B-166073, MARCH 3, 1969 48 COMP. GEN. 576

B-166073: Mar 3, 1969

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ESTIMATED AMOUNTS NOT WARRANTY PROVISIONS IN AN INVITATION FOR TRASH AND GARBAGE REMOVAL THAT SUGGESTED BIDDERS INSPECT THE VETERANS ADMINISTRATION HOSPITAL WHERE THE SERVICES WERE TO BE PERFORMED FOR FULL INFORMATION CONCERNING "THE CHARACTER AND CONDITIONS UNDER WHICH THE SERVICE IS TO BE PERFORMED. -WERE CALCULATED TO DISCOURAGE RELIANCE ON THE GOVERNMENT'S SUGGESTED SCHEDULE OF PICKUP FREQUENCIES AND CONTAINER SIZES AND NOT TO SERVE AS A WARRANTY. THE CONTRACTOR IS NOT ENTITLED TO ADDITIONAL COMPENSATION FOR AN 11 PERCENT VARIATION IN THE QUANTUM OF WORK PERFORMED- . A VARIATION THAT IS NOT THE SPECIFICATION "CHANGE" THAT IS ACTIONABLE FOR FAILURE TO ISSUE A CHANGE ORDER. DEVIATION FROM SPECIFICATIONS THE WORD "WARRANTY" IS NOT SIMPLE TO DEFINE.

B-166073, MARCH 3, 1969 48 COMP. GEN. 576

CONTRACTS--REQUIREMENTS--ESTIMATED AMOUNTS NOT WARRANTY PROVISIONS IN AN INVITATION FOR TRASH AND GARBAGE REMOVAL THAT SUGGESTED BIDDERS INSPECT THE VETERANS ADMINISTRATION HOSPITAL WHERE THE SERVICES WERE TO BE PERFORMED FOR FULL INFORMATION CONCERNING "THE CHARACTER AND CONDITIONS UNDER WHICH THE SERVICE IS TO BE PERFORMED," AND THAT REQUIRED THE SUCCESSFUL CONTRACTOR SHORTLY AFTER AWARD TO SUBMIT A LIST OF CONTAINERS, LOCATIONS, AND FREQUENCIES OF PICKUP-- WHICH IT FAILED TO DO-- -WERE CALCULATED TO DISCOURAGE RELIANCE ON THE GOVERNMENT'S SUGGESTED SCHEDULE OF PICKUP FREQUENCIES AND CONTAINER SIZES AND NOT TO SERVE AS A WARRANTY. THEREFORE, THE CONTRACTOR IS NOT ENTITLED TO ADDITIONAL COMPENSATION FOR AN 11 PERCENT VARIATION IN THE QUANTUM OF WORK PERFORMED- --A VARIATION THAT IS NOT THE SPECIFICATION "CHANGE" THAT IS ACTIONABLE FOR FAILURE TO ISSUE A CHANGE ORDER. CONTRACTS--WARRANTIES--DEVIATION FROM SPECIFICATIONS THE WORD "WARRANTY" IS NOT SIMPLE TO DEFINE---AT A MINIMUM, A WARRANTY, WHETHER AN EXPRESSED OR IMPLIED WARRANTY, IS SOMETHING OF AN ASSURANCE BY ONE PARTY THAT THE OTHER MAY RELY ON THE TRUTH OF A GIVEN REPRESENTATION. NO SUCH ASSURANCE IS IMPLIED UNDER A REQUIREMENTS CONTRACT FOR TRASH AND GARBAGE REMOVAL WHERE THE GOVERNMENT HAD "SUGGESTED" A PICKUP SCHEDULE AND CONTAINER SIZES AND THE CONTRACTOR AFTER AWARD WAS "REQUIRED" TO INSPECT THE WORK AREA AND SUBMIT ITS OWN LIST OF CONTAINERS, LOCATIONS, AND FREQUENCIES OF PICKUPS AND, THEREFORE, THE CONTRACTOR IS NOT ENTITLED TO ADDITIONAL COMPENSATION ON THE BASIS OF AN 11 PERCENT VARIATION BETWEEN THE WORK PERFORMED AND THE GOVERNMENT'S SUGGESTIONS---A VARIATION THAT IS NOT A SPECIFICATION CHANGE.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, MARCH 3, 1969:

WE REFER TO A LETTER (REFERENCE 134C) DATED JANUARY 31, 1969, FROM THE DIRECTOR OF THE SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, FORWARDING DOCUMENTS RELATIVE TO THE REQUEST OF DISPOS-O-WASTE COMPANY FOR ADDITIONAL COMPENSATION UNDER CONTRACT NO. V515P-1288.

THE INVITATION FOR BIDS, ISSUED ON JUNE 12, 1968, DESCRIBED THE SUBJECT OF THE PROCUREMENT IN THE FOLLOWING MANNER: COMPLETE MISCELLANEOUS TRASH AND NONEDIBLE GARBAGE REMOVAL SERVICES FOR THE PERIOD JULY 1, 1968 THRU JUNE 30, 1969, INCLUSIVE. FURNISH NECESSARY LABOR AND MATERIAL TO RENDER COMPLETE MISCELLANEOUS TRASH AND NONEDIBLE GARBAGE REMOVAL SERVICE FOR THE VETERANS ADMINISTRATION HOSPITAL, BATTLE CREEK (FORT CUSTER), MICHIGAN, FOR ABOVE PERIOD, IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS AND PROVISIONS OF THIS PROPOSAL. PAGE 5 OF THE INVITATION, ENTITLED "REQUIREMENTS," BEGAN WITH THIS PREAMBLE: SERVICES, LABOR, MATERIAL AND EQUIPMENT NECESSARY FOR THE COLLECTION, TRANSPORTATION AND DISPOSAL OF ALL REFUSE SPECIFIED IN THE CONTRACT, AT THE VA HOSPITAL, BATTLE CREEK, MICHIGAN. PARAGRAPH 1 OF THE REQUIREMENTS STATED, IN PART: SPECIFICATIONS AND ACCOMPANYING DRAWING PROVIDE FOR COLLECTING REFUSE AND DISPOSING OF SAME IN A COMPLETE AND WORKMANLIKE MANNER FOR A PERIOD OF 365 CALENDAR DAYS AFTER AWARD OF CONTRACT. * * * THE CONTRACTOR WILL FURNISH ALL PLANT SUPERVISION, LABOR, MATERIAL, AND EQUIPMENT NECESSARY FOR THE COLLECTING, TRANSPORTING, AND DISPOSAL OF ALL REFUSE SPECIFIED IN THE CONTRACT. THE FIRST SENTENCE OF PARAGRAPH 2 WAS AS FOLLOWS:SPECIFICATIONS AND ACCOMPANYING PLANS STATE AND SHOW THE WORK TO BE PERFORMED UNDER THE CONTRACT. * * * HOWEVER, THE FIRST SENTENCE OF PARAGRAPH 16 OF THE REQUIREMENTS PERMITTED THE CONTRACTOR SOME FREEDOM IN DETERMINING THE METHOD OF PERFORMANCE: AS SOON AS PRACTICAL, BUT WITHIN 10 CALENDAR DAYS AFTER AWARD OF CONTRACT, THE CONTRACTOR SHALL SUBMIT A COMPLETE LISTING OF CONTAINERS, LOCATIONS, AND PROPOSED FREQUENCIES OF PICKUP. * * * PARAGRAPH 17 OF THE REQUIREMENTS (PAGE 7 OF THE INVITATION) CONTAINED A TABLE SHOWING "SUGGESTED" SIZES OF CONTAINERS AND FREQUENCIES OF PICKUP. ON PAGES 8 THROUGH 10 OF THE INVITATION CERTAIN "SPECIAL CONDITIONS" WERE RECITED. CONDITION NUMBER 4 ADMONISHED BIDDERS: BIDDERS ARE REQUIRED TO VISIT THE HOSPITAL TO FULLY INFORM THEMSELVES OF THE CHARACTER AND CONDITIONS UNDER WHICH THE SERVICE IS TO BE PERFORMED. FAILURE TO DO SO WILL IN NO WAY RELIEVE THE SUCCESSFUL BIDDER FROM THE NECESSITY OF FURNISHING THE SERVICES AS SPECIFIED IN THIS PROPOSAL WITHOUT ADDITIONAL COST TO THE GOVERNMENT. * * *

ON JUNE 28, 1968, THE CONTRACT WAS AWARDED TO DISPOS-O-WASTE AT ITS BID PRICE OF $1,175 PER MONTH, OR A TOTAL OF $14,100 FOR THE FULL CONTRACT PERIOD. ALTHOUGH DISPOS-O-WASTE WAS OBLIGATED UNDER PARAGRAPH 16 OF THE REQUIREMENTS TO SUBMIT WITHIN 10 DAYS OF AWARD A COMPLETE LIST OF CONTAINERS, LOCATIONS, AND FREQUENCIES OF PICKUP, THERE IS NO INDICATION IN THE RECORD THAT SUCH A LIST WAS FORTHCOMING.

THE NEXT EVENT OCCURRED ON JULY 30, 1968, WHEN DISPOS-O-WASTE WROTE TO THE CONTRACTING OFFICER AT THE VA HOSPITAL AND STATED:

ITEM 17 OF THE SPECIFICATIONS, IN THE INVITATION, INDICATED THE SIZES OF THE CONTAINERS AND THE FREQUENCY OF PICKUPS REQUIRED AT THE VARIOUS LOCATIONS. WE INSTALLED OUR CONTAINERS IN ACCORDANCE WITH THESE SPECIFICATIONS AND HAVE PROVIDED THE FREQUENCY STIPULATED * * * WITH TWO NOTED EXCEPTIONS. THE LETTER FURTHER RELATED THAT "WE HAVE DISCOVERED THAT YOU HAVE NOT PROVIDED FOR ADEQUATE SERVICE AT 19 OF THE BUILDINGS INVOLVED." THEREUPON DISPOS-O-WASTE DISCLOSED THAT ITS PURPOSE IN WRITING THE LETTER WAS "TO REQUEST THAT THE CONTRACT BE MODIFIED TO STIPULATE INCREASED FREQUENCY OF COLLECTION AT THE 19 LOCATIONS INVOLVED AND THAT OUR COMPENSATION BE INCREASED FROM $1,175.00 TO $1,473.00 PER MONTH." DISPOS-O-WASTE ENCLOSED A SUGGESTED REVISED SCHEDULE OF PICKUP FREQUENCIES AND CONTAINER SIZES, INVOLVING A TOTAL WEEKLY INCREASE OF 78 CUBIC YARDS.

ON AUGUST 17, 1968, DISPOS-O-WASTE AGAIN WROTE TO THE CHIEF OF THE HOSPITAL'S SUPPLY DIVISION. THE LETTER REVEALS THAT VARIOUS CONTAINERS HAD BEEN MOVED TO OTHER BUILDINGS AND THAT AS A RESULT THE AMOUNT OF OVERFLOW HAD BEEN REDUCED. DISPOS-O-WASTE THEN STATED, IN PART, "SINCE MOST OF THE PROBLEMS HAVE NOW BEEN SOLVED WE WILL BEGIN TO PERFORM IN ACCORDANCE WITH THE CONTRACT * * *."

DISPOS-O-WASTE SENT A THIRD LETTER, DATED NOVEMBER 13, 1968, TO THE CHIEF OF THE HOSPITAL'S SUPPLY DIVISION. IT IS THEREIN RELATED THAT THERE REMAINED OVERFLOW TRASH AT CERTAIN LOCATIONS. THE EXCESS OVER THE AMOUNT "INDICATED IN THE SPECIFICATIONS" WAS SAID TO BE 27 CUBIC YARDS PER WEEK. DISPOS-O-WASTE THEN STATED AS FOLLOWS: "WE REQUEST THAT OUR CONTRACT BE AMENDED TO REFLECT THIS INCREASE IN THE QUANTITY WHICH WE HAVE BEEN HAULING, ALMOST FROM THE BEGINNING OF THE CONTRACT PERIOD." THE LETTER CONTINUED:

OUR BID, $1,175.00 PER MONTH, WAS BASED ON APPROXIMATELY $1.07 PER CUBIC YARD MULTIPLIED BY THE 1,105 CUBIC YARDS PER MONTH STIPULATED IN THE SPECIFICATIONS. WE PROPOSE TO HAUL THE ADDITIONAL 117 CUBIC YARDS PER MONTH AT A CHARGE OF $1.07 PER CUBIC YARD OR $125.19 PER MONTH ADDITIONAL.

ON DECEMBER 10, 1968, THE CHIEF OF THE HOSPITAL'S ENGINEERING DIVISION SENT A MEMORANDUM TO THE CHIEF OF THE HOSPITAL'S SUPPLY DIVISION, IN SUBSTANCE VERIFYING THE GENERATION OF ABOUT 27 ADDITIONAL CUBIC YARDS OF TRASH A WEEK.

THE DIRECTOR OF THE SUPPLY SERVICE HAS RECOMMENDED ADJUSTMENT OF THE CONTRACT PRICE AS REQUESTED. IN SUPPORT OF THIS POSITION, HE HAS CITED TWO DECISIONS OF OUR OFFICE, B-159937, OCTOBER 18, 1966, AND B 164995, AUGUST 26, 1968. BOTH OF THESE DECISIONS CITED THE CASE OF EASTERN SERVICE MANAGEMENT COMPANY V. UNITED STATES, 243 F. SUPP. 302 (E.D.S.C. 1965).

IN OUR EARLIER DECISION, WE EXPRESSLY RECOGNIZED THE LIMITED APPLICABILITY OF THE DOCTRINE OF REFORMATION: "WHERE, BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT AND INTENTION OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS." 157899, NOVEMBER 1, 1965. HOWEVER, IN NEITHER OF THE CITED DECISIONS WAS APPLICATION OF THAT DOCTRINE POSSIBLE; WE SIMILARLY BELIEVE THAT THE INSTANT FACTS DO NOT PRESENT A CASE WHERE REFORMATION IS APPROPRIATE.

NEVERTHELESS, PAYMENT OF ADDITIONAL COMPENSATION WAS AUTHORIZED IN BOTH DECISIONS ON THE BASIS THAT THE GOVERNMENT'S "APPROXIMATE" ESTIMATE OF THE QUANTUM OF WORK TO BE PERFORMED WAS SO ERRONEOUS AS TO BE MISLEADING TO THE CONTRACTOR. AT THIS POINT IN BOTH DECISIONS, WE CITED THE EASTERN CASE FOR AUTHORITY. WE BELIEVE OUR TWO PREVIOUS DECISIONS ARE FACTUALLY DISTINGUISHABLE INASMUCH AS THE ACTUAL WORK EXCEEDED THE ESTIMATES BY 47 PERCENT AND 49 PERCENT, WHEREAS IN THIS CASE THE ADDITIONAL AMOUNT OF WORK IS ONLY ABOUT 11 PERCENT GREATER THAN THAT "SUGGESTED" IN THE INVITATION.

THE EASTERN CASE INVOLVED TWO PRINCIPLES WHICH ARE RELEVANT TO THE PRESENT CONTRACT CLAIM: (1) THE GOVERNMENT'S APPROXIMATED ESTIMATE OF THE SQUARE FOOTAGE OF FLOOR TO BE SERVICED CONSTITUTED A WARRANTY OR REPRESENTATION BINDING ON THE GOVERNMENT, AND FAILURE TO INCLUDE IN THE ESTIMATE LOBBY, CORRIDOR AND RESTROOM SPACE WAS A BREACH WHICH ENTITLED THE CONTRACTOR TO DAMAGES; AND (2) DISCOVERY OF THE ACTUAL SIZE OF THE SPACE TO BE SERVICED WAS A "CHANGE" WITHIN THE MEANING OF THE "CHANGES" CLAUSE AND THE CONTRACTING OFFICER'S REFUSAL TO ISSUE A CHANGE ORDER WAS ALSO A BREACH OF CONTRACT.

WE DO NOT CONSIDER THAT THE GOVERNMENT IN THE CIRCUMSTANCES OF THE PRESENT CASE HAS MADE ANY EXPRESS OR IMPLIED WARRANTY CONCERNING THE AMOUNT OF WORK TO BE PERFORMED BY DISPOS-O-WASTE. OF COURSE, IT IS NO SIMPLE MATTER TO DEFINE WHAT IS MEANT BY A "WARRANTY." CONSIDER THE FOLLOWING EXCERPT FROM STRIKA V. NETHERLANDS MINISTRY OF TRAFFIC, 185 F. 2D 555, 558 (2D CIR. 1950):

* * * IT IS TRUE THAT A WARRANTY, WHETHER EXPRESS OR IMPLIED, IS TREATED AS IF IT WERE AN ASSURANCE BY THE WARRANTOR TO THE WARRANTEE THAT HE MAY RELY UPON THE TRUTH OF THE FACT WARRANTED, AND IN THE CASE OF EXPRESS WARRANTIES IT WOULD BE DIFFICULT IN PRINCIPLE TO TREAT THAT ASSURANCE AS OTHER THAN ITSELF A PROMISE. HOWEVER, IMPLIED WARRANTIES, ALTHOUGH THEY ARE CONSENSUAL IN THE SENSE THAT THEY PRESUPPOSE THAT THE PARTIES HAVE ENTERED INTO SOME SORT OF CONTRACT, ARE NOT PROMISES BY THE WARRANTOR THAT THE FACT WARRANTED IS TRUE; THEY ARE "OBLIGATIONS" IMPOSED IN INVITUM AS A CONSEQUENCE OF MAKING THE CONTRACT REGARDLESS OF THE WARRANTOR'S INTENT. HENCE IT IS ONLY BY A FICTION THAT WE CALL THEM PROMISES AT ALL IN THE SENSE THAT EXPRESS WARRANTIES ARE PROMISES.

AT THE MINIMUM, A WARRANTY IS SOMETHING OF AN ASSURANCE BY ONE PARTY THAT THE OTHER MAY RELY ON THE TRUTH OF A GIVEN REPRESENTATION. THERE IS NO SUCH ASSURANCE INTENDED OR TO BE IMPLIED IN THIS CASE.

IT IS TRUE THAT THE GOVERNMENT IMPLIEDLY REPRESENTED THAT THE SUGGESTED SCHEDULE OF PICKUP FREQUENCIES AND CONTAINER SIZES WERE ADEQUATE TO EFFECT "COMPLETE" TRASH REMOVAL, BUT IT WAS ONLY "SUGGESTED." BIDDERS WERE "REQUIRED" TO INSPECT THE PREMISES FOR FULL INFORMATION CONCERNING "THE CHARACTER AND CONDITIONS UNDER WHICH THE SERVICE IS TO BE PERFORMED." BIDDERS ALSO KNEW THAT THE CONTRACTOR WOULD BE "REQUIRED" WITHIN A VERY SHORT TIME AFTER AWARD TO SUBMIT ITS OWN LIST OF CONTAINERS, LOCATIONS, AND FREQUENCIES OF PICKUP. IT SEEMS TO US THAT SUCH PROVISIONS WERE CALCULATED TO DISCOURAGE RELIANCE ON THE GOVERNMENT'S "SUGGESTIONS." INDEED, THE PRESENCE OF THE LATTER CONTRACTUAL REQUIREMENT IS A DISTINGUISHING FACTOR WHICH WAS NOT PRESENT IN EASTERN. ADDITIONALLY, IN EASTERN THE GOVERNMENT MADE A REPRESENTATION OF A FACT CAPABLE OF RATHER EXACT MEASUREMENT NOT SUBJECT TO FLUCTUATION, AND ONE "WHICH NORMALLY WOULD BE PRESUMED TO BE WITHIN ITS SPECIFIC KNOWLEDGE." EASTERN, PAGE 305. THE SAME IS NOT TRUE OF THE AMOUNT OF TRASH GENERATED AT A LARGE HOSPITAL COMPLEX. THIS WOULD ALSO MILITATE AGAINST IMPLYING A WARRANTY (OR ASSURANCE OF ACCURACY) IN THIS CASE.

WE SIMILARLY CONCLUDE THAT THERE HAS BEEN NO "CHANGE" IN THIS INSTANCE SO AS TO MAKE ACTIONABLE A FAILURE TO ISSUE A CHANGE ORDER. IN EASTERN, THE GOVERNMENT HAD A RIGHT TO THE CLEANING OF "APPROXIMATELY" 129,300 SQUARE FEET OF OFFICE SPACE. THE COURT HELD THAT WHEN IT TURNED OUT THAT THE GOVERNMENT WOULD REQUIRE CLEANING OF 138,300 SQUARE FEET, THERE HAD BEEN A "CHANGE" IN THE SPECIFICATIONS. THE VARIATION THERE WAS ABOUT 7 PERCENT. WHILE THE VARIATION IN THE PRESENT CASE IS ABOUT 11 PERCENT, THE SUBJECT MATTER OF THE CONTRACT IS OF VARIABLE QUANTITY WITH A TENDENCY IN RECENT YEARS TO INCREASE RATHER SUBSTANTIALLY DUE TO MORE WIDESPREAD USE OF PREPACKAGED AND DISPOSABLE GOODS. IN LIGHT OF THESE CONSIDERATIONS, WE FIND NO LEGAL BASIS TO AUTHORIZE THE PAYMENT OF ADDITIONAL COMPENSATION UNDER THE CONTRACT.