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THE CLAIM WAS SUBMITTED INITIALLY ON SEPTEMBER 25. THE TWO LOW BIDS WERE REJECTED BY THE CONTRACTING AGENCY FOR FAILURE TO MEET THAT REQUIREMENT. WAS AWARDED A CONTRACT PURSUANT TO THE INVITATION ON MARCH 24. THIS AWARD WAS PROMPTLY PROTESTED BY THE LOW BIDDER AND. WE FOUND THAT YOUR BID WAS NOT RESPONSIVE TO THE INVITATION SINCE DATA FURNISHED WITH AND MADE PART OF THE BID SHOWED THAT THE BUILDING OFFERED BY YOUR FIRM FAILED BY SOME 290 SQUARE FEET OF MEETING THE MINIMUM NET AREA. YOUR CLAIM IS SAID TO REPRESENT COSTS INCURRED BY YOU PRIOR TO RECEIPT OF NOTIFICATION OF CANCELLATION ON SEPTEMBER 5. YOU POINT OUT THAT AFTER IT WAS INDICATED THAT THE AWARD WAS BEING PROTESTED YOU INCURRED EXPENDITURES PURSUANT TO THE CONTRACT ONLY UPON RECEIPT OF ASSURANCES FROM REPRESENTATIVES OF THE GENERAL SERVICES ADMINISTRATION THAT THE AGENCY INTENDED TO GO FORWARD WITH THE CONTRACT.

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B-145486, SEP. 26, 1962

TO NORTH PACOLET CORPORATION:

THIS CONCERNS YOUR CLAIM OF $59,967 ARISING OUT OF THE CANCELLATION OF A CONTRACT FOR THE LEASE OF BUILDING SPACE BY THE GENERAL SERVICES ADMINISTRATION PURSUANT TO INVITATION FOR BIDS NO. AT-54, ISSUED JANUARY 23, 1961, BY THE GENERAL SERVICES ADMINISTRATION BUSINESS SERVICE CENTER AT ATLANTA, GEORGIA. THE CLAIM WAS SUBMITTED INITIALLY ON SEPTEMBER 25, 1961, AND SUPPLEMENTED BY LETTERS OF OCTOBER 5, 1961, AND JULY 27, 1962.

THE INVITATION, AS INTERPRETED, REQUIRED A MINIMUM OF 9,880 FEET OF NET USABLE FLOOR SPACE ON A SINGLE FLOOR. THE TWO LOW BIDS WERE REJECTED BY THE CONTRACTING AGENCY FOR FAILURE TO MEET THAT REQUIREMENT. THE THIRD LOW BIDDER, YOUR FIRM, WAS AWARDED A CONTRACT PURSUANT TO THE INVITATION ON MARCH 24, 1961. THIS AWARD WAS PROMPTLY PROTESTED BY THE LOW BIDDER AND, IN OUR DECISION B-145486, JUNE 15, 1961, TO THE ADMINISTRATOR OF GENERAL SERVICES, WE FOUND THAT YOUR BID WAS NOT RESPONSIVE TO THE INVITATION SINCE DATA FURNISHED WITH AND MADE PART OF THE BID SHOWED THAT THE BUILDING OFFERED BY YOUR FIRM FAILED BY SOME 290 SQUARE FEET OF MEETING THE MINIMUM NET AREA. THEREFORE, WE CONCLUDED THE AWARD HAD NOT BEEN MADE TO THE LOW RESPONSIBLE AND RESPONSIVE BIDDER AS REQUIRED BY THE ADVERTISING STATUTES AND SHOULD BE CANCELLED.

YOUR CLAIM IS SAID TO REPRESENT COSTS INCURRED BY YOU PRIOR TO RECEIPT OF NOTIFICATION OF CANCELLATION ON SEPTEMBER 5, 1961. IN YOUR LETTER OF JULY 27, 1962, YOU POINT OUT THAT AFTER IT WAS INDICATED THAT THE AWARD WAS BEING PROTESTED YOU INCURRED EXPENDITURES PURSUANT TO THE CONTRACT ONLY UPON RECEIPT OF ASSURANCES FROM REPRESENTATIVES OF THE GENERAL SERVICES ADMINISTRATION THAT THE AGENCY INTENDED TO GO FORWARD WITH THE CONTRACT. YOU POINT OUT ALSO THAT A SIGNIFICANT PORTION OF THE COSTS WERE INCURRED BETWEEN THE ISSUANCE OF OUR DECISION DIRECTING CANCELLATION AND NOTIFICATION TO YOU BY GENERAL SERVICES ADMINISTRATION OF OUR ACTION. THE LETTER YOU REPORT ALSO THAT YOU HAVE BEEN UNABLE TO AGREE WITH REPRESENTATIVES OF THE GENERAL SERVICES ADMINISTRATION ON THE COSTS WHICH MAY PROPERLY BE CHARGED AGAINST THE CONTRACT PRIOR TO THE RECEIPT BY YOU OF NOTICE OF CANCELLATION. THE GENERAL SERVICES ADMINISTRATION HAS INDICATED THAT CERTAIN OF THE EXPENSES SHOULD NOT HAVE BEEN INCURRED UNTIL AFTER APPROVAL OF THE PLANS AND SPECIFICATIONS, WHICH WAS NEVER OBTAINED.

THE PROCUREMENT WAS UNDERTAKEN PURSUANT TO SECTION 302 (C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 252 (C), WHICH PROVIDES THAT, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, PURCHASES OF AND CONTRACTS FOR PROPERTY OR SERVICES OF THE KIND UNDER CONSIDERATION SHALL BE MADE BY FORMAL ADVERTISING. IT IS FURTHER PROVIDED AT SECTION 303 (B), 41 U.S.C. 253 (B), THAT---

"* * * AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY WRITTEN NOTICE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED * * *.'

WHERE, AS IN THIS CASE, A CONTRACT IS REQUIRED BY STATUTE TO BE AWARDED PURSUANT TO FORMAL ADVERTISING, A BID WHICH VARIES MATERIALLY FROM THE SPECIFICATIONS MUST BE REJECTED. 63 C.J.S. MUNICIPAL CORPORATIONS SEC. 1000; 43 AM.JUR. PUBLIC WORKS AND CONTRACTS SEC. 40; WILLIAM A. CAREY AND CO. V. BOROUGH OF FAIR LAWN (N.J. 1955) 117 A.2D 140; 38 OP.A.G. 555; TUFANO V. BOROUGH OF CLIFF SIDE PARK (N.J. 1933) 165 A. 628; INTERNATIONAL MOTOR CO. V. MAYOR, ETC., OF PLAINFIELD (N.J. 1921) 115 A. 391; AND SUTTON V. CITY OF ST. PAUL (MINN. 1951) 48 N.W.2D 436. IN THE CITED OPINION OF THE ATTORNEY GENERAL IT WAS STATED:

"IT IS ALSO WELL ESTABLISHED THAT IF IN RESPONSE TO AN INVITATION FOR BIDS ON A GOVERNMENT CONTRACT ONE IS SUBMITTED WHICH OFFERS TO FURNISH A PRODUCT MATERIALLY DIFFERENT FROM THAT DESCRIBED OR SPECIFIED IN THE INVITATION, IT NOT ONLY MAY, BUT MUST, BE REJECTED. * * *. ANY OTHER RULE WOULD DEFEAT THE PURPOSES OF THE STATUTE. * * *.'

A BID WHICH VARIES MATERIALLY FROM THE TERMS OF THE INVITATION MAY NOT BE MODIFIED AFTER OPENING TO CONFORM TO THE SPECIFICATIONS. 63 C.J.S. MUNICIPAL CORPORATIONS SEC. 1003; 10 MCQUILLIN ON MUNICIPAL CORPORATIONS 3D ED.SEC. 29.65.

A CONTRACT REQUIRED TO BE LET PURSUANT TO COMPETITIVE BID PROCEDURES WHICH IS AWARDED ON A BID CONTAINING MATERIAL VARIANCES FROM THE INVITATION, IS VOID AB INITIO. HUDSON CITY CONTRACT CO. V. JERSEY CITY INCINERATOR AUTHORITY (N.J. 1955) 111 A.2D 385. SUCH CONTRACT IS INVALID AND CONFERS NO RIGHTS ON THE PURPORTED CONTRACTOR. TUPFER V. BOARD OF CHOSEN FREEHOLDERS (N.J. 1917) 100 A. 927; HORNUNG V. TOWN OF WEST NEW YORK (N.J. 1911) 81 A. 1116; CASE V. INHABITANTS OF TRENTON (N.J. 1909) 74 A. 672; KONIG V. MAYOR, ETC., OF BALTIMORE (MD. 1915) 95 A. 478; DIAMOND V. MANKATO (MINN. 1903) 93 N.W. 911; LE TOURNEAU V. HUGO (MINN. 1903) 97 N.W. 115; COLLER V. CITY OF ST. PAUL (MINN. 1947) 26 N.W.2D 835; UNITED STATES V. ELLICOTT (1911) 223 U.S. 524; 20 OP.A.G. 496; NEW YORK MAIL AND NEWSPAPER TRANS.CO. V. UNITED STATES (1957) 139 CT.CL. 751.

IN THE CASE OF UNITED STATES V. ELLICOTT, SUPRA, AN INVITATION HAD BEEN ISSUED INCORPORATING CERTAIN SPECIFICATIONS. THE LOW BID AS SUBMITTED CONTAINED EXCEPTIONS TO THOSE SPECIFICATIONS. AFTER CORRESPONDENCE BETWEEN THE CONTRACTING OFFICER AND THE BIDDER AS TO THE INTENT OF THE EXCEPTIONS, A CONTRACT WAS ENTERED INTO INCORPORATING THE EXCEPTIONS. AFTER AWARD, THE CONTRACTOR SUBMITTED DETAILED DRAWINGS WHICH, IT WAS DETERMINED, DEPICTED A PRODUCT MATERIALLY DEFICIENT FROM THE VIEWPOINT OF THE GOVERNMENT'S NEEDS. AFTER CANCELLATION, THE CONTRACTOR SUED FOR BREACH OF CONTRACT. THE SUPREME COURT HELD THAT IF THE ORIGINAL SPECIFICATIONS WERE TO BE FOLLOWED THERE WAS NO CONTRACT, SINCE THE BIDDER HAD NOT OFFERED SUCH PERFORMANCE, AND IF THE MODIFICATIONS OFFERED BY THE BIDDER WERE TO BE REGARDED AS HAVING BEEN ADOPTED THERE WAS NO CONTRACT "* * * SINCE IT WOULD THEN COME TO PASS THAT THE CONTRACT WAS SO ERRONEOUS TO AND DESTRUCTIVE OF THE ADVERTISED PROPOSALS AS TO NULLIFY THEM, AND THEREFORE CAUSE IT TO RESULT THAT THE CONTRACT WAS ONE MADE WITHOUT THE COMPETITIVE BIDDING WHICH WAS NECESSARY TO GIVE IT VALIDITY.'

IN THE CASE OF KONIG V. MAYOR, ETC., OF BALTIMORE, SUPRA, THERE WAS CONSIDERED THE VALIDITY OF A CONTRACT AWARDED UNDER THE TERMS OF A STATUTE REQUIRING AWARD TO THE LOWEST RESPONSIBLE BIDDER. THE INVITATION SOLICITED BIDS ON ALTERNATIVE ITEMS WITH THE CONTRACTING OFFICER RESERVING THE RIGHT TO ACCEPT EITHER. THE LOW BIDDER SUBMITTED A BID ON THE FIRST ALTERNATE WITH THE PROVISION THAT IF THIS ALTERNATE COULD NOT BE EMPLOYED WITHOUT OBTAINING A LICENSE FROM THE PATENT HOLDER HE COULD THEN PERFORM IN ACCORDANCE WITH A SECOND ALTERNATE. THE BIDDER WAS AWARDED A CONTRACT WHICH PROVIDED THAT THE CITY RETAINED THE OPTION AT THE APPROPRIATE TIME TO DIRECT THE USE OF EITHER ALTERNATIVE. THE COURT HELD THAT THE CONTRACT WAS "UTTERLY VOID" SINCE THE BID SUBMITTED WAS NOT IN CONFORMITY WITH THE SPECIFICATIONS.

IN THE CASE OF COLLER V. CITY OF ST. PAUL, SUPRA, THE STATUTE REQUIRED AWARD TO THE LOWEST RESPONSIBLE BIDDER. AN INVITATION HAD BEEN ISSUED FOR THE PROCUREMENT AND INSTALLATION OF STREET PARKING METERS. THE LOW BIDDER OFFERED AN ALTERNATIVE METHOD OF INSTALLING CERTAIN OF THE METERS AND TOOK EXCEPTION TO THE SPECIFICATION REQUIREMENT THAT THE CONTRACTOR PAY THE SALARY OF THE CITY'S SERVICEMAN FOR SIX MONTHS. AFTER OPENING, THE LOW BIDDER WITHDREW THE EXCEPTIONS AND OFFERED TO PERFORM EXACTLY IN ACCORDANCE WITH THE INVITATION; AND ON THAT BASIS HE WAS AWARDED THE CONTRACT. THE COURT HELD THAT WHERE, AS HERE, THERE IS A MATERIAL VARIANCE BETWEEN THE BID AND THE INVITATION, THE BID MUST BE REJECTED. THE COURT FURTHER FOUND THAT THE VARIANCE WAS MATERIAL IN THAT IT WOULD HAVE GIVEN THE BIDDER A SUBSTANTIAL ADVANTAGE OVER THE OTHER BIDDERS SINCE THE ALTERNATE METHOD OFFERED WOULD SAVE APPROXIMATELY $2,100 OUT OF A TOTAL PRICE OF $69,000. THE COURT SPECIFICALLY HELD ALSO THAT NO BID COULD BE MODIFIED AFTER OPENING, EVEN THOUGH NO FRAUD OR WRONGDOING HAD BEEN SHOWN, AND THAT THE AWARD TO THE LOW BIDDER UNDER THE CIRCUMSTANCES WAS OID.' AS TO THE APPLICABILITY OF THE RULE REGARDLESS OF THE GOOD FAITH OF THE PARTIES SEE ALSO DIAMOND V. CITY OF MANKATO, SUPRA, AND KONIG V. MAYOR, ETC., OF BALTIMORE, SUPRA. AS TO THE MATERIALITY OF THE VARIANCE OF THE SPECIFICATIONS, SEE ALSO 63 C.J.S. MUNICIPAL CORPORATIONS, SEC. 1000.

IN THE PRESENT CASE, WE BELIEVE THAT YOUR OFFER TO PROVIDE LESS THAN THE MINIMUM ACCEPTABLE USABLE FLOOR SPACE--- BY SOME 290 SQUARE FEET- - CONSTITUTES A MATERIAL VARIANCE FROM THE TERMS OF THE INVITATION SINCE ACCEPTANCE OF YOUR BID ON THE TERMS SUBMITTED GAVE YOU A DECIDED COMPETITIVE ADVANTAGE OVER BIDDERS WHO RESPONDED TO THE SPECIFICATIONS. IN ACCORDANCE WITH THE FOREGOING AUTHORITIES, WE MUST CONCLUDE, THEREFORE, THAT NO VALID CONTRACT EVER EXISTED.

THE ISSUE NOW PRESENTED IS THE MEASURE OF YOUR FIRM'S ENTITLEMENT TO REIMBURSEMENT FOR WORK PERFORMED AND EXPENSES INCURRED PRIOR TO RECEIPT OF NOTICE OF CANCELLATION OF THE AWARD. WHERE CONTRACTS HAVE BEEN CANCELLED BECAUSE THEY WERE ENTERED INTO WITHOUT CONFORMING TO THE STATUTES GOVERNING COMPETITIVE BID PROCEDURES, WE HAVE RECOGNIZED THE RIGHT OF THE CONTRACTOR TO PAYMENT ON A QUANTUM MERUIT OR QUANTUM VALEBAT BASIS FOR THE VALUE RECEIVED AND ACCEPTED BY THE GOVERNMENT AGENCY CONCERNED. 40 COMP. GEN. 447. HOWEVER, THE WEIGHT OF JUDICIAL AUTHORITY PROVIDES NO PRECEDENT FOR PAYMENT OF COSTS INCURRED BY THE CONTRACTOR WHICH DID NOT RESULT IN A BENEFIT TO OR IN THE RECEIPT OF VALUABLE GOODS OR SERVICES BY THE GOVERNMENTAL UNIT INVOLVED. IN NEW YORK MAIL AND NEWSPAPER TRANS.CO. V. UNITED STATES (1957), 139 CT. CL. 751, THE MAJORITY OPINION STATED THAT, RATHER THAN PROVIDING FOR PAYMENT ON A STRICTLY QUANTUM MERUIT BASIS, THE PARTIES SHOULD BE PLACED SUBSTANTIALLY IN THE POSITION THEY WOULD HAVE BEEN IN HAD THERE BEEN NO ATTEMPTED CONTRACT. WHILE THE MATTER IS NOT ENTIRELY CLEAR, IT MAY BE THAT THE JUDGMENT AWARDED EXCEEDED THE AMOUNT WHICH WOULD HAVE BEEN PAID UNDER QUANTUM MERUIT. HOWEVER, EVEN ACCEPTING THE RULE IN THAT CASE (OVERLOOKING THE PRECEDENTS TO THE CONTRARY AND THE DICTUM IN THE STRONG DISSENT UNDER WHICH NO PAYMENT WOULD HAVE BEEN AWARDED THE CONTRACTOR HAD THERE BEEN NO VALID CONTRACT) IT DOES NOT APPEAR THAT THE PREAWARD POSITION OF THE PARTIES COULD ANY MORE BE RESTORED IF THE UNITED STATES WERE TO PAY THE CLAIM THAN IF THE PARTIES WERE LEFTIN STATUS QUO. IN ANY CASE, WE THINK THE MATTER HAS BEEN SPECIFICALLY DECIDED BY THE SUPREME COURT IN THE RECENT CASE OF UNITED STATES V. MISSISSIPPI VALLEY GENERATING CO. (1961) 364 U.S. 520, 566, WHERE IT WAS STATED (FOOTNOTE NO. 22):

"THE RESPONDENT ALSO CONTENDS THAT EVEN IF THE CONTRACT IS NOT ENFORCEABLE, A RECOVERY QUANTUM VALEBAT SHOULD BE DECREED. HOWEVER, SUCH A REMEDY IS APPROPRIATE ONLY WHERE ONE PARTY TO A TRANSACTION HAS RECEIVED AND RETAINED TANGIBLE BENEFITS FROM THE OTHER PARTY. SEE CROCKER V. UNITED STATES, 240 U.S. 74, 81-82. SINCE THE GOVERNMENT HAS RECEIVED NOTHING FROM THE RESPONDENT, NO RECOVERY QUANTUM VALEBAT IS IN ORDER.'

IN ACCORDANCE WITH THE FOREGOING WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE MAY GIVE FAVORABLE CONSIDERATION TO YOUR CLAIM. MAY APPEAR UNDULY HARSH TO REQUIRE THE CONTRACTOR WHO ACTED IN GOOD FAITH TO ABSORB THE COSTS APPLICABLE TO THOSE ITEMS NOT ACCEPTED AT THE TIME OF CANCELLATION. HOWEVER, THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY AND THE MANNER OF EXERCISE THEREOF IS PRESCRIBED AND LIMITED BY STATUTE, REGULATION AND ADMINISTRATIVE AND JUDICIAL DETERMINATION. TO MAKE THE GOVERNMENT LIABLE FOR OTHER THAN BENEFITS RECEIVED WOULD, IN EFFECT, PERMIT AGENTS OF THE GOVERNMENT TO OBLIGATE THE UNITED STATES IN DIRECT CONTRAVENTION OF THOSE LIMITATIONS AND PRESCRIPTIONS, THUS NULLIFYING THE BASIC PURPOSES OF THE STATUTES, REGULATIONS AND DETERMINATIONS.

IN ADDITION, AND WITHOUT REFERENCE TO ITS MERITS, IT SHOULD ALSO BE NOTED THAT THE CLAIM IS ESSENTIALLY ONE FOR UNLIQUIDATED DAMAGES ARISING OUT OF BREACH OF CONTRACT. IT IS THUS OF A CATEGORY WHICH THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE HISTORICALLY DECLINED TO SETTLE--- NOT BECAUSE OF LACK OF JURISDICTION BUT BECAUSE OF THE IMPRACTICABILITY OF REACHING AN ACCURATE DETERMINATION OF THE MERITS AND QUANTUM OF DAMAGES WITHOUT PROVISION FOR TAKING SWORN TESTIMONY, CROSS-EXAMINATION, AND RELATED EVIDENCE, FOR WHICH OUR OFFICE LACKS THE FACILITIES. 4 COMP. GEN. 404; 19 COMP. DEC. 409. IN SUCH CASES IT HAS BEEN OUR CONSISTENT POLICY TO DISALLOW THE CLAIM AND LEAVE THE CLAIMANT TO SUCH REMEDY AS HE MAY OBTAIN IN THE COURTS.

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