B-72669, FEBRUARY 6, 1948, 27 COMP. GEN. 436

B-72669: Feb 6, 1948

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BIDDERS - BID DEPOSITS - FORFEITURE UPON BID WITHDRAWAL UNDER AN INVITATION ON BID ON THE SALE OF GOVERNMENT-USED VEHICLES ON AN "AS IS" BASIS. - PROVIDING THAT FAILURE TO INSPECT WILL NOT CONSTITUTE GROUNDS FOR WITHDRAWAL OF BIDS AFTER THE DATE SET FOR OPENING AND THAT THE REQUIRED BID DEPOSITS WILL BE FORFEITED TO THE GOVERNMENT UPON WITHDRAWAL OF BIDS AFTER OPENING. IT IS MANDATORY THAT THE BID DEPOSIT OF A BIDDER BE FORFEITED UPON HIS ELECTION. 1948: I HAVE YOUR LETTER OF JANUARY 9. ALL PROPERTY LISTED HEREIN OFFERED "AS IS" AND "WHERE IS" WITHOUT WARRANTY OR GUARANTY AS TO QUALITY. NO CLAIM WILL BE CONSIDERED FOR ALLOWANCES OR ADJUSTMENT BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.

B-72669, FEBRUARY 6, 1948, 27 COMP. GEN. 436

BIDDERS - BID DEPOSITS - FORFEITURE UPON BID WITHDRAWAL UNDER AN INVITATION ON BID ON THE SALE OF GOVERNMENT-USED VEHICLES ON AN "AS IS" BASIS--- WITHOUT WARRANTY OR GUARANTY AS TO QUALITY, CONDITIONS, ETC.--- PROVIDING THAT FAILURE TO INSPECT WILL NOT CONSTITUTE GROUNDS FOR WITHDRAWAL OF BIDS AFTER THE DATE SET FOR OPENING AND THAT THE REQUIRED BID DEPOSITS WILL BE FORFEITED TO THE GOVERNMENT UPON WITHDRAWAL OF BIDS AFTER OPENING, IT IS MANDATORY THAT THE BID DEPOSIT OF A BIDDER BE FORFEITED UPON HIS ELECTION, AFTER THE OPENING OF BIDS, TO WITHDRAW HIS OTHERWISE PROPER BID WHICH OVERESTIMATED THE VEHICLES' VALUE DUE TO HIS FAILURE TO INSPECT PRIOR TO SUBMISSION THEREOF.

ACTING COMPTROLLER GENERAL YATES TO THE SECRETARY OF THE TREASURY, FEBRUARY 6, 1948:

I HAVE YOUR LETTER OF JANUARY 9, 1948, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER RELIEF MAY BE GRANTED TO ROYAL C. MAIN, JR., SAN DIEGO, CALIFORNIA, IN CONNECTION WITH HIS UNDATED BID OFFERING TO PURCHASE A QUANTITY OF USED AUTOMOBILES AND TRUCKS FROM THE TREASURY DEPARTMENT.

THE TREASURY DEPARTMENT, BUREAU OF FEDERAL SUPPLY, BY INVITATION NO. 4G- 56347-S-4-11-19-47, REQUESTED BIDS--- TO BE OPENED NOVEMBER 19, 1947 -- FOR THE SALE BY THE GOVERNMENT OF A LARGE QUANTITY OF USED AUTOMOBILES AND TRUCKS LOCATED AT OAK RIDGE, TENNESSEE. THE GENERAL CONDITIONS ATTACHED TO THE INVITATION PROVIDED, IN PART, AS FOLLOWS:

3. ALL PROPERTY LISTED HEREIN OFFERED "AS IS" AND "WHERE IS" WITHOUT WARRANTY OR GUARANTY AS TO QUALITY, CHARACTER, WEIGHT, SIZE, OR KIND, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCES OR ADJUSTMENT BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED. BIDDERS ARE THEREFORE CAUTIONED TO INSPECT THE PROPERTY PRIOR TO SUBMITTING BID, AS FAILURE TO INSPECT WILL NOT CONSTITUTE GROUNDS FOR RELIEF, OR FOR THE WITHDRAWAL OF A BID AFTER OPENING DATE. ( ITALICS SUPPLIED.)

11. BIDS FOR THE PURCHASE OF USED EQUIPMENT MUST BE ACCOMPANIED BY DEPOSITS OF AT LEAST 25 PERCENT OF THE TOTAL BID. ONLY CASHIER'S OR CERTIFIED CHECKS OR BANK OR POSTAL MONEY ORDERS PAYABLE TO THE TREASURER OF THE UNITED STATES WILL BE ACCEPTED AS DEPOSITS. THE MINIMUM DEPOSIT SHALL BE $50.00 UNLESS THE TOTAL AMOUNT OF THE BID IS LESS THAN $50.00 IN WHICH CASE THE DEPOSIT SHALL BE THE FULL AMOUNT OF THE BID. DEPOSITS ACCOMPANYING BIDS WHICH ARE WITHDRAWN WITHIN THE PERIOD SPECIFIED BY THE BIDDER AFTER THE OPENING FOR ACCEPTANCE, OR, IF NO PERIOD IS SPECIFIED, WITHIN SIXTY (60) DAYS AFTER THE OPENING, SHALL BE FORFEITED TO THE GOVERNMENT.

MR. ROYAL C. MAIN, JR., SUBMITTED A BID, IN RESPONSE TO THE INVITATION, WHEREIN HE OFFERED TO PURCHASE NUMEROUS USED AUTOMOBILES AND TRUCKS AT CERTAIN SPECIFIED PRICES, AND SUBMITTED WITH HIS BID A CHECK FOR $5,000 AS A BID DEPOSIT.

IN YOUR LETTER IT IS STATED THAT SHORTLY AFTER THE BIDS WERE OPENED, MR. MAIN ORALLY REQUESTED PERMISSION TO WITHDRAW HIS BID ON THE BASIS THAT HE HAD NOT INSPECTED THE AUTOMOBILES AND TRUCKS PRIOR TO SUBMITTING HIS BID THEREON AND, AS THE RESULT THEREOF, HE ESTIMATED THE VALUE OF THE AUTOMOBILES AND TRUCKS TOO HIGH. THE BUREAU OF FEDERAL SUPPLY INFORMED MR. MAIN THAT HIS BID COULD NOT BE DISREGARDED ON HIS ORAL REQUEST AND SUGGESTED THAT HE SUBMIT HIS REQUEST IN WRITING AND EXPLAIN IN FULL HIS REASONS FOR REQUESTING WITHDRAWAL OF HIS BID. BY LETTER DATED NOVEMBER 26, 1947, MR. MAIN ADVISED THE BUREAU OF FEDERAL SUPPLY, IN PERTINENT PART, AS FOLLOWS:

SUBJECT: SUBMITTING OF BID NUMBER 4G-56347-S-R-11-19-47.

ON NOVEMBER 19, 1947 MR. HOWARD HAKES ACTING AS MY AGENT DID SUBMIT IN PERSON COPIES OF THE ABOVE INVITATION WITH AN OFFERING ON ALL ITEMS LISTED. THIS LETTER IS A PLEA TO ASK FOR RELIEF FROM THIS ACTION AS FULFILLMENT OF OBLIGATIONS ARISING FROM THE AWARDING OF THESE ITEMS WOULD RESULT IN MY FINANCIAL DISASTER. IN SUBMITTING MY PLEAS I AM AWARE THAT THE GENERAL CONDITIONS GOVERNING THE BIDS SOMEWHAT DISSOLVE THEM, BUT HAVE BELIEF THAT THE GOVERNMENT WHICH I HELP TO MAINTAIN THROUGH TAXES IS FUNCTIONING TO HELP THOSE THAT SUPPORT IT AND NOT DESTROY THEM.

MY AGENT WAS SENT EAST BY AIR TWO DAYS BEFORE BID DEADLINE AND WAS TO HAVE STOPPED OFF ENROUTE TO WASHINGTON AT OAK RIDGE, TENNESSEE TO INSPECT VEHICLES OFFERED IN BID, BUT THROUGH A SERIES OF BAD AIR LINE CONNECTIONS AND DELAYS, ENDED UP IN WASHINGTON WITHOUT GETTING TO OAK RIDGE, BARELY A FEW HOURS BEFORE BID SUBMITTING TIME. SOMEWHAT CONFUSED AND RELYING ON THE INSPECTION OF PREVIOUS VEHICLES OFFERED BY THIS DEPARTMENT, HE SUBMITTED OFFERINGS WORKED OUT BEFOREHAND ON THE BASIS OF THE VEHICLES IN FAIR CONDITION. THIS JUDGMENT PROVED MISGUIDED UPON INSPECTION THE FOLLOWING DAY AT OAK RIDGE. THEIR TRUE VALUE IS THIRTY-FIVE (35) TO FORTY -FIVE (45) PERCENT LESS THAN ESTIMATED AND THE FINANCIAL ASSISTANCE ACCORDED AUTOMOBILE DEALERS LIKE MYSELF BY FINANCE COMPANIES COULD NOT BE FORTHCOMING ON THAT BASIS TO CONSUMMATE THE CONTRACT.

THERE APPEARS TO HAVE BEEN NO ERROR IN THE BID OF MR. MAIN, THAT IS, HIS BID WAS AS INTENDED WHEN IT WAS SUBMITTED--- THE REQUEST FOR WITHDRAWAL OF THE BID HAVING BEEN MADE ON THE BASIS THAT UPON INSPECTION OF THE VEHICLES AFTER OPENING THE BIDS THE VEHICLES WERE NOT AS HAD BEEN ANTICIPATED. HOWEVER, THE VEHICLES WERE OFFERED FOR SALE "AS IS" WITHOUT WARRANTY OR GUARANTY AS TO QUALITY, CHARACTER, CONDITION, ETC., AND ALL PROSPECTIVE BIDDERS WERE EXPRESSLY CAUTIONED IN THE INVITATION TO INSPECT THE VEHICLES PRIOR TO SUBMITTING A BID "AS FAILURE TO INSPECT WILL NOT CONSTITUTE GROUNDS FOR RELIEF, OR FOR THE WITHDRAWAL OF A BID AFTER OPENING DATE.'

IN THE CASE OF TRIAD CORPORATION V. UNITED STATES, 63 C.1CLS. 151, 156, INVOLVING THE SALE OF SURPLUS PROPERTY, THE COURT STATED WITH REFERENCE TO CONTRACT PROVISIONS SIMILAR TO THOSE IN THE PRESENT CASE THAT---

THE PLAINTIFF DID NOT TAKE ADVANTAGE OF ITS RIGHT TO INSPECT, BUT BOUGHT THE LOT WITHOUT INSPECTING IT.

UNDER THE TERMS OF THE CATALOGUE IT IS DIFFICULT TO PERCEIVE HOW THE GOVERNMENT COULD HAVE GIVEN PURCHASERS MORE SPECIFIC WARNING THAN IT DID, THAT THEY BOUGHT AT THEIR RISK WHAT MATERIAL IT HAD AND WAS OFFERING FOR SALE; THAT IF A PURCHASER WISHED TO PROTECT HIMSELF HE COULD DO SO BY INSPECTION, FULL OPPORTUNITIES FOR WHICH WERE OFFERED, AND THAT IF HE FAILED TO INSPECT AND RECEIVED SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING HE COULD HAVE NO REDRESS AND COULD NOT CLAIM ALLOWANCES BY REASON THEREOF. MORE THAN THAT, HE WAS DISTINCTLY TOLD THAT FAILURE TO INSPECT WOULD NOT BE CONSIDERED AS A GROUND FOR ADJUSTMENT. IF PLAINTIFF NEGLECTED TO EMBRACE THE OPPORTUNITY OFFERED IT TO INSPECT AND PURCHASED THE PROPERTY WITHOUT DOING SO, WITH NOTICE THAT IT BOUGHT AT IS OWN RISK, IT CREATED BY ITS OWN NEGLIGENCE THE SITUATION FROM WHICH IT NOW SEEKS RELIEF.

UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGATED TO ACT IN GOOD FAITH, AND THIS IT DID. THE MATERIAL WAS SOLD FOR WHAT THE GOVERNMENT BELIEVED IT TO BE. THE PLAINTIFF CANNOT RECOVER. ( CASES CITED.)

MOREOVER, IN CONNECTION WITH THE PROVISIONS OF PARAGRAPH 11 OF THE GENERAL CONDITIONS, SPECIFYING THE DEPOSITS ACCOMPANYING BIDS WHICH WERE WITHDRAWN WOULD BE FORFEITED TO THE GOVERNMENT, ATTENTION IS INVITED TO THE CASE OF W. A. SCOTT V. UNITED STATES, 44 C.1CLS. 524, INVOLVING AN INVITATION ISSUED BY THE COMMISSIONER OF INDIAN AFFAIRS REQUESTING BIDS FOR LEASING CERTAIN LANDS AND REQUIRING THAT EACH PROPOSAL SHOULD BE ACCOMPANIED BY A CERTIFIED CHECK OR DRAFT WHICH WAS TO BE FORFEITED TO THE GOVERNMENT IN CASE ANY BIDDER RECEIVING AN AWARD SHOULD FAIL TO ENTER INTO THE PRESCRIBED LEASE. THE PLAINTIFF SUBMITTED A BID OFFERING TO LEASE THE LAND AND ACCOMPANIED HIS BID WITH A CERTIFIED CHECK FOR $500. ON THE DAY AFTER THE OPENING OF THE BIDS, THE PLAINTIFF WITHDREW HIS BID ON THE BASIS THAT AN ERROR HAD BEEN MADE THEREIN AND REQUESTED THE RETURN OF THE CHECK WHICH ACCOMPANIED HIS BID. THE COURT, IN DENYING RECOVERY OF THE CHECK, SAID:

THE AGENTS OF THE GOVERNMENT STAND UPON A DIFFERENT FOOTING FROM PRIVATE INDIVIDUALS IN THE MATTER OF ADVERTISING FOR THE LETTING OF CONTRACTS IN BEHALF OF THE UNITED STATES. THEY HAVE NO DISCRETION. THEY MUST ACCEPT THE LOWEST OR THE HIGHEST RESPONSIBLE BID, OR REJECT ALL AND READVERTISE. PRIVATE INDIVIDUALS ARE NOT REQUIRED THUS TO ACT. HENCE IT IS APPARENT THAT GOVERNMENT AGENTS SHOULD BE ALLOWED A REASONABLE TIME AFTER THE OPENING OF BIDS BEFORE THEY ARE ALLOWED TO BE WITHDRAWN, SO THEY CAN BE AFFORDED OPPORTUNITIES TO ASCERTAIN WHETHER COLLUSION OR FRAUD HAD BEEN PERPETRATED AGAINST THE UNITED STATES BY THE PARTIES ENGAGED IN THE BIDDING. IT IS ALSO APPARENT THAT IF THE RULE OF ALLOWING IMMEDIATE WITHDRAWALS AFTER THE RESULTS OF THE BIDDING ARE MADE KNOWN, FRAUDS INNUMERABLE COULD BE PERPETRATED AGAINST THE UNITED STATES, AND THUS PUBLIC JUSTICE WOULD BE GREATLY HAMPERED. EXPERIENCE IN ADVERTISING FOR PROPOSALS FOR CONTRACTS HAS RENDERED IT NECESSARY FOR THE DIFFERENT DEPARTMENTS OF THE GOVERNMENT TO REQUIRE A DEPOSIT OF 5 TO 10 PERCENT OF THE APPROXIMATE AMOUNT INVOLVED AS AN EVIDENCE OF GOOD FAITH AND HONEST DEALING ON THE PART OF THE BIDDERS, SAID DEPOSIT TO BE FORFEITED IF THE RULES OF THE DEPARTMENTS ARE NOT COMPLIED WITH; OTHERWISE SUCH DEPOSITS WILL BE RETURNED TO THE BIDDERS. IT IS AN EASY MATTER FOR A BIDDER TO SHUN RESPONSIBILITY IF HE HAS UNDERESTIMATED OR OVERESTIMATED IN HIS PROPOSAL, PROVIDED HE IS ALLOWED TO WITHDRAW HIS BID AND WITH IT RECOVER THE AMOUNT OF HIS DEPOSIT.

* * * WHILE WE DO NOT SAY THAT COLLUSION OR FRAUD IS ESTABLISHED IN THIS CASE, YET IT IS A FACT THAT THE GOVERNMENT LOST $11,535 BY THE FAILURE OF PLAINTIFF TO COMPLY WITH THE TERMS OF HIS PROPOSAL, WHICH FACT, CONSIDERED IN CONNECTION WITH HIS REFUSAL TO FURNISH THE INDIAN OFFICE WITH PROOF OF THE ALLEGED MISTAKE IN TRANSMITTING HIS BID, JUSTIFIES THE COURT IN THE BELIEF THAT THERE WAS SOME REASON, NOT FAVORABLE TO THE PLAINTIFF, WHICH PROMPTED HIM NOT TO FURNISH EVIDENCE OF GOOD FAITH. WE, THEREFORE, DECIDE THAT THE SECRETARY OF THE INTERIOR WAS JUSTIFIED IN DECLARING THE DRAFT OF $500 FORFEITED TO THE UNITED STATES, AND THE PETITION IS ACCORDINGLY DISMISSED. ( ITALICS SUPPLIED.)

IN THE PRESENT CASE THE INVITATION REQUIRED ALL BIDDERS TO SUBMIT A CHECK OR ANNUAL BOND WITH THEIR BIDS. THE PURPOSE OF THE CHECK OR ANNUAL BOND WAS TO INSURE GOOD FAITH IN BIDDING. THE COURT IN THE CASE OF UNITED STATES V. CONTI ( C.C.A. 1), 119 F.2D 652, 655, DEFINED THE TERM "BID SECURITY" AS A DEPOSIT "REQUIRED OF THE BIDDER IN ORDER TO ASSURE THE GOVERNMENT OF THE SERIOUSNESS OF THE BID, THE DEPOSIT TO BE FORFEITED IF THE BIDDER SHOULD WITHDRAW HIS BID BEFORE THE GOVERNMENT HAD ACCEPTED IT.' THE PLAIN TERMS OF PARAGRAPH 11 OF THE GENERAL CONDITIONS, QUOTED ABOVE, REQUIRE FORFEITURE OF THE BID DEPOSIT TO THE GOVERNMENT IF A BIDDER WITHDRAWS HIS BID AFTER OPENING OF THE BIDS.

ACCORDINGLY, SINCE MR. MAIN ELECTED TO WITHDRAW HIS BID AFTER OPENING OF THE BIDS, THE FORFEITURE OF HIS BID DEPOSIT TO THE GOVERNMENT IS MANDATORY UNDER THE CONDITIONS OF THE BID.