B-150667, JAN. 29, 1963

B-150667, JAN. 29, 1963

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JANUARY 18, 1963, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION ON THE MATTER OF THE ERRONEOUS AWARD ON ITEM 1 AND 2 UNDER INVITATION FOR BIDS NO. 160-159-63 TO OTHER THAN THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

THE INVITATION, ISSUED BY THE U.S. NAVY YARDS AND DOCKS SUPPLY OFFICE, PORT HUENEME, CALIFORNIA, REQUESTED BIDS ON THREE ITEMS OF COUPLINGS. AMONG THE BIDS RECEIVED, THAT OF THE ARO CORPORATION OFFERED TO FURNISH THE THREE ITEMS AT UNIT PRICES OF $1.45, $1.40 AND $0.45 NET, RESPECTIVELY. SUCH BID WAS UNCONDITIONAL. IN ADDITION THE ARO CORPORATION STATED IN AN ACCOMPANYING LETTER THAT IT WOULD FURNISH THE TOTAL QUANTITY SPECIFIED UNDER ALL THREE ITEMS FOR A PRICE OF $8,198 NET. THE TOTAL PRICE ON THE BASIS OF THE INDIVIDUAL ITEMS WAS $8,874 NET.

IN EVALUATING THE BIDS THE "ALL OR NONE" RESTRICTION OF THE ARO BID WAS MISTAKENLY APPLIED TO ITS UNRESTRICTED PRICES ON THE INDIVIDUAL ITEMS AND ITS RESTRICTED PRICE ON THE "ALL OR NONE" BASIS WAS ENTIRELY OVERLOOKED. ON SUCH BASIS THE LOWEST COST TO THE GOVERNMENT WAS AWARDS TO HOFMANN ENGINEERING COMPANY ON ITEM 3 AT A UNIT PRICE OF $0.29, OR A TOTAL OF $1,341.25, AND THE PERFECTING SERVICE COMPANY ON ITEMS 1 AND 2 AT UNIT PRICES OF $1.62 AND $1.47, RESPECTIVELY, OR A TOTAL FOR THE TWO ITEMS OF $7,133.94 ($7,206 LESS $72.06 REPRESENTING 1 PERCENT PROMPT PAYMENT DISCOUNT). THE TOTAL AGGREGATE COST ON SUCH BASIS WAS $8,475.19 AGAINST A TOTAL COST OF $8,874 UNDER ARO'S BID FOR THE THREE ITEMS AS MISTAKENLY CONSIDERED. AWARDS WERE ACCORDINGLY MADE TO HOFMANN ENGINEERING COMPANY FOR ITEM 3 AND TO THE PERFECTING SERVICE COMPANY FOR ITEMS 1 AND 2.

HAD ARO'S BID BEEN PROPERLY CONSIDERED THE AWARD SHOULD HAVE BEEN MADE TO ARO FOR ITEMS 1 AND 2 FOR A TOTAL PRICE OF $6,792.75 AND TO HOFMANN ENGINEERING COMPANY FOR ITEM 3 AT A TOTAL PRICE OF $1,341.25, OR AN AGGREGATE TOTAL OF $8,134 NET FOR THE THREE ITEMS. THE DIFFERENCE BETWEEN THE AWARDS ON THIS BASIS AND THE AWARDS AS MADE IS $341.19 NET.

IT IS REPORTED THAT THE PERFECTING SERVICE COMPANY HAS DELIVERED A SUBSTANTIAL NUMBER OF THE COUPLINGS TO SEVERAL OF THE DESTINATIONS PURSUANT TO THE CONTRACT AWARDED TO IT AND THAT THE CONTRACTOR HAS BEEN REQUESTED TO STOP FURTHER SHIPMENT ON THE CONTRACT PENDING A DECISION IN THE MATTER.

WITH RESPECT TO AN ERRONEOUS AWARD IT WAS STATED IN DECISION OF MARCH 3, 1959, B-137717, AS FOLLOWS:

"* * * CASES INVOLVING SOMEWHAT SIMILAR CIRCUMSTANCES HAVE BEEN CONSIDERED BY THE COURTS, AND BY FORMER ACCOUNTING OFFICERS OF THE GOVERNMENT, AND IT HAS BEEN UNIFORMALLY HELD THAT UNAUTHORIZED ACTS OF ITS AGENTS CANNOT OBLIGATE THE UNITED STATES. FILOR V. UNITED STATES, 9 WALL. 45; WHITESIDE ET AL. V. UNITED STATES, 93 U.S. 247, 257. ADMITTEDLY RESPONSIBILITY FOR THE ERROR RESTS SOLELY WITH THE PROCUREMENT OFFICIALS INVOLVED. HOWEVER, SUCH ERROR DOES NOT ESTABLISH THE LEGALITY OF THE TRANSACTION. THE AWARD OF A CONTRACT TO OTHER THAN THE LOWEST RESPONSIVE BIDDER, THROUGH MISTAKE OR OTHERWISE, CONSTITUTES AN ACT IN EXCESS OF THE CONTRACTING OFFICER'S VESTED AUTHORITY, AND FROM A LEGAL STANDPOINT, IS NO LONGER AN ACT OF THE GOVERNMENT. THE UNDERWRITER 6 F.2D 937. THEREFORE, IT NECESSARILY FOLLOWS THAT THE PURCHASING OFFICIAL RESPONSIBLE FOR THE TRANSACTION WAS NOT AUTHORIZED TO OBLIGATE THE GOVERNMENT TO PAY ANY AMOUNT IN EXCESS OF THE LOWEST CORRECT BID WHICH SHOULD HAVE BEEN ACCEPTED. 30 COMP. GEN. 24; CF. 36 ID. 94.'

SEE ALSO 37 COMP. GEN. 33, 40 ID. 447, ID. 697.

APPLYING THE ABOVE PRINCIPLES IN THE INSTANT CASE, THE PERFECTING SERVICE COMPANY MAY BE PAID FOR THE COUPLINGS FURNISHED UNDER THE INVALID CONTRACT AT UNIT PRICES OF $1.45 AND $1.40 NET FOR ITEMS 1 AND 2, THE PRICES FOR WHICH SUCH ITEMS SHOULD HAVE BEEN PROCURED. AS TO THE REMAINING QUANTITY, IN VIEW OF THE CIRCUMSTANCES HERE INVOLVED WE WOULD NOT OBJECT TO PERMITTING THE PERFECTING SERVICE COMPANY TO FURNISH THE BALANCE OF THE COUPLINGS IF IT WILL ACCEPT THE UNIT PRICES OF $1.45 AND $1.40 NET FOR ITEMS 1 AND 2 FOR THE BALANCE OF THE COUPLINGS TO BE FURNISHED.