B-148464, MAY 7, 1962

B-148464, MAY 7, 1962

TO THE SECRETARY OF THE NAVY:

BY LETTER DATED MARCH 20, 1962, R11.2, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, THERE WAS SUBMITTED FOR OUR CONSIDERATION A CLAIM OF THE NAVY PURCHASING OFFICE AGAINST THE CONSOLIDATED DIESEL ELECTRIC CORPORATION, STAMFORD, CONNECTICUT, FOR $21,420, REPRESENTING EXCESS FREIGHT COSTS WHICH ALLEGEDLY WERE INCURRED BY THE GOVERNMENT IN CONNECTION WITH THE SHIPMENT OF 21 OF THE 32 AIR TRANSPORTABLE MOTOR VANS PURCHASED FROM THE CONSOLIDATED DIESEL ELECTRIC CORPORATION UNDER CONTRACT NO. N600 (17) 52069.

ON FEBRUARY 4, 1959, THE NAVY PURCHASING OFFICE ISSUED INVITATION FOR BIDS NO. 600-1378-59, COVERING A PROPOSED PROCUREMENT OF ONE OF THE TWO SPECIFIED LOTS OF AIR TRANSPORTATION MOTOR VANS, WITH RELATED TECHNICAL AND CATALOGING DATA AND RELATED PUBLICATIONS. BIDS WERE INVITED ON THE BASIS OF DELIVERY TO SPECIFIED DESTINATIONS, ALL TRANSPORTATION CHARGES PAID, OR DELIVERY F.O.B. ORIGIN, OR BOTH, AND THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD ON SUCH DELIVERY BASIS AS THE CONTRACTING OFFICER DETERMINED TO BE MOST ADVANTAGEOUS TO THE GOVERNMENT. LOT NO. 1 WAS SELECTED FOR PROCUREMENT AFTER OPENING OF BIDS AND AN AWARD IN THE TOTAL AMOUNT OF $508,694 WAS MADE TO THE CONSOLIDATED DIESEL ELECTRIC CORPORATION ON JUNE 3, 1959. THAT AMOUNT INCLUDED $4,367 FOR PUBLICATIONS. THE BALANCE OF $504,327 COVERED THE PURCHASE OF 32 VANS, WITH RELATED TECHNICAL AND CATALOGING DATA, AT AN F.O.B. ORIGINA PRICE OF $15,676 PER VAN FOR 21 VANS AND AT A PRICE OF $15,921 PER VAN, INCLUDING TRANSPORTATION COSTS TO CHERRY POINT, NORTH CAROLINA, FOR 11 VANS.

THE VANS PURCHASED AT THE F.O.B. ORIGIN PRICE OF $15,676 PER VAN WERE SCHEDULED FOR DELIVERY TO DESTINATIONS AS FOLLOWS: 11 VANS TO THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, AND 10 VANS TO THE MARINE CORPS AIR STATION, IRVINE, CALIFORNIA (IF BY TRUCK, EL TORO, SNATA ANA, CALIFORNIA). THE CONTRACTOR HAD QUOTED AN F.O.B. ORIGIN PRICE OF $15,676 PER VAN ON ALL 32 VANS AND DESTINATION PRICES OF $16,098 AND $16,041 PER VAN, RESPECTIVELY, FOR DELIVERY, ALL TRANSPORTATION CHARGES PAID, TO OAKLAND, CALIFORNIA, AND IRVINE, CALIFORNIA.

WHEN THE CONTRACTOR'S BID WAS EVALUATED THE CONTRACTING OFFICER ASSUMED OR POSSIBLE WAS INFORMED THAT THE CONTRACTOR INTENDED TO MANUFACTURE THE 11 VANS SCHEDULED FOR EAST COAST DELIVERY AT THE CONTRACTOR'S PLANT IN STAMFORD, CONNECTICUT, AND TO MANUFACTURE THE 21 VANS SCHEDULED FOR WEST COAST DELIVERY AT THE CONTRACTOR'S PLANT IN VAN NUYS, CALIFORNIA. ACCORDINGLY, THE DOCUMENT ISSUED ON JUNE 3, 1959, ACCEPTING THE CONTRACTOR'S BID SET FORTH THE PLANTS AT STAMFORD, CONNECTICUT, AND VAN NUYS, CALIFORNIA, IN EACH OF TWO PARAGRAPHS ENTITLED "PLACE OF DELIVERY: ORIGIN" AND "INSPECTION AND ACCEPTANCE.' HOWEVER, ALL 32 VANS DELIVERED UNDER THE CONTRACT WERE MANUFACTURED AT THE CONTRACTOR'S PLANT IN STAMFORD, CONNECTICUT.

THE GOVERNMENT REPORTEDLY PAID TRANSPORTATION CHARGES OF $23,436ON SHIPMENTS FROM STAMFORD, CONNECTICUT, TO OAKLAND, CALIFORNIA, AND IRVINE, CALIFORNIA. IT HAS BEEN DETERMINED ADMINISTRATIVELY THAT THE COST OF TRANSPORTING THE 21 UNITS INVOLVED WOULD HAVE BEEN $2,016 IF THE SHIPMENTS HAD ORIGINATED AT OR NEAR THE PLANT IN VAN NUYS, CALIFORNIA. THE CONTRACTOR WAS REQUESTED TO REIMBURSE THE GOVERNMENT FOR THE DIFFERENCE OF $21,420 BUT THE CONTRACTOR REFUSED TO DO SO. THE PARTIES AGREED TO SUBMIT THE MATTER FOR DECISION BY OUR OFFICE, PRELIMINARY TO FURTHER ADMINISTRATIVE CONSIDERATION UNDER THE TERMS OF THE "CHANGES" AND "DISPUTES" CLAUSES OF STANDARD FORM 32, OCTOBER 1957 EDITION, INCORPORATED BY REFERENCE AS A PART OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS AND THE RESULTING CONTRACT AWARD.

THE PROCEDURE ADOPTED IN THIS CASE IS UNUSUAL IN THAT WE WOULD NOT BE AUTHORIZED TO CONSIDER THE NAVY'S CLAIM AT THIS TIME IF WE BELIEVED THAT THE ISSUES PRESENTED WERE PRIMARILY OF A FACTUAL NATURE AND, AS SUCH, REQUIRING INDEPENDENTLY ARRIVED AT ADMINISTRATIVE DECISIONS UNDER THE ,CHANGES" AND "DISPUTES" CLAUSES. HOWEVER, SINCE THE CLAIM INVOLVES ESSENTIALLY A QUESTION OF LAW, IT IS APPARENT THAT EITHER OUR OFFICE OR THE COURTS WOULD HAVE IMMEDIATE JURISDICTION TO DETERMINE ITS MERITS. SEE INTERNATIONAL POTATO CORP. V. UNITED STATES, 142 CT.CL. 604, 607; AND ATLANTIC CARRIERS V. UNITED STATES, 131 F.SUPP. 1,5.

THE INFORMATION FOR BIDS REQUIRED BIDDERS TO FURNISH CERTAIN INFORMATION CONCERNING PLACE OF ANY PROPOSED ORIGIN DELIVERY AND PLACE WHERE EQUIPMENT WOULD BE AVAILABLE FOR INSPECTION PRIOR TO SHIPMENT IN THE CASE OF AN AWARD BASED UPON PRICES FOR EITHER OR BOTH F.O.B. ORIGIN AND DESTINATION DELIVERIES. IN ONE OF THE FOUR SPACES PROVIDED AT PAGE 6 OF THE BIDDING SCHEDULE FOR INSERTION OF INFORMATION CONCERNING PLACE OF F.0.B. ORIGIN DELIVERY, THE CONTRACTOR LISTED STAMFORD, CONNECTICUT, AND VAN NUYS, CALIFORNIA, AS THE "CITY OR TOWN IN WHICH PLANT IS LOCATED.' INSERTIONS IN THE REMAINING THREE SPACES, SHOWING PROPOSED SHIPPING POINTS FOR RAIL, TRUCK AND WATER SHIPMENTS, ARE CONSISTENT WITH THE NAMING OF TWO PLANT LOCATIONS IN THE FIRST SPACE. HOWEVER, AT PAGE 7 OF THE BIDDING SCHEDULE, WHERE INFORMATION WAS TO BE SET FORTH REGARDING PLACE FOR INSPECTION OF SUPPLIES FOR CONFORMANCE WITH CONTRACT REQUIREMENTS, THE CONTRACTOR LISTED STAMFORD, CONNECTICUT, AS THE LOCATION OF ITS MANUFACTURING FACILITY AND INDICATED THAT MATERIAL WOULD BE OFFERED FOR INSPECTION AT SUCH PLANT.

BY LETTER DATED JULY 6, 1959, APPROXIMATELY ONE MONTH AFTER ACCEPTANCE OF ITS BID, THE CONTRACTOR ADVISED THE NAVY PURCHASING OFFICE THAT IT INTENDED TO MANUFACTURE THE END ITEMS CALLED FOR UNDER THE CONTRACT AT STAMFORD. THE LETTER REFERS TO THE DATA FURNISHED RESPECTING F.O.B. ORIGIN DELIVERIES AS HAVING BEEN BASED UPON ALLOWING THE CONTRACTOR AN OPTION TO SELECT THE DESIRED LOCATION. THE LETTER STATES THAT: "OUR INTENTION IS EVIDENCED BY THE UNIFORMITY OF ORIGINAL PRICES. IF WE HAD INTENDED OTHERWISE, WE WOULD NECESSARILY HAVE BEEN REQUIRED TO CONSIDER VARIATIONS IN INCOMING FREIGHT COSTS FOR MATERIAL.' CONTRACT MODIFICATION 1, DATED JULY 20, 1959, AMENDED THE CONTRACT TO AGREE WITH THE CONTRACTOR'S EXPRESSED DETERMINATION TO MANUFACTURE AND OFFER ALL OF THE EQUIPMENT FOR INSPECTION AT THE FACILITY IN STAMFORD, CONNECTICUT. THE CONTRACT MODIFICATION STATES IN PART THAT "THE PRICE AND ALL OTHER TERMS AND CONDITIONS OF THE CONTRACT REMAIN UNCHANGED.'

IT IS THE POSITION OF THE SUCCESSOR CONTRACTING OFFICER AND THE BUREAU OF SUPPLIES AND ACCOUNTS THAT THE ISSUANCE OF MODIFICATION NO. 1 WITHOUT EQUITABLE PRICE ADJUSTMENT CONSTITUTED THE SURRENDER OF A VESTED RIGHT OF THE GOVERNMENT AND, SINCE NO OFFICER OF THE GOVERNMENT IS AUTHORIZED TO GIVE AWAY ANY SUCH RIGHT, THE INCREASED COSTS DUE TO THE CHANGE IN THE F.O.B. ORIGIN POINT FOR VANS SCHEDULED FOR DELIVERY TO WEST COAST DESTINATIONS SHOULD BE RECOVERED FROM THE CONTRACTOR. IN A LETTER WRITTEN IN RESPONSE TO THE CONTRACTOR'S REQUEST FOR A WRITTEN STATEMENT SETTING FORTH THE LEGAL BASIS FOR THE NAVY'S CLAIM, THERE WAS CITED 39 COMP. GEN. 726. IN THAT CASE IT WAS HELD THAT THE GRANTING OF A DEVIATION FROM CONTRACT REQUIREMENTS, WHICH REDUCED THE CONTRACTOR'S COSTS AND WAS NOT SUPPORTED BY CONSIDERATION TO THE GOVERNMENT, DID NOT PRECLUDE THE GOVERNMENT FROM ASSERTING A CLAIM FOR A PRICE ADJUSTMENT UNDER THE CONTRACT "CHANGES" CLAUSE. IT WAS STATED IN THE DECISION THAT IT IS AXIOMATIC THAT NO OFFICER OF THE GOVERNMENT IS AUTHORIZED TO GIVE AWAY "SUCH A VESTED RIGHT" AND THAT THE GOVERNMENT, INDEPENDENTLY OF STATUTE, HAS THE RIGHT TO RECOVER FUNDS WHICH ITS AGENTS HAVE WRONGFULLY, ERRONEOUSLY, OR ILLEGALLY PAID.

INITIALLY THE CONTRACTOR WAS ADVISED THAT, PRIOR TO EVALUATION AND AWARD, THE NAVY PURCHASING OFFICE WAS ASSURED THAT THE BID PRICES REPRESENTED THE MANUFACTURE OF EQUIPMENT AT VAN NUYS, CALIFORNIA, FOR WEST COAST DELIVERY AND AT STAMFORD, CONNECTICUT, FOR EAST COAST DELIVERY; AND THAT,"ACCORDINGLY EVALUATION AND AWARD THEREOF WAS MADE WITH THIS UNDERSTANDING.'

THE RECORD BEFORE US DOES NOT CONTAIN EVIDENCE TO SHOW THAT ANY ASSURANCE WAS GIVEN BY THE CONTRACTOR BEFORE AWARD OF THE CONTRACT THAT THE VANS REQUIRED FOR WEST COAST DELIVERY WOULD BE MANUFACTURED AT THE PLANT IN VAN NUYS, CALIFORNIA. NOR DOES THE RECORD CONTAIN EVIDENCE WHICH SUPPORTS THE CONTRACTORS' ALLEGATION THAT, DURING THE FACILITY SURVEY CONDUCTED PRIOR TO AWARD, THE GOVERNMENT WAS ADVISED THAT ALL OF THE 32 VANS BID ON WOULD BE MANUFACTURED AT AND SHIPPED FROM THE STAMFORD PLANT.

THE CONTRACTOR CONTENDS THAT ITS COSTS WERE NEITHER INCREASED NOR DECREASED AS THE RESULT OF THE ACTION TAKEN BY THE CONTRACTING OFFICER IN ISSUING CONTRACT MODIFICATION NO. 1. THE CONTRACTOR FURTHER CONTENDS THAT IT HAD THE RIGHT TO RELY ON THE CONTRACT AMENDMENT AND THAT ITS ISSUANCE WAS THE SOLE CAUSE OF ANY ADDITIONAL COSTS THE GOVERNMENT MAY HAVE INCURRED IN THE TRANSPORTATION OF THE VANS SCHEDULED FOR WEST COAST DELIVERY. IT IS ARGUED THAT, IF THE NAVY HAD SOUGHT A PRICE REDUCTION TO COMPENSATE IT FOR ANY ADDITIONAL FREIGHT COSTS, THE DECISION WOULD HAVE BEEN MADE TO COMMENCE PRODUCTION IN CALIFORNIA IN ORDER NOT TO SUSTAIN THE ADDITIONAL COST OF FREIGHT; AND THAT, IN VIEW OF THE CONFUSION OVER THE POINT OF INSPECTION, THERE WAS NO LACK OF CONSIDERATION FOR THE CONTRACT AMENDMENT. IT IS SUGGESTED THAT THERE WAS A VALID CONSIDERATION SINCE THE GOVERNMENT WAS REQUIRED TO INSPECT AT ONLY ONE SITE RATHER THAN TWO SITES AND THE CONTRACTOR RELINQUISHED THE BENEFIT OF HAVING PERSONNEL IN ITS WESTERN FACILITY TRAINED TO MAKE THE VANS ON FURTHER PROCUREMENTS. IT IS ALSO SUGGESTED THAT ADDITIONAL BENEFITS MAY HAVE INURED TO THE GOVERNMENT AS THE RESULT OF THE CONTRACT AMENDMENT SUCH AS EARLIER DELIVERY THAN POSSIBLE FROM THE WEST COAST PLANT, MORE CONFORMABILITY, INTERCHANGEABILITY OF PARTS, ETC.

THE CONTRACTOR REQUESTED THAT IN THE CONSIDERATION OF THE QUESTION AS TO WHETHER OR NOT THE CONTRACTING OFFICER ACTED BEYOND THE SCOPE OF HIS AUTHORITY, OUR DECISION, 39 COMP. GEN. 726, SHOULD BE COMPARED WITH A BOARD OF CONTRACT APPEALS CASE INVOLVING THE WICKS ENGINEERING AND CONSTRUCTION COMPANY. WE ASSUME THAT THE CITED CASE HAS REFERENCE TO AN APPEAL OF THAT COMPANY UNDER A CONTRACT WITH THE DEPARTMENT OF THE INTERIOR WHICH WAS CONSIDERED BY THE INTERIOR BOARD OF CONTRACT APPEALS IN DECISIONS RENDERED ON NOVEMBER 30, 1960, AND JANUARY 18, 1961, IBCA 191.

THE ORIGINAL DECISION OF THE INTERIOR BOARD OF CONTRACT APPEALS IN THE CASE OF THE APPEAL OF WICKS ENGINEERING AND CONSTRUCTION COMPANY SUSTAINED ONE OF THE APPELLANT'S CLAIMS WHICH RELATED TO AN ATTEMPTED ADJUSTMENT BY SUBSEQUENT CHANGE ORDER OF AN AGREED UPON AMOUNT TO BE PAID BY THE GOVERNMENT FOR EXCAVATION OF ROCK IN EXCESS OF THE CONTRACT SPECIFICATION FIGURE OF 150 CUBIC YARDS. THE BOARD CONCLUDED THAT IT WAS BEYOND THE POWER OF THE CONTRACTING OFFICER OR THAT OF HIS SUPERIORS TO UNILATERALLY ISSUE A CHANGE ORDER REDUCING THE PRICE OF THE WORK PERFORMED WITHOUT THE APPELLANT'S CONSENT. THE BOARD'S DECISION OF JANUARY 18, 1961, ON THE GOVERNMENT'S MOTION FOR RECONSIDERATION, CITED VARIOUS AUTHORITIES IN SUPPORT OF ITS ORIGINAL DECISION ON THE PARTICULAR CLAIM. THE BOARD ALSO POINTED OUT THAT THE CASE OF SALEM PRODUCTS CORPORATION, CONSIDERED IN 39 COMP. GEN. 726, AND IN PRIOR DECISIONS OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS, DID NOT INVOLVE AN ATTEMPT TO UPSET A PRICE ADJUSTMENT PREVIOUSLY AGREED TO BY BOTH PARTIES TO THE CONTRACT.

ASSUMING THAT THE DECISIONS IN THE CASE OF THE APPEAL OF THE WICKS ENGINEERING AND CONSTRUCTION COMPANY WERE CORRECT, THAT CASE CANNOT BE CONSIDERED AS A PRECEDENT FOR HOLDING THAT THE GOVERNMENT IS BOUND BY ALL AGREEMENTS WHICH MODIFY THE TERMS OF EXISTING CONTRACTS WHETHER OR NOT THE AGREEMENTS HAVE BEEN ENTERED INTO IN ACCORDANCE WITH CONTRACT PROVISIONS FOR THE MAKING OF EQUITABLE PRICE ADJUSTMENTS BASED UPON AUTHORIZED CHANGES IN CONTRACT SPECIFICATIONS WHICH DO NOT GO BEYOND THE GENERAL SCOPE OF THE CONTRACT WORK. UNDER THE MINIMAL STANDARD OF REVIEW AS SET FORTH IN PUBLIC LAW 356, APPROVED MAY 11, 1954, 68 STAT. 81, 41 U.S.C. 321, 322, A CONTRACT AMENDMENT UNDER THE "CHANGES" ARTICLE OF A CONTRACT MUST NOT BE CONTRARY TO LAW OR BASED UPON A DECISION WHICH IS EITHER FRAUDULENT, CAPRICIOUS, ARBITRARY, SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. A CONTRACTING OFFICER IS NOT AUTHORIZED TO SURRENDER A VESTED CONTRACT RIGHT OF THE GOVERNMENT NOR TO ENTER INTO SUPPLEMENTAL AGREEMENTS RELATING TO CHANGES IN CONTRACT REQUIREMENTS WHICH OBVIOUSLY ARE PREJUDICIAL TO THE INTERESTS OF THE GOVERNMENT.

IN SALEM PRODUCTS CORPORATION V. UNITED STATES, 298 F.2D 808, THE UNITED STATES COURT OF APPEALS, SECOND CIRCUIT, AGREED WITH THE POSITION TAKEN BY OUR OFFICE AND THE ARMED SERVICES BOARD OF CONTRACT APPEALS IN THE SAME MATTER. THE COURT OF APPEALS DISAGREED WITH THE DISTRICT JUDGE'S FINDING AS A MATTER OF LAW THAT THE CONTRACTING OFFICER HAD AGREED TO THE CHANGE IN CONTRACT SPECIFICATIONS WITHOUT CHANGE IN PRICE, AND THE COURT STATED: "IN FACT IT IS VERY DOUBTFUL THAT THE CONTRACTING OFFICER HAD THE AUTHORITY TO WAIVE THE GOVERNMENT'S RIGHT TO RECOVER A SAVING IN THE CONTRACT PRICE. SEE BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 CT.CL. 584, 607 (1934).'

OUR OFFICE HAS CONSISTENTLY FOLLOWED THE RULE THAT THE NAMING OF AN F.O.B. POINT IN A CONTRACT FIXES THE MAXIMUM LIABILITY OF THE GOVERNMENT FOR FREIGHT. IN 28 COMP. GEN. 953, IT WAS HELD THAT THE ISSUANCE OF A CHANGE ORDER AT THE REQUEST AND FOR THE CONVENIENCE OF THE CONTRACTOR, AUTHORIZING THE SHIPMENT OF CERTAIN MATERIALS ON GOVERNMENT BILLS OF LADING FROM A PLACE OTHER THAN THE F.O.B. SHIPPING POINT DESIGNATED IN THE CONTRACT, WITH THE STIPULATION THAT ALL OTHER TERMS AND CONDITIONS OF THE CONTRACT REMAIN UNCHANGED, IS NOT TO BE REGARDED AS IMPOSING A LIABILITY ON THE GOVERNMENT FOR THE ADDITIONAL FREIGHT COSTS RESULTING THEREFROM, NOTWITHSTANDING THE FACT THAT THE DESTINATION POINT WAS UNDETERMINED AT THE TIME OF THE ISSUANCE OF THE CHANGE ORDER. IT WAS STATED IN THE DECISION THAT:

"* * * SINCE NO CONSIDERATION ACCRUED TO THE GOVERNMENT THROUGH THE ISSUANCE OF THE SAID CHANGE ORDER, THE GOVERNMENT WAS ENTITLED TO HAVE THE CONTRACT PERFORMED IN ACCORDANCE WITH THE INITIAL AGREEMENT. IT HAS BEEN HELD REPEATEDLY THAT NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER ANY RIGHT VESTED IN THE GOVERNMENT UNDER A CONTRACT. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168; SIMPSON V. UNITED STATES, 172 U.S. 372; UNITED STATES V. AMERICAN SALES RP., 27 F.2D 389.'

THE CONTRACTOR STATES THAT NO DISCUSSIONS WERE HAD PERTAINING TO ANY COST REDUCTION IN VIEW OF THE FACT THAT THE QUESTIONABLE CONTRACT AMENDMENT INCLUDED THE STATEMENT THAT "THE PRICES AND ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.' APPARENTLY THE CONTRACTING OFFICER ERRONEOUSLY ASSUMED THAT ALL OF THE CONTRACT ITEMS WERE BEING PURCHASED ON THE BASIS OF QUOTED DESTINATION PRICES AND, THEREFORE, NO FREIGHT ADJUSTMENT WOULD BE REQUIRED. ON THE POINT AS TO WHICH PARTY CAUSED THE INCREASED COSTS OF TRANSPORTATION, IT APPEARS THAT THE CONTRACTOR WAS PRIMARILY RESPONSIBLE, CONSIDERING THAT ITS BID LISTED MORE THAN ONE F.O.B. ORIGIN POINT OF DELIVERY AND THAT, UPON EXERCISING ITS ASSERTED RIGHT TO HAVE ALL OF THE 32 VANS MANUFACTURED AT ONE PLANT, THE CONTRACTOR INDICATED THAT ITS "ORIGINAL" BID PRICES WERE UNIFORM AND FAILED TO MENTION ANY PROBLEM CONCERNING FREIGHT COST DIFFERENTIALS, ALTHOUGH IT HAD QUOTED DESTINATION PRICES FOR WEST COAST DELIVERY WHICH OBVIOUSLY WOULD BE CONSIDERABLY LESS THAN THE DELIVERED COST OF 21 OF THE 32 VANS AFTER ADDING TO THE F.O.B. ORIGIN PRICE THE FREIGHT CHARGES APPLICABLE TO SHIPMENT OF SUCH EQUIPMENT FROM STAMFORD, CONNECTICUT, TO CALIFORNIA.

IN ANY EVENT, WE DO NOT AGREE THAT THE CONTRACTOR HAD THE RIGHT TO RELY UPON THE CONTRACT AMENDMENT AS HAVING RELINQUISHED ANY VALID CONTRACTUAL RIGHT OF THE GOVERNMENT TO RECOVER EXCESS FREIGHT COSTS RESULTING FROM THE SHIPMENT OF 21 VANS FROM A SHIPPING POINT OTHER THAN AS CONTEMPLATED AT THE TIME OF MAKING AWARD OF THE CONTRACT. IT IS A WELL-ESTABLISHED RULE THAT ,ANYONE ENTERING INTO AN ARRANGEMENT WITH THE GOVERNMENT TAKES THE RISK OF HAVING ASCERTAINED THAT HE WHO PURPORTS TO ACT FOR THE GOVERNMENT STAYS WITHIN THE BOUNDS OF HIS AUTHORITY.' FEDERAL CROP INSURANCE CORP. V. MERRIL, 332 U.S. 380,384.

WE DOUBT THAT THE CONTRACTOR'S MANUFACTURING COSTS WERE NOT DECREASED AS THE RESULT OF THE CHANGE IN THE CONTEMPLATED METHOD OF ACCEPTING DELIVERY OF THE 21 VANS. HOWEVER, WE CONSIDER THIS QUESTION TO BE IMMATERIAL FROM THE STANDPOINT THAT THE GOVERNMENT'S MAXIMUM LIABILITY FOR FREIGHT EVIDENTLY WAS FIXED AT THE TIME OF THE CONTRACT AWARD. IN OUR OPINION, THE CONTRACTOR MUST BE PRESUMED TO HAVE KNOWN FROM THER TERMS OF THE INVITATION FOR BIDS THAT THE NAVY WAS INTERESTED IN OBTAINING EQUIPMENT AT THE LOWEST POSSIBLE DELIVERED COSTS AND THAT IT WOULD NOT HAVE AGREED TO PAY THE F.O.B. ORIGIN PRICE OF $15,676 PER VAN FOR THE 21 VANS SCHEDULED FOR DELIVERY TO WEST COAST DESTINATIONS EXCEPT UPON THE BASIS OF A BELIEF THAT THE SHIPMENTS WOULD ORIGINATE AT THE PLANT IN VAN NUYS, CALIFORNIA.

IT IS HIGHLY SPECULATIVE WHETHER ANY INCIDENTAL BENEFITS ACCRUED TO THE GOVERNMENT IN THE MATTER, WITH RESPECT TO ANY POSSIBLE SAVING IN INSPECTION COSTS, THE CONTRACTOR INSISTED THAT IT INTENDED AND HAD THE RIGHT TO MAKE THE DESIRED SELECTION OF PLANT LOCATION FOR MANUFACTURING PURPOSES AFTER RECEIPT OF CONTRACT AWARD. WE BELIEVE THAT THE CONTRACTOR IS NOT NOW IN A POSITION TO MAINTAIN THAT IT RELINQUISHED ANY RIGHT AS AN INDUCEMENT TO THE GOVERNMENT TO PERMIT INSPECTION AND ACCEPTANCE AT ONLY ONE OF THE TWO PLANTS REFERRED TO IN THE BID AND THE BID ACCEPTANCE DOCUMENT. AS IN THE CASE OF 28 COMP. GEN. 953, THE CONCLUSION APPEARS TO BE REQUIRED THAT THE CONTRACT AMENDMENT MUST BE REGARDED AS HAVING BEEN ISSUED SOLELY FOR THE CONTRACTOR'S CONVENIENCE AND WHOLLY WITHOUT CONSIDERATION OF ANY KINDMOVING TO THE GOVERNMENT.

ACCORDINGLY, WE AGREE WITH THE BUREAU OF SUPPLIES AND ACCOUNTS THAT THE AMOUNT OF THE INCREASED FREIGHT COSTS SHOULD BE RECOVERED FROM THE CONTRACTOR.