B-149466, JUL. 27, 1962

B-149466: Jul 27, 1962

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TO THE SECRETARY OF THE AIR FORCE: WE HAVE A LETTER OF JULY 18. THE INVITATION CONTAINED NINE ITEMS: THE FIRST SEVEN SOLICITED FIXED PRICES WHILE THE LAST TWO WERE ON A REQUIREMENTS BASIS AND RESERVED AN OPTION IN THE CONTRACTING OFFICER TO AWARD A NUMBER OF ADDITIVE SUBITEMS. AFTER OPENING IT WAS DETERMINED TO AWARD ALL OF THE SUBITEMS. THE LOW BID FOR THE ENTIRE PROCUREMENT WAS SUBMITTED BY THE QUALITY MAINTENANCE COMPANY. QUALITY MAINTENANCE SUBMITTED THE LOW RESPONSIVE BID FOR EACH ITEM EXCEPT ITEM NO. 7 ON WHICH ITS BID WAS $3. THE LOW BID FOR ITEM NO. 7 WAS SUBMITTED BY THE ONLY OTHER RESPONSIVE BIDDER. IT APPEARS THAT IN EVALUATING THE BIDS THE ADDITIONAL PROMPT PAYMENT DISCOUNT OFFERED BY QUALITY FOR AWARD OF THE ENTIRE PROCUREMENT WAS OVERLOOKED AND AWARDS WERE MADE ON JUNE 15.

B-149466, JUL. 27, 1962

TO THE SECRETARY OF THE AIR FORCE:

WE HAVE A LETTER OF JULY 18, 1962, WITH ENCLOSURES, YOUR REFERENCE AFSPM- PO-1, REQUESTING OUR DECISION AS TO THE PROPRIETY OF THE AWARD OF A CONTRACT FOR ITEM NO. 7 OF INVITATION FOR BIDS NO. 32-605-62 65,ISSUED MAY 4, 1962, FOR THE PERFORMANCE OF CUSTODIAL SERVICES IN BUILDINGS AT GRAND FORKS AIR FORCE BASE, NORTH DAKOTA, FOR THE PERIOD JULY 1, 1962, THROUGH JUNE 30, 1963.

THE INVITATION CONTAINED NINE ITEMS: THE FIRST SEVEN SOLICITED FIXED PRICES WHILE THE LAST TWO WERE ON A REQUIREMENTS BASIS AND RESERVED AN OPTION IN THE CONTRACTING OFFICER TO AWARD A NUMBER OF ADDITIVE SUBITEMS. AFTER OPENING IT WAS DETERMINED TO AWARD ALL OF THE SUBITEMS.

THE LOW BID FOR THE ENTIRE PROCUREMENT WAS SUBMITTED BY THE QUALITY MAINTENANCE COMPANY, INC., AT AN EVALUATED PRICE OF $80,726.80, LESS A PROMPT PAYMENT DISCOUNT OF 2 PERCENT AND AN ADDITIONAL 3 PERCENT PROMPT PAYMENT DISCOUNT IF THAT FIRM SHOULD BE AWARDED THE ENTIRE PROCUREMENT. QUALITY MAINTENANCE SUBMITTED THE LOW RESPONSIVE BID FOR EACH ITEM EXCEPT ITEM NO. 7 ON WHICH ITS BID WAS $3,750 PER MONTH, LESS THE PROMPT PAYMENT DISCOUNTS AS INDICATED. THE LOW BID FOR ITEM NO. 7 WAS SUBMITTED BY THE ONLY OTHER RESPONSIVE BIDDER, THE TRENTON WINDOW CLEANING COMPANY, AT $3,680 PER MONTH LESS A PROMPT PAYMENT DISCOUNT OF 5 PERCENT.

IT APPEARS THAT IN EVALUATING THE BIDS THE ADDITIONAL PROMPT PAYMENT DISCOUNT OFFERED BY QUALITY FOR AWARD OF THE ENTIRE PROCUREMENT WAS OVERLOOKED AND AWARDS WERE MADE ON JUNE 15, 1962, TO TRENTON FOR ITEM NO. 7 AND TO QUALITY FOR THE REMAINING ITEMS. BY LETTER OF JULY 3, 1962, QUALITY POINTED OUT THAT THE LOWEST PRICE FOR THE PROCUREMENT COULD BE OBTAINED BY AWARDING ALL OF THE ITEMS TO THAT FIRM, THUS TAKING ADVANTAGE OF THE ADDITIONAL 3 PERCENT PROMPT PAYMENT DISCOUNT OFFERED ON AN ALL OR NONE BASIS. UPON RECEIPT OF THAT LETTER THE CONTRACTING AGENCY REEVALUATED THE BIDS AND DETERMINED THAT AWARD TO QUALITY OF THE ENTIRE PROCUREMENT WOULD RESULT IN A SAVING TO THE GOVERNMENT OF $273.80 OVER THE DUAL AWARDS ACTUALLY MADE.

SPECIFICALLY, OUR ADVICE IS REQUESTED AS TO WHETHER, IN VIEW OF THE FOREGOING, THE AWARD TO TRENTON FOR ITEM NO. 7 SHOULD BE CANCELLED AND, IF SO, WHETHER PAYMENT MAY PROPERLY BE MADE TO TRENTON FOR SERVICES RENDERED PRIOR TO SUCH CANCELLATION, IT BEING NOTED THAT THE GOVERNMENT HAS HAD THE BENEFIT OF TRENTON'S SERVICES UNDER ITEM 7 SINCE JULY 1, 1962.

IT IS APPARENT THAT IN THIS CASE AWARD WAS MADE TO OTHER THAN THE LOW BIDDER BECAUSE OF A FAILURE TO CONSIDER ALL OF THE ELEMENTS OF THE PRICES OFFERED IN EVALUATING THE BIDS. IN A SIMILAR SITUATION CONSIDERED AT 37 COMP. GEN. 330, 331, WE STATED:

"IT IS PROVIDED AT 10 U.S.C. 2305 (B) 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.' WE HAVE HELD THAT THE QUOTED PROVISION REQUIRES THAT AWARD, IF ANY, BE MADE TO THE LOW BIDDER WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE. 28 COMP. GEN. 662, 664. 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, 92; CLARK V. UNITED STATES, 95 U.S. 539; G. G. LOEHLER V. UNITED STATES, 90 C.CLS. 158; 36 COMP. GEN. 94; 34 COMP. GEN. 115; B-120632, SEPTEMBER 10, 1954, B-29602, OCTOBER 23, 1942. IN THE LAST DECISION CITED, WE STATED IN RELATION TO A STATUTORY PROVISION WHICH, LIKE THAT IN QUESTION, HAS BEEN CONSTRUED TO REQUIRE AWARD TO THE LOW BIDDER, THAT:

" "THE QUESTION AS TO WHETHER THE UNITED STATES SHOULD CANCEL A CONTRACT WHICH WAS AWARDED ERRONEOUSLY BECAUSE OF A MISTAKE OF FACT ORDINARILY ARISES UNDER CIRCUMSTANCES WHEREIN AWARD IS REQUIRED TO BE MADE TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING, PURSUANT TO THE PROVISIONS OF SECTION 3709, REVISED STATUTES, AND IT SUBSEQUENTLY IS DETERMINED THAT THE BID OF THE SUCCESSFUL CONTRACTOR WAS NOT THE LOWEST RESPONSIBLE BID RECEIVED. SINCE, IN SUCH A CASE, THERE HAS BEEN A FAILURE TO COMPLY WITH SECTION 3709, REVISED STATUTES, WHICH STATUTE HAS BEEN CONSTRUED BY THE COURTS TO BE MANDATORY IN NATURE, ADMINISTRATIVE OFFICERS USUALLY ARE REQUIRED TO CANCEL THE CONTRACT, PARTICULARLY IF SUCH MAY BE DONE WITHOUT JEOPARDIZING THE INTEREST OF THE UNITED STATES. SEE 17 COMP. GEN. 312 AND CASES CITED THEREIN. * * *"

"SINCE AWARD RESULTED FROM A MISTAKE OF FACT, WE THINK THAT THE RULE IS APPLICABLE TO THIS CASE AND THAT THE CONTRACT SHOULD BE CANCELED.

"THE FOREGOING APPLIES TO AWARDS MADE DUE TO ERRORS OF EXISTING FACT WHERE THE CONTRACTING AGENCY MAY BE CHARGED WITH KNOWLEDGE OF THE TRUE STATE OF THE FACTS; IT DOES NOT APPLY TO AWARDS BASED UPON THE REASONABLE EXERCISE OF HONEST JUDGMENT, SUCH AS THE PROPER CLASSIFICATION FOR FREIGHT RATE PURPOSES OF A COMMODITY TO THE TRANSPORTED, EVEN THOUGH A LATER DETERMINATION OF A COURT OR OTHER AUTHORITATIVE TRIBUNAL WOULD REQUIRE A DIFFERENT CONCLUSION. SEE B 127917, JULY 17, 1956.'

SEE ALSO, TO THE SAME EFFECT, 38 COMP. GEN. 368.

BASED UPON THE FOREGOING PRECEDENT, THE AWARD TO TRENTON, NOT HAVING BEEN MADE TO THE LOWEST BIDDER FOR THE ITEM AS REQUIRED BY THE TERMS OF 10 U.S.C. 2305 (B) AS IT HAS TRADITIONALLY AND CONSISTENTLY BEEN INTERPRETED, IS INVALID AND SHOULD BE CANCELLED. AWARD OF ITEM NO. 7 MAY THEN BE MADE TO QUALITY FOR THE REMAINDER OF THE CONTRACT PERIOD, ASSUMING QUALITY IS WILLING TO GIVE THE GOVERNMENT THE ADVANTAGE OF THE ADDITIONAL PROMPT PAYMENT DISCOUNT OF 3 PERCENT. SINCE NO VALID CONTRACT WITH TRENTON FOR THE ITEM EXISTS, NO PAYMENTS MAY PROPERLY BE MADE UNDER THE PURPORTED CONTRACT ENTERED ON JUNE 15, 1962. HOWEVER, AS TO ANY SERVICES OR BENEFITS ACCEPTED AND RECEIVED BY THE GOVERNMENT, PAYMENT MAY BE MADE ON A QUANTUM MERUIT BASIS FOR THE REASONABLE VALUE THEREOF, WHICH IN THIS PARTICULAR CASE MAY BE MEASURED BY TRENTON'S BID PRICE. 37 COMP. GEN. 330, 332; 38 COMP. GEN. 368. SEE ALSO 40 COMP. GEN. 447, 451.