B-129539, NOV. 5, 1956

B-129539: Nov 5, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16. WAS AWARDED. THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $663.21. WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $210. WAS ACCEPTED AS TO LOTS NOS. 1 AND 8 ON JUNE 7. IT WAS STATED THAT A REPRESENTATIVE OF THE PECK IRON AND METAL COMPANY. WAS PRESENT AT THE BID OPENING AND THAT. THAT IT WAS ACCEPTING THE MATERIAL COVERED BY LOT NO. 8. ITS PROPOSAL TO FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF LOT NO. 1 WAS NOT ACCEPTABLE TO THE GOVERNMENT. TO THE EFFECT THAT THE CORPORATION WAS WILLING TO FORFEIT ITS ENTIRE BID DEPOSIT OF $210. THE CORPORATION WAS ADVISED THAT IF. NO WRITTEN APPEAL WAS RECEIVED BY THE DISTRICT ENGINEER'S OFFICE.

B-129539, NOV. 5, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE PECK IRON AND METAL COMPANY, INC., PORTSMOUTH, VIRGINIA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA/S/-44-110 CIVENG-56-35, DATED JUNE 7, 1956, WAS AWARDED.

BY INVITATION NO. CIVENG/S/-44-110-56-18, THE NORFOLK DISTRICT, CORPS OF ENGINEERS, NORFOLK, VIRGINIA, REQUESTED BIDS, TO BE OPENED AT 11:00 A.M. ON JUNE 7, 1956, FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHERS, A QUANTITY OF UNUSED PLUMBING SUPPLIES, LOT NO. 1, THE ORIGINAL ACQUISITION COST OF WHICH WAS STATED TO BE $663.21. IN RESPONSE THE PECK IRON AND METAL COMPANY, INC., SUBMITTED A BID DATED MAY 18, 1956, OFFERING TO PURCHASE, AMONG OTHER LOTS, THE PLUMBING SUPPLIES COVERED BY LOT NO. 1 FOR THE PRICE OF $514.30. THE BID OF THE CORPORATION, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $210, WAS ACCEPTED AS TO LOTS NOS. 1 AND 8 ON JUNE 7, 1956.

IN A MEMORANDUM DATED SEPTEMBER 20, 1956, FROM THE DISTRICT ENGINEER, NORFOLK DISTRICT, TO THE DIVISION ENGINEER, NORTHERN ATLANTIC DIVISION, IT WAS STATED THAT A REPRESENTATIVE OF THE PECK IRON AND METAL COMPANY, INC., WAS PRESENT AT THE BID OPENING AND THAT, UPON NOTICING THE DIFFERENCE BETWEEN HIS CORPORATION'S BID ON LOT NO. 1 AND THAT OF THE OTHER BIDDERS, HE CALLED HIS OFFICE BY TELEPHONE; AND THAT ON THE SAME DAY THE CORPORATION SUBMITTED A LETTER REQUESTING THAT IT BE PERMITTED TO WITHDRAW ITS BID ON LOT NO. 1. IN THE LETTER OF JUNE 7, 1956, MR. PECK OF THE PECK IRON AND METAL COMPANY, INC., STATED THAT A REPRESENTATIVE OF THE CORPORATION WHO INSPECTED THE MATERIAL COVERED BY LOT NO. 1 GAVE HIM THE WRONG INFORMATION ON THAT LOT AND THAT AS A RESULT THEREOF HE QUOTED AN EXORBITANT PRICE FOR THE MATERIAL.

BY LETTER DATED JUNE 13, 1956, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT UNDER THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION, IT COULD NOT BE PERMITTED TO WITHDRAW ITS BID ON LOT NO. 1; THAT SINCE LOTS NOS. 1 AND 8 HAD BEEN AWARDED TO THE CORPORATION, IT SHOULD REMIT THE BALANCE DUE UNDER THE CONTRACT FOR THE MATERIAL COVERED BY THOSE LOTS.

BY LETTER DATED JUNE 15, 1956, THE CORPORATION ADVISED THAT IT WISHED TO FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF LOT NO. 1, WHICH IT STATED AMOUNTED TO $102.86; THAT IT WAS ACCEPTING THE MATERIAL COVERED BY LOT NO. 8; AND THAT AFTER DEDUCTING THE AMOUNT OF THE FORFEITURE AND THE PURCHASE PRICE OF LOT NO. 8 FROM ITS BID DEPOSIT OF $210, THERE REMAINED A BALANCE OF $35.84 DUE IT AS A REFUND. IN REPLY THE CONTRACTING OFFICER ADVISED THE CORPORATION BY LETTER DATED JUNE 26, 1956, THAT IN VIEW OF THE PROVISIONS OF PARAGRAPH 4 OF THE GENERAL SALE TERMS AND CONDITIONS, ITS PROPOSAL TO FORFEIT 20 PERCENT OF THE PURCHASE PRICE OF LOT NO. 1 WAS NOT ACCEPTABLE TO THE GOVERNMENT; AND THAT IF THE CORPORATION DID NOT REMIT THE BALANCE DUE UNDER THE CONTRACT AND REMOVE THE PROPERTY COVERED BY LOTS NOS. 1 AND 8 BY JULY 17, 1956, IT WOULD BE DECLARED IN DEFAULT.

IN A LETTER DATED AUGUST 2, 1956, IN WHICH THE ACTING DISTRICT ENGINEER, NORFOLK DISTRICT, REFERRED TO PREVIOUS CORRESPONDENCE OF HIS OFFICE AND TO A VERBAL STATEMENT MADE BY MR. PECK ON JULY 30, 1956, TO THE EFFECT THAT THE CORPORATION WAS WILLING TO FORFEIT ITS ENTIRE BID DEPOSIT OF $210, THE CORPORATION WAS ADVISED THAT IF, WITHIN FIVE DAYS FROM THE DATE OF THE LETTER, NO WRITTEN APPEAL WAS RECEIVED BY THE DISTRICT ENGINEER'S OFFICE, IT WOULD BE THE DECISION OF THE CONTRACTING OFFICER TO READVERTISE FOR SALE THE MATERIALS COVERED BY LOTS NOS. 1 AND 8 AND THAT UNDER THE PROVISIONS OF PARAGRAPH 4 OF THE GENERAL SALE TERMS AND CONDITIONS, ITS BID DEPOSIT OF $210 WOULD BE APPLIED BY THE GOVERNMENT TO ANY LOSS, COST AND EXPENSE OCCASIONED TO THE GOVERNMENT THEREBY. BY LETTER DATED AUGUST 4, 1956, THE CORPORATION APPEALED THE DECISION OF THE CONTRACTING OFFICER AND QUESTIONED THE RIGHT OF THE GOVERNMENT TO HOLD IT RESPONSIBLE FOR MORE THAN 20 PERCENT OF THE VALUE OF ITS BID.

WHILE IT IS NOT SPECIFICALLY SO STATED IN THE DISTRICT ENGINEER'S REPORT, IT SEEMS REASONABLY CLEAR FROM THE FACTS RECITED THEREIN THAT THE CORPORATION'S REQUESTED WITHDRAWAL OF ITS BID ON LOT NO. 1, BECAUSE OF AN ERROR IN THE UNIT PRICE, WAS RECEIVED BY THE CONTRACTING OFFICER PRIOR TO RECEIPT BY THE CORPORATION OF THE NOTICE OF AWARD, AND POSSIBLY PRIOR TO THE MAILING OF THE NOTICE.

IT IS NOT SUFFICIENT IN CASES WHERE BIDS ON SURPLUS PROPERTY ARE OPENED AND THE AMOUNTS OF ALL THE BIDS DISCLOSED, THAT THE HIGH BIDDER MERELY ALLEGE ERROR IN ITS BID IN ORDER TO BE RELIEVED FROM PURCHASING THE MATERIAL ON WHICH IT HAS BID. IN ORDER TO OBTAIN RELIEF IN SUCH CASES, THERE SHOULD BE PRESENTED IMMEDIATELY SUCH PROOF AND EXPLANATION AS TO LEAVE NO ROOM FOR DOUBT THAT A BONA FIDE MISTAKE WAS MADE AND HOW IT OCCURRED. SEE REFINING ASSOCIATES, INC. V. UNITED STATES, 124C.CLS. 115; 9 COMP. GEN. 339; AND 14 ID. 78. WHILE, IN ITS LETTER OF JUNE 7, 1956, THE CORPORATION ATTEMPTED TO EXPLAIN THE ERROR, THERE WAS NOT FURNISHED SUFFICIENT EVIDENCE TO CONCLUSIVELY ESTABLISH THE ALLEGED ERROR. THE ABSTRACT OF BIDS SHOWS THAT THE FIVE OTHER BIDDERS QUOTED PRICES RANGING FROM $166.49 TO $33.56 FOR LOT NO. 1. ALTHOUGH THE BID OF THE PECK IRON AND METAL COMPANY, INC., WAS SOMEWHAT HIGHER THAN THE OTHER BIDS RECEIVED ON LOT NO. 1, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO HAVE PLACED THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN THE BID OF THE CORPORATION ON THE LOT. IN VIEW OF THE WIDE RANGE OF PRICES ORDINARILY RECEIVED ON WASTE, SALVAGE AND SURPLUS PROPERTY--- WELL EXEMPLIFIED IN THE BIDS UNDER THIS INVITATION--- A MERE DIFFERENCE IN THE PRICES BID DOES NOT NECESSARILY PLACE THE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN A BID FOR THE PURCHASE OF SUCH PROPERTY FROM THE GOVERNMENT, AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED TO THE GOVERNMENT. SEE 16 COMP. GEN. 596; 17 ID. 388; ID. 601; ID. 976; 28 ID. 261; ID. 550. HENCE, AT THE TIME THE CORPORATION'S BID WAS ACCEPTED THERE WAS NOTHING BEFORE THE CONTRACTING OFFICER TO SHOW CONCLUSIVELY THAT THE BID AS TO LOT NO. 1 WAS NOT INTENDED OR THAT THE ALLEGATION OF ERROR WAS NOT MERELY TO AVOID THE CONSEQUENCES OF AN ILL-ADVISED BID.

IT IS REPORTED THAT THERE ARE 70 ITEMS IN LOT NO. 1, OF WHICH ONLY 14 HAVE BRASS CONTENT, AND THAT THE TOTAL WEIGHT OF THE BRASS ITEMS COULD HAVE BEEN READILY DETERMINED FROM THE DESCRIPTION OF THE RESPECTIVE ITEMS IN THE INVITATION. THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED WAS UPON THE BIDDER. SEE FRAZIER DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. IF, AS STATED IN ITS LETTER OF JUNE 7, 1956, THE PECK IRON AND METAL COMPANY, INC., INADVERTENTLY OVERESTIMATED THE WEIGHT OF THE BRASS ITEMS IN LOT NO. 1, SUCH ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SEE GRYMES V. SANDERS ET AL., 93 U.S. 55, 61. ANY ERROR THAT WAS MADE IN THE BID OF THE CORPORATION WAS UNILATERAL--- NOT MUTUAL--- AND, THEREFORE, DOES NOT ENTITLE THE CORPORATION TO RELIEF. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 249, AND SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505, 507. FROM THE FACTS RECITED, IT SEEMS CLEAR THAT THE BID SUBMITTED WAS EXACTLY WHAT THE BIDDER INTENDED, EVEN THOUGH IT MAY HAVE BEEN BASED ON A MISUNDERSTANDING BETWEEN ITS EMPLOYEES.

CONCERNING THE CORPORATION'S CONTENTION THAT THE AMOUNT THAT WOULD BE CHARGEABLE TO IT BY REASON OF A DEFAULT WOULD BE LIMITED TO THE AMOUNT OF ITS BID DEPOSIT OF $210, IT SHOULD BE NOTED THAT SUCH BID DEPOSIT WAS FURNISHED IN COMPLIANCE WITH ARTICLE 4 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, WHICH READS IN PERTINENT PART:

"4. BID GUARANTEE.--- THE BIDDER AGREES THAT * * * IN THE EVENT OF ANY DEFAULT BY THE BIDDER OR ANY FAILURE BY THE BIDDER TO COMPLY WITH ALL TERMS AND CONDITIONS OF THIS CONTRACT, ANY DEPOSIT MADE BY THE BIDDER MAY BE APPLIED BY THE GOVERNMENT TO ANY LOSS, COST, AND EXPENSE OCCASIONED TO THE GOVERNMENT THEREBY, INCLUDING ANY LOSS, COST, AND EXPENSE INCURRED IN SELLING THE PROPERTY AND INCLUDING ANY DIFFERENCE BETWEEN THE AMOUNT SPECIFIED IN THE BID AND THE AMOUNT FOR WHICH THE GOVERNMENT MAY SELL THE PROPERTY, IF THE LATTER AMOUNT BE LESS THAN THE FORMER. * * *"

THUS, THE DECLARED PURPOSE OF THE REQUIRED BID DEPOSIT IS TO SAFEGUARD THE GOVERNMENT AGAINST POSSIBLE LOSS WHICH MIGHT RESULT FROM THE BIDDER'S DEFAULT OR FAILURE TO PERFORM. SEE 23 COMP. GEN. 234, IT WAS HELD--- QUOTING FROM THE SYLLABUS--- AS FOLLOWS:

IN DECISION OF THIS OFFICE DATED SEPTEMBER 27, 1943, 23 COMP. GEN. 234, IT WAS HELD--- QUOTING FROM THE SYLLABUS--- AS FOLLOWS.

"IN THE ABSENCE OF EXPRESS OR CLEARLY IMPLIED STIPULATIONS TO THE CONTRARY, A DEPOSIT TO SECURE FAITHFUL PERFORMANCE OF A GOVERNMENT CONTRACT IS REGARDED MERELY AS A GUARANTEE AGAINST SUCH LOSS OR DAMAGE AS IS ACTUALLY OCCASIONED THE GOVERNMENT BY BREACH OF THE CONTRACT, RATHER THAN AS A LIQUIDATION IN ADVANCE OF THE DAMAGES WHICH MIGHT RESULT FROM THE CONTRACTOR'S DEFAULT, SO THAT A BREACH OF THE CONTRACT DOES NOT OF ITSELF GIVE THE GOVERNMENT AN ABSOLUTE RIGHT TO THE AMOUNT DEPOSITED; BUT THE GOVERNMENT MAY EXERCISE ITS COMMON-LAW RIGHT TO RETAIN AND RESORT TO SUCH DEPOSIT FOR APPLICATION OR SET-OFF AGAINST DAMAGES RESULTING FROM DEFAULT.'

IN ITS LETTER OF JUNE 15, 1956, THE PECK IRON AND METAL COMPANY, INC., INDICATED THAT IT WAS WILLING TO ACCEPT THE MATERIAL COVERED BY LOT NO. 8, FOR WHICH IT QUOTED A PRICE OF $71.30 AND ON WHICH LOT NO ERROR WAS ALLEGED BY IT. SINCE, AS STATED IN 23 COMP. GEN. 234, 236, UNDER THE TYPE OF CONTRACT INVOLVED, A BREACH OF THE CONTRACT BY THE CONTRACTOR DOES NOT OF ITSELF GIVE THE GOVERNMENT AN ABSOLUTE RIGHT TO THE AMOUNT DEPOSITED AS A GUARANTEE, IT WOULD APPEAR TO BE PROPER TO APPLY $71.30 OF THE AMOUNT OF $210 DEPOSITED BY THE CORPORATION TOWARDS THE PURCHASE OF LOT NO. 8, IF IT DESIRES TO COMPLETE ITS PURCHASE OF THAT ITEM, AND TO RETAIN THE BALANCE OF $138.70 FOR APPLICATION OR SET-OFF AGAINST SUCH DAMAGES AS MIGHT BE SUSTAINED BY THE GOVERNMENT IN THE RESALE OF LOT NO. 1.

ONE SET OF THE PAPERS IN THE CASE IS BEING RETAINED. THE OTHER PAPERS ARE RETURNED.