B-160063, FEB. 10, 1967

B-160063: Feb 10, 1967

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THIS MATTER WAS THE SUBJECT OF AN ADMINISTRATIVE REPORT DATED OCTOBER 7. THIS WAS FURTHER AMPLIFIED ON PAGE 3 OF THE INVITATION WHERE IT WAS STATED: "QUANTITY TO BE ORDERED: THE STATEMENT OF QUANTITY AS SHOWN ON PAGE 1 OF THIS INVITATION IS GIVEN AS AN ESTIMATE ONLY OF OUR REQUIREMENTS DURING THE PERIOD SPECIFIED FOR THE BIDDERS' INFORMATION. BIDS WILL BE CONSIDERED UNDER THIS INVITATION WHICH PROVIDE THAT TOTAL DELIVERIES SHALL NOT EXCEED A CERTAIN SPECIFIED UANTITY. NO PROPOSAL WILL BE CONSIDERED WHICH REQUIRES THE GOVERNMENT TO ORDER ANY DEFINITE QUANTITY.'. THE LAST PHRASE IN THE QUANTITIES CLAUSE OF THE PRESENT CONTRACT STATES THAT: "* * * NO PROPOSAL WILL BE CONSIDERED WHICH REQUIRES THE GOVERNMENT TO ORDER ANY DEFINITE QUANTITY.'.

B-160063, FEB. 10, 1967

TO COMMISSIONER OF INDUSTRIES:

WE REFER AGAIN TO A LETTER DATED SEPTEMBER 14, 1966, FROM THE U.S. COMPRESSED GAS COMPANY, KING OF PRUSSIA, PENNSYLVANIA, REQUESTING PRICE RELIEF IN THEIR CONTRACT 14PI-3950 FOR THE SUPPLY OF PROPANE GAS TO THE FEDERAL PRISON INDUSTRIES, INC., LEWISBURG, PENNSYLVANIA.

THIS MATTER WAS THE SUBJECT OF AN ADMINISTRATIVE REPORT DATED OCTOBER 7, 1966, FROM THE ASSISTANT SECRETARY. ENCLOSED PLEASE FIND A COPY OF OUR LETTER OF TODAY TO THE U.S. COMPRESSED GAS COMPANY STATING THAT WE CANNOT APPROVE THE RELIEF REQUESTED.

DURING THE INVESTIGATION OF CLAIMANT'S REQUEST HOWEVER, QUESTIONS AROSE WHICH WE FEEL SHOULD BE BROUGHT TO YOUR ATTENTION. FIRST, THE INVITATION CALLED FOR AN ESTIMATED QUANTITY OF 95,000 GALLONS OF PROPANE GAS. THIS WAS FURTHER AMPLIFIED ON PAGE 3 OF THE INVITATION WHERE IT WAS STATED:

"QUANTITY TO BE ORDERED: THE STATEMENT OF QUANTITY AS SHOWN ON PAGE 1 OF THIS INVITATION IS GIVEN AS AN ESTIMATE ONLY OF OUR REQUIREMENTS DURING THE PERIOD SPECIFIED FOR THE BIDDERS' INFORMATION, AND SHALL NOT IN ANY CASE RELIEVE THE CONTRACTOR FROM HIS OBLIGATION TO FILL ALL ORDERS PRESENTED DURING THE TERM OF THIS CONTRACT, PROVIDED HOWEVER, BIDS WILL BE CONSIDERED UNDER THIS INVITATION WHICH PROVIDE THAT TOTAL DELIVERIES SHALL NOT EXCEED A CERTAIN SPECIFIED UANTITY; BUT NO PROPOSAL WILL BE CONSIDERED WHICH REQUIRES THE GOVERNMENT TO ORDER ANY DEFINITE QUANTITY.'

THE LAST PHRASE IN THE QUANTITIES CLAUSE OF THE PRESENT CONTRACT STATES THAT:

"* * * NO PROPOSAL WILL BE CONSIDERED WHICH REQUIRES THE GOVERNMENT TO ORDER ANY DEFINITE QUANTITY.'

IN COMPTROLLER GENERAL DECISION B-101099, DATED MARCH 7, 1951, THE GOVERNMENT WAS PURCHASING SOCIAL SECURITY FORMS IN ESTIMATED QUANTITIES. THE QUANTITY CLAUSES IN THE TWO CONTRACTS INVOLVED THERE WERE VERY SIMILAR TO THAT IN THE INSTANT CONTRACT. THEY PROVIDED IN PERTINENT PART:

"QUANTITY: NO SPECIFIC QUANTITY OR NUMBER OF ORDERS CAN BE GUARANTEED * *

THE COMPTROLLER GENERAL HELD THAT, UNDER THESE TERMS, NO OBLIGATION TO PURCHASE WAS IMPOSED UPON THE BUYER, IN THIS CASE THE GOVERNMENT. THOUGH THE LANGUAGE HERE IS A BIT STRONGER THAN THAT USED IN OUR CONTRACT, AND THOUGH THE TERM "SPECIFIC QUANTITY" APPEARS, WHILE OUR CONTRACT USES THE TERM "DEFINITE QUANTITY," WE FEEL THE TERMS ARE SYNONYMOUS; INDEED, THEY ARE SO DEFINED IN WEBSTER'S SEVENTH NEW COLLEGIATE DICTIONARY AND IN FUNK AND WAGNALLS NEW STANDARD DICTIONARY OF THE ENGLISH LANGUAGE.

IT IS GENERALLY RECOGNIZED THAT "REQUIREMENTS" OR "NEEDS" CONTRACTS ARE VALID AND ENFORCEABLE INASMUCH AS THE PURCHASER PROMISES TO FILL ALL OF ITS REQUIREMENTS OR NEEDS IF ANY, FROM THE SELLER AND THE SELLER AGREES TO SUPPLY SUCH NEEDS. IN SUCH CASES THERE ARE PROMISES BY BOTH PARTIES TO DO SOMETHING. SEE GOVERNMENT CONTRACTS, SECTIONS 21.10 AND 21.20 BY MCBRIDE AND WACHTEL. HOWEVER, WHEN THE SITUATION IS SUCH THAT PERFORMANCE IS TOTALLY DEPENDENT UPON THE WISH, WILL, OR WANT OF ONE OF THE PARTIES, AN ENFORCEABLE CONTRACT DOES NOT EXIST BECAUSE OF A LACK OF MUTUALITY. THIS REGARD SEE WILLARD, SUTHERLAND AND COMPANY V. UNITED STATES, 262 U.S. 489 (1923). WHILE WE REALIZE THAT THE FACTS IN THE WILLARD CASE ARE DISTINGUISHABLE FROM THE FACTS AT HAND, WE FEEL THAT CASE AND THE OTHER AUTHORITIES MENTIONED ABOVE INDICATE THAT EXTRA CARE NEED BE TAKEN IN THE DRAFTING OF REQUIREMENTS CONTRACTS.

WE SUGGEST, THEREFORE, IN THE FUTURE THAT LANGUAGE BE USED IN ESTIMATED QUANTITY TYPE CONTRACTS WHICH IS SUFFICIENT TO OBLIGATE THE GOVERNMENT SO THAT THE CONTRACTS WILL NOT BE OPEN TO THE ALLEGATION THAT THEY ARE UNENFORCEABLE FOR LACK OF MUTUALITY. THIS CAN BE DONE SIMPLY ENOUGH WITH THE INSERTION OF A PHRASE TO THE EFFECT THAT WHATEVER QUANTITIES OF THE PRODUCT IN QUESTION WHICH THE USING ACTIVITY MAY NEED IT WILL PURCHASE FROM THE CONTRACTOR; OR, IF THE USING ACTIVITY PREFERS, IT MAY PROMISE TO PURCHASE AT LEAST A STATED MINIMUM NUMBER OF UNITS FROM THE CONTRACTOR.

ALSO, IF THIS WAS A KNOWN ANNUAL REQUIREMENT, WE BELIEVE PROMPTER SOLICITATION WOULD HAVE PERMITTED PROCUREMENT BY ADVERTISING RATHER THAN NEGOTIATION.

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