B-157265, AUG. 24, 1965

B-157265: Aug 24, 1965

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BIDS WERE ADVERTISED ON JULY 30. TWO BIDS WERE RECEIVED AS A RESULT OF THE ADVERTISEMENT. WAS LOW ON TWO (2) ITEMS OF THE INVITATION. PHILLIPS PETROLEUM COMPANY WAS LOW BIDDER ON TWO (2) ITEMS OF THE INVITATION AND THE ONLY BIDDER ON FOUR (4) OTHER ITEMS. AWARD WAS MADE TO THE LOWEST RESPONSIVE BIDDER FOR EACH ITEM. THE CONTRACTING OFFICER STATES THAT IT WAS NOTED THAT PHILLIPS PETROLEUM COMPANY HAD INSERTED THE WORD "NOT" IN THE PARAGRAPH PERTAINING TO DETENTION CHARGES IN ITS BID AT THE TIME OF OPENING OF BIDS. THE PROVISION ON PAGE 8 OF THE CONTRACT STATES AS FOLLOWS: "DETENTION CHARGES WILL NOT BE ALLOWED FOR ALL TIME IN EXCESS OF 2 HOURS CONSUMED IN THE COURSE OF UNLOADING UNLESS DIRECTLY TRACEABLE TO FAILURE OF THE CONTRACTOR'S OR HIS CARRIER'S PERSONNEL.

B-157265, AUG. 24, 1965

TO MR. H. M. STEELE, DISBURSING OFFICER, DEPARTMENT OF THE ARMY:

BY LETTER DATED JULY 14, 1965, REFERENCE ENGEC-FA, THE ENGINEER COMPTROLLER FORWARDED YOUR LETTER OF MAY 18, 1965, REFERENCE SWTCF, AND ENCLOSURES, REQUESTING OUR DECISION AS TO THE PROPRIETY OF PAYING THE TRANSMITTED VOUCHER IN THE AMOUNT OF $242.50 COVERING PAYMENT OF THE DETENTION (DEMURRAGE) CHARGES CLAIMED UNDER CONTRACT NO. DA-34-066 CIVENG- 65-960.

IT APPEARS FROM YOUR LETTER AND ENCLOSURES THAT A REQUIREMENT FOR BITUMINOUS PRIME COAT FOR USE IN SURFACING OF ROADS IN ACCESS AREAS AT TWO CORPS OF ENGINEERS PROJECTS DEVELOPED DURING THE SUMMER OF 1964. BIDS WERE ADVERTISED ON JULY 30, 1964, AND OPENED ON AUGUST 13, 1964. TWO BIDS WERE RECEIVED AS A RESULT OF THE ADVERTISEMENT. SUNRAY DX OIL COMPANY, TULSA, OKLAHOMA, WAS LOW ON TWO (2) ITEMS OF THE INVITATION. PHILLIPS PETROLEUM COMPANY WAS LOW BIDDER ON TWO (2) ITEMS OF THE INVITATION AND THE ONLY BIDDER ON FOUR (4) OTHER ITEMS. AWARD WAS MADE TO THE LOWEST RESPONSIVE BIDDER FOR EACH ITEM.

THE CONTRACTING OFFICER STATES THAT IT WAS NOTED THAT PHILLIPS PETROLEUM COMPANY HAD INSERTED THE WORD "NOT" IN THE PARAGRAPH PERTAINING TO DETENTION CHARGES IN ITS BID AT THE TIME OF OPENING OF BIDS. THE PROVISION ON PAGE 8 OF THE CONTRACT STATES AS FOLLOWS:

"DETENTION CHARGES WILL NOT BE ALLOWED FOR ALL TIME IN EXCESS OF 2 HOURS CONSUMED IN THE COURSE OF UNLOADING UNLESS DIRECTLY TRACEABLE TO FAILURE OF THE CONTRACTOR'S OR HIS CARRIER'S PERSONNEL. DETENTION CHARGES WILL BE ALLOWED AT THE RATE OF $1.25 OF EACH 15 MINUTES OR FRACTION THEREOF.'

YOU STATE THAT THE WORD "NOT" BETWEEN THE WORDS "WILL" AND "BE" WAS ADDED BY MR. C. H. HARRIS OF PHILLIPS PETROLEUM COMPANY BEFORE HE SIGNED THE CONTRACT, AND THAT, THEREFORE, DOUBT EXISTS AS TO WHETHER THE TRANSMITTED VOUCHER CAN BE PAID.

IN A LETTER DATED MARCH 30, 1965, TO THE DISTRICT ENGINEER, TULSA, OKLAHOMA, MR. C. H. HARRIS OF PHILLIPS PETROLEUM COMPANY STATED, INTER ALIA, THAT THE COMPANY IN ITS QUOTATION CALCULATED COMMON CARRIER FREIGHT FROM ITS OKMULGEE REFINERY TO DESTINATION POINTS WITH THE USUAL TWO HOURS OF FREE FREIGHT DEMURRAGE BEING INCLUDED AND THAT THE WORD "NOT" WAS INSERTED SOLELY FOR THE PURPOSE OF ATTEMPTING TO BE SURE THAT THE COMPANY DID NOT ASSUME ANY RESPONSIBILITY FOR MORE THAN THE USUAL TWO HOURS OF FREE TIME OTHER THAN DELAYS ATTRIBUTABLE TO THE CARRIER OR THE SUPPLIER. THE CONTRACTING OFFICER STATES IN THE ADMINISTRATIVE REPORT OF FACTS THAT IT WAS THE INTENTION OF THE ADVERTISEMENT THAT DETENTION TIME WOULD BE PAID BY THE GOVERNMENT AND THAT, IN HIS OPINION, THE BIDDER, IN EFFECT, REEMPHASIZED THE INTENTION OF THE GOVERNMENT THAT DETENTION CHARGES IN EXCESS OF FREE TIME WOULD NOT BE AN OBLIGATION OF THE BIDDER AND THAT AWARD WAS MADE ACCORDINGLY. INSERTION OF A RATE PER HOUR OR FRACTION THEREOF BY THE BIDDER AS REQUIRED BY THE INVITATION IS SAID TO HAVE SUBSTANTIATED THE CONTRACTING OFFICER'S JUDGMENT IN MAKING THE AWARD. DETENTION CHARGES ARE MADE BY THE DELIVERING CARRIER AND ARE REGULATED BY TARIFFS ESTABLISHED BY THE OKLAHOMA CORPORATION COMMISSION. THE CONTRACT IS FOR MATERIAL F.O.B. JOB SITE AND THE DETENTION CHARGE IS PAYABLE TO THE SUPPLIER, PHILLIPS PETROLEUM COMPANY. THE CONTRACT HAS BEEN FULLY PERFORMED.

THE RECORD CLEARLY SHOWS THAT IT WAS THE INTENTION OF THE GOVERNMENT TO ASSUME LIABILITY FOR DETENTION CHARGES UNLESS SUCH WERE CAUSED BY THE SUPPLIER OR HIS CARRIER. THE CONTRACTOR'S INTERPRETATION OF THE CLAUSE AS CHANGED WAS THE SAME AS THE GOVERNMENT'S BEFORE THE CHANGE--- THAT THE SUPPLIER WOULD NOT BE LIABLE FOR DETENTION CHARGES EXCEPT WHEN THE DETENTION WAS CAUSED BY THE SUPPLIER OR HIS CARRIER. TO VIEW THE CLAUSE AS REQUIRING PAYMENT OF DETENTION CHARGES BY THE GOVERNMENT ONLY WHEN THE FAULT FOR SUCH DETENTION WAS ATTRIBUTABLE TO THE SHIPPER OR HIS CARRIER, WOULD CREATE AN ANOMALOUS SITUATION, CONTRARY AND REPUGNANT TO THE INTENTION OF THE PARTIES TO THE CONTRACT. 17 AM.JUR.2D, CONTRACTS, SECTIONS 21 AND 22.

SINCE THE BID WAS NOT CONSIDERED BY THE CONTRACTING OFFICER AS CONTAINING A DEVIATION AND IT WAS THE INTENT OF THE PARTIES THAT THE GOVERNMENT SHOULD ASSUME THE LIABILITY FOR DETENTION CHARGES WITH THE STATED EXCEPTION, IT MUST BE CONCLUDED THAT THE ADDITION OF THE WORD "NOT" BY THE BIDDER CREATED NO SUBSTANTIAL CHANGE IN THESE CIRCUMSTANCES AND THE ACTION BY THE BIDDER SHOULD NOT BE CONSIDERED AS HAVING BEEN TAKEN AGAINST HIS OWN INTEREST.

THEREFORE, THIS OFFICE WOULD HAVE NO OBJECTION TO PAYMENT OF THE DETENTION CHARGES BY THE GOVERNMENT AS RECOMMENDED BY THE CONTRACTING OFFICER, IF OTHERWISE PROPER.