B-141889, FEB. 15, 1960

B-141889, FEB. 15, 1960

TO PROTECTIVE COATINGS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 26, 1960, REQUESTING THAT OUR OFFICE RECONSIDER THE ACTIONS HERETOFORE TAKEN IN CONNECTION WITH YOUR INDEBTEDNESS TO THE UNITED STATES ARISING FROM YOUR FAILURE TO FURNISH CERTAIN COAL TAR PRODUCTS UNDER CONTRACT NO. N189-40999A DATED SEPTEMBER 26, 1958.

WHILE THE RECORD IN THIS MATTER FULLY SUPPORTS THE CLAIM OF THE UNITED STATES, IN VIEW OF THE REPRESENTATIONS MADE IN YOUR LETTER THE FACTUAL AND LEGAL BASES OF THE GOVERNMENT'S POSITION WILL BE SET OUT HERE IN MORE DETAIL.

INVITATION FOR BIDS NO. 189-76-59 DATED AUGUST 18, 1958, REQUESTED BIDS FOR FURNISHING TWO ITEMS OF COAL TAR PRODUCTS FOR F.O.B. SHIPMENT TO THE FREIGHT TERMINAL OFFICER, NSC, NORFOLK, VIRGINIA. DELIVERY WAS DESIRED BY THE GOVERNMENT WITHIN 20 DAYS AFTER THE DATE OF THE CONTRACT. BIDS WERE PUBLICLY OPENED ON SEPTEMBER 16, 1958. YOU OFFERED TO FURNISH ITEM 1 FOR $1.71 PER GALLON AND ITEM 2 FOR $72.70 PER TON, LESS A DISCOUNT OF ONE- HALF PERCENT FOR PAYMENT WITHIN 10 DAYS. YOU ALSO AGREED THEREIN TO MAKE DELIVERY WITHIN 20 DAYS AFTER DATE OF CONTRACT. THE ABSTRACT OF BIDS RECEIVED ON THIS INVITATION REVEALS THE FOLLOWING BID PRICE INFORMATION:

TABLE

BIDDER ITEM 1 ITEM 2 INERTOL CO.

$2.70 $143.00 ALLIED CHEMICAL 1.505 76.60 MASTIC TAR CO. 1.52 78.00 MOLAND CO.

1.95 83.00 PROTECTIVE COATINGS, INC. 1.71 72.70 C. E. THURSTON CO. 1.62 82.22 HENRY WALKE CO.

2.60 --

SINCE YOU SUBMITTED THE LOWEST BID IN THE AGGREGATE ($4,062.50 AS COMPARED TO $4,206.25 OF THE NEXT LOWEST AGGREGATE BIDDER), AWARD OF ITEMS 1 AND 2 WAS MADE TO YOU ON SEPTEMBER 26, 1958. AT THE TIME OF AWARD THERE WAS NOTHING ON THE FACE OF YOUR BID TO INDICATE THE POSSIBILITY OF ERROR. HOWEVER, ON OCTOBER 6, 1958, YOU ADVISED THE CONTRACTING OFFICER OF AN ERROR IN YOUR BID AND REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY $488.87. UPON ADVICE FROM THE CONTRACTING OFFICER THAT THE DIFFERENCE BETWEEN YOUR BID AND THE NEXT LOWEST BID AMOUNTED TO ONLY $145.18, YOU REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY SUCH AMOUNT. THIS WAS DENIED. BY LETTERS OF OCTOBER 17 AND 29, 1958, YOU ADVISED THAT THE ERROR AROSE BECAUSE OF A MISTAKE MADE BY YOUR SUPPLIER IN COMPUTING THE FREIGHT RATE FROM GARWOOD, NEW JERSEY, TO NORFOLK, VIRGINIA. ON MARCH 11, 1959, THE CONTRACT WAS TERMINATED FOR DEFAULT AND YOU WERE ADVISED THAT THE CONTRACT SUPPLIES WOULD BE PURCHASED ELSEWHERE AGAINST YOUR ACCOUNT PURSUANT TO THE DEFAULT CLAUSE OF THE CONTRACT. UNDER NEGOTIATED CONTRACT NO. N189-42391A DATED MARCH 30, 1959, THE CONTRACT SUPPLIES WERE PURCHASED RESULTING IN THE ACCRUAL OF EXCESS COSTS TO THE GOVERNMENT IN THE AMOUNT OF $489.96. THIS AMOUNT WAS REDUCED BY REMITTANCES FROM YOU TOTALING $34.11, LEAVING A BALANCE NOW DUE OF $458.80, INCLUDING INTEREST.

THE ONLY QUESTION FOR CONSIDERATION HERE IS NOT WHETHER YOU MADE AN ERROR IN YOUR BID BUT WHETHER A VALID AND BINDING CONTRACT WAS CONSUMMATED BY THE ACCEPTANCE OF YOUR BID. IT IS UNQUESTIONABLE THAT YOU ALONE WERE RESPONSIBLE FOR THE PREPARATION OF YOUR BID. WHILE THE QUOTATION RECEIVED FROM YOUR SUPPLIER MAY HAVE BEEN IN ERROR SO FAR AS FREIGHT RATES WERE CONCERNED, THE CONTRACTING OFFICER HAD NEITHER ACTUAL NOR CONSTRUCTIVE NOTICE THAT THE QUOTATION MAY HAVE BEEN IN ERROR. IN THE CASE OF FRAZIER- DAVIS CONSTRUCTION COMPANY V. UNITED STATES, 100 C.CLS. 120, 163, IT WAS STATED:

"* * * THE PARTIES ARE DEALING AT ARMS LENGTH AND BIDDERS ARE PRESUMED TO BE QUALIFIED TO ESTIMATE THE PRICE AT WHICH THEY CAN PERFORM THE WORK SPECIFIED AT A REASONABLE PROFIT. IF THEY FAIL TO DO SO, AS PLAINTIFF DID IN THIS CASE, THE GOVERNMENT CANNOT FOR THAT REASON BE HELD FOR THE RESULTING LOSS.'

ANY ERROR THAT WAS MADE IN YOUR BID WAS UNILATERAL--- NOT MUTUAL--- AND DOES NOT ENTITLE YOU TO ANY RELIEF THEREFROM. SEE OGDEN AND DOUGHERTY V. UNITED STATES, 102 C.CLS. 294; SALIGMAN ET AL. V. UNITED STATES, 56 F.SUPP. 505. IN FACT, HAD THE CONTRACTING OFFICER NOT AWARDED THE CONTRACT TO YOU UNDER THE CIRCUMSTANCES HERE PRESENT, HE WOULD HAVE BEEN DERELICT IN HIS DUTY TO THE GOVERNMENT SINCE YOU WERE THE LOWEST RESPONSIBLE BIDDER AND, HENCE, ENTITLED UNDER LAW TO THE AWARD. SEE CARNEGIE STEEL COMPANY V. CONNELLY, 97 A. 774; SHRIMPTON MFG. COMPANY V. BRIN, 125 S.W. 942; ALABAMA SHIRT AND TROUSER COMPANY V. UNITED STATES, 121 C.CLS. 313.

TURNING NOW TO THE QUESTION WHETHER THE PRICES BID BY YOU WERE SO OUT OF LINE WITH OTHER BIDS RECEIVED AS TO CONSTITUTE CONSTRUCTIVE NOTICE TO THE CONTRACTING OFFICER OF THE POSSIBILITY OF ERROR, IT IS ABUNDANTLY CLEAR THAT A COMPARISON OF ALL BIDS REVEALS NO SIGNIFICANT DISPARITY. RATHER, THE BIDS SUBMITTED REPRESENTED A REASONABLE DEGREE OF PRICE PROGRESSION ORDINARILY EXPECTED TO OCCUR WHEN COMPETITIVE BIDS ARE SOLICITED.

THE CONTRACT, AS EXECUTED, REPRESENTED THE FINAL UNDERSTANDING OF THE PARTIES THERETO AND FIXED ALL RIGHTS AND LIABILITIES THEREUNDER. THE RIGHT OF THE GOVERNMENT TO RECEIVE PERFORMANCE IN STRICT ACCORDANCE WITH THE CONTRACT TERMS MAY NOT BE WAIVED IN THE ABSENCE OF ADEQUATE CONSIDERATION AND NO AGENT OF THE GOVERNMENT MAY WAIVE SUCH VESTED RIGHTS FOR CONSIDERATIONS OF EQUITIES IN FAVOR OF THE CONTRACTOR. SEE 22 COMP. GEN. 260; DAY V. UNITED STATES, 245 U.S. 159.

SPECIFICALLY, IN REPLY TO YOUR CONTENTION THAT THE "GOVERNMENT WAS NOTIFIED OF THE INVALIDITY OF THE BID BEFORE AWARD," THE RECORD CLEARLY DISCLOSES THAT ERROR WAS NOT ALLEGED UNTIL OCTOBER 6, 1958, OR AFTER THE AWARD HAD BEEN MADE TO YOU. ALSO, THE EXCESS COSTS CHARGEABLE TO YOU WERE BASED, NOT UPON ANY VARIATION IN FREIGHT RATES AS STATED BY YOU, BUT UPON THE DIFFERENCE IN PRICE BETWEEN YOUR BID PRICE AND THAT OF THE REPLACING CONTRACTOR. THE RECORD ESTABLISHES THE FACT THAT TIME WAS OF THE ESSENCE BUT THAT REPLACEMENT OF THE CONTRACT SUPPLIES COULD NOT BE EFFECTED WHILE THE MATTER OF ALLEGED ERROR WAS BEING RESOLVED AND UNTIL YOUR RIGHT TO FURNISH THE SUPPLIES WAS FORMALLY TERMINATED UNDER THE TERMS OF THE CONTRACT.

IT IS ELEMENTARY THAT CASES, SUCH AS HERE INVOLVED, MUST BE DECIDED UPON LEGAL GROUNDS WITH DUE REGARD TO THE CIRCUMSTANCES AND FACTS INHERENT IN THE MATTER. THE FACT THAT YOU ARE A SMALL BUSINESS FIRM DOES NOT CREATE ANY EXCEPTION TO THE LEGAL PRINCIPLES STATED ABOVE. IN THE EVENT YOU WISH TO PURSUE THE MATTER FURTHER, YOU ARE ADVISED THAT RECOURSE TO THE FEDERAL COURTS IS PERMITTED BY STATUTE IN A SUIT TO RECOVER THE AMOUNT OF EXCESS COST REFUNDED TO THE GOVERNMENT.

ACCORDINGLY, REMITTANCE OF THE BALANCE OF THE INDEBTEDNESS REMAINING DUE SHOULD BE MADE WITHOUT FURTHER DELAY; OTHERWISE MORE FORMAL COLLECTION PROCEEDINGS WILL BE INSTITUTED.