B-150438, MAR. 7, 1963

B-150438: Mar 7, 1963

Additional Materials:

Contact:

Ralph O. White
(202) 512-8278
WhiteRO@gao.gov

Kenneth E. Patton
(202) 512-8205
PattonK@gao.gov

 

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

BIDS WERE OPENED ON DECEMBER 11. YOU HAVE PROPOSED TO ACCEPT THE AIRCRAFT. EITHER AS A RESULT OF REMOVING PARTS NOT SPECIFICALLY INCLUDED IN THE AGREEMENT OR BECAUSE OF THE MANNER IN WHICH THOSE PARTS WERE REMOVED. 000 FOR AIRPLANE PARTS WHICH WERE REMOVED AFTER AWARD. A CLAIM PRESENTED TO OUR OFFICE IN WHICH THE SUCCESSFUL BIDDER ALLEGES DAMAGE TO THE AIRCRAFT BECAUSE OF THE MANNER IN WHICH PARTS WERE REMOVED. YOU CONTEND THAT THE GOVERNMENT'S ALLEGED CONCERN OVER POSSIBLE LIABILITY IS UNWARRANTED BECAUSE YOU OFFER TO EXECUTE A WRITTEN INSTRUMENT ABSOLVING THE GOVERNMENT OF ALL POSSIBLE LIABILITY. THERE IS SUBSTANTIAL JUDICIAL AUTHORITY FOR THE VIEW THAT A CONTRACTUAL CLAUSE WHICH EXCULPATES A PARTY FROM HIS OWN FUTURE NEGLIGENCE IS UNENFORCEABLE.

B-150438, MAR. 7, 1963

TO THE NORMANDIE IRON AND METAL CO., INC.:

IN YOUR LETTER OF JANUARY 10, 1963, YOU OBJECT TO THE CANCELLATION OF INVITATION FOR BIDS 49-S-63-10, BY WHICH THE DEFENSE SURPLUS SALES OFFICE SOLICITED BIDS FOR THE SALE OF 254 AIRCRAFT CARCASSES LOCATED AT DAVIS- MONTHAN AIR FORCE BASE, ARIZONA.

BIDS WERE OPENED ON DECEMBER 11, 1962. YOUR COMPANY SUBMITTED THE HIGHEST BID. HOWEVER, PRIOR TO AWARD, THE CONTRACTING OFFICER RECEIVED NOTICE THAT THE DEPARTMENT OF THE AIR FORCE REQUIRED FURTHER CANNIBALIZATION OF THE AIRCRAFT. ACCORDINGLY, THE GOVERNMENT EXERCISED ITS RIGHT UNDER PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS AND ARTICLE "Q" OF THE SPECIAL CONDITIONS OF THE INVITATION FOR BIDS, AND REJECTED ALL BIDS AND WITHDREW ALL ADVERTISED ITEMS IN ORDER TO PERMIT CANNIBALIZATION. YOU HAVE PROPOSED TO ACCEPT THE AIRCRAFT, LESS THOSE MILITARY PARTS SPECIFICALLY LISTED FOR CANNIBALIZATION, AT YOUR ORIGINAL BID PRICE, AND OBJECT TO THE REFUSAL OF THE DEFENSE SUPPLY AGENCY TO ACCEPT THIS PROPOSAL.

THE AGENCY REPORTS THAT IT REJECTED YOUR PROPOSAL BECAUSE OF THE POSSIBILITY THAT THE GOVERNMENT MIGHT LATER BE SUBJECTED TO CLAIMS ON WHICH ITS POTENTIAL LIABILITY COULD EXCEED THE CONTRACT PRICE, EITHER AS A RESULT OF REMOVING PARTS NOT SPECIFICALLY INCLUDED IN THE AGREEMENT OR BECAUSE OF THE MANNER IN WHICH THOSE PARTS WERE REMOVED. IT CITES AS EXAMPLES A SUIT NOW PENDING IN THE COURT OF CLAIMS FOR $565,000 FOR AIRPLANE PARTS WHICH WERE REMOVED AFTER AWARD, AND A CLAIM PRESENTED TO OUR OFFICE IN WHICH THE SUCCESSFUL BIDDER ALLEGES DAMAGE TO THE AIRCRAFT BECAUSE OF THE MANNER IN WHICH PARTS WERE REMOVED.

YOU CONTEND THAT THE GOVERNMENT'S ALLEGED CONCERN OVER POSSIBLE LIABILITY IS UNWARRANTED BECAUSE YOU OFFER TO EXECUTE A WRITTEN INSTRUMENT ABSOLVING THE GOVERNMENT OF ALL POSSIBLE LIABILITY. HOWEVER, THERE IS SUBSTANTIAL JUDICIAL AUTHORITY FOR THE VIEW THAT A CONTRACTUAL CLAUSE WHICH EXCULPATES A PARTY FROM HIS OWN FUTURE NEGLIGENCE IS UNENFORCEABLE. SEE 175 A.L.R. 12, ET SEQ.; WILLISTON ON CONTRACTS, REVISED EDITION, SECTION 1751C, AND CORBIN ON CONTRACTS, SECTION 1472.

IN OUR DECISION 17 COMP. GEN. 554, 559, WE OBSERVED THAT A CONTRACTING OFFICER IS NOT BOUND TO ACCEPT A BID FOR THE PROCUREMENT OF CERTAIN ITEMS WHEN HE DETERMINES THAT THE PUBLIC INTEREST WOULD BE SERVED BY A REJECTION OF ALL BIDS. CF. 37 COMP. GEN. 760. IT IS EQUALLY WELL ESTABLISHED THAT AN INVITATION FOR BIDS FOR THE SALE OF CERTAIN ITEMS MAY BE CANCELED WHEN IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. B-147837, DATED FEBRUARY 23, 1962. IN VIEW OF THE LIABILITY WHICH MIGHT RESULT FROM AWARDING THIS CONTRACT TO YOU OR ANY OTHER BIDDER, THE SPECIFIC RESERVATIONS IN THE INVITATION OF THE RIGHT TO REJECT ALL BIDS AND WITHDRAW ALL ITEMS PRIOR TO AWARD, AND THE BROAD DISCRETION OF THE CONTRACTING OFFICER IN DECIDING WHETHER CANCELLATION IS PROPER, WE BELIEVE THE DETERMINATION TO WITHDRAW THE INVITATION WAS JUSTIFIED AS BEING IN THE PUBLIC INTEREST, AND THEREFORE, FIND NO LEGAL OBJECTION TO THE ACTION TAKEN BY THE ADMINISTRATIVE AGENCY.

Feb 26, 2021

Feb 25, 2021

Feb 24, 2021

Looking for more? Browse all our products here