B-142716, MAY 12, 1961

B-142716, MAY 12, 1961

TO ROCKHILL, VANDERVEER, KENNEDY AND LEE:

WE HAVE YOUR LETTER OF MARCH 15, 1961, ON BEHALF OF J. D. WALLACE AND COMPANY, INCORPORATED, REQUESTING RECONSIDERATION OF THEIR CLAIM ARISING OUT OF CANCELLATION OF CONTRACT NO. AF 09/603/-35205 IN THE REDUCED AMOUNT OF $29,828.61.

J. D. WALLACE AND COMPANY SUBMITTED THE LOW BID FOR THE PROCUREMENT WHICH WAS ADVERTISED UNDER INVITATION NO. 09-603-60-635, ISSUED SEPTEMBER 8, 1959. SOME QUESTION THEN AROSE AS TO THE RESPONSIVENESS OF THE LOW BID, BUT THE MATTER WAS DROPPED WHEN THE PROCUREMENT WAS CANCELLED. THE PROCUREMENT OFFICE LATER DETERMINED THAT THE SAWS WERE STILL NEEDED AND ASKED THE BIDDERS IF THEY WOULD BE WILLING TO REINSTATE THEIR BIDS. WALLACE RESPONDED IN THE AFFIRMATIVE BY LETTER OF DECEMBER 8, 1959. THE QUESTION OF THE RESPONSIVENESS OF THE LOW BID WAS AGAIN PLACED IN ISSUE BUT, AFTER THE CONTRACTING OFFICER RECEIVED A TELEGRAM SENT ON DECEMBER 10, 1959, WHICH STATED THAT WALLACE PROPOSED TO FURNISH THE ARTICLE IN CONFORMITY WITH THE SPECIFICATIONS CONTAINED IN THE INVITATION, A CONTRACT WAS AWARDED TO THAT FIRM ON JANUARY 26, 1960.

IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, AN INSPECTION TEAM WAS SENT BY THE PROCURING AGENCY ON MARCH 29, 1960, TO THE WALLACE PLANT TO INSPECT THE PROTOTYPE MODEL. THIS WAS FOUND NOT TO CONFORM TO THE SPECIFICATIONS IN FIVE RESPECTS. THE CONTRACTOR AGREED TO REMEDY THE FIVE DEFICIENCIES. HOWEVER, IT WAS NO LONGER POSSIBLE TO MAKE DELIVERY OF THE FIRST 18 SAWS ON APRIL 5, 1960, AS ORIGINALLY REQUIRED. A SUPPLEMENTAL AGREEMENT, EFFECTIVE MAY 3, 1960, WAS ENTERED INTO EXTENDING THE DELIVERY DATE OF THE FIRST 18 SAWS TO MAY 23, 1960, AND REDUCING THE CONTRACT PRICE BY $78, $1 PER SAW.

MEANWHILE, THAT AWARD WAS PROTESTED AND, UPON DUE CONSIDERATION, WE FOUND THAT THE BID ORIGINALLY SUBMITTED BY WALLACE WAS NOT RESPONSIVE TO THE SPECIFICATIONS IN AT LEAST TWO ASPECTS--- THE MEANS OF PREVENTING MOVEMENT OF THE CUTTING HEAD RELATIVE TO THE UPRIGHT COLUMN AND THE POWER BRAKE. THIS DETERMINATION APPEARS TO HAVE BEEN BORNE OUT BY THE FAILURE OF THE PROTOTYPE SUBMITTED IN ACCORDANCE WITH THE TERMS OF THE CONTRACT TO MEET THE SPECIFICATIONS FOR THESE AND OTHER REASONS. ACCORDINGLY, WE CONCLUDED IN OUR DECISION B-142716, JUNE 13, 1960 (39 COMP. GEN. 832), THAT THE WALLACE BID WAS NOT RESPONSIVE TO THE INVITATION, THAT THE AWARD WAS ERRONEOUS AND SHOULD BE DISAVOWED BY THE UNITED STATES, AND THAT THE CONTRACTOR SHOULD BE ADVISED THAT NO FURTHER DELIVERIES WOULD BE ACCEPTED.

PURSUANT TO OUR INSTRUCTIONS THE CONTRACT WAS CANCELLED ON OR ABOUT JUNE 23, 1960. THE ONLY DELIVERY MADE UNDER THE CONTRACT WAS THAT OF MAY 26, 1960, COMPRISING THE FIRST 18 UNITS, WHICH UNDER THE SUPPLEMENTAL AGREEMENT WERE TO BE FURNISHED BY MAY 23. WE ARE ADVISED THAT PAYMENT IN THE AMOUNT OF $13,106.16 WAS MADE ON MAY 28, 1960, BY THE AIR FORCE FOR THE DELIVERY.

BY LETTER OF DECEMBER 8, 1960, WITH ENCLOSURES, YOU SUBMITTED ON BEHALF OF WALLACE A CLAIM IN THE AMOUNT OF $49,956.82, LESS ANY RECEIPTS REALIZED FROM SALVAGE OPERATIONS. IN OUR DECISION B-142716, FEBRUARY 6, 1961, WE DENIED THE CLAIM ON THE GROUNDS THAT THE CONTRACT WAS INVALID BECAUSE THE BID SUBMITTED BY WALLACE DID NOT CONFORM TO THE SPECIFICATIONS IN THE INVITATION AS REQUIRED BY SECTION 2305 (C) OF TITLE 10, U.S.C. WE HELD, FURTHER, THAT UNDER THE STATED CIRCUMSTANCES PAYMENT WAS AUTHORIZED ONLY ON A QUANTUM VALEBAT BASIS FOR THE VALUE RECEIVED BY THE GOVERNMENT. SINCE THE ONLY BENEFITS OBTAINED BY THE GOVERNMENT WERE THE 18 SAWS COMPRISING THE FIRST DELIVERY FOR WHICH PAYMENT HAD ALREADY BEEN MADE, WE HELD THERE WAS NO LEGAL BASIS UPON WHICH TO ALLOW ANY PART OF THE ADDITIONAL AMOUNT CLAIMED.

IN YOUR LETTER OF MARCH 15, YOU REQUEST RECONSIDERATION OF THE CLAIM IN A REDUCED AMOUNT, $29,828.61, WHICH REPRESENTS THE PROPORTION OF THE CONTRACT PRICE FOR THE REMAINING 60 SAWS EQUAL TO THE PERCENTAGE OF COMPLETION OF THE SAWS AT THE TIME OF CANCELLATION, LESS THE AMOUNT REALIZED FROM OTHER DISPOSITION OF THE MATERIALS. WHILE YOU DO NOT DISPUTE THE GENERAL PRINCIPLES OF LAW APPLIED IN OUR DECISION OF FEBRUARY 6, 1961, YOU CONTEND THAT THE CASES CITED AS PRECEDENT ARE NOT APPLICABLE BECAUSE OF THE FREEDOM FROM FRAUD AND THE EXTREME HARDSHIP PRESENT IN THIS CASE. YOU STATE THAT THE DENIAL OF THE CLAIM IS "MANIFESTLY UNFAIR, UNJUST AND INEQUITABLE" BECAUSE OF THE LAPSE OF TIME BETWEEN AWARD AND CANCELLATION, THE DIRECTION BY THE CONTRACTING AGENCY TO PROCEED WITH THE WORK, THE ACCEPTANCE OF AND PAYMENT FOR THE 18 SAWS, THE TYING UP OF THE FIRM'S CREDIT AND FACILITIES, AND THE CONSEQUENCES OF THE DENIAL ON THE CLAIMANT AND ITS SUPPLIERS.

WE CANNOT AGREE THAT THE PRINCIPLES OF LAW CITED IN OUR DECISION OF FEBRUARY 6, 1961, ARE NOT APPLICABLE HERE BECAUSE OF THE GOOD FAITH OF THE CLAIMANT AND THE RESULTING HARDSHIP. AS WE NOTED IN OUR EARLIER DECISION, GOOD FAITH IS NOT A FACTOR IN THE APPLICATION OF THE PRINCIPLES. SEE COLLER V. CITY OF ST. PAUL, 26 N.W.2D 835; DIAMOND V. CITY OF MANKATO, 93 N.W. 911; AND KONIG V. MAYOR, ETC., OF BALTIMORE, 95 A. 478. THE PROPOSITIONS URGED IN YOUR LETTER ON BEHALF OF YOUR CLIENT RELATE TO THE EQUITIES SUPPORTING THE CLAIM RATHER THAN ANY LEGAL ENTITLEMENT TO THE STATED AMOUNT. THE JURISDICTION OF OUR OFFICE IN MATTERS OF THIS KIND LIMITS OUR AUTHORITY TO SETTLE CLAIMS AGAINST THE UNITED STATES TO THOSE HAVING A LEGAL BASIS. WE HAVE NO AUTHORITY TO ALLOW CLAIMS BASED SOLELY ON EQUITABLE OR MORAL CONSIDERATIONS. THE CLAIM, THEREFORE, MUST AGAIN BE DENIED.