B-7893, JANUARY 19, 1940, 19 COMP. GEN. 662

B-7893: Jan 19, 1940

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WHERE IT IS IN THE GOVERNMENT'S INTEREST TO MAKE REASONABLE MODIFICATIONS AND THE PARTIES ARE ABLE MUTUALLY TO AGREE RESPECTING THE DESIRED CHANGES. THERE IS. WHERE CONTRACTING OFFICIALS OF THE GOVERNMENT HAVE BEEN REQUESTED BEFORE AWARD OF A CONTRACT TO MAKE A MATERIAL ALTERATION IN THE SPECIFICATION REQUIREMENTS BUT UPON CONSIDERATION HAVE REFUSED OR FAILED TO DO SO. REQUESTED THAT THE SPECIFICATIONS BE AMENDED SO AS TO PERMIT BIDDERS TO FURNISH FLAGS OF "WELL CARDED" COTTON INSTEAD OF "WELL COMBED" COTTON BUT THE AMENDMENT WAS REFUSED AND THE CONTRACT AS AWARDED TO THE SAID BIDDER CLEARLY CALLED FOR DELIVERY OF FLAGS MADE OF "WELL COMBED" COTTON. THERE IS NO LEGAL AUTHORITY FOR ACCEPTING THE CONTRACTOR'S PROPOSAL TO MODIFY THE CONTRACT SO AS TO PERMIT THE DELIVERY OF FLAGS MADE FROM "WELL CARDED" COTTON AT A REDUCTION IN THE CONTRACT PRICE.

B-7893, JANUARY 19, 1940, 19 COMP. GEN. 662

CONTRACTS - MODIFICATION - AUTHORITY GENERALLY AND AUTHORITY WHERE REQUEST FOR MODIFICATION INVOLVES A MATTER REFUSED PRIOR TO AWARD WHILE CONTRACTING OFFICERS OF THE GOVERNMENT MAY NOT LEGALLY MODIFY EXISTING GOVERNMENT CONTRACTS EXCEPT IN THE INTEREST OF THE UNITED STATES, WHERE IT IS IN THE GOVERNMENT'S INTEREST TO MAKE REASONABLE MODIFICATIONS AND THE PARTIES ARE ABLE MUTUALLY TO AGREE RESPECTING THE DESIRED CHANGES, THERE IS, GENERALLY SPEAKING AND WITHIN REASONABLE LIMITATIONS, NO OBJECTION TO ALTERING THE ORIGINAL CONTRACT, BUT SUCH CHANGES MAY NOT, UNDER THE GUISE OF MODIFICATION, IN FACT TRANSFORM AN EXISTING CONTRACT INTO AN ENTIRELY NEW AND DIFFERENT ONE OR EMPLOY A MODIFICATION AGREEMENT SO AS UNNECESSARILY TO INTERFERE WITH OR DEFEAT THE PURPOSE OF COMPETITIVE BIDDING. TERM "MODIFY" DEFINED. WHERE CONTRACTING OFFICIALS OF THE GOVERNMENT HAVE BEEN REQUESTED BEFORE AWARD OF A CONTRACT TO MAKE A MATERIAL ALTERATION IN THE SPECIFICATION REQUIREMENTS BUT UPON CONSIDERATION HAVE REFUSED OR FAILED TO DO SO, SAID OFFICIALS MAY NOT, AFTER AWARD AND WHEN COMPETITION HAS BEEN ELIMINATED, AND IN THE FACE OF UNCHANGED CONDITIONS, ENTER INTO A MODIFICATION AGREEMENT WITH THE CONTRACTOR FOR THE PURPOSE OF EFFECTING THE SAME CHANGE THAT THEY HAD PREVIOUSLY REFUSED OR FAILED TO MAKE. WHERE ONE OF SEVERAL BIDDERS UNDER AN INVITATION FOR BIDS HAD, PRIOR TO THE OPENING OF BIDS, REQUESTED THAT THE SPECIFICATIONS BE AMENDED SO AS TO PERMIT BIDDERS TO FURNISH FLAGS OF "WELL CARDED" COTTON INSTEAD OF "WELL COMBED" COTTON BUT THE AMENDMENT WAS REFUSED AND THE CONTRACT AS AWARDED TO THE SAID BIDDER CLEARLY CALLED FOR DELIVERY OF FLAGS MADE OF "WELL COMBED" COTTON, THERE IS NO LEGAL AUTHORITY FOR ACCEPTING THE CONTRACTOR'S PROPOSAL TO MODIFY THE CONTRACT SO AS TO PERMIT THE DELIVERY OF FLAGS MADE FROM "WELL CARDED" COTTON AT A REDUCTION IN THE CONTRACT PRICE, BUT IF IT IS ADMINISTRATIVELY DETERMINED THAT FLAGS MADE FROM THE LESS COSTLY "CARDED COTTON" WILL SERVE THE GOVERNMENT'S NEEDS AND THAT IT WILL BE IN THE GOVERNMENT'S INTEREST TO SECURE FLAGS OF THIS TYPE INSTEAD OF INSISTING ON PERFORMANCE OF THE CONTRACT AS AWARDED, THERE IS NO OBJECTION TO MAKING AN AGREEMENT WITH THE CONTRACTOR FOR RESCISSION OF THE CONTRACT, IN WHICH EVENT THE MATTER WOULD BE FOR READVERTISING UNDER PROPER AMENDED SPECIFICATIONS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JANUARY 19, 1940:

I HAVE YOUR LETTER OF JANUARY 4, 1940, AS FOLLOWS:

ON SEPTEMBER 11, 1939, THE VETERANS' ADMINISTRATION OPENED BIDS FOR SUPPLYING FLAGS, AND THE FOLLOWING BIDS WERE RECEIVED:

CHART

ITEM 1 ITEM 2

(EACH) (EACH) DISCOUNT ---- --------------------------------------------- ------------------------ VALLEY FORGE SALES

CORPORATION------ $2.56 $2.47 ( 2 PERCENT, 10 DAYS.

( 1/4 PERCENT, 30 DAYS. DETTRA FLAG CO., ( 1 2.55 1 2.55 2 PERCENT, 10 DAYS.

INC. ------------ ( 3.03 3.03 1 PERCENT, 20 DAYS. COLLEGEVILLE FLAG AND 2.63 2.63 ( 2 PERCENT, 10 DAYS.

MANUFACTURING CO. ( 1 PERCENT, 20 DAYS. ------------- ------------------ ------------------------------------------ 1 ALTERNATE.

THE ADVERTISED SPECIFICATION INFORMED ALL BIDDERS THAT FLAGS SHALL BE MANUFACTURED FROM BUNTING AS DESCRIBED IN FEDERAL SPECIFICATION CC B-791A, DATED AUGUST 27, 1937. PARAGRAPH C-1 OF THE CITED SPECIFICATION IS AS FOLLOWS:

"MATERIAL.--- THE BUNTING SHALL BE MADE OF COTTON. THE COTTON SHALL BE THOROUGHLY CLEANED, WELL COMBED, EVENLY DRAWN, SPUN.'

THE BID OF THE VALLEY FORGE SALES CORPORATION WAS ACCEPTED, THIS CONCERN HAVING SUBMITTED THE LOWEST BID MEETING THE REQUIREMENTS OF THE ADVERTISED SPECIFICATIONS, AND IN ACCORDANCE WITH THE TERMS OF THE BID INVITATION THE VALLEY FORGE SALES CORPORATION FURNISHED BOND IN THE AMOUNT OF $5,820 TO GUARANTEE PERFORMANCE OF ITS CONTRACT. THE LOWER BID OF THE DETTRA FLAG COMPANY, INC., ON ITEM 1 WAS REJECTED FOR THE REASON THAT THIS COMPANY DID NOT PROPOSE TO FURNISH FLAGS MADE FROM "WELL COMBED" COTTON AS REQUIRED BY FEDERAL SPECIFICATION CCC-B-791A.

THE VALLEY FORGE SALES CORPORATION TENDERED FOR DELIVERY THE BUNTING TO BE USED IN THE MANUFACTURE OF THE FLAGS, BUT INSPECTION OF THIS BUNTING DISCLOSED THAT INSTEAD OF ITS BEING MADE FROM "WELL COMBED" COTTON IT IS MANUFACTURED FROM "CARDED" COTTON, IN VIEW OF WHICH THE MATERIAL WAS REJECTED. THE VALLEY FORGE SALES CORPORATION, THROUGH ITS WASHINGTON REPRESENTATIVE, MR. ROY G. EPPERLEY, PROTESTED THE REJECTION OF THE MATERIAL FOR THE REASON INDICATED IN MR. EPPERLEY'S LETTER OF NOVEMBER 21, 1939, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS TO WHICH RESPONSE WAS MADE BY THE ADMINISTRATOR OF VETERANS' AFFAIRS UNDER DATE OF NOVEMBER 21, 1939, INDICATING THE POSITION OF THE VETERANS' ADMINISTRATION. THESE COMMUNICATIONS, TOGETHER WITH SUBSEQUENT CORRESPONDENCE BETWEEN THE ADMINISTRATOR OF VETERANS' AFFAIRS AND THE VALLEY FORGE SALES CORPORATION, ARE ENCLOSED, AND PARTICULAR ATTENTION IS INVITED TO LETTER OF DECEMBER 14, 1939, FROM COLONEL O. R. MCGUIRE, REQUESTING THAT THE VALLEY FORGE SALES CORPORATION BE PERMITTED TO FURNISH FLAGS MANUFACTURED FROM BUNTING MADE FROM "CARDED" COTTON AT A REDUCTION IN PRICE.

EACH OF THE BIDDERS ABOVE LISTED REALIZED THAT THE SPECIFICATIONS CALLED FOR "WELL COMBED" MATERIAL. THIS FACT IS CLEARLY ESTABLISHED BY THE EVIDENCE. THE COLLEGEVILLE FLAG AND MFG. COMPANY ENCLOSED WITH ITS BID A LETTER DATED SEPTEMBER 9, 1939, FROM WHICH THE FOLLOWING IS QUOTED:

"WE ARE PLEASED TO INCLUDE HEREWITH OUR BID COVERING THE ABOVE INFORMATION, AND IF WE ARE SUCCESSFUL WE WILL FURNISH THE INSPECTORS OF THE VETERANS' ADMINISTRATION A CERTIFIED REPORT FROM THE MILL THAT WILL MANUFACTURE THE BUNTING IN CONNECTION WITH THE ABOVE INVITATION CERTIFYING THAT THE YARN USED IN CONNECTION WITH THE WEAVING OF THIS BUNTING IS IN STRICT ACCORDANCE WITH THE SPECIFICATIONS PERTAINING TO THIS INVITATION, AND THAT IS THAT THE BUNTING WILL BE MADE OF COMBED YARN. ALTHOUGH THIS IS NOT IN ACCORDANCE WITH YOUR REQUIREMENTS IN CONNECTION WITH THIS INVITATION, WE ARE WILLING TO GET THE CERTIFICATION FROM THE MILL INASMUCH AS THERE SEEMS TO BE A VERY SLIGHT DIFFERENCE BETWEEN THE PREVIOUS SPECIFICATIONS ON WHICH YOU QUOTE CARDED YARNS. WE FEEL THAT IN GIVING YOU THE CERTIFICATION FROM THE MILL THAT WE WILL FURTHER ASSURE YOU OF THE FACT THAT YOU ARE RECEIVING COMBED YARN IN THE BUNTING AS SPECIFIED.'

THE DETTRA FLAG COMPANY, INC., ENCLOSED WITH ITS BID A LETTER DATED SEPTEMBER 9, 1939, FROM WHICH THE FOLLOWING IS QUOTED:

" EXPLANATION REGARDING ALTERNATE BID.--- YOUR SPECIFICATIONS CALL FOR FLAGS TO BE MADE OF MATERIALS WHEREIN THE YARNS ARE COMBED YARNS. WE ARE BIDDING ACCORDINGLY. WE ARE ALSO PUTTING IN AN ALTERNATE BID FOR YARNS MADE WITH OUR EXCLUSIVE TUFF TEXT SPINNING. AS AN EXPLANATION TO YOU, AND TO COVER THE SUBJECT MORE FULLY, THE TUFF TEXT YARNS THAT WE USE IN OUR BUNTING WILL BE EQUAL TO GOVERNMENT SPECIFICATIONS AS TO BREAKING STRENGTH, COUNT OF THE YARN, WEIGHT OF THE FABRIC, FASTNESS OF COLOR, AND FLYABILITY OF THE FLAG. WE BELIEVE THE TUFF TEXT YARN FLAG THAT WE ARE BIDDING ON WILL BE AN IMPROVEMENT OVER THE COMBED YARN FLAG IN THE WAY OF WEARING QUALITY BECAUSE OUR TESTS SHOW THAT OUR BUNTING HAS A GREATER TENSILE STRENGTH IN THE GRAB TEST METHOD BOTH IN THE WARP AND IN THE FILLING THAN THE COMBED YARN MATERIAL HAS AND THAT IS WHERE WE GET OUR WEARING QUALITY.'

THAT THE VALLEY FORGE SALES CORPORATION UNDERSTOOD THAT THE SPECIFICATIONS CALLED FOR ,WELL-COMBED" MATERIAL IS CLEARLY ESTABLISHED BY THE ENCLOSED MEMORANDUM DATED DECEMBER 22, 1939, FROM THE CHIEF, PROCUREMENT DIVISION, VETERANS' ADMINISTRATION, TO MR. KIDD, DIRECTOR OF SUPPLIES, READING AS FOLLOWS:

"PRIOR TO THE OPENING OF INVITATION NO. X-21 FOR BURIAL FLAGS, MR. EPPERLEY, WASHINGTON REPRESENTATIVE OF THE VALLEY FORGE SALES CORPORATION, VISITED MY OFFICE AND CALLED ATTENTION TO THE FACT THAT THERE WAS NO PROVISION IN THE INVITATION REQUIRING A PERFORMANCE BOND, AND REQUESTED THAT AN AMENDMENT BE ISSUED CALLING FOR FLAGS MADE OF WELL-CARDED COTTON INSTEAD OF WELL-COMBED COTTON, AS REQUIRED BY FEDERAL SPECIFICATION CCC-B- 791A, COVERING BUNTING, COTTON, MERCERIZED, OF WHICH THE FLAGS WERE REQUIRED TO BE MADE, AS STATED IN THE INVITATION.

"IT WAS POINTED OUT TO MR. EPPERLEY THAT THE PROVISION FOR PERFORMANCE BOND WAS INADVERTENTLY OMITTED, AND FURTHER, AS REGARDS THE TYPE OF YARN FROM WHICH THE BUNTING WAS TO BE MADE, THAT THIS OFFICE COULD SEE NO REASON FOR AMENDING THE SPECIFICATION INASMUCH AS THIS WAS A REQUIREMENT OF THE FEDERAL SPECIFICATION, NOR WAS IT SEEN HOW ANY CHANGE COULD BE AUTHORIZED UNLESS THE FEDERAL SPECIFICATIONS BOARD ISSUED AN AMENDMENT TO THE FEDERAL SPECIFICATION OR UNLESS THERE WAS SOME COMPELLING REASON ON THE PART OF THE VETERANS' ADMINISTRATION. MR. EPPERLEY STATED THAT HE WAS TAKING THE MATTER UP WITH THE FEDERAL SPECIFICATIONS BOARD FOR THE REASON THAT THERE WERE NOT MANY MILLS THAT MANUFACTURED BUNTING MADE OF WELL- COMBED YARN AND THAT WELL-CARDED YARN WAS JUST AS SATISFACTORY FOR THIS PURPOSE. MR. EPPERLEY WAS FINALLY INFORMED THAT THE MATTER WOULD BE GIVEN CONSIDERATION AND IN THE EVENT IT WAS DECIDED TO CHANGE THE SPECIFICATION, AN AMENDMENT WOULD BE ISSUED.

"THE MATTER WAS DISCUSSED WITH THE FEDERAL SPECIFICATIONS BOARD BUT THE TEXTILE COMMITTEE OF THE BOARD HAD NOT MADE UP ITS MIND AT THAT TIME WHETHER AN AMENDMENT TO THE FEDERAL SPECIFICATION WOULD BE ISSUED, AND HENCE NO AMENDMENT TO THE INVITATION TO BID WAS ISSUED PERMITTING BIDS ON CARDED INSTEAD OF COMBED YARN, ALTHOUGH AN AMENDMENT TO THE INVITATION WAS ISSUED TO STATE THAT A PERFORMANCE BOND WOULD BE REQUIRED OF THE SUCCESSFUL BIDDER.

" MR. EPPERLEY DID NOT RETURN TO MY OFFICE PRIOR TO THE OPENING OF BIDS BUT HE DID VISIT THE PROCUREMENT DIVISION AND WAS IN CONTACT WITH MR. HILKERT, CHIEF, X-RAY AND TEXTILE SECTION, WHO INFORMED MR. EPPERLEY THAT NO AMENDMENT WOULD BE ISSUED PERMITTING BIDS ON BUNTING MADE OF CARDED, AS AGAINST THAT MADE OF COMBED YARN.'

ON NOVEMBER 22, 1939, THE VALLEY FORGE SALES CORPORATION ADDRESSED A LETTER TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, FROM WHICH THE FOLLOWING IS QUOTED:

"IN FURTHER REFERENCE TO VETERANS' ADMINISTRATION CONTRACT NO. VAP 14492, PURCHASE ORDER 40-VA-4552, CALLING FOR INTERMENT FLAGS, FOLLOWING RECEIPT OF YOUR LETTER DATED NOVEMBER 21, RESPONDING TO MY CONVERSATION WITH YOU NOVEMBER 20 AND MY LETTER DATED NOVEMBER 21, WE DESIRE TO MAKE THE FOLLOWING OFFER AND REQUEST.

"AS HAS PREVIOUSLY BEEN STATED, ALL BUNTING ON THIS CONTRACT HAS BEEN PURCHASED AND THE WAY CLEARED AT OUR FACTORY TO GIVE YOUR CONTRACT CLEAR RUNNING. WE ARE OFFERING TO YOU THE IDENTICAL BUNTING WHICH WE HAVE BEEN FURNISHING TO YOUR BUREAU ON PREVIOUS ORDERS RECEIVED AND TO VARIOUS OTHER DEPARTMENTS OF THE FEDERAL GOVERNMENT, THIS BUNTING HAVING BEEN TESTED AND APPROVED BY THE NAVAL INSPECTORS AND BUREAU OF STANDARDS. IN VIEW OF ALL THE ABOVE, TOGETHER WITH THE FACT THAT IF NEW BUNTING HAS TO BE MADE, WE WILL BE OBLIGED TO SHUT DOWN OUR FACTORY, LAYING OFF OVER 50 OF OUR EMPLOYEES, FOR A PERIOD OF OVER TWO MONTHS, ACCORDINGLY, WE WOULD LIKE TO OFFER YOU THE FOLLOWING:

"WE OFFER YOU THE SAME BUNTING AS FURNISHED ON PREVIOUS FEDERAL GOVERNMENT CONTRACTS, MEETING ALL FEDERAL SPECIFICATION REQUIREMENTS EXCEPT THAT THE BUNTING WILL BE WELL CARDED INSTEAD OF COMBED, AT A REDUCTION OF $1,163.96. * * * "

IN 8 COMP. GEN. 649, 651, IT IS STATED:

"* * * THIS OFFICE HAS HELD IN NUMEROUS DECISIONS THAT THE CONTRACT OFFERED THE SUCCESSFUL BIDDER MUST BE THE EXACT CONTRACT WHICH WAS SUBMITTED TO COMPETITION, AND ATTENTION IS INVITED TO 8 COMP. GEN. 299, 300, WHEREIN THERE WAS QUOTED AN EXTRACT FROM AN OPINION DATED OCTOBER 13, 1928, OF THE ATTORNEY GENERAL THAT NO ADMINISTRATIVE OFFICER HAS ANY POWER TO GRANT ANY BIDDER ANY TERM MATERIALLY ADVANTAGEOUS TO HIM WHICH WAS NOT ANNOUNCED IN THE ADVERTISEMENT FOR BIDS AND THAT "THE CONTRACT ENTERED INTO MUST BE THE CONTRACT OFFERED TO THE * * * BIDDER BY ADVERTISEMENT.

TO PERMIT THE VALLEY FORGE SALES CORPORATION TO SUPPLY FLAGS MADE OF "WELL CARDED" MATERIAL INSTEAD OF "WELL COMBED" MATERIAL WOULD, IT IS BELIEVED, BE DOING A DECIDED INJUSTICE TO THE OTHER BIDDERS. HOWEVER, IN 18 COMP. GEN. 114, 116, IT IS STATED:

"* * * CONTRACTING OFFICERS MAY NOT LEGALLY MODIFY EXISTING GOVERNMENT CONTRACTS EXCEPT IN THE INTEREST OF THE UNITED STATES * * *.'

THE VALLEY FORGE SALES CORPORATION, AS ABOVE NOTED, HAS OFFERED TO DEDUCT THE SUM OF $1,163.96, FROM THE CONTRACT PRICE WHICH OF COURSE WOULD BE A MATERIAL SAVING TO THE GOVERNMENT. FURTHERMORE, FLAGS PURCHASED IN THE FUTURE WILL BE MADE FROM "WELL CARDED" MATERIAL, THE SAME MATERIAL WHICH THE VALLEY FORGE SALES CORPORATION DESIRES TO FURNISH UNDER THE CONTRACT IN QUESTION, AS FEDERAL SPECIFICATION CCC-B 791A HAS BEEN AMENDED AS OF OCTOBER 17, 1939, TO SPECIFY ,WELL CARDED" INSTEAD OF "WELL COMBED" MATERIAL.

AFTER REVIEWING THE ENCLOSURES LISTED BELOW, WHICH YOU ARE REQUESTED TO RETURN WITH YOUR REPLY, IT WILL BE APPRECIATED IF YOU WILL ADVISE AT AN EARLY DATE WHETHER THE CONTRACTING OFFICER MAY MODIFY THE CONTRACT WITH THE VALLEY FORGE SALES CORPORATION TO PERMIT IT TO DELIVER FLAGS MADE FROM "WELL CARDED" MATERIAL AT A REDUCTION OF $1,163.96 IF IT BE ADMINISTRATIVELY DETERMINED THAT TO DO SO IS IN THE INTEREST OF THE UNITED STATES.

LETTER OF NOVEMBER 21, 1939, FROM ROY G. EPPERLEY, GOVERNMENT REPRESENTATIVE, VALLEY FORGE SALES CORPORATION, TO THE VETERANS' ADMINISTRATION.

LETTER OF NOVEMBER 21, 1939, FROM ADMINISTRATOR OF VETERANS' AFFAIRS TO ROY G. EPPERLEY, GOVERNMENT REPRESENTATIVE, VALLEY FORGE SALES CORPORATION.

LETTER OF NOVEMBER 22, 1939, FROM ROY G. EPPERLEY, GOVERNMENT REPRESENTATIVE, VALLEY FORGE SALES CORPORATION, TO THE VETERANS' ADMINISTRATION.

LETTER OF NOVEMBER 29, 1939, FROM ADMINISTRATOR OF VETERANS' AFFAIRS TO ROY G. EPPERLEY, GOVERNMENT REPRESENTATIVE, VALLEY FORGE SALES CORPORATION.

LETTER OF DECEMBER 14, 1939, FROM COLONEL O. R. MCGUIRE, ATTORNEY FOR THE VALLEY FORGE SALES CORPORATION, TO THE VETERANS' ADMINISTRATION, AND ATTACHMENTS.

MEMORANDUM OF DECEMBER 22, 1939, FROM CHIEF, PROCUREMENT DIVISION, VETERANS' ADMINISTRATION, TO MR. KIDD, DIRECTOR OF SUPPLIES.

BID OF DETTRA FLAG COMPANY, INC., AND LETTER OF SEPTEMBER 9, 1939, ACCOMPANYING BID.

BID OF COLLEGEVILLE FLAG AND MFG. COMPANY, AND LETTER OF SEPTEMBER 9, 1939, ACCOMPANYING BID.

CONTRACT VAP-14492 WITH VALLEY FORGE SALES CORPORATION.

THE VALLEY FORGE SALES CORPORATION AGREED, BY THE TERMS OF ITS OFFER OF SEPTEMBER 9, 1939, TO FURNISH TO THE UNITED STATES A TOTAL OF 23,088 UNITED STATES FLAGS OF SPECIFIED DIMENSIONS, SAID FLAGS TO BE MADE OF COTTON BUNTING WHICH HAD BEEN "THOROUGHLY CLEANED, WELL COMBED, EVENLY DRAWN, SPUN.' THIS OFFER WAS ACCEPTED UNEQUIVOCALLY ON BEHALF OF THE UNITED STATES ON SEPTEMBER 13, 1939, AND AS OF THAT DATE THERE RESULTED A VALID AND BINDING CONTRACT. SINCE THE CONTRACT AS AWARDED CLEARLY CALLED FOR DELIVERY OF FLAGS EXACTLY AS DESCRIBED IN THE SPECIFICATIONS REFERRED TO IN THE INVITATION--- INCLUDING THE REQUIREMENT THAT THEY BE MADE OF "WELL COMBED" BUNTING--- THERE IS NOT INVOLVED IN THIS CASE ANY QUESTION OF OFFERING A SUCCESSFUL BIDDER A DIFFERENT CONTRACT THAN THE ONE SUBMITTED TO COMPETITION (8 COMP. GEN. 649, 651). RATHER THERE IS INVOLVED HERE THE QUESTION OF WHETHER THIS CONTRACT FOR PURCHASE OF FLAGS, ONCE MADE, MAY BE ALTERED OR MODIFIED BY SUBSEQUENT AGREEMENT OF THE PARTIES SO AS TO PERMIT THE SUBSTITUTION OF BUNTING MADE FROM "CARDED" COTTON FOR BUNTING MADE FROM "COMBED" COTTON. IT IS, OF COURSE, WELL SETTLED THAT MUTUAL ASSENT OF THE PARTIES IS INDISPENSABLE TO ANY MODIFICATION OF A CONTRACT. UTLEY V. DONALDSON, 94 U.S. 29, 47; HAWKINS V. UNITED STATES, 96 U.S. 689, 694. THUS IT IS CLEAR THAT THE CONTRACTOR IN THIS CASE COULD NOT REQUIRE THE UNITED STATES, WITHOUT ITS CONSENT, TO ACCEPT FLAGS MADE OF "CARDED" MATERIAL; ON THE CONTRARY, THE UNITED STATES IS ENTITLED TO INSIST UPON DELIVERY OF SUPPLIES EXACTLY AS CALLED FOR BY THE TERMS OF THE CONTRACT AND IF THE CONTRACTOR REFUSES TO FURNISH THEM THEY MAY BE SECURED ELSEWHERE AND ANY EXCESS COST THEREFOR CHARGED AGAINST ITS ACCOUNT.

ALSO, IT IS WELL SETTLED THAT CONTRACTING OFFICERS MAY NOT LEGALLY MODIFY EXISTING GOVERNMENT CONTRACTS EXCEPT IN THE INTEREST OF THE UNITED STATES. 18 COMP. GEN. 114, 116, AND CASES THERE CITED.

SITUATIONS MAY ARISE, HOWEVER, AFTER AWARD OF A CONTRACT, WHERE IT IS IN THE PUBLIC INTEREST TO MAKE CERTAIN REASONABLE CHANGES OR MODIFICATIONS IN THE TERMS OF AN AGREEMENT. WHERE SUCH IS THE CASE, AND THE PARTIES ARE ABLE MUTUALLY TO AGREE RESPECTING THE DESIRED CHANGES, THERE IS, GENERALLY SPEAKING AND WITHIN REASONABLE LIMITATIONS, NO OBJECTION TO ALTERING THE ORIGINAL CONTRACT SO AS TO INCORPORATE SUCH CHANGES WITHIN ITS TERMS. STATED BY THE ATTORNEY GENERAL IN AN OPINION DATED AUGUST 13, 1895 (21 OP. ATTY. GEN. 207, 208):

IT WOULD BE REMARKABLE, INDEED, IN VIEW OF THE DIVERSITY OF SUBJECTS' MATTER AND CONDITIONS UNDER WHICH PUBLIC CONTRACTS OF THE GOVERNMENT ARE MADE, THAT MODIFICATIONS TO MEET THE INFINITE CONTINGENCIES TO WHICH THE LIMITS OF THE HUMAN FORECAST AND SAGACITY SUBJECT US COULD NOT, EVEN BY CONSENT OF THE CONTRACTING PARTIES, BE MADE WITHOUT RESCINDING AND ABROGATING THE ENTIRE CONTRACT. CERTAINLY NO SUCH RULE IS KNOWN IN THE GENERAL LAW OF CONTRACTS. THE MINDS WHICH AGREED TO FORM MAY IN LIKE MANNER AGREE TO MODIFY. SEE, ALSO, UNITED STATES V. CORLISS STEAM-ENGINE COMPANY, 91 U.S. 321.

IT IS NOT TO BE UNDERSTOOD FROM THE ABOVE, HOWEVER, THAT THE PARTIES TO A CONTRACT MAY, BY A MODIFICATION AGREEMENT, TRANSFORM AN EXISTING CONTRACT INTO AN ENTIRELY NEW AND DIFFERENT ONE. WHILE THE TERM "MODIFY" MEANS "TO CHANGE SOMEWHAT THE FORM OR QUALITIES OF; TO ALTER SOMEWHAT," THE CHANGES MUST NOT BE SUCH AS TO DESTROY IDENTITY. "THE WORD IMPLIES NO POWER TO CREATE OR BRING INTO EXISTENCE, BUT ONLY THE POWER TO CHANGE OR VARY IN SOME PARTICULAR AN ALREADY CREATED OR LEGALLY EXISTING THING.' STATE V. LAWRENCE, 12 ORE. 297, QUOTED WITH APPROVAL IN STATE V. TUCKER, 36 ORE. 291, 51 L.R.A. 246, 250. SEE, ALSO, 40 CORPUS JURIS 1487; SCHNEIDER V. UNITED STATES, 19 CT.1CLS. 547, 551.

NOR IS IT TO BE UNDERSTOOD THAT THE CONTRACTING PARTIES MAY EMPLOY A MODIFICATION AGREEMENT SO AS UNNECESSARILY TO INTERFERE WITH OR DEFEAT THE PURPOSES OF COMPETITIVE BIDDING--- AS BY WAITING UNTIL AFTER AWARD TO MAKE MATERIAL CHANGES IN THE SPECIFICATIONS, WHICH CHANGES WERE BROUGHT TO ATTENTION AND CONSIDERED PRIOR TO AWARD AND, IF THEY HAD BEEN DEEMED NECESSARY OR DESIRABLE, COULD HAVE JUST AS CONVENIENTLY BEEN MADE AT THAT TIME AND BEFORE COMPETITION WAS ELIMINATED. IN THE PRESENT CASE IT WAS CLEARLY MADE KNOWN TO BIDDERS THAT COMBED COTTON WAS REQUIRED. SO FAR AS THE VALLEY FORGE SALES CORPORATION IS CONCERNED, IT IS STATED IN YOUR LETTER THAT PRIOR TO OPENING OF THE BIDS THIS FIRM REQUESTED THAT AN AMENDMENT TO THE SPECIFICATIONS BE ISSUED SO AS TO PERMIT BIDDERS TO FURNISH FLAGS OF WELL CARDED COTTON INSTEAD OF WELL COMBED COTTON. SUCH CHANGE WAS MADE. HAVING RECEIVED AWARD OF THE CONTRACT THIS REQUEST FOR A CHANGE IS NOW RENEWED. IT CANNOT BE SUCCESSFULLY ALLEGED THAT THE CHANGE IS ONE MADE NECESSARY BY CONDITIONS DISCOVERED AFTER AWARD. NEITHER IS IT A CHANGE TO MEET A CONTINGENCY "TO WHICH THE LIMITS OF THE HUMAN FORECAST AND SAGACITY SUBJECT US.' RATHER IT IS A CHANGE WHICH THE CONTRACTOR UNSUCCESSFULLY SOUGHT TO HAVE MADE BEFORE THE CONTRACT WAS ENTERED INTO AND WHICH IT NOW, WITH COMPETITION ELIMINATED, AGAIN SEEKS TO HAVE MADE. WHILE A CHANGE IN THE TYPE OF MATERIAL TO BE USED IN THE PERFORMANCE OF A GOVERNMENT CONTRACT, OR A CHANGE IN THE METHOD TO BE EMPLOYED IN PROCESSING MATERIAL FOR USE IN SUCH A CONTRACT, MIGHT IN A PROPER CASE BE THE SUBJECT OF A MODIFICATION AGREEMENT, THIS DOES NOT APPEAR TO BE SUCH A CASE. WHERE CONTRACTING OFFICIALS OF THE GOVERNMENT HAVE BEEN REQUESTED BEFORE AWARD TO MAKE A MATERIAL ALTERATION IN THE SPECIFICATION REQUIREMENTS BUT UPON CONSIDERATION HAVE REFUSED OR FAILED TO DO SO, SAID OFFICIALS MAY NOT AFTER AWARD HAS BEEN MADE IN ACCORDANCE WITH THE ORIGINAL SPECIFICATION REQUIREMENTS, AND IN THE FACE OF UNCHANGED CONDITIONS, ENTER INTO A MODIFICATION AGREEMENT WITH THE CONTRACTOR FOR THE PURPOSE OF EFFECTING THE SAME CHANGE THAT THEY HAD PREVIOUSLY REFUSED OR FAILED TO MAKE. SEE 13 OP. ATTY. GEN. 510, 511; 17 COMP. GEN. 554, 558.

FURTHERMORE, EVEN IF THE MAKING OF THE PROPOSED MODIFICATION AGREEMENT WERE OTHERWISE UNOBJECTIONABLE IT IS NOT ESTABLISHED BY THE PRESENT RECORD THAT ACCEPTANCE OF THE CHANGE AS PROPOSED BY THE CONTRACTOR WOULD BE IN THE INTEREST OF THE UNITED STATES. THE DETTRA FLAG CO., C., OFFERED TO FURNISH FLAGS MADE OF "COMBED" YARN FOR $3.03 EACH AND, AS AN ALTERNATIVE OFFER, AGREED TO FURNISH FLAGS REPRESENTED AS JUST AS GOOD OR BETTER BUT WHICH WOULD BE MADE OF YARN NOT COMBED FOR $2.55 EACH--- OR APPROXIMATELY 15.84 PERCENT LESS. IT WILL BE NOTED THAT THE CONTRACTOR'S PRESENT OFFER TO REDUCE ITS CONTRACT PRICE BY $1,163.96 ON CONDITION THAT IT BE PERMITTED TO FURNISH FLAGS MADE FROM "CARDED" COTTON REPRESENTS ONLY A 2- PERCENT REDUCTION IN PRICE. THUS WHILE THE DETTRA FLAG CO., INC., OFFERED A 15.84 PERCENT REDUCTION IF PERMITTED TO FURNISH FLAGS MADE FROM COTTON NOT COMBED THE CONTRACTOR SEEKS PRACTICALLY THE SAME PRIVILEGE, WITH COMPETITION ELIMINATED, AT A 2 PERCENT REDUCTION. ALSO, IT MAY BE OBSERVED THAT IF BIDS HAD BEEN SOLICITED ON THE BASIS OF USING CARDED COTTON AND THE COLLEGEVILLE FLAG AND MANUFACTURING CO. HAD, LIKE ITS COMPETITOR, ENTERED A BID 15.84 PERCENT LESS THAN THE ONE IT ENTERED FOR FLAGS MADE FROM COMBED COTTON, ITS BID WOULD HAVE BEEN MATERIALLY LESS THAN THE CONTRACTORS' PRESENT REDUCED PRICE OFFER. FURTHERMORE, IT IS ENTIRELY POSSIBLE THAT IF BIDS HAD BEEN SOLICITED FOR FLAGS MADE FROM CARDED COTTON A NUMBER OF BIDS WOULD HAVE BEEN SUBMITTED IN ADDITION TO THE THREE ACTUALLY RECEIVED. IN THIS CONNECTION ATTENTION IS INVITED TO THE STATEMENT CONTAINED IN THE BRIEF OF THE CONTRACTORS' ATTORNEY THAT "THERE ARE VERY FEW COTTON MILLS IN THE UNITED STATES WHICH ARE EQUIPPED TO COMB FIBER IN THE MANUFACTURE OF COTTON CLOTH.'

IN VIEW OF THE ABOVE, YOU ARE ADVISED THAT THERE IS NO LEGAL AUTHORITY FOR MODIFYING THE CONTRACT WITH THE VALLEY FORGE SALES CORPORATION SO AS TO PERMIT IT TO DELIVER FLAGS MADE FROM ,WELL CARDED" COTTON AT A REDUCTION OF $1,163.96 IN ITS PRESENT CONTRACT PRICE. HOWEVER, IF IT IS ADMINISTRATIVELY DETERMINED THAT FLAGS MADE FROM THE LESS COSTLY "CARDED" COTTON WILL SATISFACTORILY SERVE THE NEEDS OF THE UNITED STATES AND THAT IT WILL BE IN THE INTEREST OF THE GOVERNMENT TO SECURE FLAGS OF THIS TYPE, THERE WOULD APPEAR TO BE NO OBJECTION TO THE MAKING OF AN AGREEMENT WITH THE CONTRACTOR FOR RESCISSION OF THE CONTRACT HERE IN QUESTION ( SAVAGE ARMS CORPORATION V. UNITED STATES, 266 U.S. 217, 220) IN WHICH EVENT, OF COURSE, THE MATTER WOULD BE FOR READVERTISING UNDER PROPER AMENDED SPECIFICATIONS. IF IT BE NOT CONSIDERED IN THE INTEREST OF THE UNITED STATES TO CHANGE THE CONTRACT REQUIREMENTS, OR IF THE CONTRACTOR WILL NOT AGREE TO A RESCISSION OF THE EXISTING AGREEMENT, THEN PERFORMANCE OF THE CONTRACT IN STRICT ACCORDANCE WITH ITS TERMS SHOULD BE REQUIRED.