B-177658, OCT 3, 1973

B-177658, OCT 3, 1973

CLAIM DENYING AMOUNT OF $20,488.53 REPRESENTING SEVERANCE PAY AND ADMINISTRATIVE EXPENSES INCURRED IN CONNECTION WITH DISMISSAL OF 54 OF ITS EMPLOYEES WHEN THE REQUIREMENTS FOR PACKAGING, CRATING AND PRESERVATION SERVICES AT CAMP SMEDLEY D. BUTLER, OKINAWA, WERE REDUCED UNDER CONTRACT NO. M67400-71-C-0073. POSSIBILITY OF RELIEF UNDER A THEORY OF EITHER MUTUAL MISTAKE OR INNOCENT MISREPRESENTATION FOUND UNTENABLE.

TO TAIEI COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR UNDATED LETTER RECEIVED ON JUNE 19, 1973, REQUESTING RECONSIDERATION OF A CLAIM AGAINST THE UNITED STATES IN THE AMOUNT OF $20,488.53. THIS AMOUNT REPORTEDLY REPRESENTS SEVERANCE PAY AND ADMINISTRATIVE EXPENSES INCURRED IN CONNECTION WITH DISMISSAL OF 54 OF YOUR EMPLOYEES WHEN THE REQUIREMENTS FOR PACKAGING, CRATING AND PRESERVATION SERVICES AT CAMP SMEDLEY D. BUTLER, OKINAWA, WERE REDUCED UNDER CONTRACT NO. M67400-71-C-0073.

THE SOLICITATION FOR FISCAL YEAR 1972 WAS ISSUED ON MAY 1, 1971, AND THE PROVISIONS CONTAINED THEREIN STATE THAT THE CONTRACT WOULD BE A REQUIREMENTS CONTRACT AND THAT THE MARINE CORPS WOULD PROCURE ALL OF THE CONTRACT SUPPLIES AND SERVICES IT REQUIRED. THE REQUEST DID NOT CONTAIN ANY ESTIMATED MINIMUM OR MAXIMUM QUANTITIES. A LATER AMENDMENT WHICH GUARANTEED A MONTHLY MINIMUM WAS ADDED BECAUSE OF THE REALIZATION THAT THE AMOUNT OF THE SERVICES TO BE PERFORMED UNDER THE PROPOSED CONTRACT WAS HIGHLY CONTINGENT ON THE SCALE OF UNITED STATES OPERATIONS IN INDOCHINA.

YOUR COMPANY SUBMITTED THE LOWEST BID. NEGOTIATIONS WERE HELD BETWEEN REPRESENTATIVES OF TAIEI COMPANY AND THE MARINE CORPS IN WHICH TAIEI AGREED TO A GUARANTEED MONTHLY MINIMUM OF $25,000, APPARENTLY AFTER MARINE CORPS PERSONNEL REPRESENTED THAT THE QUANTITIES ORDERED WOULD BE ESSENTIALLY THE SAME AS IN PRIOR YEARS (APPROXIMATELY $34,000 PER MONTH). THE CONTRACT WAS AWARDED TO TAIEI ON APPROXIMATELY JUNE 8, 1971, WITH SERVICES TO COMMENCE ON JULY 1, 1971.

ON JUNE 28, 1971, BOTH THE CONTRACTING OFFICER AND THE CONTRACTOR WERE INFORMED THAT THE GOVERNMENT'S REQUIREMENTS WERE NOT TO EXCEED $25,000 PER MONTH. ON JULY 15, 1971, YOUR COMPANY ADVISED THE GOVERNMENT THAT DUE TO THIS REDUCTION IN THE SCOPE OF THE CONTRACT, IT WAS OBLIGED TO DISMISS 54 EMPLOYEES AND THAT IN CONNECTION WITH THIS DISMISSAL ITS EXPENSES WERE $20,488.53. THE PROCUREMENT PERSONNEL ON OKINAWA FORWARDED YOUR CLAIM TO MARINE CORPS HEADQUARTERS, WHICH ADVISED THE LOCAL PERSONNEL THAT PAYMENT OF YOUR CLAIM COULD NOT BE PERMITTED UNDER THE TERMS OF THE CONTRACT.

YOUR COMPANY, CLAIMING A RIGHT TO PAYMENT UNDER THE "TERMINATION FOR CONVENIENCE CLAUSE" IN THE CONTRACT, APPEALED THIS DECISION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA NO. 17123, OCTOBER 24, 1972). IN THE COURSE OF DETERMINING THAT THE PAYMENT OF YOUR CLAIM WAS NOT PERMITTED BY ANY OF THE CONTRACT PROVISIONS, THE BOARD HELD THAT THE LETTER OF JUNE 28, 1971, TO TAIEI, DID NOT CONSTITUTE A PARTIAL TERMINATION OF THE CONTRACT AND THAT THE LETTER CONSTITUTED ONLY A NOTICE TO THE CONTRACTOR THAT ORDERS UNDER THE CONTRACT WOULD BE LIMITED TO $25,000 A MONTH. THE BOARD SUGGESTED TO YOU THAT TAIEI MIGHT HAVE A CLAIM BASED ON A THEORY OF MUTUAL MISTAKE OR INNOCENT MISREPRESENTATION ON THE PART OF THE CONTRACTING OFFICER AND THAT RELIEF BASED ON THESE THEORIES MIGHT BE OBTAINED FROM THE GENERAL ACCOUNTING OFFICE.

ON DECEMBER 12, 1972, YOU WROTE THIS OFFICE REQUESTING CONSIDERATION OF YOUR CLAIM. IN OUR APRIL 30, 1973, RESPONSE WE INDICATED TO YOU THAT THIS OFFICE LACKED THE POWER TO REVIEW BOARD OF CONTRACT APPEALS DECISIONS PURSUANT TO THE DISPUTES CLAUSE OF A CONTRACT, ABSENT A SHOWING OF FRAUD OR BAD FAITH. HOWEVER, WE DID HAVE THE AUTHORITY TO CONSIDER THE POSSIBILITY OF RELIEF UNDER THE THEORIES OF MUTUAL MISTAKE OR INNOCENT MISREPRESENTATION. AFTER CONSIDERATION OF THESE POSSIBILITIES, WE CONCLUDED THAT NO LEGAL RELIEF WAS AVAILABLE TO TAIEI UNDER EITHER THEORY.

IN YOUR MOST RECENT COMMUNICATION WITH THIS OFFICE, AN UNDATED LETTER RECEIVED ON JUNE 19, 1973, YOU STATE, ONCE AGAIN, THAT YOUR CLAIM IS FILED UNDER THE "TERMINATION FOR CONVENIENCE CLAUSE" IN THE CONTRACT, AND THAT YOU DO NOT INTEND TO CLAIM A MISTAKE OR AMBIGUITY UNDER THE CONTRACT. EFFECT, YOU ARE ASKING THE GENERAL ACCOUNTING OFFICE TO OVERRULE THE OCTOBER 24, 1972, DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS WHICH HELD THAT YOUR CLAIM DOES NOT COME UNDER THE "TERMINATION FOR CONVENIENCE CLAUSE" IN THE CONTRACT. HOWEVER, THIS OFFICE, FOLLOWING THE UNITED STATES SUPREME COURT'S DECISION IN S & E CONTRACTORS, INC. V. UNITED STATES, 406 U.S. 1 (1972), NO LONGER REVIEWS BOARD OF CONTRACT APPEALS DECISIONS ABSENT A SHOWING OF FRAUD OR BAD FAITH. B-174899, JUNE 1, 1972. THEREFORE, THIS OFFICE DOES NOT HAVE THE AUTHORITY TO CONSIDER YOUR CLAIM THAT YOU ARE ENTITLED TO RELIEF UNDER THE "TERMINATION FOR CONVENIENCE CLAUSE". FURTHER REVIEW OF THE ASBCA DECISION MAY BE HAD IN THE COURT OF CLAIMS.

AS A RESULT OF YOUR MOST RECENT LETTER, THIS OFFICE CONDUCTED A REVIEW OF OUR INITIAL DECISION CONCERNING THE POSSIBILITY OF RELIEF UNDER A THEORY OF EITHER MUTUAL MISTAKE OR INNOCENT MISREPRESENTATION. AFTER REVIEWING THE RECORD, WE AFFIRM OUR EARLIER DECISION AND CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE MAY AUTHORIZE PAYMENT OF YOUR CLAIM.