B-158536, MAY 16, 1966, 45 COMP. GEN. 698

B-158536: May 16, 1966

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THE FACT THAT AN EARLIER INVITATION WAS CANCELED BECAUSE OF A MISTAKE IN THE ESTIMATED NUMBER OF MEALS. THE ESTIMATE REVISED AND READVERTISED MAY NOT REASONABLY BE RELIED ON AS A REPRESENTATION THAT THE ESTIMATE UPON WHICH THE CONTRACT WAS AWARDED WAS ACCURATE WITHIN ANY PARTICULAR DEGREE OR PERCENTAGE. ABSENT AN INDICATION IN THE RECORD THAT THE NUMBER OF MEALS ESTIMATED WAS BASED ON OTHER THAN THE BEST INFORMATION AVAILABLE AT THE TIME OF CONTRACTING. A DEVIATION OF ONE THIRD IN THE ACTUAL REQUIREMENTS IS NOT UNREASONABLE AND THERE IS NO BASIS UPON WHICH TO GRANT AN UPWARD ADJUSTMENT IN THE AMOUNT PAID UNDER THE CONTRACT. 1966: FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 15. THE CONTRACT WAS AWARDED IN THE ESTIMATED AMOUNT OF $433.

B-158536, MAY 16, 1966, 45 COMP. GEN. 698

CONTRACTS - REQUIREMENTS - ESTIMATED AMOUNTS NOT WARRANTY WHEN THE NUMBER OF MEALS SUPPLIED UNDER A 1-YEAR REQUIREMENTS CONTRACT APPROXIMATES ONLY TWO-THIRDS OF THE GOVERNMENT'S ESTIMATE, AN UPWARD PRICE ADJUSTMENT TO THE CONTRACTOR MAY NOT BE AUTHORIZED, THE ESTIMATE OF MEALS TO BE FURNISHED HAVING BEEN MADE IN GOOD FAITH, THE FACT THAT AN EARLIER INVITATION WAS CANCELED BECAUSE OF A MISTAKE IN THE ESTIMATED NUMBER OF MEALS, THE ESTIMATE REVISED AND READVERTISED MAY NOT REASONABLY BE RELIED ON AS A REPRESENTATION THAT THE ESTIMATE UPON WHICH THE CONTRACT WAS AWARDED WAS ACCURATE WITHIN ANY PARTICULAR DEGREE OR PERCENTAGE; THEREFORE, ABSENT AN INDICATION IN THE RECORD THAT THE NUMBER OF MEALS ESTIMATED WAS BASED ON OTHER THAN THE BEST INFORMATION AVAILABLE AT THE TIME OF CONTRACTING, A DEVIATION OF ONE THIRD IN THE ACTUAL REQUIREMENTS IS NOT UNREASONABLE AND THERE IS NO BASIS UPON WHICH TO GRANT AN UPWARD ADJUSTMENT IN THE AMOUNT PAID UNDER THE CONTRACT.

TO COVINGTON AND BURLING, MAY 16, 1966:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 15, 1966, ON BEHALF OF IRA GELBER, REQUESTING AN UPWARD ADJUSTMENT OF THE AMOUNT PAID UNDER CONTRACT NO. DA-01-021-AMC-392 (Z) FOR SUPPLYING FOOD SERVICES TO THE ARMY AT REDSTONE ARSENAL, ALABAMA. THE CONTRACT WAS AWARDED IN THE ESTIMATED AMOUNT OF $433,330.56, THE AMOUNT OF MR. GELBER'S BID, AND THE PAYMENTS ACTUALLY RECEIVED WERE APPROXIMATELY $150,000 LESS THAN THIS AMOUNT.

THE INVITATION PURSUANT TO WHICH THE SUBJECT CONTRACT WAS AWARDED ON JUNE 25, 1964, THE TERMS OF WHICH WERE INCORPORATED THEREIN BY REFERENCE, WAS ISSUED ON MAY 25, 1964, AND CALLED FOR BIDS ON FURNISHING THE "REQUIREMENTS OF THIS AGENCY DURING THE PERIOD 1 JULY 1964 THROUGH 30 JUNE 1965 FOR FOUR (4) ITEMS OF CIVILIAN MESS ATTENDANT SERVICES WHICH ARE SPECIFIED ON PAGE 2, AND ARE FOR ALL MESS OPERATED WITH CIVILIAN MESS ATTENDANTS.' IMMEDIATELY ABOVE THIS LANGUAGE IS NOTICE THAT THIS IS A "REQUIREMENTS CONTRACT.' HEADING THE COLUMN FOR THE NUMBER OF MEALS AT EACH OF THE FOUR MESSES IS THE PHRASE,"TOTAL ESTIMATED QUANTITY," AND THE COLUMN FOR THE TOTAL COST FOR EACH ITEM IS HEADED "ESTIMATED TOTAL.' IMMEDIATELY BELOW THE SCHEDULE OF ITEMS APPEARS THE FOLLOWING:

THE QUANTITIES LISTED ABOVE REPRESENT THE BEST ESTIMATE AVAILABLE OF QUANTITIES TO BE REQUIRED DURING THE TERM OF THIS AGREEMENT AND ARE NOT TO BE CONSIDERED THE ACTUAL QUANTITIES FOR WHICH ORDERS HEREUNDER WILL BE USED.

THE GOVERNMENT IS OBLIGATED HEREBY TO ORDER FROM CONTRACTOR SUCH QUANTITIES AS ARE NECESSARY TO SATISFY THE ABOVE DESCRIBED REQUIREMENT. CONTRACTOR IS OBLIGATED HEREBY TO PROVIDE IN ACCORDANCE WITH THE TERMS AND CONDITIONS HEREIN SET FORTH ALL SUCH QUANTITIES. ALTHOUGH THE ESTIMATED NUMBER OF MEALS TO BE SERVED WAS 2,407,392, THE NUMBER OF MEALS ACTUALLY SERVED WAS APPROXIMATELY TWO-THIRDS OF THIS FIGURE.

BASICALLY, IT IS YOUR CONTENTION THAT UNDER THE CIRCUMSTANCES OF THIS CASE IT WAS UNCONSCIONABLE FOR THE GOVERNMENT TO REQUIRE PERFORMANCE OF THIS CONTRACT AT THE UNIT PRICE BID AND UPON WHICH THE AWARD WAS MADE, AND THAT AS A MATTER OF EQUITABLE DEALING THE UNIT PRICE SHOULD BE INCREASED AND THE CONTRACT PRICE ADJUSTED ACCORDINGLY. YOU POINT OUT THAT THE ESTIMATED NUMBER OF MEALS WAS THE ONLY BASIS UPON WHICH THE PRICE FOR PERFORMING THE CONTRACT COULD BE COMPUTED; THAT CANCELLATION OF AN EARLIER INVITATION FOR THE REQUIREMENT BECAUSE OF A MISTAKE IN THE ESTIMATED NUMBER OF MEALS AND REVISION OF THE ESTIMATE AND READVERTISEMENT LED THE BIDDERS TO BELIEVE THAT THERE WOULD BE NO ABNORMAL DEVIATION BETWEEN THE ESTIMATED AND THE ACTUAL MEALS; THAT A DEVIATION OF ONE-THIRD WAS UNREASONABLE; THAT THE NET PROFIT ON THE CONTRACT BEFORE TAXES WAS ONLY $3,979.08; THAT THIS CONTRACT CANNOT BE EQUATED TO THE ORDINARY SUPPLY CONTRACT BECAUSE THE CONTRACTOR WAS NOT LEFT WITH TANGIBLE GOODS THAT COULD BE SOLD TO MINIMIZE A LOSS OR REALIZE A PROFIT; THAT WHEREAS AN "EXPERIENCED LAWYER, WELL-VERSED IN THE FIELD OF GOVERNMENT CONTRACTS" SHOULD BE HELD TO THE RISKS OF A "REQUIREMENTS CONTRACT," MR. GELBER WAS NOT AN EXPERIENCED GOVERNMENT CONTRACTS LAWYER; AND THAT ALTHOUGH MR. GELBER HAS HAD REQUIREMENTS CONTRACTS BEFORE HE HAS NEVER HAD THIS HAPPEN.

WITH RESPECT TO THE EARLIER ADVERTISING FOR THIS REQUIREMENT, IT IS REPORTED THAT THE EARLIER INVITATION WAS ISSUED ON APRIL 17, 1964, AND THAT THE ESTIMATED NUMBER OF MEALS CALLED FOR THEREUNDER WAS 2,845,392, BASED UPON A PROJECTED 1965 FISCAL YEAR STUDENT LOAD OF 1,844, AS REFLECTED IN THE THIRD U.S. ARMY COMMAND OPERATING PROGRAM GUIDANCE DATED JANUARY 17, 1964. HOWEVER, THIS FIGURE WAS REVISED ON MAY 13, 1964, TO 1,476 STUDENTS. THEREFORE, IT WAS DECIDED TO CANCEL THE IFB AND ADVERTISE ON THE BASIS OF THE MOST CURRENT PROJECTED STUDENT LOAD. IN SPITE OF THIS EFFORT TO MAKE THE ESTIMATED NUMBER OF MEALS AS REALISTIC AS POSSIBLE, THE ACTUAL REQUIREMENTS OF THE ACTIVITY FELL SHORT OF THE ESTIMATE. BELIEVE THESE CIRCUMSTANCES INDICATE THAT THE GOVERNMENT'S BEST ESTIMATE OF THE NUMBER OF MEALS THAT WOULD BE REQUIRED WAS MADE IN GOOD FAITH, AND THE FACT OF READVERTISING MAY NOT REASONABLY BE RELIED ON AS A REPRESENTATION THAT THE LAST ESTIMATE WAS ACCURATE WITHIN ANY PARTICULAR DEGREE OR PERCENTAGE.

AS TO THE REMAINDER OF YOUR ARGUMENTS, WE BELIEVE THEY ARE ANSWERED BY OUR DECISION OF APRIL 17, 1958, 37 COMP. GEN. 688, A COPY OF WHICH IS ENCLOSED. ALTHOUGH YOU APPARENTLY BELIEVE THAT MR. GELBER HAS NEVER BEFORE BEEN CONFRONTED WITH A SITUATION AS IN THE INSTANT CASE WHEN PERFORMING A REQUIREMENTS CONTRACT, AND THAT THIS FACT AFFORDS A BASIS FOR GRANTING THE RELIEF REQUESTED, YOU WILL NOTE THAT THE CITED CASE INVOLVED MR. GELBER AND THE FACTS WERE ALMOST IDENTICAL TO THOSE IN THE INSTANT CASE.

AS WAS SAID IN THAT CASE, AND FOR THE REASONS STATED THEREIN, "* * * 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 PERCEIVE NO BASIS UPON WHICH WE MAY PROPERLY GRANT YOUR REQUEST FOR ANY UPWARD ADJUSTMENT OF THE AMOUNT PAID UNDER THE CONTRACT. THE REQUEST IS THEREFORE DENIED.