B-144122, NOV. 30, 1960

B-144122, NOV. 30, 1960

TO ZEISEL MACHINERY COMPANY:

WE REFER TO A LETTER OF AUGUST 20, 1960, FROM YOUR ATTORNEY, JOSEPH N. SCIARRA, REQUESTING A DECISION REGARDING YOUR CLAIM FOR ITEM 167, SALES INVITATION B-4-61-407, CONTRACT NO. N407S-11089.

BY LETTER DATED OCTOBER 27, 1960, THE DEPARTMENT OF THE NAVY FORWARDED A REPORT FROM THE COMMANDING OFFICER, U.S. NAVAL SUPPLY DEPOT, MECHANICSBURG, PENNSYLVANIA, SETTING FORTH THE DETAILS OF THE SALE. THE BIDS RECEIVED IN RESPONSE TO SALES INVITATION B-4-61-407 WERE PUBLICLY OPENED, READ, AND RECORDED ON JULY 15, 1960. A BID FROM PAT MCDOWELL MACHINERY, HOUSTON, TEXAS, WAS RECORDED IN THE AMOUNT OF $13,061 FOR ITEM 167, A VERTICAL TURRET LATHE, AND YOUR BID OF $6,263 WAS RECORDED FOR THE SAME ITEM. YOUR BID WAS ERRONEOUSLY SELECTED AS THE HIGHEST BID RECEIVED AND CONTRACT NO. N407S-11089 COVERING AWARD OF ITEM 167 AND RECEIVED AND CONTRACT NO. N407S-11089 COVERING AWARD OF ITEM 167 AND TWO OTHER ITEMS WAS MAILED TO YOU ON FRIDAY, JULY 22, 1960.

THE ERROR WAS NOT DISCOVERED UNTIL AFTER THE CONTRACT HAD BEEN MAILED. ON MONDAY, JULY 25, 1960, THE CONTRACTING OFFICER TELEPHONED TO ADVISE YOU OF THE MISTAKE AND TO ASK THAT YOU RETURN THE CONTRACT IN ORDER THAT A CORRECTED COPY COULD BE ISSUED. THE CONTRACTING OFFICER REPORTED THAT MR. MURRAY ZEISEL, A PARTNER IN YOUR FIRM, AGREED TO RETURN THE ERRONEOUS CONTRACT BY MAIL. HOWEVER, THE CONTRACT WAS NOT RETURNED, AND INSTEAD MR. ZEISEL ARRIVED AT THE DISPOSAL DEPARTMENT ON JULY 27, 1960, AND SUBMITTED A CLAIM FOR DELIVERY OF ITEM 167.

ALTHOUGH MR. ZEISEL WAS AGAIN INFORMED OF THE ERROR AND PERMITTED TO EXAMINE THE BID BOOK AND ALL OTHER RECORDS PERTAINING TO THE SALE, HE REFUSED TO RETURN HIS COPY OF THE CONTRACT AND STATED HE FELT THE CONTRACT WAS VALID. THE CONTRACTING OFFICER ADVISED MR. ZEISEL THAT AN AWARD COULD NOT BE MADE ON THE BASIS OF THE ERROR AND THAT ITEM 167 WOULD NOT BE RELEASED TO HIS FIRM. THE REPORT CONCLUDED WITH THE RECOMMENDATION OF THE CONTRACTING OFFICER THAT THE AWARD OF ITEM 167 BE MADE TO PAT MCDOWELL MACHINERY, THE HIGH BIDDER.

YOUR ATTORNEY SET FORTH A LESS DETAILED SUMMARY OF THE FACTS, STATING MERELY THAT YOU MADE A BONA FIDE BID OF $6,263 FOR THE LATHE LISTED AS ITEM 167, THAT YOU LEARNED OF THE AWARD UNOFFICIALLY ON JULY 22, 1960, AND RECEIVED WRITTEN ACCEPTANCE OF YOUR BID ON JULY 25, 1960. HE ADDED THAT A REPRESENTATIVE OF YOUR COMPANY MADE AN ATTEMPT TO PAY FOR THE LATHE ON JULY 27, 1960, BY TENDERING A CERTIFIED CHECK. YOUR PAYMENT WAS REFUSED AND YOUR REPRESENTATIVE WAS ADVISED THAT THE AWARD WAS AN ERROR.

YOUR ATTORNEY SUBMITTED HIS OPINION THAT WHEN YOU RECEIVED THE WRITTEN AWARD, A FIRM AND BINDING CONTRACT RESULTED AND ANY ACT TO TRY TO VOID OR NEGATE THE CONTRACT WAS TANTAMOUNT TO A BREACH. HE FURTHER STATED THAT YOU PURCHASED THE LATHE IN GOOD FAITH AND WOULD LIKE TO PAY FOR AND PICK IT UP AS SOON AS POSSIBLE.

THE BASIC STATUTORY AUTHORITY FOR THE SALE IS FOUND IN SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 63 STAT. 385, 40 U.S.C. 484 (E). PARAGRAPH (E) (2) (C) OF THAT SECTION PROVIDES THAT "AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE THE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.'

IN DETERMINING WHETHER A BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT, WE HAVE HELD WITH RESPECT TO PURCHASES THAT SUCH A PROVISION REQUIRES THAT AWARD, IF ANY, BE MADE TO THE LOW BIDDER WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE. 28 COMP. GEN. 622. MOREOVER, THE REQUIREMENT OF SECTION 3709, REVISED STATUTES, 41 U.S.C. 5, THAT THERE BE ADVERTISING FOR BIDS IN CONNECTION WITH PURCHASES AND SALES BY THE GOVERNMENT HAS BEEN CONSTRUED AS REQUIRING ACCEPTANCE OF THE HIGH BID IN A SALE AND THE LOW BID IN A PURCHASE. IN SCOTT V. UNITED STATES, 44 CT.CL. 524, THE PRINCIPLE IS STATED THAT:

"THE AGENTS OF THE GOVERNMENT STAND UPON A DIFFERENT FOOTING FROM PRIVATE INDIVIDUALS IN THE MATTER OF ADVERTISING FOR THE LETTING OF CONTRACTS IN BEHALF OF THE UNITED STATES. THEY HAVE NO DISCRETION. THEY MUST ACCEPT THE LOWEST OR THE HIGHEST RESPONSIBLE BID, OR REJECT ALL AND READVERTISE.'

IN APPLYING THE PROVISIONS OF SECTION 3709, REVISED STATUTES, IN O BRIEN V. CARNEY, 6 F.SUPP. 761, THE COURT SAID THAT "IT MUST FOLLOW AS A NECESSARY COROLLARY THAT THIS ACT IMPOSES A DUTY UPON THE DEPARTMENT TO ACCEPT THE PROPOSAL MOST ADVANTAGEOUS TO THE GOVERNMENT; OTHERWISE THE STATUTE WOULD BE MEANINGLESS.' IN THIS REGARD, THE COURTS AND OUR OFFICE HAVE REPEATEDLY HELD THAT AWARD OF A CONTRACT BY A GOVERNMENT AGENCY CONTRARY TO THE PROVISIONS OF STATUTE IS A NULLITY AND CONFERS NO RIGHTS ON THE CONTRACTOR AGAINST THE UNITED STATES. UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88; CLARK V. UNITED STATES, 95 U.S. 539; G. G. LOEHLER V. UNITED STATES, 90 CT.CL. 158; 37 COMP. GEN. 330; 17 COMP. GEN. 312.

THE RULE WAS APPLIED IN THE CASE AT 36 COMP. GEN. 94, IN WHICH THE FACTS WERE SIMILAR TO THE CASE AT HAND. THERE, THE HIGH BID IN RESPONSE TO A SALES INVITATION WAS OVERLOOKED AND AWARD WAS MADE TO THE SECOND HIGH BIDDER. WE HELD THAT THE INTERESTS OF THE UNITED STATES AS WELL AS THE DUTY TO AWARD TO THE HIGHEST BIDDER REQUIRED THAT THE ERRONEOUS AWARD BE CANCELLED AND THE AWARD BE MADE TO THE HIGH BIDDER WHOSE BID WAS ORIGINALLY OVERLOOKED. WE ALSO POINTED OUT THAT UNDER THE EXPRESS LANGUAGE OF PARAGRAPH 11 OF THE GENERAL SALE TERMS AND CONDITIONS, A REFUND OF THE BID DEPOSIT SATISFIED THE FULL RESPONSIBILITY OF THE GOVERNMENT TO THE COMPANY RECEIVING THE ERRONEOUS AWARD.

WE ARE AWARE OF NO CIRCUMSTANCES IN THE PRESENT CASE WHICH WOULD JUSTIFY A DEPARTURE FROM THE ABOVE STATED PRINCIPLES. THE CONTRACTING OFFICER WAS CORRECT IN HIS REFUSAL TO ACCEPT YOUR TENDER OF PAYMENT AND IN HIS REFUSAL TO DELIVER THE LATHE. HIS DUTY, UNDER THE APPLICABLE STATUTES AND PRECEDENT, WAS TO CANCEL THE ERRONEOUS AWARD FOR ITEM 167 AND TO MAKE THE AWARD TO THE HIGHEST BIDDER, PAT MCDOWELL MACHINERY. MOREOVER, THE LIMITATION ON THE GOVERNMENT'S LIABILITY IN PARAGRAPH 11 OF THE GENERAL SALE TERMS AND CONDITIONS WOULD PRECLUDE ANY RECOVERY ON YOUR PART, EVEN IF LIABILITY OF THE GOVERNMENT COULD BE ESTABLISHED, SINCE THE GOVERNMENT RECEIVED NO PART OF THE PURCHASE PRICE FOR ITEM 167 FROM YOU. THE DEPOSIT ACCOMPANYING YOUR BID WAS NOT LARGE ENOUGH TO COVER THE CONTRACT PRICE OF THE TWO ITEMS PROPERLY AWARDED TO YOU, SO THERE IS NO BASIS FOR ANY REFUND.