B-135104, APRIL 17, 1958, 37 COMP. GEN. 688

B-135104: Apr 17, 1958

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REQUIREMENTS CONTRACTS - AMOUNTS - INDEFINITE - CONTRACTOR'S LIABILITY UNDER A CONTRACT WHICH PROVIDES THAT THE STATED QUANTITIES ARE ONLY ESTIMATES AND ARE NOT TO BE CONSIDERED AS A GUARANTY OF THE EXACT NUMBER OF ITEMS TO BE FURNISHED. IN THE ABSENCE OF EVIDENCE THAT THE ESTIMATES WERE BASED ON OTHER THAN THE BEST INFORMATION AVAILABLE. ALTHOUGH A CONTRACTOR'S CLAIM FOR A PRICE ADJUSTMENT DUE TO A SHARP REDUCTION IN THE REQUIREMENTS OF THE GOVERNMENT UNDER A REQUIREMENTS CONTRACT WHICH PROVIDES THAT THE STATED QUANTITIES ARE ONLY ESTIMATES MAY NOT BE CONSIDERED UNDER THE MERITORIOUS CLAIMS ACT OF APRIL 10. UNTIL THE CONTRACT IS COMPLETED. A CLAIM FOR LOSS AT THAT TIME WHEN THE GOVERNMENT HAS RECEIVED NO MORE THAN IT WAS ENTITLED TO DOES NOT CONTAIN ANY ELEMENTS OF EQUITY TO JUSTIFY REPORTING IT TO CONGRESS UNDER 31 U.S.C. 236.

B-135104, APRIL 17, 1958, 37 COMP. GEN. 688

REQUIREMENTS CONTRACTS - AMOUNTS - INDEFINITE - CONTRACTOR'S LIABILITY UNDER A CONTRACT WHICH PROVIDES THAT THE STATED QUANTITIES ARE ONLY ESTIMATES AND ARE NOT TO BE CONSIDERED AS A GUARANTY OF THE EXACT NUMBER OF ITEMS TO BE FURNISHED, THE GOVERNMENT HAS A RIGHT TO REQUIRE LESS THAN THE ESTIMATES AND THE CONTRACTOR ASSUMES THE RISK OF VARIATIONS FROM THE ESTIMATE SO THAT THE FACT THAT A REQUIREMENTS CONTRACT HAS BECOME UNPROFITABLE DUE TO A SHARP REDUCTION IN THE QUANTITIES NEEDED DOES NOT JUSTIFY A PRICE ADJUSTMENT, IN THE ABSENCE OF EVIDENCE THAT THE ESTIMATES WERE BASED ON OTHER THAN THE BEST INFORMATION AVAILABLE. ALTHOUGH A CONTRACTOR'S CLAIM FOR A PRICE ADJUSTMENT DUE TO A SHARP REDUCTION IN THE REQUIREMENTS OF THE GOVERNMENT UNDER A REQUIREMENTS CONTRACT WHICH PROVIDES THAT THE STATED QUANTITIES ARE ONLY ESTIMATES MAY NOT BE CONSIDERED UNDER THE MERITORIOUS CLAIMS ACT OF APRIL 10, 1928, 31 U.S.C. 236, UNTIL THE CONTRACT IS COMPLETED, A CLAIM FOR LOSS AT THAT TIME WHEN THE GOVERNMENT HAS RECEIVED NO MORE THAN IT WAS ENTITLED TO DOES NOT CONTAIN ANY ELEMENTS OF EQUITY TO JUSTIFY REPORTING IT TO CONGRESS UNDER 31 U.S.C. 236.

TO IRA GELBER, APRIL 17, 1958:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 23, 1958, WITH ENCLOSURES, REQUESTING REFORMATION OF CONTRACT NO. DA-09-200-AIII-2061 FOR FURNISHING MEALS TO PREINDUCTEES, INDUCTEES, ACCEPTED APPLICANTS AND ENLISTEES AT THE UNITED STATES ARMY RECRUITING MAIN STATION, MONTGOMERY, ALABAMA, DURING THE PERIOD JULY 1, 1957, THROUGH JUNE 30, 1958, BY ADJUSTING THE UNIT PRICES STIPULATED IN THE CONTRACT TO PROVIDE FOR HIGHER PRICES WHEN THE GOVERNMENT DOES NOT REQUIRE THE NUMBER OF MEALS ESTIMATED IN THE CONTRACT.

THE FACE SHEET OF THE CONTRACT STATES: SERVICES, MEALS, * * * FOR THE PERIOD 1 JULY 1957 THROUGH 30 JUNE 1958. * * *

ESTIMATED

BREAKFAST------------------------------------------- 25,000

DINNER---------------------------------------------- 28,000

SUPPER---------------------------------------------- 27,000

THE SPECIAL CONDITIONS, INSOFAR AS PERTINENT, PROVIDE:

CHART 8. ESTIMATED REQUIREMENTS:

ESTIMATED NUMBER OF MEALS PER DAY TO BE SERVED, MONDAYS THROUGH

FRIDAYS:

BREAKFAST----------------------------------------- 70

DINNER-------------------------------------------- 95

SUPPER-------------------------------------------- 105 NOTE: ESTIMATED NUMBER OF MEALS TO BE FURNISHED ON SATURDAYS:

BREAKFAST-------------------------------------------- 17

DINNER----------------------------------------------- 5

(FOREGOING IS AN ESTIMATE ONLY, AND THE GOVERNMENT CANNOT BE OBLIGATED TO USE THE ABOVE ESTIMATED SERVICES. THE GOVERNMENT WILL ADVISE THE CONTRACTOR EACH DAY, AT THE EARLIEST TIME POSSIBLE OF THE ESTIMATED NUMBER OF MEALS TO BE SERVED THE FOLLOWING DAY.)

10. VARIATIONS:

THE QUANTITIES OF THE VARIOUS ARTICLES LISTED ARE BASED UPON THE BEST INFORMATION OBTAINABLE AND REPRESENT THE ESTIMATED AND NOT THE ACTUAL AMOUNTS FOR WHICH SERVICES MAY BE REQUIRED DURING THE PERIOD STATED IN THIS CONTRACT. THE FACT THAT SPECIFIC QUANTITIES CANNOT BE DETERMINED AND GIVEN IN THIS CONTRACT WILL NOT RELIEVE THE GOVERNMENT OF ITS OBLIGATION TO ORDER FROM THE CONTRACTOR ALL OF THE SERVICES, WHICH, IN THE JUDGMENT OF THE CONTRACTING OFFICER, MAY BE NEEDED AND SHALL NOT IN ANY CASE RELIEVE THE CONTRACTOR OF HIS OBLIGATION TO FILL ALL ORDERS FOR SERVICES WHICH HE MAY BE REQUIRED TO FURNISH DURING THE CONTRACT PERIOD. SERVICES FOR THE ESTIMATED QUANTITIES WHICH ARE NOT ORDERED FOR A DELIVERY PRIOR TO EXPIRATION OF THE PERIOD SPECIFIED WILL BE AUTOMATICALLY CANCELED.

BEGINNING WITH AUGUST 1957, THERE WAS A SHARP REDUCTION IN INDUCTION AND ENLISTMENT ACTIVITIES WITH A RESULTANT DECREASE IN THE NUMBER OF MEALS REQUIRED TO BE SERVED AT THE UNITED STATES ARMY RECRUITING MAIN STATION. THE MEALS SERVED NUMBERED LESS THAN THE MEALS ESTIMATED IN THE CONTRACT. YOU CONTEND THAT AS A RESULT OF THESE CIRCUMSTANCES YOU HAVE BEEN OPERATING AT A DEFICIT SINCE SEPTEMBER 1957 AND YOU REQUEST THAT THE CONTRACT BE ADJUSTED TO PROVIDE FOR PAYMENT ON A SLIDING SCALE RETROACTIVE TO OCTOBER 1, 1957.

THE LANGUAGE OF THE CONTRACT INDICATES THAT THE STATED QUANTITIES ARE ESTIMATES ONLY AND ARE NOT TO BE CONSIDERED EXACT FIGURES OR GUARANTY OF THE EXACT NUMBER OF MEALS THAT ARE TO BE REQUIRED. THE GOVERNMENT IS ONLY OBLIGATED TO ORDER ITS ACTUAL REQUIREMENTS. CLEARLY, THEN, UNDER THE SPECIFIC TERMS OF THE CONTRACT, THE GOVERNMENT, DEPENDING UPON ITS OWN NEEDS, HAS A RIGHT TO REQUIRE LESS THAN THE ESTIMATED NUMBER OF MEALS AND THE CONTRACTOR ASSUMES THE RISK THAT THE GOVERNMENT'S REQUIREMENTS WILL APPROACH OR EXCEED THE ESTIMATE.

HISTORICALLY, INDUCTION AND ENLISTMENT ACTIVITIES HAVE BEEN VARIABLE. THEREFORE, WHEN THE CONTRACT WAS MADE, IT WAS REASONABLY FORESEEABLE TO THE CONTRACTOR THAT THE GOVERNMENT'S NEEDS MIGHT EITHER EXCEED OR FALL SHORT OF THE CONTRACT ESTIMATE.

"REQUIREMENTS" CONTRACTS ARE VALID CONTRACTS. 1 CORBIN ON CONTRACTS 156; 1 WILLISTON ON CONTRACTS 104A; AND 2 WILLISTON ON SALES 464. IN BRAWLEY V. UNITED STATES, 96 U.S. 168, A CASE SIMILAR TO THE INSTANT MATTER, THE CONTRACT ENTERED INTO BY THE CLAIMANT WITH THE GOVERNMENT CALLED FOR THE DELIVERY OF 880 CORDS OF WOOD "MORE OR LESS, AS SHALL BE DETERMINED TO BE NECESSARY, BY THE POST COMMANDER, FOR THE REGULAR SUPPLY, IN ACCORDANCE WITH ARMY REGULATIONS, OF THE TROOPS AND EMPLOYEES OF THE GARRISON OF SAID POST, FOR THE FISCAL YEAR BEGINNING JULY 1, 1871.' FOUR DAYS AFTER THE CONTRACT WAS SIGNED, THE POST COMMANDER NOTIFIED THE CLAIMANT THAT ONLY 40 CORDS OF WOOD WOULD BE REQUIRED, AND DURING THE FISCAL YEAR THE POST DID NOT REQUIRE ANY MORE. THE COURT, IN HOLDING THAT THE GOVERNMENT WAS NOT LIABLE FOR ANY MORE WOOD THAN IT REQUIRED AND WAS DELIVERED TO IT, SAID:

* * * THE CONTRACT WAS NOT FOR THE DELIVERY FOR ANY PARTICULAR LOT, OR ANY PARTICULAR QUANTITY, * * * AND THE QUANTITY DESIGNATED, * * * TO BE REGARDED MERELY AS AN ESTIMATE OF WHAT THE OFFICER MAKING THE CONTRACT AT THE TIME SUPPOSED MIGHT BE REQUIRED. ID. AT 173.

* * * THE VARIATION FROM THE QUANTITY NAMED WILL DEPEND UPON HIS (BUYER- S) DISCRETION AND REQUIREMENTS, SO LONG AS HE ACTS IN GOOD FAITH. ID. AT 172.

AND FURTHER, THE COURT SAID IT COULD NOT "ALTER OR MODIFY THE PLAIN LANGUAGE WHICH THEY (THE CONTRACTING PARTIES) HAVE USED.' ID. AT 174.

WHEN DURING THE TERM OF A "REQUIREMENTS" CONTRACT, THE BUYER'S ACTUAL REQUIREMENTS TAPER OFF, DIMINISH OR ALTOGETHER CEASE BECAUSE OF A CHANGE IN NEEDS, NO PROMISE TO CONTINUE TO HAVE REQUIREMENTS WILL BE READ INTO THE CONTRACT, NOR WILL THE SITUATION BE TREATED AS A BREACH OF CONTRACT, SINCE THE BUYER DID NOT AGREE TO PURCHASE ANY SPECIFIC QUANTITY, BUT ONLY HIS REQUIREMENTS. SEE IN RE UNITED CIGAR STORES CO., 8 F. SUPP. 243, 244- 245. ALSO, TO SIMILAR EFFECT IS ROYAL PAPER BOX CO. V. E. R. APT SHORE CO., 195 N.E. 96, 98, WHEREIN THE COURT CITING THE BRAWLEY CASE, SUPRA, SAID:

* * * IF BUSINESS CONDITIONS * * * RESULTED IN REDUCING THE DEFENDANT'S (BUYER-S) REQUIREMENTS FOR THE BALANCE OF THE YEAR FAR BELOW THE APPROXIMATE ESTIMATE THAT IS THE MISFORTUNE OF THE PLAINTIFF (SELLER) AND ANY LOSS TO IT IS A CONSEQUENCE OF THE KIND OF AGREEMENT INTO WHICH IT ENTERED.

OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO AMEND OR TO MODIFY EXISTING CONTRACTS UNLESS A COMPENSATING BENEFIT OR CONSIDERATION RESULTS TO THE UNITED STATES. SEE J. J. PREIS AND CO. V. UNITED STATES, 58 C.1CLS. 81, 87, AND VULCANITE CEMENT CO. V. UNITED STATES, 74 C.1CLS. 692, 705. WHILE IT IS REGRETTED THAT YOU ARE LOSING MONEY IN THE PERFORMANCE OF THE CONTRACT, CONSIDERATIONS OF SYMPATHY FOR THE MISFORTUNE OF A CONTRACTOR DO NOT AUTHORIZE AN EXCEPTION TO APPLICABLE LEGAL PRINCIPLES.

WITH REGARD TO YOUR REQUEST FOR A REFORMATION OF THE CONTRACT TO PROVIDE FOR AN INCREASE IN PRICES, THERE IS NO LEGAL JUSTIFICATION FOR SUCH ACTION HERE. REFORMATION OF A WRITTEN INSTRUMENT MUST BE PREDICATED UPON THE MUTUAL MISTAKE OF THE PARTIES, AS WHERE THE CONTRACT REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL INTENTION OF THE PARTIES AND IT IS ESTABLISHED CLEARLY WHAT THE CONTRACT ACTUALLY WAS OR WOULD HAVE BEEN BUT FOR THE MISTAKE. SEE 20 COMP. GEN. 533, 537, AND 30 ID. 220, 221. HOWEVER, IN THE PRESENT MATTER, THERE CAN BE NO DOUBT THAT THE AWARDED CONTRACT WAS THE INTENDED AGREEMENT OF THE PARTIES.

THERE HAS BEEN SUGGESTED YOUR POSSIBLE ENTITLEMENT TO RELIEF UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, 31 U.S.C. 236, WHICH PROVIDES- -

THAT WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON.

WHILE THAT ACT AUTHORIZES OUR OFFICE TO REPORT TO THE CONGRESS FOR ITS CONSIDERATION CERTAIN CLAIMS FILED IN THE GENERAL ACCOUNTING OFFICE THE PROVISIONS OF THE ACT MAY BE INVOKED ONLY WHEN IT IS DETERMINED DEFINITELY THAT THE CLAIM "CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS.' TECHNICALLY YOU WOULD NOT HAVE A CLAIM WITHIN THE PURVIEW OF THE ACT UNTIL AFTER THE CONTRACT WAS COMPLETED, SINCE UNTIL THAT TIME THE EXTENT OF THE AMOUNT OF YOUR DEMAND WOULD BE UNCERTAIN. NEVERTHELESS, EVEN IF AT THAT TIME THE PERFORMANCE OF THE CONTRACT HAD RESULTED IN A LOSS INSTEAD OF A PROFIT, THAT WOULD NOT BE A JUSTIFIABLE EXCUSE OR EXTENUATING CIRCUMSTANCE THAT WOULD WARRANT OUR REFERRING THE MATTER TO THE CONGRESS AS AN EQUITABLE CLAIM. 9 COMP. GEN. 378. HERE THE GOVERNMENT IS RECEIVING NO MORE THAN IT IS ENTITLED TO RECEIVE UNDER THE CONTRACT, AS ALL THE SERVICES PERFORMED AND FURNISHED ARE WITHIN THE "FOUR CORNERS" OF THE CONTRACT. THEREFORE, YOUR CLAIM COULD NOT BE SAID TO CONTAIN SUCH ELEMENTS OF EQUITY AS TO JUSTIFY SUBMISSION OF IT TO THE CONGRESS PURSUANT TO THE ACT OF APRIL 10, 1928.

UNDER THE CIRCUMSTANCES, AND SINCE THERE IS NO INDICATION IN THE RECORD BEFORE US THAT THE NUMBER OF MEALS ESTIMATED WAS BASED ON OTHER THAN THE BEST INFORMATION AVAILABLE AT THE TIME OF CONTRACTING, AS REPRESENTED IN THE CONTRACT, WE ARE COMPELLED TO CONCLUDE THAT YOU ARE REQUIRED TO CONTINUE TO PERFORM YOUR OBLIGATIONS UNDER YOUR CONTRACT AT THE PRICES PROVIDED THEREIN.