B-127476, AUG. 20, 1956

B-127476, AUG. 20, 1956

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER DATED MAY 31, 1956, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, FURNISHING A REPORT CONCERNING THE REQUEST OF NIAGARA SWITCHGEAR COMPANY TO BE RELIEVED FROM LIABILITY UNDER CONTRACT NO. 14-06- D DATED SEPTEMBER 12, 1955, FOR FURNISHING TWO BATTERY CHARGERS FOR THE PALISADES POWER PLANT UNDER SCHEDULE NO. 4, INVITATION NO. DS-4429, ISSUED BY THE BUREAU OF RECLAMATION, DENVER, COLORADO.

THE INVITATION REQUESTED BIDS FOR EQUIPMENT LISTED UNDER FOUR SCHEDULES AND ALSO COMBINATION BIDS ON VARIOUS OR ALL OF THE SCHEDULES. IN RESPONSE TO THE INVITATION, NIAGARA SWITCHGEAR COMPANY, A PARTNERSHIP COMPOSED OF ROBERT H. WHERRY AND LYLE L. EDWARDS, SUBMITTED A BID ON EACH OF THE FOUR SCHEDULES AND ON EACH OF THE COMBINATIONS OF THE SCHEDULES. THE BID OF NIAGARA SWITCHGEAR COMPANY WAS LOW ONLY ON SCHEDULE 4, WHICH COVERED THE FURNISHING OF TWO STATIC TYPE BATTERY CHARGES. NIAGARA SWITCHGEAR COMPANY QUOTED A PRICE OF $1,000 FOR THE TWO BATTERY CHARGERS AND SHOWED THE SHIPPING WEIGHT AS 400 POUNDS. THE ABSTRACT OF BIDS SHOWS THAT THE THREE OTHER BIDS RECEIVED ON SCHEDULE 4 QUOTED PRICES OF $3,120, $3,560.76 AND $4,428 AND THAT THE SHIPPING WEIGHTS WERE SHOWN AS 2,000, 4,000 AND 1,500 POUNDS, RESPECTIVELY.

IN VIEW OF THE LOW PRICES AND THE SHIPPING WEIGHT SHOWN IN THE BID, THE CONTRACTING OFFICER BY LETTER DATED AUGUST 17, 1955, REQUESTED NIAGARA SWITCHGEAR COMPANY TO CONFIRM ITS BID PRICE AND SHIPPING WEIGHT. NO REPLY HAVING BEEN RECEIVED BY SEPTEMBER 8, FOUR DAYS PRIOR TO THE EXPIRATION OF THE ACCEPTANCE PERIOD, A TELEGRAM WAS DISPATCHED REQUESTING IMMEDIATE REPLY. ON SEPTEMBER 12, THE LAST DAY FOR ACCEPTANCE, THE BID WAS ACCEPTED AND COPIES OF THE CONTRACT AND BOND FORMS WERE FORWARDED TO THE COMPANY FOR EXECUTION. NOTHING WAS HEARD FROM THE CONTRACTOR AND AN INSPECTOR WAS REQUESTED TO CALL UPON HIM.

IN REPORT DATED DECEMBER 3, 1955, THE INSPECTOR STATES THAT HE HAD GREAT DIFFICULTY IN TRYING TO LOCATE THE CONTRACTOR AS THE ADDRESS WAS GIVEN AS A PRIVATE RESIDENCE AND NO ONE WAS AT HOME; THAT HE FINALLY ASCERTAINED THAT MR. LYLE L. EDWARDS WAS EMPLOYED BY A LOCAL FIRM; THAT MR. EDWARDS WAS FINALLY CONTACTED AND IT WAS LEARNED THAT BOTH HE AND MR. WHERRY WERE EMPLOYED AS ELECTRICAL ENGINEERS BY THAT FIRM AND THAT THEY WERE ATTEMPTING TO ESTABLISH A BUSINESS ON THE SIDE; THAT THEY HAD BUILT SEVERAL SMALL SWITCHBOARDS AND OUTDOOR SUBSTATIONS AND THAT IT WAS HIS OPINION THAT THEY WERE SINCERE AND WOULD GET THE JOB DONE ONE WAY OR ANOTHER. IT FURTHER DEVELOPED THAT THE COMPANY ALLEGED THAT IT WAS PRIMARILY INTERESTED IN OBTAINING AWARD OF ALL OR PART OF THE OTHER THREE ITEMS AND APPARENTLY HAD ONLY BID ON ITEM 4 IN THE BELIEF IT WOULD ENABLE THEM TO OBTAIN ONE OR ALL OF THE OTHER ITEMS. IT WAS ALSO ALLEGED THAT THE PRICE OF ITEM 4 SHOULD HAVE BEEN $1,000 EACH, RATHER THAN FOR BOTH BATTERIES, THAT THE COST OF FREIGHT WAS OMITTED, AND IT WAS NOT KNOWN THAT A PERFORMANCE BOND WOULD BE REQUIRED.

THE COMPANY ATTEMPTED TO PERFORM THE CONTRACT AND SUBMITTED CERTAIN REQUIRED PRELIMINARY DRAWINGS WHICH WERE REJECTED AS NOT MEETING THE REQUIREMENTS OF THE SPECIFICATIONS. THE COMPANY THEN REALIZED THAT IT COULD NOT BUILD THE BATTERY CHARGES BECAUSE THEY WERE TOO COMPLICATED AND REQUIRED EQUIPMENT WHICH THEY COULD NOT OBTAIN. AN ATTEMPT WAS MADE TO PURCHASE THE BATTERY CHARGERS BUT IT WAS DISCOVERED THAT THEY WOULD COST IN EXCESS OF $3,600 AND THE COMPANY DID NOT HAVE SUFFICIENT FINANCES TO DO SO IN VIEW OF THEIR CONTRACT PRICE OF $1,000.

DUE TO THE CONTRACTOR'S INABILITY TO PERFORM AND URGENT NEED BY THE GOVERNMENT FOR THE EQUIPMENT, THE CONTRACTING OFFICER FOUND IT NECESSARY ON MARCH 30, 1956, TO DECLARE THE CONTRACTOR IN DEFAULT AND TERMINATE THE CONTRACT.

IN VIEW OF THE CIRCUMSTANCES APPEARING IN THIS CASE, PARTICULARLY THE GREAT DIFFERENCE BETWEEN THE BID PRICES, THERE IS EXTREME DOUBT THAT THE ACCEPTANCE OF THE BID CONSTITUTED A VALID AND BINDING CONTRACT REQUIRING THE COMPANY TO FURNISH THE EQUIPMENT FOR THE AMOUNT QUOTED IN ITS BID. SEE ALTA ELECTRIC AND MECHANICAL COMPANY, INC. V. UNITED STATES, 90 C.CLS. 466, 476, AND KEMP V. UNITED STATES, 38 F.SUPP. 568.

ACCORDINGLY, AND SINCE NO FORMAL CONTRACT WAS EVER EXECUTED BY THE COMPANY, THE NIAGARA SWITCHGEAR COMPANY SHOULD BE RELIEVED FROM THE RESPONSIBILITY IN THE MATTER.

THE BID OF NIAGARA SWITCHGEAR COMPANY, THE PERFORMANCE BOND AND THE COPY OF THE CONTRACT ARE RETURNED HEREWITH. THE OTHER PAPERS ARE BEING RETAINED HERE.