B-127203, MAY 8, 1956

B-127203: May 8, 1956

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TO BUCKEYE PAINT AND VARNISH COMPANY: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27. IT IS YOUR CONTENTION. THAT THE SPECIFICATIONS WERE AMBIGUOUS. SEVEN OTHER BIDS WERE RECEIVED RANGING FROM $15. WAS SUBSTANTIALLY LOWER THAN THOSE OFFERS. SINCE THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THE NATURE OF ITS MISTAKE. WAS CONSUMMATED. IT IS APPARENT THAT EVEN THOUGH SUBSEQUENT DEVELOPMENTS PROVED THE OFFER TO BE UNPROFITABLE. THE CONTRACT WAS EXECUTED IN GOOD FAITH WITHOUT KNOWLEDGE OF ERROR. THUS VESTING IN THE GOVERNMENT THE RIGHT TO HAVE THE WORK PERFORMED IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT. CASES INVOLVING SIMILAR CIRCUMSTANCES HAVE BEEN CONSIDERED BY THE COURTS AND IT HAS BEEN HELD REPEATEDLY THAT SUPERVENING OR UNFORESEEN EVENTS WHICH RENDERED PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE.

B-127203, MAY 8, 1956

TO BUCKEYE PAINT AND VARNISH COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27, 1956, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED FEBRUARY 2, 1956, WHICH DISALLOWED YOUR CLAIM FOR $13,419.97, REPRESENTING AN ADDITIONAL AMOUNT, IN EXCESS OF THE CONTRACT PRICE, ALLEGED TO BE DUE IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. DA-33-019-ORD-1317.

IT IS YOUR CONTENTION, FIRST, THAT BERTER INDUSTRIES, INC.,MADE A MISTAKE IN ITS BID AND THEREFORE RELIEF SHOULD BE GRANTED TO THE EXTENT OF THE LOSSES INCURRED IN PERFORMANCE OF THE UNDERTAKING. SECONDLY, AS SUCCESSOR TO THE ORIGINAL CONTRACTOR YOU CONTEND, IN EFFECT, THAT THE SPECIFICATIONS WERE AMBIGUOUS; THAT THE PREDECESSOR COMPANY RELIED UPON AN OPINION OF A FORMER GOVERNMENT INSPECTOR THAT A PARTICULAR PACKAGE AND PACKING ARRANGEMENT WOULD MEET THE CONTRACT REQUIREMENTS; AND, THAT THE CONTAINER AND PACKING ULTIMATELY APPROVED EXCEEDED THE BASIC REQUIREMENTS CALLED FOR BY THE APPLICABLE SPECIFICATIONS.

WITH RESPECT TO YOUR FIRST CONTENTION THE RECORD DISCLOSES THAT IN RESPONSE TO THE INVITATION ISSUED BY THE CLEVELAND ORDNANCE DISTRICT, SEVEN OTHER BIDS WERE RECEIVED RANGING FROM $15,400 TO $35,000. BECAUSE THE OFFER OF BERTER INDUSTRIES, INC., WAS SUBSTANTIALLY LOWER THAN THOSE OFFERS, THE CONTRACTING OFFICER REQUESTED YOUR PREDECESSOR COMPANY TO VERIFY THE UNIT PRICE IT QUOTED. SINCE THERE WAS NOTHING ON THE FACE OF THE BID TO INDICATE THE NATURE OF ITS MISTAKE, IF ANY, THE PROCUREMENT OFFICIALS COULD MERELY SUGGEST THE POSSIBILITY OF ERROR BY REQUESTING A VERIFICATION. IN RESPONSE TO SUCH INQUIRY THE CONTRACTOR CONFIRMED THE CORRECTNESS OF ITS OFFER BY TELEGRAM DATED APRIL 23, 1953, ON THE STRENGTH OF WHICH THE CONTRACT DATED APRIL 30, 1953, WAS CONSUMMATED. HENCE, IT IS APPARENT THAT EVEN THOUGH SUBSEQUENT DEVELOPMENTS PROVED THE OFFER TO BE UNPROFITABLE, THE CONTRACT WAS EXECUTED IN GOOD FAITH WITHOUT KNOWLEDGE OF ERROR, THUS VESTING IN THE GOVERNMENT THE RIGHT TO HAVE THE WORK PERFORMED IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT. BRAWLEY V. UNITED STATES, 96 U.S. 168. CASES INVOLVING SIMILAR CIRCUMSTANCES HAVE BEEN CONSIDERED BY THE COURTS AND IT HAS BEEN HELD REPEATEDLY THAT SUPERVENING OR UNFORESEEN EVENTS WHICH RENDERED PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASIONED A LOSS, ARE NOT SUFFICIENT TO AFFORD A CONTRACTOR RELIEF. AMONG THE MANY DECISIONS RENDERED, SEESUN PUBLISHING CO. V. MOORE, 183 U.S. 642; PENN BRIDGE CO. V. UNITED STATES, 59 C.CLS. 244; AND PACIFIC HARDWARE CO. V. UNITED STATES, 49 C.CLS. 327. OF COURSE, AFTER NEGOTIATION OF THE CONTRACT IF THE BIDDER HAD REASON TO BELIEVE THAT A MISTAKE HAD BEEN MADE EITHER BY THE CONTRACTING OFFICER OR BY ITS OWN EMPLOYEES SO THAT THE CONTRACT DID NOT EXPRESS ITS AGREEMENT IN THE MATTER THE COMPANY HAD THE RIGHT TO RESCIND THE INSTRUMENT. NOT ONLY DID THE BIDDER FAIL TO ALLEGE ERROR PRIOR TO OR AT THE TIME OF AWARD, BUT INSTEAD, IT AFFIRMED THE OFFER WHEN THE POSSIBILITY OF ERROR WAS CALLED TO ITS ATTENTION BY WAY OF THE VERIFICATION REQUEST. IN SUCH MATERIAL FACT LIES THE DISTINCTION, AMONG OTHERS, BETWEEN THE CASES CITED BY YOUR ATTORNEY, SUCH AS RAPOLLI CO. V. UNITED STATES, 98 C.CLS. 499, AND THE AUTHORITIES RELIED UPON HEREIN. ALSO, HAD PERFORMANCE BEEN REFUSED, AS WAS DONE IN SEVERAL OF THE CASES CITED IN YOUR ATTORNEY'S APPEAL, A DIFFERENT CONCLUSION MIGHT BE REACHED, BUT THERE IS NO LEGAL BASIS FOR A PARTY TO CONTRACT, PERFORM, COLLECT THE FULL CONTRACT PRICE, AND THEN REPUDIATE THE CONTRACT AND RECOVER AS IF THERE HAD BEEN NONE. BOARD OF TRUSTEES, ETC. V. O. D. WILSON CO., 133 F.2D 399.

PRESUMABLY, AT THE TIME VERIFICATION WAS REQUESTED THE PRICE QUOTED WAS RECOMPUTED BY THE BIDDER AS TO MATERIAL AND LABOR COSTS AND THE CONFIRMING ACKNOWLEDGMENT ESTABLISHES THE FACT THAT THE QUOTATION WAS AS INTENDED. APPARENTLY, THE ERROR WAS IN THE COMPANY'S MISINTERPRETATION OF THE MINIMUM REQUIREMENTS OF THE SPECIFICATIONS WHICH DOUBT SHOULD HAVE BEEN RESOLVED DURING NEGOTIATIONS OF THE CONTRACT. MUCH EMPHASIS IS PLACED UPON A STATEMENT BY A FORMER GOVERNMENT INSPECTOR WHO ADVISED THAT THE ORIGINAL PILOT PACK CONTEMPLATED BEING USED BY THE CONTRACTOR WOULD BE ACCEPTABLE. AT BEST, SUCH STATEMENT ONLY CONSTITUTED AN EXPRESSION OF OPINION BY THE FORMER EMPLOYEE, AND COULD NOT BE BINDING ON THE GOVERNMENT, PARTICULARLY SINCE THE PACKAGE INVOLVED FAILED TO MEET THE SPECIFICATIONS. THE CONTRACTOR WAS, OR SHOULD HAVE BEEN, AWARD OF THE REQUIRED TESTS SET FORTH IN THE SPECIFICATIONS TO WHICH ITS PRODUCT WOULD BE SUBJECTED PRIOR TO APPROVAL. IT IS CONCEDED THAT YOUR PREDECESSOR COMPANY FAILED TO TAKE INTO CONSIDERATION THE REQUIREMENTS OF THE DROP TEST IN DESIGNING THE PACKAGE TO BE USED IN PACKING THE STARTER ASSEMBLIES, BUT IT COULD NOT BE SERIOUSLY URGED THAT KNOWLEDGE OF SUCH CARELESSNESS OR INEXACTNESS, RESULTING IN A LESSER BID PRICE, SHOULD BE IMPUTED TO THE CONTRACTING OFFICER. THE FACT THAT THE CONTAINER ULTIMATELY CAPABLE OF MEETING THE SPECIFICATION REQUIREMENTS PROVED MORE COSTLY TO CONSTRUCT CONSTITUTES NO LEGAL BASIS FOR AUTHORIZING PAYMENT OF ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE. ALSO, THE REPRESENTATIONS MADE TO YOU, AS SUCCESSOR TO THE CONTRACT, BY ADMINISTRATIVE OFFICE PERSONNEL, RELATIVE TO THE FILING OF A FUTURE CLAIM PRESUMABLY UNDER TITLE II OF THE FIRST WAR POWERS ACT, 1941, 55 STAT. 838, AS AMENDED, CONCERN THE GRANTING OR DENIAL OF RELIEF BY THE DEPARTMENT OF THE ARMY REGARDLESS OF THE CONTRACT TERMS, AND INVOLVE MATTERS OVER WHICH THE GENERAL ACCOUNTING OFFICE HAS NO JURISDICTION.

IT IS REGRETTED THAT A LOSS HAS BEEN SUSTAINED IN THE PERFORMANCE OF THE CONTRACT BY YOU AS SUCCESSOR TO BERTER INDUSTRIES, INC., UNDER THE CORPORATE MERGER WHICH IS NOT IN ISSUE HERE; HOWEVER, SINCE THE AGREEMENT WAS LEGAL AND BINDING ON THE PARTIES, AND SINCE PERFORMANCE CONSTITUTED ONLY COMPLIANCE WITH YOUR CONTRACTUAL OBLIGATIONS, PAYMENT OF ANY AMOUNT IN ADDITION TO THE CONTRACT CONSIDERATION IS UNAUTHORIZED.

ACCORDINGLY, OUR SETTLEMENT OF FEBRUARY 2, 1956, MUST BE SUSTAINED.