B-136141, JUN. 30, 1958

B-136141, JUN. 30, 1958

TO DIMOND AND THORMAN:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 14, 1958, WITH ENCLOSURES, REQUESTING RELIEF FOR IRVING FRIEDMAN UNDER THE ACT OF APRIL 10, 1928, 45 STAT. 413, 31 U.S.C. 236, BECAUSE OF AN ALLEGED MISREPRESENTATION IN CAFETERIA CONCESSION CONTRACTS NOS. VA-B2-36, DATED APRIL 1, 1947, AND V2002SR-1, DATED JUNE 7, 1948, AS TO THE NUMBER OF PERSONS TO BE EMPLOYED BY THE VETERANS ADMINISTRATION BROOKLYN REGIONAL OFFICE.

THE SPECIAL CONDITIONS OF CONTRACT NO. VA-B2-36, INSOFAR AS PERTINENT, PROVIDED:

"6. THE CONCESSIONNAIRE AGREES TO SUPPLY APPROPRIATE AND ADEQUATE EQUIPMENT TO PROPERLY STORE AND SERVE ALL ITEMS OF FOOD, MEATS AND OTHER ARTICLES TO BE DISPENSED BY HIM ON THE PREMISES. THE CONCESSIONNAIRE FURTHER AGREES TO PROVIDE TABLES AND CHAIRS TO ADEQUATELY ACCOMODATE (SIC) 450 PATRONS; * * *" AND FURTHER STATED:

"INFORMATION FOR BIDDERS: IT IS ANTICIPATED THAT THERE WILL BE APPROXIMATELY 2,000 EMPLOYEES EMPLOYED BY THE BROOKLYN REGIONAL OFFICE.'

IN ADDITION, THE CONTRACT PROVIDED THAT IT WOULD BE TERMINATED AT ANY TIME UPON REQUEST OF EITHER PARTY BY 90 DAYS WRITTEN NOTICE TO THE OTHER PARTY. THE CONTRACT CALLED FOR A MONTHLY RENTAL OF $400.

IT IS ALLEGED THAT THE VETERANS ADMINISTRATION EMPLOYEES NUMBERED LESS THAN THE NUMBER ESTIMATED IN THE CONTRACT AND THAT, AS A RESULT, THE CONTRACTOR SUSTAINED A SUBSTANTIAL LOSS. PURSUANT TO THE CONTRACT TERMS, ON APRIL 1, 1948, THE CONTRACTOR ADVISED THE VETERANS ADMINISTRATION THAT IT WAS TERMINATING CONTRACT NO. VA-B2-36. THE TERMINATION WAS ACCEPTED BY THE GOVERNMENT AS OF THE CLOSE OF BUSINESS JUNE 30, 1948.

ON JUNE 7, 1948, A NEW CONTRACT, NO. V2002SR-1, WAS ENTERED INTO EFFECTIVE JULY 1, 1948. THAT CONTRACT, INSOFAR AS PERTINENT, PROVIDED:

"INFORMATION FOR BIDDERS: IT IS ANTICIPATED THAT THERE WILL BE APPROXIMATELY 1,300 EMPLOYEES EMPLOYED BY THE BROOKLYN REGIONAL OFFICE.'

ALSO, IT CONTAINED THE 90-DAY TERMINATION CLAUSE THAT WAS IN THE FIRST CONTRACT. THE CONTRACT BY REASON OF EXTENSIONS AND RENEWALS WAS IN EFFECT UNTIL JUNE 30, 1952, AT A MONTHLY RENTAL OF $52.

THE CONTRACTOR FILED SUIT, IRVING FRIEDMAN V. UNITED STATES, NO. 358-55, IN THE COURT OF CLAIMS FOR $126,000 FOR LOSSES RESULTING FROM ALLEGED MISREPRESENTATIONS IN THE CAFETERIA CONCESSION CONTRACTS AS TO THE NUMBER OF EMPLOYEES THAT WOULD BE EMPLOYED BY THE VETERANS ADMINISTRATION. THE SUIT WAS DISMISSED ON JULY 12, 1957. THE COURT OF CLAIMS CONCLUDED THAT THE CLAIM UPON THE FIRST CONTRACT WAS BARRED BY THE STATUTE OF LIMITATIONS AND THAT THE CLAIM UPON THE SECOND CONTRACT FAILED TO STATE A CLAIM UPON WHICH RELIEF COULD BE GRANTED. WITH RESPECT TO THE CLAIM BASED UPON THE SECOND CONTRACT, THE COURT OF CLAIMS SAID:

"THE CERTIFICATION BY THE PERSONNEL OFFICER OF THE VETERANS ADMINISTRATION REGIONAL OFFICE, BROOKLYN, WHICH IS ATTACHED TO DEFENDANT'S MOTION AS EXHIBIT C, SHOWS THAT THERE WAS IN FACT APPROXIMATELY 1,300 EMPLOYEES ON HAND DURING THE FIRST YEAR OF THE CONTRACT. THE AFFIDAVIT OF MARK J. JACOBY, PERSONNEL OFFICER OF THE BROOKLYN REGIONAL OFFICE OF THE VETERANS ADMINISTRATION, CONTAINS THE CASE INFORMATION.

"THEREFORE, IF THE STATEMENT OF INFORMATION FOR BIDDERS CONSTITUTED A WARRANTY, THERE CLEARLY WAS NO BREACH THEREOF BY THE GOVERNMENT. AS A MATTER OF FACT, THE SECOND CONTRACT WAS TWICE RENEWED, WHEN IN FACT PLAINTIFF COULD HAVE CANCELLED AT ANY TIME BY GIVING 90 DAYS' NOTICE. THE NATURAL CONCLUSION FROM THAT IS THAT PLAINTIFF WAS SATISFIED WITH THE SECOND CONTRACT OR HE WOULD HAVE CANCELLED.

"THEREFORE, IF PLAINTIFF'S CAUSE OF ACTION IS PREDICATED ON THE SECOND CONTRACT, HE FAILS TO ALLEGE A BREACH THEREOF IN THE PETITION AND FURTHERMORE THE FACTS SHOW THAT THERE WAS NO BREACH.'

THE COURT OF CLAIMS IN ITS DECISION WOULD NOT SAY THAT THE "INFORMATION FOR BIDDERS" STATEMENT CONSTITUTED A WARRANTY, AND IT IS OUR VIEW THAT IT DID NOT CREATE A WARRANTY. THE QUANTITIES ARE STATED TO BE "ANTICIPATED" ESTIMATES. THEREFORE, THE STATEMENT IS NOT CERTAIN AND NEITHER ARE THE FIGURES EXACT AS TO THE NUMBER OF EMPLOYEES THAT WOULD BE EMPLOYED. THINK IT MAY BE REASONABLY CONSTRUED MERELY AS A STATEMENT OF OPINION OR BELIEF OF THE NUMBER OF EMPLOYEES THAT MIGHT BE EMPLOYED. FURTHERMORE, ALTHOUGH THE CONTRACTOR ALLEGEDLY RELIED ON THE STATEMENT OF INFORMATION FOR BIDDERS, THE CONTRACTOR SHOULD HAVE REALIZED THAT THE STATEMENT WAS NOT SIGNIFICANT SINCE A MERE STATEMENT OF THE NUMBER TO BE EMPLOYED IN THE BUILDING WOULD NOT BE A GUARANTEE OF THE NUMBER THAT WOULD PURCHASE FOOD IN THE BUILDING CAFETERIA. IN FACT, WHILE THE FIRST CONTRACT ESTIMATED THAT THERE WOULD BE APPROXIMATELY 2,000 EMPLOYEES, THE CONTRACTOR AGREED TO PROVIDE ADEQUATE ACCOMMODATIONS FOR ONLY 450 PATRONS.

WHILE THE ACT OF APRIL 10, 1928, AUTHORIZES OUR OFFICE TO REPORT TO THE CONGRESS FOR ITS CONSIDERATION CERTAIN CLAIMS FILED IN THE GENERAL ACCOUNTING OFFICE, THE PROVISIONS OF THE ACT MAY BE INVOKED ONLY WHEN IT IS DETERMINED DEFINITELY THAT THE CLAIM "CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS.' THE FACT THAT THE PERFORMANCE OF A CONTRACT RESULTS IN A LOSS INSTEAD OF A PROFIT IS NOT A JUSTIFIABLE EXCUSE OR EXTENUATING CIRCUMSTANCE THAT WOULD WARRANT OUR REFERRING THE MATTER TO THE CONGRESS. 9 COMP. GEN. 378.

UNDER THE CIRCUMSTANCES, IT IS OUR CONCLUSION THAT THE SUBJECT CLAIM DOES NOT CONTAIN SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO JUSTIFY SUBMISSION OF IT TO THE CONGRESS PURSUANT TO THE ACT OF APRIL 10, 1928.