B-81788, MAR 10, 1949

B-81788: Mar 10, 1949

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THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 17. HIS BID WAS ACCEPTED BY LETTER DATED JUNE 26. W-41-142-AC-829 WAS FORWARDED FOR HIS SIGNATURE. WHILE THE AMOUNT OF THE CONTRACT WAS LESS THAN $2. THIS DISCREPANCY WAS CORRECTED BY LETTER DATED JULY 14. HE WAS THEREIN REQUESTED TO RETURN THE CONTRACT PROPERLY SIGNED AND WITNESSED. REQUEST WAS AGAIN MADE ON AUGUST 23. SANDERS WAS GIVEN OFFICIAL NOTICE TO PROCEED WITH THE WORK. HE WAS ADVISED THAT THERE WAS NO AUTHORITY FOR SUCH ACTION. NOTHING FURTHER WAS HEARD FROM MR. IS FOLLOWS: "MR. SANDERS REGRETS THAT DUE TO RISING COSTS AND DUE TO THE FACT THAT HE IS FAIRLY NEW IN THE CONSTRUCTION BUSINESS THAT HE WAS UNABLE TO SECURE PERFORMANCE AND PAYMENT BONDS AND THAT NOW HE IS UNABLE TO ENTER INTO ANY SORT OF CONTRACT WITH YOU BASED ON HIS BID OF JUNE 23.

B-81788, MAR 10, 1949

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 17, 1948, WITH ENCLOSURES, FROM THE CONTRACTING OFFICER, KELLY AIR FORCE BASE, KELLY FIELD, TEXAS (OFFICE SYMBOL SASP), REQUESTING A DECISION AS TO WHETHER T. B. SANDERS MAY BE RELIEVED FROM OBLIGATION UNDER HIS ACCEPTED BID FOR INSTALLATION OF CEILOMETERS AT GOODFELLOW AIR FORCE BASE, SAN ANGELO, TEXAS.

IT APPEARS THAT IN RESPONSE TO INVITATION FOR BIDS-- TO BE OPENED JUNE 24, 1948-- FOR THE INSTALLATION OF CEILOMETERS AT THE GOODFELLOW AIR FORCE BASE, T. B. SANDERS SUBMITTED A BID DATED JUNE 23, 1948 IN THE AMOUNT OF $1,665. HIS BID WAS ACCEPTED BY LETTER DATED JUNE 26, 1948, AND CONTRACT NO. W-41-142-AC-829 WAS FORWARDED FOR HIS SIGNATURE. WHILE THE AMOUNT OF THE CONTRACT WAS LESS THAN $2,000, THE CONTRACT AS PREPARED INADVERTENTLY CONTAINED AN ARTICLE REQUIRING PERFORMANCE AND PAYMENT BONDS, EACH IN THE AMOUNT OF $832.50. HOWEVER, THIS DISCREPANCY WAS CORRECTED BY LETTER DATED JULY 14, 1948, TO MR. SANDERS, AND HE WAS THEREIN REQUESTED TO RETURN THE CONTRACT PROPERLY SIGNED AND WITNESSED. REQUEST WAS AGAIN MADE ON AUGUST 23, 1948, FOR THE RETURN OF THE CONTRACT, AND ON SEPTEMBER 24, 1948, MR. SANDERS WAS GIVEN OFFICIAL NOTICE TO PROCEED WITH THE WORK. LETTER OF OCTOBER 9, 1948, THE CONTRACTOR STATED THAT HE WISHED TO WITHDRAW HIS BID, AND IN REPLY THERETO OF OCTOBER 14, 1948, HE WAS ADVISED THAT THERE WAS NO AUTHORITY FOR SUCH ACTION. NOTHING FURTHER WAS HEARD FROM MR. SANDERS, BUT THE PENULTIMATE PARAGRAPH OF A LETTER DATED NOVEMBER 2, 1948, FROM HIS ATTORNEYS, IS FOLLOWS:

"MR. SANDERS REGRETS THAT DUE TO RISING COSTS AND DUE TO THE FACT THAT HE IS FAIRLY NEW IN THE CONSTRUCTION BUSINESS THAT HE WAS UNABLE TO SECURE PERFORMANCE AND PAYMENT BONDS AND THAT NOW HE IS UNABLE TO ENTER INTO ANY SORT OF CONTRACT WITH YOU BASED ON HIS BID OF JUNE 23. IT IS HIS SUGGESTION, HOWEVER, THAT IF YOU DESIRE HIM TO SUBMIT A BID FOR SUCH CONSTRUCTION AT THIS TIME HE MAY BE IN A POSITION TO DO SO THOUGH THE BID WOULD NECESSARILY BE HIGHER THAN BEFORE BECAUSE OF HIGHER COST OF MATERIAL AND LABOR."

IT IS CLEAR THAT THE ACCEPTANCE OF THE BID CONSTITUTED A VALID AND BINDING CONTRACT, WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES THERETO. IT IS WELL SETTLED THAT IN CONTRACTING WITH THE GOVERNMENT A VALID AND ENFORCEABLE CONTRACT RESULTS UPON ACCEPTANCE BY AN AUTHORIZED AGENT OF THE GOVERNMENT OF A BIDDER'S OFFER OR PROPOSAL, EVEN THOUGH THE PARTIES CONTEMPLATE, OR THE STATUTES REQUIRE, THAT A FORMAL WRITTEN CONTRACT IS TO BE THEREAFTER EXECUTED BY THE PARTIES, AND IRRESPECTIVE OF WHETHER SUCH FORMAL CONTRACT IS THEREAFTER EXECUTED. SEE GARFIELDS V. UNITED STATES, 93 U.S. 242; HARVEY V. UNITED STATES, 105 U.S. 671, 688; UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP COMPANY, 239 U.S. 88; ACKERLIND V. UNITED STATES, 240 U.S. 531; UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75; WATERS V. UNITED STATES, 75 C.CLS. 126.

ACCORDINGLY, YOU ARE ADVISED THAT THE RECORD BEFORE THIS AFFORDS NO LEGAL BASIS FOR RELIEVING T. B. SANDERS FROM OBLIGATION UNDER HIS ACCEPTED BID. IN THE EVENT OF THE FAILURE OF THE CONTRACTOR TO PERFORM THE CONTRACT WORK ANY EXCESS COST INCURRED BY REASON OF THE DEFAULT SHOULD BE CHARGED AGAINST SANDER'S ACCOUNT.

SINCE THE CONTRACTING OFFICER IS NOT ENTITLED TO A DECISION THE CONTRACT HAVING BEEN AWARDED-- THE DECISION IS BEING RENDERED TO YOU.