A-92919, MARCH 25, 1938, 17 COMP. GEN. 774

A-92919: Mar 25, 1938

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CONTRACTS - SPECIFICATIONS - AUTOMOBILES - SERVICE REQUIREMENTS AND CONTRACTOR'S LIABILITY IN ABSENCE OF DEFINITE PERFORMANCE STANDARDS THE FACT THAT AUTOMOBILES FURNISHED BY A CONTRACTOR WERE UNSATISFACTORY AS TO HILL CLIMBING POWER AND SPEED. IS NOT SUFFICIENT TO SUPPORT A CHARGE AGAINST THE CONTRACTOR FOR BREACH OF CONTRACT IN THE ABSENCE OF A REQUIREMENT IN THE SPECIFICATIONS OF A DEFINITE STANDARD OF PERFORMANCE AND OF POSITIVE REPRESENTATIONS BY THE CONTRACTOR THAT THE VEHICLES WOULD TRAVEL THE ROADS TO BE ENCOUNTERED AT A PARTICULAR SPEED OR CLIMB SPECIFIED GRADES WITHOUT RESORTING TO LOWER GEARS. WHERE EXCEPTIONALLY SEVERE SERVICE CONDITIONS ARE NORMALLY TO BE ENCOUNTERED IN THE USE OF AUTOMOBILES BY THE GOVERNMENT AND THAT FACT IS MADE PLAIN IN ADVERTISED SPECIFICATIONS.

A-92919, MARCH 25, 1938, 17 COMP. GEN. 774

CONTRACTS - SPECIFICATIONS - AUTOMOBILES - SERVICE REQUIREMENTS AND CONTRACTOR'S LIABILITY IN ABSENCE OF DEFINITE PERFORMANCE STANDARDS THE FACT THAT AUTOMOBILES FURNISHED BY A CONTRACTOR WERE UNSATISFACTORY AS TO HILL CLIMBING POWER AND SPEED, ETC., FOR THE PURPOSE INTENDED, IS NOT SUFFICIENT TO SUPPORT A CHARGE AGAINST THE CONTRACTOR FOR BREACH OF CONTRACT IN THE ABSENCE OF A REQUIREMENT IN THE SPECIFICATIONS OF A DEFINITE STANDARD OF PERFORMANCE AND OF POSITIVE REPRESENTATIONS BY THE CONTRACTOR THAT THE VEHICLES WOULD TRAVEL THE ROADS TO BE ENCOUNTERED AT A PARTICULAR SPEED OR CLIMB SPECIFIED GRADES WITHOUT RESORTING TO LOWER GEARS. A-91590, DATED JANUARY 10, 1938, DISTINGUISHED. WHERE EXCEPTIONALLY SEVERE SERVICE CONDITIONS ARE NORMALLY TO BE ENCOUNTERED IN THE USE OF AUTOMOBILES BY THE GOVERNMENT AND THAT FACT IS MADE PLAIN IN ADVERTISED SPECIFICATIONS, THE REJECTION OF LOW BIDS OFFERING VEHICLES EQUIPPED WITH MOTORS OF A HORSEPOWER PROVEN TO BE INADEQUATE WOULD BE JUSTIFIED, RENDERING UNNECESSARY THE INCLUSION IN THE ADVERTISED SPECIFICATIONS OF A MINIMUM HORSEPOWER REQUIREMENT, BUT SPECIFICATIONS SHOULD NOT BE DRAWN TO EXCLUDE SUCH LOWER POWERED VEHICLES IN CASES WHERE THEY WOULD BE ADEQUATE FOR THE PURPOSES OF THE GOVERNMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, MARCH 25, 1938:

YOUR LETTER OF FEBRUARY 24, 1938, IS AS FOLLOWS:

DURING THE FIRST FOUR MONTHS OF THE CALENDAR YEAR 1937, A NUMBER OF FORD 60 HP. 1937 MODEL PASSENGER AUTOMOBILES WERE DELIVERED BY THE NORTHWEST MOTOR COMPANY, CHEVY CHASE, MARYLAND, UNDER CONTRACTS WITH THIS DEPARTMENT NUMBERED AS SHOWN IN THE ENCLOSED LIST. DETAILED REPORTS ON THE ACTUAL PERFORMANCE OF THESE AUTOMOBILES SHOWED THAT THEY LACKED POWER TO CLIMB GRADES EFFICIENTLY AND TO ACCELERATE ON SLIGHT GRADES WHEN NECESSARY TO PASS SLOW MOVING VEHICLES; ALSO, THAT THEY WERE UNSATISFACTORY IN OTHER RESPECTS. THE PURCHASING OFFICER OF THIS DEPARTMENT TRANSMITTED THE SUBSTANCE OF THESE REPORTS TO THE NORTHWEST MOTOR COMPANY IN A LETTER OF SEPTEMBER 21, 1937 (COPY ENCLOSED), REQUESTING AN ADJUSTMENT TO COMPENSATE THE GOVERNMENT FOR THE FAILURE OF THESE AUTOMOBILES TO MEET THE STATED SERVICE REQUIREMENTS IN THE CONTRACTS COVERING THEIR PURCHASE. THE DEPARTMENT DESIRES TO CALL YOUR SPECIAL ATTENTION TO THESE FIELD REPORTS, BELIEVING THEM INDISPENSABLE TO A FULL UNDERSTANDING OF THIS CASE AND BELIEVING THAT YOU WILL FIND THEM CONCLUSIVE AS TO THE DEPARTMENT'S POSITION IN THIS MATTER. THE NORTHWEST MOTOR COMPANY REPLIED, IN LETTER OF DECEMBER 20, 1937 (ENCLOSED), TO THE EFFECT THAT THEIR CONTRACTUAL OBLIGATIONS HAD BEEN FULFILLED AND NO ADJUSTMENT SHOULD BE REQUIRED.

IN THE OPINION OF THIS DEPARTMENT, THE CONTRACTOR IS IN DEFAULT OF THE OBLIGATIONS ARISING FROM THE SERVICE REQUIREMENTS IN THESE CONTRACTS, AND THE UNITED STATES IS ENTITLED TO THE REPLACEMENT OF THESE DEFICIENT AUTOMOBILES AT THE CONTRACTOR'S EXPENSE. TO ACCOMPLISH THIS, THE DEPARTMENT IS CONTEMPLATING THE PURCHASE OF A LIKE NUMBER OF AUTOMOBILES TO MEET THE SERVICE REQUIREMENTS, OFFERING THE DEFICIENT FORD 60 HP. CARS FOR EXCHANGE OR CASH SALE IN CONJUNCTION WITH THE PURCHASE, AND CHARGING THE ULTIMATE NET COST OF THE TRANSACTION TO THE NORTHWEST MOTOR COMPANY FOR COLLECTION AS A CLAIM. IN ARRIVING AT THE ULTIMATE NET COST, THE DEPARTMENT WOULD SET OFF TO THE CONTRACTOR'S CREDIT A REASONABLE AMOUNT FOR THE ACCUMULATED MILEAGE ON THE CARS REPLACED. (SEE YOUR DECISION OF JANUARY 10, 1938 (A-91590) TO THIS DEPARTMENT ON A SOMEWHAT SIMILAR CASE.) IT IS RESPECTFULLY REQUESTED THAT YOU AGREE WITH OR ADVISE THE DEPARTMENT REGARDING THE CONTEMPLATED ACTION AND THE BASIS THEREFOR.

CAREFUL STUDY HAS BEEN GIVEN TO THE CONTENTIONS OF THE CONTRACTOR IN THE LETTER OF DECEMBER 20, 1937. THE UNDISPUTED FACT THAT THE INDIAN SERVICE ONCE USED AUTOMOBILES OF 22 1/2 HP. IS IMMATERIAL; THE INDIAN SERVICE ALSO USED HORSES AND PACK MULES BEFORE AUTOMOBILES WERE AVAILABLE AND STILL USES SUCH MEANS OF TRANSPORTATION TO AND FROM POINTS OTHERWISE INACCESSIBLE, BUT OBVIOUSLY AN EMPLOYEE USING SUCH PRIMITIVE TRANSPORTATION COULD ACCOMPLISH ONLY A SMALL PORTION OF THE WORK THAT CAN NOW BE PERFORMED IN A GIVEN PERIOD WITH THE AID OF RAPID TRANSPORTATION. THE FAILURE OF THESE FORD 60 HP. CARS TO NEGOTIATE ORDINARY GRADES EFFICIENTLY AT A REASONABLE ROAD SPEED HAS DEFINITELY CURTAILED THE AMOUNT OF PRODUCTIVE WORK THE EMPLOYEES USING THESE CARS CAN ACCOMPLISH.

THE CONTRACTOR'S CLAIM OF GASOLINE AND OIL ECONOMY IS NOT IN ACCORDANCE WITH THE REPORTS; HOWEVER, THIS WAS NOT A SPECIFIED REQUIREMENT AND THE POINT WAS NOT RAISED BY THE PURCHASING OFFICER IN CLAIMING DEFAULT. THE NECESSARILY FREQUENT USE OF THE LOWER GEARS ON AVERAGE AND STEEP GRADES BECAUSE OF LACK OF POWER IN HIGH GEAR SEEMS TO OFFSET ANY APPARENT ECONOMY IN THE SMALLER ENGINE.

THE NORTHWEST MOTOR COMPANY CONTENDS THAT THE VOLUME OF SALES OF THIS MODEL TO THE GENERAL PUBLIC INDICATES IT TO BE "THE BEST VALUE, EVERYTHING CONSIDERED, IN THE AUTOMOBILE FIELD.' REGARDLESS OF THAT CONTENTION, THIS DEPARTMENT HAS ESTABLISHED BY ACTUAL EXPERIENCE WITH MANY OF THESE CARS UNDER VARIOUS CONDITIONS, THAT THEY LACK SUFFICIENT POWER TO PERFORM IN A REASONABLY SATISFACTORY MANNER UNDER THE CONDITIONS DESCRIBED IN THE SERVICE REQUIREMENTS.

THE SECOND GENERAL CONTENTION OF THE NORTHWEST MOTOR COMPANY IS IN EFFECT THAT THE STATED SERVICE REQUIREMENTS IN THESE CONTRACTS DID NOT DESCRIBE A "JOB TO BE DONE" BEYOND THE CAPABILITIES OF THE FORD 60 HP. CAR. THE CONTRACTOR COMPLAINS THAT NO REFERENCE WAS MADE AS TO THE GEAR IN WHICH CAR WAS TO OPERATE NOR TO THE RATE OF SPEED AT WHICH CAR WAS TO TRAVEL, NOR TO COMPARISONS WITH OTHER MORE EXPENSIVE CARS. THE CONTRACTOR GOES ON TO SAY, IN EFFECT, THAT THE FORD 60 HP. CAR WILL GO ANYWHERE IN LOW GEAR. AS TO THE SERVICE REQUIREMENTS YOU WILL FIND, BY REFERENCE TO THE ORIGINAL CONTRACTS ON FILE IN YOUR OFFICE, THAT IN EVERY INSTANCE THEY STATED THE CARS WOULD BE SUBJECTED TO SEVERE SERVICE OVER POOR ROADS AND ROUGH TRAILS, SOMETIMES IN HILLY AND MOUNTAINOUS COUNTRY. FURTHERMORE, YOU WILL ALSO FIND, IN MANY OF THESE CONTRACTS, A MORE DETAILED STATEMENT OF THE SERVICE CONDITIONS TO BE MET BY THE CARS, INCLUDING THE APPROXIMATE ROAD SPEED AT WHICH THEY WOULD BE EXPECTED TO OPERATE.

THE NORTHWEST MOTOR COMPANY CANNOT RIGHTFULLY CONTEND THAT THE SERVICE REQUIREMENTS IN ANY OF THESE CONTRACTS FAILED TO SHOW THE NEED FOR STURDY, POWERFUL AUTOMOBILES CAPABLE OF DEPENDABLE PERFORMANCE UNDER ADVERSE CONDITIONS. THIS COMPANY IN RECENT YEARS HAS BEEN THE SUCCESSFUL BIDDER ON THOUSANDS OF MOTOR VEHICLES PURCHASED BY THIS DEPARTMENT, AND SHOULD BE FULLY AWARE OF THE PERFORMANCE REQUIREMENTS INVOLVED WHEN THE SERVICE IS DESCRIBED IN GENERAL TERMS AS IN SOME OF THESE CONTRACTS.

AS A SUMMATION OF THE ARGUMENT, THE CONTRACTOR CONTENDS IN EFFECT THAT THE OFFER AND ACCEPTANCE OF THE BID, TOGETHER WITH SUBSEQUENT ACCEPTANCE OF DELIVERY, CONSTITUTED A "MEETING OF THE MINDS" AS TO THE FORD 60 HP. CAR BEING IN ACCORDANCE WITH THE SPECIFICATIONS. THIS CONTENTION IS OBVIOUSLY WITHOUT MERIT, BECAUSE THE FORD 60 HP. CAR WAS A NEW, UNTRIED MODEL WHOSE PERFORMANCE ABILITY HAD NOT BEEN DEMONSTRATED PUBLICLY. THE DEPARTMENT UNDERSTOOD, IN CONTRACTING FOR THESE CARS, THAT THE NORTHWEST MOTOR COMPANY OFFERED THEM AS MEETING THE SPECIFICATIONS AND SERVICE REQUIREMENTS WITHOUT EXCEPTION, AS EVIDENCED BY A STATEMENT TO THAT EFFECT IN EACH BID. IT WAS PROPERLY ASSUMED THAT THE NORTHWEST MOTOR COMPANY, A RESPONSIBLE BIDDER, WAS IN POSSESSION OF INFORMATION LEADING THE COMPANY TO ASSUME RESPONSIBILITY FOR THE PERFORMANCE OF THIS MODEL IN ACCORDANCE WITH THE STATED SERVICE REQUIREMENTS. IT SEEMED UNNECESSARY FROM A CONTRACTING STANDPOINT, AND IMPROPER FROM AN ADMINISTRATIVE STANDPOINT, TO WITHHOLD ALL PURCHASES OF PASSENGER AUTOMOBILES FOR SEVERAL MONTHS, SERIOUSLY DISRUPTING NORMAL ACTIVITIES, IN ORDER TO PROTECT A SUPPOSEDLY RESPONSIBLE BIDDER FROM A POSSIBLE ERROR IN HIS JUDGMENT. IN VIEW OF YOUR DECISIONS OF AUGUST 25, 1936, A-77145, 16 COMP. GEN. 178, AND OF FEBRUARY 25, 1937, A-77145, A-80290, TO THIS DEPARTMENT, IT SEEMED EQUALLY IMPROPER TO CONSIDER REJECTING BIDS ON THIS NEW AND UNTIRED MODEL. THE PURCHASING OFFICER, THEREFORE, ADMITTED THIS MODEL TO CONSIDERATION IN THE FIRM BELIEF THAT YOUR OFFICE WOULD LEND FULL SUPPORT TO A SUBSEQUENT CLAIM AGAINST THE CONTRACTOR IF THE MODEL PROVED TO BE INADEQUATE.

IN ADVERTISING FOR THESE CARS, THE PURCHASING OFFICER ENDEAVORED TO COMPLY FULLY WITH YOUR MANY DECISIONS THAT A PROPER STATEMENT OF SERVICE REQUIREMENTS IS THE ESSENTIAL ELEMENT OF THE SPECIFICATIONS AND THAT THE USE OF LIMITING MECHANICAL REQUIREMENTS SUCH AS MINIMUM WHEELBASE, MINIMUM WEIGHT, MINIMUM HORSEPOWER, ETC., IS OBJECTIONABLE TO YOUR OFFICE. THEREFORE, THE SPECIFICATIONS IN THESE CONTRACTS CONTAINED NO MECHANICAL LIMITATIONS THAT WOULD ELIMINATE THE FORD 60 HP. AUTOMOBILE, AND THE STATEMENT OF SERVICE REQUIREMENTS REMAINS AS THE ONLY DETERMINING FACTOR INSOFAR AS ENGINE POWER IS CONCERNED.

THE NORTHWEST MOTOR COMPANY HAS IGNORED ONE IMPORTANT FACTOR BEARING ON THIS CONTROVERSY. DURING THE MONTH OF MAY 1937, WHEN THE PURCHASING OFFICER HAD ASSEMBLED A SUFFICIENT NUMBER OF CONCLUSIVE REPORTS ON THE ACTUAL PERFORMANCE OF THESE AUTOMOBILES, IT WAS DECIDED THERE WAS AMPLE JUSTIFICATION THEREAFTER FOR THE REJECTION OF BIDS OFFERING THE FORD 60 HP. CAR. PURSUANT TO THAT DECISION THE PURCHASING OFFICER HAS SUBSEQUENTLY REJECTED BIDS OFFERING FORD 60 HP. AUTOMOBILES WHERE THE SERVICE REQUIREMENTS WERE COMPARABLE TO THOSE APPEARING IN THE CONTRACTS HERE INVOLVED. THE NORTHWEST MOTOR COMPANY, DISCOVERING THAT THE PURCHASING OFFICER WAS REFUSING TO CONSIDER BIDS ON THE FORD 60 HP. AUTOMOBILE, THEREAFTER CONSISTENTLY REFRAINED FROM OFFERING THAT MODEL TO MEET SERVICE REQUIREMENTS COMPARABLE WITH THOSE HERE INVOLVED, AND REGULARLY OFFERED THE FORD 85 HP. MODEL. THIS COMPANY DID NOT CONTEST THE REFUSAL TO CONSIDER BIDS ON THE 60 HP. MODEL AND MADE NO PROTEST THAT WOULD SUBSTANTIATE THE POSITION NOW TAKEN AS TO ITS ADEQUACY. IT APPEARS TO THE DEPARTMENT THAT THE CONTRACTOR IS ENTIRELY INCONSISTENT IN THUS OFFERING FIRST THE 60 HP. AND LATER THE 85 HP. AUTOMOBILE TO MEET SIMILAR SERVICE REQUIREMENTS. IT IS NOT APPARENT WHY THE CONTRACTOR DID NOT CONTINUE TO OFFER THE 60 HP. MODEL AND MAKE A VIGOROUS PROTEST AGAINST THE REJECTION THEREOF IF HE WERE ABLE TO SUPPORT SUCH A PROTEST BY A SHOWING OF FACTS.

THE CASE HERE PRESENTED ILLUSTRATES THE DIFFICULTIES WHICH ARE ENCOUNTERED IN DEPENDING ENTIRELY UPON A STATEMENT OF SERVICE REQUIREMENTS AS THE DETERMINING FACTOR IN AUTOMOBILE SPECIFICATION. THE PROCURING OFFICER MAY BE CONFRONTED WITH A DIFFICULT DECISION WHEN A LOW BIDDER CLAIMS THAT THE AUTOMOBILE HE IS OFFERING WILL MEET THE STATED SERVICE REQUIREMENTS SATISFACTORILY. IN FACE OF SUCH A DECLARATION BY A RESPONSIBLE BIDDER, AND IN THE ABSENCE OF ACTUAL EXPERIENCE TO REFUTE SUCH A DECLARATION, THE PROCURING OFFICER MUST CHOOSE BETWEEN ALTERNATIVES EQUALLY UNDESIRABLE. IF HE REJECTS THE LOW BID ON AN AUTOMOBILE OF UNKNOWN QUALIFICATIONS IN FAVOR OF A HIGHER BID ON A MODEL KNOWN TO BE ACCEPTABLE, A SUBSEQUENT EXCEPTION BY YOUR OFFICER IS VERY PROBABLE. HE ACCEPTS THE LOW BID ON A MODEL OF UNKNOWN QUALIFICATIONS, THE CERTIFICATION BY THE RESPONSIBLE BIDDER THAT IT WILL MEET THE REQUIREMENTS IS HIS ONLY RESOURCE TO INSURE THE GOVERNMENT AGAINST THE EFFECTS OF AN ERROR IN JUDGMENT OR A WILLFUL MISREPRESENTATION BY THE BIDDER.

THE DEPARTMENT BELIEVES THAT THE EXPERIENCE OF RESPONSIBLE OFFICIALS AND EMPLOYEES IN THE ADMINISTRATIVE BUREAUS AND IN THE PURCHASING OFFICE SHOULD BE RECOGNIZED BY YOUR OFFICE AS PROPERLY FOR USE IN THE PROMULGATION OF DEFINITE SPECIFICATIONS CONTAINING MECHANICAL LIMITATIONS WHENEVER NECESSARY TO ELIMINATE BIDS ON MODELS OF DOUBTFUL OR UNCERTAIN ABILITY, PROVIDED SUCH LIMITATIONS ARE NOT ARBITRARILY RAISED ABOVE THE RANGE OF STANDARD COMPETITIVE MODELS IN THE LOW PRICED CLASS. FOR EXAMPLE, IN THE PRESENT INSTANCE A PROVISION IN THE SPECIFICATIONS DEFINITELY REQUIRING THE ENGINE TO DEVELOP AT LEAST 80 HP. WOULD HAVE PREVENTED THE SITUATION HERE PRESENTED AND WOULD HAVE BEEN BASED ON THE SATISFACTORY POWER OF THE AUTOMOBILES OF THIS CLASS PURCHASED IN THE CALENDAR YEAR 1936, AS FOLLOWS:

TABLE

HORSEPOWER

CHEVROLET------------------------------- 80

FORD------------------------------------ 85

PLYMOUTH-------------------------------- 82

WITH MECHANICAL SPECIFICATIONS DEVELOPED ON THAT BASIS FROM YEAR TO YEAR, THERE WOULD BE SOME ASSURANCE THAT A NEW MODEL WOULD PERFORM AT LEAST AS SATISFACTORILY AS THOSE PREVIOUSLY PURCHASED, AND FURTHERMORE, A RESPONSIBLE BIDDER WOULD BE RELIEVED FROM THE RISK OF AN ERROR IN JUDGMENT AS TO ABILITY OF THE PARTICULAR MODEL TO MEET SERVICE REQUIREMENTS. UNLESS THE DEPARTMENT IS PERMITTED TO PROMULGATE DEFINITE SPECIFICATIONS FOR AUTOMOBILES IN THE MANNER SUGGESTED, A CONTINUATION OF PRESENT DIFFICULTIES IS PROBABLE.

IN CONCLUSION, IT IS AGAIN RESPECTFULLY REQUESTED THAT YOU APPROVE THE PROPOSED ACTION AGAINST THE DEFAULTING CONTRACTOR OR ADVISE THE DEPARTMENT AS TO A PROPER ALTERNATIVE; ALSO THAT YOU GIVE FAVORABLE CONSIDERATION TO THE PROPOSAL THAT THIS DEPARTMENT PROMULGATE AUTOMOBILE SPECIFICATIONS IN THE MANNER DESCRIBED.

THE DECISION OF JANUARY 10, 1938, A-91590, WAS WITH REFERENCE TO FOUR GRAHAM "CRUSADER" AUTOMOBILES PURCHASED FOR USE BY LAW ENFORCEMENT OFFICERS OF THE INDIAN SERVICE IN CONNECTION WITH EMERGENCY CONSERVATION WORK, AND THE CONTRACT SPECIFICATIONS PROVIDED IN PERTINENT PART AS FOLLOWS:

THE POWER OF THE CARS PURCHASED SHOULD BE SUCH THAT THEY CAN BE OPERATED AT THE MAXIMUM SPEED OF 80 MILES PER HOUR AND MUST BE ABLE TO MAINTAIN THIS SPEED FOR SUSTAINED DRIVING WITHOUT UNDUE STRAIN OR OVERHEATING OF THE MOTOR BECAUSE IT IS NECESSARY TO OVERTAKE AND APPREHEND VIOLATORS OF THE LAW.

IT WILL BE SEEN THAT THE SPECIFICATIONS IN THAT CASE WERE EXPLICIT. NOT ONLY WAS THE JOB TO BE DONE SET FORTH CLEARLY, BUT THERE WAS PRESCRIBED A DEFINITE AND UNQUALIFIED STANDARD OF POWER AND PERFORMANCE WHICH THE VEHICLE MUST MEET OR FALL BELOW THE REQUIREMENTS OF THE CONTRACT. FAILURE OF THE AUTOMOBILES PURCHASED TO ATTAIN AND MAINTAIN THE REQUIRED SPEED UNQUESTIONABLY WAS A BREACH OF THE CONTRACTOR'S WARRANTY IN THAT RESPECT FOR WHICH IT WAS LIABLE. INCLOSURES WITH YOUR PRESENT LETTER INCLUDE A LIST OF THE CONTRACTS TO WHICH YOUR SUBMISSION HAS REFERENCE, A TABULATION OF EXCERPTS FROM REPORTS OF FIELD REPRESENTATIVES AND EMPLOYEES OF THE INTERIOR DEPARTMENT WHO HAD OPERATED THE 60-HORSEPOWER FORD AUTOMOBILES DELIVERED UNDER THE VARIOUS CONTRACTS, AND AN INTERCHANGE OF LETTERS BETWEEN YOUR DEPARTMENT AND THE CONTRACTOR. THE REPORTS INDICATED THAT THE FORD AUTOMOBILES HAD BEEN FOUND TO BE UNSATISFACTORY IN PERFORMANCE, THE CHIEF COMPLAINT BEING LACK OF RESERVE POWER IN THE 60-HORSEPOWER MOTOR, AND ITS INABILITY TO NEGOTIATE THE HILLS, MOUNTAINS, AND LOW GRADE ROADS ENCOUNTERED IN "HIGH SPEED," THUS NECESSITATING RESORT TO LOWER GEARS WITH A CORRESPONDING SLOWING UP IN SPEED AND IN THE AMOUNT OF TRAVEL ACCOMPLISHED. UNDER DATE OF SEPTEMBER 21, 1937, YOUR DEPARTMENT ADDRESSED A LETTER TO THE NORTHWEST MOTOR COMPANY FORWARDING A COPY OF SAID REPORTS OF UNSATISFACTORY VEHICLE PERFORMANCE, AND CALLING UPON THE CONTRACTOR "FOR SOME DEFINITE ACTION COMPENSATING THE GOVERNMENT FOR YOUR FAILURE TO GIVE VALUE RECEIVED IN THESE PURCHASES.' THE NORTHWEST MOTOR COMPANY REPLIED BY LETTER OF DECEMBER 20, 1937, DISCLAIMING LIABILITY, AND SUBMITTING "TWO GENERAL FACTS" IN SUPPORT OF ITS DISCLAIMER. THESE "FACTS" WERE PRESENTED IN PARAGRAPHS NUMBERED 1 AND 2 OF ITS LETTER. IS SUFFICIENT TO SAY THAT THE ARGUMENTS ADVANCED IN PARAGRAPH NUMBERED 1 WERE WITHOUT POINT IN THE PRESENT INSTANCE AND MERIT SLIGHT CONSIDERATION HERE. THEY MISINTERPRET THE DECISIONS OF THIS OFFICE, PRESENT SOME COMPARATIVE SALES FIGURES AS BETWEEN THE FORD 60 AND FORD 85-HORSEPOWER MOTORS, AND EXPRESS SOME VIEWS AS TO THE VALUE OF THE 60-HORSEPOWER FORD AUTOMOBILE FROM THE STANDPOINT OF ECONOMY OF PRICE AND OPERATION, WITH THE IMPLICATION THAT ITS PURCHASE FOR GOVERNMENT USE IS IMPERATIVE FOR THAT REASON. IT IS, OF COURSE, ABSURD TO SUGGEST THAT THE FACT THAT OTHER AND LESS EFFICIENT MEANS OF TRANSPORTATION HAVE BEEN EMPLOYED IN PAST YEARS PRECLUDES THE GOVERNMENT FROM KEEPING ABREAST OF THE TIMES IN ACQUIRING UP -TO-DATE VEHICLES AND REQUIRING EFFICIENT PERFORMANCE AND SERVICE.

THIS OFFICE HAS HELD CONSISTENTLY THAT THE GOVERNMENT IS NOT REQUIRED TO PURCHASE THE LOWEST PRICED EQUIPMENT OBTAINABLE WITHOUT REGARD TO ITS FITNESS FOR THE PARTICULAR SERVICE TO BE RENDERED, AND IT HAS NEVER BEEN SUGGESTED THAT ACTUAL EFFICIENCY MUST OR PROPERLY MAY BE SACRIFICED TO FALSE ECONOMY. AND WHEN IT HAS BEEN SHOWN BY ACTUAL EXPERIENCE THAT EQUIPMENT OFFERED IS NOT ADEQUATE FOR THE NEEDS OF THE GOVERNMENT FOR USE UNDER SERVICE CONDITIONS FAIRLY AND ACCURATELY STATED, THE REJECTION OF A LOW BID OFFERING SUCH EQUIPMENT HAS NOT BEEN QUESTIONED HERE. THE TABULATION OF COMPARATIVE SALES TO OTHERS THAN THE GOVERNMENT OF THE 60- HORSEPOWER FORD AND THE 85 HORSEPOWER FORD IN THE REGIONS COVERED BY THE CONTRACTS HAS NO BEARING ON THE INSTANT MATTER AND IS WITHOUT POINT, AS IS THE CONCLUSION STATED -- IN THE NATURE OF "DEALER'S TALK--- THAT THE FORD AUTOMOBILE EQUIPPED WITH THE 60-HORSEPOWER ENGINE IS THE BEST VALUE IN THE AUTOMOBILE FIELD. WHATEVER MAY BE ITS COMPARATIVE VALUE UNDER OTHER CONDITIONS, IF AND WHEN IT HAS BEEN SHOWN BY EXPERIENCE TO RENDER INEFFICIENT SERVICE UNDER CONDITIONS ACTUALLY AND ORDINARILY ENCOUNTERED IN A PARTICULAR CASE, THE GOVERNMENT IS NOT REQUIRED TO PURCHASE IT MERELY BECAUSE IT CAN BE ACQUIRED AT THE LOWEST PRICE OFFERED.

HOWEVER, IN CONSIDERING YOUR PROPOSED ACTION AS OUTLINED IN THE SECOND PARAGRAPH OF YOUR LETTER, THERE MAY NOT BE OVERLOOKED THE FORCE OF THE CONTRACTOR'S ARGUMENT PRESENTED IN THE SECOND NUMBERED PARAGRAPH OF ITS LETTER AS FOLLOWS:

YOUR SERVICE REQUIREMENTS MAKE NO REFERENCE TO GEAR IN WHICH CAR IS TO OPERATE UNDER SEVERE CONDITIONS. YOUR SERVICE REQUIREMENTS MAKE NO REFERENCE TO RATE OF SPEED AT WHICH CAR IS TO TRAVEL. YOUR SERVICE REQUIREMENTS MAKE NO STIPULATION REGARDING COMPARISONS WITH OTHER MORE EXPENSIVE CARS. THEY SAY IN SUBSTANCE THAT THE VEHICLE FURNISHED IS TO NEGOTIATE CERTAIN TERRAINS. WE FIND NO COMPLAINT WHICH STATES THAT THE 60 -HORSEPOWER FORD HAS BEEN UNABLE TO TRAVERSE THE ROAD BEFORE IT, WITH ONE EXCEPTION AND, FRANKLY, WE BELIEVE THE AGENT MAKING THAT REPORT RENDERED SAME BEFORE ASCERTAINING THE FACTS. * * *

THE SERVICE REQUIREMENTS AS STATED IN CONTRACT NO. I-1-IND 12583, JANUARY 28, 1937--- SELECTED AT RANDOM FROM THOSE REFERRED TO IN YOUR LETTER--- ARE AS FOLLOWS:

THE VEHICLES TO BE PURCHASED UNDER THIS ADVERTISEMENT WILL BE USED BY THE U.S. INDIAN SERVICE, AND WILL TRAVEL OVER ROADS OF LOW GRADE AND OFTEN OVER ROUGH TRAILS IN HILLY AND SOMETIMES MOUNTAINOUS COUNTRY WHERE DANGEROUS CURVES IN THE ROADS WILL BE TRAVERSED. THE VEHICLES WILL BE SUBJECTED TO A MOST SEVERE SERVICE AND MAY BE TRANSFERRED FROM ONE PROJECT TO ANOTHER.

SERVICE REQUIREMENTS STATED IN SOME OF THE OTHER CONTRACTS VARIED SLIGHTLY IN PHRASEOLOGY BUT NOT IN SUBSTANCE. IT THUS IS APPARENT THAT THE SPECIFICATIONS SET FORTH IN GENERAL TERMS THE CHARACTER OF ROADS TO BE ENCOUNTERED, BUT DID NOT SPECIFY A STANDARD OF PERFORMANCE TO BE REQUIRED FOR THE VEHICLES UNDER THE CONDITIONS OUTLINED; AND WHILE IT APPEARS FROM THE REPORTS OF THE EMPLOYEES THAT IN OPERATING THE FORD 60-HORSEPOWER AUTOMOBILE RESORT TO LOWER GEARS WAS REQUIRED MORE OFTEN THAN PROBABLY WOULD HAVE BEEN NECESSARY HAD THE VEHICLES BEEN EQUIPPED WITH MORE POWERFUL MOTORS, THEREBY RENDERING THE USE OF THE VEHICLES UNSATISFACTORY FOR THE PURPOSE INTENDED, THAT FACT WOULD NOT APPEAR SUFFICIENT IN LAW TO SUPPORT A CHARGE AGAINST THE CONTRACTOR FOR A BREACH OF CONTRACT, IN THE ABSENCE OF A REQUIREMENT IN THE SPECIFICATIONS OF A DEFINITE STANDARD OF PERFORMANCE AND IN THE ABSENCE OF POSITIVE REPRESENTATIONS BY THE CONTRACTOR THAT THE VEHICLES WOULD TRAVEL THE ROADS TO BE ENCOUNTERED AT A PARTICULAR SPEED, OR CLIMB SPECIFIED GRADES WITHOUT RESORT TO LOWER GEARS. IT WAS, PERHAPS, TO BE ANTICIPATED THAT THE 60-HORSEPOWER ENGINES WOULD NOT AFFORD THE SAME DEGREE OF OPERATING EASE AND EFFICIENCY TO BE FOUND IN HIGHER POWERED MOTORS, AND THEIR FAILURE TO DO SO WOULD NOT, IPSO FACTO, CONSTITUTE A BREACH OF CONTRACT.

THIS OFFICE IS NOT AND HAS NOT BEEN UNMINDFUL OF THE SITUATION PRESENTED BY THE INTRODUCTION OF THE FORD 60-HORSEPOWER MOTOR WHICH, PRESUMABLY, COULD AT ALL TIMES BE OFFERED AT A LOWER PRICE THAN OTHER VEHICLES RECOGNIZED AS BEING IN THE SAME GENERAL COMPETITIVE CLASS, THUS NECESSITATING ITS PURCHASE IN THE ABSENCE OF KNOWLEDGE, BASED ON EXPERIENCE, THAT IT WOULD NOT RENDER ACCEPTABLE SERVICE UNDER PARTICULAR SERVICE CONDITIONS, AND ITS ARBITRARY EXCLUSION FROM COMPETITION WITHOUT REFERENCE TO ITS POSSIBILITIES WOULD NOT HAVE BEEN JUSTIFIED.

HOWEVER, IT WOULD APPEAR THAT THE ONLY RECOURSE OF THE GOVERNMENT IN THE PRESENT INSTANCE IS TO PROFIT BY THE EXPERIENCE GAINED IN THESE CASES, FOR FUTURE GUIDANCE IN THE PURCHASE OF MOTOR EQUIPMENT, WHEN THE KNOWN SERVICE CONDITIONS ARE SUCH AS TO RENDER THE FORD 60 HORSEPOWER ENGINE INADEQUATE. ALSO, IT WOULD APPEAR THAT, WITHOUT BEING MADE UNDULY RESTRICTIVE, EXCEPTIONAL SERVICE CONDITIONS MIGHT BE STATED WITH SOMEWHAT MORE DETAIL IN THE ADVERTISED SPECIFICATIONS, COUPLED WITH REASONABLE REQUIREMENTS AS TO THE CHARACTER OF PERFORMANCE TO BE REQUIRED UNDER SUCH CONDITIONS. IN SUCH A CASE, THE ESTABLISHED FAILURE OF VEHICLES TO MEET THE PERFORMANCE REQUIREMENTS--- AS IN THE CASE OF THE GRAHAM "CRUSADERS"-- - WOULD CONSTITUTE A CONCRETE BREACH OF CONTRACT BY THE CONTRACTOR.

REFERRING TO YOUR SUGGESTION THAT A MINIMUM MOTOR HORSEPOWER OF 80 SHOULD BE STIPULATED IN SPECIFICATIONS COVERING THE PURCHASE OF AUTOMOBILES, IT MAY BE POINTED OUT THAT SUCH A STIPULATION WOULD APPEAR TO BE UNNECESSARY AT THIS TIME. IT IS THE UNDERSTANDING OF THIS OFFICE THAT THERE ARE VERY FEW AUTOMOBILE ENGINES WITH LESS THAN 80 HORSEPOWER BEING OFFERED FOR SALE AT THE PRESENT TIME. THE PAST EXPERIENCE OF YOUR DEPARTMENT WITH THE 60- HORSEPOWER FORD MOTOR WOULD APPEAR TO BE SUFFICIENT TO JUSTIFY REJECTION OF LOW BIDS OFFERING SUCH VEHICLES AND OTHER VEHICLES EQUIPPED WITH SIMILARLY LOW-POWERED MOTORS IN CASES WHERE IT IS KNOWN THAT EXCEPTIONALLY SEVERE SERVICE CONDITIONS ARE NORMALLY TO BE ENCOUNTERED, AND THAT FACT IS MADE PLAIN IN THE ADVERTISEMENT, IT BEING UNDERSTOOD THAT SPECIFICATIONS WILL NOT BE SO DRAWN AS TO EXCLUDE SUCH LOWER POWERED VEHICLES FROM COMPETITION IN CASES IN WHICH THEY WOULD BE ADEQUATE FOR THE PURPOSES OF THE GOVERNMENT.