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TO THE INDEPENDENT LOCK COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 24. WHICH WAS ENTERED INTO BETWEEN YOUR COMPANY AND THE DEPARTMENT OF THE NAVY UNDER DATE OF MARCH 22. IT BEING STATED THAT THE ACTION AROSE OUT OF THE FACT THAT YOUR COMPANY WAS NOT THE LOW BIDDER ON THAT ITEM AND THE AWARD OF THE INDICATED CONTRACT WAS THEREFORE IN ERROR. WHICH WE HAVE OBTAINED FROM THE DEFENSE SUPPLY AGENCY. ITEM 1 OF THE INVITATION CALLED FOR A QUANTITY OF SIZE II DOOR CLOSERS AND YOUR COMPANY WAS THE LOW BIDDER AS TO THAT ITEM. AWARD WAS MADE TO YOUR COMPANY AS TO ITEM 1 AND IS REPORTED THAT NO DISPUTE EXISTS WITH RESPECT TO SUCH ITEM. BIDS WERE SOLICITED ON A TOTAL QUANTITY BASIS.

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B-149795, NOV. 6, 1962

TO THE INDEPENDENT LOCK COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 24, 1962, WITH ENCLOSURE, WHEREIN YOU PROTESTED THE CANCELLATION BY THE DEFENSE INDUSTRIAL SUPPLY CENTER, PHILADELPHIA, PENNSYLVANIA, OF CONTRACT NO. N 63077-11137, WHICH WAS ENTERED INTO BETWEEN YOUR COMPANY AND THE DEPARTMENT OF THE NAVY UNDER DATE OF MARCH 22, 1962.

THE ENCLOSURE TO YOUR LETTER CONSISTED OF A COPY OF A LETTER DATED AUGUST 24, 1962, TO THE DEFENSE SUPPLY AGENCY, PROTESTING THE ACTION OF THE DEFENSE INDUSTRIAL SUPPLY SECTION IN CANCELLING ITEM 2 OF THE CONTRACT IN QUESTION, IT BEING STATED THAT THE ACTION AROSE OUT OF THE FACT THAT YOUR COMPANY WAS NOT THE LOW BIDDER ON THAT ITEM AND THE AWARD OF THE INDICATED CONTRACT WAS THEREFORE IN ERROR. YOU REQUESTED THAT OUR OFFICE ADVISE YOU CONCERNING THE LEGAL PROCEDURE YOU SHOULD FOLLOW AND TO WHOM YOU SHOULD DIRECT YOUR COMMUNICATIONS.

THE RECORD OF THE PROCUREMENT, WHICH WE HAVE OBTAINED FROM THE DEFENSE SUPPLY AGENCY, SHOWS THAT BY INVITATION FOR BIDS NO. 63077-2612 62, DATED MARCH 1, L962, THE MILITARY INDUSTRIAL SUPPLY AGENCY INVITED BIDS FOR FURNISHING TWO ITEMS OF DOOR CLOSERS, THE BIDS TO BE OPENED AT 10:00 A.M. ON MARCH 16, 1962. ITEM 1 OF THE INVITATION CALLED FOR A QUANTITY OF SIZE II DOOR CLOSERS AND YOUR COMPANY WAS THE LOW BIDDER AS TO THAT ITEM. AWARD WAS MADE TO YOUR COMPANY AS TO ITEM 1 AND IS REPORTED THAT NO DISPUTE EXISTS WITH RESPECT TO SUCH ITEM.

ITEM 2 OF THE INVITATION CONSISTED OF A QUANTITY OF 816 DOOR CLOSERS, SIZE III, AND BIDS WERE SOLICITED ON A TOTAL QUANTITY BASIS, F.O.B. DESTINATION. THE TWO LOWEST BIDS RECEIVED FOR ITEM 2 WERE THE BID SUBMITTED BY YOUR COMPANY AT THE TOTAL PRICE OF $7,466.40, SUBJECT TO A PROMPT PAYMENT DISCOUNT OF 1 PERCENT, AND THE BID SUBMITTED BY HARDWARE PRODUCTS, INCORPORATED, AT THE TOTAL PRICE OF $7,548, SUBJECT TO A PROMPT PAYMENT DISCOUNT OF 3 PERCENT. TAKING INTO CONSIDERATION THE ALLOWABLE DISCOUNTS, IT WILL BE SEEN THAT THE TWO BIDS WERE REDUCED TO THE SUMS OF $7,391.73 AND $7,321.56, RESPECTIVELY. IN OTHER WORDS THE BID SUBMITTED BY YOUR COMPANY AS TO ITEM 2 WAS NOT THE LOWEST RESPONSIVE BID. APPEARS, HOWEVER, THAT THROUGH ADMINISTRATIVE ERROR AN AWARD WAS MADE TO YOUR COMPANY UNDER DATE OF MARCH 22, 1962, FOR BOTH ITEMS.

THE CONTRACTING OFFICER REPORTS THAT WHEN THE ERRONEOUS AWARD WAS BROUGHT TO HIS ATTENTION ITEM 1 OF THE CONTRACT HAD BEEN COMPLETELY SHIPPED AND THAT ALL BUT 362 OF THE CLOSERS COVERED BY ITEM 2 HAD BEEN ACCEPTED AND SHIPPED. AFTER YOUR COMPANY DECLINED TO ENTER INTO A NO COST CANCELLATION OF THE 362 CLOSERS, THE CONTRACTING OFFICER, UNDER DATE OF JUNE 21, 1962, SENT YOUR COMPANY A NOTICE CANCELLING THE CONTRACT TO THE EXTENT OF THE REMAINING QUANTITY WHICH HAD NOT BEEN DELIVERED TO AND ACCEPTED BY THE GOVERNMENT. FOLLOWING THE CANCELLATION OF THE CONTRACT, AN AWARD WAS MADE TO HARDWARE PRODUCTS, INCORPORATED, FOR THE 362 DOOR CLOSERS AND PERFORMANCE UNDER THAT CONTRACT HAS BEEN COMPLETED.

THE PROVISIONS OF THE LAW WHICH WERE APPLICABLE TO THE PROCUREMENT WITH WHICH WE ARE CONCERNED MAY BE FOUND IN 10 U.S.C. 2305 (C) AND REQUIRE, IN PERTINENT PART, THAT---

"AWARDS SHALL BE MADE * * * TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. * * *"

OUR OFFICE HAS HELD THAT THE QUOTED PROVISIONS OF THE STATUTE REQUIRE THAT AWARD, IF ANY, BE MADE TO THE LOW BIDDER, WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE, AND THAT AN AWARD OF A CONTRACT BY A GOVERNMENT AGENCY CONTRARY TO THE PROVISIONS OF THE STATUTE IS A NULLITY AND CONFERS NO RIGHTS ON THE CONTRACTOR AGAINST THE UNITED STATES. UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP COMPANY, 239 U.S. 88, 92; CLARK V. UNITED STATES, 95 U.S. 539; G. G. LOEHLER V. UNITED STATES, 90 CT.CL. 158; 36 COMP. GEN. 94; 34 COMP. GEN. 115; B 120632, SEPTEMBER 10, 1954; AND B- 29602, OCTOBER 23, 1942. IN THE LAST CITED DECISION WE STATED WITH REFERENCE TO A STATUTORY PROVISION WHICH, LIKE THAT IN QUESTION, HAD BEEN CONSTRUED TO REQUIRE AWARD TO THE LOW BIDDERS, THAT---

"THE QUESTION AS TO WHETHER THE UNITED STATES SHOULD CANCEL A CONTRACT WHICH WAS AWARDED ERRONEOUSLY BECAUSE OF A MISTAKE OF FACT ORDINARILY ARISES UNDER CIRCUMSTANCES WHEREIN AWARD IS REQUIRED TO BE MADE TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING, PURSUANT TO THE PROVISIONS OF SECTION 3709, REVISED STATUTES, AND IT SUBSEQUENTLY IS DETERMINED THAT THE BID OF THE SUCCESSFUL CONTRACTOR WAS NOT THE LOWEST RESPONSIBLE BID RECEIVED. SINCE, IN SUCH A CASE, THERE HAS BEEN A FAILURE TO COMPLY WITH SECTION 3709, REVISED STATUTES, WHICH STATUTE HAS BEEN CONSTRUED BY THE COURTS TO BE MANDATORY IN NATURE, ADMINISTRATIVE OFFICERS USUALLY ARE REQUIRED TO CANCEL THE CONTRACT, PARTICULARLY IF SUCH MAY BE DONE WITHOUT JEOPARDIZING THE INTEREST OF THE UNITED STATES. SEE 17 COMP. GEN. 312 AND CASES CITED THEREIN. * * *"

THERE IS ALSO FOR CONSIDERATION SECTION 623 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT FOR THE FISCAL YEAR 1962, DATED AUGUST 17, 1961, 75 STAT. 365, 379, WHICH, IN SUBSTANCE, REQUIRES AN AWARD TO BE MADE TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

IT IS CLEAR FROM THE RECORD THAT AN ERRONEOUS AWARD WAS MADE TO YOUR COMPANY FOR ITEM 2 OF THE PROCUREMENT. CASES INVOLVING SOMEWHAT SIMILAR SITUATIONS HAVE BEEN CONSTRUED BY THE COURTS AND BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT, AND IT HAS BEEN UNIFORMLY HELD THAT UNAUTHORIZED ACTS OF ITS AGENTS CANNOT OBLIGATE THE UNITED STATES. FILOR V. UNITED STATES, 9 WALL. 45, AND WHITESIDE, ET AL. V. UNITED STATES, 93 U.S. 247, 257. THE AWARD OF A CONTRACT TO OTHER THAN THE LOWEST RESPONSIVE BIDDERS, THROUGH MISTAKE OR OTHERWISE, CONSTITUTES AN ACT IN EXCESS OF THE CONTRACTING OFFICER'S VESTED AUTHORITY AND, FROM A LEGAL STANDPOINT, IS NO LONGER AN ACT OF THE GOVERNMENT. THE UNDERWRITER, 6 F.2D 937.

IT IS UNFORTUNATE THAT THE BIDS WERE NOT PROPERLY EVALUATED IN THE FIRST INSTANCE AND ANY INCONVENIENCE OR COST WHICH YOUR COMPANY MAY HAVE INCURRED BY REASON OF THE CANCELLATION ARE REGRETTED. HOWEVER, THERE IS NO LEGAL BASIS UNDER WHICH YOUR COMPANY MAY BE REIMBURSED FOR ANY EXPENSES YOU MAY HAVE INCURRED. SINCE THE BIDS WERE PUBLICLY OPENED, YOU WERE CHARGEABLE WITH NOTICE OF THE FACT THAT YOUR BID ON ITEM 2 WAS NOT THE LOWEST.

WITH RESPECT TO YOUR REQUEST FOR ADVICE CONCERNING THE LEGAL PROCEDURES YOU SHOULD FOLLOW, IT HAS BEEN NOTED THAT YOU HAVE FILED AN APPEAL WITH THE ARMED SERVICES BOARD OF CONTRACT APPEALS, ASBCA NO. 8570. IT IS OUR VIEW THAT THE QUESTION INVOLVED HEREIN IS ONE OF LAW AND THUS WITHIN OUR JURISDICTION TO DECIDE. DECISIONS OF OUR OFFICE, INVOLVING QUESTIONS OF LAW ARE BINDING ON THE EXECUTIVE DEPARTMENTS AND AGENCIES OF THE GOVERNMENT AND THE LAW MAKES NO PROVISION FOR APPEAL THEREFROM. SUCH DECISIONS ARE NOT, HOWEVER, BINDING UPON THE COURTS, AND IF YOU FEEL THAT YOU HAVE A VALID CLAIM AGAINST THE UNITED STATES ARISING OUT OF THE CANCELLATION OF THE CONTRACT IN THIS CASE, YOU MAY INSTITUTE AN ACTION IN THE UNITED STATES DISTRICT COURT PURSUANT TO THE PROVISIONS OF SECTION 1346 OF TITLE 28, U.S.C., OR IN THE UNITED STATES COURT OF CLAIMS PURSUANT TO THE PROVISIONS OF SECTION 1481 OF TITLE 28, U.S.C. ..END :

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