B-103842, OCT. 13, 1955

B-103842, OCT. 13, 1955

TO BLUM ELECTRIC, INC.:

REFERENCE IS MADE TO A LETTER DATED JUNE 16, 1955, FROM YOUR ATTORNEY, RELATING TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $3,000, REPRESENTING THE AMOUNT OF THE BID BOND FURNISHED IN CONNECTION WITH A BID SUBMITTED BY YOU IN RESPONSE TO INVITATION FOR BIDS NO. 33-023- 51-14, DATED NOVEMBER 24, 1950.

IT IS CONTENDED BY YOUR ATTORNEY THAT THE ACCEPTANCE OF YOUR BID WAS CONDITIONED UPON ITS APPROVAL BY THE COMMANDING GENERAL, THAT IS TO SAY, IT WAS NOT TO BECOME BINDING UNTIL SO APPROVED, AND THAT SINCE IT WAS NEVER APPROVED BY THE COMMANDING GENERAL IT NEVER BECAME BINDING UPON YOU. IN SUPPORT OF THAT VIEW YOUR ATTORNEY REFERS TO OUR DECISION DATED MARCH 25, 1952, B-103842, WHEREIN IT WAS CONCLUDED THAT THE CONDITIONAL ACCEPTANCE OF YOUR BID DID NOT RESULT IN A VALID AND BINDING CONTRACT. COMPARE, HOWEVER, THE DECISION RENDERED JUNE 19, 1952, IN THE CASE OF SINGLETON, ET AL. V. DISTRICT OF COLUMBIA, 198 F.2D 945, INVOLVING SIMILAR FACTS WHEREIN IT WAS HELD THAT, NOTWITHSTANDING THE ABSENCE OF THE REQUISITE APPROVAL OF THE CONTRACT BY HIGHER AUTHORITY, THE AWARD TO THE LOW BIDDER BY THE CONTRACTING OFFICER RESULTED IN A BINDING AGREEMENT.

BUT, WHETHER A VALID AND BINDING CONTRACT AROSE AS THE RESULT OF THE ACCEPTANCE OF YOUR BID DATED NOVEMBER 24, 1950, HAS NO BEARING ON THE QUESTION OF YOUR LIABILITY IN THIS CASE. IT IS CLEAR FROM THE RECORD THAT IT WAS SOLELY DUE TO YOUR FAILURE TO EXECUTE THE CONTRACT FORMS THAT THE CONTRACTING OFFICER WAS PRECLUDED FROM OBTAINING THE REQUIRED APPROVAL OF THE COMMANDING GENERAL. THE GOVERNMENT'S CLAIM HEREIN IS NOT BASED UPON THE EXISTENCE OF FORMAL WRITTEN CONTRACT BETWEEN THE PARTIES. IT IS BASED UPON YOUR LIABILITY ARISING FROM YOUR ACCEPTED BID AND THE BID BOND. YOUR BID WAS ACCOMPANIED BY A BID BOND WHEREBY YOUR COMPANY, AS PRINCIPAL, AND THE GLOBE INDEMNITY COMPANY, AS SURETY, WERE JOINTLY AND SEVERALLY BOUND TO THE UNITED STATES IN THE SUM OF $3,000, THE CONDITION THEREOF BEING, IN PART, AS FOLLOWS:

"NOW, THEREFORE, IF THE PRINCIPAL SHALL NOT WITHDRAW SAID BID WITHIN THE PERIOD SPECIFIED THEREIN AFTER THE OPENING OF THE SAME, OR, IF NO PERIOD BE SPECIFIED, WITHIN SIXTY (60) DAYS AFTER SAID OPENING, AND SHALL WITHIN THE PERIOD SPECIFIED THEREFOR, OR, IF NO PERIOD BE SPECIFIED, WITHIN TEN (10) DAYS AFTER THE PRESCRIBED FORMS ARE PRESENTED TO HIM FOR SIGNATURE, ENTER INTO A WRITTEN CONTRACT WITH THE GOVERNMENT, IN ACCORDANCE WITH THE BID AS ACCEPTED, AND GIVE BOND WITH GOOD AND SUFFICIENT SURETY OR SURETIES, AS MAY BE REQUIRED, FOR THE FAITHFUL PERFORMANCE AND PROPER FULFILLMENT OF SUCH CONTRACT, * * * THEN THE ABOVE OBLIGATION SHALL BE VOID AND OF NO EFFECT, OTHERWISE TO REMAIN IN FULL FORCE AND VIRTUE.'

THE BID BOND WAS A PART OF YOUR OFFER AND UPON THE ACCEPTANCE OF YOUR BID YOU WERE COMMITTED TO CARRY OUT THE TERMS THEREOF; THAT IS TO SAY, YOU OBLIGATED YOURSELF TO ENTER INTO A WRITTEN CONTRACT WITH THE GOVERNMENT AND TO GIVE BOND FOR THE FAITHFUL PERFORMANCE AND PROPER FULFILLMENT OF THE CONTRACT. THIS YOU FAILED TO DO. UNDER THE OBLIGATION QUOTED ABOVE YOU AGREED THAT IN THE EVENT OF YOUR FAILURE TO FULFILL THE REQUIREMENTS THEREOF THE SAME WOULD REMAIN IN FULL FORCE AND VIRTUE, MEANING THAT THERE WOULD BE PAID TO THE UNITED STATES THE SUM OF $3,000.

YOUR ATTORNEY ALLEGES THAT THE ELECTRICAL EQUIPMENT INVOLVED ULTIMATELY WAS OBTAINED AT A PRICE LESS THAN YOUR ORIGINAL BID. INSOFAR AS THE GOVERNMENT'S RIGHT TO RECOVER IN THIS CASE IS CONCERNED, IT IS IMMATERIAL WHETHER THE UNITED STATES ACTUALLY SUFFERED ANY MEASURABLE DAMAGE AS THE RESULT OF YOUR DEFAULT. THE OBLIGATION OF THE BOND WAS, IN EFFECT, A LIQUIDATION IN ADVANCE OF THE DAMAGES WHICH THE GOVERNMENT MIGHT SUFFER AS THE RESULT OF YOUR FAILURE TO ENTER INTO THE CONTRACT. IN THE CASE OF SUN PRINTING AND PUBLISHING ASSN. V. MOORE, 183 U.S. 642, 662, THE COURT SAID:

"THE DECISIONS OF THIS COURT ON THE DOCTRINE OF LIQUIDATED DAMAGES AND PENALTIES LEND NO SUPPORT TO THE CONTENTION THAT PARTIES MAY NOT BONA FIDE, IN A CASE WHERE THE DAMAGES ARE OF AN UNCERTAIN NATURE, ESTIMATE AND AGREE UPON THE MEASURE OF DAMAGES WHICH MAY BE SUSTAINED FROM THE BREACH OF AN AGREEMENT. ON THE CONTRARY, THIS COURT HAS CONSISTENTLY MAINTAINED THE PRINCIPLE THAT THE INTENTION OF THE PARTIES IS TO BE ARRIVED AT BY A PROPER CONSTRUCTION OF THE AGREEMENT MADE BETWEEN THEM, AND THAT WHETHER A PARTICULAR STIPULATION TO PAY A SUM OF MONEY IS TO BE TREATED AS A PENALTY, OR AS AN AGREED ASCERTAINMENT OF DAMAGES, IS TO BE DETERMINED BY THE CONTRACT, FAIRLY CONSTRUED, IT BEING THE DUTY OF THE COURT ALWAYS, WHERE THE DAMAGES ARE UNCERTAIN AND HAVE BEEN LIQUIDATED BY AN AGREEMENT, TO ENFORCE THE CONTRACT.'

FOR THESE REASONS, IT IS REQUESTED THAT YOU FORWARD TO THIS OFFICE YOUR CHECK IN THE AMOUNT OF $3,000, MADE PAYABLE TO THE TREASURER OF THE UNITED STATES, IN PAYMENT OF YOUR LIABILITY.