B-170806, NOV. 10, 1970

B-170806, NOV. 10, 1970

CONTRACTS - DEFAULT - EXCESS COST RELIEF DENIAL OF RELIEF FROM ASSESSMENT OF EXCESS COSTS INCIDENT TO DEFAULT OF UFORMA, INC., UNDER CONTRACT FOR PRODUCTION OF A FORM FOR USE OF V.A. WHICH RELIEF IS ADMINISTRATIVELY RECOMMENDED. A CONTRACTOR WHO ADVISED THAT HE COULD NOT MEET THE SEWING REQUIREMENTS IN THE SPECIFICATIONS FOR THE PRODUCTION OF A FORM WHICH SPECIFICATIONS INDICATED THE TYPE OF FASTENING MAY NOT BE RELIEVED OF LIABILITY FOR EXCESS COSTS WHEN DEFAULT WAS DUE SOLELY TO CONTRACTOR'S OWN NEGLIGENCE IN PREPARING ITS BID.

TO MR. SPENCE:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14, 1970, WITH ENCLOSURES, REQUESTING A DECISION ON THE REQUEST OF UFORMA, INC., ROSEVILLE, MICHIGAN, FOR RELIEF FROM AN ASSESSMENT OF EXCESS COSTS IN THE AMOUNT OF $820.50 ON ACCOUNT OF THAT COMPANY'S DEFAULT UNDER A CONTRACT WITH THE GOVERNMENT PRINTING OFFICE (GPO). WE ALSO HAVE A LETTER DATED SEPTEMBER 25, 1970, FROM THE COMPTROLLER, GPO, IN THIS MATTER.

IT IS REPORTED THAT THE CONTRACT UNDER PURCHASE ORDER 57928, JACKET NO. 378-283, WAS AWARDED TO UFORMA ON APRIL 9, 1970, IN THE AMOUNT OF $3,661.50 FOR THE PRODUCTION OF 150,000 SETS OF A FORM ENTITLED "REQUEST FOR APPROVAL OF SCHOOL ATTENDANCE" WHICH WAS FOR THE USE OF THE VETERANS ADMINISTRATION. AFTER AWARD, GPO FORWARDED A SAMPLE OF THE SEWING REQUIRED FOR BINDING ON THE JOB TO THE CONTRACTOR. BY LETTER DATED APRIL 13, 1970, THE CONTRACTOR ADVISED THE PROCUREMENT OFFICE THAT AFTER INSPECTING THE SAMPLE, IT COULD NOT PRODUCE THE TYPE OF SEWING (SPOT SEWING) REQUIRED. THE CONTRACTOR STATED THAT IT WAS A MISINTERPRETATION OF THE SEWING REQUIREMENTS ON ITS PART, AND THAT IT DID NOT HAVE THE EQUIPMENT REQUIRED FOR SPOT SEWING. ALL COPY AND MATERIAL WERE RETURNED WITH THE LETTER.

IN VIEW OF THE FOREGOING, THE PROCUREMENT OFFICE, BY LETTER DATED APRIL 17, 1970, IN ACCORDANCE WITH THE STANDARD GOVERNMENT DEFAULT CLAUSE IN ARTICLE 18 OF THE GPO CONTRACT TERMS NO. 1, NOTIFIED UFORMA THAT IT WAS IN DEFAULT. THE CONTRACTOR WAS ALSO ADVISED THAT AFTER REPROCUREMENT OF THE WORK SPECIFIED ALL COSTS IN EXCESS OF ITS QUOTATION WOULD BE RECOVERED FROM IT AS DEFAULTING CONTRACTOR. TO SATISFY THE NEEDS OF THE GOVERNMENT THE REQUIREMENT WAS PURCHASED AS SPECIFIED FROM THE SECOND LOW BIDDER, DUPLEX PRODUCTS, INC., ON PURCHASE ORDER 58328 IN THE AMOUNT OF $4,482. ON JUNE 19, 1970, A BILL IN THE AMOUNT OF $820.50 WAS SENT TO UFORMA AS EXCESS COSTS REPRESENTING THE DIFFERENCE BETWEEN ITS QUOTATION AND THE PURCHASE PRICE OF THIS REQUIREMENT FROM DUPLEX.

BY LETTER DATED JULY 23, 1970, UFORMA ASKED FOR RELIEF FROM THIS ASSESSMENT AND REQUESTED THAT IT BE CANCELED. THE REQUEST FOR RELIEF IS BASED ON THE FOLLOWING: (1) THE METHOD OF CONSTRUCTION (SPOT SEWING) OF THIS PRODUCT IS UNUSUAL; (2) CONTRACTOR WOULD NOT HAVE QUOTED ON THE REQUIREMENT HAD A SAMPLE BEEN FURNISHED WITH THE INVITATION FOR BIDS; (3) CONTRACTOR CONTENDS THAT THE TERMINOLOGY IN THE FORMS INDUSTRY COULD STAND CLARIFICATION.

THE CONTRACTING OFFICER AGREES THAT THE METHOD OF FASTENING THIS REQUIREMENT IS UNUSUAL AND BELIEVES THAT THE GOVERNMENT SHOULD HAVE FURNISHED A SAMPLE OF THE REQUIREMENT WITH THE INVITATION FOR BIDS. ALSO, BECAUSE UFORMA IS A RELATIVELY NEW SUPPLIER AND BECAUSE OF THE UNCOMMON METHOD OF FASTENING, THE CONTRACTING OFFICER FEELS HE SHOULD HAVE ALERTED THE CONTRACTOR BEFORE MAKING AWARD. IN VIEW OF THE FOREGOING, IT IS ADMINISTRATIVELY RECOMMENDED THAT THE $820.50 BE REMITTED TO UFORMA.

WE UNDERSTAND THAT THE REQUIREMENT WAS ORIGINALLY ADVERTISED ON MARCH 9, 1970, TO 20 POTENTIAL SUPPLIERS AND THAT THE ROTARY PRINTING COMPANY WAS THE ONLY BIDDER IN THE AMOUNT OF $4,539. HOWEVER, THIS BID WAS NONRESPONSIVE BECAUSE IT PROPOSED TO SEW WITH A WIRE STITCH. THE SAME SPECIFICATIONS WERE READVERTISED WITH A REVISED BID LIST ON MARCH 20, 1970, AND BIDS WERE RECEIVED FROM UFORMA IN THE AMOUNT OF $3,661.50; DUPLEX AT $4,482; AND ROTARY AT $5,512.50. ROTARY WAS DISQUALIFIED BECAUSE IT PROPOSED TO SEW WITH A WIRE STITCH AND UFORMA RECEIVED THE AWARD SINCE IT APPEARED THAT AT THE TIME OF AWARD THE COMPANY WAS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER. WITH RESPECT TO THE METHOD OF JOINING, THE SPECIFICATIONS PROVIDED: "CRIMP PARTS & CARBONS AT LEFT AND CRIMP PARTS ONLY AT RIGHT. SPOT SEW IN 2 PLACES ON THE LEFT (PARTS & CARBONS), 3" FROM TOP EDGE & 8" FROM TOP EDGE." UFORMA BID TO THE SPECIFICATIONS AND DID NOT QUALIFY ITS BID AS ROTARY DID IN OFFERING SOME OTHER METHOD OF JOINING. UPON ACCEPTANCE OF THE BID, A VALID AND ENFORCEABLE CONTRACT WAS FORMED AND THE GOVERNMENT BECAME VESTED WITH THE RIGHT TO RECEIVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE BID, OR TO ENFORCE THE PROVISIONS THEREOF UPON DEFAULT.

THERE IS NOTHING IN THE RECORD WHICH WOULD INDICATE THAT THE CONTRACTOR'S DEFAULT WAS DUE TO CAUSES ENUMERATED IN ARTICLE 18 AS EXCUSING LIABILITY. RATHER, IT APPEARS THAT THE CONTRACTOR'S DIFFICULTY WAS CAUSED BY AN IMPROVIDENT SUBMISSION OF ITS BID WITHOUT FULL ATTENTION TO THE SPOT SEWING REQUIREMENT. IN THIS RESPECT, THE CONTRACTOR STATED IN ITS LETTER OF JULY 23, 1970, TO GPO THAT "I DON'T KNOW EXACTLY WHO QUOTED THIS JOB FOR OUR COMPANY (CHECKED SPECS AND SO FORTH) BUT I UNDOUBTEDLY GAVE IT MY OK." THE CONTRACTOR DID NOT ASK FOR AN EXTENSION OF CONTRACT TIME OR ATTEMPT TO EXCUSE AN ANTICIPATED DELAY. IT SIMPLY STATED THAT IT COULD NOT PRODUCE THE JOB AS REQUIRED. THEREFORE, THE LETTER OF APRIL 13, 1970, CONSTITUTED AN ANTICIPATORY REPUDIATION, SUCH AS TO ENTITLE THE GOVERNMENT TO TREAT IT AS AN ANTICIPATORY BREACH OF CONTRACT. UNDER THE PREVAILING LEGAL AUTHORITIES, A POSITIVE STATEMENT, BY THE PROMISOR TO THE PROMISEE THAT THE PROMISOR CANNOT PERFORM, IS SUFFICIENT TO CONSTITUTE AN ANTICIPATORY REPUDIATION WHICH IS A TOTAL BREACH OF CONTRACT. MOBLEY V NEW YORK LIFE INSURANCE CO., 295 U.S. 632, 638 (1935), AND CASES CITED THEREIN; ALSO, RESTATEMENT OF CONTRACTS, SECTION 318(A). IT IS UNNECESSARY THAT THE PROMISOR IN SUCH CASE STATE THAT HE IS UNWILLING TO PERFORM FOR HE MAKES IT CLEAR THAT HE IN FACT WILL NOT PERFORM. SEE 5 WILLISTON ON CONTRACTS, SECTION 1326 (REVISED). 41 COMP. GEN. 382 (1961); B-166067, MARCH 5, 1969.

THERE WAS NO REQUIREMENT THAT A BID SAMPLE BE FURNISHED WITH INVITATIONS SENT TO PROSPECTIVE BIDDERS AND NOTHING IN UFORMA'S BID OPERATED TO ALERT THE CONTRACTING OFFICER THAT IT WAS PROPOSING TO FURNISH ANYTHING DIFFERENT THAN SPECIFICATION REQUIREMENTS. WE BELIEVE, THEREFORE, THAT THE DEFAULT WAS DUE SOLELY TO THE CONTRACTOR'S OWN NEGLIGENCE IN PREPARING ITS BID.

CONCERNING A CANCELLATION OR WAIVER OF THE EXCESS COSTS, THERE APPEARS TO BE NO QUESTION AS TO THE PROPRIETY OF SUCH CHARGES IN THESE CIRCUMSTANCES AND THE GOVERNMENT'S RIGHT TO REIMBURSEMENT THEREFOR UNDER THE TERMS OF THE CONTRACT. IT IS WELL ESTABLISHED THAT UNLESS SPECIFICALLY AUTHORIZED BY LAW, AN OFFICIAL OF THE GOVERNMENT MAY NOT GIVE AWAY OR REMIT A CLAIM DUE THE GOVERNMENT. 20 COMP. GEN. 652, 659 (1941). THE AUTHORITY VESTED IN OUR OFFICE BY 41 U.S.C. 256A TO REMIT LIQUIDATED DAMAGES DOES NOT EXTEND TO A WAIVER OR REMISSION OF PROPERLY ESTABLISHED EXCESS COSTS, AND WE ARE AWARE OF NO OTHER PROVISION OF LAW WHICH WOULD AUTHORIZE SUCH ACTION. SEE 46 COMP. GEN. 252 (1966) AND 45 ID. 823 (1966).

ACCORDINGLY, THE REQUEST FOR RELIEF IS DENIED. THE FILE FORWARDED WITH LETTER OF SEPTEMBER 14, 1970, IS RETURNED.