B-160276, FEB. 7, 1967

B-160276: Feb 7, 1967

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WILLIAM LAMONT CAREW: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 11. THE INVITATION PURSUANT TO WHICH THE SUBJECT CONTRACT WAS AWARDED WAS ISSUED ON OCTOBER 4. AWARD WAS MADE TO KENNEDY AS THE LOW BIDDER UNDER ITEM 2B OF ITS ALTERNATE BID WHICH COVERED REFUSE COLLECTION AND DISPOSAL FOR A 12-MONTH PERIOD OF AN ESTIMATED QUANTITY OF 24. THE AMOUNT OF SUPPLIES AND SERVICES WHICH WILL BE REQUIRED DURING THE PERIOD COVERED BY THIS CONTRACT SHALL DEPEND UPON THE NEEDS OF THE GOVERNMENT ESTABLISHMENT ISSUING THIS CONTRACT. QUANTITIES OF SUPPLIES AND SERVICES SPECIFIED HEREIN ARE BASED UPON THE BEST INFORMATION AVAILABLE AS TO THESE REQUIREMENTS. ARE NOT DEFINITELY PURCHASED HEREBY. THE CONTRACT CONSIDERATION WAS INCREASED BY $1.

B-160276, FEB. 7, 1967

TO MR. WILLIAM LAMONT CAREW:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 11, 1967, ON BEHALF OF KENNEDY'S CUSTODIAL SERVICE INC. (KENNEDY), REQUESTING REVIEW OF OUR SETTLEMENT DATED JANUARY 3, 1967, WHICH DISALLOWED KENNEDY'S CLAIM IN THE AMOUNT OF $33,807.93, PLUS ACCRUED INTEREST, ALLEGED TO BE DUE UNDER CONTRACT NO. DA-05-010-AV-2529, AWARDED BY THE DEPARTMENT OF THE ARMY, CENTRAL PROCUREMENT DIVISION, FORT CARSON, COLORADO, ON NOVEMBER 16, 1965. ALSO, YOUR LETTER OF DECEMBER 19,1966, TO THE DEPARTMENT OF THE ARMY, HAS BEEN FORWARDED FOR CONSIDERATION WITH OUR REVIEW.

THE INVITATION PURSUANT TO WHICH THE SUBJECT CONTRACT WAS AWARDED WAS ISSUED ON OCTOBER 4, 1965, AND CALLED FOR BIDS FOR FURNISHING TRASH COLLECTION AND DISPOSAL AT FORT CARSON, COLORADO, FOR A 12-MONTH PERIOD AFTER AWARD OF CONTRACT. AWARD WAS MADE TO KENNEDY AS THE LOW BIDDER UNDER ITEM 2B OF ITS ALTERNATE BID WHICH COVERED REFUSE COLLECTION AND DISPOSAL FOR A 12-MONTH PERIOD OF AN ESTIMATED QUANTITY OF 24,000 TONS AT $5.71 PER TON USING GOVERNMENT-FURNISHED PROPERTY.

WITH REFERENCE TO THE ESTIMATED QUANTITY OF 24,000 TONS, SPECIAL PROVISION NO. SP-5 OF THE INVITATION AND THE RESULTING CONTRACT ENTITLED "ESTIMATED REQUIREMENTS" PROVIDED AS FOLLOWS:

"A. THE AMOUNT OF SUPPLIES AND SERVICES WHICH WILL BE REQUIRED DURING THE PERIOD COVERED BY THIS CONTRACT SHALL DEPEND UPON THE NEEDS OF THE GOVERNMENT ESTABLISHMENT ISSUING THIS CONTRACT. QUANTITIES OF SUPPLIES AND SERVICES SPECIFIED HEREIN ARE BASED UPON THE BEST INFORMATION AVAILABLE AS TO THESE REQUIREMENTS, BUT ARE NOT DEFINITELY PURCHASED HEREBY. THE GOVERNMENT GUARANTEES THE CONTRACTOR NO MINIMUM OR MAXIMUM AMOUNT OF WORK.

"B. NOTWITHSTANDING THE FOREGOING, THE CONTRACTOR AGREES TO FURNISH AT THE PRICES HEREIN SPECIFIED ALL SUPPLIES AND SERVICES OF THE KIND HEREIN DESCRIBED WHICH THE CONTRACTING OFFICER MAY CALL FOR DURING THE CONTRACT PERIOD; AND THE GOVERNMENT SHALL CALL ON THE CONTRACTOR FOR ALL SUCH SUPPLIES AND SERVICES WHICH THE GOVERNMENT ESTABLISHMENT ISSUING THIS CONTRACT MAY REQUIRE DURING SUCH PERIOD.'

THE RECORD SHOWS THAT AFTER COMMENCING THE TRASH COLLECTION SERVICES KENNEDY COMPLAINED THAT THE QUANTITY OF TRASH AND REFUSE AVAILABLE FOR COLLECTION, IF PROJECTED OVER THE 12-MONTH PERIOD, WOULD FALL FAR SHORT OF THE ESTIMATED CONTRACT QUANTITY OF 24,000 TONS. THEREAFTER, THE CONTRACT CONSIDERATION WAS INCREASED BY $1,792.56 TO COVER ADDITIONAL PICK-UPS FOR THE 3 MONTHS' SERVICES PERFORMED. THE NET INCREASE OF $1,392.56, AFTER DEDUCTING $400 TO COVER NECESSARY REPAIRS TO A GOVERNMENT VEHICLE, WAS MADE THE SUBJECT OF MODIFICATION NO. 1, DATED MARCH 1, 1966.

HOWEVER, THE LACK OF REFUSE AND TRASH IN THE QUANTITIES ANTICIPATED LED TO A REQUEST BY KENNEDY FOR RESCISSION OF THE CONTRACT ON THE BASIS THAT A MUTUAL MISTAKE HAD BEEN MADE IN THE EXECUTION OF THE CONTRACT. PURSUANT TO ASPR 17-203 AND 17-204 SUCH RESCISSION WAS EFFECTED BY MODIFICATION NO. 2, DATED MARCH 4, 1966, BY MUTUAL CONSENT WITHOUT EXCEPTION. ON MARCH 14, 1966, PAYMENT WAS MADE TO KENNEDY FOR ALL SERVICES PERFORMED TO DATE IN THE AMOUNT OF $4,705.93. KENNEDY'S CLAIM FOR $33,807.93 WAS DISALLOWED ON THE BASIS THAT THERE WAS NO WARRANTY IN THE CONTRACT GUARANTEEING ANY MINIMUM AMOUNT OF TRASH AND REFUSE TO BE COLLECTED AND NO FURTHER RIGHTS TO COMPENSATION ACCRUED TO KENNEDY AFTER RESCISSION OF THE CONTRACT.

YOU REQUEST REVIEW OF THIS CLAIM ON THE BASIS OF INTENTIONAL MISREPRESENTATIONS MADE BY THE GOVERNMENT TO THE EFFECT THAT 24,000 TONS OF REFUSE WOULD BE AVAILABLE FOR COLLECTION AND DISPOSAL DURING THE PERIOD OF THE CONTRACT WHEN, IN FACT, ONLY 6,432 TONS WERE GENERATED. THEREFORE, YOU URGE THAT THE GOVERNMENT BREACHED ITS CONTRACT WARRANTY AS TO QUANTITY. IN SUPPORT OF THIS PROPOSITION, YOU CITE EASTERN SERVICE MANAGEMENT V. UNITED STATES, D.C., S.C. (JULY 8, 1965), IN WHICH THE COURT HELD THAT A SIZE SPECIFICATION DESCRIBING THE TOTAL SPACE TO BE SERVICED WAS AN EXPRESS REPRESENTATION OR WARRANTY. SEE THE GOVERNMENT CONTRACTOR, PARAGRAPH 539, DATED DECEMBER 6, 1965. INASMUCH AS THIS CASE WAS NOT REPORTED WE ARE DEPRIVED OF THE COURT'S REASONING. WE DO NOT NECESSARILY AGREE WITH THE DECISION, AND WE NOTE, IN ANY EVENT, THAT IT IS NOT IN POINT WITH THE FACTS IN THE INSTANT CASE. THERE THE ESTIMATE WAS SMALLER THAN THE ACTUALITY AND THE CONTRACTOR DID MORE WORK THAN ANTICIPATED; IN OUR CASE THE ESTIMATE EXCEEDED THE ACTUALITY AND THE CONTRACTOR DID LESS WORK THAN ANTICIPATED. MOREOVER, SPECIAL PROVISION NO. SP-5 DISCLAIMED ANY WARRANTY AS TO THE QUANTITY ESTIMATE. CONSIDERING THE PLAIN LANGUAGE USED IN THAT PROVISION, WE CANNOT CONCLUDE THAT IT CONSTITUTED A WARRANTY, EXPRESS OR OTHERWISE.

RATHER, WE INVITE YOUR ATTENTION TO THE CASE OF SHADER CONTRACTORS, INC. V. UNITED STATES, 276 F.2D 1 (CT.CL. 1960), WHICH IS MORE ANALOGOUS TO THE PRESENT CLAIM. IN SHADER THE COURT CONSIDERED A CONTRACT UNDER WHICH THE CONTRACTOR WAS TO COLLECT AND DISPOSE OF GARBAGE AND RUBBISH AND HAUL COAL FOR A PERIOD OF 1 YEAR, AND PROVIDED THAT THE GOVERNMENT ESTIMATED THE QUANTITY OF REFUSE TO BE 4,000 TONS AND THE QUANTITY OF COAL TO BE HANDLED AT 5,500 TONS, AND THAT QUANTITIES REPRESENTED ESTIMATED AND NOT ACTUAL AMOUNTS. THE COURT HELD THAT THIS WAS A ,REQUIREMENTS CONTRACT" FOR SERVICES TO BE MEASURED BY THE GOVERNMENT'S REQUIREMENTS AND CONCLUDED THAT WHERE THE GOVERNMENT PURCHASED ALL OF ITS NECESSARY SERVICES FROM THE CONTRACTOR, THE GOVERNMENT FULLY PERFORMED ITS PART OF THE CONTRACT, AND THE CONTRACTOR WAS NOT ENTITLED TO RECOVER THAT PORTION OF ESTIMATED SERVICES WHICH HAD NOT BEEN ORDERED BY THE GOVERNMENT. WE FEEL THAT THIS CASE IS GENERALLY DISPOSITIVE OF THE CLAIM.

YOU MADE REFERENCE TO OUR DECISION B-153472, DATED DECEMBER 2, 1965, IN SUPPORT OF THE CLAIM. HOWEVER, THAT DECISION INVOLVED THE REFORMATION OF A CONTRACT WHERE A CONTRACTOR RELIED ON THE GOVERNMENT'S MISREPRESENTATION OF A MATERIAL FACT TO HIS DETRIMENT AND TO THE GOVERNMENT'S BENEFIT. HERE, THE GOVERNMENT CLEARLY ADVISED ALL RESPONDING BIDDERS THAT ITS ESTIMATE OF QUANTITY WAS NOT A GUARANTY THAT THE ESTIMATE WOULD BE MET BY THE GOVERNMENT. THE ESTIMATE WAS NOT MISREPRESENTED NOR WERE THE NEEDS OF THE GOVERNMENT OVERSTATED OR MISLEADING. BIDDERS, INCLUDING KENNEDY, RESPONDED TO THAT ESTIMATE FULLY ADVISED THAT FUTURE NEEDS MIGHT NOT APPROXIMATE THE ESTIMATE.

RATHER THERE IS FOR APPLICATION HERE OUR DECISION AT 37 COMP. GEN. 400, WHEREIN WE REFERRED TO THE WELL-ESTABLISHED RULE THAT THE USE OF SUCH WORDS AS "ESTIMATED" FOLLOWING THE DESCRIPTION OF THE SUBJECT OF A CONTRACT INDICATES THAT A STATEMENT OF QUANTITY IS A MATTER OF DESCRIPTION AND NOT OF THE ESSENCE OF THE CONTRACT AND THE PARTIES BEAR THE RISK AS TO QUANTITY IF THERE IS NO INTERMIXTURE OF FRAUD. SEE CASES CITED THEREIN, PARTICULARLY BRAWLEY V. UNITED STATES, 96 U.S. 168. SEE, ALSO, 37 COMP. GEN. 688.

IN VIEW OF THE FOREGOING, AND SINCE THE CONTRACT WAS RESCINDED BY MUTUAL AGREEMENT WHICH SPECIFICALLY RESERVED ALL TERMS AND CONDITIONS OF THE CONTRACT, INCLUDING THE DISCLAIMER OF WARRANTY AS TO QUANTITY, THE SETTLEMENT OF JANUARY 3, 1967, IS AFFIRMED.