A-94935, MAY 21, 1938, 17 COMP. GEN. 968

A-94935: May 21, 1938

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IT IS ADMINISTRATIVELY REPORTED THE TOTAL NEEDS OF THE GOVERNMENT WILL APPROXIMATE FIVE TIMES THE ESTIMATED REQUIREMENTS SPECIFIED. - THE MAJORITY BEING FOR PROJECTS NOT CONTEMPLATED WHEN THE CONTRACT WAS ENTERED INTO. WAS ENTERED INTO WITH THE GENERAL TRUCKING COMPANY. AT THE TIME THE SAID CONTRACT WAS ENTERED INTO THE NEEDS OF THE NAVY WERE ESTIMATED AT 600 CUBIC YARDS OF SAID SAND. PROJECTS NOT CONTEMPLATED AT THE TIME SAID CONTRACT WAS ENTERED INTO HAVE NOW BEEN APPROVED THAT WILL REQUIRE AN ADDITIONAL MINIMUM OF 2. THAT BY THE MORE OR LESS REQUIREMENT IT WAS TO DELIVER APPROXIMATELY 600 CUBIC YARDS OF SAND. THAT NO PROVISION WAS MADE FOR COMMITMENTS OF AN ABNORMAL AMOUNT OVER SUCH ESTIMATED REQUIREMENTS.

A-94935, MAY 21, 1938, 17 COMP. GEN. 968

CONTRACTS - AMOUNTS - INDEFINITE - REQUIREMENTS IN EXCESS OF ESTIMATED QUANTITY WHERE A CONTRACT FOR DELIVERY OF SAND AS REQUIRED FOR A STATED PERIOD SPECIFIED AN ESTIMATED QUANTITY,"MORE OR LESS," AND CONTRACTOR HAS ALREADY DELIVERED MORE THAN 50 PERCENT IN EXCESS OF THE ESTIMATED QUANTITY AND HAS REQUESTED THAT THE CONTRACT BE TERMINATED BECAUSE OF AN ADMINISTRATIVELY VERIFIED INCREASE IN PRICE OF SAND, AND IT IS ADMINISTRATIVELY REPORTED THE TOTAL NEEDS OF THE GOVERNMENT WILL APPROXIMATE FIVE TIMES THE ESTIMATED REQUIREMENTS SPECIFIED--- THE MAJORITY BEING FOR PROJECTS NOT CONTEMPLATED WHEN THE CONTRACT WAS ENTERED INTO--- THE CONTRACT MAY BE CONSIDERED AS COMPLETED AND A NEW CONTRACT ENTERED INTO IN ACCORDANCE WITH LAW FOR THE ADDITIONAL REQUIREMENTS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE NAVY, MAY 21, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 11, 1938, IN PERTINENT PART, AS FOLLOWS:

CONTRACT NO. N244S-21306, DATED FEBRUARY 17, 1938, WAS ENTERED INTO WITH THE GENERAL TRUCKING COMPANY, A PARTNERSHIP CONSISTING OF G. W. AND A. W. BILLINGS, 1950 MAIN STREET, SAN DIEGO, CALIFORNIA, FOR SAND FOR CONCRETE AS REQUIRED BY THE NAVAL AIR STATION, NORTH ISLAND, SAN DIEGO, CALIFORNIA, DURING THE PERIOD ENDING JUNE 30, 1938, AT A COST OF $1.30 PER CUBIC YARD. AT THE TIME THE SAID CONTRACT WAS ENTERED INTO THE NEEDS OF THE NAVY WERE ESTIMATED AT 600 CUBIC YARDS OF SAID SAND. THE DELIVERIES UNDER SAID CONTRACT TO APRIL 16, 1938, AGGREGATED 900 CUBIC YARDS OF SAND, OR APPROXIMATELY 50 PERCENT IN EXCESS OF THE ESTIMATED QUANTITIES. PROJECTS NOT CONTEMPLATED AT THE TIME SAID CONTRACT WAS ENTERED INTO HAVE NOW BEEN APPROVED THAT WILL REQUIRE AN ADDITIONAL MINIMUM OF 2,000 CUBIC YARDS OF SAND.

THE GENERAL TRUCKING COMPANY, UNDER DATE OF MARCH 31, 1938, REQUESTED THAT THE ABOVE CONTRACT BE TERMINATED AS IT HAD BEEN DELIVERED MORE THAN THE ESTIMATED REQUIREMENTS, AND UNDER DATE OF APRIL 19, 1938, IT AGAIN REQUESTED THAT SAID CONTRACT BE TERMINATED, CONTENDING THAT IT HAD ALREADY DELIVERED OVER 900 CUBIC YARDS OF SAND UNDER A CONTRACT IT INTERPRETED AS REQUIRING THE DELIVERY OF 600 CUBIC YARDS OF SAND, MORE OR LESS, AND THAT BY THE MORE OR LESS REQUIREMENT IT WAS TO DELIVER APPROXIMATELY 600 CUBIC YARDS OF SAND, RUNNING OVER OR UNDER SAID AMOUNT AS REQUIREMENTS WOULD DEMAND BUT ONLY WITHIN REASONABLE LIMITS.

THE GENERAL TRUCKING COMPANY STATED THAT IT HAD MADE PROVISION FOR THE DELIVERY OF THE ESTIMATED REQUIREMENTS OF SAND, BUT THAT NO PROVISION WAS MADE FOR COMMITMENTS OF AN ABNORMAL AMOUNT OVER SUCH ESTIMATED REQUIREMENTS, AND THAT TO CONTINUE TO FURNISH ADDITIONAL SAND UNDER SAID CONTRACT IT WILL BE REQUIRED TO PAY MORE THEREFOR THAN IT WILL RECEIVE.

AS A MEANS OF VERIFYING THE ALLEGED INCREASE IN THE PRICE OF SAND, COMPETITIVE BIDS WERE INVITED FOR OPENING APRIL 15, 1938, FOR APPROXIMATELY 2,000 CUBIC YARDS OF SAND FOR DELIVERY OF SAND TO THE SAID NAVAL AIR STATION AS REQUIRED, DURING THE PERIOD ENDING JUNE 30, 1938. BIDS UNDER THE OPENING UNDER WHICH CONTRACT NO. N244S-21306 WAS AWARDED WERE RECEIVED AS FOLLOWS:

TABLE

PER CUBIC YARD GENERAL TRUCKING CO-- ----------------- $1.30 NELSON AND SLOAN----------------------- 1.56 H. G. FENTON--------------------------- 1.80 PAUL CHANDLER----------- -------------- 1.95 CANDEL AND JOHNSON------ --------------- 1.95

BIDS WERE RECEIVED FOR OPENING APRIL 15, 1938, AS FOLLOWS:

TABLE

PER CUBIC YARD NELSON AND SLOAN---------------- ------ $1.85 H. G. FENTON --------------------------- 1.755 PAUL CHANDLER-------------------------- 1.50 CANDEL AND JOHNSON------------ -------- 2.00 CANYON ROCK------------- --------------- 1.99

THE NAVY DEPARTMENT BELIEVES THAT UNDER THE DECISION OF THE SUPREME COURT IN THE CASE OF BRAWLEY V. UNITED STATES (96 U.S., 168), THE AMOUNT OF 600 CUBIC YARDS OF SAND MUST BE REGARDED AS MERELY AN ESTIMATE OF WHAT THE CONTRACTING OFFICER SUPPOSED AT THE TIME MIGHT BE REQUIRED AND THAT THE SUBSTANTIAL ENGAGEMENT WAS TO FURNISH SUCH SAND AS SHOULD BE DETERMINED TO BE NECESSARY DURING THE PERIOD COVERED BY THE CONTRACT. IN VIEW OF THE FACT THAT THE PROJECTS THAT NOW REQUIRE 2,000 ADDITIONAL CU.YD. OF SAND WERE NOT CONTEMPLATED WHEN CONTRACT NO. N244S-21306 WAS ENTERED INTO THE CONTRACTING OFFICER MUST BE PRESUMED TO HAVE ACTED IN GOOD FAITH. THE CASE OF BRAWLEY V. UNITED STATES, HAS BEEN WIDELY CITED BY THE COURTS. THIS CONNECTION, SEE WHITE V. UNITED STATES (38 APPL.D.C., 131). IN THE CASE OF MOORE V. UNITED STATES (196 U.S., 157), THE SUPREME COURT OF THE UNITED STATES HELD THAT UNDER A CONTRACT FOR "ABOUT 5,000 TONS OF COAL" THE UNITED STATES COULD NOT REFUSE TO ACCEPT MORE THAN 4,634 TONS, BUT WAS LIABLE FOR THE DIFFERENCE IN VALUE ON 366 TONS TENDERED AND ACCEPTANCE REFUSED, HOLDING, THAT THE WORDS "ABOUT" AND "MORE OR LESS" ARE ONLY FOR THE PURPOSE OF PROVIDING AGAINST ACCIDENTAL, AND NOT MATERIAL, VARIATIONS, AND THAT THE DIFFERENCE BETWEEN 4,634 TONS AND 5,000 TONS IS TOO GREAT FOR 4,634 TONS TO BE "ABOUT 5,000 TONS.' THIS LATTER CASE, HOWEVER, DID NOT INVOLVE A REQUIREMENTS CONTRACT.

WHILE THE NAVY DEPARTMENT BELIEVES CONTRACT NO. N244S-21306 IS A REQUIREMENTS CONTRACT UNDER WHICH THE CONTRACTOR IS OBLIGATED TO FURNISH THE ADDITIONAL SAND REQUIRED, THERE IS A POSSIBILITY THAT THE APPROPRIATE COURT MAY HOLD THAT QUANTITIES AGGREGATING FIVE TIMES THE ESTIMATED REQUIREMENTS SPECIFIED, THE MAJORITY OF WHICH IS FOR PROJECTS NOT CONTEMPLATED WHEN THE CONTRACT WAS ENTERED INTO, ARE SO UNREASONABLE AS TO DEPRIVE THE CONTRACT OF MUTUALITY, WHICH IS ESSENTIAL TO A VALID CONTRACT. THEREFORE, IT IS REQUESTED THAT THE NAVY DEPARTMENT BE INFORMED WHETHER THE GENERAL TRUCKING COMPANY SHOULD BE REQUIRED TO DELIVER SUCH ADDITIONAL QUANTITIES OF SAND, IRRESPECTIVE OF THE AMOUNT, AS MAY BE REQUIRED FOR THE NEW PROJECTS AT THE NAVAL AIR STATION, NORTH ISLAND, SAND DIEGO, CALIFORNIA, REGARDLESS OF THE AMOUNT ESTIMATED AS REQUIRED AND INCORPORATED IN CONTRACT NO. N244S-21306 AS 600 CUBIC YARDS, MORE OR LESS, OR WHETHER SAID CONTRACT MAY BE REGARDED AS FULLY PERFORMED BY THE CONTRACTOR WHO HAS ALREADY FURNISHED MORE THAN 50 PERCENT OVER SUCH ESTIMATED AMOUNT AND THE NAVY ENTER ANOTHER VALID CONTRACT FOR THE NOW KNOWN REQUIREMENTS OF SAID NAVAL AIR STATION FOR SAND FOR THE REMAINDER OF THE CURRENT FISCAL YEAR.

IN VIEW OF THE FACTS REPORTED, CONTRACT N244S-21306, DATED FEBRUARY 17, 1938, MAY BE CONSIDERED AS COMPLETED AND A CONTRACT MAY BE ENTERED INTO IN ACCORDANCE WITH LAW FOR THE LARGE ADDITIONAL QUANTITIES OF SAND STATED TO BE REQUIRED. IN ADDITION TO THE CASES REFERRED TO IN YOUR LETTER SEE HADLEY DEAN PLATE GLASS CO. V. HIGHLAND GLASS CO., 143 FED. 242. ALSO, SEE WILLARD, SUTHERLAND AND CO. V. UNITED STATES, 262 U.S. 489, 494, PARTICULARLY THE PART THEREOF RELATING TO REFUSAL TO FURTHER PERFORM.