B-143384, SEP. 16, 1960

B-143384: Sep 16, 1960

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THAT CONTRACT WAS AWARDED AS A RESULT OF YOUR BID IN RESPONSE TO INVITATION NO. YOUR COMPANY WAS AWARDED A CONTRACT FOR ITEMS 222 THROUGH 416. THE GENERAL SERVICES ADMINISTRATION IS OBLIGATED. THE CONTRACTOR IS OBLIGATED TO DELIVER HEREUNDER ALL SUCH QUANTITIES AS MAY BE SO ORDERED FROM TIME TO TIME. THE ESTIMATED QUANTITIES SHOWN ARE FOR INFORMATION OF BIDDERS ONLY. "MINIMUM GUARANTEED QUANTITIES: MINIMUM GUARANTEED QUANTITIES ARE SPECIFIED FOR EACH ITEM ON WHICH THE GOVERNMENT IS OBLIGATED TO PLACE ORDERS DURING THE CONTRACT PERIOD. "ESTIMATED QUANTITIES: THE ESTIMATED QUANTITIES SHOWN FOR EACH DESTINATION ARE STATISTICAL ESTIMATES FOR THE CONTRACT PERIOD. MINIMUM GUARANTEED QUANTITIES THAT THE GOVERNMENT WILL BE OBLIGATED TO PURCHASE WILL APPLY ONLY TO THE STOCK ITEM AND NOT TO THE ESTIMATED QUANTITY WHICH MAY BE SHOWN FOR CERTAIN GSA STORES DEPOTS.

B-143384, SEP. 16, 1960

TO JANUARY AND WOOD COMPANY, INCORPORATED:

YOUR LETTER OF JUNE 27, 1960, AND SUBSEQUENT LETTERS OF JULY 20, 1960, AUGUST 1, 1960, AND AUGUST 9, 1960, REQUEST RELIEF FROM THE PROVISIONS OF GENERAL SERVICES ADMINISTRATION CONTRACT NO. GS-00S 23453.

THAT CONTRACT WAS AWARDED AS A RESULT OF YOUR BID IN RESPONSE TO INVITATION NO. FN-7L-19101-A-5-27-59, FOR GSA'S REQUIREMENTS OF COTTON CORD, ROPE, AND TWINE FOR THE PERIOD AUGUST 1, 1959 TO JULY 31, 1960. LOW BIDDER ON CERTAIN ITEMS, YOUR COMPANY WAS AWARDED A CONTRACT FOR ITEMS 222 THROUGH 416.

THE INVITATION INCLUDED THE FOLLOWING PROVISIONS:

"SCOPE OF CONTRACT. THIS CONTRACT PROVIDES FOR THE NORMAL SUPPLY REQUIREMENTS OF THE GENERAL SERVICES ADMINISTRATION STORES DEPOTS DURING THE PERIOD FROM AUGUST 1, 1959 THROUGH JULY 31, 1960. THE QUANTITIES SHOWN REPRESENT THE ESTIMATED REQUIREMENTS FOR EACH ITEM DURING THE CONTRACT PERIOD. THE GENERAL SERVICES ADMINISTRATION IS OBLIGATED, EXCEPT IN EMERGENCIES TO ORDER HEREUNDER SUCH QUANTITIES AS MAY BE NEEDED FROM TIME TO TIME TO FILL ANY GENERAL SERVICES ADMINISTRATION STORES DEPOT REQUIREMENTS DETERMINED IN ACCORDANCE WITH THE CURRENTLY APPLICABLE PROCUREMENT AND SUPPLY PROCEDURES. EXCEPT AS OTHERWISE HEREIN PROVIDED, THE CONTRACTOR IS OBLIGATED TO DELIVER HEREUNDER ALL SUCH QUANTITIES AS MAY BE SO ORDERED FROM TIME TO TIME. THE ESTIMATED QUANTITIES SHOWN ARE FOR INFORMATION OF BIDDERS ONLY, AND SHALL NOT RELIEVE THE CONTRACTOR OF HIS OBLIGATION TO FILL ALL ORDERS WHICH MAY BE PLACED HEREUNDER.

"MINIMUM GUARANTEED QUANTITIES: MINIMUM GUARANTEED QUANTITIES ARE SPECIFIED FOR EACH ITEM ON WHICH THE GOVERNMENT IS OBLIGATED TO PLACE ORDERS DURING THE CONTRACT PERIOD. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT TO DEFER SHIPMENT ON ANY UNORDERED MINIMUM GUARANTEED QUANTITIES FOR 60 DAYS FOLLOWING THE EXPIRATION DATE OF THE CONTRACT.

"ESTIMATED QUANTITIES: THE ESTIMATED QUANTITIES SHOWN FOR EACH DESTINATION ARE STATISTICAL ESTIMATES FOR THE CONTRACT PERIOD, BASED ON PREVIOUS STORES SALES. MINIMUM GUARANTEED QUANTITIES THAT THE GOVERNMENT WILL BE OBLIGATED TO PURCHASE WILL APPLY ONLY TO THE STOCK ITEM AND NOT TO THE ESTIMATED QUANTITY WHICH MAY BE SHOWN FOR CERTAIN GSA STORES DEPOTS. TOTAL PRODUCTION CAPABILITY SHOULD NOT BE LESS THAN THAT REQUIRED TO MEET TOTAL QUANTITIES ESTIMATED FOR THE CONTRACT PERIOD. BIDDER THEREFORE SHALL INDICATE THE MAXIMUM QUANTITY PER MONTH FOR EACH STOCK ITEM WHICH HE CAN MAKE AVAILABLE FOR GSA REQUIREMENTS. IN THE ABSENCE OF ANY INSERTION IN THE SPACE, IT IS UNDERSTOOD AND AGREED THAT THE BIDDER STANDS READY TO DELIVER ANY QUANTITIES ORDERED WHICH ARE NOT AT VARIANCE WITH OTHER TERMS AND CONDITIONS OF THIS CONTRACT.'

IN YOUR BID, YOU SET FORTH NO FIGURES REGARDING YOUR TOTAL PRODUCTION CAPABILITY. INSTEAD, YOU ENTERED DASHES IN THE SPACES PROVIDED FOR MAXIMUM MONTHLY QUANTITIES.

YOU PROCEEDED WITH DELIVERIES UNDER THE CONTRACT DURING THE FIRST SIX MONTHS OF THE TERM, BUT ON FEBRUARY 1, 1960, DUE TO AN INCREASE IN RAW COTTON PRICES, YOU WROTE TO GSA TO REQUEST RELIEF FROM CONTINUING DELIVERIES AT THE CONTRACT PRICE. YOUR LETTER POINTED OUT THAT ORDERS FOR THE FIRST SIX MONTHS OF THE CONTRACT PERIOD HAD EXCEEDED THE MINIMUM QUANTITY GUARANTEED IN THE CONTRACT.

ON APRIL 4, 1960, YOU AGAIN WROTE TO GSA TO REQUEST RELIEF, STATING THAT A WAGE INCREASE TO YOUR EMPLOYEES ON MARCH 28, 1960, HAD FURTHER INCREASED YOUR COSTS. YOU NOTED THAT ORDERS ON MARCH 31, 1960, HAD EXCEEDED THE ORIGINAL ESTIMATED AMOUNT OF 270,000 POUNDS. YOU ASKED FOR RELIEF ON THE BALANCE OF APPROXIMATELY 100,000 POUNDS WHICH IT WAS ESTIMATED WOULD BE ORDERED DURING THE REMAINDER OF THE CONTRACT. YOU STATED THAT AN INCREASE OF FOUR CENTS PER POUND WOULD ENABLE YOU TO OPERATE ON A "BREAK EVEN" BASIS.

AFTER THESE REQUESTS WERE DENIED BY GSA, YOU WROTE TO OUR OFFICE ON JUNE 27, 1960, TO ASK OUR OPINION REGARDING YOUR REQUEST FOR RELIEF. IN THAT LETTER YOU DESCRIBED THE ESTIMATED QUANTITY OF 270,000 POUNDS AS THE "ESTIMATED MAXIMUM QUANTITY" AND STATED THAT ORDERS UNDER THE CONTRACT AMOUNTED TO 390,098 POUNDS AS OF JUNE 27, 1960. YOU NOTED THAT BIDS FOR GSA'S REQUIREMENTS FOR 1960-1961 WERE OPENED ON MAY 24, 1960, AND THE AWARD WAS SOME FOUR CENTS PER POUND HIGHER THAN THE PRICE IN YOUR CONTRACT.

YOUR LETTER OF AUGUST 9, 1960, FURNISHED FIGURES WHICH SHOW THAT A TOTAL OF 437,786 POUNDS HAD BEEN ORDERED BY GSA AT THE END OF THE CONTRACT PERIOD AS COMPARED WITH WHAT YOU DESCRIBE AS "GSA ESTIMATED MAXIMUM" OF 270,900 POUNDS.

THE LANGUAGE OF THE CONTRACT INDICATES THAT ESTIMATED QUANTITIES ARE FOR INFORMATION ONLY AND ,SHALL NOT RELIEVE THE CONTRACTOR OF HIS OBLIGATION TO FILL ALL ORDERS WHICH MAY BE PLACED HEREUNDER.' THERE IS NO SUPPORT FOR YOUR INTERPRETATION OF THE ESTIMATED QUANTITIES AS "MAXIMUM" QUANTITIES. THE WORD "MAXIMUM" APPEARS ONLY IN CONNECTION WITH THE OPPORTUNITY WHICH WAS AFFORDED TO YOU TO INDICATE YOUR TOTAL PRODUCTION CAPABILITY. WHEN YOU ENTERED NO FIGURES IN THE SPACES PROVIDED FOR THE MAXIMUM QUANTITY PER MONTH FOR EACH STOCK ITEM WHICH YOU COULD MAKE AVAILABLE FOR GSA REQUIREMENTS, YOU INDICATED, BY THE SPECIFIC TERMS OF THE CONTRACT, THAT YOU AGREED TO STAND READY TO DELIVER ANY QUANTITIES ORDERED WHICH WERE NOT AT VARIANCE WITH OTHER TERMS AND CONDITIONS OF THE CONTRACT.

IN A REQUIREMENTS CONTRACT SUCH AS THIS WHERE THE CONTRACT PROVIDES THAT THE QUANTITIES MENTIONED ARE ESTIMATES ONLY AND THE MEASURE OF GOODS TO BE ORDERED MUST BE THE NEEDS OF THE BUYER, THE COURTS HAVE HELD THAT THERE MAY BE SUBSTANTIAL VARIATIONS FROM THE ESTIMATES AS LONG AS THE BUYER ACTS IN GOOD FAITH. BRAWLEY V. UNITED STATES, 96 U.S. 168; WALTERS V. UNITED STATES, 131 CT.CL. 218; SHADER CONTRACTORS, INC.,ET AL. V. UNITED STATES, CT.CL. NO. 186-58, DECIDED APRIL 6, 1960.

WHILE MARKET CONDITIONS MAY RESULT IN AN ECONOMIC LOSS TO A PARTY TO A REQUIREMENTS CONTRACT IN WHICH THE UNIT PRICE IS FIXED, THE COURTS WILL NOT INHIBIT THE PERFORMANCE OF SUCH A CONTRACT AS LONG AS THE OTHER PARTY'S ACTIONS MEET THE TEST OF GOOD FAITH. STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677; CARSTENS PACKING CO. V. UNITED STATES, 52 CT.CL. 430.

IT HAS BEEN HELD THAT A CONTRACT TO SUPPLY ALL OF A BUYER'S REQUIREMENTS OF MALT FOR A CERTAIN PERIOD WAS NOT COMPLIED WITH BY DELIVERY OF 20,000 BUSHELS OF MALT, NOTWITHSTANDING THE CONTRACT PROVIDED THAT "THE AMOUNT OF MALT TO BE USED WILL BE BETWEEN 15,000 AND 20,000 BUSHELS," WHERE THE ACTUAL REQUIREMENTS OF THE BUYER WERE IN EXCESS OF 20,000 BUSHELS. MARX V. AMERICAN MALTING CO., 169 F. 582. IN WOLFF V. WELLS FARGO AND CO., 115 F. 32, WHERE THE CONTRACT WAS TO FURNISH ALL THE CEMENT THE BUYER SHOULD REQUIRE FOR THE CONSTRUCTION OF A BUILDING, "ABOUT 5,000 BARRELS, MORE OR LESS," AND THE SELLER DELIVERED 5,000 BARRELS OF CEMENT BUT REFUSED TO MAKE FURTHER DELIVERIES, THE BUYER WAS AWARDED DAMAGES FOR THE FAILURE OF THE SELLER TO FURNISH 2,925 ADDITIONAL BARRELS REQUIRED IN THE CONSTRUCTION OF THE BUILDING.

THE PRESENT CASE FALLS SQUARELY WITHIN THE RULE APPLIED IN THE MARX AND WOLFF CASES. THE CONTRACT SETS FORTH IN EXPLICIT TERMS THAT THE ESTIMATED AMOUNTS ARE FOR INFORMATION ONLY AND THE MEASURE OF GOODS TO BE ORDERED WILL BE THE REQUIREMENTS OF GSA. THE RIGHT OF GSA TO ORDER ITS REQUIREMENTS IN EXCESS OF THE ESTIMATED AMOUNTS CANNOT BE QUESTIONED AS LONG AS IT ACTS IN GOOD FAITH IN DETERMINING THOSE REQUIREMENTS. ALTHOUGH YOU CONTEND THAT PURCHASES IN EXCESS OF THE ESTIMATED AMOUNTS CONSTITUTE "STOCK PILING" IN ANTICIPATION OF A HIGHER PRICE UNDER THE CONTRACT BEGINNING AUGUST 1, 1960, YOU HAVE FURNISHED NO EVIDENCE TO SUPPORT THIS STATEMENT. THERE IS NOTHING IN THE RECORD BEFORE US TO SUPPORT YOUR CONTENTION THAT GSA'S ORDERS UNDER THE CONTRACT EXCEEDED ITS REQUIREMENTS.

WITH REGARD TO YOUR REQUEST FOR REFORMATION OF THE CONTRACT TO PROVIDE FOR AN INCREASE IN PRICE TO COVER YOUR INCREASE IN MATERIAL AND LABOR COSTS, WE FIND NO LEGAL BASIS FOR SUCH ACTION. OFFICERS OF THE GOVERNMENT DO NOT HAVE AUTHORITY TO REFORM, AMEND OR MODIFY EXISTING CONTRACTS UNLESS THE GOVERNMENT RECEIVES A COMPENSATING BENEFIT OR CONSIDERATION. SEE SIMPSON V. UNITED STATES, 172 U.S. 372; J. J. PREIS AND CO. V. UNITED STATES, 58 CT.CL. 81; VULCANITE CEMENT CO. V. UNITED STATES, 74 CT.CL. 692. WHILE YOU HAVE APPARENTLY ENCOUNTERED HARDSHIP IN PERFORMANCE OF THE CONTRACT, CONSIDERATIONS OF SYMPATHY FOR THE MISFORTUNES OF A CONTRACTOR DO NOT AUTHORIZE AN EXCEPTION TO APPLICABLE LEGAL PRINCIPLES.

UNDER THE CIRCUMSTANCES, WE MUST CONCLUDE THAT THE ORDERS PLACED BY GSA ARE WITHIN THE TERMS OF THE CONTRACT AND THERE IS NO BASIS FOR GRANTING RELIEF IN THE FORM OF AN INCREASE IN PRICE FOR ANY OF THE ITEMS ORDERED.