B-132763, AUG. 22, 1957

B-132763: Aug 22, 1957

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THE CONTRACTOR SHALL FURNISH SATISFACTORY EVIDENCE TO THE CONTRACTING OFFICER THAT THE LIABILITY REFERRED TO HEREIN IS ADEQUATELY COVERED BY INSURANCE TO THE EXTENT OF NOT LESS THAN $25. WAS AWARDED THE CONTRACT SUBJECT TO FURNISHING A PERFORMANCE BOND AND EVIDENCE OF INSURANCE REQUIRED BY SPECIAL CONDITION 5. IT IS ASSUMED THAT THE COVERAGE WILL BE RENEWED BEFORE ITS EXPIRATION. IT IS A WELL-ESTABLISHED RULE THAT EVERY TORTFEASOR IS SUBJECT TO TORT LIABILITY. 298: "* * * THEY ARE MEASURES SUCH AS RESPONSIBLE CONTRACTORS OBSERVE AND CHARGE TO OVERHEAD EXPENSES AS A MATTER OF COURSE. THE BIDDER'S STATEMENT THAT IT PREFERS TO BE RESPONSIBLE DIRECTLY FOR ANY PROPERTY DAMAGE THAT MAY OCCUR AS A RESULT OF ITS NEGLIGENCE IS TANTAMOUNT TO A STATEMENT OF SELF-INSURANCE WHICH IN THIS CASE MAY BE MAY BE TREATED AS SUBSTANTIAL COMPLIANCE WITH SPECIAL CONDITION 5 OF THE SPECIFICATIONS.

B-132763, AUG. 22, 1957

TO JOHN S. HERRING, M.D., MANAGER, VETERANS ADMINISTRATION HOSPITAL:

IN YOUR LETTER DATED JULY 29, 1957, REFERENCE 5258-134, YOU REQUESTED A DECISION WHETHER A CONTRACT FOR ELEVATOR MAINTENANCE SERVICE MAY BE AWARDED TO A BIDDER WHO HAS FAILED TO COMPLY STRICTLY WITH THE INVITATION REQUIREMENT FOR LIABILITY AND INSURANCE COVERAGE.

INVITATION NO. 58-14, DATED JUNE 18, 1957, SOLICITED BIDS FOR MAINTENANCE SERVICE ON OTIS PASSENGER AND DUMB WAITER ELEVATORS "FOR THE PERIOD BEGINNING JULY 1, 1956 (SIC) AND ENDING JUNE 30, 1957 (SIC).' SPECIAL CONDITION 5 OF THE INVITATION PROVIDED:

"LIABILITY AND INSURANCE COVERAGE: THE CONTRACTOR SHALL BE LIABLE FOR INJURIES OR DAMAGES TO PERSONS OR PROPERTY DUE TO ACTS OF (SIC) OMISSIONS OF HIS OR ANY OF HIS EMPLOYEES WHILE PERFORMING WORK UNDER THIS CONTRACT. THE CONTRACTOR SHALL FURNISH SATISFACTORY EVIDENCE TO THE CONTRACTING OFFICER THAT THE LIABILITY REFERRED TO HEREIN IS ADEQUATELY COVERED BY INSURANCE TO THE EXTENT OF NOT LESS THAN $25,000.00.'

OTIS ELEVATOR COMPANY, THE SOLE BIDDER, WAS AWARDED THE CONTRACT SUBJECT TO FURNISHING A PERFORMANCE BOND AND EVIDENCE OF INSURANCE REQUIRED BY SPECIAL CONDITION 5. THE PERFORMANCE BOND HAS BEEN SUBMITTED. ON JULY 18, 1957, THE BIDDER'S INSURANCE FOR INJURIES TO PERSONS UNTIL JANUARY 1, 1958, AND IT IS ASSUMED THAT THE COVERAGE WILL BE RENEWED BEFORE ITS EXPIRATION. HOWEVER, BY LETTER DATED JULY 18, 1957, THE BIDDER ADVISED THAT IT DOES NOT CARRY CONTRACTOR'S PROPERTY DAMAGE LIABILITY INSURANCE BECAUSE IT PREFERS TO BE RESPONSIBLE DIRECTLY FOR ANY PROPERTY DAMAGE THAT MAY OCCUR AS A RESULT OF ITS NEGLIGENCE.

IT IS A WELL-ESTABLISHED RULE THAT EVERY TORTFEASOR IS SUBJECT TO TORT LIABILITY. THEREFORE, INASMUCH AS THE INVITATION SOLELY REQUIRED THAT THE BIDDER BE INSURED, THE INSURANCE WOULD APPEAR TO BE FOR THE PROTECTION OF THE CONTRACTOR AND ACTUALLY WOULD CONFER NO BENEFIT ON THE GOVERNMENT.

IN REGARD TO STIPULATIONS WHICH REQUIRE CONTRACTORS TO FURNISH PUBLIC LIABILITY INSURANCE IN THE NATURE OF THAT IN THE INSTANT CASE, IT HAS BEEN STATED IN 18 COMP. GEN. 285; 298:

"* * * THEY ARE MEASURES SUCH AS RESPONSIBLE CONTRACTORS OBSERVE AND CHARGE TO OVERHEAD EXPENSES AS A MATTER OF COURSE. AN EXPRESS CONTRACTUAL STIPULATION REQUIRING THEIR OBSERVANCE DOES NO MORE THAN TO REQUIRE OTHER CONTRACTORS TO MEET USUAL STANDARDS OF RESPONSIBILITY.'

THE BIDDER'S STATEMENT THAT IT PREFERS TO BE RESPONSIBLE DIRECTLY FOR ANY PROPERTY DAMAGE THAT MAY OCCUR AS A RESULT OF ITS NEGLIGENCE IS TANTAMOUNT TO A STATEMENT OF SELF-INSURANCE WHICH IN THIS CASE MAY BE MAY BE TREATED AS SUBSTANTIAL COMPLIANCE WITH SPECIAL CONDITION 5 OF THE SPECIFICATIONS, IF THE BIDDER IS DETERMINED TO BE FINANCIALLY AND OTHERWISE RESPONSIBLE.