B-149795, JAN. 4, 1963

B-149795, JAN. 4, 1963

TO INDEPENDENT LOCK COMPANY:

WE HAVE YOUR LETTER OF NOVEMBER 26, 1962, WITH RESPECT TO YOUR CLAIM ARISING OUT OF THE CANCELLATION OF CONTRACT N-63077-11137.

THE CONTRACT WAS CANCELED BY THE CONTRACTING OFFICER'S NOTICE MAILED JUNE 21, 1962, ON THE GROUNDS THAT YOUR FIRM WAS NOT THE LOW BIDDER AND, THEREFORE, WAS NOT ELIGIBLE FOR AN AWARD AFTER ADVERTISING UNDER 10 U.S.C. 2305 (C) AS THAT PROVISION HAS BEEN CONSISTENTLY INTERPRETED. IT APPEARS THAT AWARD WAS MADE TO YOUR FIRM BECAUSE THE PROMPT PAYMENT DISCOUNT OFFERED BY THE ACTUAL LOW BIDDER WAS NOT PROPERLY EVALUATED.

IN OUR LETTER TO YOU DATED NOVEMBER 6, 1962, WE POINTED OUT THAT AN AWARD UNDER SUCH CIRCUMSTANCES WAS A NULLITY AND CONFERRED NO RIGHTS ON THE PURPORTED CONTRACTOR. WE FURTHER NOTED THAT THE CONTRACTING OFFICER HAD NO AUTHORITY TO MAKE AN AWARD TO OTHER THAN THE LOW BIDDER AND, THEREFORE, THAT THE AWARD TO YOU WAS UNAUTHORIZED AND DID NOT BIND THE UNITED STATES.

YOU HAVE BEEN PAID FOR ALL DELIVERIES MADE AND ACCEPTED UNDER THE CONTRACT PRIOR TO CANCELLATION. IT IS YOUR POSITION, HOWEVER, THAT YOU ACTED IN COMPLETE GOOD FAITH IN CARRYING OUT THE CONTRACT AND WERE ENTIRELY WITHOUT FAULT IN THE MATTER. YOU CONTEND THAT YOU ARE ENTITLED TO COMPENSATION FOR THOSE EXPENSES INCURRED IN PERFORMANCE PRIOR TO NOTICE OF TERMINATION WHICH ARE NOT COMPENSATED FOR BY THE PRICE RECEIVED FOR THE DELIVERED ARTICLES. IN THIS CONNECTION YOU CITE NEW YORK MAIL AND NEWSPAPER TRANSPORTATION CO. V. UNITED STATES (1957), 139 CT.CL. 751, IN SUPPORT OF YOUR CLAIM. FINALLY, YOU SUGGEST THAT UNDER THE CIRCUMSTANCES THERE MUST BE SOME MACHINERY AVAILABLE SHORT OF LITIGATION TO GIVE REDRESS TO A CONTRACTOR IN THESE CIRCUMSTANCES.

AS WE STATED IN OUR EARLIER DECISION, THE PURPORTED CONTRACT AWARDED TO YOU MUST BE REGARDED AS A NULLITY AND WITHOUT LEGAL EFFECT. PAYMENT MAY BE AUTHORIZED, THEREFORE, ONLY ON A QUANTUM VALEBAT OR QUANTUM MERUIT BASIS. SUCH BASIS PRESUMES THE RECEIPT OF VALUABLE GOODS BY THE GOVERNMENT. THERE IS NO AUTHORITY FOR PAYMENT OF COSTS INCURRED BY THE CONTRACTOR WHICH DID NOT RESULT IN A BENEFIT TO OR IN THE RECEIPT OF VALUABLE GOODS OR SERVICES BY THE GOVERNMENTAL UNIT INVOLVED. IN NEW YORK MAIL AND NEWSPAPER TRANSPORTATION CO. V. UNITED STATES, SUPRA, THE MAJORITY OPINION STATED THAT, RATHER THAN PROVIDING FOR PAYMENT ON A STRICTLY QUANTUM MERUIT BASIS, THE PARTIES SHOULD BE PLACED SUBSTANTIALLY IN THE POSITION THEY WOULD HAVE BEEN IN HAD THERE BEEN NO ATTEMPTED CONTRACT. WHILE THE MATTER IS NOT ENTIRELY CLEAR, IT MAY BE THAT THE JUDGMENT AWARDED EXCEEDED THE AMOUNT WHICH WOULD HAVE BEEN PAID UNDER QUANTUM MERUIT, I.E., VALUE RECEIVED BY THE GOVERNMENT AGENCY. HOWEVER, EVEN ACCEPTING THE RULE IN THAT CASE (OVERLOOKING THE PRECEDENTS TO THE CONTRARY AND THE DICTUM IN THE STRONG DISSENT UNDER WHICH NO PAYMENT WOULD HAVE BEEN AWARDED THE CONTRACTOR HAD THERE BEEN NO VALID CONTRACT) IT DOES NOT APPEAR THAT THE PREAWARD POSITION OF THE PARTIES COULD ANY MORE BE RESTORED IF THE UNITED STATES WERE TO PAY THE CLAIM THAN IF THE PARTIES WERE LEFT IN STATUS QUO.

IN ANY CASE, WE THINK THE MATTER HAS BEEN SPECIFICALLY DECIDED BY THE SUPREME COURT IN UNITED STATES V. MISSISSIPPI VALLEY GENERATING CO. (1961), 364 U.S. 520, 566, WHERE IT WAS STATED (FOOTNOTE NO. 22):

"THE RESPONDENT ALSO CONTENDS THAT EVEN IF THE CONTRACT IS NOT ENFORCEABLE, A RECOVERY QUANTUM VALEBAT SHOULD BE DECREED. HOWEVER, SUCH A REMEDY IS APPROPRIATE ONLY WHERE ONE PARTY TO A TRANSACTION HAS RECEIVED AND RETAINED TANGIBLE BENEFITS FROM THE OTHER PARTY. SEE CROCKER V. UNITED STATES, 240 U.S. 74, 81-82. SINCE THE GOVERNMENT HAS RECEIVED NOTHING FROM THE RESPONDENT, NO RECOVERY QUANTUM VALEBAT IS IN ORDER.'

IN ACCORDANCE WITH THE FOREGOING WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE MAY GIVE FAVORABLE CONSIDERATION TO YOUR CLAIM. MAY APPEAR UNDULY HARSH TO REQUIRE A CONTRACTOR WHO ACTED IN GOOD FAITH TO ABSORB THE COSTS APPLICABLE TO THOSE ITEMS UNDELIVERED AT THE TIME OF CANCELLATION. HOWEVER, THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY, AND THE MANNER OF EXERCISE THEREOF, IS PRESCRIBED AND LIMITED BY STATUTE, REGULATION, AND ADMINISTRATIVE AND JUDICIAL DETERMINATION. TO MAKE THE GOVERNMENT LIABLE FOR OTHER THAN BENEFITS RECEIVED WOULD, IN EFFECT, PERMIT AGENTS OF THE GOVERNMENT TO OBLIGATE THE UNITED STATES IN DIRECT CONTRAVENTION OF THOSE LIMITATIONS AND PRESCRIPTIONS. IN EFFECT, THE BASIC PURPOSES OF THE STATUTES, REGULATIONS AND DETERMINATIONS WOULD BE NULLIFIED. SUCH RESULT IS OPPOSED TO THE PUBLIC INTEREST.

IN ADDITION, AND WITHOUT REFERENCE TO ITS MERITS, IT SHOULD ALSO BE NOTED THAT THE CLAIM IS ESSENTIALLY ONE FOR UNLIQUIDATED DAMAGES ARISING OUT OF BREACH OF CONTRACT. IT IS THUS OF A CATEGORY WHICH THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE TRADITIONALLY DECLINED TO SETTLE--- NOT BECAUSE OF LACK OF JURISDICTION BUT BECAUSE OF THE IMPRACTICABILITY OF REACHING AN ACCURATE MEASURE OF THE MERITS AND QUANTUM OF DAMAGES WITHOUT PROVISIONS FOR TAKING SWORN TESTIMONY, CROSS EXAMINATION, AND RELATED EVIDENCE, FOR WHICH OUR OFFICE LACKS THE FACILITIES. 4 COMP. GEN. 404; 19 COMP. DEC. 409. IN SUCH CASES IT HAS BEEN OUR CONSISTENT POLICY TO DISALLOW THE CLAIM AND LEAVE THE CLAIMANT TO SUCH REMEDY AS HE MAY OBTAIN IN THE COURTS.