B-192965, MAR 5, 1981

B-192965, MAR 5, 1981

SUBJECT: AYDIN CORPORATION, D/B/A AYDIN ENERGY SYSTEMS V. UNITED STATES, COURT OF CLAIMS NO. 139-80C

THOMAS MARTIN, ESQ., DEPARTMENT OF JUSTICE:

ATTENTION: FRANK M. RAPAPORT, ESQ., COMMERCIAL LITIGATION BRANCH:

THE PURPOSE OF THIS LETTER IS TO COMMENT ON CERTAIN STATEMENTS IN PLAINTIFF'S FEBRUARY 2, 1981 REPLY BRIEF ON MOTIONS FOR SUMMARY JUDGMENT IN THE SUBJECT CASE.

THE CASE INVOLVES A CLAIM BY AYDIN UNDER CONTRACT NO. N00039-75-C 0331 WITH THE NAVAL ELECTRONIC SYSTEMS COMMAND, BASED ON AN ALLEGED UNILATERAL MISTAKE IN AYDIN'S OFFER UPON WHICH THE CONTRACT IS BASED. WE DENIED AYDIN'S CLAIM (THE NAVY HAD DENIED THE FIRM RELIEF UNDER PUB. L. NO. 85-804, 50 U.S.C. SECS. 1431-1435 (1976)) IN OUR DECISION AYDIN ENERGY SYSTEMS, B-192965, SEPTEMBER 6, 1979, 79-2 CPD 180. WE LATER AFFIRMED THAT DECISION IN RESPONSE TO AYDIN'S REQUEST FOR RECONSIDERATION. AYDIN ENERGY SYSTEMS - RECONSIDERATION, B-192965, JANUARY 24, 1980, 80-1 CPD 68. THE STATEMENTS TO WHICH THESE COMMENTS ARE DIRECTED ARE IN SECTION 7 OF PLAINTIFF'S BRIEF, PAGES 14-21, REGARDING AN EX PARTE TELEPHONE CALL BETWEEN NAVY COUNSEL AND OUR OFFICE, THE SUBSTANCE OF WHICH IS MENTIONED IN OUR JANUARY 24, 1980 DECISION.

WE BELIEVE PLAINTIFF'S STATEMENTS ARE MISLEADING AND DO NOT ACCURATELY REPRESENT THE PROCESS BY WHICH THIS OFFICE CONSIDERS AND RESOLVES CLAIMS SUCH AS THE ONE FILED BY THE PLAINTIFF. BEFORE COMMENTING AT LENGTH ON THOSE STATEMENTS, HOWEVER, WE BELIEVE A BRIEF REVIEW OF OUR TWO DECISIONS WOULD BE APPROPRIATE.

THE BASIS FOR OUR SEPTEMBER 6, 1979 DENIAL OF AYDIN'S CLAIM FOR $624,204 WAS THAT THE CONTRACTING OFFICER WAS NOT ON CONSTRUCTIVE NOTICE OF THE ALLEGED UNILATERAL ERROR BY AYDIN BEFORE AWARDING THE CONTRACT TO THE FIRM. WE FOUND THAT ALTHOUGH THE DIFFERENCE BETWEEN AYDIN'S OFFER OF $2,866,808 AND THE ONLY OTHER OFFER, RCA'S AT $3,989,790, WAS 39 PERCENT, AYDIN'S UNIT PRICE OF $158,800 WAS ABOUT $4,000 MORE THAN THE GOVERNMENT'S INITIAL ENGINEERING ESTIMATE AND ABOUT $3,000 LESS THAN THE GOVERNMENT'S UNIT PRICE ESTIMATE MADE PRIOR TO AWARD FOR BUSINESS CLEARANCE PURPOSES. IN THIS REGARD, WE NOTED AYDIN'S CONTENTION THAT THE GOVERNMENT'S ESTIMATE MAY HAVE BEEN AS ERRONEOUS AS AYDIN'S OFFER ALLEGEDLY WAS, BUT WE POINTED OUT THAT THERE WAS NO EVIDENCE THAT THE GOVERNMENT ESTIMATE WAS WRONG; WE CITED THE HOLDING IN ALLIED CONTRACTORS, INC. V. UNITED STATES, 159 CT. CL. 548 (1962), THAT A DISCREPANCY BETWEEN OFFERS DOES NOT PUT THE GOVERNMENT ON NOTICE OF ERROR IN THE LOWER ONE WHERE IT IS CLOSE TO THE GOVERNMENT'S OWN COST ESTIMATE.

THE BASIS FOR AYDIN'S REQUEST THAT WE RECONSIDER OUR POSITION WAS THE CONTENTION THAT THE GOVERNMENT ESTIMATES WERE WRONG, AND THAT IF PROPER ESTIMATES HAD BEEN PREPARED, AYDIN'S ALLEGED ERROR WOULD HAVE BEEN APPARENT AND VERIFICATION THEREFORE WOULD HAVE BEEN REQUESTED. THE FIRM THUS SOUGHT TO CHARGE THE CONTRACTING OFFICER WITH CONSTRUCTIVE KNOWLEDGE OF ALLEGED ERROR IN A GOVERNMENT ESTIMATE, AND CONSEQUENT CONSTRUCTIVE KNOWLEDGE OF ERROR IN AYDIN'S LOW OFFER.

HOWEVER, WE POINTED OUT THAT THE ISSUE WAS NOT SIMPLY WHETHER A GOVERNMENT ESTIMATE WAS WRONG. WE STATED THAT THE RELEVANT QUESTION WAS "WHETHER THERE WAS SUFFICIENT INFORMATION AVAILABLE TO THE CONTRACTING OFFICER TO REASONABLY DISPEL ANY DOUBT AS TO THE QUESTION OF MISTAKE" SO THAT A REQUEST FOR VERIFICATION OF THE PRICES OFFERED IN THIS NEGOTIATED PROCUREMENT WAS NOT NECESSARY.

WE PROCEEDED TO DESCRIBE A NUMBER OF FACTORS REGARDING THE ESTIMATES, THEIR PREPARATION, AND THE TWO OFFERS RECEIVED, WHICH IN OUR VIEW SHOWED THAT THE CONTRACT AWARD WAS REASONABLE WITHOUT A REQUEST BY THE CONTRACTING OFFICER THAT AYDIN VERIFY ITS OFFER.

WE THEN SPECIFICALLY ADDRESSED AYDIN'S ATTEMPT TO IMPEACH THE GOVERNMENT ESTIMATE. THE FIRM CONTENDED THAT THE GOVERNMENT KNEW THAT THE ACTUAL COST OF PRODUCING THE ITEMS UNDER A 1970 NAVY/AYDIN CONTRACT WAS SUBSTANTIALLY ABOVE THE 1970 CONTRACT PRICE AND THEREFORE SHOULD NOT HAVE BEEN A BASIS FOR AN ESTIMATE FOR THE INSTANT CONTRACT. AYDIN REFERRED TO A 1975 INTERNAL NAVY MEMORANDUM WHICH INDICATES THAT THE ACTUAL CONTRACT COST WAS ABOVE THE 1970 CONTRACT PRICE. WE STATED:

"*** HOWEVER, WE HAVE BEEN ADVISED THAT THE HIGHER ESTIMATED COST THE COST REFLECTED IN THE 1975 NAVY MEMORANDUM WAS AN APPROXIMATION BASED ON AN ENGINEERING ESTIMATE WHICH INCLUDED THE COST OF REPAIRS TO FIRST RUN UNITS WHICH WERE NOT SATISFACTORY. ALSO POINT OUT THAT AYDIN ITSELF WAS APPARENTLY UNAWARE OF ANY ERROR FOR AT LEAST 4 MONTHS AFTER IT BECAME AWARE OF RCA'S OFFER, EVEN THOUGH IT HAD FULL KNOWLEDGE OF ITS COSTS FOR THE 1970 CONTRACT AS WELL AS THE COST FOR ITS MOST RECENT PRODUCTION. UNDER THE CIRCUMSTANCES WE DO NOT BELIEVE THE CONTRACTING OFFICER 'SHOULD HAVE KNOWN' MORE THAN THE OFFEROR. THUS GIVEN THE DETAILED ANALYSIS IN THE BUSINESS CLEARANCE MEMORANDUM WHICH WE BELIEVE REASONABLY EXPLAINS THE 39 PERCENT PRICE DIFFERENCE BETWEEN AYDIN'S AND RCA'S OFFERS, WE BELIEVE THAT THE CONTRACTING OFFICER COULD REASONABLY RELY ON THE ESTIMATE AS AN ADDITIONAL BASIS TO 'DISPEL ANY DOUBTS' AS TO THE EXISTENCE OF A MISTAKE IN AYDIN'S OFFER."

ON SEPTEMBER 24, 1980, AFTER THE SUIT WAS FILED IN THE COURT OF CLAIMS, PLAINTIFF'S COUNSEL TELEPHONED OUR OFFICE TO ASK THE ORIGIN OF THE "ADVICE" REFERRED TO IN THE UNDER-SCORED PORTION OF THE ABOVE QUOTATION. THE NEXT DAY, PLAINTIFF'S COUNSEL WAS TOLD BY A MEMBER OF OUR STAFF THAT OUR RECORDS SHOW THAT THE "ADVICE" WAS CONVEYED IN OCTOBER 25, 1979 AND NOVEMBER 14, 1979 TELEPHONE CALLS BETWEEN A GENERAL ACCOUNTING OFFICE ATTORNEY AND NAVY COUNSEL. PLAINTIFF'S COUNSEL WAS THEN FURNISHED A COPY OF OUR HAND-WRITTEN RECORD OF THESE TELEPHONE CALLS, WHICH WE ALSO FURNISHED YOU BY LETTER OF SEPTEMBER 29, 1980.

IN THE REPLY BRIEF, PLAINTIFF ARGUES THAT THE EX PARTE COMMUNICATION WITH THE NAVY WAS IMPROPER, AND THAT THE ADVICE WE RECEIVED, WHICH PLAINTIFF SUGGESTS CONSTITUTED "THE CRUX OF THE DECISION," IN FACT WAS "GROSSLY ERRONEOUS." PLAINTIFF COMPARES THE SITUATION TO THAT IN GREY ADVERTISING, INC. V. MIDDENDORF (D.C D.C.) IN WHICH, PLAINTIFF STATES, A GAO DECISION WAS INVALIDATED BECAUSE OF AN EX PARTE COMMUNICATION BY A NAVY PROCUREMENT OFFICIAL WITH THE COMPTROLLER GENERAL. PLAINTIFF ARGUES THAT THE EX PARTE COMMUNICATION IN THE INSTANT CASE:

"TAINTED, AND *** COMPLETELY VITIATED, THE GAO DECISION. IT ALSO SHOWS THE LOW LEVEL OF THE DISORDERLY PROCEEDINGS BEFORE THE GAO, THE HORRIBLE DEFECTS IN ITS DECISION, THE STANDARDS OF CONDUCT MAINTAINED BY NAVY OFFICIALS, AND THE EXTENT TO WHICH GAO WILL GO TO WHITEWASH THE NAVY. ***" PLAINTIFF ARGUES:

"THERE IS A CLEAR NEED FOR REFORM. WE SUBMIT THAT IT IS GROSSLY UNFAIR TO THE PUBLIC, INDEED TO THE UNITED STATES, FOR THIS SORT OF THING TO GO ON WITHIN THE GOVERNMENT. TO TOLERATE EX PARTE COMMUNICATIONS IN AN ADVERSARY PROCEEDING IS TO CORRUPT JUSTICE AND DESTROY CONFIDENCE."

PLAINTIFF'S POSITION IS UNTENABLE.

FIRST, IT IS EVIDENT FROM THE DECISION THAT THE SUBJECT ADVICE HAD NO REAL BEARING ON THE RESULT, I.E., PLAINTIFF'S SUGGESTION THAT THE INFORMATION CONVEYED CONSTITUTED "THE CRUX OF THE DECISION" IS WRONG. WE CLEARLY INDICATED IN THE DECISION, THE ACCURACY OR INACCURACY OF THE GOVERNMENT ESTIMATE SIMPLY WAS NOT THE RELEVANT ISSUE. RATHER, THE ISSUE WAS WHETHER THE FACT THAT THE CONTRACTING OFFICER DID NOT REQUEST VERIFICATION BASED ON RELIANCE ON DETAILED GOVERNMENT ESTIMATES WAS REASONABLE. ACCORDINGLY, EVEN IF THE EX PARTE ADVICE WAS INCORRECT, THE RESULT WE WOULD REACH WOULD BE THE SAME RESULT AS IN THE DECISION.

SECOND, PLAINTIFF'S REPRESENTATION OF THE FORUM IN WHICH AYDIN'S ALLEGED MISTAKE WAS CONSIDERED AS AN "ADVERSARY PROCEEDING" IS INCORRECT.

CLAIMS SUCH AS AYDIN'S BASED ON ALLEGED UNILATERAL MISTAKES ARE ONE OF A NUMBER OF TYPES OF CASES WHICH OUR PROCUREMENT LAW STAFF CONSIDERS EACH YEAR. THE PARTIES INVOLVED IN MISTAKE CLAIMS GENERALLY ARE ONLY THE CLAIMANT WHO MADE THE OFFER AND THE CONTRACTING AGENCY. A FIRM SEEKING RELIEF FROM A UNILATERAL MISTAKE IS REQUESTING THE EQUITABLE REMEDY OF CONTRACT REFORMATION ESSENTIALLY ON THE BASIS THAT FOR SOME REASON THE BURDEN FOR THE CONSEQUENCES OF ITS OWN ERROR HAS SHIFTED TO THE CONTRACTING AGENCY.

WE DO NOT HAVE SPECIFIC PROCEDURES BY WHICH WE RESOLVE UNILATERAL MISTAKE CLAIMS, IN LARGE PART BECAUSE WE DO NOT VIEW THE CLAIMS RESOLUTION PROCEEDING AS ADVERSARIAL. IN OUR VIEW, THE NATURE OF THE CLAIM - A REQUEST FOR EQUITABLE RELIEF BASED ON THE CLAIMANT'S OWN ADMITTED (ALLEGED) MISTAKE - AND THE FACT THAT WE ARE BEING ASKED TO FIND THAT THE CONTRACTING OFFICER REASONABLY SHOULD HAVE KNOWN MORE THAN THE OFFEROR DID, NECESSITATE ONLY THAT WE CONSIDER THE MATTER IN A MANNER CONSISTENT WITH THE EQUITIES OF THAT PARTICULAR CASE. THUS, WE SOMETIMES RESOLVE CLAIMS BASED ONLY ON THE FACTS PRESENTED BY THE CLAIMANT, E.G., THE ALLEGATION AND A BID ABSTRACT. OTHER TIMES, WE MAY ASK THE CLAIMANT OR THE PROCURING AGENCY FOR FACTS TO COMPLETE THE RECORD NECESSARY FOR RESOLUTION. STILL OTHER TIMES, BEFORE EXERCISING OUR DISCRETION TO ALLOW OR DENY REFORMATION, WE FIND IT APPROPRIATE TO REQUEST A REPORT ON THE MATTER FROM THE AGENCY AND AFFORD THE CLAIMANT AN OPPORTUNITY TO COMMENT ON IT. WE CHOSE THIS LAST APPROACH IN RESOLVING AYDIN'S INITIAL CLAIM.

THE MAJORITY OF THE CASES WHICH OUR PROCUREMENT LAW STAFF CONSIDERS ARE, OF COURSE, BID PROTESTS, I.E., COMPLAINTS REGARDING THE AWARDS OF FEDERAL CONTRACTS. IN CONTRAST TO THE ACTORS IN A UNILATERAL MISTAKE CLAIM, THE PARTIES INVOLVED IN BID PROTESTS GENERALLY INCLUDE THE PROTESTER, THE CONTRACTING AGENCY, AND A FIRM OR FIRMS WITH AN ECONOMIC INTEREST IN THE OUTCOME, E.G., THE BIDDER OR OFFEROR THAT WILL BE AWARDED THE CONTRACT IF THE PROTEST IS UNSUCCESSFUL. WE HAVE ESTABLISHED BID PROTEST PROCEDURES (4 C.F.R. PART 20 (1980)) WHICH ARE DESIGNED TO AFFORD A PROTESTER AND INTERESTED PARTIES A REASONABLE OPPORTUNITY TO PRESENT THEIR CASES IN A FAIR AND SATISFACTORY METHOD, CONSISTENT WITH THE GOVERNMENT'S NEED TO TIMELY MEET ITS REQUIREMENTS. THEY PROVIDE FOR WRITTEN SUBMISSIONS, THE FURNISHING OF COPIES OF SUBMISSIONS TO ALL INTERESTED PARTIES, AND AN OPPORTUNITY TO COMMENT ON OR REBUT SUBMISSIONS. HOWEVER, WE HAVE BEEN CAREFUL TO POINT OUT IN OUR DECISIONS THAT OUR BID PROTEST PROCEDURES PROVIDE FOR SOME BUT NOT ALL ELEMENTS OF A PURELY ADVERSARIAL PROCEDURE, AND THUS IT IS NOT NECESSARY THAT A PROTESTER BE APPRISED OF ALL INFORMATION IN THE RECORD (FOR EXAMPLE, INFORMATION DENIED THE PROTESTER UNDER THE FREEDOM OF INFORMATION ACT). SEE BOKONON SYSTEMS, INC. - RECONSIDERATION, B-189064, AUGUST 8, 1978, 78-2 CPD 101.

NONETHELESS, IN CONSONANCE WITH OUR EFFORTS TO PROVIDE AN IMPARTIAL FORUM FOR RESOLVING PROTESTS, WE DO AVOID EX PARTE CONVERSATIONS WITH THE INTERESTED PARTIES ON THE MERITS OF PENDING PROTESTS, ALTHOUGH WE WILL PARTICIPATE IN EX PARTE CONVERSATIONS WITH RESPECT TO PROCEDURAL, AS OPPOSED TO SUBSTANTIVE, ASPECTS OF PENDING BID PROTEST CASES AND WITH RESPECT TO CASE STATUS. WE DO NOT REGARD THESE LATTER CONVERSATIONS TO BE OBJECTIONABLE SINCE WE BELIEVE THAT THE PARTIES TO A PROTEST SHOULD AND CAN BE PROVIDED A READY MEANS OF OBTAINING STATUS AND PROCEDURAL INFORMATION WITHOUT THE NEED FOR A MEETING WITH ALL OTHER PARTIES WITHOUT RUNNING AFOUL OF BASIC STANDARDS OF FAIRNESS. WE ALSO OCCASIONALLY ACCEPT "INFORMAL," I.E., ORAL, ADVICE FROM AGENCIES OR PROTESTERS REGARDING MINOR POINTS THAT LEND TO OUR DISCUSSIONS BUT HAVE NO REAL BEARING ON THE OUTCOME OF THE CASE. OUR RECORDS SHOW THAT PLAINTIFF'S COUNSEL, WHO HAS UTILIZED OUR FORUM MANY TIMES, IS WELL AWARE OF OUR POLICY.

PLAINTIFF SUGGESTS THAT OUR BID PROTEST PROCEDURES ARE DEFECTIVE. VIEW OF THE ABOVE, THAT SUGGESTION IS WITHOUT FOUNDATION. MOREOVER, IT IS TOTALLY IRRELEVANT TO THE INSTANT CASE, AS THE MISTAKE CLAIM WAS NOT CONSIDERED UNDER THOSE PROCEDURES, WHICH ARE ONLY APPLICABLE TO BID PROTESTS.

WE BELIEVE OUR OCTOBER AND NOVEMBER 1979 EX PARTE CONTACTS WITH THE NAVY REGARDING AYDIN'S CLAIM WERE CONSISTENT WITH A PROPER RESOLUTION OF A REQUEST FOR EQUITABLE RELIEF. WE POINT OUT HERE THAT PLAINTIFF'S CONCERN WITH EX PARTE CONVERSATIONS DID NOT PREVENT PLAINTIFF FROM INITIATING A SEPTEMBER 24, 1980 EX PARTE TELEPHONE CONVERSATION WITH OUR OFFICE WHILE INVOLVED IN LITIGATION IN THE COURT OF CLAIMS WITHOUT FIRST ADVISING YOUR OFFICE.

THE GREY ADVERTISING SITUATION MENTIONED BY PLAINTIFF INVOLVED A BID PROTEST HANDLED IN ACCORDANCE WITH OUR BID PROTEST PROCEDURES AND OUR POLICY AGAINST EX PARTE COMMUNICATIONS ON THE MERITS.

IN GREY ADVERTISING, INC., 55 COMP.GEN. 1111 (1976), 76-1 CPD 325, WE DENIED THE NAMED FIRM'S BID PROTEST AGAINST THE NAVY'S AWARD OF A CONTRACT TO ANOTHER FIRM FOR RECRUITING ADVERTISING SERVICES. IN THE INSTANT BRIEF, PLAINTIFF STATES:

"WHAT HAPPENED WAS THAT GORDEN RULE, A NAVY PROCUREMENT OFFICIAL WHO HAD BEEN INVOLVED IN THE AWARD OF THE CONTRACT, HAD PRIVATELY DISCUSSED THE MERITS OF GREY'S PROTEST WITH ELMER STAATS, THE COMPTROLLER GENERAL AT GAO. THE COURT DENIED THE GOVERNMENT REQUEST FOR RECONSIDERATION FOR SUMMARY JUDGMENT, AND HELD THAT IT WAS NOT BOUND BY GAO'S FINDINGS SINCE GAO'S OWN OBJECTIVITY AND INTEGRITY WERE IN QUESTION."

WE DID NOT, OF COURSE, DISCUSS THE MERITS OF THE CASE, AND THE COURT DID NOT SO FIND, AS PLAINTIFF NOW WOULD HAVE ONE CONCLUDE; ENCLOSED ARE COPIES OF LETTERS OF JULY 14, 1976 AND AUGUST 26, 1976 FROM OUR OFFICE TO GREY'S COUNSEL ADDRESSING THAT MATTER. FURTHER, AS PLAINTIFF RECOGNIZES ON PAGE 15 OF ITS BRIEF, A COURT IS NEVER "BOUND" BY OUR FINDINGS IN ANY CASE, ALTHOUGH IN VIEW OF OUR RECOGNIZED EXPERTISE IN GOVERNMENT PROCUREMENT LAW, OUR OPINIONS ON CASES INVOLVING PENDING LITIGATION GENERALLY ARE AFFORDED CONSIDERABLE WEIGHT. SEE WHEELABRATOR CORP. V. CHAFEE, 455 F.2D 1306 (D. C. CIR. 1971). IN GREY ADVERTISING, THE COURT DID DENY THE GOVERNMENT'S MOTION, BUT ULTIMATELY DISMISSED THE COMPLAINT WITH PREJUDICE. ENCLOSED IS A COPY OF THE COURT'S DECEMBER 27, 1976 ORDER IN THAT CASE, TO WHICH PLAINTIFF REFERS.

IN SHORT, PLAINTIFF SEEMS TO BE SEEKING SUCCESS BY ATTACKING A FORUM WHICH FOUND, QUITE SIMPLY, THAT UNDER THE CIRCUMSTANCES THE BURDEN OF UNILATERAL MISTAKE REMAINED WITH THE OFFEROR AND BY ATTACKING PROCEDURES WHICH ARE NOT GERMANE TO THE PROCESSING OF THE PLAINTIFF'S CLAIM.

DIGEST 1

GAO DOES NOT HAVE SPECIFIC PROCEDURES BY WHICH TO RESOLVE UNILATERAL MISTAKE CLAIMS, IN LARGE PART BECAUSE CLAIMS RESOLUTION PROCEEDING IS NOT ADVERSARIAL. RATHER, NATURE OF CLAIM - REQUEST FOR EQUITABLE RELIEF BASED ON CLAIMANT'S OWN ADMITTED (ALLEGED) MISTAKE - AND FACT THAT GAO IS BEING ASKED TO FIND THAT CONTRACTING OFFICER REASONABLY SHOULD HAVE KNOWN MORE THAN OFFEROR DID, NECESSITATE ONLY THAT GAO CONSIDER MATTER IN MANNER CONSISTENT WITH EQUITIES OF EACH PARTICULAR CASE.

DIGEST 2

IN CONSONANCE WITH GAO EFFORT TO PROVIDE IMPARTIAL BID PROTEST FORUM, GAO GENERALLY AVOIDS EX PARTE CONVERSATIONS WITH INTERESTED PARTIES ON MERITS OF PENDING PROTESTS, ALTHOUGH GAO WILL PARTICIPATE IN EX PARTE CONVERSATIONS REGARDING PROCEDURAL, AS OPPOSED TO SUBSTANTIVE, ASPECTS OF PENDING PROTESTS. GAO ALSO OCCASIONALLY ACCEPTS "INFORMAL," I.E., ORAL, ADVICE FROM AGENCIES OR PROTESTERS REGARDING MINOR POINTS THAT LEND TO DISCUSSION OF PROTEST BUT HAVE NO REAL BEARING IN OUTCOME OF CASE.