B-127116, JUN. 18, 1956

B-127116: Jun 18, 1956

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INC.: REFERENCE IS MADE TO YOUR ATTORNEY'S LETTER DATED FEBRUARY 20. IT IS CONTENDED THAT. YOU WERE AWARDED A CONTRACT FOR FURNISHING 100 UNITS ONLY. WHEREAS PURSUANT TO THE SAME INVITATION A CONTRACT WAS AWARDED TO THE WEIDENHOFF COMPANY FOR FURNISHING 225 UNITS AT A UNIT PRICE OF $1. RELIEF IS REQUESTED ON THE THEORY THAT UNDER THE ARMED SERVICES PROCUREMENT ACT OF 1947. WE ARE AUTHORIZED EITHER TO PAY YOUR CLAIM OR TO RECOMMEND TO CONGRESS THAT IT BE PAID. IT IS CLAIMED THAT THERE IS NO LEGAL OR EQUITABLE REASON WHY YOU SHOULD HAVE BEEN COMPELLED TO PRODUCE 100 UNITS AT $895 EACH WHEN THE WEIDENHOFF COMPANY WAS GIVEN A CONTRACT FOR 225 PURSUANT TO THE SAME INVITATION AT A PRICE OF $1.

B-127116, JUN. 18, 1956

TO HEYER PRODUCTS COMPANY, INC.:

REFERENCE IS MADE TO YOUR ATTORNEY'S LETTER DATED FEBRUARY 20, 1956, MAKING CLAIM ON YOUR BEHALF FOR $45,000 TO COVER THE LOSS ALLEGEDLY SUSTAINED INCIDENT TO THE PERFORMANCE OF CONTRACT NO. DA-20-089 12306FS, DATED FEBRUARY 6, 1951.

IT IS CONTENDED THAT, ALTHOUGH THE DEPARTMENT OF THE ARMY INVITED BIDS FOR FURNISHING 325 GENERATOR TEST BENCHES, AND YOU BASED YOUR BID OF $895 PER UNIT ON FURNISHING THAT NUMBER OF UNITS, YOU WERE AWARDED A CONTRACT FOR FURNISHING 100 UNITS ONLY, WHEREAS PURSUANT TO THE SAME INVITATION A CONTRACT WAS AWARDED TO THE WEIDENHOFF COMPANY FOR FURNISHING 225 UNITS AT A UNIT PRICE OF $1,124.20. RELIEF IS REQUESTED ON THE THEORY THAT UNDER THE ARMED SERVICES PROCUREMENT ACT OF 1947, OR THE ACT OF APRIL 10, 1928, 45 STAT. 413, WE ARE AUTHORIZED EITHER TO PAY YOUR CLAIM OR TO RECOMMEND TO CONGRESS THAT IT BE PAID; ALSO THAT REMEDIAL ACTION CAN BE TAKEN BY OUR OFFICE UNDER TITLE II OF THE FIRST WAR POWERS ACT, 1941, 55 STAT. 839, 50 U.S.C. APP., SECTION 611, AS AMENDED BY PUBLIC LAW 921, 81ST CONGRESS, OR THAT WE CAN SUGGEST THAT THE ARMY TAKE SUCH ACTION UNDER 32 CODE OF FEDERAL REGULATIONS SECTION 438.2 (B) (A) (1), (2), 438.2 (B) (B) AND (C). FINALLY, IT IS CLAIMED THAT THERE IS NO LEGAL OR EQUITABLE REASON WHY YOU SHOULD HAVE BEEN COMPELLED TO PRODUCE 100 UNITS AT $895 EACH WHEN THE WEIDENHOFF COMPANY WAS GIVEN A CONTRACT FOR 225 PURSUANT TO THE SAME INVITATION AT A PRICE OF $1,124.20 PER UNIT AND THAT "THIS WAS AN ILLEGAL AND ARBITRARY DISCRIMINATION AGAINST A SMALL BUSINESS IN FAVOR OF A LARGE ONE.'

THE DEPARTMENT OF THE ARMY HAS FURNISHED A REPORT OF THE FACTS IN THE MATTER, TOGETHER WITH A COPY OF THE INVITATION FOR BIDS, AN ABSTRACT OF THE BIDS RECEIVED AND OTHER PERTINENT DATA. IT APPEARS FROM THE RECORD THAT BY INVITATION NO. DA-20-089-ORD-51-1038 FS, ISSUED OCTOBER 11, 1950, THE ORDNANCE TANK-AUTOMOTIVE CENTER, DETROIT, MICHIGAN, INVITED SEALED BIDS IN TRIPLICATE FOR FURNISHING A NUMBER OF ITEMS LISTED IN THE SCHEDULE, INCLUDING 350 GENERATOR TEST BENCHES, ITEM 3/5). BIDDERS WERE ADVISED BY THE INVITATION THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON, AT THE UNIT PRICE OFFERED, UNLESS THE BIDDER SPECIFIED OTHERWISE IN HIS BID. YOUR BID STATED NO EXCEPTION TO THAT PROVISION.

BIDS WERE OPENED ON NOVEMBER 6, 1950, AND WERE FORWARDED TO THE ROSSFORD ORDNANCE DEPOT, THE REQUISITIONING INSTALLATION, FOR DETERMINATION AS TO ENGINEERING ACCEPTABILITY. THE UNIT OFFERED BY YOU AS THE LOW BIDDER IS REPORTED TO HAVE RECEIVED QUALIFIED APPROVAL BECAUSE IT HAD NEVER BEEN PRODUCED BY YOU AND, FOR THAT REASON,"IT WAS NOT POSSIBLE TO EVALUATE THE PRIME FACTORS OF ITS PERFORMANCE IN SERVICE AND MAINTENANCE LIFE.' THE ROSSFORD DEPOT FURTHER STATED THAT COMPLETE COMPLIANCE WITH SPECIFICATION AND DELIVERY REQUIREMENTS WAS ESSENTIAL BECAUSE OF THE CRITICAL NATURE OF THE KOREAN EMERGENCY IN LATE 1950. THE DEPARTMENT REPORTS THAT A SURVEY TEAM WAS SENT TO YOUR PLANT TO INVESTIGATE YOUR ABILITY TO MEET THE SPECIFICATION AND DELIVERY REQUIREMENTS IN THE EVENT YOU RECEIVED THE PENDING AWARD. THE RESULT OF THE SURVEY, TOGETHER WITH OTHER PERTINENT FACTORS, WAS APPARENTLY PRESENTED TO A BOARD OF AWARDS WHICH RECOMMENDED AWARD OF 100 TEST BENCHES TO YOU AND THE BALANCE OF THE REQUIREMENT TO THE PREVIOUS SUPPLIER, THE WEIDENHOFF COMPANY TO ASSURE ESSENTIAL COMPLIANCE WITH SPECIFICATION AND DELIVERY REQUIREMENTS. THE UNIT OFFERED BY THE SECOND LOW BIDDER WAS REJECTED BECAUSE IT DID NOT MEET THE REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS, WHILE THAT OFFERED BY THE THIRD LOW BIDDER, WEIDENHOFF COMPANY, RECEIVED AN UNQUALIFIED APPROVAL.

IT FURTHER APPEARS THAT THE CONTRACT ENTERED INTO WITH YOU FOR 100 TEST BENCHES WAS NOT MADE BY SUMMARY ACCEPTANCE OF YOUR BID, WHICH BY ITS TERMS COULD NOT HAVE BEEN ACCEPTED AFTER 30 DAYS FROM THE DATE OF OPENING, BUT THAT PURSUANT TO THE NEGOTIATING AUTHORITY OF SECTION 2 (C) (1) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, THE CONTRACT WAS MADE IN THE FORM OF A PURCHASE ORDER WHICH REQUIRED ACCEPTANCE BY YOU IN ORDER TO BIND YOU. THIS WAS SPECIFICALLY BROUGHT TO YOUR ATTENTION BY THE LETTER OF TRANSMITTAL DATED FEBRUARY 6, 1951, BY WHICH THE CONTRACTING OFFICER REQUESTED "IF THIS ORDER IS ACCEPTABLE TO YOU THAT YOU SIGN THE ORIGINAL AND ONE CARBON COPY IN THE SPACE PROVIDED FOR CONTRACTOR'S ACCEPTANCE AND RETURN SAME TO THIS OFFICE.'

THE CONTRACT WAS MODIFIED BY SUPPLEMENTAL AGREEMENTS NOS. 1, 2 AND 4 DATED DECEMBER 28, 1951, FEBRUARY 15, 1942, AND JUNE 29, 1953. BY THE TERMS OF SUPPLEMENTAL AGREEMENT NO. 4 THE UNIT PRICE FOR THE TEST BENCHES WAS INCREASED FROM $895 TO $985.13 AND THE TOTAL CONTRACT PRICE FROM $91,638 TO $100,801.80 UNDER THE PRICE REDETERMINATION CLAUSE OF THE CONTRACT, WHICH LIMITED THE MAXIMUM PRICE ADJUSTMENT TO TEN PERCENT. THIS AGREEMENT, WHICH YOU SIGNED, CONTAINED THE STATEMENT THAT ,PAYMENT OF THE AFORESAID AMOUNT OF $100,801.80 SHALL CONSTITUTE PAYMENT IN FULL UNDER THE CONTRACT.'

IT THUS IS SHOWN THAT YOU WERE ON NOTICE AT THE TIME YOU SUBMITTED YOUR BID THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE PRICE OFFERED UNLESS YOU SPECIFIED OTHERWISE, AND THAT YOUR BID FIXED NO LIMITATION UPON THAT RIGHT. YOU WERE THEN FULLY DISCHARGED FROM ANY OBLIGATION UNDER YOUR BID BY THE GOVERNMENT'S FAILURE TO ACCEPT IT WITHIN 30 DAYS, BUT NEVERTHELESS VOLUNTARILY ACCEPTED THE CONTRACT FOR 100 UNITS, WITH A PRICE ADJUSTMENT CLAUSE LIMITING THE POSSIBLE PRICE INCREASE TO TEN PERCENT. THE FACT THAT A CONTRACT FOR 225 UNITS WAS AWARDED TO THE WEIDENHOFF COMPANY AT A HIGHER UNIT PRICE AFFORDS NO PROPER BASIS FOR GRANTING RELIEF TO YOU. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT VALID CONTRACTS ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THE FACT THAT SUPERVENING OR UNFORESEEN CAUSES RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A LOSS, IS NOT SUFFICIENT TO EXCUSE PERFORMANCE OR TO ENTITLE A CONTRACTOR TO ADDITIONAL COMPENSATION. COLUMBUS RAILWAY, POWER AND LIGHT COMPANY V. COLUMBUS, 249 U.S. 399, 412; 19 COMP. GEN. 903; AND 30 ID. 264, 266 AND THE CASES THERE CITED. THE RESPONSIBILITY FOR PERFORMANCE OF WORK IN ACCORDANCE WITH THE PROVISIONS OF A CONTRACT IS ON THE CONTRACTOR, AND IF HE FAILS TO ASCERTAIN THE REQUIREMENTS OF THE SPECIFICATIONS MADE A PART OF THE CONTRACT HE IS NOT ENTITLED TO ADDITIONAL COMPENSATION.

AS THERE IS NOTHING IN THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21, WHICH AUTHORIZES PAYMENT OF LOSSES INCURRED IN THE PERFORMANCE OF CONTRACTS AWARDED PURSUANT TO THE TERMS OF THAT ACT, THE PROVISIONS OF THAT ACT MAY NOT BE REGARDED AS FORMING A BASIS FOR PAYMENT OF THE LOSSES WHICH YOU CLAIM TO HAVE SUSTAINED INCIDENT TO THE PERFORMANCE OF THIS CONTRACT.

WITH RESPECT TO THE SUGGESTION THAT THE COMPTROLLER GENERAL CAN RECOMMEND TO THE CONGRESS THAT YOUR CLAIM BE PAID AS A MERITORIOUS CLAIM AGAINST THE UNITED STATES UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, IT MAY BE POINTED OUT THAT, WHILE THE SAID ACT AUTHORIZES THE REPORTING TO CONGRESS FOR ITS CONSIDERATION OF CERTAIN CLAIMS FILED IN THE GENERAL ACCOUNTING OFFICE, THE PROVISIONS MAY BE INVOKED ONLY WHEN IT IS DEFINITELY DETERMINED THAT A CLAIM OR DEMAND AGAINST THE UNITED STATES "MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE," AND THEN ONLY WHEN THE CLAIM OR DEMAND "CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS.' THE AUTHORITY CONFERRED BY THE ACT IS NOT A PLENARY ONE, BUT MUST BE EXERCISED IN ACCORDANCE WITH ESTABLISHED PRINCIPLES AND PRECEDENTS, AND A LOSS UNDER A CONTRACT ORDINARILY DOES NOT AFFORD A PROPER BASIS FOR EQUITABLE RELIEF. 30 C.J.S. 411; 19 AM. JUR. 57; COLUMBUS RAILWAY, POWER AND LIGHT COMPANY V. COLUMBUS, SUPRA; MANUFACTURERS' FINANCE CO. V. MCKEY, 294 U.S. 442.

FOR THE REASONS STATED AND UPON THE BASIS OF THE AUTHORITIES CITED, WE DO NOT FEEL THAT YOUR CLAIM CONTAINS SUCH ELEMENTS OF LEGAL OR EQUITABLE LIABILITY AS TO JUSTIFY SUBMISSION TO THE CONGRESS FOR ITS CONSIDERATION PURSUANT TO THE ACT OF APRIL 10, 1928, SUPRA.

TITLE II OF THE FIRST WAR POWERS ACT OF DECEMBER 18, 1941, 55 STAT. 839, AS AMENDED (50 U.S.C. SECTION 611), PROVIDES IN PERTINENT PART AS FOLLOWS:

"THE PRESIDENT MAY AUTHORIZE ANY DEPARTMENT OR AGENCY OF THE GOVERNMENT EXERCISING FUNCTIONS IN CONNECTION WITH THE NATIONAL DEFENSE, IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE PRESIDENT FOR THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT, TO ENTER INTO CONTRACTS AND INTO AMENDMENTS OR MODIFICATIONS OF CONTRACTS HERETOFORE OR HEREAFTER MADE AND TO MAKE ADVANCE, PROGRESS AND OTHER PAYMENTS THEREON, WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS WHENEVER HE DEEMS SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE.'

EXECUTIVE ORDER NO. 10210, DATED FEBRUARY 2, 1951, AUTHORIZED THE DEPARTMENT OF DEFENSE TO EXERCISE THE FUNCTIONS AND POWERS SET FORTH IN THE ACT AND PRESCRIBED REGULATIONS FOR THE EXERCISE OF SUCH FUNCTIONS AND POWERS. AS THE SPECIAL AUTHORITY IN THE EXECUTIVE ORDER WAS CONFERRED UPON THE DEPARTMENT OF DEFENSE RATHER THAN UPON OUR OFFICE, ANY REQUEST FOR RELIEF THEREUNDER OR UNDER THE ADMINISTRATIVE REGULATIONS REFERRED TO, IN CONNECTION WITH THE SUBJECT CONTRACT, WOULD NECESSARILY BE FOR CONSIDERATION SOLELY BY THE DEPARTMENT OF THE ARMY.

MOREOVER, SINCE IT IS INDICATED BY THE RECORD BEFORE US THAT THE CONTRACT WAS COMPLETED AND THAT PAYMENT OF THE CONTRACT PRICE HAS BEEN MADE, THE QUESTION ARISES AS TO WHETHER YOUR REQUEST FOR RELIEF COMES WITHIN THE SCOPE OF THE FIRST WAR POWERS ACT AND THE EXECUTIVE ORDERS ISSUED UNDER THAT ACT. IT WAS HELD IN TWO DECISIONS OF OUR OFFICE,24 COMP. GEN. 723 AND 31 COMP. GEN. 685, THAT THE AUTHORITY GRANTED BY THE ACT TO AMEND CONTRACTS WITHOUT CONSIDERATION TO THE GOVERNMENT CANNOT BE EXERCISED IN THE CASE OF CONTRACTS WHICH HAVE CEASED TO EXIST BY REASON OF COMPLETE PERFORMANCE ON BOTH SIDES, THAT IS, AFTER A COMPLETION OF THE WORK BY THE CONTRACTOR AND FINAL PAYMENT THEREON.

THE BASIS FOR THE CONTENTION THAT THE AWARD OF THE CONTRACT WAS ILLEGAL AND ARBITRARY IS NOT UNDERSTOOD. SO FAR AS THE RECORD HERE SHOWS THE CONTRACT WAS NEGOTIATED WITH YOU IN GOOD FAITH ON TERMS WHICH WERE ACCEPTABLE TO YOU AT THE TIME. THE FACT THAT YOU WERE A SMALL BUSINESS DOES NOT AT THIS LATE DATE FORM ANY LEGAL OR EQUITABLE BASIS FOR HOLDING THAT THE GOVERNMENT IS OBLIGATED TO MAKE GOOD THE LOSS WHICH YOU CLAIM TO HAVE SUSTAINED. SEE 31 COMP. GEN. 431 AND COMPARE 35 COMP. GEN. 233.

ACCORDINGLY, WE FIND NO BASIS FOR ALLOWANCE OF ANY AMOUNT IN EXCESS OF THAT FIXED BY THE CONTRACT, AS AMENDED.