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Heyer Products Co. v. U.S., 135 Ct.Cl. 63, 140 F.Supp. 409, (Fed. CL.

Facts: Action by bidder for damages for loss of profits and for expenses incurred in preparing a bid which
allegedly was rejected by the government as the result of arbitrary and capricious action taken in bad
faith. The material allegations of the petition are as follows: On March 17, 1952, the Ordnance Tank
Automotive Center, United States Army advertised for bids on 5,500 low-voltage circuit testers. The
plaintiff submitted a bid of $205,975 which was the law bid, and that it was and is a responsible bidder;
but that the Government, nevertheless, awarded the contract to a bidder whose bid was higher than the
bids of six other bidders, including the plaintiff, and $190,043 higher than plaintiff's low bid of $205,975.
Plaintiff alleges that the failure of defendant to award it the contract ‘was the result of a deliberate
artifice to retaliate against plaintiff for testifying against OTAC at a Senate hearing in 1952; that
defendant deliberately and in violation of law wished to favor the successful bidder, and that
defendant's action throughout the entire transaction was arbitrary, capricious, and taken in bad faith.
Defendant moves to dismiss plaintiff's petition on the ground that it does not state a cause of action.
Issue: Does the Plaintiffs petition state a proper cause of action?
Law: It has been settled beyond controversy that most statutes governing the awarding of bids by
governmental agencies are enacted for the benefit of the public who are served by these agencies, and
not for the benefit of the bidders, and, therefore, that bidders have no right to sue on the ground that
the provisions of such an Act have been violated, in that the contract had not been let to the lowest
bidder. United States v. New York & Puerto Rico Steamship Co., 239 U.S. 88, 36 S.Ct. 41, 60 L.Ed. 161;
American Smelting & Refining Co. v. United States, 259 U.S. 75, 42 S.Ct. 420, 66 L.Ed. 833; Perkins v.
Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108; Colorado Paving Co. v. Murphy, 8 Cir., 78 F.
28, 37 L.R.A. 630. All bids shall be publicly opened at the time and place stated in the advertisement.
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: Provided, That all bids may be rejected when the agency head determines that
it is in the public interest so to do.’ 41 U.S.C.A. § 152(b). United States v. Purcell Envelope Co., 249 U.S.
313, 39 S.Ct. 300, 301, 63 L.Ed. 620 In the interest of both government and bidder, necessarily giving
rights to both and placing obligations on both.
Reasoning: The Government is under the obligation to honestly consider the plaintiffs bid and not to
wantonly disregard it. If this obligation is breached and plaintiff is put to needless expense in preparing
its bid, it is entitled to recover such expenses. It goes without saying that not every unsuccessful bidder
is entitled to recover the cost of putting in his bid. Recovery can be had in only those cases where it can
be shown by clear and convincing proof that there has been a fraudulent inducement for bids, with the
intention, before the bids were invited or later conceived, to disregard them all except the ones from
bidders to one of whom it was intended to let the contract, whether he was the lowest responsible
bidder or not.
Holding: Motion denied