B-140182, AUG. 5, 1959

B-140182: Aug 5, 1959

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 24. THE PURCHASE ORDER WAS ISSUED TO YOU ON JUNE 26. SUBSEQUENT TO THE AWARD IT WAS FOUND THAT IN CONSIDERING THE BIDS WHICH WERE RECEIVED. WAS THE TOTAL DIFFERENCE IN THE BIDS INSTEAD OF THE DIFFERENCE IN THE UNIT PRICES ONLY AND. YOU WERE ADVISED BY TELEPHONE ON JULY 15. THAT AN ERROR HAD BEEN MADE IN AWARDING ITEM NO. 8012 TO YOU AND LATER YOU WERE ADVISED NOT TO INCUR ANY RESPONSIBILITY WITH RESPECT TO PERFORMANCE. THE ITEM ULTIMATELY WAS CANCELED FROM THE PURCHASE ORDER AND NO SUBSEQUENT ORDER WAS ISSUED FOR THE CABINETS AS THE REQUIREMENT THEREFOR NO LONGER EXISTED. ADVANCES THE CONTENTION THAT THE LOW BID OF $58.50 WAS NOT THE LOWEST CORRECT BID RECEIVED SINCE THE CABINET OFFERED BY THAT BID WAS OF A DIFFERENT MANUFACTURE AND NOT OF THE REQUIRED CAPACITY AND.

B-140182, AUG. 5, 1959

TO IDEAL RESTAURANT SUPPLY CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 24, 1959, REGARDING OUR SETTLEMENT DATED JUNE 5, 1959, WHICH DISALLOWED YOUR CLAIM FOR $45 ALLEGED TO BE DUE UNDER DEPARTMENT OF THE AIR FORCE PURCHASE ORDER NO. (04 -606) 58-22906, DATED JUNE 26, 1958.

ON THE BASIS OF THE BID WHICH YOU SUBMITTED TO THE MCCLELLAN AIR FORCE BASE, THE PURCHASE ORDER WAS ISSUED TO YOU ON JUNE 26, 1958, FOR FURNISHING, AMONG OTHERS, ITEM NO. 8012, COVERING 25 DELIVERY AND STORAGE PASTRY CABINETS AT $68.07 EACH, OR FOR A TOTAL PRICE FOR THE ITEM OF $1,701.75. SUBSEQUENT TO THE AWARD IT WAS FOUND THAT IN CONSIDERING THE BIDS WHICH WERE RECEIVED, THE GOVERNMENT PURCHASING OFFICER MISTAKENLY BELIEVED THAT THE DIFFERENCE OF $9.57, WHICH EXISTED BETWEEN THE LOWEST BID RECEIVED OF $58.50 FOR THE CABINETS AND YOUR BID OF $68.07, WAS THE TOTAL DIFFERENCE IN THE BIDS INSTEAD OF THE DIFFERENCE IN THE UNIT PRICES ONLY AND, THEREFORE, MADE A MULTIPLE AWARD TO YOU UNDER PARAGRAPH NO. 15 OF THE SPECIAL PROVISIONS OF THE INVITATION. AS A RESULT, YOU WERE ADVISED BY TELEPHONE ON JULY 15, 1958, THAT AN ERROR HAD BEEN MADE IN AWARDING ITEM NO. 8012 TO YOU AND LATER YOU WERE ADVISED NOT TO INCUR ANY RESPONSIBILITY WITH RESPECT TO PERFORMANCE. THE ITEM ULTIMATELY WAS CANCELED FROM THE PURCHASE ORDER AND NO SUBSEQUENT ORDER WAS ISSUED FOR THE CABINETS AS THE REQUIREMENT THEREFOR NO LONGER EXISTED. YOU CLAIM THE SUM OF $45, ALLEGEDLY REPRESENTING THE COST OF LONG DISTANCE TELEPHONE CALLS, LEGAL AND OFFICE EXPENSES.

YOUR LETTER OF JUNE 24, 1959, ADVANCES THE CONTENTION THAT THE LOW BID OF $58.50 WAS NOT THE LOWEST CORRECT BID RECEIVED SINCE THE CABINET OFFERED BY THAT BID WAS OF A DIFFERENT MANUFACTURE AND NOT OF THE REQUIRED CAPACITY AND, THEREFORE, WAS NOT THE EQUAL OF THE ITEM SPECIFIED IN THE INVITATION. IN VIEW OF THIS, YOU STATE IT CANNOT BE UNDERSTOOD HOW THE AWARD MADE TO YOU CAN BE CONSIDERED ILLEGAL. ALSO, YOU CONTEND THAT SINCE NO OTHER AWARD WAS MADE FOR THE PASTRY CABINETS THE CANCELLATION WAS FOR THE CONVENIENCE OF THE GOVERNMENT AND UNDER THOSE CIRCUMSTANCES YOU ARE ENTITLED TO THE EXPENSES INCURRED BY REASON OF THE SAID CANCELLATION.

THE PROVISIONS OF THE PROCUREMENT LAW APPLICABLE TO THE TRANSACTIONS WITH WHICH WE ARE HERE CONCERNED MAY BE FOUND IN 10 U.S.C. 2305 (B) AND REQUIRE, IN PERTINENT PART, THAT:

"AWARDS SHALL BE MADE * * * TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. * * *"

THE FACTS AS REPORTED BY THE DEPARTMENT OF THE AIR FORCE SHOW THAT CRESCENT METAL PRODUCTS, C., DID SUBMIT THE LOWEST BID RECEIVED. MOREOVER, THERE CAN BE NO DOUBT THAT PRIOR TO THE CANCELLATION OF ITEM NO. 8012 FROM THE PURCHASE ORDER, THE MCCLELLAN AIR FORCE BASE FULLY CONSIDERED AND DETERMINED THAT THE PASTRY CABINETS OFFERED BY THE LOW BIDDER WERE IN STRICT COMPLIANCE WITH THE REQUIREMENTS OF THE INVITATION. IN VIEW OF THIS, AND SINCE IT IS NOT SHOWN THAT CRESCENT METAL PRODUCTS, INC., WAS NOT AN OTHERWISE RESPONSIBLE BIDDER, IT IS OBVIOUS THAT THE PURCHASING OFFICER'S REJECTION OF THE CORPORATION'S LOW BID OF $58.50 EACH --- THROUGH THE ERRONEOUS BELIEF AS TO THE EXTENT OF THE DIFFERENCE IN THE BIDS--- AND THE AWARD OF THE CONTRACT TO YOU AS THE NEXT LOWEST RESPONSIBLE BIDDER WAS CONTRARY TO THE STATUTE AND, THEREFORE, WAS WITHOUT LEGAL EFFECT TO CREATE A CONTRACT. AS STATED IN OUR SETTLEMENT OF JUNE 5, 1959, THE PRINCIPLE IS WELL ESTABLISHED THAT ACTS OF CONTRACTING OFFICERS IN EXCESS OF AUTHORITY CONFERRED UPON THEM BY STATUTE OR REGULATION ARE VOID AND DO NOT BIND OR ESTOP THE GOVERNMENT.

IN ADDITION, THE DEPARTMENT OF THE AIR FORCE REPORTS THAT YOUR TELEPHONE CALLS TO THE MCCLELLAN AIR FORCE BASE WERE MADE AT GOVERNMENT EXPENSE. ALSO, IT APPEARS FROM YOUR LETTER OF JULY 19, 1958, TO THAT BASE THAT YOU PLACED YOUR ORDER FOR THE PASTRY CABINETS AND CARRIED ON RELATED NEGOTIATIONS WITH YOUR MANUFACTURER'S REPRESENTATIVE RIGHT IN NEW YORK CITY. HOWEVER, EVEN IF YOUR CLAIM FOR THE $45 WERE COMPLETELY SUBSTANTIATED, OUR OFFICE CONSISTENTLY HAS DENIED REIMBURSEMENT OF COSTS INCURRED BY BIDDERS IN RELIANCE ON AN ILLEGAL AWARD WHERE THERE IS NO SHOWING THAT THE UNITED STATES HAS RECEIVED ANY DIRECT BENEFIT FROM SUCH EXPENDITURES. PERSONS DEALING WITH AGENTS OF THE UNITED STATES ARE PRESUMED TO KNOW THE EXTENT OF THE AGENT'S AUTHORITY AND EXPENSES INCURRED BY A BIDDER BASED ON AN ILLEGAL AWARD ARE INCURRED AT HIS OWN RISK. SEE 37 COMP. GEN. 51.

WE DO NOT AGREE THAT THE CANCELLATION OF ITEM NO. 8012 WAS MADE FOR THE CONVENIENCE OF THE GOVERNMENT. THE DEPARTMENT OF THE AIR FORCE EXPRESSLY STATES THAT THE CANCELLATION BECAME NECESSARY BECAUSE OF THE ILLEGAL AWARD. ALSO, THE FACT THAT THE AIR FORCE BASE NEGOTIATED WITH YOU AT OR ABOUT THE TIME THE ERRONEOUS AWARD WAS DISCOVERED TO SEE IF YOU COULD FURNISH THE CABINETS AT A REDUCED PRICE CLEARLY SHOWS THAT AT THAT TIME THE BASE STILL WAS DESIROUS OF EFFECTING DELIVERY OF THE CABINETS IF SOME OTHER MUTUALLY SATISFACTORY AND PROPER ADJUSTMENT OF THE TRANSACTION COULD BE WORKED OUT. THE FACT THAT IT LATER WAS DETERMINED THE CABINETS WERE NO LONGER REQUIRED IN NO WAY MAY BE ASSOCIATED WITH THE PRIOR CANCELLATION.