B-130183, JANUARY 22, 1957, 36 COMP. GEN. 520

B-130183: Jan 22, 1957

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CAN BE GIVEN EFFECT ONLY IF THE DELIVERY PROVISIONS ARE REGARDED AS MANDATORY RATHER THAN TENTATIVE. A CONTRACTOR WHO HAS FAILED TO MEET THE DELIVERY SCHEDULE SPECIFIED IN THE CONTRACT IS PRECLUDED FROM INVOKING THE ESCALATION CLAUSE TO OBTAIN A PRICE INCREASE ON THE DELAYED DELIVERIES. INITIAL DELIVERY IS REQUIRED BY THE GOVERNMENT AT THE DESTINATION INDICATED IN THIS SCHEDULE AND THE SPECIFICATIONS BEGINNING NOT LATER THAN 1 JULY 1956 WITH COMPLETION OF ALL SHIPMENTS BY 30 AUGUST 1956. BIDDERS WILL COMPLETE PROPOSED DELIVERY INFORMATION REQUESTED BELOW AND. WILL COMMENCE DELIVERY . IN THE EVENT ALL BIDS RECEIVED ARE IN EXCESS OF THE DELIVERY REQUIREMENT INDICATED ABOVE. AWARD WILL BE MADE TO THE BIDDER WHOSE DELIVERY IS CLOSEST TO THE REQUIRED TIME OR TO THE LOWEST BIDDER OR BIDDERS WHOSE DELIVERIES ARE CONSIDERED SUFFICIENTLY CLOSE TO THE REQUIRED TIME.

B-130183, JANUARY 22, 1957, 36 COMP. GEN. 520

CONTRACTS - DELIVERY PROVISIONS - MANDATORY V. TENTATIVE - ESCALATION CLAUSE THE PROVISIONS OF A CONTRACT, WHICH REQUIRE DELIVERY IN ACCORDANCE WITH A DEFINITE SCHEDULE, SPECIFY THE RIGHTS OF THE GOVERNMENT IN EVENT THE CONTRACTOR FAILS TO ADHERE TO THE SCHEDULE, AND WHICH PERMIT AN EXTENSION OF THE DELIVERY SCHEDULE UNDER CERTAIN CIRCUMSTANCES, CAN BE GIVEN EFFECT ONLY IF THE DELIVERY PROVISIONS ARE REGARDED AS MANDATORY RATHER THAN TENTATIVE, AND THEREFORE, A CONTRACTOR WHO HAS FAILED TO MEET THE DELIVERY SCHEDULE SPECIFIED IN THE CONTRACT IS PRECLUDED FROM INVOKING THE ESCALATION CLAUSE TO OBTAIN A PRICE INCREASE ON THE DELAYED DELIVERIES.

TO J. F. SEELY, DEPARTMENT OF THE ARMY, JANUARY 22, 1957:

YOUR REQUEST FOR AN ADVANCE DECISION DATED NOVEMBER 28, 1956, CONCERNING THE PROPRIETY OF PAYMENT OF VOUCHERS TO THE COLUMBIA-GENEVA STEEL DIVISION, UNITED STATES STEEL CORPORATION, FOR $713.75 AND $2,244.59, HAS BEEN FORWARDED TO US BY SECOND ENDORSEMENT OF DECEMBER 19, 1956. YOU REQUEST A DECISION AS TO WHETHER THE VOUCHERS FOR PRICE ESCALATION UNDER CONTRACTS DA45-164 CIVENG 56-98 AND DA45-164 CIVENG 56 99 MAY BE PAID UNDER THE CIRCUMSTANCES SET OUT BELOW.

INVITATION FOR BIDS NO. CIVENG-45-164-56-38 INVITED BIDS ON CERTAIN ITEMS OF STEEL. PARAGRAPH 2 OF THE INVITATION PROVIDED:

2. DELIVERY.--- A. INITIAL DELIVERY IS REQUIRED BY THE GOVERNMENT AT THE DESTINATION INDICATED IN THIS SCHEDULE AND THE SPECIFICATIONS BEGINNING NOT LATER THAN 1 JULY 1956 WITH COMPLETION OF ALL SHIPMENTS BY 30 AUGUST 1956. BIDDERS WILL COMPLETE PROPOSED DELIVERY INFORMATION REQUESTED BELOW AND, IF UNABLE TO COMPLETE DELIVERY WITHIN THE REQUIRED TIME, SHALL INDICATE THE TIME REQUIRED BY THEM TO COMMENCE AND COMPLETE SUCH DELIVERIES. (CHECK APPLICABLE PORTION.)

DELIVERY COMPLETE WITHIN TIME SPECIFIED ABOVE --------------------; UNABLE TO COMPLETE DELIVERY WITHIN THE TIME SPECIFIED ABOVE ----------- , WILL COMMENCE DELIVERY ------------------- AND COMPLETE ALL SHIPMENTS BY -

B. IN THE EVENT ALL BIDS RECEIVED ARE IN EXCESS OF THE DELIVERY REQUIREMENT INDICATED ABOVE, AWARD WILL BE MADE TO THE BIDDER WHOSE DELIVERY IS CLOSEST TO THE REQUIRED TIME OR TO THE LOWEST BIDDER OR BIDDERS WHOSE DELIVERIES ARE CONSIDERED SUFFICIENTLY CLOSE TO THE REQUIRED TIME, WHICHEVER METHOD IS TO THE BEST INTERESTS OF THE GOVERNMENT.

C. EXCEPT AS OTHERWISE STATED IN THE BID, IT SHALL BE UNDERSTOOD THAT THE BIDDER OFFERS TO DELIVER FROM STOCKS ON HAND OR AVAILABLE TO THE BIDDER IN TIME TO PERMIT DELIVERY WITHIN THE SPECIFIED TIME. FOR ANY SUPPLIES DELIVERED AFTER THE SPECIFIED TIME AND ACCEPTED, THE PRICE PAYABLE TO THE CONTRACTOR, IF HIGHER THAN THAT AT WHICH AWARD WOULD HAVE BEEN MADE IF TIME OF DELIVERY HAD NOT BEEN A FACTOR, SHALL BE SUCH LOWER PRICE UNLESS THE DELAY IS EXCUSABLE UNDER ARTICLE 11B OR 26 OF THE GENERAL PROVISIONS ( STANDARD FORM 32).

C. PROGRESS SCHEDULE FOR DELIVERY.--- THE CONTRACTOR SHALL WITHIN 30 DAYS AFTER DATE OF AWARD, PREPARE AND SUBMIT TO THE CONTRACTING OFFICER, A PRACTICABLE SCHEDULE SHOWING THE ORDER IN WHICH THE CONTRACTOR PROPOSES TO CARRY ON THE WORK, THE DATE ON WHICH HE WILL COMMENCE THE SEVERAL SALIENT FEATURES AND THE CONTEMPLATED DATES FOR COMPLETING THE SAME. THE SCHEDULE SHALL BE IN THE FORM OF A PROGRESS CHART OF SUITABLE SCALE TO INDICATE APPROPRIATELY THE PERCENTAGE OF WORK SCHEDULED FOR COMPLETION AT ANY TIME.

BY LETTER OF JANUARY 12, 1956, WHICH BECAME PART OF ITS BID, COLUMBIA- GENEVA STEEL SUBMITTED THE FOLLOWING DELIVERY SCHEDULE FOR ITEMS 2, 3, AND 4 OF THE INVITATION COMPRISING 235 NET TONS OF TEES, WYES AND CROSSES:

235 TONS WILL BE SCHEDULED FOR LATE MAY AND EARLY JUNE 1956 SHIPMENT.

THE BID OF COLUMBIA-GENEVA STEEL WAS ACCEPTED AND THE DELIVERY SCHEDULE OFFERED BY THE BIDDER WAS ADOPTED IN THE AWARD IN THE FOLLOWING LANGUAGE:

ITEMS 2, 3 AND 4 COMPLETE, LATE MAY OR EARLY JUNE 1956.

IT DOES NOT APPEAR FROM THE RECORD THAT THE CONTRACTOR MADE ANY OBJECTION TO THE LANGUAGE IN THE AWARD CONCERNING DELIVERY.

ON JANUARY 13, 1956, NEGOTIATED CONTRACT DA-45-164-CIVENG-56-99 WAS AWARDED TO COLUMBIA-GENEVA STEEL FOR ADDITIONAL QUANTITIES OF STEEL. THE SHIPPING SCHEDULE FOR ITEM 2 IS STATED ON PAGE 1 OF THE CONTRACT AS "COMPLETE, LATE MAY OR EARLY JUNE 1956.'

CONTRACT 56-98 PROVIDES, UNDER THE GENERAL PROVISIONS AS FOLLOWS:

SECTION 29. PRICE ESCALATION

(C) THE CONTRACTOR MAY FROM TIME TO TIME AFTER THE DATE OF THIS CONTRACT AND DURING THE PERFORMANCE HEREOF, BY WRITTEN NOTICE TO THE CONTRACTING OFFICER, REQUEST AN UPWARD ADJUSTMENT IN ANY OF THE CONTRACT UNIT PRICES TO BE EFFECTIVE AS OF A DATE TO BE SPECIFIED BY THE CONTRACTOR. SUCH REQUEST SHALL BE ACTED UPON IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS CLAUSE.

(D) AN UPWARD ADJUSTMENT IN A CONTRACT UNIT PRICE MAY BE MADE UNDER THIS CLAUSE ONLY IN ACCORDANCE WITH THE FOLLOWING CONDITIONS.

(5) NO UPWARD ADJUSTMENT IN UNIT PRICES HEREUNDER SHALL APPLY TO SUPPLIES WHICH WERE REQUIRED BY THE CONTRACT DELIVERY SCHEDULE TO BE DELIVERED PRIOR TO THE EFFECTIVE DATE OF THE RELATED INCREASE IN THE APPLICABLE ESTABLISHED PRICE, UNLESS THE CONTRACTOR'S FAILURE TO DELIVER SUPPLIES IN ACCORDANCE WITH THE DELIVERY SCHEDULE RESULTS FROM CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, WITHIN THE MEANING OF PARAGRAPH (B) OF THE CLAUSE OF THIS CONTRACT ENTITLED " DEFAULT," IN WHICH CASE THE CONTRACT SHALL BE AMENDED TO MAKE AN EQUITABLE EXTENSION OF THE DELIVERY SCHEDULE.

THE IDENTICAL PROVISION IS ALSO INCLUDED IN THE NEGOTIATED CONTRACT.

ITEMS 2, 3 AND 4 OF CONTRACT 56-98 AND ITEM 2 OF CONTRACT 56-99 WERE NOT DELIVERED IN LATE MAY OR EARLY JUNE NOR WERE THEY DELIVERED BY AUGUST 15. PURSUANT TO SECTION 29 OF THE GENERAL PROVISIONS OF BOTH CONTRACTS, THE CONTRACTING OFFICER RECEIVED NOTICE ON AUGUST 15 FROM THE CONTRACTOR OF A REQUESTED INCREASE IN PRICE FOR THOSE ITEMS BECAUSE OF A GENERAL INCREASE IN PRICES. SINCE SECTION 29 (B) (5) OF BOTH CONTRACTS SPECIFICALLY PROVIDES THAT ANY UPWARD ADJUSTMENT IN PRICES UNDER THE CONTRACT SHOULD APPLY ONLY TO THOSE ITEMS TO BE DELIVERED UNDER THE CONTRACTS SUBSEQUENT TO THE EFFECTIVE DATE OF THE RELATED INCREASE, THE INCREASES WOULD NOT APPEAR TO APPLY TO THE ITEMS UNDER CONSIDERATION. THE CONTRACTOR CONTENDED IN HIS LETTER OF SEPTEMBER 27, 1956, HOWEVER, THAT THE SHIPPING SCHEDULE INCLUDED IN THE CONTRACTS WAS NOT TO BE CONSTRUED TO MEAN A FIRM COMMITMENT BUT RATHER THAT THE SCHEDULE WAS TENTATIVE. THE CONTRACTOR FURTHER INDICATES THAT THIS CONSTRUCTION OF THE DELIVERY PROVISIONS OF THE CONTRACTS IS ACCEPTED PRACTICE THROUGHOUT THE STEEL INDUSTRY.

IT IS WELL SETTLED THAT A CONTRACT SHOULD BE INTERPRETED TO GIVE EFFECT TO ALL PROVISIONS OF THE CONTRACT, WHENEVER POSSIBLE, WITHOUT VIOLATING THE PLAIN LANGUAGE OF THE CONTRACT OR THE CLEAR INTENT OF THE PARTIES. BRODERICK WOOD PROJECTS COMPANY V. UNITED STATES, 195 F.2D 433. COURTS WILL DECLARE A CONTRACT PROVISION MEANINGLESS ONLY WHEN SUCH A CONCLUSION IS LEGALLY OR FACTUALLY COMPELLED. FOX MIDWEST THEATRES V. MEANS, 221 F.2D 173. THEREFORE EVEN IF THE DELIVERY PROVISIONS IN THE INSTANT CONTRACTS BE VIEWED AS AMBIGUOUS, THE CONTRACTOR'S POSITION SHOULD NOT BE ADOPTED IF SUCH INTERPRETATION WILL RENDER OTHER PROVISIONS OF THE CONTRACT MEANINGLESS AND ANOTHER INTERPRETATION PERMITS GIVING EFFECT TO ALL PROVISIONS.

IT IS CLEAR IN VIEWING THE CONTRACT AS A WHOLE THAT THE INTENT OF THE LANGUAGE IS TO MAKE THE DELIVERY SCHEDULE BINDING ON THE PARTIES. FOR EXAMPLE, IN INVITATION FOR BIDS NO. CIVENG-45-164-56-38, THE CLEAR INTENT OF THE DELIVERY PROVISIONS, WHICH ARE QUOTED ABOVE, IS THAT TIME OF DELIVERY IS OF THE ESSENCE TO THE GOVERNMENT AND, THEREFORE, THAT ANY DELIVERY SCHEDULE ACCEPTED BY THE GOVERNMENT MUST BE CONSIDERED AS MANDATORY. FURTHER, THE LIMITATION OF ESCALATION IN SECTION 29 (D) (5) OF BOTH CONTRACTS, QUOTED ABOVE, WOULD HAVE NO MEANING UNLESS THE DELIVERY SCHEDULES WERE REGARDED AS MANDATORY. IF THE DELIVERY SCHEDULES COULD BE CHANGED AT THE INSTANCE OF THE CONTRACTOR, THE LIMITATION IN THAT SECTION WOULD NEVER BE FOR APPLICATION. FURTHER, SECTION SC1 OF THE SPECIAL CONDITIONS TO BOTH CONTRACTS SPECIFICALLY PROVIDES THAT THE CONTRACTOR "SHALL MAKE DELIVERY OF ALL MATERIAL AS HEREINBEFORE SPECIFIED.' GENERAL PROVISION 11 (A) (1) OF BOTH CONTRACTS PROVIDES THAT THE GOVERNMENT MAY TERMINATE THE CONTRACT IN WHOLE OR IN PART IF THE CONTRACTOR FAILS TO PERFORM WITHIN THE SPECIFIED TIME. GENERAL PROVISION 23, WHICH IS CONTAINED IN BOTH CONTRACTS, PROVIDES FOR AN EXTENSION OF TIME WHERE DELAY IN PERFORMANCE OF THE CONTRACT IS DUE SOLELY TO THE OPERATION OF THE GOVERNMENT PRIORITIES AND ALLOCATION SYSTEM.

THUS THE APPLICABLE PROVISIONS OF THE CONTRACTS PROVIDE THAT DELIVERY MUST BE MADE IN ACCORDANCE WITH THE DELIVERY SCHEDULE, GIVE RIGHTS TO THE GOVERNMENT IN THE EVENT THE CONTRACTOR FAILS TO ADHERE TO SUCH SCHEDULE, AND PERMIT THE EXTENSION OF THE DELIVERY SCHEDULE UNDER CERTAIN CIRCUMSTANCES. SHOULD THE DELIVERY PROVISIONS BE INTERPRETED ACCORDING TO THE CONTENTION OF THE CONTRACTOR, NONE OF THESE CITED SECTIONS WOULD HAVE MEANING SINCE THE CONTRACTOR WOULD NOT BE OBLIGATED TO MEET THE DELIVERY SCHEDULES AND, CONSEQUENTLY, NO RIGHTS WOULD ACCRUE TO THE GOVERNMENT IN THE EVENT OF A FAILURE BY THE CONTRACTOR TO DELIVER IN ACCORDANCE WITH THE SCHEDULES, NOR WOULD THERE BE NEED FOR ANY PROVISIONS WHICH WOULD PERMIT EXTENSION OF THE SCHEDULE UNDER CERTAIN SPECIFIED CIRCUMSTANCES. THE PROVISIONS CITED ABOVE CAN BE GIVEN EFFECT ONLY IF THE DELIVERY SCHEDULES ARE CONSIDERED TO BE FIRM.

THE DELIVERY PROVISIONS OF BOTH CONTRACTS MUST, THEREFORE, BE REGARDED AS MANDATORY ON THE PARTIES AND, SINCE THE REQUEST FOR UPWARD ESCALATION APPLIES TO DELIVERIES MADE SUBSEQUENT TO THE TIME THE DESIGNATED ITEMS WERE REQUIRED TO BE DELIVERED, THE ESCALATION MAY NOT BE APPLIED TO THOSE ITEMS AND THE VOUCHERS, WHICH ARE RETAINED HERE, PROPERLY MAY NOT BE PAID.