B-134246, NOV. 21, 1957

B-134246: Nov 21, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 29. DA 36-030-QM-8682 WAS AWARDED. NINE OTHER BIDS WERE RECEIVED ON THE PROJECT RANGING FROM $22. THE BID OF THE CORPORATION WAS ACCEPTED ON OCTOBER 15. THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT THERE WAS NO PROVISION IN THE CONTRACT FOR THE ISSUANCE OF EXEMPTION CERTIFICATES FOR FEDERAL. ALL TERMS AND CONDITIONS OF THE CONTRACT WERE MADE KNOWN TO THE CORPORATION. THE CORPORATION STATED THAT IT HAD BEEN ITS PREVIOUS EXPERIENCE AS A SUBCONTRACTOR THAT TAXES WERE NOT REQUIRED TO BE PAID ON CONTRACTS FOR THE GOVERNMENT. THAT THE FAILURE TO ADD SUCH TAXES WAS THE RESULT OF A MISTAKE ON ITS PART. THE CORPORATION ADVISED THE CONTRACTING OFFICER OF THE MANNER IN WHICH ITS ORIGINAL BID WAS COMPUTED.

B-134246, NOV. 21, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 29, 1957, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY (LOGISTICS), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH S. KANE AND SON, INC., PHILADELPHIA, PENNSYLVANIA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA 36-030-QM-8682 WAS AWARDED.

THE PHILADELPHIA QUARTERMASTER DEPOT, PHILADELPHIA, PENNSYLVANIA, BY INVITATION NO. QM-36-030-57-107, REQUESTED BIDS FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE INSTALLATION OF A MECHANICAL VENTILATING SYSTEM IN BUILDING NO. 6 AT THE DEPOT. IN RESPONSE S. KANE AND SON, INC., SUBMITTED A BID DATED SEPTEMBER 4, 1956, OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $21,139. NINE OTHER BIDS WERE RECEIVED ON THE PROJECT RANGING FROM $22,053 TO $36,189. THE BID OF THE CORPORATION WAS ACCEPTED ON OCTOBER 15, 1956.

IN A LETTER DATED DECEMBER 20, 1956, THE CORPORATION ADVISED THE CONTRACTING OFFICER THAT IT HAD BEEN REQUESTED BY ITS MATERIAL SUPPLIERS TO FURNISH "COPIES OF EXCISE TAX EXEMPTION CERTIFICATES, ETC., " AND REQUESTED THAT HE FORWARD THE CERTIFICATES TO THE CORPORATION AT HIS EARLIEST CONVENIENCE. BY LETTER DATED JANUARY 15, 1957, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT THERE WAS NO PROVISION IN THE CONTRACT FOR THE ISSUANCE OF EXEMPTION CERTIFICATES FOR FEDERAL, STATE AND LOCAL TAXES; THAT AT THE TIME OF THE ISSUANCE OF THE INVITATION, ALL TERMS AND CONDITIONS OF THE CONTRACT WERE MADE KNOWN TO THE CORPORATION; AND THAT PROCUREMENT REGULATIONS DO NOT PROVIDE FOR ISSUANCE OF EXEMPTION CERTIFICATES FOR CONSTRUCTION CONTRACTS.

BY LETTER DATED APRIL 12, 1957, THE CORPORATION REQUESTED THAT IT BE REIMBURSED THE AMOUNT OF $444.12, REPRESENTING A MANUFACTURER'S FEDERAL EXCISE TAX OF $181.75 ON THE ELECTRIC FANS AND A 3 PERCENT PENNSYLVANIA STATE SALES AND USE TAX OF $262.37 ON CERTAIN ELECTRICAL EQUIPMENT, WHICH, IT ALLEGED, IT HAD PAID TO ITS SUPPLIERS. THE CORPORATION STATED THAT IT HAD BEEN ITS PREVIOUS EXPERIENCE AS A SUBCONTRACTOR THAT TAXES WERE NOT REQUIRED TO BE PAID ON CONTRACTS FOR THE GOVERNMENT; THAT WHEN IT HAD SUBMITTED ITS BID IT HAD NEGLECTED TO ADD TAXES TO THE BID PRICE, AND THAT THE FAILURE TO ADD SUCH TAXES WAS THE RESULT OF A MISTAKE ON ITS PART. LETTER DATED APRIL 30, 1957, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT REGULATIONS DO NOT PERMIT THE GRANTING OF TAX EXEMPTION CERTIFICATES UNDER THE TERMS OF THE SUBJECT CONTRACT, BUT THAT IF IT WISHED TO PURSUE THE MATTER FURTHER, IT SHOULD BE DONE UPON THE BASIS OF ALLEGING A "MISTAKE IN BID AFTER AWARD.'

BY LETTER DATED MAY 2, 1957, THE CORPORATION ADVISED THE CONTRACTING OFFICER OF THE MANNER IN WHICH ITS ORIGINAL BID WAS COMPUTED, AND IT SUBMITTED ITS WORKSHEET AND A DUPLICATE COPY OF AN INVOICE RECEIVED FROM ONE OF ITS SUPPLIERS WHICH SHOWS A MANUFACTURER'S EXCISE TAX ASSESSMENT OF $181.75 AND A 3 PERCENT PENNSYLVANIA STATE SALES TAX OF $159 ON THE EQUIPMENT COVERED BY THE INVOICE. IN A LETTER DATED MAY 15, 1957, THE CONTRACTING OFFICER ADVISED THE CORPORATION THAT THE DATA SUBMITTED WITH ITS LETTER OF MAY 2, 1957, WAS NOT SUFFICIENT TO WARRANT REIMBURSEMENT OF THE TAXES PAID BY IT TO ITS SUPPLIERS, BUT THAT IF IT DESIRED IT COULD FILE A FORMAL CLAIM, ADDRESSED TO THE GENERAL ACCOUNTING OFFICE, WHICH WOULD BE FORWARDED TO HIGHER AUTHORITY FOR CONSIDERATION.

IN A LETTER DATED MAY 17, 1957, ADDRESSED TO THE GENERAL ACCOUNTING OFFICE, THE CORPORATION REQUESTED THAT IT BE REIMBURSED THE AMOUNT OF $441.12, WHICH, IT STATED, REPRESENTS THE AMOUNT OF THE FEDERAL EXCISE TAXES AND PENNSYLVANIA STATE SALES AND USE TAXES PAID TO ITS SUPPLIERS. SUBSEQUENTLY, THE CORPORATION ADVISED, BY TELEPHONE, THAT THE AMOUNT OF ITS CLAIM SHOULD BE REDUCED TO $430.42.

THE DECISIONS OF OUR OFFICE CONSISTENTLY HAVE HELD THAT THE FORMULATION, PREPARATION AND SUBMISSION OF A BID FOR A GOVERNMENT CONTRACT IS SOLELY THE RESPONSIBILITY OF THE BIDDER; THAT, IN THE ABSENCE OF AN AFFIRMATIVE SHOWING ON THE FACE OR IN THE BODY OF A SUBMITTED BID THAT THE FEDERAL EXCISE TAX HAS BEEN EXCLUDED FROM THE BID PRICE, THE TAX, TOGETHER WITH ALL OTHER ELEMENTS OF COST AND PROFIT, IS PRESUMED TO BE INCLUDED; THAT BIDS ARE FOR CONSIDERATION AND EVALUATION AS SUBMITTED, BEING FOR ACCEPTANCE OR REJECTION, AS THE CASE MAY BE, ON THAT BASIS; THAT IF, THEREAFTER, IT DEVELOPS THAT A BIDDER THROUGH INADVERTENCE, NEGLIGENCE OR OTHERWISE, HAS OMITTED FROM OR INCLUDED IN HIS BID SOME PROVISION TO HIS DETRIMENT, THE CONSEQUENCE THEREOF MUST BE BORNE BY HIM; AND THAT NO SUBSEQUENT STATEMENT OF A CONTRACTOR THAT THE PRICES ACTUALLY SUBMITTED WERE EXCLUSIVE OF THE TAX MAY BE ACCEPTED AS JUSTIFYING THE ISSUANCE OF TAX EXEMPTION CERTIFICATES. SEE 19 COMP. GEN. 1021; 18 ID. 465; 17 ID. 1039; 16 ID. 1021, ID. 1054.

THE INVITATION FOR BIDS DID NOT CONTAIN A TAX CLAUSE RELATIVE TO THE INCLUSION IN OR THE EXCLUSION OF FEDERAL, STATE AND LOCAL TAXES FROM THE BID PRICE. IF IT WAS THE CORPORATION'S INTENTION TO SUBMIT THE BID ON A TAX EXCLUSIVE BASIS AND TO CLAIM TAX EXEMPTION CERTIFICATES REPRESENTING THE AMOUNT OF THE APPLICABLE FEDERAL EXCISE TAX AND REIMBURSEMENT OF THE AMOUNT OF THE APPLICABLE STATE TAXES IN ADDITION TO THE QUOTED PRICE, THAT FACT SHOULD HAVE BEEN MADE KNOWN BY THE CORPORATION WHEN THE BID WAS SUBMITTED. THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON NOTICE OF ERROR PRIOR TO THE ACCEPTANCE OF THE BID. SO FAR AS THE PRESENT RECORD SHOWS THE ACCEPTANCE OF THE BID WAS IN GOOD FAITH--- NO ERROR HAVING BEEN ALLEGED BY THE CORPORATION UNTIL AFTER AWARD. THE ACCEPTANCE OF THE BID, IN THE CIRCUMSTANCES INVOLVED, CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

THE RESPONSIBILITY FOR THE PREPARATION OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION WAS UPON THE BIDDER. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163. IT IS CLEAR THAT SUCH ERROR AS WAS MADE IN THE BID OF THE CORPORATION WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR OVERSIGHT IN FAILING TO STIPULATE IN ITS BID THAT ITS BID PRICE WAS EXCLUSIVE OF ANY FEDERAL, STATE OR LOCAL TAXES, AND WAS IN NO WAY INDUCED OR CONTRIBUTED TO BY THE GOVERNMENT. SEE GRYMES V. SANDERS, ET AL., 93 U.S. 56, 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.

ACCORDINGLY, THERE APPEARS NO LEGAL BASIS FOR MODIFYING THE PRICE SPECIFIED IN CONTRACT NO. DA 36-030-QM-8682.

THE CONTRACTING OFFICER'S STATEMENT OF SEPTEMBER 16, 1957, AND A DUPLICATE SET OF THE OTHER ..END :