B-153023, JUN. 24, 1964

B-153023, JUN. 24, 1964

TO NORWOOD STUDIOS, INCORPORATED:

WE REFER TO YOUR LETTER DATED DECEMBER 4, 1963, WITH ENCLOSURE, IN WHICH YOU REQUEST CONSIDERATION BY OUR OFFICE OF YOUR CLAIM FOR DAMAGES FOR BREACH OF CONTRACT UNDER CONTRACT NO. GS-00S-36700.

ON FEBRUARY 6, 1962, THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, NATIONAL BUYING DIVISION, ACCEPTED YOUR BID UNDERINVITATION FOR BIDS NO. FNH-5G-26564-A-12-1-61 AND YOU WERE AWARDED A TERM CONTRACT FOR FURNISHING SERVICES INCIDENTAL TO THE PROCESSING AND DISTRIBUTION OF COPIES (PRINTS) OF SUCH MOTION PICTURES AND FILM STRIPS AS REQUIRED BY THE UNITED STATES GOVERNMENT THROUGH DECEMBER 31, 1963. IN REGARD TO THIS CONTRACT YOU ALLEGE THAT THE GOVERNMENT FAILED TO PROVIDE INFORMATION WHICH THE GOVERNMENT WAS OBLIGATED TO FURNISH, THAT YOU WERE REQUIRED TO UTILIZE YOUR EMPLOYEES TO OBTAIN THIS INFORMATION AND THAT YOUR LOSS FOR SALARIES PAID TO THESE EMPLOYEES TO OBTAIN THIS INFORMATION IS $10,881.07. YOU ALSO ALLEGE THAT YOUR PERFORMANCE DURING THE CONTRACT PERIOD WAS SHARPLY CURTAILED DUE TO DELAYS BY THE GOVERNMENT RESULTING IN A LOSS OF $78,669.85 BECAUSE OF REDUCED SALES.

WE HAVE REVIEWED THE ABOVE CONTRACT AND THE ONLY LANGUAGE WE FIND THEREIN OBLIGATING THE GOVERNMENT TO PROVIDE YOU WITH INFORMATION APPEARS ON PAGE 11, CLAUSE 16, WHICH STATES IN PERTINENT PART AS FOLLOWS:

"* * * THE GOVERNMENT, THROUGH ITS CONTRACTING OFFICER OR HIS DULY AUTHORIZED REPRESENTATIVE, WILL NOTIFY THE CONTRACTOR IN WRITING OF THE RELEASE TO HIM, OF ALL FILMS, BOTH THOSE AVAILABLE ON JANUARY 1, 1962, AND THOSE RELEASED SUBSEQUENTLY; AND THE CONTRACTOR SHALL NOT MAKE OR DISTRIBUTE PRINTS FOR ANY SUBJECT FOR WHICH HE DOES NOT HAVE SUCH WRITTEN AUTHORIZATION.'

A DEPARTMENTAL STAFF REPORT PREPARED BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, HEREAFTER REFERRED TO AS HEW, DATED DECEMBER 17, 1962, IN ANSWER TO YOUR LETTER TO HEW DATED SEPTEMBER 11, 1962, INDICATES ON PAGE 7 THAT THE CONTRACTING OFFICER FURNISHED YOU WITH INFORMATION REGARDING THE RELEASE OF 889 OFFICE OF EDUCATION FILMS, AND THAT YOU WERE ALSO FURNISHED INFORMATION REGARDING THE RELEASE OF SOME 1,138 FILMS FROM OTHER GOVERNMENT AGENCIES. PURSUANT TO CLAUSE 2 ON PAGES 5 AND 6 OF YOUR CONTRACT, THE CONTRACT SCHEDULE IS MANDATORY UPON THE OFFICE OF EDUCATION, HEW, AND OPTIONAL WITH OTHER GOVERNMENT AGENCIES FOR WHICH THE GENERAL SERVICES ADMINISTRATION IS AUTHORIZED BY LAW TO PROCURE. THE HEW REPORT INDICATES ON PAGE 8 THAT ON DECEMBER 6, 1962, THE OFFICE OF EDUCATION PROVIDED YOU WITH A LIST OF TITLES FOR 3,229 FILMS INCLUDING THE SALE PRICE FOR PRINTS OF EACH FILM. WHILE YOU MAY HAVE USED YOUR PERSONNEL TO ACQUIRE INFORMATION WHICH YOU DEEMED NECESSARY TO ENABLE YOU TO OBTAIN THE PERFORMANCE UNDER YOUR CONTRACT WHICH YOU FELT WAS DESIRABLE, IN VIEW OF THE PROVISIONS OF YOUR CONTRACT AND THE INFORMATION IN THE HEW REPORT IT DOES NOT APPEAR THAT THE GOVERNMENT WAS UNDER AN OBLIGATION TO PROVIDE YOU WITH MORE INFORMATION THAN WAS ACTUALLY FURNISHED TO YOU. MOREOVER, CLAUSE 3 ON PAGE 6 OF THE CONTRACT INDICATES THAT THE CONTRACTOR HAD THE BURDEN OF OBTAINING INFORMATION RELATING TO THE SCOPE OF THE CONTRACT OR THE RESPONSIBILITIES OF THE CONTRACTOR.

IN REGARD TO YOUR CONTENTION THAT YOUR SALES DURING THE CONTRACT PERIOD WERE REDUCED BECAUSE OF DELAYS BY THE GOVERNMENT, GSA ADVISES THAT THE DOLLAR VOLUME OF YOUR SALES REPORTED TO THE CONTRACT ADMINISTRATOR (HEW) TOTALED $422,357.00. CLAUSE 4 ON PAGE 6 OF THE INVITATION FOR BIDS STATES THAT ESTIMATED SALES FOR 1962 AND 1963 BASED ON SALES RECORDS FOR 1960 AND THE FIRST SIX MONTHS OF 1961 WOULD BE $600,000. THIS CLAUSE ALSO STATES THAT THE SALES PROJECTIONS ARE FOR INFORMATION ONLY AND THAT THE GOVERNMENT DOES NOT REPRESENT THAT SUCH SALES WILL OCCUR. CLAUSE 16 ON PAGE 11 OF YOUR CONTRACT STATES THAT IT IS ESTIMATED BUT NOT REPRESENTED THAT 3,200 FILMS WILL BE AVAILABLE FOR DISTRIBUTION ON JANUARY 1, 1962. WHILE THE RECORD DOES NOT ESTABLISH THE EXACT NUMBER OF FILMS WHICH WERE RELEASED TO YOU DURING THE CONTRACT TERM, PAGE 7 OF HEW'S REPORT INDICATES THAT AT LEAST 2,027 FILMS WERE RELEASED TO YOU DURING THE CONTRACT TERM.

THE PROJECTIONS IN THE INVITATION REGARDING THE ESTIMATED SALES AND THE ESTIMATED NUMBER OF FILMS TO BE RELEASED WERE CLEARLY STATED TO BE ESTIMATES ONLY. THESE PROJECTIONS WERE BASED ON RECORDS OF CONTRACT PERFORMANCE UNDER THE PRIOR CONTRACT FOR THESE SERVICES AND THERE IS NO EVIDENCE OF BAD FAITH ON THE PART OF THE GOVERNMENT IN SETTING FORTH THESE PROJECTIONS. YOUR CONTRACT WAS A REQUIREMENTS CONTRACT WHICH OBLIGATED ONLY THE OFFICE OF EDUCATION, HEW, TO SATISFY ITS NEEDS UNDER YOUR CONTRACT AND THERE IS NO EVIDENCE OR ALLEGATION THAT THE OFFICE OF EDUCATION FULFILLED ITS REQUIREMENTS UNDER ANY CONTRACT OTHER THAN YOURS. THE HEW REPORT STATES THAT THERE HAVE BEEN PROBLEMS ASSOCIATED WITH THE TRANSFER OF YOUR CONTRACT FROM THE PRIOR CONTRACTOR, UNITED WORLD FILMS, SINCE THE PRIOR CONTRACTOR HELD THE CONTRACT FOR THESE SERVICES FOR A PERIOD OF MANY YEARS; HOWEVER, BAD FAITH ON THE PART OF THE GOVERNMENT IN ADMINISTERING YOUR CONTRACT HAS NOT BEEN SHOWN.

IN A REQUIREMENTS CONTRACT WHERE THE CONTRACT PROVIDES THAT THE QUANTITIES MENTIONED ARE ESTIMATES ONLY, THERE MAY BE SUBSTANTIAL VARIATIONS FROM THE ESTIMATES AS LONG AS THE BUYER ACTS IN GOOD FAITH. SEE BROCK ET AL. V. UNITED STATES, 84 CT.CL. 453, CITING AS PRECEDENT BRAWLEY V. UNITED STATES, 96 U.S. 168; RUSSEL AND PUGH LUMBER COMPANY V. UNITED STATES, 154 CT.CL. 122 AND 37 COMP. GEN. 688. IT IS CLEAR THAT THE ESTIMATED VOLUME OF SALES AND THE ESTIMATED NUMBER OF FILMS TO BE RELEASED SET FORTH IN THE INVITATION DID NOT CONSTITUTE A WARRANTY AND WAS NOT BINDING ON THE GOVERNMENT AS TO THE NUMBER OF FILMS WHICH WOULD IN FACT BE RELEASED OR THE ACTUAL SALES THAT WOULD OCCUR UNDER YOUR CONTRACT. THESE CIRCUMSTANCES IT IS DOUBTFUL WHETHER A BREACH OF YOUR CONTRACT HAS BEEN ESTABLISHED ON THE BASIS THAT YOUR PERFORMANCE UNDER THE CONTRACT WAS LESS THAN THE ESTIMATES SET FORTH IN THE INVITATION FOR BIDS.

ASSUMING THE ALLEGATIONS IN YOUR LETTER OF DECEMBER 4, 1963, ARE CORRECT- -- A FACT WHICH WE DO NOT ON THE PRESENT RECORD CONCEDE--- YOUR CLAIM WOULD BE FOR UNLIQUIDATED DAMAGES FOR COSTS INCURRED AND LOSS OF PROFIT SUFFERED UNDER YOUR CONTRACT. THIS TYPE OF CLAIM IS OF A CLASS WHICH THE ACCOUNTING OFFICERS OF THE GOVERNMENT CONSISTENTLY AND HISTORICALLY HAVE DECLINED TO CONSIDER ON THE MERITS, NOT BECAUSE OF LACK OF JURISDICTION, BUT BECAUSE THE NATURE OF YOUR CLAIM IS SUCH THAT IT IS VIRTUALLY IMPOSSIBLE TO MAKE AN ACCURATE DETERMINATION OF THE MERITS AND THE MEASURE OF DAMAGES WITHOUT THE TAKING OF TESTIMONY, CROSS EXAMINATION OF WITNESSES, AND THE WEIGHING OF CONFLICTING EVIDENCE, FOR WHICH OUR OFFICE DOES NOT HAVE THE FACILITIES. SEE 19 COMP. DEC. 409; 21 COMP. DEC. 134; 4 COMP. GEN. 404 AND B-151583, DECEMBER 10, 1963. MOREOVER, AN ANALYSIS OF THE RECORD INDICATES THAT YOUR CLAIM IS SO DUBIOUS AS TO LEAVE SERIOUS DOUBT WHETHER IT WOULD BE RECOGNIZED BY THE COURTS, AND IN THIS SITUATION IT IS THE PROPER COURSE FOR OUR OFFICE TO REJECT YOUR CLAIM.

SEE LONGWILL V. UNITED STATES, 17 CT.CL. 288 AND CHARLES V. UNITED STATES, 19 CT.CL. 316.