B-126529, APR. 16, 1956

B-126529, APR. 16, 1956

TO MANHATTAN LIGHTING EQUIPMENT COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF NOVEMBER 28, DECEMBER 24, 1955, AND JANUARY 3, 1956, WHEREIN YOU REQUEST THAT YOU BE RELIEVED OF LIABILITY ARISING IN CONNECTION WITH YOUR REPORTED DEFAULTS UNDER CONTRACTS DATED JUNE 15, JUNE 24 AND AUGUST 10, 1955, RESULTING FROM INVITATIONS FOR BIDS NOS. 04-609-55-64, 04-609-55-72 AND 04-609-56-3, ISSUED UNDER DATES OF MAY 20, JUNE 9 AND JULY 21, 1955, BY THE GEORGE AIR FORCE BASE, CALIFORNIA.

AS YOU WERE ADVISED IN OUR COMMUNICATION OF JANUARY 20, 1956, WE ORDERED A COMPLETE INVESTIGATION INTO THE MERITS OF THE SEVERAL CONTENTIONS RAISED BY YOU, THE RESULTS OF WHICH ARE DISCLOSED IN AN ADMINISTRATIVE REPORT DATED MARCH 2, 1956, PREPARED AND SUBMITTED BY THE OFFICE OF HEADQUARTERS, GEORGE AIR FORCE BASE.

CONCERNING YOUR CONTENTION THAT OBVIOUS ERRORS WERE MADE IN SEVERAL OF YOUR QUOTATIONS UNDER THE INVITATIONS REFERRED TO, THE COMMANDER OF THE GOVERNMENT PROCUREMENT AGENCY REPORTS AS OLLOWS:

"THIS HEADQUARTERS HAS DETERMINED THAT THE CONTENTIONS RAISED BY THE MANHATTAN LIGHTING EQUIPMENT CO., INC. WERE:

"A. AN OBVIOUS ERROR WAS MADE IN AWARDING THE ITEMS. THIS HEADQUARTERS IS OF THE OPINION THAT AN ERROR WAS NOT MADE IN THE AWARDS, AND THAT THE AWARDS WERE MADE TO THE LOWEST RESPONSIBLE BIDDER. THE FOLLOWING HAS BEEN ABSTRACTED FROM THE THREE INVITATIONS CONCERNED:

TABLE "IFB 04-609-55-64:

MANHATTAN OTHER BIDDERS "ITEM 21 $1.69 $2.25, $3.56, $2.99, $2.95, $2.80, $3.59

SPREAD OF 25 PERCENT BETWEEN NEXT LOW BIDDER. "ITEM 22 $1.99 $3.05, $3.83, $3.19, $3.16, $3.10, $3.75

SPREAD OF 35 PERCENT BETWEEN NEXT LOW BIDDER. "IFB 04-609-55 72:

MANHATTAN OTHER BIDDERS "ITEM 18 $1.69 $2.70, $2.07, $2.85, $2.37, $2.25

SPREAD OF 18 PERCENT BETWEEN NEXT LOW BIDDER. "IFB 04-609-56 3: "ITEM 6 $1.79 $2.20, $2.10, $2.53, $2.179, $2.09, $2.28

SPREAD OF 14 PERCENT BETWEEN NEXT LOW BIDDER. "ITEM 7 $2.39 $3.10, $2.97, $3.56, $3.049, $2.45, $3.21

SPREAD OF 2 PERCENT BETWEEN NEXT LOW BIDDER.

"THESE SPREADS OF PERCENTAGE BETWEEN THE LOW BIDDER AND THE NEXT LOW BIDDER WERE NOT CONSIDERED EXCESSIVE BY THE CONTRACTING OFFICER MAKING THE AWARD. SPREADS OF 20 PERCENT TO 30 PERCENT ARE NOT THE EXCEPTION IN PROCUREMENT OF HARDWARE ITEMS AS AN ANALYSIS OF THE ABSTRACTS INCLOSED WILL INDICATE. PURCHASING OF CLASS 17B ITEMS HAS ALWAYS SHOWN A WIDE VARIANCE OF PRICES AND UNLESS THE SPREAD IS OVER 50 PERCENT, AND THEN ONLY IN PARTICULAR CASES, IS THE BID QUESTIONED AS TO RESPONSIBILITY.'

THE COURTS AND OUR OFFICE LONG HAVE RECOGNIZED THAT THE RESPONSIBILITY FOR THE PREPARATION OF A PROPOSAL RESTS SOLELY WITH THE BIDDER, AND HE CANNOT, UNDER CIRCUMSTANCES SUCH AS THESE, ESCAPE LIABILITY FROM THE CONSEQUENCES OF NEGLIGENCE UPON HIS PART IN PREPARING HIS BID. SEE FRAZIER-DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 160; 20 COMP. GEN. 652. THE GOVERNMENT'S REQUIREMENTS UNDER THESE INVITATIONS WERE CLEARLY SET FORTH, AND ANY ALLEGED ERRORS UPON YOUR PART IN BIDDING ON THESE ITEMS MUST BE REGARDED AS HAVING BEEN ATTRIBUTABLE SOLELY TO YOUR FAULT OR NEGLIGENCE. THERE WAS NOTHING IN YOUR BIDS ON THESE ITEMS WHICH INDICATED ERROR, AND SINCE THE PRICES QUOTED BY YOU ARE NOT CONSIDERED DISPROPORTIONATE TO THE AMOUNTS OF THE NEXT LOWEST AND THE OTHER BIDS RECEIVED ON THIS TYPE EQUIPMENT, AS TO WHICH THERE NORMALLY IS A WIDE FLUCTUATION, IT MUST BE CONCLUDED THAT THE ACCEPTANCE OF YOUR PROPOSALS CONSUMMATED BINDING AND VALID CONTRACTS WHICH OBLIGATED YOU TO PERFORM IN ACCORDANCE WITH THEIR TERMS.

WITH RESPECT TO YOUR CONTENTION THAT CERTAIN OF THE ITEMS WERE PATENTED, THE COMMANDER OF THE GEORGE AIR FORCE BASE HAS REPORTED:

"B. CONTENTION NUMBER TWO IS THAT THE ITEM CALLED FOR IN THE INVITATION WAS A PATENTED ITEM AND THAT THE TERM "OR EQUAL" IS UNFAIR TO BIDDERS, AND THAT THEREFORE HE SHOULD BE RELIEVED FROM SUPPLYING BECAUSE HE CANNOT MEET THE REQUIREMENTS. IT IS THE OPINION OF THIS HEADQUARTERS THAT THE BIDDER SHOULD HAVE QUALIFIED HIS BID AS AN ALTERNATE. THE FACT THAT HIS SUPPLIER LISTED HIS HAMMER AS EQUAL TO THE NEW PLASTIC HAMMER HAS NO BASIS FOR ACCEPTANCE BY THIS HEADQUARTERS. IN ACCORDANCE WITH GENERAL PROVISION 5, ENTITLED "INSPECTION," THE INSPECTOR REJECTED THE MATERIAL AS NOT BEING EQUAL. INCLOSED IS A TRUE COPY OF THE INSPECTOR'S REPORT. THIS HEADQUARTERS BELIEVES THAT IT HAS NO AUTHORITY TO ISSUE AN INVITATION CALLING FOR AN ITEM, THAT DOES NOT HAVE ADEQUATE SPECIFICATIONS, WITHOUT THE TERM "OR EQUAL.' IT IS KNOWN BY THE CONTRACTING OFFICER THAT THE ITEM IS PATENTED AND THAT THIS TENDS TO RESTRICT COMPETITION BETWEEN MANUFACTURERS. HOWEVER, THE ITEM HAS BEEN PURCHASED FROM SEVERAL DEALERS AND IS AVAILABLE FROM MANY DISTRIBUTORS THROUGHOUT THE COUNTRY. IT IS FELT THAT THE CLAIMANT COULD HAVE BOUGHT DIRECTLY FROM THE MANUFACTURER AND THEN MADE DELIVERY TO GEORGE AIR FORCE BASE. ON 15 DECEMBER 1955, AIR MATERIEL COMMAND TERMINATED THE ITEMS FOR DEFAULT BECAUSE OF FAILURE TO DELIVER ON SCHEDULE.'

THE MERE FACT THAT THE ARTICLE REQUIRED BY THE GOVERNMENT IS PATENTED DOES NOT NECESSARILY PRECLUDE IT FROM ACQUIRING SUCH ITEM UNDER PROPER CIRCUMSTANCES. IN THAT CONNECTION, IT WAS STATED IN OUR DECISION PUBLISHED IN 34 COMP. GEN. 336, AT PAGE 338:

"* * * IF THE DEPARTMENTS OR AGENCIES OF THE GOVERNMENT WERE TO BE RESTRICTED TO THE PURCHASE OF ONLY NONPATENTED ARTICLES, ITS SOURCE OF SUPPLY OF NEEDED ARTICLES WOULD INDEED BE LIMITED, ESPECIALLY IN THE PRESENT DAY OR MODERN FIELD OF COMMERCIAL MANUFACTURE.'

ALONG THIS LINE, THERE SHOULD BE STRESSED THE ESTABLISHED PRINCIPLE OF LAW LAID DOWN BY THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156, PAGE 164: "* * * THE VERY ESSENCE OF THE PROVISION OF A CONTRACT TO DELIVER ARTICLES IS ABILITY TO PROCURE OR MAKE THEM.' THUS, IF THE MANUFACTURE OF CERTAIN OF THESE ITEMS INVOLVED THE USE OF A PATENTED PROCESS, THAT CONTINGENCY WAS SOLELY YOUR RESPONSIBILITY, AND NOT THAT OF THE GOVERNMENT.

AS TO YOUR CONTENTION THAT THE PURCHASING AGENCY RETURNED CERTAIN OF THE REJECTED ITEMS OF HAMMERS TO YOUR SUPPLIER--- A CALIFORNIA MANUFACTURER--- RATHER THAN TO YOU, THE RECORD SHOWS THAT YOU FIRST WERE NOTIFIED OF THE REJECTION OF THESE ARTICLES AS EARLY AS AUGUST 22, 1955, ON WHICH DATE YOU ALSO WERE REQUESTED TO FURNISH THE PURCHASING OFFICE WITH APPROPRIATE DISPOSITION INSTRUCTIONS. DESPITE THIS AND OTHER SUBSEQUENT REQUESTS MADE IN THE ADMINISTRATIVE LETTERS OF AUGUST 31 AND SEPTEMBER 13, 1955, WHEREIN YOU WERE ADVISED OF THE LACK OF AVAILABLE STORAGE SPACE AT THAT DEPOT, AND OF THE AGENCY'S INTENTION OF DISPOSING OF THE REJECTED ITEMS AT ITS DISCRETION IF NOT IN RECEIPT OF THIS INSTRUCTION BY SEPTEMBER 16, 1955--- LATER EXTENDED TO SEPTEMBER 28--- YOU NEVERTHELESS FAILED TO ISSUE SUCH INSTRUCTIONS FOR THE DISPOSITION OF THE REJECTED MERCHANDISE UNTIL AS LATE AS NOVEMBER 1955, AND IN THE MEANTIME THE ITEMS HAD BEEN RETURNED TO YOUR CALIFORNIA SUPPLIER VIA COMMERCIAL TRUCK LINES, AS THEY HAD REQUESTED. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE AGENCY'S ACTION IN RETURNING THE ITEMS TO YOUR SUPPLIER, PURSUANT TO ITS REQUEST, WAS IMPROPER.

ACCORDINGLY, IT IS CONCLUDED THAT NO BASIS EXISTS FOR RELIEVING YOU OF ANY LIABILITY FOR EXCESS COSTS, UNDER THE PROVISIONS OF ARTICLE 11 OF THESE CONTRACTS, RESULTING FROM YOUR DEFAULT.