B-176750, MAR 27, 1973

B-176750, MAR 27, 1973

CONTRACTS - DAMAGES CLAIM - ERRONEOUS GOVERNMENT ESTIMATES DECISION ALLOWING THE CLAIM OF PEPSI COLA BOTTLING COMPANY OF NEW BERN, INC., FOR DAMAGES INCURRED IN THE PERFORMANCE OF A CONTRACT AWARDED IT BY THE U.S. MARINE CORPS FOR BEVERAGE REQUIREMENTS FOR FOOD SERVICES IN THE CAMP LEJEUNE, N.C. AREA. SINCE IN THE PRESENT CASE ESTIMATES WERE PREPARED CARELESSLY AND WERE NOT BASED ON THE BEST INFORMATION THAT WAS AVAILABLE AT THE TIME, THE CONTRACTOR IS ENTITLED TO RELIEF FOR THE LOSS HE INCURRED AS A RESULT OF THESE ERRONEOUS ESTIMATES. SEE B-169037, MAY 4, 1970.

TO GEN. ROBERT E. CUSHMAN, JR.:

THIS IS IN REGARD TO LETTER CSG:LKH OF FEBRUARY 2, 1973, FROM THE QUARTERMASTER GENERAL, CONCERNING THE CLAIM PRESENTED ON NOVEMBER 13, 1972, BY THE PEPSI COLA BOTTLING CO. OF NEW BERN, INC., FOR DAMAGES INCURRED IN THE PERFORMANCE OF CONTRACT M67001-71-D-0356.

THE CONTRACT IS A REQUIREMENTS TYPE FOR THE SUPPLY OF SOFT DRINKS AND REQUISITE DISPENSING EQUIPMENT IN THE MESS HALLS IN THE CAMP LEJEUNE AREA FOR THE PERIOD JULY 1, 1971, TO JUNE 30, 1972, WITH AN OPTION FOR EXTENSION TO JUNE 30, 1973, THAT HAS BEEN EXERCISED. THE ESTIMATED YEARLY BEVERAGE REQUIREMENTS IN THE CONTRACT WERE BASED UPON INFORMATION SUPPLIED BY THE FOOD SERVICES OFFICERS AT CAMP LEJEUNE AND THE MARINE CORPS AIR STATION AT NEW RIVER. THE ESTIMATES STATED IN THE CONTRACT AND THE ESTIMATES UPON WHICH THEY WERE BASED, ALL EXPRESSED IN TERMS OF GALLONS OF SYRUP PER YEAR, WERE AS FOLLOWS:

CAMP LEJEUNE MARINE CORPS AIR STATION CONTRACT

ESTIMATE ESTIMATE ESTIMATE

COLA 140,000 90,000 230,000

LEMON LIME 70,000 4,000 74,000

ROOT BEER 50,000 2,500 52,500

ORANGE 40,000 1,500 41,500

IN THE COMPUTATION OF THE APPROXIMATE REQUIREMENTS FOR THE MESS HALLS AT CAMP LEJEUNE, THE FOOD SERVICES OFFICER DETERMINED THE NUMBER OF MEALS SERVED AT THE CAMP DURING FISCAL YEAR 1970 AND ASSUMED THAT THE NUMBER WOULD BE SUBSTANTIALLY THE SAME DURING FISCAL YEAR 1972. IN COMPUTING THE ESTIMATED AMOUNT OF SOFT DRINK TO BE CONSUMED, IT WAS ESTIMATED THAT EACH MAN WOULD DRINK TWO 10-OUNCE GLASSES AT EACH MEAL, INCLUDING BREAKFAST. THE ERRONEOUS INCLUSION OF BREAKFAST IN THE COMPUTATION RESULTED IN THE CAMP LEJEUNE ESTIMATE BEING OVERSTATED BY ONE-THIRD OF THE TOTAL QUANTITY OR 100,000 GALLONS.

THE SOFT DRINK ESTIMATES FOR THE MARINE CORPS AIR STATION WERE MADE FROM COMPUTATIONS BASED UPON THE 2,000 MAXIMUM SEATING CAPACITY OF THE INSTALLATION MESS HALLS INSTEAD OF THE AVERAGE OF 848 PERSONS ACTUALLY BEING SERVED. IN ADDITION, THROUGH CLERICAL ERROR, THE 9,000-GALLON ESTIMATE FOR COLA SYRUP WAS EXPRESSED AS 90,000 GALLONS. THUS, THE ESTIMATE FOR THE MARINE CORPS AIR STATION WAS OVERSTATED BY SOME 92,000 GALLONS. IN VIEW OF THE ERRONEOUS ESTIMATES FOR CAMP LEJEUNE AND THE MARINE CORPS AIR STATION, THE 398,000-GALLON TOTAL ESTIMATE IN THE CONTRACT IS AN OVERESTIMATE OF ABOUT 192,000 GALLONS, APPROXIMATELY 50 PERCENT OF THE TOTAL ESTIMATE.

THE CONTRACTOR'S CLAIM FOR DAMAGES IS BASED UPON THE FACT THAT IT HAS CERTAIN FIXED COSTS WHICH IT PRORATED OVER THE ESTIMATED NUMBER OF GALLONS IN THE CONTRACT AND THAT THE COST PER GALLON WOULD HAVE BEEN HIGHER IF THE ESTIMATED GALLONS WERE LOWER.

THE CONTRACTOR HAS MADE A CLAIM TO THE MARINE CORPS FOR $37,932.12 ON THE BASIS THAT IT WILL SUSTAIN SUCH A LOSS ON THE CONTRACT BECAUSE THE GOVERNMENT DID NOT USE THE BEST INFORMATION AVAILABLE IN ESTIMATING THE QUANTITIES REQUIRED. THE MARINE CORPS HAS DETERMINED THAT THE CONTRACTOR'S CLAIM FOR $37,932.12 IS VALID AND RECOMMENDS THAT AUTHORIZATION BE GRANTED TO PAY DAMAGES IN THAT AMOUNT.

IN REGARD TO REQUIREMENTS CONTRACTS, IN B-169037, MAY 4, 1970, OUR OFFICE STATED:

*** THERE IS A BASIS FOR RELIEF WHEN THE ESTIMATE OF THE REQUIREMENTS IS NOT BASED ON THE BEST INFORMATION AVAILABLE OR BAD FAITH, FRAUD OR MISREPRESENTATION WAS EXERCISED IN ESTIMATING THE REQUIREMENTS.

IN B-173356, SEPTEMBER 27, 1971, OUR OFFICE STATED FURTHER:

*** WE BELIEVE *** THAT A SHOWING OF GOOD FAITH REQUIRES THAT A DETERMINATION OF THE ESTIMATED REQUIREMENTS BE BASED ON THE BEST INFORMATION AVAILABLE AT THE TIME THE ESTIMATES ARE FORMULATED. ***

SINCE IT APPEARS THAT IN THE PRESENT CASE THE ESTIMATES WERE PREPARED CARELESSLY AND WERE NOT BASED ON THE BEST INFORMATION THAT WAS AVAILABLE AT THE TIME, WE CONCLUDE THAT UNDER THE FOREGOING PRINCIPLES THE CONTRACTOR IS ENTITLED TO RELIEF. ACCORDINGLY, OUR OFFICE HAS NO OBJECTION TO THE SETTLEMENT OF THE PEPSI COLA CLAIM AS ADMINISTRATIVELY RECOMMENDED.