B-63244, FEBRUARY 5, 1947, 26 COMP. GEN. 567

B-63244: Feb 5, 1947

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

1947: I HAVE YOUR LETTER OF JANUARY 23. AS FOLLOWS: REFERENCE IS MADE TO THE ATTACHED FILE RELATIVE TO A BID RECEIVED FROM THE NEW ORLEANS LAUNDRY. IT WILL BE OBSERVED FROM THE FILE THAT AT THE TIME THE BID WAS OPENED IN THE OFFICE OF THE POSTMASTER IT BORE A STATEMENT " PLUS O.P.A. THE AMOUNT OF PERMITTED INCREASE AT THE TIME OF SUBMISSION OF THE BID WHICH WAS 16 PERCENT AND PLACED THIS INFORMATION ON THE BID. AS THERE WAS NO EVIDENCE ON THE PROPOSAL TO INDICATE THAT THE BID HAD BEEN ALTERED. IT WAS APPROVED FOR ACCEPTANCE. IT WOULD HAVE BEEN REJECTED AS BEING AN INDEFINITE OR QUALIFIED BID. HE WAS ADVISED ON JUNE 18 THAT THE INCREASE WAS NOT APPLICABLE AND COULD NOT BE PAID. A LETTER OF OCTOBER 2 STATED THAT THE BID WAS NOT IN THE FILE OF THAT OFFICE.

B-63244, FEBRUARY 5, 1947, 26 COMP. GEN. 567

CONTRACTS - OFFER AND ACCEPTANCE - ACCEPTANCE DIFFERING FROM OFFER WHERE A CONTRACTING OFFICER, IN ACCEPTING A BID FOR FURNISHING LAUNDRY SERVICES DURING THE FISCAL YEAR 1947 AT A STIPULATED UNIT PRICE " PLUS O.P.A. PERMITTED INCREASE," INSERTED, WITHOUT THE BIDDER'S ASSENT, THE THEN PERMITTED INCREASE OF 16 PERCENT, WHEREAS THE BID CONTEMPLATED A STIPULATED UNIT PRICE PLUS ANY EXISTING AUTHORIZED INCREASE AS WELL AS ANY ADDITIONAL INCREASE THAT SUBSEQUENTLY MIGHT BE AUTHORIZED BY THE OFFICE OF PRICE ADMINISTRATION, SUCH CHANGE--- BEING MATERIAL--- CONSTITUTED A REJECTION BY THE GOVERNMENT AND A COUNTER PROPOSAL, AND, THEREFORE, THE PURPORTED AGREEMENT SHOULD BE SET ASIDE AND THE SERVICES FOR THE REMAINDER OF THE FISCAL YEAR READVERTISED.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, FEBRUARY 5, 1947:

I HAVE YOUR LETTER OF JANUARY 23, 1947, AS FOLLOWS:

REFERENCE IS MADE TO THE ATTACHED FILE RELATIVE TO A BID RECEIVED FROM THE NEW ORLEANS LAUNDRY, INC. FOR LAUNDERING TOWELS ON A CONSOLIDATED BASIS DURING THE FISCAL YEAR 1947 FOR THE FEDERAL POST OFFICE BUILDINGS AT NEW ORLEANS, LOUISIANA, AND APPROVAL GIVEN THE POSTMASTER FOR ACCEPTANCE.

IT WILL BE OBSERVED FROM THE FILE THAT AT THE TIME THE BID WAS OPENED IN THE OFFICE OF THE POSTMASTER IT BORE A STATEMENT " PLUS O.P.A. PERMITTED INCREASE" WITHOUT ANY DEFINITE AMOUNT OF INCREASE STATED THEREON. THE POSTMASTER SECURED FROM THE LOCAL OFFICE OF THE OFFICE OF PRICE ADMINISTRATION BEFORE SUBMITTING THE BID TO THIS DEPARTMENT FOR APPROVAL, THE AMOUNT OF PERMITTED INCREASE AT THE TIME OF SUBMISSION OF THE BID WHICH WAS 16 PERCENT AND PLACED THIS INFORMATION ON THE BID. AS THERE WAS NO EVIDENCE ON THE PROPOSAL TO INDICATE THAT THE BID HAD BEEN ALTERED, IT WAS APPROVED FOR ACCEPTANCE; IT BEING THE ONLY BID RECEIVED. HAD THE PROPOSAL BEEN FORWARDED IN THE ORIGINAL FORM AS SUBMITTED BY THE BIDDER, IT WOULD HAVE BEEN REJECTED AS BEING AN INDEFINITE OR QUALIFIED BID.

ON JUNE 11 LAST THE POSTMASTER REQUESTED AN INCREASE IN HIS ALLOWANCE DUE TO AN ADDITIONAL 8 PERCENT BEING AUTHORIZED BY THE OFFICE OF PRICE ADMINISTRATION. HE WAS ADVISED ON JUNE 18 THAT THE INCREASE WAS NOT APPLICABLE AND COULD NOT BE PAID. ON AUGUST 21 THE POSTMASTER TRANSMITTED A LETTER FROM THE BIDDER CONCERNING THIS INCREASE, ALSO POSTMASTER'S COPY OF THE APPROVED BID. THIS BUREAU ON AUGUST 27 REQUESTED OF THE GENERAL ACCOUNTING OFFICE A PHOTOSTATIC COPY OF THE APPROVED BID. A LETTER OF OCTOBER 2 STATED THAT THE BID WAS NOT IN THE FILE OF THAT OFFICE. OCTOBER 4 THIS DEPARTMENT ADDRESSED THE GENERAL ACCOUNTING OFFICE GIVING THE T NO. 41 AND DATE OF THE JOURNAL, APRIL 11, 1946, AS ADDITIONAL INFORMATION TO ASSIST IN LOCATING THE BID. A LETTER FROM THAT OFFICE DATED OCTOBER 31, 1946, STATED THAT THE BID WAS NOT RECEIVED WITH THE JOURNAL. THIS WAS DUE TO THE FACT THAT IT WAS RETURNED TO THE POSTMASTER, WHO WAS INSTRUCTED TO FORWARD IT TO THE GENERAL ACCOUNTING OFFICE WITH THE ORIGINAL SIGNED COPY OF THE ALLOWANCE AND FIRST VOUCHER FORM 1526-P. ON OCTOBER 24, 1946, HE WAS ASKED TO FORWARD THE BID, IF IN HIS FILE, TO THIS DEPARTMENT FOR EXAMINATION, WHICH WAS DONE AS SHOWN BY THE POSTMASTER'S LETTER OCTOBER 28, 1946. PLEASE NOTE FROM THE POSTMASTER'S LETTER OF OCTOBER 28, 1946, HE STATES THAT THE "PLUS 16 PERCENT PERMITTED O.P.A. INCREASE" WAS INSERTED BY HIS OFFICE AND NOT BY THE BIDDER.

DUE TO THE FACT THAT THE POSTMASTER ERRONEOUSLY INSERTED THIS INFORMATION ON THE FACE OF THE PROPOSAL OF WHICH THE DEPARTMENT HAD NO KNOWLEDGE AT THE TIME OF APPROVAL, IT WILL BE APPRECIATED IF YOU WILL ADVISE, IN VIEW OF THE POSTMASTER'S STATEMENT THAT THE BIDDER WAS NEVER NOTIFIED IN WRITING OF THE ACCEPTANCE OF HIS BID, WHETHER THIS APPROVED ACCEPTANCE MAY BE CANCELED AND NEW BIDS CALLED FOR; ALSO THE NECESSARY STEPS TO BE TAKEN TO MAKE SETTLEMENT OF THE BILLS RENDERED BY THE NEW ORLEANS LAUNDRY, INC., WHICH BEAR THE ADDITIONAL 8 PERCENT INCREASE WHICH WAS AUTHORIZED BY THE OFFICE OF PRICE ADMINISTRATION SUBSEQUENT TO THE APPROVAL OF THE BID. YOUR PROMPT ATTENTION, WITH THE RETURN OF THE ATTACHED PAPERS, WILL BE APPRECIATED.

BY INCLUDING IN ITS BID THE WORDS " PLUS O.P.A. PERMITTED INCREASE," NEW ORLEANS LAUNDRIES, NC., CLEARLY INDICATED THAT PAYMENT FOR SERVICES TO BE PERFORMED UNDER THE CONTRACT WAS TO BE AT THE STIPULATED UNIT PRICE, PLUS ANY EXISTING AUTHORIZED INCREASE AS WELL AS ANY ADDITIONAL INCREASE WHICH SUBSEQUENTLY MIGHT BE AUTHORIZED BY THE OFFICE OF PRICE ADMINISTRATION. IT APPEARS, HOWEVER, THAT THE BID WAS ACCEPTED ON THE BASIS OF THE THEN EXISTING PERMITTED INCREASE OF 16 PERCENT AND A PROVISION TO THAT EFFECT WAS PLACED IN THE BID BY THE POSTMASTER CONCERNED. ADMITTEDLY, THIS CHANGE IN THE PROPOSAL WAS NOT BROUGHT TO THE ATTENTION OF THE CORPORATION.

IN ORDER THAT THERE MAY BE A MEETING OF THE MINDS--- WHICH IS ESSENTIAL TO THE FORMATION OF A CONTRACT--- THE ACCEPTANCE OF THE OFFER MUST BE SUBSTANTIALLY AS MADE. IN OTHER WORDS, THERE MUST BE NO MATERIAL VARIANCE BETWEEN THE ACCEPTANCE AND THE OFFER. ISELIN V. UNITED STATES, 271 U.S. 136; BEER V. MACKIN, 145 U.S. 629; SHIPMAN V. DISTRICT OF COLUMBIA, 119 U.S. 148; RICHARDSON V. GREENSBORO WAREHOUSE AND STORAGE COMPANY, 223 N.C. 344, 26 S.E.2D 897. ACCORDINGLY, AND SINCE THERE IS NO RECORD OF ANY ACTION ON THE PART OF THE CORPORATION FROM WHICH IT MIGHT BE INFERRED THAT IT ASSENTED TO THE CHANGE MADE IN ITS BID, SUCH CHANGE--- BEING A MATERIAL ONE--- CONSTITUTED A REJECTION BY THE GOVERNMENT OF THE OFFER AND A COUNTERPROPOSAL. PHOENIX IRON AND STEEL COMPANY V. WILKOFF COMPANY, 253 F. 165; BAIRD V. PRATT, 148 F. 825.

IN VIEW OF THE AUTHORITIES CITED ABOVE, AND IN SPECIFIC ANSWER TO THE QUESTION PRESENTED IN YOUR LETTER, YOU ARE ADVISED THAT THE PURPORTED AGREEMENT WITH NEW ORLEANS LAUNDRIES, INC., SHOULD BE SET ASIDE AND THE NEEDS OF THE DEPARTMENT FOR THE REMAINDER OF THE FISCAL YEAR 1947 SHOULD BE READVERTISED. SINCE, HOWEVER, THERE EXISTS AN IMPLIED OBLIGATION ON THE PART OF YOUR DEPARTMENT TO PAY FOR THE SERVICES WHICH ALREADY HAVE BEEN PERFORMED, PAYMENT THEREFOR SHOULD BE MADE ON A QUANTUM MERUIT BASIS- -- THAT IS, WHAT THE SERVICES REASONABLY ARE WORTH--- BUT, IN NO EVENT SHOULD ANY PAYMENT EXCEED THE APPLICABLE MAXIMUM PRICE ESTABLISHED BY THE OFFICE OF PRICE ADMINISTRATION FOR SUCH SERVICES AS WERE RENDERED PRIOR TO THE REMOVAL OF PRICE CONTROLS WITH RESPECT THERETO.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHERS COVERING PAYMENT FOR THE LAUNDRY SERVICES FURNISHED BY THE CORPORATION.