A-35071, FEBRUARY 2, 1931, 10 COMP. GEN. 340

A-35071: Feb 2, 1931

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TO THE EFFECT THAT THE STATEMENTS AS TO QUANTITY LISTED IN THE SCHEDULE ARE GIVEN FOR INFORMATION ONLY. WILL NOT RELIEVE THE CONTRACTING OFFICE OF ITS OBLIGATION TO ORDER FROM THE CONTRACTOR ALL SUPPLIES THAT MAY. IS SUFFICIENTLY DEFINITE TO OBLIGATE THE GOVERNMENT TO ORDER SUPPLIES OF THE CHARACTER CONTRACTED FOR EXCLUSIVELY FROM THE CONTRACTOR TO THE LIMITS OF THE GOOD-FAITH NEEDS OF THE SERVICE CONCERNED. REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON THE VOUCHER AT PRICES AGGREGATING $40.70 IN EXCESS OF THE PRICES STATED IN THE CONTRACT. READING: AS IT IS IMPOSSIBLE TO DETERMINE THE QUANTITIES OF DIFFERENT KINDS OF ARTICLES AND MATERIALS DESCRIBED IN THIS INVITATION FOR BIDS THAT WILL BE REQUIRED DURING THE CONTRACT TERM.

A-35071, FEBRUARY 2, 1931, 10 COMP. GEN. 340

CONTRACTS - INDEFINITE QUANTITIES A PROVISION IN AN ADVERTISEMENT FOR THE FURNISHING OF SUPPLIES TO THE GOVERNMENT, SUBSEQUENTLY BECOMING A PART OF THE CONTRACT, TO THE EFFECT THAT THE STATEMENTS AS TO QUANTITY LISTED IN THE SCHEDULE ARE GIVEN FOR INFORMATION ONLY, AND WILL NOT RELIEVE THE CONTRACTING OFFICE OF ITS OBLIGATION TO ORDER FROM THE CONTRACTOR ALL SUPPLIES THAT MAY, IN THE JUDGMENT OF THE ORDERING OFFICER, BE NEEDED, IS SUFFICIENTLY DEFINITE TO OBLIGATE THE GOVERNMENT TO ORDER SUPPLIES OF THE CHARACTER CONTRACTED FOR EXCLUSIVELY FROM THE CONTRACTOR TO THE LIMITS OF THE GOOD-FAITH NEEDS OF THE SERVICE CONCERNED, AND ALSO TO OBLIGATE THE CONTRACTOR TO FURNISH SUCH SUPPLIES AT THE CONTRACT PRICE, UPON THE RECEIPT OF ORDERS THEREFOR.

COMPTROLLER GENERAL MCCARL TO FIRST LIEUT. R. B. OXRIEDER, UNITED STATES ARMY, DISBURSING OFFICER, ALASKA ROAD COMMISSION, FEBRUARY 2, 1931:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 16, 1930, TRANSMITTING AN UNPAID VOUCHER STATED IN FAVOR OF SWIFT AND CO., SEATTLE, WASHINGTON, FOR THE SUM OF $374.10 IN PAYMENT FOR CERTAIN SUBSISTENCE SUPPLIES PURCHASED FOR THE ALASKA ROAD COMMISSION UNDER CONTRACT NO. W-1091-ENG-439, DATED JULY 30, 1930, AND REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON THE VOUCHER AT PRICES AGGREGATING $40.70 IN EXCESS OF THE PRICES STATED IN THE CONTRACT, AND, ALSO, WITHOUT DEDUCTING FROM THE AMOUNT OF THE VOUCHER THE SUM OF $8.25, BEING THE EXCESS PAID FOR CERTAIN OPEN-MARKET PURCHASES OVER AND ABOVE THE PRICES STIPULATED IN THE CONTRACT.

THE CONTRACT OF JULY 30, 1930, CALLED FOR THE FURNISHING AND DELIVERING TO THE SEATTLE DOCKS FOR THE ALASKA ROAD COMMISSION'S REQUIREMENTS THEREFOR FOR THE MONTH OF AUGUST, 1930, ON ORDERS TO BE ISSUED AS REQUIRED, 1,000 POUNDS OF BUTTER AT $0.35 PER POUND, 50 POUNDS OF CHEESE AT $0.1720 PER POUND, AND 2,400 DOZEN EGGS AT $0.26 PER DOZEN, UNDER A STIPULATION IN THE INVITATION FOR BIDS, READING:

AS IT IS IMPOSSIBLE TO DETERMINE THE QUANTITIES OF DIFFERENT KINDS OF ARTICLES AND MATERIALS DESCRIBED IN THIS INVITATION FOR BIDS THAT WILL BE REQUIRED DURING THE CONTRACT TERM, EACH BIDDER WHOSE BID IS ACCEPTED WILL BE REQUIRED TO DELIVER ALL SUPPLIES OF THE KIND WHICH HE AGREES TO FURNISH, THAT MAY BE ORDERED DURING THE CONTRACT TERM, EXCEPT AS OTHERWISE INDICATED IN THE BID. SUPPLIES WILL BE ORDERED FROM TIME TO TIME IN SUCH QUANTITIES AS MAY BE NEEDED. THE STATEMENTS AS TO QUANTITY LISTED IN THE SCHEDULES ARE GIVEN FOR INFORMATION ONLY, AND WILL NOT RELIEVE THE WAR DEPARTMENT OF ITS OBLIGATION TO ORDER FROM CONTRACTORS ALL SUPPLIES THAT MAY, IN THE JUDGMENT OF THE ORDERING OFFICERS, BE NEEDED, AND SHALL NOT IN ANY CASE RELIEVE THE CONTRACTOR OF HIS OBLIGATION TO FILL ALL SUCH ORDERS WHICH HE HAS AGREED TO FURNISH. BIDS WILL BE CONSIDERED IF MADE WITH THE PROVISO THAT THE TOTAL DELIVERIES WILL NOT EXCEED A CERTAIN SPECIFIED QUANTITY, BUT NO PROPOSAL WILL BE CONSIDERED WHICH PROVIDES THAT THE GOVERNMENT SHALL GUARANTEE TO TAKE ANY DEFINITE QUANTITY.

IT APPEARS FROM YOUR LETTER THAT AFTER THE CONTRACTOR HAD FURNISHED, ON ORDERS ISSUED THEREFOR, THE QUANTITIES OF THE DIFFERENT SUPPLIES MENTIONED IN THE CONTRACT, IT DECLINED TO MAKE ADDITIONAL DELIVERIES OF BUTTER AND EGGS REQUIRED FOR USE DURING AUGUST, 1930, AT PRICES STIPULATED IN THE CONTRACT, IT BEING CLAIMED THAT THE CONTRACT HAD BEEN COMPLETED, BUT THAT IT DID FURNISH, IN ADDITION TO THE AMOUNTS SPECIFIED IN THE CONTRACT, DURING THE MONTH OF AUGUST, 1930, 450 POUNDS OF BUTTER AND 660 DOZEN EGGS AT AN AGGREGATE INCREASE IN PRICE $40.70. IT FURTHER APPEARS THAT THERE WERE PURCHASED FROM OTHER CONCERNS FOR THE ALASKA ROAD COMMISSION'S USE DURING THE MONTH OF AUGUST, 1930, 300 POUNDS OF BUTTER AT A PRICE OF $8.75 IN EXCESS OF WHAT IT WOULD HAVE COST IF SAME HAD BEEN DELIVERED BY THE CONTRACTOR UNDER THE CONTRACT.

THE STIPULATION COVERING THE FURNISHING OF THE SUPPLIES, AS ABOVE QUOTED, AND MADE A PART OF THE CONTRACT, HAS HERETOFORE BEEN CONSIDERED BY THIS OFFICE AND HAS BEEN HELD TO BE PROPER FOR INSERTION IN CONTRACTS WHERE IT IS IMPOSSIBLE TO DEFINITELY STATE THE NEEDED REQUIREMENTS FOR AN INSTRUMENTALITY OF THE GOVERNMENT FOR A GIVEN TIME, AND HAS BEEN HELD BINDING ON BOTH PARTIES TO THE CONTRACT. IN DECISION A-23680, OF JANUARY 7, 1929, TO THE SECRETARY OF WAR, IN DISCUSSING A SIMILAR PROVISION FOR INSERTION IN ADVERTISEMENTS FOR BIDS, IT WAS SAID THAT:

THE LANGUAGE NOW PROPOSED TO BE USED IN ADVERTISING FOR CONTRACTS FOR SUPPLIES, LIMITING THE QUANTITY ONLY BY THE NEEDS OF THE PARTICULAR SERVICE OVER A GIVEN PERIOD, IF INCORPORATED BY REFERENCE OR OTHERWISE IN SUCH CONTRACTS, WOULD APPEAR TO OBVIATE CERTAIN OF THE OBJECTIONS TO CONTRACTING FOR INDEFINITE QUANTITIES. THE PROVISION THAT "STATEMENTS AS TO QUANTITY LISTED IN THE SCHEDULES ARE GIVEN FOR INFORMATION ONLY,AND WILL NOT RELIEVE THE WAR DEPARTMENT OF ITS OBLIGATION TO ORDER FROM CONTRACTORS ALL SUPPLIES THAT MAY, IN THE JUDGMENT OF THE ORDERING OFFICERS, BE NEEDED," APPEARS SUFFICIENTLY DEFINITE TO OBLIGATE THE GOVERNMENT TO ORDER SUPPLIES OF THE CHARACTER CONTRACTED FOR EXCLUSIVELY FROM THE PARTICULAR CONTRACTOR TO THE LIMIT OF THE GOOD FAITH NEEDS OF THE SERVICE CONCERNED, AND THUS TO PROVIDE THE REQUISITE MUTUALITY OF CONSIDERATION TO BRING SUCH CONTRACTS WITHIN THE PRINCIPLE OF UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313, AS DISTINGUISHED BY THE SUPREME COURT OF THE UNITED STATES IN WILLARD SUTHERLAND AND COMPANY V. UNITED STATES, 262 U.S. 489 * * *.

IF, AS HELD IN THE ABOVE-MENTIONED CASE, THE GOVERNMENT IS OBLIGATED UNDER SUCH A PROVISION IN A CONTRACT, TO ORDER ALL SUPPLIES THAT MIGHT BE NEEDED OF THE KIND CONTRACTED FOR, EXCLUSIVELY FROM THE CONTRACTOR FOR THE PERIOD INVOLVED, THE CONTRACTOR WOULD BE OBLIGATED TO FURNISH SUCH SUPPLIES AT THE CONTRACT PRICES UPON THE ISSUANCE OF ORDERS THEREFOR. IS TO BE NOTED THAT ADDITIONAL QUANTITIES REQUIRED FOR THE PERIOD COVERED BY THE CONTRACT INCREASED THE AMOUNT OF THE CONTRACT BY LESS THAN 50 PERCENT WHICH, OF COURSE, IS NOT UNCONSCIONABLE. ACCORDINGLY, YOU ARE ADVISED THAT YOU ARE NOT AUTHORIZED TO MAKE PAYMENT ON THE VOUCHER IN QUESTION AT PRICES IN EXCESS OF THOSE SPECIFIED IN THE CONTRACT, AND THAT THERE SHOULD BE DEDUCTED, ALSO, THE AMOUNT PAID FOR BUTTER PURCHASED IN THE OPEN MARKET DURING AUGUST, 1930, FROM THE OTHER CONCERNS MENTIONED IN YOUR LETTER, IN EXCESS OF THE PRICE THEREFOR STIPULATED IN CONTRACT OF JULY 30, 1930.