B-159734, OCT. 24, 1966

TO EPPORT AND DELEVIE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 19, 1966, WITH ENCLOSURES, PROTESTING ON BEHALF OF SWIFT AUTO RENTAL, INC., AGAINST THE METHOD OF COMPUTATION OF PAYMENTS MADE UNDER CONTRACT NO. GS-09S-12184 BY THE GENERAL SERVICES ADMINISTRATION (GSA).

THE RECORD SHOWS THAT THE SUBJECT CONTRACT WAS AWARDED TO SWIFT ON JULY 19, 1963, PURSUANT TO ITS BID ON INVITATION NO. SFD-6825-63, AND COVERED VEHICLE RENTAL SERVICES IN THE LOS ANGELES AREA FOR THE PERIOD AUGUST 1, 1963, THROUGH JULY 31, 1964. WHILE THE SUBJECT MATTER OF THE CONTRACT HAS BEEN COMPLETED, THE METHOD OF COMPUTATION OF PAYMENT BY GSA FOR THE HIRE OF VEHICLES PROVIDED BY SWIFT HAS GIVEN RISE TO YOUR PROTEST.

AS YOU KNOW, GSA AUDITORS TOOK EXCEPTION TO THE BILLINGS AND PAYMENTS MADE UNDER SWIFT'S CONTRACT WITH GSA ON THE SAME BASIS DISCUSSED IN OUR DECISION B-157999, DATED MARCH 28, 1966, INVOLVING JACK BARRETT TRUCK AND AUTO LEASING, INC. APPARENTLY, GSA FURNISHED A COPY OF THAT DECISION TO YOU AS THE BASIS FOR ITS BILL OF COLLECTION AGAINST YOUR CLIENT.

THE GSA COLLECTION VOUCHER NO. 966-CL-159, DATED MAY 26, 1966, IN THE AMOUNT OF $28,609.80 WAS ADDRESSED TO SWIFT AND SET OUT THE OVERPAYMENT OF SUNDRY INVOICES WHICH WERE SUBMITTED FOR PAYMENT DURING 1963 THROUGH 1965 UNDER CONTRACT NO. GS-09S-12184, AS RECOMPUTED TO EFFECT THE LOWEST POSSIBLE COMBINATION OF RATES STIPULATED IN SUCH CONTRACT PURSUANT TO OUR HOLDING IN THE BARRETT DECISION. THE RECOMPUTATION SCHEDULES AND RECAPITULATION SHEETS WERE FURNISHED TO SWIFT WITH THE COLLECTION VOUCHER, AND NO EVIDENCE HAS BEEN PRESENTED CONTRADICTING THEIR ACCURACY. RATHER, YOUR ARGUMENTS IN THIS MATTER ARE DIRECTED TO THE QUESTION OF CONTRACT INTERPRETATION.

SCHEDULE "A" OF CONTRACT NO. GS-09S-12184 PRESCRIBED THE FOLLOWING SCHEDULE OF RENTAL RATES:

"A. PER HOUR:

MINIMUM 2.00 PER HOUR (PLUS) (OR) ------- CENTS PER MILE.

5 FREE MILES, OVERAGE 8 CENTS PER MILE

"B. PER 12-HOUR DAY:

MINIMUM 3.00 PER 12 HOURS (PLUS) (OR) ------ CENTS PER MILE.

50 FREE MILES, OVERAGE 8 CENTS PER MILE.

"C. PER 24-HOUR DAY:

MINIMUM 10.00 PER 24 HOURS (PLUS) (OR) ------ CENTS PER MILE.

100 FREE MILES, OVERAGE 8 CENTS PER MILE

"D. PER 5-DAY WEEK:

MINIMUM 48.00 PER 5 DAY WEEK (PLUS) (OR) ------ CENTS PER MILE.

500 FREE MILES, OVERAGE 8 CENTS PER MILE.

"E. PER 7-DAY WEEK:

MINIMUM 48.00 PER 7 DAY WEEK (PLUS) (OR) ------ CENTS PER MILE.

700 FREE MILES, OVERAGE 8 CENTS PER MILE.

"F. PER MONTH:

MINIMUM 160.00 PER MONTH (PLUS) (OR) ------ CENTS PER MILE.

3000 FREE MILES, OVERAGE 8 CENTS PER MILE.' THE ISSUE HERE, AS IN THE BARRETT CASE, INVOLVES THE "NOTE" APPENDED AT THE END OF EACH OF THE CONTRACT SCHEDULES. SUCH "NOTE" PROVIDES AS FOLLOWS:

"FOR EACH SUBITEM CONTRACTOR SHALL COMPUTE CHARGES FOR SERVICE AT THE LOWEST POSSIBLE COMBINATION OF RATES.'

IN YOUR LETTER TO GSA IN THIS MATTER YOU CONTEND THAT IF THE SWIFT CONTRACT IS INTERPRETED IN A MANNER URGED BY THE GOVERNMENT, SUBPARAGRAPHS "C" THROUGH "E" OF SCHEDULES "A" AND "B" WILL HAVE TO BE COMPLETELY DISREGARDED SINCE THE RENTAL CHARGE FOR TWO 12-HOUR PERIODS IS ALWAYS LESS THAN ONE 24-HOUR RENTAL, THE RENTAL CHARGE FOR TEN 12 HOUR PERIODS IS ALWAYS LESS THAN A 5-DAY RENTAL, AND THE RENTAL CHARGE FOR FOURTEEN 12- HOUR RENTALS IS ALWAYS LESS THAN A 7-DAY RENTAL. YOU ALLEGE THAT THE EFFECT OF THIS INTERPRETATION WAS NOT CONSIDERED BY OUR OFFICE IN B- 157999, AND THAT THE REASONING THEREIN WOULD NOT APPLY TO THE SWIFT CONTRACT. YOU ALSO URGE THAT THE "NOTE" APPEARING AFTER EACH OF THE SCHEDULES IS AMBIGUOUS AND ANY AMBIGUITY MUST BE CONSTRUED AGAINST THE GOVERNMENT, AND YOU CONTEND THAT PRIOR ACTIONS OF THE CONTRACTING PARTIES (SWIFT AND GSA) ARE ENTITLED TO GREAT WEIGHT IN THE DETERMINATION OF THE MEANING OF THE TERMS OF A CONTRACT.

CONTRARY TO YOUR BELIEF IN THIS MATTER, THE SAME ARGUMENT PRESENTED BY YOU AS TO THE INTERPRETATION OF THE MEANING OF THE "NOTE" IN THE INSTANT CONTRACT WAS PRESENTED AND FULLY CONSIDERED IN THE BARRETT DECISION. THAT CASE, BARRETT CONTENDED THAT THE "NOTE" AT THE END OF EACH SCHEDULE IN ITS CONTRACT SHOULD NOT BE INTERPRETED AS THE GSA AUDITORS INTERPRETED IT BECAUSE THIS WOULD DISREGARD THE 24-HOUR DAY RATE UPON WHICH THE ENTIRE VEHICLE RATE-HIRE STRUCTURE DEPENDS, AND THAT TO DISREGARD THE 24-HOUR DAY RATE WOULD BE CONTRARY TO THE REPRESENTATION IN THE INVITATIONS UNDER/WHICH BIDS WERE SOLICITED ON THE BASIS THAT 70 PERCENT OF THE RENTAL TRANSACTIONS WOULD BE 24-HOUR PERIODS. IT IS THEREFORE CONCLUDED THAT THE INVITATIONS WERE MISLEADING TO THE BIDDERS AS ALLOWANCES WERE MADE IN VARIOUS OTHER RATES WHICH WOULD NOT HAVE BEEN MADE BUT FOR THIS REPRESENTATION. IN THIS REGARD, WE REFER TO THE STATEMENTS MADE BY YOU ON PAGE 5 OF YOUR LETTER TO GSA THAT SWIFT, WITHOUT TAKING INTO CONSIDERATION THE EFFECT OF THE "NOTE" APPEARING IN THE SCHEDULES, DELIBERATELY BID LOW ON THE 12-HOUR RENTAL PERIOD IN ORDER TO OBTAIN AN ADVANTAGE IN BIDDING BASED ON ITS BELIEF THAT A GREAT WEIGHT WOULD BE GIVEN TO BIDS FOR THE 12 HOUR PERIOD. HOWEVER, WE AGREE WITH GSA THAT IT WOULD BE MOST INAPPROPRIATE TO ALLOW SWIFT TO BENEFIT FROM THE UNBALANCING OF ITS BID PRICES BY ACCEPTING ITS INTERPRETATION OF THE CONTRACT PROVISION.

IN YOUR LETTER TO GSA, YOU CITED MANY OF THE CASES DEALING WITH CONTRACT CONSTRUCTION THAT WE DISCUSSED IN THE BARRETT DECISION TO SUPPORT YOUR ARGUMENTS IN THIS MATTER. HOWEVER, AS IN THE BARRETT CASE, THE "NOTE" IN QUESTION CLEARLY REQUIRES THAT THE CONTRACTOR'S "CHARGES FOR SERVICE" BE COMPUTED ON THE "LOWEST POSSIBLE COMBINATION OF RATES.' THE ONLY POSSIBLE AMBIGUITY, IF ANY, IN THIS CLAUSE IS IN THE USE OF THE WORD "SUBITEM" TO DESCRIBE WHAT THE "CHARGES FOR SERVICE" RELATE TO. IN ORDER TO GIVE MEANING AND EFFECT TO THE WORD "SUBITEM" AND THE "NOTE" AS A OLE,"SUBITEM" MUST BE INTERPRETED AS REFERRING TO "RENTAL" OR "RENTAL PERIOD.' THE "NOTE," THUS INTERPRETED, WOULD READ "FOR EACH RENTAL OR RENTAL PERIOD CONTRACTOR SHALL COMPUTE CHARGES FOR SERVICE AT THE LOWEST POSSIBLE COMBINATION OF RATES.' TO ACCEPT SWIFT'S INTERPRETATION OF THIS NOTE WOULD BE, IN EFFECT, TO REWRITE IT RATHER THAN TO INTERPRET THE WORD "SUBITEM.' AS IN THE BARRETT CASE, IT IS OUR OPINION THAT FOR THE "NOTE" TO HAVE ANY MEANING AT ALL IT IS REASONABLY SUSCEPTIBLE OF THE ABOVE- STATED CONSTRUCTION, AND WE MUST CONCLUDE THAT THE GENERAL PROPOSITION, THAT ANY AMBIGUITY IN THE LANGUAGE OF A CONTRACT IS TO BE CONSTRUED MOST STRONGLY OR STRICTLY AGAINST THE AUTHOR OF SUCH LANGUAGE, IS NOT APPLICABLE IN THE INSTANT MATTER.

WHILE YOU HAVE URGED THAT PRIOR AUTO RENTAL DEALINGS BETWEEN YOUR CLIENT AND GSA MIGHT SHOW THE INTENTION OF THE CONTRACTING PARTIES AND INVOKE THE DOCTRINE OF EQUITABLE ESTOPPEL AGAINST THE GOVERNMENT, GSA REPORTS THAT THE RELATIONSHIP BETWEEN THE GOVERNMENT AND SWIFT PRIOR TO EXECUTION OF CONTRACT NO. GS-09S-12184 PRESENTED A SUBSTANTIAL FACTUAL DISTINCTION TENDING TO PRECLUDE THE RELIEF THAT WAS GRANTED WITH RESPECT TO THE SECOND AND THIRD BARRETT CONTRACTS. PRIOR TO THE AWARD OF SUCH CONTRACT, SWIFT HAD NEVER ENTERED INTO A FORMAL CONTRACT WITH GSA. WHILE SWIFT DID RENT AUTOMOBILES TO GSA AFTER THE DEFAULT OF A PRIOR CONTRACTOR, ORDERS WERE ISSUED FOR A PARTICULAR TIME PERIOD IN ACCORDANCE WITH SWIFT'S COMMERCIAL RATES, AND ON ANY OCCASION ON WHICH THE VEHICLE WAS USED FOR A PERIOD OTHER THAN THAT ORDERED, PAYMENT WAS MADE IN ACCORDANCE WITH SWIFT'S APPLICABLE COMMERCIAL RATES. THUS, IT CANNOT BE SEEN HOW SWIFT WAS MISLED BY ANY ACTION TAKEN UNDER SUCH INFORMAL ORDERS, ESPECIALLY SINCE THE ORDERS PLACED WERE OPEN MARKET TRANSACTIONS WHEREUNDER NO FORMAL CONTRACTUAL REQUIREMENTS, OR EVEN DETAILED ORAL INSTRUCTIONS, WERE SET FORTH. HENCE, SUCH INFORMAL ORDERS DO NOT HAVE ANY BEARING ON THE GOVERNMENT'S RIGHT TO RECOVER EXCESS PAYMENTS IN THE INSTANT MATTER MADE UNDER FORMAL CONTRACTING PROCEDURES.

ACCORDINGLY, WE BELIEVE THAT THE CLAIM OF GSA FOR REPAYMENT OF THE EXCESS CHARGES HAS BEEN PROPERLY ASSERTED, AND YOUR PROTEST AGAINST THE METHOD OF COMPUTING PAYMENTS UNDER THE CONTRACT IS DENIED.