B-154922, SEP. 23, 1964

B-154922: Sep 23, 1964

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TO LAWKER EQUIPMENT CORPORATION: REFERENCE IS MADE TO TELEGRAM OF AUGUST 10. ALL BIDS WERE TO BE ACCOMPANIED BY A DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID. INCLUDED IN THE LIST OF THE FORMS OF DEPOSIT THAT WERE ACCEPTABLE WAS AN UNCERTIFIED PERSONAL OR BUSINESS CHECK. "PROVIDED SUCH CHECKS ARE NOT DRAWN BY A THIRD PARTY.'. THE AMOUNT SO DEPOSITED WAS TO BE RETAINED BY THE GOVERNMENT AS LIQUIDATED DAMAGES IN THE EVENT THE PURCHASER BREACHED THE CONTRACT BY FAILING TO MAKE PAYMENT OF THE BALANCE OF THE PURCHASE PRICE UPON DEMAND AND BEFORE REMOVAL OF THE PROPERTY. NINE BIDS WERE RECEIVED. THE HIGH BID WAS SUBMITTED BY ST. PIERRE CONSTRUCTION LIMITED AND WAS IN THE AMOUNT OF $247. THE BID WAS ACCOMPANIED BY AN UNCERTIFIED PERSONAL CHECK FOR $53.

B-154922, SEP. 23, 1964

TO LAWKER EQUIPMENT CORPORATION:

REFERENCE IS MADE TO TELEGRAM OF AUGUST 10, 1964, FROM YOUR ATTORNEY AND TELEGRAMS OF AUGUST 12 AND 19 AND SEPTEMBER 4, 1964, FROM YOUR FIRM, PROTESTING THE ACTION TAKEN BY GENERAL SERVICES ADMINISTRATION (GSA) IN READVERTISING THE SALE AND REMOVAL OF A HIGH ENERGY FUEL PLANT LOCATED AT AIR FORCE PLANT NO. 68, MODEL CITY, LEWISTON, NEW YORK, UPON THE DEFAULT OF ST. PIERRE CONSTRUCTION LIMITED IN MAKING PAYMENT OF THE SALE PRICE OF THE PROPERTY.

ON JUNE 8, 1964, GENERAL SERVICES ADMINISTRATION, REGION 2, ISSUED INVITATION FOR BIDS NO. 2UPS-65-5 IN WHICH IT SOLICITED BIDS FOR THE PURCHASE AND REMOVAL OF A HIGH ENERGY FUEL PLANT AT LEWISTON, NEW YORK. ALL BIDS WERE TO BE ACCOMPANIED BY A DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID. INCLUDED IN THE LIST OF THE FORMS OF DEPOSIT THAT WERE ACCEPTABLE WAS AN UNCERTIFIED PERSONAL OR BUSINESS CHECK,"PROVIDED SUCH CHECKS ARE NOT DRAWN BY A THIRD PARTY.' THE AMOUNT SO DEPOSITED WAS TO BE RETAINED BY THE GOVERNMENT AS LIQUIDATED DAMAGES IN THE EVENT THE PURCHASER BREACHED THE CONTRACT BY FAILING TO MAKE PAYMENT OF THE BALANCE OF THE PURCHASE PRICE UPON DEMAND AND BEFORE REMOVAL OF THE PROPERTY.

NINE BIDS WERE RECEIVED. THE HIGH BID WAS SUBMITTED BY ST. PIERRE CONSTRUCTION LIMITED AND WAS IN THE AMOUNT OF $247,500. THE BID WAS ACCOMPANIED BY AN UNCERTIFIED PERSONAL CHECK FOR $53,460 AND WAS DRAWN ON THE TORONTO DOMINION BANK, LONDON, ONTARIO, CANADA. YOUR BID IN THE AMOUNT OF $225,750 WAS THE SECOND HIGH BID SUBMITTED. IN CONSIDERING THE BIDS PRIOR TO MAKING AN AWARD THE GSA REGIONAL DIRECTOR AT NEW YORK CITY TELEPHONED THE BANK TO VERIFY THAT SUFFICIENT FUNDS WERE ON DEPOSIT IN THE HIGH BIDDER'S ACCOUNT AT THE TIME TO COVER THE CHECK AND HE WAS INFORMED THAT SUCH WAS THE CASE. ACCORDINGLY AN AWARD WAS MADE TO ST. PIERRE AND A NOTICE THEREOF WAS SENT ON JULY 24, 1964. UNDER PARAGRAPH "F" OF SPECIAL SALE TERMS AND CONDITIONS OF THE INVITATION THE SUCCESSFUL BIDDER WAS REQUIRED TO PAY THE BALANCE OF THE PURCHASE PRICE--- IN THIS CASE, $194,040--- WITHIN FIVE DAYS AFTER RECEIPT OF THE NOTICE OF AWARD. ST. PIERRE FAILED TO MAKE SUCH PAYMENT WITHIN FIVE DAYS AND THEREFORE WAS IN DEFAULT. THEREAFTER, ON AUGUST 4, 1964, THE CONTRACTING OFFICER WAS ADVISED THAT ITS BID DEPOSIT OF $53,460 HAD BEEN RETURNED BY THE BANK MARKED "INSUFFICIENT FUNDS.' ON THE SAME DAY THE CONTRACTING OFFICER SENT A NOTICE OF DEFAULT TO ST. PIERRE, ADVISING THAT IN THE EVENT THE FULL PURCHASE PRICE OF $247,500 WAS NOT RECEIVED WITHIN 15 DAYS, IT WOULD LOSE ALL RIGHT, TITLE AND INTEREST IT MIGHT OTHERWISE HAVE ACQUIRED IN THE PROPERTY AND WOULD BE LIABLE FOR DAMAGES AS SPECIFIED IN THE CONTRACT. THIS NOTICE WAS GIVEN IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH "E" OF THE SPECIAL SALE TERMS AND CONDITIONS. SINCE ST. PIERRE DID NOT CURE ITS DEFAULT, ITS CONTRACT WAS TERMINATED AND THE PROPERTY WAS READVERTISED AND OFFERED FOR SALE UNDER AN INVITATION FOR BIDS WHICH WAS OPENED ON SEPTEMBER 9, 1964.

IT IS YOUR CONTENTION THAT THERE WAS A DEVIATION FROM THE PROVISIONS OF THE INVITATION BY PERMITTING ST. PIERRE TO HAVE UNTIL AUGUST 19, 1964, TO PAY THE FULL AMOUNT OF $247,500 WHEN THE CHECK FOR $53,460 WAS NOT HONORED BY THE BANK ON WHICH IT WAS DRAWN. ALSO, IT IS CONTENDED IN YOUR LATEST TELEGRAM OF SEPTEMBER 4, 1964, THAT NO STATEMENT WAS EVER MADE BY THE OFFICIALS OF THE BANK TO GSA IN NEW YORK CITY THAT ST. PIERRE HAD A SUFFICIENT AMOUNT OF MONEY ON DEPOSIT TO COVER ITS CHECK FOR $53,460. AND YOU STATE THAT YOU WERE ENTITLED TO THE CONTRACT UPON THE DEFAULT BY ST. PIERRE.

WITH REGARD TO YOUR ALLEGATION THAT OFFICIALS OF THE BANK DID NOT INFORM THE GSA CONTRACTING OFFICE IN NEW YORK CITY THAT ST. PIERRE HAD A SUFFICIENT AMOUNT OF MONEY ON DEPOSIT TO COVER ITS CHECK FOR $53,460, IT HAS BEEN THE INVARIABLE RULE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO ACCEPT THE REPORT OF THE ADMINISTRATIVE OFFICERS ON DISPUTED QUESTIONS OF FACT IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE THAT THE FACTS AS REPORTED ARE NOT CORRECT. ON THE BASIS OF THE REPORTED FACTS THE CONTRACTING OFFICER ACTED PROPERLY WHEN HE AWARDED THE CONTRACT TO ST. PIERRE SINCE IT HAD FURNISHED A CHECK IN THE AMOUNT OF THE REQUIRED DEPOSIT. THE FACT THAT SUBSEQUENT TO THE AWARD OF THE CONTRACT ST. PIERRE DID NOT HAVE SUFFICIENT FUNDS IN ITS ACCOUNT, WHETHER THROUGH OVERSIGHT OR OTHERWISE, DID NOT RENDER THE CONTRACT INVALID. UNDER PARAGRAPH 4 OF THE GENERAL SALE TERMS AND CONDITIONS AND PARAGRAPH "E" OF THE SPECIAL SALE TERMS AND CONDITIONS, IF THE PURCHASER BREACHED ITS CONTRACT BY FAILING TO MAKE PAYMENT OF THE BALANCE OF THE PURCHASE PRICE "AFTER APPLYING THE TOTAL BID DEPOSIT * * * (OR OTHERWISE THE FULL PURCHASE PRICE)," THE GOVERNMENT WAS ENTITLED TO SEND THE PURCHASER A 15-DAY WRITTEN NOTICE OF DEFAULT. THE GOVERNMENT FOLLOWED THIS PROCEDURE.

WE ARE NOT AWARE OF ANY LAW OR REGULATION THAT WOULD REQUIRE THE GOVERNMENT, IN A CASE WHERE THE PURCHASER HAS BREACHED ITS CONTRACT BY FAILING TO PAY THE FULL AMOUNT OF THE PURCHASE PRICE OR BY FAILING TO REMOVE ALL THE PROPERTY, TO AWARD THE CONTRACT TO THE SECOND HIGHEST BIDDER UPON THE ORIGINAL SOLICITATION OF BIDS AND WHOSE BID HAD BEEN REJECTED WHEN THE CONTRACT HAD BEEN AWARDED TO THE DEFAULTING CONTRACTOR. IN FACT, WHEN A VALID AWARD IS ONCE MADE, THE OTHER BIDS MUST BE CONSIDERED TO HAVE BEEN REJECTED AND ARE NO LONGER EXTANT. THEREFORE, THE ADMINISTRATIVE ACTION TAKEN WAS, IN OUR VIEW, PROPER. IN THIS REGARD WE HAVE INFORMALLY ASCERTAINED FROM A REPRESENTATIVE OF GSA THAT THE AMOUNT OF THE HIGHEST BID RECEIVED UPON THE READVERTISEMENT IN THIS CASE IS WELL IN EXCESS OF THE ST. PIERRE BID.