B-12960, OCTOBER 28, 1940, 20 COMP. GEN. 216

B-12960: Oct 28, 1940

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HAS RECENTLY ATTACHED TO ALL ITS BIDS A SHEET ENTITLED " SPECIAL CONDITIONS" CONTAINING SEVERAL PROVISIONS WHICH ARE APPARENTLY DESIGNED TO COMPLETELY SAFEGUARD THIS COMPANY AGAINST THE ORDINARY LIABILITIES ENCOUNTERED BY FIRMS ENTERING INTO COMPETITIVE BIDS WITH THE GOVERNMENT. THERE IS ATTACHED A COPY OF THE " SPECIAL CONDITIONS" ENCLOSED WITH BIDS SUBMITTED BY THE KEMP MACHINERY COMPANY. YOUR ADVICE IS REQUESTED AS TO WHETHER BIDS RECEIVED FROM THIS COMPANY SUBJECT TO THESE CONDITIONS. IN CONNECTION WITH BIDS SUBMITTED BY IT ARE AS FOLLOWS: THIS BID DOES NOT NECESSARILY COVER THE PARTICULAR MAKE OF EQUIPMENT SPECIFIED. SIZE AND TYPE IS SHOWN IN OUR BID THE BID COVERS MATERIAL STRICTLY IN ACCORDANCE WITH YOUR SPECIFICATIONS.

B-12960, OCTOBER 28, 1940, 20 COMP. GEN. 216

ADVERTISING - BIDS - QUALIFIED A BID SHOULD BE REJECTED WHERE IT INCLUDES " SPECIAL CONDITIONS" WHICH MATERIALLY QUALIFY THE TERMS OF THE INVITATION TO BID BY (1) RESTRICTING THE GOVERNMENT'S REMEDY TO RESCISSION OF THE CONTRACT AND RETURN OF THE MATERIAL FURNISHED IF, FOR ANY REASON, THE MATERIAL SHOULD BE UNSATISFACTORY; (2) BINDING THE GOVERNMENT TO PAY IN CASH OR CHECK WITHIN 45 DAYS OF THE DATE OF DELIVERY, ANY DISCOUNT PERIOD TO RUN FROM SUCH DATE; AND (3) ATTEMPTING TO THROW ON THE UNITED STATES THE BURDEN OF ESTABLISHING THE CORRECTNESS OF THE BID BEFORE ACCEPTANCE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, UNITED STATES MARITIME COMMISSION, OCTOBER 28, 1940:

THERE HAS BEEN RECEIVED A LETTER DATED OCTOBER 16, 1940, FROM THE CHIEF, PURCHASES AND SALES SECTION, UNITED STATES MARITIME COMMISSION, AS FOLLOWS:

THE KEMP MACHINERY COMPANY, 211 PRESIDENT STREET, BALTIMORE, MARYLAND, A CONSISTENT BIDDER ON INVITATIONS FOR FURNISHING TOOLS AND EQUIPMENT FOR USE ON VESSELS BEING CONSTRUCTED FOR THE UNITED STATES MARITIME COMMISSION, HAS RECENTLY ATTACHED TO ALL ITS BIDS A SHEET ENTITLED " SPECIAL CONDITIONS" CONTAINING SEVERAL PROVISIONS WHICH ARE APPARENTLY DESIGNED TO COMPLETELY SAFEGUARD THIS COMPANY AGAINST THE ORDINARY LIABILITIES ENCOUNTERED BY FIRMS ENTERING INTO COMPETITIVE BIDS WITH THE GOVERNMENT.

IN SEVERAL INSTANCES, THE KEMP MACHINERY COMPANY HAS SUBMITTED LOW BIDS AND IN ORDER TO OBTAIN SUITABLE MATERIAL IN SUFFICIENT TIME TO MEET DELIVERY DATES FOR CERTAIN VESSELS ON WHICH CONSTRUCTION HAS BEEN ADVANCED, THIS OFFICE HAS AWARDED THE ITEMS TO THE KEMP MACHINERY COMPANY.

THERE IS ATTACHED A COPY OF THE " SPECIAL CONDITIONS" ENCLOSED WITH BIDS SUBMITTED BY THE KEMP MACHINERY COMPANY, AND YOUR ADVICE IS REQUESTED AS TO WHETHER BIDS RECEIVED FROM THIS COMPANY SUBJECT TO THESE CONDITIONS, SHOULD BE CONSIDERED IN THE FUTURE, OR WHETHER SUCH BIDS SHOULD BE REJECTED.

THE " SPECIAL CONDITIONS" PROPOSED BY THE KEMP MACHINERY CO. IN CONNECTION WITH BIDS SUBMITTED BY IT ARE AS FOLLOWS:

THIS BID DOES NOT NECESSARILY COVER THE PARTICULAR MAKE OF EQUIPMENT SPECIFIED. THE BID COVERS MATERIAL OF THE MAKE, SIZE, AND TYPE INDICATED IN OUR BID. UNLESS SUCH NOTATION AS TO MAKE, SIZE AND TYPE IS SHOWN IN OUR BID THE BID COVERS MATERIAL STRICTLY IN ACCORDANCE WITH YOUR SPECIFICATIONS. IF THE MATERIAL FURNISHED YOU IN ACCORDANCE WITH OUR BID AND YOUR ACCEPTANCE FOR ANY REASON DOES NOT MEET THE GOVERNMENT REQUIREMENTS, THE GOODS MAY BE RETURNED TO DESTINATION WHICH WE WILL SPECIFY, AND THIS RETURN SHALL CANCEL OUR OBLIGATIONS TO THE GOVERNMENT; IN OTHER WORDS, WE PROPOSE TO FURNISH EQUIPMENT ONLY AS DETAILED IN OUR BID. IF OUR BID DOES NOT TAKE EXCEPTION TO YOUR SPECIFICATIONS AS TO MAKE, SIZE AND TYPE, THE BID COVERS MATERIAL EXACTLY AS SPECIFIED.

TERMS: IF AWARD IS MADE TO US, IT IS WITH THE UNDERSTANDING THAT FUNDS HAVE BEEN APPROPRIATED AND ARE AVAILABLE FOR PAYMENT FOR THE GOODS OR MATERIAL TO BE SUPPLIED, AND OUR TERMS ARE THAT AFTER DELIVERY OF THE GOODS OR EQUIPMENT, PAYMENT SHALL BE MADE WITHIN THE LIMITS OF THE TIME INDICATED ON YOUR FORM, AS TO PAYMENT: SUBJECT TO ANY DISCOUNT INDICATED THEREON FOR PREPAYMENT. PAYMENT MUST BE MADE TO US WITHIN THE MAXIMUM LIMIT OF 45 DAYS AFTER DELIVERY, EITHER IN CASH, OR BY GOVERNMENT CHECK MADE PAYABLE TO US AND MAILED TO US. NO OTHER TERMS SHALL APPLY AND IF PAYMENT IS NOT SO MADE, THE GOVERNMENT SHALL BE IN DEFAULT.

BECAUSE OF THE ACTION OF RECENT LAWS FIXING THE MINIMUM WAGE RATES, FREIGHT RATES, AND OTHER CONDITIONS ENTERING INTO THE COST OF PRODUCTION OF MECHANICAL EQUIPMENT, THE CORRECT VALUE OF EQUIPMENT AND SUPPLIES SHALL CONSTITUTE WEIGHT OF EVIDENCE TO THIS EFFECT; CONSEQUENTLY ON ACCOUNT OF THE HUMAN ELEMENT INVOLVED IN PREPARING BIDS, SHOULD THIS BID BE NOTICEABLY LOWER, OR HIGHER, THAN ONE OR MORE OTHER BIDS RECEIVED, IT SHALL CONSTITUTE NOTICE TO THE PURCHASING OFFICER THAT AN UNINTENTIONAL ERROR HAS BEEN MADE AND AWARD TO US BY THE PURCHASING OFFICER WITHOUT FIRST ASKING US TO CONFIRM THE PRICE BID, SHALL CONSTITUTE AN EFFORT ON THE PART OF THE CONTRACTING OFFICER TO TAKE UNDUE OR ILLEGAL ADVANTAGE OF THE ERROR.

THE FIRST PARAGRAPH OF THE CONDITIONS APPARENTLY WOULD RESTRICT THE GOVERNMENT'S REMEDY TO A RESCISSION OF THE CONTRACT AND THE RETURN OF THE MATERIAL FURNISHED, IN CASE THE MATERIAL FURNISHED BY THE CONTRACTOR IS, FOR ANY REASON, UNSATISFACTORY. THE SECOND PARAGRAPH WOULD BIND THE GOVERNMENT TO PAY IN CASH OR CHECK WITHIN 45 DAYS OF DELIVERY, ANY DISCOUNT PERIOD TO RUN FROM DELIVERY OF THE MATERIAL. THOSE STIPULATIONS ARE MATERIAL QUALIFICATIONS OF THE CONDITIONS INCORPORATED IN STANDARD FORM NO. 33, INVITATION, BID, AND ACCEPTANCE (SHORT FORM CONTRACT), SPECIFICALLY CONDITIONS NOS. 2 AND 3.

BY THE THIRD PARAGRAPH OF THE " SPECIAL CONDITIONS" THE BIDDER ATTEMPTS TO THROW ON THE UNITED STATES THE BURDEN OF ESTABLISHING THE CORRECTNESS OF THE BID BEFORE ACCEPTANCE. SUCH A CONDITION HAS THE APPARENT EFFECT OF RESERVING TO THE BIDDER THE RIGHT TO REFUSE AWARD AFTER IT HAS BEEN DETERMINED THAT ITS BID IS LOW WITH RESPECT TO PURCHASES OR HIGH WITH RESPECT TO SALES; AND WOULD PUT A PREMIUM ON LAXITY AND CARELESSNESS ON THE PART OF THE BIDDER FOR GOVERNMENT BUSINESS.

SUCH CONDITIONS MATERIALLY QUALIFY THE TERMS OF THE CONTRACT OFFERED TO OTHER BIDDERS; AND THE ACCEPTANCE OF A BID IN WHICH THOSE CONDITIONS ARE INCORPORATED IS MANIFESTLY UNFAIR TO THOSE BIDDERS WHO HAVE NOT SIMILARLY QUALIFIED THEIR BIDS. (SEE 17 COMP. GEN. 864; 19 ID. 450; 20 ID. 4.)

YOU ARE ADVISED, THEREFORE, THAT THE INCORPORATION IN A BID OF THE QUOTED " SPECIAL CONDITIONS" SO MATERIALLY QUALIFIES THE TERMS OF THE INVITATION TO BID AS TO PRECLUDE ITS CONSIDERATION, AND ANY SUCH BIDS SHOULD BE REJECTED.