B-129223, OCT. 2, 1956

B-129223, OCT. 2, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 13, 1956, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), INQUIRING AS TO THE LIABILITY, IF ANY, OF MR. LEON SIEGAL, BRIGHTON, MASSACHUSETTS, ARISING OUT OF DEFAULTS UNDER SALES CONTRACTS NOS. O.I. 36-028-55-859S AND O.I. 36 -028A-55-53S AWARDED ON MARCH 23 AND JULY 25, 1955, RESPECTIVELY, BY THE NEW CUMBERLAND GENERAL DEPOT, PENNSYLVANIA.

IT APPEARS THAT BY INVITATION NO. 36-028-S-55-10, ISSUED FEBRUARY 16, 1955, THE CONTRACTING OFFICER FOR THE NEW CUMBERLAND GENERAL DEPOT SOLICITED PROPOSALS ON NUMEROUS ITEMS OF MISCELLANEOUS SURPLUS SUPPLIES, INCLUDING ITEMS NOS. 43 AND 68, CONSISTING, RESPECTIVELY, OF A LOT OF 10,000 UNUSED SKI AND MOUNTAIN GOGGLES, AND 21 PAIRS OF MOUNTAIN SKIS, AS THEREIN DESCRIBED. ON MARCH 23, 1955, BOTH OF THESE ITEMS WERE AWARDED MR. LEON SIEGAL ON HIS HIGH BIDS OF $2,600 AND $115.50, RESPECTIVELY, MAKING A TOTAL OF $2,715.50 FOR THE TWO ITEMS. MR. SIEGAL'S PROPOSAL WAS ACCOMPANIED BY A BID DEPOSIT OF $1,941, OR APPROXIMATELY 20 PERCENT OF THE TOTAL AMOUNT OF HIS BID (ON THESE AND OTHER ITEMS) AS REQUIRED BY THE TERMS OF THE INVITATION, LEAVING A BALANCE OF $774.50 DUE UNDER HIS CONTRACT. ON MARCH 16, 1955, 200 PAIRS OF THE GOGGLES WERE SHIPPED TO MR. SIEGAL. DESPITE SEVERAL ADMINISTRATIVE DEMANDS MADE UPON HIM FOR PAYMENT OF THE BALANCE OF $774.50 AND REMOVAL OF THE REMAINDER OF THE ITEMS, MR. SIEGAL NEVERTHELESS FAILED TO COMPLETE HIS CONTRACT, ALLOWING THE UNDELIVERED PROPERTY TO REMAIN IN THE GOVERNMENT'S WAREHOUSE AT NEW CUMBERLAND.

AFTER THE EXPIRATION OF SEVERAL MONTHS, THE REMAINING 9,800 PAIRS OF MOUNTAIN GOGGLES WERE INCLUDED WITH A GROUP OF OTHER MISCELLANEOUS SUPPLIES WHICH WERE OFFERED FOR SALE BY THE NEW CUMBERLAND GENERAL DEPOT UNDER ITS INVITATION NO. 36-028-S-55-23, ISSUED JUNE 28, 1955. IT APPEARS THAT THIS ITEM OF GOGGLES, DESIGNATED IN THE SALES CATALOG AS ITEM NO. 54, WAS AWARDED ON AUGUST 2, 1955, TO ONE CARL H. MILLER, 1123 BROADWAY, NEW YORK CITY, BY VIRTUE OF HIS HIGH BID THEREON OF $3,050, OR $450 MORE THAN THE AMOUNT QUOTED FOR THE LOT BY THE DEFAULTING CONTRACTOR, LEON SIEGAL. THIS BID WAS ACCOMPANIED BY A 20 PERCENT BID DEPOSIT, AMOUNTING TO $610, AS REQUIRED BY THE TERMS OF THE INVITATION. MR. MILLER LIKEWISE DEFAULTED ON HIS CONTRACT, AND EVENTUALLY THE ITEMS OF GOGGLES AND SKIS, HERE INVOLVED, WERE DISPOSED OF BY THE GOVERNMENT FOR A TOTAL OF $881.30.

THE DETERMINATION OF THE DEFAULTING CONTRACTORS' LIABILITY FOR THESE DEFAULTS IS COMPLICATED BY THE FACT THAT, AS THE RESULT OF INFORMATION RECEIVED IN THE LATTER PART OF AUGUST 1955, IT HAS BEEN DETERMINED THAT MESSRS. SIEGAL AND MILLER ARE ONE AND THE SAME PERSON, BOTH OF THE ACCEPTED PROPOSALS WHICH RESULTED IN THE AFORESAID DEFAULTED CONTRACTS HAVING BEEN SUBMITTED BY ONE PARTY ONLY, MR. LEON SIEGAL OF BRIGHTON, MASSACHUSETTS. JUST WHAT HIS PURPOSE WAS IN OUTBIDDING HIMSELF FOR THE SAME ITEM OF GOGGLES, AS ADVERTISED UNDER THE ORIGINAL AND THE RESALE INVITATIONS, IS NOT APPARENT, BUT FROM A TELEPHONE CALL RECEIVED BY THE DISPOSAL OFFICER SOME TIME AFTER THE SECOND AWARD, PURPORTEDLY FROM MR. SIEGAL'S BROTHER, IT SEEMS LIKELY THAT THIS PROCEDURE WAS ADOPTED AS A MEANS OF OBTAINING MORE TIME TO RAISE THE BALANCE OF THE FUNDS REQUIRED TO COMPLETE THE PURCHASE OF THE GOGGLES. FURTHERMORE, THERE IS NOTHING OF RECORD WHICH WOULD INDICATE THAT MR. SIEGAL EVER HAS BEEN ADJUDGED INCOMPETENT, OR THAT HE WAS IN FACT INCAPABLE OF CONDUCTING ORDINARY BUSINESS TRANSACTIONS.

AT THE TIME OF THE SECOND SALE, THE CONTRACTING OFFICER HAD NO NOTICE OF ANY FACTS WHICH MADE HIS ACCEPTANCE OF THE "MILLER" BID IMPROPER, ALTHOUGH IT MAY BE THAT HE WOULD HAVE BEEN JUSTIFIED IN REJECTING IT IF HE HAD KNOWN THAT IT WAS IN FACT THE BID OF SIEGAL, WHOSE PRIOR DEFAULT MIGHT HAVE BEEN CONSIDERED AS ESTABLISHING HIS LACK OF RESPONSIBILITY. BUT SINCE IT WAS SIEGAL'S OWN CONCEALMENT OF HIS IDENTITY WHICH PREVENTED THE CONTRACTING OFFICER FROM KNOWING THE TRUE FACTS, AND SINCE THE "MILLER" BID APPEARS TO HAVE BEEN SUBMITTED DELIBERATELY AS A WAY OF GAINING MORE TIME, WE ARE OF OPINION THAT THE SECOND SALE SHOULD BE CONSIDERED AS VALID AND BINDING. IT FOLLOWS, THEREFORE, THAT THE TWO DEPOSITS SHOULD BE APPLIED AGAINST THE DEFICIENCY MEASURED BY THE DIFFERENCE BETWEEN THE SECOND SALE PRICE OF $3,050 AND THE AMOUNT REALIZED ON THE SUBSEQUENT RESALE; IN ADDITION TO THE DEFICIENCY RESULTING FROM THE RESALE OF ITEM 68. THE BALANCE, APPARENTLY OF $266.80, SHOULD BE REFUNDED TO MR. SIEGAL.