B-143983, OCT. 6, 1961

B-143983, OCT. 6, 1961

TO JONES, DAY, COCKLEY AND REAVIS:

WE HAVE YOUR LETTER OF JULY 19, 1961, WITH ENCLOSURES, SUBMITTING ON BEHALF OF UNITED STEEL FABRICATORS, INCORPORATED, A CLAIM IN THE AMOUNT OF $51,159.14, REPRESENTING PRE-PRODUCTION EXPENSES INCURRED UNDER A CONTRACT AWARDED BY THE DEPARTMENT OF THE ARMY, A SIZEABLE PORTION OF WHICH WAS LATER CANCELLED AS ILLEGAL PURSUANT TO OUR DECISION B-143983, NOVEMBER 23, 1960.

INVITATION FOR BIDS NO. TC 23-204-60-159 WAS ISSUED APRIL 22, 1960, FOR 5,000 CONEX CONTAINERS, F.O.B. BIDDER'S SHIPPING POINT. FOR EVALUATION PURPOSES THE FINAL DESTINATION OF 3,500 WAS REGARDED AS NEWCUMBERLAND, PENNSYLVANIA, AND OF THE REMAINING 1,500 AS LATHROP, CALIFORNIA. DUE TO THE APPLICATION OF AN ERRONEOUS FREIGHT RATE, UNITED STEEL WAS DETERMINED TO BE THE LOW OVERALL BIDDER. ACCORDINGLY, AWARD OF THE ENTIRE PROCUREMENT WAS MADE TO THAT FIRM ON JUNE 16, 1960.

THE FAB-WELD CORPORATION, ANOTHER BIDDER, IMMEDIATELY PROTESTED THE AWARD. IN OUR DECISION OF SEPTEMBER 28, 1960, WE FOUND THAT IF THE CORRECT FREIGHT RATES WERE APPLIED, FAB-WELD WAS THE OVER-ALL LOW BIDDER BY $9,575. WE HELD, HOWEVER, THAT SINCE THE AWARD TO OTHER THAN THE LOW BIDDER RESULTED SOLELY FROM THE GOVERNMENT'S ERROR, AND IN VIEW OF THE AMOUNT OF MONEY ALREADY EXPENDED BY THE CONTRACTOR IN PREPARING FOR PERFORMANCE, THE GOVERNMENT'S BEST INTERESTS WOULD BE SERVED BY PERMITTING THE AWARD TO STAND.

FAB-WELD REQUESTED RECONSIDERATION OF OUR FIRST DECISION AND AFTER REVIEWING THE ENTIRE MATTER CAREFULLY WE HELD ON NOVEMBER 23, 1960, THAT THE AWARD WAS ILLEGAL SINCE IT WAS NOT MADE TO THE LOWEST RESPONSIBLE BIDDER AS REQUIRED BY 10 U.S.C. 2305 (C). FURTHER, WE FOUND, CONTRARY TO THE ADVICE WE FIRST RECEIVED, THAT THE UNITED STEEL BID HAD NOT BEEN SUBMITTED ON AN ALL-OR-NONE BASIS AND THE BEST PRICE TO THE GOVERNMENT COULD BE OBTAINED BY AN AWARD OF 1,667 UNITS TO UNITED STEEL AND THE REMAINING 3,333 UNITS TO FAB-WELD. IN ACCORDANCE WITH OUR DIRECTIONS, THE INITIAL AWARD TO UNITED STEEL WAS CANCELLED AND SPLIT AWARDS MADE AS INDICATED ABOVE.

THE CLAIM YOU HAVE NOW SUBMITTED ON BEHALF OF UNITED STEEL IS SAID TO REPRESENT THE DIFFERENCE BETWEEN THE ESTIMATED PRE-PRODUCTION COSTS WHICH WOULD HAVE BEEN INCURRED HAD THE CONTRACT ORIGINALLY BEEN FOR 1,667 UNITS, AND THE PRE-PRODUCTION COSTS ACTUALLY INCURRED IN RELIANCE UPON THE ORIGINAL AWARD. IT IS NOTED FURTHER THAT THE CLAIM DOES NOT INCLUDE ANY AMOUNT FOR LOSS OF PROFIT. IN SUPPORT OF THE CLAIM THERE IS SUBMITTED A DETAILED COST ANALYSIS.

YOUR LETTER OF JULY 19, 1961, IS ACCOMPANIED BY A MEMORANDUM OF LAW ASSERTING A LEGAL BASIS FOR THE CLAIM. WE NEED NOT CONSIDER THE MERITS OF THE ARGUMENTS PRESENTED. THE CLAIM IS AN UNLIQUIDATED ONE FOR DAMAGES ARISING OUT OF AN ALLEGED BREACH OF CONTRACT. OUR OFFICE HAS FIRMLY ESTABLISHED THE POSITION THAT CLAIMS OF THIS TYPE WILL NOT BE CONSIDERED BY US BECAUSE OF OUR LACK OF FACILITIES FOR TAKING TESTIMONY, CROSS- EXAMINING WITNESSES, AND WEIGHING CONFLICTING EVIDENCE NECESSARY IN DECIDING SUCH CLAIMS. SEE 21 COMP. DEC. 134. SEE ALSO B-143968, JULY 25, 1961; B-91378, JULY 19, 1960; B-129403, MARCH 21, 1958.

AS NOTED PREVIOUSLY, WE HAVE FOUND THAT THE INITIAL AWARD TO YOUR CLIENT WAS ILLEGAL AS NOT CONFORMING TO THE REQUIREMENTS OF STATUTE. WHILE OUR DISPOSITION OF THE MATTER DOES NOT REQUIRE ITS CONSIDERATION, THERE SHOULD BE NOTED OUR POSITION THAT AN ILLEGAL AWARD DOES NOT OBLIGATE THE UNITED STATES TO COMPENSATE THE PURPORTED CONTRACTOR EXCEPT ON A QUANTUM MERUIT OR QUANTUM VALEBAT BASIS FOR VALUE RECEIVED. 40 COMP. GEN. 447.

YOU REQUEST IN YOUR LETTER THAT IF WE REACH THE CONCLUSION THAT THE CLAIM IS NOT ALLOWABLE WE CONSIDER ITS SUBMISSION TO THE CONGRESS UNDER 31 U.S.C. 236. UNDER THE CITED STATUTORY PROVISION WE HAVE THE AUTHORITY TO RECOMMEND FAVORABLY TO THE CONGRESS CLAIMS WHICH MAY NOT BE LAWFULLY ADJUSTED UNDER AN EXISTING APPROPRIATION BUT WHICH IN OUR JUDGMENT CONTAIN SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF CONSIDERATION BY THE CONGRESS. THE REMEDY IS AN EXTRAORDINARY ONE AND ITS USE IS LIMITED TO EXTRAORDINARY CIRCUMSTANCES. IN OUR CONSIDERED JUDGMENT THE CLAIM SUBMITTED DOES NOT CONTAIN THE NECESSARY ELEMENTS TO MEET THE TEST OF THE STATUTE.

IN ACCORDANCE WITH THE FOREGOING, WE MUST DENY THE CLAIM AND LEAVE THE CLAIMANT TO SUCH REMEDY AS HE MAY HAVE IN THE COURTS.