B-174476(1), DEC 7, 1971

B-174476(1): Dec 7, 1971

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PART A OF THE CLAIM IS FOR PROFITS WHICH WOULD HAVE BEEN MADE ON ITEM NO. 3 OF THE SOLICITATION HAD IT NOT BEEN AWARDED TO ANOTHER FIRM UNDER THE BUY INDIAN ACT. ALTHOUGH REQUIREMENTS ON WHICH BIDS HAVE BEEN RECEIVED SHOULD NOT BE CANCELLED EXCEPT FOR COGENT REASONS. AS WAS DONE HERE. PART B OF THE CLAIM IS FOR ACTUAL COSTS OF THE CONTRACT ON ITEM NO. 2. SINCE THERE WAS A VALID CONTRACT COVERING ITEM 2. THE PRESENTATION OF THIS CLAIM IS PREMATURE SINCE THERE ARE SEVERAL QUESTIONS REGARDING ENTITLEMENTS UNDER THE CONTRACT WHICH HAVE NOT YET BEEN DETERMINED BY THE ADMINISTRATIVE AGENCY. MUST BE DENIED BECAUSE THERE IS NO STATUTORY AUTHORITY TO GRANT THE INTEREST. NOR IS THERE ANYTHING IN THE CONTRACT WHICH WOULD AUTHORIZE PAYMENT OF INTEREST ON THE CLAIM.

B-174476(1), DEC 7, 1971

CONTRACT - CANCELLATION OF REQUIREMENT - PREMATURE SUBMISSION OF CLAIM - INTEREST ON CLAIM DENIAL OF CLAIM BY MODULAR HOUSING, INC., FOR $283,337.36 ALLEGED TO BE DUE UNDER A CONTRACT LET BY THE BUREAU OF INDIAN AFFAIRS. PART A OF THE CLAIM IS FOR PROFITS WHICH WOULD HAVE BEEN MADE ON ITEM NO. 3 OF THE SOLICITATION HAD IT NOT BEEN AWARDED TO ANOTHER FIRM UNDER THE BUY INDIAN ACT, 25 U.S.C. 47. ALTHOUGH REQUIREMENTS ON WHICH BIDS HAVE BEEN RECEIVED SHOULD NOT BE CANCELLED EXCEPT FOR COGENT REASONS, A CONTRACTING OFFICER DOES NOT ABUSE THE DISCRETION RESERVED TO HIM WHEN HE REJECTS ALL BIDS, AS WAS DONE HERE, BECAUSE OF SUBSTANTIAL CHANGES IN THE SCOPE OF THE WORK. ALSO, PARAGRAPH 10(B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS UNDER THE IFB. PART B OF THE CLAIM IS FOR ACTUAL COSTS OF THE CONTRACT ON ITEM NO. 2, PLUS SETTLEMENT EXPENSE AND PROFIT. SINCE THERE WAS A VALID CONTRACT COVERING ITEM 2, PAYMENT MUST BE AS PROVIDED IN THE CONTRACT, RATHER THAN ON THE BASIS SET OUT IN THE CLAIM. FURTHER, THE PRESENTATION OF THIS CLAIM IS PREMATURE SINCE THERE ARE SEVERAL QUESTIONS REGARDING ENTITLEMENTS UNDER THE CONTRACT WHICH HAVE NOT YET BEEN DETERMINED BY THE ADMINISTRATIVE AGENCY. PART C OF THE CLAIM, FOR INTEREST ON THE MONEY CLAIMED IN PARTS A AND B, MUST BE DENIED BECAUSE THERE IS NO STATUTORY AUTHORITY TO GRANT THE INTEREST, NOR IS THERE ANYTHING IN THE CONTRACT WHICH WOULD AUTHORIZE PAYMENT OF INTEREST ON THE CLAIM. ACCORDINGLY, THE CLAIM IS DENIED.

TO MODULAR HOUSING, INC.:

REFERENCE IS MADE TO YOUR CLAIM FOR $283,337.36 ALLEGED TO BE DUE IN CONNECTION WITH INVITATION FOR BIDS (IFB) NO. BIA-0150-70-17, ISSUED MAY 14, 1970, BY THE DEPARTMENT OF THE INTERIOR, BUREAU OF INDIAN AFFAIRS, ALBUQUERQUE, NEW MEXICO, AND CONTRACT NO. 14-20-0150-1037 AWARDED YOUR FIRM PURSUANT THERETO.

THE SUBJECT IFB CALLED FOR BIDS ON THREE SEPARATE ITEMS OR BASE BIDS, WITH ALTERNATES, FOR FACTORY PREFABRICATED QUARTERS AND HEALTH CENTERS TO BE INSTALLED ON FOUNDATIONS AND SITES PREPARED BY OTHERS IN NEW MEXICO, ARIZONA, NORTH DAKOTA AND SOUTH DAKOTA. THE IFB, AS AMENDED, INCLUDED STANDARD FORM 33A (MARCH 1969 EDITION), SOLICITATION INSTRUCTIONS AND CONDITIONS, WHICH, IN PARAGRAPH 10, RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS, AND TO ACCEPT ANY ITEM OR GROUP OF ITEMS OF A BID, UNLESS THE BIDDER QUALIFIED HIS BID BY SPECIFIC LIMITATIONS. YOU BID ON ALL THREE ITEMS, AND YOUR BID WAS NOT QUALIFIED OR LIMITED AS TO ANY SPECIFIC ITEMS OR COMBINATION OF ITEMS.

YOU WERE THE LOW BIDDER ON ITEMS (BASE BIDS) NOS. 2 AND 3, AND AFTER A PREAWARD SURVEY OF YOUR FIRM YOU WERE AWARDED A CONTRACT FOR ITEM NO. 2 ON JULY 20, 1970. THIS CONTRACT, AS MODIFIED BY CHANGE ORDERS, IS REPORTED TO BE IN THE AMOUNT OF $104,543.95. IT IS FURTHER REPORTED THAT DURING THE PERIOD OF THE PREAWARD SURVEY OF YOUR FIRM, IT WAS DETERMINED THAT THE REQUIREMENTS FOR ITEM NO. 3 SHOULD BE MATERIALLY INCREASED TO REQUIRE THE CONTRACTOR TO PROVIDE BASEMENTS FOR THE HOUSES INVOLVED, PLUS ALL EXTERIOR UTILITIES, STREETS, AND OTHER WORK AT THE SITE IN BELCOURT, NORTH DAKOTA. ALSO, DURING THIS PERIOD, A LOCAL CONTRACTOR QUALIFYING AS AN INDIAN ENTERPRISE REQUESTED THE BUREAU OF INDIAN AFFAIRS TO NEGOTIATE A CONTRACT FOR THE HOUSING AND INCREASED WORK REQUIREMENTS AT BELCOURT UNDER THE BUY INDIAN ACT, 25 U.S.C. 47. A CONTRACT, WHICH INCLUDED THE HOUSING UNITS SPECIFIED UNDER ITEM NO. 3 OF THE IFB, WAS AWARDED TO THE INDIAN ENTERPRISE PURSUANT TO NEGOTIATIONS CONDUCTED UNDER THE AUTHORITY OF THE BUY INDIAN ACT ON JULY 2, 1970.

WHILE YOU REQUESTED WITHDRAWAL OF YOUR BID ON ITEM NO. 2 BY TELEGRAM DATED JULY 20, 1970, SUCH TELEGRAM WAS NOT RECEIVED FROM THE TELEGRAPH COMPANY UNTIL JULY 21, 1970, THE DAY AFTER THE AWARD OF THE CONTRACT FOR ITEM NO. 2 TO YOUR FIRM. YOUR REQUEST DID NOT ALLEGE A MISTAKE IN YOUR BID, BUT SUGGESTED THAT ITEM NO. 2 BE TIED IN WITH NEGOTIATIONS ON ITEM NO. 3. ON JULY 22, 1970, THE BUREAU OF INDIAN AFFAIRS ADVISED YOU THAT YOUR BID WAS NOT SUBJECT TO WITHDRAWAL; THAT AWARD ON ITEM NO. 2 HAD BEEN MADE TO YOUR FIRM ON JULY 20; AND THAT A CONTRACT ON THAT ITEM, WITH NOTICE TO PROCEED, HAD BEEN FORWARDED TO YOU ON THE DATE OF THE AWARD. THIS CONNECTION, PARAGRAPH 10(D) OF STANDARD FORM 33A, SUPRA, PROVIDES THAT A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY.

THE RECORD SHOWS THAT YOU UNDERTOOK PERFORMANCE ON ITEM NO. 2, BUT YOU DID NOT COMPLETE THE WORK IN AN ACCEPTABLE MANNER. WHEN YOU FAILED TO UNDERTAKE THE NECESSARY CORRECTIVE WORK WITHIN THE TIME SPECIFIED, THE GOVERNMENT COMPLETED THE WORK AT ITS OWN EXPENSE UNDER PARAGRAPH 5, INSPECTION, OF THE GENERAL PROVISIONS (STANDARD FORM 32, JUNE 1964 EDITION) OF THE CONTRACT.

YOU CONTEND THAT ITEM NO. 3 WAS THE MOST PROFITABLE ITEM FOR YOU IN THE IFB; THAT YOU INCURRED EXCESSIVE COSTS IN ATTEMPTING TO PERFORM YOUR CONTRACT ON ITEM NO. 2; AND THAT THE CONTRACTING OFFICER ERRED BOTH IN NOT AWARDING YOU A CONTRACT FOR ITEM NO. 3 AND IN DENYING THE WITHDRAWAL OF YOUR BID ON ITEM NO. 2. YOU SUMMARIZE YOUR CLAIM FOR THE AMOUNTS ALLEGED TO BE DUE YOU AS A RESULT OF THE CONTRACTING OFFICER'S ACTIONS AS FOLLOWS:

A. FOR DEFAULT OF CONTRACT PHASE, $ 43,590.15

BASE BID NO. 3, 15% OF CONTRACT

AMOUNT ($290,601) TO COVER LOST

PROFIT

B. FOR ACTUAL COSTS OF CONTRACT $223,709.25

PHASE, BASE BID NO. 2, PLUS

SETTLEMENT EXPENSE AND PROFIT

C. FOR 6% INTEREST BASED ON ABOVE $ 16,037.96

UNTIL FINAL SETTLEMENT DATE

TOTAL $283,337.36

CONCERNING THE WITHDRAWAL OF ITEM NO. 3 FROM CONSIDERATION FOR AWARD UNDER THE IFB, THE RECORD SHOWS, AS INDICATED ABOVE, THAT THE REQUIREMENTS WHICH HAD BEEN CONTEMPLATED UNDER THAT ITEM WERE SUBSTANTIALLY INCREASED BY THE ADDITION OF CONTRACTOR-FURNISHED BASEMENTS, STREETS, ETC., IN THE PROJECT. ALTHOUGH REQUIREMENTS ON WHICH BIDS HAVE BEEN RECEIVED SHOULD NOT BE CANCELED EXCEPT FOR COGENT REASONS, OUR DECISIONS IN SIMILAR SITUATIONS HAVE CONSISTENTLY HELD THAT A CONTRACTING OFFICER DOES NOT ABUSE THE DISCRETION RESERVED TO HIM WHEN HE REJECTS ALL BIDS ON A SOLICITED REQUIREMENT BECAUSE OF SUBSTANTIAL CHANGES NEEDED IN THE SCOPE OF THE WORK CONCERNED. SEE 49 COMP. GEN. 584 (1970). ALSO, PARAGRAPH 10(B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS UNDER THE IFB, AND IT HAS BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CORRECT BID. SEE 41 COMP. GEN. 709, 711 (1962) AND CASES CITED THEREIN. ACCORDINGLY, THE RECORD PROVIDES NO BASIS FOR THIS OFFICE TO OBJECT TO THE ACTION OF THE CONTRACTING OFFICER IN REJECTING ALL BIDS ON ITEM NO. 3 AND NOT AWARDING YOU A CONTRACT ON THAT ITEM. IN VIEW THEREOF, PART A OF YOUR CLAIM, COVERING THE LOST PROFIT ON ITEM NO. 3 WHICH YOU BELIEVE YOU WOULD HAVE MADE HAD YOU BEEN AWARDED A CONTRACT THEREFOR, MAY NOT BE ALLOWED, EVEN IF ANTICIPATED PROFIT ON A PROSPECTIVE CONTRACT COULD OTHERWISE BE CONSIDERED AS A PROPER ITEM FOR ALLOWANCE.

CONCERNING THE AWARD TO YOUR FIRM OF A CONTRACT PURSUANT TO YOUR BID ON ITEM NO. 2, UNDER THE PROVISION ENTITLED OFFER ON THE FACE SHEET OF THE IFB, STANDARD FORM 33 (JULY 1966 EDITION), YOUR BID WAS SUBJECT TO BEING ACCEPTED BY THE CONTRACTING OFFICER FOR 60 CALENDAR DAYS FROM THE DATE SET FOR RECEIPT OF BIDS UNLESS YOU SPECIFIED A DIFFERENT PERIOD. YOU DID NOT SPECIFY A DIFFERENT PERIOD FOR ACCEPTANCE, AND YOUR BID ON ITEM NO. 2 WAS ACCEPTED BY THE CONTRACTING OFFICER WITHIN THE 60-DAY PERIOD. YOUR PRICE ON ITEM NO. 2 WAS NOT OUT-OF-LINE WITH THE SECOND AND THIRD LOW BIDS ON THAT ITEM, AND THERE IS NOTHING IN THE PRESENT RECORD WHICH WOULD, IN OUR VIEW, OPERATE TO AFFECT THE VALIDITY OF THE AWARD. ACCORDINGLY, THE ACCEPTANCE OF YOUR BID GAVE RISE TO A VALID AND BINDING CONTRACT AND VESTED IN THE GOVERNMENT THE RIGHT TO HAVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. WE DO NOT PERCEIVE ANY BASIS ON WHICH THE CONTRACTING OFFICER COULD HAVE RESCINDED THE AWARD (OR EVEN HAVE AUTHORIZED THE WITHDRAWAL OF YOUR BID HAD A TIMELY REQUEST BEEN MADE) SINCE, UNLESS SPECIFICALLY AUTHORIZED BY STATUTE, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO DIVEST THE UNITED STATES OF ITS VESTED RIGHTS OR TO ALLOW COMPENSATION FOR PERFORMANCE OF A CONTRACT IN AN AMOUNT GREATER THAN THAT AGREED UPON IN THE CONTRACT. SEE 20 COMP. GEN. 652 (1941) AND COURT CASES CITED THEREIN.

SINCE THERE WAS A VALID CONTRACT FOR THE REQUIREMENTS COVERED BY ITEM NO. 2 OF THE IFB, PAYMENT FOR PERFORMANCE OF SUCH REQUIREMENTS MUST BE AS PROVIDED FOR IN THE CONTRACT, RATHER THAN ON THE BASIS SET OUT IN PART B OF YOUR CLAIM, THAT IS, FOR ACTUAL COSTS PLUS SETTLEMENT EXPENSES AND PROFIT. CONCERNING THE AMOUNTS WHICH MAY PROPERLY BE PAID BY THE ADMINISTRATIVE OFFICE IN ACCORDANCE WITH THE TERMS OF YOUR CONTRACT FOR ITEM NO. 2, THERE IS ENCLOSED A COPY OF THE NARRATIVE PORTION OF THE ADMINISTRATIVE REPORT SUBMITTED TO THIS OFFICE IN CONNECTION WITH YOUR CLAIM. YOU WILL NOTE ON PAGE 8 THEREOF THAT THE CONTRACTING OFFICER HAS NOT REACHED A DECISION ON YOUR REQUEST FOR AN EXTENSION OF THE PERFORMANCE PERIOD, WHICH COULD AFFECT THE AMOUNT OF DAMAGES THAT MAY BE ASSESSABLE UNDER PARAGRAPH 7, LIQUIDATED DAMAGES, OF THE GENERAL CONDITIONS OF THE CONTRACT. IN ADDITION, IT IS STATED ON PAGE 11 OF THE REPORT THAT THE COST OF THE CORRECTIVE WORK PERFORMED AT GOVERNMENT EXPENSE HAS NOT BEEN COMPUTED, AND THEREFORE AN ACCURATE APPRAISAL OF THE AMOUNT DUE YOU UNDER YOUR CONTRACT ON ITEM NO. 2 HAS NOT BEEN MADE. SINCE THESE ARE MATTERS PROPERLY FOR CONSIDERATION AND SETTLEMENT IN THE FIRST INSTANCE BY THE CONTRACTING OFFICER, WE CONSIDER THE PRESENTATION OF YOUR CLAIM TO THIS OFFICE, INSOFAR AS IT INVOLVES THE INITIAL PAYMENT OF YOUR CONTRACT, TO BE PREMATURE AT THIS TIME. THEREFORE, WE ARE RETURNING THE MATTER TO THE DEPARTMENT OF THE INTERIOR FOR COMPUTATION AND PAYMENT OF ANY AMOUNTS WHICH MAY BE ADMINISTRATIVELY DETERMINED TO BE DUE UNDER YOUR CONTRACT FOR ITEM NO. 2. SHOULD YOU BE IN DISAGREEMENT WITH ANY OF THE FACTUAL DECISIONS OF THE CONTRACTING OFFICER UPON WHICH THE AMOUNT DETERMINED TO BE DUE IN ACCORDANCE WITH THE CONTRACT PROVISIONS IS BASED, RESOLUTION OF THE DISPUTE SHOULD BE EFFECTED PURSUANT TO THE PROCEDURES AGREED UPON BY THE CONTRACTING PARTIES UNDER THE DISPUTES CLAUSE OF THE CONTRACT, PARAGRAPH 12, GENERAL PROVISIONS. IF, AFTER THE EXHAUSTION OF YOUR ADMINISTRATIVE REMEDIES, YOU BELIEVE THE FINAL ADMINISTRATIVE DECISION IS IMPROPER OR THAT ADDITIONAL ACTION BY THIS OFFICE IS WARRANTED, YOU MAY THEN ASK THIS OFFICE FOR SUCH RELIEF AS IS CONSIDERED TO BE APPROPRIATE, CITING THE LEGAL AND FACTUAL BASIS FOR THE RELIEF REQUESTED.

REGARDING THE MATTER OF PAYMENT OF INTEREST ON AMOUNTS CLAIMED TO BE OWING BY THE GOVERNMENT, WHICH IS THE BASIS OF PART C OF YOUR CLAIM, IT IS A RULE OF LONG STANDING THAT INTEREST MAY NOT BE PAID BY THE GOVERNMENT IN THE ABSENCE OF EXPRESS PROVISIONS IN STATUTES OR IN A LAWFUL CONTRACT. SEE 24 ALR 2D 985, SEC. 19 (1952). THIS HISTORICAL RULE IS RESTATED FOR APPLICATION BY THE COURT OF CLAIMS AT 28 U.S.C. 2516. WE ARE NOT AWARE OF ANY STATUTE OR PROVISIONS OF YOUR CONTRACT ON ITEM NO. 2 WHICH AUTHORIZES THE PAYMENT OF INTEREST ON ANY AMOUNT WHICH MAY BE FOUND DUE YOU IN THIS MATTER BY THE DEPARTMENT OF THE INTERIOR. ACCORDINGLY, PART C OF YOUR CLAIM MUST BE DISALLOWED.