
    REFINING ASSOCIATES, INC. v. THE UNITED STATES
    [No. 49699.
    Decided January 13, 1953]
    
      
      The Reporter's statement of the case:
    
      Mr. Edward J. O'Connor for the plaintiff.
    
      Mr. John B. Miller, with whom was Mr. Assistant Attorney General Holmes Baldridge, for the defendant. Mr. Gordon F. Harrison was on the brief.
   Howell, Judge,

delivered the opinion of the court:

This is a suit for $20,111.70 which plaintiff contends was wrongfully withheld by defendant from sums admittedly due plaintiff under two contracts for the delivery of oil lubricants. Defendant contends, in effect, that the sums so withheld were to compensate it for losses incurred by reason of plaintiff’s breach of a part of one of the two contracts.

Plaintiff, a California corporation engaged in the business of buying and selling oil lubricants, on or about September 30, 1948, received an Invitation for Bids issued by the defendant, through the Armed Services Petroleum Purchasing Agency, under date of September 29,1948, covering 26 separate and specific items of oil lubricants designated as items 1 to 26, to be delivered to defendant f. o. b. the supplier’s port of choice, one-third of the quantity of each item in early November, one-third in late November, and one-third in early December, 1948.

The Invitation for Bids provided that the bids would be opened at 10:00 A. M. October 12, 1948, but by Addendum #1, accepted by plaintiff before submission of its bid, this time was extended until 10:00 A. M. October 15, 1948. It also provided that the bidder “offers and agrees that if this bid be accepted within 15 calendar days * * * from the date of the opening, to furnish any or all of the items upon which prices are quoted at the price set opposite each item” U. S. Standard Form 22 (Instructions to Bidders), approved by the Acting Secretary of the Treasury July 13, 1949, 41 U. S. C. App. § 12.22, was incorporated into the Invitation for Bids by reference.

Between September 30 and October 12, 1948, plaintiff, in compliance with the Invitation for Bids, and subject to all the conditions thereof, submitted its bid on each of the 26 items, and when the bids were opened, was found to be the low bidder on items 1, 7, 8, 9, 10, and 11. On October 21, 1948, six days after the opening of bids, and nine days before the expiration of the 15-day period specified in the bids, plaintiff sent the following telegram to defendant:

REFER OUR SEALED BID IFB 49-2. PLEASE WITHDRAW OUR BID ON NAVY SYMBOL OIL 2075 NS 2110 NS 3050 NS 5150 NS 5190 NS 6135 AND NS 9370. WE ARE UNABLE BECAUSE OF CIRCUMSTANCES BEYOND OUR CONTROL TO FURNISH NAVY QUALIFICATION NUMBERS.

The first three symbol numbers in this telegram refer to items which are not involved in this suit, and the last four symbol numbers refer to items 7, 8, 9, and 10, in plaintiff’s bid on which plaintiff was low bidder, as indicated above and these are the items involved in this suit. Items 1 and 11, upon which plaintiff was also low bidder, were supplied according to the contract, but payment therefor has been withheld by defendant along with payment due plaintiff under another contract, for reasons stated below.

On October 28,1948, seven days following receipt of plaintiff’s wire asking that its bid be withdrawn, defendant executed a purported written acceptance of plaintiff’s bid, including the four disputed items, and assigned No. ASP-623 to the contract. Plaintiff was advised by telegram dated the same day of this acceptance. On November 3, 1948, plain< tiff wired defendant that it accepted the terms of the contract, except as to the items specifically revoked by wire dated October 21, 1948. '

On November 5, 1948, defendant wired plaintiff that the notice of revocation as to items 7, 8, 9, and 10 was considered to be without legal effect, and requested that it be advised as to whether these items would be delivered in accordance with the terms of the contract.

On November 12, 1948, plaintiff wired defendant stating that no contract existed as to items 7, 8, 9, and 10, because plaintiff’s revocation was transmitted prior to defendant’s acceptance. In this wire plaintiff further stated that the bid on these items was revoked because of “strike and impossibility of performance.” It is plaintiff’s position that, the strike, mentioned in this wire for the first time, refers to a strike of refining employees of the oil companies on the Pacific Coast, which began on September 1, 1948 and continued until December 3, 1948, and to strike of longshoremen on the Pacific Coast, Avhich started on August 25, 1948 and lasted until December 8,1948.

By letter dated November 29, 1948, defendant advised plaintiff that pursuant to Section 13, “Delays-Damages,” of the contract, the contract was terminated as to items 7, 8, 9, and 10, due to the contractor’s default, and that purchase of these items would be made elsewhere, with the excess cost, if any, charged to the account of the contractor.

By letter dated January 17,1949, defendant advised plaintiff that these items had been purchased from other suppliers at prices which exceeded plaintiff’s bid prices by $20,111.70, and requested that plaintiff’s check in this amount be forwarded to defendant. When this was not done, defendant accomplished collection of its claim against plaintiff by withholding the sum of $20,111.70 from moneys admittedly due plaintiff under this contract (items 1 and 11), and under another contract entered into with defendant for the delivery of oil lubricants.

It is not contended by plaintiff that the withholding of this sum was wrongful if a valid contract as to items 7, 8, 9, and 10 existed. The parties agree that the first issue for determination is whether or not under the facts of this case the attempted revocation was effective. Plaintiff contends that as the offer* was revoked before acceptance, there is no contract. Defendant contends that the attempted revocation, after the opening of the bids and during the period agreed upon in which defendant might accept, was ineffective and that a valid contract was created by the Government’s acceptance.

It is conceded by defendant that under ordinary principles of contract law an offeror may withdraw his offer, not under seal or for a consideration, at any time before acceptance, and that his right of revocation exists even though the offeror agreed to keep the offer open for a time certain. Defendant contends, however, that this rule does not apply here, either because of regulations pursuant to which plaintiff’s bid was submitted, or because government contracts constitute a well recognized exception to the general rule.

U. S. Standard Form 22, approved by the Acting Secretary of the Treasury July 13,1939,41 U. S. C. App. § 12.22, which was incorporated by reference into the Invitation for Bids, provides in part as follows:

12. Withdrawal of bids
Bids may be withdrawn on written or telegraphic request received from bidders prior to the time fixed for opening. Negligence on the part of the bidder in preparing the bid confers no right for the withdrawal of the bid after it has been opened.

Section 2.303 of the Armed Services Procurement Regulations, effective May 19,1948,13 F. R. 3074, 3079, provides in part as follows:

2.303 Modification or withdrawal of bids
Bids may be modified or withdrawn, at any time prior to the time fixed for opening thereof, by written or telegraphic notice received prior to the time fixed for opening. After the opening of bids, no bid may be modified * * * or withdrawn unless such modification or withdrawal is received before the award has been made and either (a) failure of the modification or withdrawal to arrive prior to the time fixed for opening as due solely to a delay in the mails for which the bidder was not responsible or (b) modification is in the interest of the Government and not prejudical to other bidders.

It is apparent from the facts in this case that if these regulations are controlling, the attempted withdrawal by plaintiff of its bid was without legal effect. Plaintiff contends that the regulations do not control, and that the application of them in this case would enforce a penalty upon plaintiff, and create out of the transaction a contract, where the fundamental elements of a contract are lacking.

When the United States enters into contractual relations, its rights and duties are governed generally by the law applicable to contracts between private parties. Cooke v. United States, 91 U. S. 389, 398. It is plaintiff’s contention that this rule applies to the case at bar.

This court, has, on many occasions, granted relief to plaintiffs seeking to withdraw or modify bids after the date of opening. In Alta Electric and Mechanical Company v. United States, 90 C. Cls. 466, we held that where plaintiff made a mistake in its bid, it had the right to withdraw it after opening of the bids but prior to acceptance. The important factor here was that from the bid itself the defendant should have suspected the existence of the mistake. In Leitman v. United States, 104 C. Cls. 324, plaintiff contended that a telegraphic modification of his bid downward should be disregarded, as it had arrived an hour and forty minutes after the time set for the opening of the bids. We held that the rule that amendments to bids received after the opening are to be disregarded does not apply where the bid is already the lowest. Implicit in this decision is a recognition of the validity of the rule.

In Nason Coal Company v. United States, 64 C. Cls. 526, we held that plaintiff could withdraw a bid submitted under an erroneous impression that delivery was to take place a year after the submission of the bid, when in fact delivery was to take place immediately. In this case, plaintiff notified defendant of its mistake prior to acceptance, and we held that a subsequent acceptance of the bid by the War Department did not constitute a contract.

In these cases, however, elements not present in the instant case are found. The Alta and Nason cases are founded on mistake. In Leitman is found the fact that the regulation was for the protection of the government, and consequently under the facts of that case, the government having waived the benefit of the regulation, plaintiff was not allowed to take advantage of it.

In the instant case, plaintiff, in its original notice of revocation, asked that its bid be withdrawn “because of circumstances beyond our control.” In its telegram dated November 12,1948, plaintiff for the first time implies that the “circumstances” are the strikes and impossibility of performance. This telegram was dated 15 days after defendant’s acceptance. There is no evidence that the strikes in any way affected plaintiff’s ability to perform. These strikes had been in progress at least a month when plaintiff submitted its bid. In spite of this fact, plaintiff selected as his port of choice Los Angeles or San Francisco, where the strikes were going on. Plaintiff knew, or should have known, of the strikes at the time the bid was submitted. In the absence of evidence, plaintiff’s contention that its revocation was due to the strikes is unjustified.

Scott v. United States, 44 C. Cls. 524, cited by both parties, involved the right of the plaintiff to recover a check submitted by him as a deposit along with his bid for leasing certain lands from the Commissioner of Indian Affairs. The deposit was made because of a regulation of the Indian Office, and approved by the Secretary of the Interior, which provided that in case any. bidder receiving an award failed to execute the lease promptly, his deposit would be forfeited. On opening the bids, it was found that plaintiff was high bidder, whereupon plaintiff withdrew his bid. Pursuant to the regulation plaintiff’s deposit was declared forfeited, and we held that the forfeiture was valid.

In effect, there was in the Scott case a bid bond, one of the purposes of which was to insure government agents a reasonable time after the opening of bids within which to consider them, and to determine which bidder was the highest responsible bidder. In the instant case, no such bid bond was required, but as a condition to bidding, it was provided by U. S. Standard Form 22, supra, and the Armed Services Procurement Regulations, supra, that after the opening of bids no bid might be withdrawn. Plaintiff submitted its bid subject to these provisions, and agreed that defendant should have 15 days from the date of opening to consider the bids. In so doing, plaintiff was accorded the right of having its bid considered on its merits, and this right was conditioned on the premise that the bid would remain open during the time specified.

Where there is no mistake, unreasonable delay, or the like, there can be no injustice in holding the bidder to the conditions of the Invitation for Bids. 30 Op. A. G. 56, 64. If, on the other hand, the bidder has the right of withdrawal in all cases, innumerable frauds could be perpetrated against the United States by the parties engaged in the bidding. Scott v. United States, supra.

There is no evidence that plaintiff’s attempted revocation was due to any of the above factors. Accordingly, we hold that plaintiff’s attempted revocation was ineffective, and that a valid contract was constituted upon timely acceptance by the government, under the facts and circumstances of this case.

We have considered plaintiff’s contention that it was not, after advising defendant that it wished to withdraw its bid, a “responsible bidder” within the meaning of U. S. Standard Form 22 and the Armed Services Procurement Regulations, and hold that it is without merit. We have also considered the other authorities cited by plaintiff, and find them inapposite.

A valid contract existed in this case, and defendant, in withholding sums due plaintiff to compensate it for excess costs incurred by reason of plaintiff’s breach of contract, was within its rights under the contract. Accordingly, plaintiff is not entitled to recover, and plaintiff’s petition is therefore dismissed.

It is so ordered.

Madden, Judge; Whitaker, Judge; Littleton, Judge; and Jones, Chief Judge, concur.

FINDINGS OF FACT

The court makes findings of fact, based upon the evidence, the stipulation of the parties, and the briefs and argument of counsel, as follows:

1. The plaintiff is a California corporation engaged in the business of buying and selling oil lubricants, with its principal place of business at Los Angeles, California.

2. Under date of September 29, 1948, the defendant’s Armed Services Petroleum Purchasing Agency issued Invitation for Bids No. I. F. B. 49-2, covering 26 separate and specific lubricants designated as Items 1 to 26, to be delivered to the defendant f. o. b. the supplier’s port of choice, one-third of the quantity of each item in early November, one-third in late November, and one-third in early December 1948.

Shortly thereafter, the plaintiff received a copy of said Invitation for Bids.

3. U. S. Standard Form 22 (Instructions to Bidders) approved by the Acting Secretary of the Treasury July 13,1939, 41 U. S. C. App. § 12.22, which was incorporated into the Invitation for Bids by reference, provides in part as follows:

1. Preparation of bids
Unless otherwise directed in the invitation, bids shall be submitted in triplicate. Forms furnished, or copies thereof, shall be used, and strict compliance with the requirements of the invitation, these instructions, and the instructions printed on the forms is necessary. Special care should be used in the preparation of bids. Bidders must make their own estimates of the facilities and difficulties attending the performance of the proposed contract, including local conditions, * * *, and all other contingencies. * * *.
*****
12. Withdrawal of bids
Bids may be withdrawn on written or telegraphic request received from bidders prior to the time fixed for opening. Negligence on the part of the bidder in preparing the bid confers no right for the withdrawal of the bid after it has been opened.
*****
14. Award or rejection of bids _ The contact will be awarded to the lowest responsible bidder complying with conditions of the invitation for bids, * * _ *. The bidder to whom the award is made will be notified at the earliest possible date. * * *. *****

4. Thereafter and before October 12, 1948, the plaintiff submitted its bid on the 26 items and stated the price at which it would sell each of the lubricants, f. o. b. Los Angeles and/or San Francisco. The bid contained the following provision:

In compliance with the above invitation for bids, and subject to all the conditions thereof, the undersigned, offers, and agrees if this bid be accepted within 15 calendar days * * * from the date of the opening, to furnish any or all of the items upon which prices are quoted at the price set opposite each item * * *.

Addendum #1 of the Invitation for Bids, accepted by the plaintiff before submission of its bid, postponed the time for opening of bids from 10 a. m. October 12, 1948, to 10 a. m., October 15, 1948. It is reasonable to conclude that the bids were opened at the scheduled time. The plaintiff was the low bidder on Items 1,7,8,9,10, and 11.

5. On October 21, 1948, the plaintiff sent and the defendant received the following telegram:

REFER OUR SEALED BID JFB 49-2. PLEASE WITHDRAW OUR BID ON NAVY SYMBOL OIL 2075 NS 2110 NS 3050 NS 5150 NS 5190 NS 6135 AND NS 9370. WE ARE UNABLE BECAUSE OF CIRCUMSTANCES BEYOND OUR CONTROL TO FURNISH NAVY QUALIFICATION NUMBERS.

The last four symbol numbers in the telegram covered the lubricants designated as Items 7, 8, 9, and 10 in the bid papers.

6. The Invitation for Bids provided in part, as follows:

The right is reserved, as the interest of the Government may require, to reject any or all bids, to waive any informality in bids received, and to accept or reject any items of any bids unless qualified by specific limitation.

On October 28, 1948, the defendant executed its written acceptance of the plaintiff’s bid as to Items 1, 7, 8, 9,10 and 11, and assigned No. ASP-628 to the contract. On the same day, the defendant’s contracting officer advised the plaintiff by telegram that plaintiff’s bid was accepted as to those items.

7. By telegram transmitted November 3,1948, the plaintiff stated to the defendant as follows:

TOUR REF: CONTRACT ASF — 623 (IFB 49-2) TOUR WIRE OF ACCEPTANCE, DATED OCTOBER 2 9, 1948 [sic] RECEIVED AND TOUR LETTER OF SAME DATE, WITH CONFIRMATION COPT OF WIRE RECEIVED. REFINING ASSOCIATES, INC. ACCEPTS TERMS OF THE CONTRACT EXCEPT THOSE SPECIFICALLT REVOKED BT WIRE DATED OCTOBER 21, 1948 ON NAVT STMBOL OIL NS 2075, NS 2110, NS 3050, NS 5151, [sic] NS 5190, NS 6135 AND NS 937 0, WHICH NOTICE OF REVOCATION WAS PRIOR TO TOUR WIRE OF ACCEPTANCE AND LETTER. THE MATERIAL OF THE CONTRACT, OTHER THAN THAT SPECIFICALLT REVOKED WILL BE AVAILABLE FOR SHIPMENT ONE THIRD EARLT NOVEMBER, 194 3, ONE THIRD LATE NOVEMBER, 1948, ONE THIRD EARLT DECEMBER, 1948, IN ICCORDANCE WITH DELIVERT TIME SPECIFIED.

8. By telegram transmitted November 5,1948, the defendant notified the plaintiff as follows:

REURTEL 3 NOVEMBER 1948 SINCE THIS AGENCT ACCEPTED TOUR BID WITHIN THE TIME LIMIT SET FORTH IN THE BID TOUR NOTICE OF REVOCATION RELATIVE NAVT STMBOL OHS 5150 CMA 5190 CMA 6135 AND 9370 IS CONSIDERED TO BE WITHOUT LEGAL EFFECT. PD PLEASE ADVISE IF PRODUCT WHL BE DELIVERED IN ACCORDANCE WITH TERMS OF THE CONTRACT. IF PRODUCT IS NOT TO BE DELIVERED THIS AGENCT MUST THEN PROCEED UNDER ARTICLE 12 OF GENERAL CONDITIONS PD REQUEST IMMEDIATELT REPLT SINCE DELAT WHL INCREASE OUR DIFFICULTIES IN SECURING PRODUCT IN TIME TO MEET SCHEDULED DELIVERIES AND MAT THEREBT INCREASE GOVERNMENT’S CLAIM ON TOUR CONTRACT.

9. By telegram transmitted November 12, 1948, the plaintiff stated to the defendant that no contract existed as to Items 7, 8, 9, and 10 because the plaintiff’s wire of revocation was transmitted before the defendant’s acceptance of the plaintiff’s bid. The plaintiff further stated that plaintiff’s bid on these items was revoked because of strikes and impossibility of performance, and that Items 1 and 11 would be delivered according to schedule.

10. A strike of the refining employees of the oil companies on the Pacific Coast commenced on September 1, 1948, and continued until December 3, 1948. A strike of the longshoremen on the Pacific Coast started on August 25,1948, and lasted until December 8,1948.

11. As stated in the defendant’s Invitation for Bids, the plaintiff’s bid and the defendant’s acceptance were subject to the following condition:

13. Delays — damages.—If the Contractor refuses or fails to perform this contract within the time specified, or any extension thereof, the Government may, by written notice, terminate the right of the Contractor to proceed with deliveries or with such part or parts thereof as to which there has been delay, and may hold the Contractor liable for any damage caused the Government by reason of such termination. The right of the Contractor to proceed with the performance of this contract shall not be terminated under this condition if the delay is due to causes beyond the control and without the fault or negligence of the Contractor, including without being limited to, any preference, priority, or allocation order issued by the Government or any other act of the Government.

12. By letter dated November 29, 1948, the defendant’s contracting officer advised the plaintiff that the contract was terminated as to Items 7, 8, 9, and 10, pursuant to the provisions of the “Delays — Damages” clause, and that the items would be purchased by the defendant, and the excess cost, if any, charged to the plaintiff’s account.

13. Prior to January 17, 1949, the defendant purchased Items 7, 8, 9, and 10 from other suppliers at prices which exceeded the plaintiff’s bid prices by the sum of $20,111.70. On that date, the defendant’s contracting officer by letter demanded that plaintiff pay this sum.

The defendant thereafter accomplished collection of its claim against the plaintiff by withholding the sum of $20,111.70 from moneys due to the plaintiff under this contract and another contract entered into with the defendant for delivery of oil lubricants.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover, and its petition is therefore dismissed.

Judgment is entered against plaintiff for the cost of printing the record herein, the amount thereof to be entered by the clerk and collected by him according to law.  