Brown & Son Electric Company v. United States

• Decision Date: 13 December 1963
• Docket Number: No. 76-61.,76-61.
• Citation: 325 F.2d 446,163 Ct. Cl. 465
• Parties: BROWN & SON ELECTRIC COMPANY v. The UNITED STATES.
• Court: U.S. Claims Court

163 Ct. Cl. 465, 325 F.2d 446 (1963)

BROWN & SON ELECTRIC COMPANY v. The UNITED STATES.

No. 76-61.

United States Court of Claims.

December 13, 1963.

Thomas M. Gittings, Jr., Washington, D. C., for plaintiff. King & King, Washington, D. C., of counsel.

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 charges 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 for 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."

When the bids were opened on June 15, 1960, these three bids were the lowest on the base work and those alternates the contracting officer included in the contract at that time:

                Base
                Bid Plus
                Bidder Base Bid 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 was 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 Associated 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 contract 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 recovery 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 have 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 the 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 guaranty in a penal sum of 20% (expressed in words & figures) of the bid price" (emphasis added). It was reasonable to read this as meaning the full amount bid, not merely the base bid. Both plaintiff and Georgia Southern so interpreted it; Torch itself admitted to the Comptroller General that it had intended to make its bond 20% of the full bid; it would be natural for the defendant to desire a bond computed on and covering all the work ultimately covered by the contract. Shortly after the opening, Torch claimed it had made a mistake and attempted to raise the amount of its bond, but, again, it was not unreasonable for the contracting officer to decide that the modification came too late. The invitation had specifically warned that the bid bond had to be received "prior to the time fixed for opening of bids." Only the year before, the Comptroller General had demanded strict enforcement of bid bond requirements (which he called "a material part of the invitation") in order, among other things, to prevent bidders from deciding after opening whether or not to try to have their bids rejected or accepted. 38 Comp.Gen. 532, 536-37 (1959); Comp.Gen.Dec. B-140624, Nov. 23, 1959. See also 39 Comp.Gen. 827, 829 (1960) (rejecting an award to a low bidder who inadvertently submitted a bond for 10% rather than 20%, of the bid); ASPR § 2.403, 32 C.F.R. § 2.403 (1960 Supp.). In his opinion on Torch's protest, the Comptroller General recognized himself that "strict rulings have recently been made with respect to the bid guaranty requirements expressed in the invitation," and he based his different conclusion here on what he called "the unusual circumstances in this case." The contracting officer was not unreasonable in thinking that no such exception should be made to the requirement that bids must conform to the invitation. We do not say that it was wrong or arbitrary for the Comptroller General to take the position he did. We do say that he was not plainly right as a matter of law, or the contracting officer plainly wrong.

Although Georgia Southern's total...