BROWN & SON ELECTRIC COMPANY v. The UNITED STATES
No. 76-61
United States Court of Claims
Dec. 13, 1963
Having written the opinion of the court in Goldwasser v. United States, Ct.Cl., No. 477-61, 325 F.2d 722, this day decided, it follows that I disagree with the opinion in this case. It reiterates, I think, the positions taken in the dissenting opinions in the Goldwasser case.
In Goldwasser, the defendant became dissatisfied with plaintiff‘s performance but it did not refuse further to honor the contract because plaintiff had defaulted in performance, but, instead, took refuge in the “indefinite-quantities clause of the contract, contending that under that clause it was no longer obligated to avail itself of plaintiff‘s services. Because we thought this clause was inapplicable and that defendant had wrongfully refused to further honor the contract unless plaintiff was actually in default, and because it did not take advantage of the termination-for-convenience-of-the-Government clause, we held this clause did not prescribe the measure of defendant‘s liability, if any.
Nor in the case at bar did defendant take advаntage of the termination-for-convenience-of-the-Government clause; it cancelled the contract because, acting upon the opinion of the Comptroller General, it held that it had been awarded without compliance with the statute and was, therefore, a nullity. It is a contradiction to say that it terminated a contract that in law it asserted had never existed. Whether it had a right to do so or not is immaterial, because it did not in fact do so. The possession of a right means nothing unless that right is exercised.
As in the Goldwasser case, a cancellation of the contract because it had been illegally entered into involved no liability on the part of the Government; a termination for convenience did render the Government liable. The Contracting Officer chose the former course. The Government is bound by the action he took.
What I have said is in harmony with our holding in Klein v. United States, 152 Ct.Cl. 8, 285 F.2d 778 (1961).
The majority relies upon College Point Boat Corp. v. United Stаtes, 267 U.S. 12, 45 S.Ct. 199, 69 L.Ed. 490 (1925), affirming 58 Ct.Cl. 380 (1923), but in that case there was no election by the Government between two alternative courses of action, one of which subjected the Government to liability and the other did not.
Edwin J. Reis, Washington, D. C., with whom was Asst. Atty. Gen., John W. Douglas, for defendant.
Before JONES, Chief Judge, and WHITAKER, LARAMORE, DURFEE and DAVIS, Judges.
DAVIS, Judge.
Plaintiff сharges the United States with breaking a valid contract by withdrawing the award and giving it to another bidder. In May 1960, the Air Force invited bids for the modification of a building at Robins Air Force Base in Georgia. The invitation called for proposals on certain electrical and construction work designated as the base work; in addition, bids were requested on a number of additive alternate items which were to “be awarded at the option of the Government contingent upon availability of funds.” The invitation stated that the “award will be made on the lowest responsive Base Bid,” but also required that bids be entered fоr both the base bid and all additive alternates. The bid bond requirement was as follows:
“Bid guaranty in a penal sum of 20% (expressed in words & figures) of the bid price will be required in support of each bid if bid price is in excess of $2,000. (See par. 4 of attached SF 22, “Instructions to Bidders.“) Failure to submit bid guaranty for receipt by the Government prior to the time fixed for opening of bids is cause for rejection of bid unless failure to do so was a result of delay in the mails for which bidder was not responsible.”
| Bidder | Base Bid | Base Bid Plus Alternates |
|---|---|---|
| Aaron Torch & Sons, Inc. | $341,584 | $376,334 |
| Brown & Son Electric Co. (plaintiff) | 378,277 | 412,501 |
| Ga. Southern Const. Co. | 380,000 | 408,634 |
Plaintiff‘s bid was accompanied by a bid bond “not to exceed Ninety Thousand & no/100 dollars ($90,000).” Torch‘s bid bond said “Twenty Percent (20%) of amount bid $68,316.80,” and its bid form recited that enclosed was a bid bond “in the amount of 20% of the amount of bid.” Georgia Southern‘s bid bond stated “Twenty Percent (20%) of amount bid.”
Torch‘s bid was the lowest on both the base unit and the total contract work, but the contracting officer, pursuant to a legal opinion from the Base Judge Advocate, rejected that bid because the tendered bond was only for 20% of the base bid, not 20% of the total bid. The award was then made, on June 30, 1960, to plaintiff which wаs the second lowest bidder on the base work (though not on the contract as a whole). The formal contract was executed on July 14, 1960.
Immediately after the award, plaintiff began compliance with the requirement in the Notice of Award that it submit a schedule of materials and equipment within 30 days. To obtain the necessary information, plaintiff was compelled (it alleges) to place purchase orders and subcontracts amounting to $265,000 and to obligate itself for other substantial costs (all before July 14th). On July 15th, plaintiff was orally notified to suspend all work because Torch (as well as the Assоciated General Contractors of America) had protested to the Comptroller General that the award to plaintiff was improper. There followed a written suspension order under the Suspension of Work Clause of the contract. Plaintiff, which had not known of the protests before July 15th, complied with these orders at once.
On September 15, 1960, the Comptroller General upheld the protest and ruled that the award to plaintiff was invalid and that it should go to Torch. On October 6th, the Air Force cancelled plaintiff‘s contract pursuant to this decision. Plaintiff filed appropriate protests and requested reimbursement by the Air Force. This was refused and the present suit was brought. Both parties have moved for summary judgment on the issue of liability and there is no factual dispute on that aspect.
In Reiner & Company v. United States, Ct.Cl., 325 F.2d 438, decided today, we treat with a similar case of cancellation of a cоntract following a General Accounting Office ruling that the award to the plaintiff was improper. In that opinion we discuss (a) the judicial standard for determining the legality of awards made by a contracting officer which are thereafter challenged as illegal, and (b) the measure of recоvery for the unhappy contractor with a legal contract which is nevertheless cancelled in such circumstances. Those principles are fully applicable here and we deal with plaintiff‘s case in their light.
Despite defendant‘s strong urging, we cannot hold the award to plaintiff to hаve been so plainly a nullity that the whole contract should now be struck down as illegal. The argument for invalidity is twofold: (i) that in no event was plaintiff the lowest responsive bidder to the invitation as issued, and (ii) alternatively, that the invitation itself must be held invalid. Under the standard set forth in Reiner, we can agree with neither branch.
Torch was undoubtedly the lowest bidder, but thе contracting officer rejected its bid because the bid bond was only 20% of the base bid, not the full amount bid.1 The invitation required a “bid
Although Georgia Southern‘s total bid was lower than plaintiff‘s, its base bid was higher. The invitation said, in the plainest words, that the “award will be mаde on the lowest responsive Base Bid.”2 The full contract price (including the additives) was not to be the standard. Once Torch‘s bid was rejected for non-compliance with the bid bond requirement, the contracting officer was required to grant the contract to plaintiff (with its lower base bid) if the terms оf the invitation were to be followed. Under the invitation, plaintiff was the next lowest responsible and responsive bidder.
Defendant‘s alternative contention is that the invitation was invalid because it called for the award to be founded on the base bid alone. This is said to be contrary to the requirement of statute and regulation that awards be made to the lowest responsible bidder.3 We note, first, that the Comptroller General does not appear to have considered the invitation unlawful. He directed that the award be made to Torch as the low bidder; if the invitation was illegal no аward should have been made and the procurement re-advertised under a corrected invitation. Here, too, there is room for dispute, but we believe the contracting officer to have acted reasonably in accord with the “lowest responsible bidder” requirement when he included this provision. Additives are portions of the work which may never be ordered because funds are not available. This procurement came toward the close of the fiscal year ending June 30, 1960. The invitation went out on May 16th and was to be opened on June 15th. The contract-
For these reasons, we hold, under one principle discussed in Reiner, that in the circumstances of this case plaintiff‘s contract should not be dеemed void.
Under another principle of Reiner, we hold that plaintiff‘s recovery is not common-law damages (including unearned but anticipated profits) but the money to which it would be entitled on a
termination of the contract for the Government‘s convenience. (This contract contained such a clause.) Unlike the Reiner case, there is no agreement here as to what that sum would be. It might be argued that this determination should first be made within the Defense Department by the contracting officer and the Board of Contract Appeals. We do not follow that course, however. This is not a case in which the contract was аctually terminated (or sought to be terminated) under the termination article. It is a case in which the agreement was cancelled for other reasons, now found to be wrong, but in which the doctrine of College Point Boat Corp. v. United States, 267 U.S. 12, 15-16, 45 S.Ct. 199, 200-201, 69 L.Ed. 490 (1925) (discussed in the Reiner opinion) “operate[s] to curtail the damages recoverable” when suit is brought for a breach. In such a case, there is no requirement of the contract or the
Defendant‘s motion for summary judgment is denied, and plaintiff‘s motion for summary judgment is granted. Judgment is entered for plaintiff. The amount of recovery will be determined under Rule 38(c) in accordance with this opinion.
I concur for the reasons stated in my concurring opinion in Reiner & Co. v. United States, Ct.Cl., 325 F.2d 438.
WHITAKER, Judge (concurring in part and dissenting in part):
I concur in that part of the oрinion which holds that the contract was validly awarded to plaintiff in the first instance, and later was wrongfully cancelled. I dissent from the holding that the measure of damages is prescribed by the termination-for-convenience-of-the-Government clause, which was not invoked. My reasons are stated in my dissеnt in Reiner & Co. v. United States, Ct.Cl., 325 F.2d 438.