B-139023, APR. 17, 1957

B-139023: Apr 17, 1957

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 28 AND MARCH 19. THE REPORT FURNISHED IN THE MATTER BY THE GENERAL SERVICES ADMINISTRATION SHOWS THAT IN JUNE 1956 AN ORDER WAS RECEIVED FROM THE INTERNATIONAL COOPERATION ADMINISTRATION TO PROCURE A NUMBER OF DESPARATE ITEMS. ALL ITEMS WERE INCLUDED ON ONE INVITATION FOR BIDS ISSUED ON JULY 10. NUMBER OF BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THE BID FROM THE POTTER'S CAMERA STORE. WHICH WAS MADE ON AN "ALL OR NONE" BASIS. WAS FOUND TO BE LOW. A CONTRACT WAS AWARDED TO THAT FIRM FOR ALL ITEMS ON OCTOBER 3. IT IS FURTHER REPORTED THAT SATISFACTORY DELIVERIES HAVE BEEN MADE ON MOST OF THE CONTRACT ITEMS. THE CONTRACTOR HAS REFUSED TO DELIVER ARTICLES MEETING SPECIFICATION REQUIREMENTS AND THE CONTRACT AS TO THESE ITEMS WAS TERMINATED FOR DEFAULT.

B-139023, APR. 17, 1957

TO SMITH AND WESSON, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 28 AND MARCH 19, 1957, RELATIVE TO YOUR BID SUBMITTED UNDER INVITATION FOR BIDS NO. P10-30- 79-120-5-60243, ISSUED ON JULY 10, 1956, BY THE EMERGENCY PROCUREMENT SERVICE, GENERAL SERVICES ADMINISTRATION, WASHINGTON, D.C.

THE REPORT FURNISHED IN THE MATTER BY THE GENERAL SERVICES ADMINISTRATION SHOWS THAT IN JUNE 1956 AN ORDER WAS RECEIVED FROM THE INTERNATIONAL COOPERATION ADMINISTRATION TO PROCURE A NUMBER OF DESPARATE ITEMS, INCLUDING PHOTOGRAPHIC EQUIPMENT AND FIREARMS. HOWEVER, IN VIEW OF THE COMMON DESTINATION AND POSSIBLE CONVENIENCE IN PACKING AND SHIPPING, ALL ITEMS WERE INCLUDED ON ONE INVITATION FOR BIDS ISSUED ON JULY 10, 1956. NUMBER OF BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THE BID FROM THE POTTER'S CAMERA STORE, BROOKLYN, NEW YORK, WHICH WAS MADE ON AN "ALL OR NONE" BASIS, WAS FOUND TO BE LOW. ACCORDINGLY, A CONTRACT WAS AWARDED TO THAT FIRM FOR ALL ITEMS ON OCTOBER 3, 1956. IT IS FURTHER REPORTED THAT SATISFACTORY DELIVERIES HAVE BEEN MADE ON MOST OF THE CONTRACT ITEMS. HOWEVER, ON SEVERAL ITEMS, INCLUDING REVOLVERS, THE CONTRACTOR HAS REFUSED TO DELIVER ARTICLES MEETING SPECIFICATION REQUIREMENTS AND THE CONTRACT AS TO THESE ITEMS WAS TERMINATED FOR DEFAULT. ON FEBRUARY 21, 1957, AN INVITATION FOR BIDS WAS ISSUED FOR THE ITEMS WHICH THE CONTRACTOR REFUSED TO DELIVER.

YOU PROTEST THE ISSUANCE OF THE NEW INVITATION FOR THE DEFAULTED ITEMS ON THE BASIS THAT SINCE THE ORIGINAL LOW BIDDER DID NOT MEET THE CONTRACTUAL REQUIREMENTS, THE AWARD SHOULD BE TRANSFERRED TO YOU COMPANY, THE NEXT LOWEST BIDDER. YOU CONSIDER THAT YOU, AS THE ORIGINAL SECOND LOW BIDDER, HAVE A VALID CLAIM TO A CONTRACT FOR THE REVOLVERS, AND THAT IT WOULD BE POINTLESS FOR YOU TO BID A SECOND TIME ON THE SAME ARTICLE INASMUCH AS YOUR COMPETITORS ARE FULLY AWARE OF YOUR ORIGINAL BID PRICE.

UNDER THE TERMS OF THE ORIGINAL CONTRACT, THE DEFAULTING CONTRACTOR IS LIABLE TO THE GOVERNMENT IN DAMAGES FOR ANY BREACH THEREOF. GENERALLY THE MEASURE OF DAMAGES IN THIS TYPE OF CASE IS THE DIFFERENCE BETWEEN THE CONTRACT PRICE AND THE MARKET PRICE AT THE TIME OF THE BREACH AS ESTABLISHED BY BIDS RECEIVED WITHIN A REASONABLE TIME ON THE GOODS INVOLVED. IT IS, THEREFORE, THE GOVERNMENT'S DUTY TO USE REASONABLE CARE AND DILIGENCE TO MITIGATE DAMAGES DUE FROM THE DEFAULTING CONTRACTOR BY REASON OF THE GOVERNMENT'S PROCUREMENT OF THE GOODS FROM ANOTHER SOURCE.

IN VIEW OF THE FACT THAT THE QUOTATIONS RECEIVED UNDER THE FIRST INVITATION WERE OVER SIX MONTHS OLD, THE GENERAL SERVICES ADMINISTRATION BELIEVED THAT IT WAS NECESSARY TO REQUEST NEW QUOTATIONS; OTHERWISE, THE GOVERNMENT'S CLAIM FOR DAMAGES MIGHT BE SUCCESSFULLY DEFENDED BY THE DEFAULTING CONTRACTOR ON THE GROUND THAT THE ARTICLES COULD HAVE BEEN PURCHASED ELSEWHERE AT A LOWER PRICE.

IN THE CIRCUMSTANCES, WE PERCEIVE NO LEGAL BASIS TO OBJECT TO THE ACTION TAKEN BY THE GENERAL SERVICES ADMINISTRATION IN THE MATTER.