B-143514, SEPTEMBER 1, 1960, 40 COMP. GEN. 147

B-143514, SEPTEMBER 1, 1960, 40 COMP. GEN. 147

APPROPRIATIONS - OBLIGATION - CONTRACTS - NOTICE OF AWARD MAILED TO WRONG BIDDER AT END OF FISCAL YEAR THE INADVERTENT MAILING OF A NOTICE OF AN AWARD OF A CONTRACT TO THE WRONG BIDDER ON THE LAST DAY OF THE FISCAL YEAR DID NOT IMPOSE ANY LIABILITY ON EITHER THE GOVERNMENT OR THE INTENDED CONTRACTOR PRIOR TO THE EXPIRATION OF THE AVAILABILITY OF THE FISCAL YEAR APPROPRIATION; THEREFORE, INASMUCH AS THE NOTICE OF AWARD TO THE SUCCESSFUL BIDDER WAS NOT MAILED UNTIL THE FIRST DAY OF THE NEW FISCAL YEAR, THERE WAS NO VALID AND BINDING AGREEMENT BETWEEN THE PARTIES PRIOR TO THE NEW FISCAL YEAR WITHIN THE MEANING OF SECTION 1311 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 31 U.S.C. 200, TO CONSTITUTE A VALID OBLIGATION OF THE PRECEDING FISCAL YEAR APPROPRIATION.

TO THE SECRETARY OF THE ARMY, SEPTEMBER 1, 1960:

REFERENCE IS MADE TO A LETTER DATED AUGUST 2, 1960, FROM THE CHIEF OF FINANCE, FILE FINKE-B, REQUESTING A DECISION IN REGARD TO A PROTEST AGAINST THE AWARD OF A CONTRACT TO METAL FORMING AND FABRICATING COMPANY UNDER INVITATION FOR BIDS NO. ENG-20-064-60-50 ISSUED JUNE 7, 1960, AS WELL AS A DECISION WHETHER, UNDER THE CIRCUMSTANCES DESCRIBED THEREIN, A CONTRACT IF NOW ENTERED INTO WITH THAT COMPANY WOULD SERVE TO OBLIGATE FISCAL YEAR 1960 FUNDS.

WITH REGARD TO THE OBLIGATION OF FISCAL YEAR 1960 FUNDS, IT IS STATED THAT THE LETTER NOTICE OF AWARD TO METAL FORMING AND FABRICATING COMPANY WAS SIGNED BY THE CONTRACTING OFFICER ON JUNE 29, 1960. THE NOTICE OF AWARD WAS PLACED IN THE MAIL THE FOLLOWING DAY; HOWEVER, THROUGH ERROR THE ENVELOPE WAS ADDRESSED TO MECHANICAL HEAT AND COLD, INC., ONE OF THE UNSUCCESSFUL BIDDERS. ON THE MORNING OF JULY 1, 1960, THE SUCCESSFUL BIDDER WAS ADVISED THAT NOTICE OF AWARD HAD BEEN MAILED. AT ABOUT NOON ON JULY 1, 1960, A REPRESENTATIVE OF MECHANICAL HEAT AND COLD, INC., CAME TO THE CONTRACTING OFFICE AND REQUESTED AN EXPLANATION AS TO WHY THE BID OF THAT COMPANY WAS NOT CONSIDERED. AFTER AN EXPLANATION WAS FURNISHED, HE SHOWED THE ENVELOPE CONTAINING THE CONTRACT DOCUMENTS WHICH WAS INADVERTENTLY FORWARDED TO HIS COMPANY. THE DOCUMENTS WERE THEN LEFT WITH THE CONTRACTING OFFICE. LATER ON IN THE DAY THE UNSUCCESSFUL BIDDER WAS ADVISED THAT THE EARLIER INFORMATION FURNISHED HIM AND THOUGHT TO BE TRUE WAS, IN FACT, INCORRECT BECAUSE OF DEVELOPMENT OF LEGAL AND FUNDING PROBLEMS.

IN DETERMINING WHETHER UNDER THOSE CIRCUMSTANCES 1960 FISCAL YEAR FUNDS HAVE BEEN OBLIGATED BY THE INTENDED AWARD, THERE IS FOR CONSIDERATION SECTION 1311 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 68 STAT. 830, 31 U.S.C. 200, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

(A) * * * AFTER AUGUST 26, 1954 NO AMOUNT SHALL BE RECORDED AS AN OBLIGATION OF THE GOVERNMENT OF THE UNITED STATES UNLESS IT IS SUPPORTED BY DOCUMENTARY EVIDENCE OF---

(1) A BINDING AGREEMENT IN WRITING BETWEEN THE PARTIES THERETO, INCLUDING GOVERNMENT AGENCIES, IN A MANNER AND FORM AND FOR A PURPOSE AUTHORIZED BY LAW, EXECUTED BEFORE THE EXPIRATION OF THE PERIOD OF AVAILABILITY FOR OBLIGATION OF THE APPROPRIATION OR FUND CONCERNED FOR SPECIFIC GOODS TO BE DELIVERED, REAL PROPERTY TO BE PURCHASED OR LEASED, OR WORK OR SERVICES TO BE PERFORMED;

THE LEGISLATION CONTAINED IN SECTION 1311 WAS EXPLAINED BY THE COMMITTEE OF CONFERENCE AS FOLLOWS:

SECTION 1311 (A) (1) PRECLUDES THE RECORDING OF AN OBLIGATION UNLESS IT IS SUPPORTED BY DOCUMENTARY EVIDENCE OF A BINDING AGREEMENT BETWEEN THE PARTIES AS SPECIFIED THEREIN. IT IS NOT NECESSARY, HOWEVER, THAT THIS BINDING AGREEMENT BE THE FINAL FORMAL CONTRACT ON ANY SPECIFIED FORM. THE PRIMARY PURPOSE IS TO REQUIRE THAT THERE BE AN OFFER AND AN ACCEPTANCE IMPOSING LIABILITY ON BOTH PARTIES. * * * (ITALICS SUPPLIED.)

SEE PAGE 18 OF HOUSE REPT. NO. 2663, 83D CONGRESS.

INASMUCH AS NOTICE OF AWARD WAS NOT MAILED TO THE SUCCESSFUL BIDDER PRIOR TO JULY 1, 1960, IT IS CLEAR THAT THERE EXISTED NO AGREEMENT IN WRITING BETWEEN THE PARTIES PRIOR TO THAT DATE AND THAT THE MISTAKE IN ADDRESSING THE ACCEPTANCE TO THE WRONG BIDDER IMPOSED NO LIABILITY ON EITHER THE GOVERNMENT OR THE INTENDED CONTRACTOR PRIOR TO EXPIRATION OF AVAILABILITY FOR OBLIGATION OF FISCAL YEAR 1960 FUNDS.

IN THIS LATTER CONNECTION IT IS STATED IN 17 C.J.S. CONTRACTS SEC. 52, IN PART, THAT---

* * * IT IS CLEAR THAT AN ACCEPTANCE TO BIND THE OFFEROR FROM THE TIME IT IS DROPPED IN THE POST OFFICE MUST BE CONTAINED IN AN ENVELOPE PROPERLY STAMPED AND ADDRESSED, AND PROPERLY POSTED FOR TRANSMISSION.

SEE ALSO, WILLISTON ON CONTRACTS, THIRD EDITION, SECTION 84.

ACCORDINGLY, WHILE A CONTRACT COULD NOW BE AWARDED TO METAL FORMING AND FABRICATING COMPANY IF A SUFFICIENT EXTENSION OF THE ACCEPTANCE PERIOD HAS BEEN GRANTED BY THE BIDDER, THE CONTRACT COULD SERVE ONLY TO OBLIGATE CURRENT FISCAL YEAR FUNDS.