B-150973, MARCH 18, 1963, 42 COMP. GEN. 493

B-150973: Mar 18, 1963

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NEGOTIATION AN AWARD OF A REPLACEMENT CONTRACT TO A LOW BIDDER WHOSE SUBSTANTIALLY LOWER BID DID NOT CONFORM TO THE ADVERTISED INVITATION FOR BIDS IN THAT IT EXCEEDED THE SPECIFIED DELIVERY LIMITATION BY ONE DAY IS NOT IMPROPER. THE STATUTORY REQUIREMENT THAT CONTRACTS BE LET AFTER COMPETITIVE BIDDING DOES NOT APPLY THE GOVERNMENT IS OBLIGATED TO MINIMIZE DAMAGES UNDER THE REPLACEMENT CONTRACT. WHICH WAS NOT REQUIRED TO ADVERTISE. 1963: REFERENCE IS MADE TO YOUR LETTERS OF MARCH 6 AND 14. ALTHOUGH TIME OF SHIPMENT WILL NOT BE A FACTOR IN DETERMINING AWARD. ANY BID OFFERING A SHIPMENT TIME WHICH EXCEEDS THE SCHEDULE STATED ABOVE BY 15 CALENDAR DAYS WILL NOT BE CONSIDERED FOR AWARD. ON THE BASIS THAT THE TIME FOR SHIPMENT OFFERED IS UNREASONABLE.

B-150973, MARCH 18, 1963, 42 COMP. GEN. 493

CONTRACTS - DEFAULT - PROCUREMENT FROM ANOTHER SOURCE -ADVERTISING V. NEGOTIATION AN AWARD OF A REPLACEMENT CONTRACT TO A LOW BIDDER WHOSE SUBSTANTIALLY LOWER BID DID NOT CONFORM TO THE ADVERTISED INVITATION FOR BIDS IN THAT IT EXCEEDED THE SPECIFIED DELIVERY LIMITATION BY ONE DAY IS NOT IMPROPER, THE PURCHASE BEING FOR THE ACCOUNT OF THE DEFAULTED CONTRACTOR, THE STATUTORY REQUIREMENT THAT CONTRACTS BE LET AFTER COMPETITIVE BIDDING DOES NOT APPLY THE GOVERNMENT IS OBLIGATED TO MINIMIZE DAMAGES UNDER THE REPLACEMENT CONTRACT, AND TO SECURE A LOWER BID; THEREFORE, THE CONTRACTING AGENCY, WHICH WAS NOT REQUIRED TO ADVERTISE, MAY REJECT ALL BIDS AND ENTER INTO PRIVATE NEGOTIATIONS WITH ONE OF THE BIDDERS.

TO ARTHUR S. LOWELL, MARCH 18, 1963:

REFERENCE IS MADE TO YOUR LETTERS OF MARCH 6 AND 14, 1963, PROTESTING AGAINST THE GENERAL SERVICES ADMINISTRATION AWARDING A CONTRACT TO THE GLOBE-WERNICKE COMPANY FOR BOOKCASE SECTIONS ADVERTISED IN INVITATION FOR BIDS FPNFO-P-26580/3-A-2-20-63.

WITH RESPECT TO TIME OF SHIPMENT, SECTION 8 OF THE INVITATION PROVIDED:

THE GOVERNMENT DESIRES THAT SHIPMENT BE MADE AS STATED HEREIN:

SCHEDULE A--- DURING PERIOD APRIL 1 THROUGH APRIL 30, 1963

SCHEDULE B--- DURING PERIOD JUNE 1 THROUGH JUNE 30, 1963

IF THE BIDDER DOES NOT INSERT A SHIPPING TIME, HIS BID SHALL BE DEEMED TO OFFER SHIPMENT IN ACCORDANCE WITH THE GOVERNMENT'S DESIRED TIME STATED ABOVE. ALTHOUGH TIME OF SHIPMENT WILL NOT BE A FACTOR IN DETERMINING AWARD, ANY BID OFFERING A SHIPMENT TIME WHICH EXCEEDS THE SCHEDULE STATED ABOVE BY 15 CALENDAR DAYS WILL NOT BE CONSIDERED FOR AWARD, ON THE BASIS THAT THE TIME FOR SHIPMENT OFFERED IS UNREASONABLE.

THE GLOBE-WERNICKE COMPANY BID, WHICH WAS $41,178.36 LOWER THAN THE HILLSIDE METAL PRODUCTS INC. BID, SPECIFIED THAT DELIVERY ON SCHEDULE A WOULD BE "ON OR BEFORE MAY 15" AND THAT ON SCHEDULE B IT WOULD BE "ON OR BEFORE JULY 15.'

AS THE INVITATION SPECIFIED, IN EFFECT, THAT BIDS OFFERING DELIVERY IN EXCESS OF 14 DAYS BEYOND THE PRESCRIBED SCHEDULES WOULD NOT BE CONSIDERED FOR AWARD AND AS THE GLOBE-WERNICKE COMPANY BID EXCEEDS THAT LIMITATION BY ONE DAY, ITS BID CLEARLY DID NOT CONFORM TO THE INVITATION. HOWEVER, THE CONTRACTING AGENCY PROPOSES TO MAKE AWARD TO THE COMPANY BECAUSE IT BELIEVES THE LANGUAGE IN SECTION 8 OF THE INVITATION MAY HAVE MISLED THE COMPANY INTO PROVIDING A SCHEDULE WITHIN THE LIMITS IT DID; BECAUSE THERE IS A DIFFERENCE OF ONLY ONE DAY IN TIME FOR DELIVERY; AND BECAUSE THERE IS A SUBSTANTIAL DIFFERENCE IN PRICE BETWEEN THE COMPANY'S AND HILLSIDE'S BID, AND THERE IS NECESSITY TO MINIMIZE DAMAGES.

AS TO THE NECESSITY TO MINIMIZE DAMAGES, THE CONTRACTING AGENCY HAS REPORTED THAT THE CONTRACT TO BE AWARDED IS A REPLACEMENT FOR A CONTRACT PREVIOUSLY DEFAULTED. IN SUCH A SITUATION, THE PURCHASE MADE IS FOR THE ACCOUNT OF THE DEFAULTED CONTRACTOR AND THE STATUTORY REQUIREMENT THAT CONTRACTS BE LET AFTER COMPETITIVE BIDDING IS NOT UNDERSTOOD BY OUR OFFICE TO APPLY. WHEN COMPETITIVE BIDDING IS NOT REQUIRED BY STATUTE AND THE PUBLIC AUTHORITY VOLUNTARILY ADVERTISES FOR BIDS, IT CAN REJECT ALL BIDS AND ENTER INTO PRIVATE NEGOTIATIONS WITH ONE OF THE BIDDERS IN ORDER TO SECURE A LOWER BID. 43 AM.JR., PUBLIC WORKS AND CONTRACTS, SECTION 49.

FURTHER, IN THE CASE OF THE REPLACEMENT OF DEFAULTED CONTRACTS, THE GOVERNMENT IS UNDER AN OBLIGATION TO MITIGATE THE DAMAGES OF THE DEFAULTING CONTRACTOR WHENEVER POSSIBLE. IN ALABAMA SHIRT AND TROUSER CO. V. UNITED STATES. 121 CT.CL. 313, THE COURT FOUND THAT THE GOVERNMENT FAILED TO MITIGATE DAMAGES WHEN IT AWARDED A REPLACEMENT CONTRACT TO THE SOLE BIDDER THAT RESPONDED TO A TELEGRAPHIC INVITATION FOR BIDS SENT TO 117 FIRMS WHEN IT POSSIBLY COULD HAVE REPURCHASED FROM OTHER MANUFACTURERS AT A LESSER COST THAN THAT STIPULATED IN THE REPLACEMENT CONTRACT.

IN THE CIRCUMSTANCES, SINCE THE CONTRACTING AGENCY WAS NOT REQUIRED TO ADVERTISE AND THE ACTION IT PROPOSES TO TAKE IN MAKING AN AWARD WOULD MINIMIZE THE DAMAGES CHARGEABLE TO THE DEFAULTING CONTRACTOR, OUR OFFICE DOES NOT FEEL COMPELLED TO OBJECT TO AN AWARD TO THE GLOBE WERNICKE COMPANY.