B-150630, B-150637, AUG. 9, 1963, 43 COMP. GEN. 142

B-150630, B-150637, AUG. 9, 1963, 43 COMP. GEN. 142

CONTRACTS - INCREASED COSTS - ACTS OF GOD, STORMS, ETC. . CONTRACTS - INCREASED COSTS - COST GREATER THAN CONTEMPLATED - SUPPLIER CHANGE A CONTRACTOR WHO CLAIMS INCREASED COSTS IN PERFORMANCE OF A COMPLETED CONTRACT FOR SUPPLYING CITRUS FRUIT JUICE TO THE VETERANS ADMINISTRATION BECAUSE OF A FREEZE THAT DAMAGED THE CITRUS CROP ON THE BASIS OF THE DEFAULT CLAUSE IN THE CONTRACT WHICH RELIEVES THE CONTRACTOR FOR EXCESS COSTS FOR PERFORMANCE FAILURE DUE TO ACTS OF GOD MAY NOT HAVE THE DEFAULT CLAUSE WHICH IS APPLICABLE ONLY TO FAILURE TO PERFORM INVOKED AS A BASIS FOR RECOVERING INCREASED COSTS IN THE PERFORMANCE OF THE CONTRACT AND, IN THE ABSENCE OF A SHOWING THAT THE CONTRACTOR WAS REQUIRED TO PURCHASE CITRUS PRODUCTS FROM A SOURCE OF SUPPLY UNREASONABLY DISTANT FROM THAT CONTEMPLATED UNDER THE CONTRACT, THE CLAIM FOR INCREASED COSTS MUST BE DENIED. A CONTRACTOR WHO HAD 26 DAYS TO OBTAIN STOCKS TO FULFILL A CONTRACT FOR SUPPLYING FRUIT JUICE BEFORE A FREEZE DAMAGED THE CITRUS CROP AND WHO CLAIMS LOSSES AS A RESULT OF HAVING TO OBTAIN THE FRUIT FOR COMPLETION OF THE REMAINING DELIVERIES AT A HIGHER PRICE FROM A SOURCE ABOUT 100 MILES DISTANT HAS NOT ACTED AS A PRUDENT, RESPONSIBLE CONTRACTOR TO BE REGARDED AS WITHOUT FAULT OR NEGLIGENCE TO BE ENTITLED TO RELIEF UNDER THE "CONTEMPLATED SOURCE OF SUPPLY" THEORY IN DILLON V. UNITED STATES, 140 CT.CL. 508, UNDER WHICH A CONTRACTOR WHO WAS REQUIRED TO OBTAIN STOCKS AT AN UNREASONABLE DISTANCE FROM THE AREA CONTEMPLATED BY THE PARTIES WAS GRANTED LIMITED RELIEF.

TO DAVID BILGORE AND CO., INC., AUGUST 9, 1963:

WE REFER TO YOUR CLAIMS FOR ADDITIONAL CHARGES FOR SUPPLYING GRAPEFRUIT JUICE, GRAPEFRUIT AND ORANGE JUICE BLEND AND ORANGE JUICE UNDER CONTRACTS V7018P-4227B AND V7018P-4189B WITH THE VETERANS ADMINISTRATION (HEREAFTER VA), BASED ON AN "ACT OF GOD" AS SET FORTH IN PARAGRAPH 11 OF STANDARD FORM 32, GENERAL PROVISIONS, WHICH WAS MADE A PART OF EACH CONTRACT. CONTRACT V7018P-4227B (HEREAFTER 4227B) WAS AWARDED TO YOUR FIRM ON DECEMBER 7, 1962. THE CONTRACTING OFFICER REPORTS THAT THE CONTRACT COVERED THE FOLLOWING ITEMS, WITH DELIVERY POINTS AS INDICATED:

CHART

FSN 8915-170-5125 GRAPEFRUIT JUICE, FANCY, GRADE A, NATURAL, 46-OZ. CAN AT $1.949 PER DOZEN.

ITEM 1. SOMERVILLE, N.J.--- 9846 DOZ.

FSN 8915-252-7685 GRAPEFRUIT AND ORANGE JUICE BLEND, NATURAL, 46 OZ. CAN AT $2.099 PER DOZ.

ITEM 7. SOMERVILLE, N.J.--- 5830 DOZ.

ITEM 9. HINES, ILL.--- 3681 DOZ.

ITEM 11. GSA CLEAR FIELD, UTAH--- 200 DOZ.

THE SUBJECT INVITATION FOR BIDS PROVIDED THAT THESE ITEMS WERE TO BE PACKED FROM FRUIT HARVESTED AFTER SEPTEMBER 1962 ONLY, AND YOUR BID WAS ON THE BASIS OF FOB ORIGIN, CLEARWATER, FLORIDA. THE CONTRACT AWARD NOTICE STATED THAT THE COMPLETION DATE OF THE CONTRACT WOULD BE THE WEEK OF FEBRUARY 18, 1962 (SIC 1963).

CONTRACT V7018P-4189B (HEREAFTER 4189B) WAS AWARDED TO YOUR FIRM ON NOVEMBER 16, 1962, AND, AS REPORTED BY THE CONTRACTING OFFICER, COVERED THE FOLLOWING ITEMS, FOB ORIGIN PACKED FROM FRUIT OF THE 1962 CROP ONLY WITH DELIVERY AS INDICATED:

TABLE

FSN 8915-241-2800 JUICE, ORANGE, CANNED, NATURAL SINGLE STRENGTH, GRADE A FANCY, 46-OZ. CANS AT $2.39 PER DOZEN.

ITEM 6. WILMINGTON, CALIF.--- 2540 DOZ., DELIVERY WK. OF 1-28-63

ITEM 7. HINES, ILL.--- 1205 DOZ., DELIVERY WK. OF 12-10-62

ITEM 8. FRANCONIA, VA. (REG. 3/--- 1200 DOZ., DELIVERY WK. OF

12-31-62

ITEM 9A. GALLUP, N. MEX. (REG. 8/--- 1000 DOZ., DELIVERY WK. OF

12-31-62

EXCEPT WHERE SPECIFICALLY INDICATED THE FOLLOWING FACTS AND CIRCUMSTANCES, AS REPORTED BY THE CONTRACTING OFFICER, ARE COMMON TO BOTH CONTRACTS: ON DECEMBER 19, 1962, MR. R. H. PRIDE OF YOUR FIRM TELEPHONED AND ADVISED MR. F. W. GILLOW, VA SENIOR PROCUREMENT AGENT, THAT, DUE TO THE SEVERITY OF THE FLORIDA FREEZE ON DECEMBER 13 AND 14, 1962, YOU WOULD BE UNABLE TO SUPPLY THE PRODUCTS CONTRACTED FOR AND REQUESTED CANCELLATION, WHICH WAS CONFIRMED BY YOUR LETTER OF THE SAME DATE. IMMEDIATELY UPON RECEIPT OF YOUR LETTER OF CONFIRMATION, THE VA CONTACTED THE UNITED STATES DEPARTMENT OF AGRICULTURE TO ASCERTAIN THE EXTENT OF DAMAGE TO THE CITRUS CROP IN THE CLEARWATER, FLORIDA, AREA WHICH COULD BE USED AS A GUIDE IN CONSIDERING YOUR REQUEST FOR CANCELLATION. THE REPLY FROM THE DEPARTMENT OF AGRICULTURE INDICATED THAT CITRUS PRODUCTS WERE IN SHORT SUPPLY BUT THAT IT WAS TOO EARLY TO ACCURATELY DETERMINE THE PERCENTAGE OF LOSS. ON DECEMBER 26, 1962, MR. PRIDE WAS ADVISED BY TELEPHONE TO SUBMIT ADDITIONAL JUSTIFICATION FOR THE REQUESTED CANCELLATION ACTION POINTING OUT SPECIFIC DETAILS AS TO THE EXTENT OF DAMAGE CAUSED BY THE SEVERE WEATHER, AND HOW THIS HAD AFFECTED YOUR ABILITY TO COMPLETE THE CONTRACTS.

BY LETTER OF DECEMBER 29, 1962, TO THE VA, WHICH WAS ACCOMPANIED WITH CLIPPINGS FROM LOCAL NEWSPAPERS, MR. PRIDE DESCRIBED THE SEVERITY OF THE CITRUS FREEZE AND ITS EFFECTS AND AGAIN REQUESTED RELIEF FROM LIABILITY CONNECTED WITH THESE CONTRACTS ON THE BASIS OF AN ACT OF GOD. THEREAFTER, BY LETTER OF JANUARY 4, 1963, YOU ADVISED THE VA, IN PERTINENT PART, AS FOLLOWS:

WITH PARTICULAR REFERENCE TO ORDER 63-HI-40453 (CONTRACT NO. 4189B), ON THIS CONTRACT WE HAVE REMAINING UNSHIPPED 4740 CASES 12/46 OZ. UNSWEETENED ORANGE JUICE. YOU WILL RECALL THAT WE STATED WE ARE RUNNING ORANGE JUICE TO TRY AND SALVAGE AS MUCH OF THE CROP AS POSSIBLE. THE COST OF THIS FRUIT KEEPS GOING UP, WHILE THE YIELD PER BOX OF FRUIT GOES DOWN. THE YIELDS PER BOX WILL BE LESS EACH DAY AS THE DAMAGED FRUIT BECOMES DRYER, THEREFORE, OUR COSTS OF PRODUCING INCREASE DAILY. THIS IS PARTICULARLY TRUE FOR ORANGES THAT WILL MAKE GRADE A UNSWEETENED ORANGE JUICE SINCE FRUIT WITH HIGH BRIX AND HIGH SOLIDS, AS REQUIRED TO MAKE UNSWEETENED JUICE, IS VERY SCARCE IT IS IN GREAT DEMAND AND COMMANDS TOP PRICES. CANNERS ARE NOW QUOTING 12/46 OZ. UNSWEETENED ORANGE JUICE AT $4.25 PER CASE, FOB CANNERY. IN AN ATTEMPT TO FULFILL THIS CONTRACT, AND IN LINE WITH OUR CONVERSATION, WE FEEL THAT WE CAN COMPLETE THE CONTRACT AT $3.25 PER CASE, FOB CANNERY. THIS PRICE IS $1.00 UNDER THE CURRENT MARKET, WHICH UNDOUBTEDLY WILL BE HIGHER AS THE SEASON PROGRESSES. SHIPMENTS COULD BE MADE FAIRLY PROMPT.

WITH REFERENCE TO ORDER 63-HI-40509 (CONTRACT NO. 4227B), NO DELIVERIES HAVE BEEN MADE AGAINST THIS CONTRACT TO THIS DATE, AND THE TOTAL UNSHIPPED QUANTITIES CALLED FOR ARE 9846 CASES 12/46 OZ. UNSWEETENED GRAPEFRUIT JUICE AND 9711 CASES 12/46 OZ. UNSWEETENED GRAPEFRUIT AND ORANGE BLENDED JUICE. CONFIRMING OUR CONVERSATION, WE WILL MAKE EVERY EFFORT TO DELIVER AGAINST THIS CONTRACT AT AN ADJUSTED PRICE OF $3.00 PER CASE FOR THE 12/46 OZ. UNSWEETENED GRAPEFRUIT AND ORANGE BLENDED JUICE, FOB CANNERY. WE FEEL THAT WE COULD PRODUCE THESE ITEMS AND GET THEM READY FOR DELIVERY ON OR ABOUT FEBRUARY 1, 1963.

THE CONTRACTING OFFICER REPORTS THAT IN RESPONSE TO THE REQUEST FOR PRICE ADJUSTMENTS AS SET FORTH IN YOUR JANUARY 4 LETTER ABOVE, MR. GILLOW OF THE VA ADVISED YOU BY TELEPHONE ON JANUARY 7, 1963, THAT INASMUCH AS YOU WERE CURRENTLY PRODUCING CITRUS PRODUCTS, THE VA COULD NOT RELIEVE YOU OF YOUR CONTRACTS OR NEGOTIATE PRICE INCREASES, BUT THAT YOU COULD SUBMIT A SEPARATE CLAIM FOR THE PROPOSED PRICE INCREASES WITH ALL PERTINENT INFORMATION JUSTIFYING THE SAME. BY LETTER OF JANUARY 23, 1963, YOU EXPRESSED YOUR INTENT TO FULFILL THE TERMS OF THE CONTRACTS ALTHOUGH CONSIDERABLE DIFFICULTY WAS BEING EXPERIENCED IN DOING SO. YOU FURTHER INDICATED THAT YOU INTENDED TO SEEK RELIEF UNDER THE ACT OF GOD PROVISIONS OF PARAGRAPH 11, STANDARD FORM 32.

WITH RESPECT TO CONTRACT 4227B THE CONTRACTING OFFICER REPORTS THAT UNITED STATES DEPARTMENT OF AGRICULTURE CERTIFICATES OF INSPECTION SHOW THAT ALL JUICES FURNISHED WERE PACKED IN JANUARY AND FEBRUARY 1963. IT IS FURTHER REPORTED THAT ALL SHIPMENTS ON THIS CONTRACT HAVE BEEN COMPLETED, THE LAST ONE EVIDENTLY DURING THE WEEK OF FEBRUARY 11, 1963. WITH RESPECT TO CONTRACT 4189B IT IS REPORTED THAT VERIFICATION OF COMPLETED DELIVERIES WAS RECEIVED BY THE VA ON APRIL 11, 1963.

AS TO THE EXTENT OF DAMAGE CAUSED BY THE FREEZE, THE CONTRACTING OFFICER REPORTS THE FOLLOWING:

4. UNDER DATE OF JANUARY 22, 1963, THE U.S. DEPARTMENT OF AGRICULTURE CROP PRODUCTION REPORT STATES "A SHARPLY REDUCED CITRUS CROP IS NOW ESTIMATED, PRIMARILY AS THE RESULT OF THE FLORIDA FREEZE OF DECEMBER 11 THRU 14, 1962. FRUIT IN THE INTERIOR AND ON THE WEST COAST OF FLORIDA WAS SEVERELY DAMAGED. THE 1962-1963 ORANGE CROP IS ESTIMATED AT 115 MILLION BOXES, DOWN 35 MILLION BOXES FROM LAST MONTH'S ESTIMATE, TWENTY-THREE MILLION BOXES BELOW THE 1961-62 CROP AND 6 PERCENT BELOW AVERAGE. THE GRAPEFRUIT CROP, AT 35 MILLION BOXES, IS DOWN 18 PERCENT FROM LAST MONTH.' * * *

THE CONTRACTING OFFICER FURTHER REPORTS THAT DEFAULT ACTION ON THESE CONTRACTS UNDER THE "ACT OF GOD" PROVISIONS OF PARAGRAPH 11 OF STANDARD FORM 32 WAS NOT FELT TO BE APPLICABLE INASMUCH AS YOU STATED THAT YOU WERE CAPABLE AND WILLING TO PERFORM PROVIDED THAT YOU COULD LATER FILE A CLAIM FOR ADDITIONAL COSTS RESULTING FROM THE FREEZE.

UPON COMPLETION OF THE CONTRACTS HERE INVOLVED YOU SUBMITTED TWO CLAIMS IN THE TOTAL AMOUNT OF $33,104.34 TO THE VETERANS ADMINISTRATION WHICH FORWARDED THEM TO OUR OFFICE FOR SETTLEMENT AS DOUBTFUL CLAIMS. CONTRACT 4227B THE AMOUNT CLAIMED IS $23,342.94 AND ON CONTRACT 4189B THE AMOUNT CLAIMED IS $9,761.40.

PARAGRAPH 11 OF STANDARD FORM 32 (SEPTEMBER 1961 EDITION) PROVIDES, IN PERTINENT PART, AS FOLLOWS:

11. DEFAULT

(A) THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (C) BELOW, BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR, TERMINATE THE WHOLE OR ANY PART OF THIS CONTRACT IN ANY ONE OF THE FOLLOWING CIRCUMSTANCES:

(I) IF THE CONTRACTOR FAILS TO MAKE DELIVERY OF THE SUPPLIES OR TO PERFORM THE SERVICES WITHIN THE TIME SPECIFIED HEREIN OR ANY EXTENSION THEREOF; OR

(II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THIS CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE.

(B) IN THE EVENT THE GOVERNMENT TERMINATES THIS CONTRACT IN WHOLE OR IN PART AS PROVIDED IN PARAGRAPH (A) OF THIS CLAUSE, THE GOVERNMENT MAY PROCURE, UPON SUCH TERMS AND IN SUCH MANNER AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE, SUPPLIES OR SERVICES SIMILAR TO THOSE SO TERMINATED, AND THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS FOR SUCH SIMILAR SUPPLIES OR SERVICES: PROVIDED, THAT THE CONTRACTOR SHALL CONTINUE THE PERFORMANCE OF THIS CONTRACT TO THE EXTENT NOT TERMINATED UNDER THE PROVISIONS OF THIS CLAUSE.

(C) EXCEPT WITH RESPECT TO DEFAULTS OF SUBCONTRACTORS, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF THE FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES MAY INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT IN EITHER ITS SOVEREIGN OR CONTRACTUAL CAPACITY, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER; BUT IN EVERY CASE THE FAILURE TO PERFORM MUST BE BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. IF THE FAILURE TO PERFORM IS CAUSED BY THE DEFAULT OF A SUBCONTRACTOR, AND IF SUCH DEFAULT ARISES OUT OF CAUSES BEYOND THE CONTROL OF BOTH THE CONTRACTOR AND SUBCONTRACTOR, AND WITHOUT THE FAULT OR NEGLIGENCE OF EITHER OF THEM, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS FOR FAILURE TO PERFORM, UNLESS THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.

IT SHOULD BE NOTED THAT PARAGRAPH 11 APPLIES, BY ITS EXPRESS TERMS, ONLY TO DEFAULTS AND FAILURE TO PERFORM. THE PROVISIONS OF THE PARAGRAPH DO NOT PROVIDE A BASIS FOR RECOVERY OF ADDITIONAL COSTS RESULTING FROM LOSSES AND DIFFICULTIES IN PERFORMANCE IN CARRYING OUT A CONTRACT; AND IT HAS BEEN SO HELD. DILLON V. UNITED STATES, 140 CT.CL. 508, 156 F.SUPP. 719.

IN THE DILLON CASE, THE PLAINTIFFS ENTERED INTO A CONTRACT WITH THE UNITED STATES TO DELIVER CERTAIN QUANTITIES OF HAY. PLAINTIFFS WERE LOCATED IN VINITA, OKLAHOMA, AND THE HAY WAS TO BE DELIVERED TO FORT RENO, OKLAHOMA, DURING THE MONTHS OF JULY, AUGUST AND SEPTEMBER 1952. THE AREA COMPRISING 5 OR 6 COUNTIES IN NORTHEASTERN OKLAHOMA WITHIN A RADIUS OF 50 MILES FROM THE CITY OF VINITA WAS RECOGNIZED AS A PRINCIPAL PRAIRIE HAY- PRODUCING AREA WITHIN THE STATE OF OKLAHOMA. IN THE YEAR 1952, DURING THE MONTH OF JUNE, AN UNUSUALLY SEVERE DROUGHT PREVAILED NOT ONLY IN OKLAHOMA BUT IN SOME OF THE SURROUNDING STATES. THE PLAINTIFFS REPEATEDLY REQUESTED CANCELLATION OF THE CONTRACT ON THE GROUND THAT IT WAS IMPOSSIBLE TO FULFILL THE CONTRACT WITH HAY PURCHASED IN OKLAHOMA AS THERE WAS NOT SUFFICIENT HAY TO MEET THE DEMAND; THAT THE FARMERS WERE REFUSING TO SELL IT; AND THAT THE PRICE HAD GONE MUCH HIGHER THAN THE RATE SPECIFIED IN THE CONTRACT. HOWEVER, THE CONTRACTING OFFICER REFUSED TO CANCEL THE CONTRACT AND INSISTED ON THE HAY BEING DELIVERED. SUBSEQUENTLY, THE PLAINTIFFS ADVISED THAT THEY WOULD DELIVER THE HAY BUT WOULD LATER PUT IN A CLAIM FOR THE INCREASED COSTS OF PERFORMANCE. THE PLAINTIFFS THEN PURCHASED THE HAY WHEREVER AVAILABLE AND AT WHATEVER PRICE THAT MIGHT BE NECESSARY IN THE STATE OF OKLAHOMA, AND IN ORDER TO COMPLETE THE CONTRACT, PURCHASED SIX RAILROAD CARS OF HAY IN THE STATE OF NEBRASKA. IN COMPLETING THE CONTRACT, THE PLAINTIFFS SUSTAINED A NET LOSS OF $17,298.48 AND FILED SUIT IN THE COURT OF CLAIMS TO RECOVER THIS AMOUNT ON THE BASIS, AS IN THE CASE BEFORE US, THAT THE DEFAULT CLAUSE OF THE CONTRACT (WHICH WAS SUBSTANTIALLY THE SAME AS PARAGRAPH 11, STANDARD FORM 32 INVOLVED HERE), RELIEVED THE CONTRACTORS OF ANY LIABILITY FOR EXCESS COSTS IF FAILURE TO PERFORM AROSE OUT OF CERTAIN CAUSES NOT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. ONE OF THE CAUSES LISTED IN THE CONTRACT WAS UNUSUALLY SEVERE WEATHER. THE COURT OF CLAIMS HELD THAT SINCE THE TERMS OF THE CONTRACT PROVIDED FOR RELIEF ONLY FOR FAILURE TO PERFORM THERE WAS NO AUTHORITY TO GRANT THE PRINCIPAL PART OF THE RELIEF SOUGHT. HOWEVER, THE COURT DID ALLOW RECOVERY OF $1,480.32 REPRESENTING DELIVERY OF THE HAY PURCHASED IN NEBRASKA ON THE BASIS, AS STATED BY THE COURT: HOLD THAT IT WAS CONTEMPLATED AND WELL UNDERSTOOD BY BOTH PARTIES THAT IN DELIVERING HAY UNDER THE CONTRACT THE PLAINTIFFS EXPECTED TO OBTAIN IT, AND TH DEFENDANT EXPECTED TO RECEIVE IT, FROM SOURCES NOT UNREASONABLY DISTANT FROM THE DELIVERY POINT CONTAINED IN THE CONTRACT, AND THAT NEWPORT, NEBRASKA, WHERE PLAINTIFFS WERE COMPELLED TO GO TO PURCHASE THE SIX CARLOADS OF HAY MENTIONED, WAS AN UNREASONABLE DISTANCE AND CLEARLY BEYOND THE AREA IN CONTEMPLATION OF BOTH PARTIES TO THE CONTRACT.

THE RATIONALE OF THE COURT IN ALLOWING RECOVERY FOR THE HAY PURCHASED IN NEBRASKA WAS BASED UPON LANGUAGE FOUND IN THE OPINION OF MITCHELL CANNERIES, INC. V. UNITED STATES, 111 CT.CL. 228. SEE, ALSO, HARGIS CANNERIES, INC. V. UNITED STATES, 60 F.SUPP. 729. BECAUSE THE MITCHELL AND HARGIS CASES INVOLVED SUCCESSFUL SUITS BY CONTRACTORS BASED UPON "ACT OF GOD" PROVISIONS SIMILAR TO THOSE INVOLVED IN THE DILLON CASE WE THINK IT WOULD BE APPROPRIATE TO DISCUSS THEM BRIEFLY HERE.

AT THE OUTSET IT SHOULD BE NOTED THAT THE MITCHELL AND HARGIS CASES INVOLVED SUITS TO RECOVER FUNDS WITHHELD BY THE UNITED STATES AS EXCESS COSTS RESULTING FROM FAILURE TO DELIVER THE PRODUCTS (BLACKBERRIES) INVOLVED IN THE CONTRACTS. BOTH CASES INVOLVED UNUSUALLY HEAVY RAINFALL WHICH SEVERELY CURTAILED THE SUPPLY OF PRODUCT AND, AFTER DEFAULTS, THE UNITED STATES TERMINATED THE CONTRACTS, PURCHASED THE NECESSARY PRODUCT IN THE OPEN MARKET AT HIGHER PRICES AND WITHHELD FUNDS DUE THE CONTRACTORS TO SATISFY THE GOVERNMENT'S CLAIMS FOR EXCESS COSTS. IN BOTH CASES THE CONTRACTING OFFICER FOUND THAT FAILURE TO DELIVER WAS DUE TO UNFORESEEABLE CAUSES. THE COURTS (FEDERAL DISTRICT COURT, ARKANSAS W.D., IN HARGIS AND COURT OF CLAIMS IN MITCHELL) ENTERED JUDGMENT FOR THE CONTRACTORS FOR THE AMOUNTS PREVIOUSLY WITHHELD.

IT IS APPARENT FROM THESE FACTS, AS BRIEFLY OUTLINED, THAT THE HARGIS AND MITCHELL CASES ARE CLEARLY DISTINGUISHABLE FROM THE DILLON DECISION. HARGIS AND MITCHELL THE COURTS ALLOWED RECOVERY FOR FUNDS OWING THE CONTRACTORS THAT HAD BEEN WITHHELD AFTER TERMINATION OF THE CONTRACTS BY THE GOVERNMENT--- THEY DID NOT HOLD THAT THE CONTRACTORS WERE ENTITLED TO RECOVER FOR LOSSES SUSTAINED IN PERFORMING THEIR CONTRACTS. IN OTHER WORDS, THE SEVERE WEATHER CONDITIONS INVOLVED IN THOSE CASES AFFORDED PROPER DEFENSES AGAINST CLAIMS BY THE GOVERNMENT FOR FAILURE TO PERFORM BUT DID NOT AFFORD AN AFFIRMATIVE BASIS FOR RECOVERY OF INCREASED COSTS OF PERFORMANCE. MOREOVER, THE COURT OF CLAIMS IN THE DILLON DECISION WAS WELL AWARE OF THE MITCHELL CASE--- IT CITED LANGUAGE FROM MITCHELL IN ITS OPINION BUT IT DID NOT, EXCEPT IN THE LIMITED MANNER PREVIOUSLY INDICATED, CONSIDER MITCHELL CONTROLLING.

IT IS READILY APPARENT THAT THE FACTS AND CIRCUMSTANCES IN THE DILLON CASE ARE STRIKINGLY SIMILAR TO THOSE INVOLVED IN YOUR CLAIMS. WE THINK THAT THE DECISION IN THE DILLON CASE WITH RESPECT TO THE APPLICABILITY OF THE DEFAULT CLAUSE IN SITUATIONS LIKE THOSE PRESENTED HERE IS CONTROLLING. MOREOVER, THE RECORD BEFORE US DOES NOT, IN OUR OPINION, REVEAL FACTS WHICH WOULD SUPPORT A CLAIM FOR PARTIAL RELIEF ON THE LIMITED BASIS RECOGNIZED BY THE COURT OF CLAIMS, BECAUSE THERE IS NO SHOWING THAT, IN ORDER TO PERFORM THE CONTRACTS, YOU PURCHASED CITRUS PRODUCTS FROM A SOURCE OF SUPPLY WHICH WAS UNREASONABLY DISTANT FROM THAT CONTEMPLATED BY THE CONTRACTS. IN THAT CONNECTION, YOUR LETTER OF FEBRUARY 22, 1963, TO THE VETERANS ADMINISTRATION STATES, WITH RESPECT TO CONTRACT 4227B, THAT "ON JANUARY 31 THROUGH FEBRUARY 5, WE PROCESSED THE 9,846 CASES 12/46 OZ. UNSWEETENED GRAPEFRUIT JUICE AND THE 9,711 CASES 12/46 OZ. UNSWEETENED BLENDED JUICE REQUIRED FOR THIS CONTRACT.' WITH RESPECT TO CONTRACT 4189B IT IS REPORTED BY THE CONTRACTING OFFICER THAT YOU SHIPPED THE NECESSARY PRODUCTS UNDER ITEM 7 ON DECEMBER 4, 1962, AND UNDER ITEM 9 ON JANUARY 31, 1963, FOR WHICH YOU MAKE NO CLAIM FOR EXCESS COSTS. AS TO ITEMS 6 AND 8 OF THIS CONTRACT YOU SUBMITTED COPIES OF INVOICES FROM OSCEOLA FRUIT DISTRIBUTORS, KISSIMMEE, FLORIDA, WHICH INDICATE THAT YOU PURCHASED THE NECESSARY PRODUCTS FOR THESE ITEMS FROM THAT COMPANY ON APRIL 1, 1963. KISSIMMEE APPEARS TO BE APPROXIMATELY 100 MILES DISTANT FROM CLEARWATER BY HIGHWAY. WE THINK THAT THE LOCATION OF KISSIMMEE IS EASILY WITHIN THE AREA CONTEMPLATED BY THE CONTRACT FROM WHICH THE ORANGE PRODUCTS WERE TO BE FURNISHED. IT WOULD NOT BE UNREASONABLE TO ASSUME THAT THE WHOLE STATE OF FLORIDA WAS THE AREA CONTEMPLATED BY THE PARTIES FROM WHICH ORANGE PRODUCTS COULD BE SUPPLIED. HOWEVER, WE NEED NOT, AND DO NOT, MAKE ANY SUCH ASSUMPTION BECAUSE, IN ANY EVENT, WE THINK THAT THE ISSUE AS TO CONTEMPLATED SOURCE OF SUPPLY IS IMMATERIAL IN THIS CASE, SINCE, AS WILL BE DISCUSSED BELOW, IT APPEARS THAT THE DIFFICULTY AND EXCESS COSTS ENCOUNTERED IN SUPPLYING THE REQUIREMENTS OF CONTRACT 4189B WERE CAUSED SOLELY BY YOUR FAILURE TO TAKE PROMPT AND ADEQUATE STEPS TO ASSURE THAT SUFFICIENT QUANTITIES OF PRODUCT WOULD BE ON HAND WITH WHICH TO MEET SUCH REQUIREMENTS. IN THIS CONNECTION THE CONTRACTING OFFICER REPORTS THE FOLLOWING:

10. WE DO NOT QUESTION THE DAMAGE TO THE FLORIDA CITRUS CROP CAUSED BY THIS SEVERE FREEZE. WE DO QUESTION THE DAVID BILGORE COMPANY'S PLANNING TO COMMIT THEMSELVES TO A CONTRACT WITHOUT ADEQUATELY PROVIDING FOR THE FULFILLMENT OF THAT COMMITMENT. WE FEEL THE VETERANS ADMINISTRATION SHOULD NOT SUFFER ADDITIONAL EXPENSE FOR ANY REASON WHATSOEVER AS THIS CONTRACT WAS AWARDED 26 DAYS PRIOR TO THE FREEZE. IT WOULD SEEM THIS WAS AMPLE TIME FOR THIS FIRM TO OBTAIN THE NECESSARY PRODUCT IF STOCKS ON HAND WERE INSUFFICIENT. THIS BID INVITATION WAS SUFFICIENTLY IN ADVANCE OF THE FREEZE AND THERE WAS SUCH AN ABUNDANCE OF PRODUCT THAT PRICES WERE LOW. AFTER THE FREEZE ELIMINATED THIS OVER ABUNDANCE, PRICES SOARED. CIRCUMSTANCES HAD BEEN REVERSED AND THERE HAD BEEN A SHARP REDUCTION IN THE MARKET PRICE, NO FIRM WOULD HAVE OFFERED A VOLUNTARY PRICE REDUCTION TO THE VETERANS ADMINISTRATION. CERTAINLY AN INCREASE IN RAW PRODUCT COST IS NO MORE TO BE EXPECTED IN A HIGHLY FLUCTUATING AND COMPETITIVE MARKET SUCH AS THIS WHICH IS BESET WITH MANY UNKNOWNS AND VARIABLES. FURTHERMORE, THIS CONTRACTOR SHIPPED 1205 DOZEN CANS OF ORANGE JUICE (ITEM 7) TO VETERANS ADMINISTRATION DEPOT HINES, ILLINOIS ON DECEMBER 4, 1962 AND 1000 DOZEN (ITEM 9) TO GENERAL SERVICES ADMINISTRATION DEPOT, GALLUP, NEW MEXICO ON JANUARY 31, 1963. BOTH SHIPMENTS WERE INSPECTED BY THE U.S. DEPARTMENT OF AGRICULTURE ON DECEMBER 3RD AND 4TH, 1962, QUITE IN ADVANCE OF THE FREEZE INDICATED BY THE ATTACHED INSPECTION CERTIFICATES NO. G- 30055 AND H-6180. AS EXPECTED, THERE IS NO CLAIM FOR EXCESS COSTS ON THESE TWO SHIPMENTS. APPARENTLY THE CONTRACTOR HAD THE QUANTITY FOR THESE TWO SHIPMENTS ON HAND PRIOR TO THE FREEZE AND WAS TAKING A CALCULATED RISK WHICH HE LOST, ON BEING ABLE TO OBTAIN THE BALANCE DUE UNDER THIS CONTRACT AT A MORE PROFITABLE PRICE. WE FURTHER NOTE THAT THE CONTRACTOR'S CLAIM FOR $5.00 PER DOZEN COULD HAVE BEEN SUBSTANTIALLY REDUCED HAD HE COMPLETED THIS CONTRACT IN JANUARY 1963, AT A PRICE OF $3.25 PER DOZEN FOB THEIR PLANT, WHICH HE OFFERED IN HIS LETTER OF JANUARY 4, 1963. HOWEVER, SINCE WE COULD NOT AUTHORIZE A NEGOTIATION INCREASING THE PRICE, CONTRACTOR FAILED TO TAKE ADVANTAGE OF WHAT PROVED TO BE A VERY FAVORABLE PRICE AND NOW WISHES TO PASS THIS ADDITIONAL EXPENSE ALONG TO THE VETERANS ADMINISTRATION. WE, THEREFORE, CANNOT AGREE THAT THE BEST INTEREST OF THE GOVERNMENT WOULD BE SERVED BY ALLOWING ADDITIONAL COMPENSATION FOR COMPLETION OF THIS CONTRACT.

WE ARE IN AGREEMENT WITH THE CONTRACTING OFFICER'S STATEMENT ABOVE TO THE EFFECT THAT YOU HAD AMPLE TIME AFTER THE CONTRACT WAS AWARDED AND PRIOR TO THE FREEZE TO OBTAIN THE NECESSARY PRODUCT IF STOCKS ON HAND WERE INSUFFICIENT. IN FACT, TWO ITEMS (7 AND 9) WERE DELIVERED FROM STOCKS ON HAND PRIOR TO THE FREEZE. THUS, IN OUR OPINION, EVEN WERE WE TO ASSUME THAT THE PROVISIONS OF THE DEFAULT CLAUSE ARE APPLICABLE TO THE CASE BEFORE US (AN ASSUMPTION WHICH, ON THE BASIS OF THE DECISION IN THE DILLON CASE, IS UNTENABLE) THOSE PROVISIONS COULD NOT AFFORD GROUNDS FOR RELIEF SINCE THEY EXPRESSLY PROVIDE THAT "THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF THE FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR.' IN VIEW OF THE FACT THAT YOU HAD 26 DAYS PRIOR TO THE FREEZE IN WHICH TO SECURE THE NECESSARY PRODUCTS FOR THE CONTRACT IT CANNOT BE SAID THAT THE ADDITIONAL COSTS INCURRED WERE BEYOND YOUR CONTROL AND WITHOUT FAULT OR NEGLIGENCE ON YOUR PART. WE THINK THAT ORDINARY PRUDENCE WOULD HAVE DICTATED THE ACQUISITION OF THE NECESSARY PRODUCT WITHIN THE AMPLE TIME AVAILABLE. THE FAIRLY CLOSE DELIVERY DATES ON THE TWO REMAINING UNDELIVERED ITEMS WOULD SEEM TO SUPPORT THIS CONCLUSION: ITEM 8 REQUIRED DELIVERY DURING THE WEEK OF DECEMBER 31, 1962, AND ITEM 6 DURING THE WEEK OF JANUARY 28, 1963. MOREOVER, AS PREVIOUSLY INDICATED, WE THINK THAT THESE SAME CONSIDERATIONS WOULD OPERATE TO FORECLOSE ANY POSSIBLE CLAIM UNDER THE ,CONTEMPLATED SOURCE OF SUPPLY" THEORY RECOGNIZED IN THE DILLON CASE SINCE, OBVIOUSLY, HAD YOU TAKEN PRUDENT AND TIMELY ACTION TO ACQUIRE THE NECESSARY ORANGE JUICE PRIOR TO THE FREEZE THE LOSS UPON WHICH YOUR CLAIM IS BASED WOULD NOT HAVE OCCURRED AND IT WOULD HAVE BEEN UNNECESSARY TO PURCHASE THE JUICE FROM OSCEOLA FRUIT DISTRIBUTORS AT THE PRICE OF $5 PER DOZEN.

IN VIEW OF THE FOREGOING, YOUR CLAIMS FOR $23,342.94 AND $9,761.40 AS ADDITIONAL CHARGES UNDER CONTRACTS 4227B AND 4189B, RESPECTIVELY, MUST BE, AND ARE, DENIED.