) ( ASSISTANT JUDGE ADVOCATE GENERAL) * * *

THE QUOTED PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION HAVE BEEN PUBLISHED IN THE FEDERAL REGISTER AND APPEAR AT 32 C.F.R. 1.602- 1.604. THE PROVISIONS OF THE ARMY PROCUREMENT PROCEDURE QUOTED ABOVE HAVE ALSO BEEN PUBLISHED IN THE FEDERAL REGISTER AND APPEAR AT 32 C.F.R. 590- 600-50 THROUGH 590-604.3. BY THE CLEAR LANGUAGE OF THE NOTICE OF DEBARMENT, YOU RECEIVED ACTUAL NOTICE THAT NO AWARDS OF CONTRACTS WERE TO BE MADE TO YOU THROUGHOUT THE DEPARTMENT OF DEFENSE FOR THE PERIOD OF DEBARMENT. THE ARMED SERVICES PROCUREMENT REGULATION AND THE ARMY PROCUREMENT PROCEDURE ALSO STATED THAT ADMINISTRATIVE DEBARMENT BY ONE AGENCY OF THE DEPARTMENT OF DEFENSE WAS EFFECTIVE AS TO ALL AGENCIES WITHIN THE DEPARTMENT OF DEFENSE. SINCE, AS WE STATED ABOVE, APPLICABLE PROVISIONS OF BOTH OF THOSE REGULATIONS WERE PUBLISHED IN THE FEDERAL REGISTER, YOU ARE CHARGED WITH NOTICE OF THEIR CONTENT JUST AS THOUGH THEY HAD ACTUALLY BEEN BROUGHT TO YOUR ATTENTION. FEDERAL CROP INSURANCE CORPORATION V. MERRILL, 332 U.S. 380.

ALL OFFICERS OF THE GOVERNMENT ARE AGENTS WITH DELEGATED POWERS WHO MUST ACT WITHIN LEGALLY PRESCRIBED LIMITATIONS IF THEIR ACTS ARE TO BIND THE FEDERAL GOVERNMENT. 91 C.J.S. UNITED STATES SECTION 38. THE AUTHORITY OF AN AGENT MAY BE RESTRICTED AS TO THE PERSONS WITH WHOM HE IS AUTHORIZED TO DEAL. 2 AM. JUR. AGENCY SECTION 128. ONE WHO DEALS WITH AN AGENT KNOWING THAT HE IS CLOTHED WITH A CIRCUMSCRIBED AUTHORITY AND THAT HIS ACT TRANSCENDS HIS POWERS, CANNOT HOLD THE AGENT'S PRINCIPAL. SLOCUM V. NEW YORK LIFE INSURANCE COMPANY, 228 U.S. 364, 374.

HERE YOU HAD ACTUAL KNOWLEDGE OF THE CONTRACTING OFFICER'S LACK OF AUTHORITY TO AWARD CONTRACTS TO YOU UNLESS IT HAD BEEN APPROPRIATELY DETERMINED TO BE ESSENTIAL IN THE PUBLIC INTEREST TO DO SO, AS PROVIDED BY THE ABOVE-QUOTED REGULATIONS. BEFORE BEING ENTITLED TO RELY UPON THE AWARD AS BEING VALID, IT WAS THEREFORE INCUMBENT UPON YOU TO ASCERTAIN WHETHER SUCH A DETERMINATION HAD BEEN MADE.

ACCORDINGLY, AND SINCE AS A MATTER OF FACT IT HAD NOT BEEN DETERMINED TO MAKE AN EXCEPTION IN THIS INSTANCE, AS PROVIDED FOR IN THE APPLICABLE REGULATIONS, THERE WAS NO AUTHORITY TO MAKE AN AWARD TO YOU AS A DEBARRED BIDDER, AND THE AWARD AS MADE WAS VOIDABLE AT THE GOVERNMENT'S OPTION. FOLLOWS FURTHER THAT THE CANCELLATION OF THE ORDER ISSUED TO YOU WAS PROPER AND THAT THERE IS NO LEGAL BASIS FOR PAYMENT BY THE GOVERNMENT OF ANY EXPENSES INCURRED BY YOU IN CONNECTION WITH THE TRANSACTION.