B-35485, JULY 14, 1943, 23 COMP. GEN. 25

B-35485, JULY 14, 1943, 23 COMP. GEN. 25

CONTRACTS - SCOPE OF "UNFORESEEABLE CAUSES" PROVISION EXCUSING PERFORMANCE UNDER THE PROVISIONS OF THE STANDARD FORM OF GOVERNMENT SUPPLY CONTRACT EXCUSING THE CONTRACTOR FROM LIABILITY FOR DAMAGES RESULTING FROM FAILURE OR REFUSAL TO DELIVER WHEN THE FAILURE OR REFUSAL IS FOUND TO BE DUE TO "UNFORESEEABLE CAUSES * * * INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS," ETC., THE ACTS OR EVENTS ENUMERATED MAY NOT BE REGARDED AS EXCUSABLE UNLESS IT FIRST BE ESTABLISHED THAT THEY WERE SO ABNORMAL, EXTRAORDINARY, OR UNUSUAL THAT THEY COULD NOT HAVE BEEN REASONABLY FORESEEN AND PROVIDED AGAINST IN THE CONTRACT. WHERE, AT THE TIME OF EXECUTION OF A CONTRACT FOR THE FURNISHING OF GASOLINE AS ORDERED BY "ANY FEDERAL ACTIVITY," THERE WERE IN EXISTENCE GOVERNMENT REGULATIONS REQUIRING PREFERENTIAL DELIVERIES OF GASOLINE TO THE ARMY, NAVY, ETC., THE LATER INABILITY OF THE CONTRACTOR--- OCCASIONED BY THE CONDITIONS EVENTUATING FROM THE REGULATIONS--- TO OBTAIN SUFFICIENT SUPPLIES OF GASOLINE TO EFFECT DELIVERY IN ACCORDANCE WITH PURCHASE ORDERS ISSUED BY A "NONPREFERRED" ACTIVITY MAY NOT BE REGARDED AS RESULTING FROM "UNFORESEEABLE CAUSES * * * INCLUDING * * * ACTS OF THE GOVERNMENT" WITHIN THE MEANING OF THE CONTRACT PROVISION EXCUSING THE CONTRACTOR, UPON DEFAULT, FROM LIABILITY FOR EXCESS COSTS INCURRED BY THE GOVERNMENT IN PURCHASING THE SUPPLIES ELSEWHERE.

ACTING COMPTROLLER GENERAL YATES TO THE POSTMASTER GENERAL, JULY 14, 1943:

I HAVE YOUR LETTER OF JUNE 30, 1943, REQUESTING A DECISION AS TO WHETHER THE BUTLER OIL CO., 58TH STREET AND SCHUYLKILL RIVER, PHILADELPHIA, PENNSYLVANIA, SHOULD BE CHARGED WITH EXCESS COST IN THE AMOUNT OF $165.49, INCURRED BY THE UNITED STATES AS A RESULT OF THE SAID COMPANY'S DEFAULT UNDER ITS CONTRACT NO. TPS-58022, DATED MARCH 8, 1943, WITH THE PROCUREMENT DIVISION, TREASURY DEPARTMENT.

BY THE TERMS OF THE CONTRACT THE COMPANY AGREED TO FURNISH GASOLINE AS ORDERED BY "ANY FEDERAL ACTIVITY" DURING THE PERIOD FROM APRIL 1 TO JUNE 30, 1943, AT A PRICE NOT EXCEEDING $0.0908 PER GALLON. HOWEVER, IT APPEARS FROM YOUR LETTER AND ENCLOSURES THEREWITH THAT DELIVERIES TOTALING 14,776 GALLONS OF GASOLINE WERE NOT ACCOMPLISHED ON APRIL 12, 14, 16, 19, 23 AND 24, 1943, IN ACCORDANCE WITH ORDERS DULY PLACED UNDER THE CONTRACT BY THE POSTMASTER AT PHILADELPHIA, AND THAT, BY REASON THEREOF, THE POSTMASTER WAS COMPELLED TO PROCURE THE NECESSARY GASOLINE IN THE OPEN MARKET AT A PRICE OF $0.0112 PER GALLON IN EXCESS OF THE MAXIMUM PRICE STIPULATED IN THE CONTRACT.

PARAGRAPH 4 OF THE CONDITIONS FORMING A PART OF THE CONTRACT PROVIDES THAT, IN THE EVENT THE CONTRACTOR REFUSES OR FAILS TO MAKE TIMELY DELIVERY OF THE SUPPLIES COVERED THEREBY, THE GOVERNMENT MAY PURCHASE THE SAME FROM ANOTHER SOURCE AND CHARGE THE CONTRACTOR WITH THE RESULTING EXCESS COST, UNLESS THE REFUSAL OR FAILURE TO DELIVER SHOULD BE FOUND TO BE DUE TO:

* * * UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, UNUSUALLY SEVERE WEATHER * * *.

IN A LETTER DATED APRIL 20, 1943, THE CONTRACTOR, THROUGH ITS ATTORNEY, NOTIFIED THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, IN PERTINENT PART AS FOLLOWS:

* * * NOTICE IS HEREBY GIVEN ON BEHALF OF THE CONTRACTOR OF DELAY DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR IN DELIVERY OF GASOLINE IN THE AMOUNTS AND WITHIN THE TIME/LIMITS REQUIRED BY THE AFORESAID CONTRACT. THESE DELAYS HAVE BEEN CAUSED BY THE INABILITY OF THE CONTRACTOR TO OBTAIN GASOLINE FROM HIS SUPPLIER, RICHFIELD OIL CORPORATION OF NEW YORK, BECAUSE OF PETROLEUM COORDINATOR'S DIRECTIVE NUMBER 59, AND/OR PETROLEUM ADMINISTRATOR'S ORDER NUMBER 1, AND FROM FAILURE TO OBTAIN GASOLINE AFTER APPLICATION TO SUPPLIES AND DISTRIBUTION COMMITTEE, DISTRICT NUMBER ONE, AND INABILITY TO OBTAIN GASOLINE IN THE OPEN MARKET.

WITH RESPECT TO THE DEFAULT, THE CONTRACTOR, IN AN AFFIDAVIT SWORN AND SUBSCRIBED TO MAY 28, 1943, STATES:

THAT, ON APRIL 14, APRIL 19 AND APRIL 23, 1943, BUTLER OIL COMPANY RECEIVED NO GASOLINE FROM ITS SUPPLIER, RICHFIELD OIL CORPORATION OF NEW YORK, AS ALLOCATIONS MADE BY THE SUPPLIES AND DISTRIBUTION COMMITTEE WERE NOT SUFFICIENT TO ALLOW THE DELIVERY OF ANY GASOLINE:

THAT ON THE DATES OF APRIL 12 AND APRIL 16, 1943, BUTLER OIL COMPANY RECEIVED SMALL QUANTITIES OF GASOLINE BY ALLOTMENT FROM THE SUPPLIES AND DISTRIBUTION COMMITTEE, BUT THAT SUCH GASOLINE WAS REQUIRED FOR DELIVERIES TO PREFERRED AGENCIES, NAMELY, THE ARMY, NAVY, MARINE CORPS, AND COAST GUARD, PURSUANT TO PARAGRAPH (H) OF PETROLEUM ADMINISTRATOR ORDER NO. 1 AS AMENDED;

THAT ON THE AFTERNOON OF APRIL 24, 1943, PURSUANT TO PETROLEUM ADMINISTRATIVE FOR WAR DIRECTIVE DATED APRIL 15, 1943, SUFFICIENT GASOLINE WAS RECEIVED TO TAKE CARE OF THE REQUIREMENTS UNDER THE ABOVE CONTRACT, BUT THAT IT WAS RECEIVED TOO LATE FOR DELIVERY ON THAT DATE AND THAT DELIVERIES THEREAFTER WERE MADE AS REQUIRED BY THE CONTRACT;

IT IS WELL SETTLED, OF COURSE, THAT VALID CONTRACTS ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THAT THE MERE INCURRENCE OF ADDITIONAL OR UNEXPECTED EXPENSE DOES NOT NECESSARILY OPERATE TO EXCUSE PERFORMANCE. SEE 22 COMP. GEN. 937, AND THE NUMEROUS AUTHORITIES THERE CITED. HERE, WHILE THE CONTRACTOR ALLEGES AS THE BASIC REASON FOR THE DEFAULT THAT, ON THE DAYS IN QUESTION ITS SUPPLIER DELIVERED NO GASOLINE AT ALL, OR SUCH INSUFFICIENT QUANTITIES OF THE SAME THAT IT WAS IMPOSSIBLE TO FULFILL THE CONTRACT REQUIREMENTS, IT IS SIGNIFICANT TO NOTE THAT, APPARENTLY, THE POSTMASTER PROCURED THE UNDELIVERED PORTIONS OF THE GASOLINE FROM ANOTHER LOCAL DEALER. IN VIEW THEREOF, AND SINCE AN EXAMINATION OF THE CONTRACT FAILS TO DISCLOSE THAT IT EXPRESSLY RESTRICTED OR LIMITED THE CONTRACTOR TO THE PRODUCT OF ANY PARTICULAR SUPPLIER, IT SEEMS CLEARLY EVIDENT THAT THE FAILURE TO DELIVER ON THE PART OF THE CONTRACTOR'S PRINCIPAL SUPPLIER SERVED ONLY TO INCREASE THE COST OF PERFORMANCE RATHER THAN TO RENDER PERFORMANCE IMPOSSIBLE.

BUT, HOWEVER THAT MAY BE, THE QUESTION AS TO WHETHER THIS OFFICE LEGALLY WOULD BE AUTHORIZED TO GRANT RELIEF TO THE CONTRACTOR IN THE MATTER IS TO BE RESOLVED BY DETERMINING WHETHER, AS ALLEGED BY THE CONTRACTOR'S ATTORNEY IN THE LETTER OF APRIL 20, QUOTED IN PART ABOVE, THE DEFAULT WAS DIRECTLY ATTRIBUTABLE TO AN UNFORESEEABLE AND, THEREFORE, AN EXCUSABLE CAUSE WITHIN THE MEANING OF PARAGRAPH 4 OF THE CONTRACT CONDITIONS, SUPRA.

IN THE CASE OF UNITED STATES V BROOKS-CALL AWAY CO., 318 U. S. 120, DECIDED FEBRUARY 1, 1943, WHEREIN THERE WAS INVOLVED THE CONSTRUCTION OF AN ALMOST IDENTICAL PROVISION CONTAINED IN A STANDARD FORM OF GOVERNMENT CONSTRUCTION CONTRACT, THE UNITED STATES SUPREME COURT SAID:

TO AVOID A NARROW CONSTRUCTION OF THE TERM,"UNFORESEEABLE CAUSES," LIMITING IT PERHAPS TO ACTS OF GOD, THE PROVISO SETS FORTH SOME ILLUSTRATIONS OF UNFORESEEABLE INTERFERENCES. THESE IT DESCRIBES AS "INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD, OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER, OR DELAYS OF SUBCONTRACTORS DUE TO SUCH CAUSES.' THE PURPOSE OF THE PROVISO TO PROTECT THE CONTRACTOR AGAINST THE UNEXPECTED, AND ITS GRAMMATICAL SENSE BOTH MILITATE AGAINST HOLDING THAT THE LISTED EVENTS ARE ALWAYS TO BE REGARDED AS UNFORESEEABLE, NO MATTER WHAT THE ATTENDANT CIRCUMSTANCES ARE. RATHER, THE ADJECTIVE "UNFORESEEABLE" MUST MODIFY EACH EVENT SET OUT IN THE "INCLUDING" PHRASE. OTHERWISE ABSURD RESULTS ARE PRODUCED * * *. HENCE, THERE NOW CAN BE NO DOUBT THAT, IN ORDER FOR AN ACT OF THE GOVERNMENT TO BE CLASSED AS AN EXCUSABLE CAUSE FOR FAILURE TO PERFORM PROPERLY UNDER A CONTRACT SUCH AS HERE INVOLVED, IT FIRST MUST BE ESTABLISHED THAT THE ACT WAS SO ABNORMAL, EXTRAORDINARY, OR UNUSUAL, THAT IT REASONABLY COULD NOT HAVE BEEN FORESEEN AND PROVIDED AGAINST IN THE CONTRACT.

PETROLEUM DIRECTIVE 59, PROVIDING GENERALLY FOR THE EFFICIENT AND EQUITABLE DISTRIBUTION OF PETROLEUM SUPPLIES IN THE EASTERN AREA OF THE UNITED STATES, WAS ISSUED BY THE PETROLEUM COORDINATOR FOR WAR, UNDER THE DATE OF SEPTEMBER 25, 1942. 7 F.R. 7759. PETROLEUM ADMINISTRATIVE ORDER 1, ORIGINALLY ISSUED BY THE DEPUTY PETROLEUM ADMINISTRATOR FOR WAR ON DECEMBER 21, 1942, WAS AMENDED FEBRUARY 1, 1943, TO PROVIDE FOR PREFERENTIAL DELIVERIES OF MOTOR FUEL OR FUEL OIL TO THE " ARMY AND THE NAVY OF THE UNITED STATES, THE COAST GUARD, THE WAR SHIPPING ADMINISTRATION, THE UNITED STATES MARITIME COMMISSION, AND THE OFFICE OF LEND-LEASE ADMINISTRATION.' 8 F.R. 1470. SINCE IT IS THUS READILY APPARENT THAT ANY CONDITIONS BROUGHT ABOUT BY THE ISSUANCE OF THE SAID DIRECTIVE AND ORDER WHICH MAY HAVE AFFECTED THE CONTRACTOR'S ABILITY TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS REQUIREMENTS, EITHER WERE IN EXISTENCE OR SHOULD HAVE BEEN ANTICIPATED AT THE TIME THE CONTRACT WAS EXECUTED, IT NECESSARILY FOLLOWS THAT SUCH CONDITIONS PROPERLY MAY NOT BE REGARDED AS CONSTITUTING "UNFORESEEABLE CAUSES" WITHIN THE MEANING OF THAT TERM AS USED IN THE CONTRACT.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD, IT MUST BE CONCLUDED THAT THERE EXISTS NO PROPER OR LEGAL BASIS FOR RELIEVING THE CONTRACTOR FROM ITS LIABILITY FOR THE EXCESS COST REPORTED TO HAVE BEEN INCURRED BY THE UNITED STATES BY REASON OF THE DEFAULT.