B-142716, FEBRUARY 6, 1961, 40 COMP. GEN. 447
Highlights
CONTRACTS - CANCELLATION - PREPARATION COSTS A CLAIM FOR THE COST OF WORK PERFORMED ON UNCOMPLETED AND UNDELIVERED UNITS AT THE TIME AN INVALID CONTRACT WAS CANCELED BECAUSE IT CONTAINED MATERIAL DEVIATIONS FROM THE SPECIFICATIONS AND AWARD WAS CONTRARY TO THE ADVERTISED PROCUREMENT STATUTE. SINCE THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY AND THE MANNER IN WHICH THE AUTHORITY IS EXERCISED IS PRESCRIBED AND LIMITED BY STATUTE. 1961: WE HAVE YOUR LETTER OF DECEMBER 8. BIDS FOR THE PROCUREMENT WERE SOLICITED UNDER INVITATION NO. 109-603 60- 635. WHEN BIDS WERE OPENED AS SCHEDULED ON OCTOBER 9. IT WAS FOUND THAT THE WALLACE BID WAS ACCOMPANIED BY A CONTINUATION SHEET.
B-142716, FEBRUARY 6, 1961, 40 COMP. GEN. 447
CONTRACTS - CANCELLATION - PREPARATION COSTS A CLAIM FOR THE COST OF WORK PERFORMED ON UNCOMPLETED AND UNDELIVERED UNITS AT THE TIME AN INVALID CONTRACT WAS CANCELED BECAUSE IT CONTAINED MATERIAL DEVIATIONS FROM THE SPECIFICATIONS AND AWARD WAS CONTRARY TO THE ADVERTISED PROCUREMENT STATUTE, 10 U.S.C. 2305 (C), WHEN SUCH WORK DID NOT RESULT IN ANY BENEFIT TO THE GOVERNMENT MAY NOT BE PAID IN VIEW OF THE JUDICIAL PRECEDENT FOR THE DENIAL OF RECOVERY ON A QUANTUM VALEBAT BASIS WHEN THE GOVERNMENT DOES NOT RECEIVE ANY TANGIBLE BENEFIT FROM THE CONTRACTOR. SINCE THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY AND THE MANNER IN WHICH THE AUTHORITY IS EXERCISED IS PRESCRIBED AND LIMITED BY STATUTE, REGULATION, AND ADMINISTRATIVE AND JUDICIAL DETERMINATION, TO MAKE THE GOVERNMENT LIABLE UNDER A CANCELED INVALID CONTRACT FOR UNCOMPLETED AND UNDELIVERED WORK FOR WHICH THE GOVERNMENT DID NOT RECEIVE ANY BENEFIT WOULD, IN EFFECT, PERMIT SUCH AGENTS TO OBLIGATE THE UNITED STATES IN DIRECT CONTRAVENTION OF THE LAW.
TO ROCKHILL, VANDERVEER, KENNEDY AND LEE, FEBRUARY 6, 1961:
WE HAVE YOUR LETTER OF DECEMBER 8, 1960, WITH ENCLOSURES, SUBMITTING ON BEHALF OF J. D. WALLACE COMPANY, INC., A CLAIM AGAINST THE UNITED STATES IN THE AMOUNT OF $49,956.82, ARISING OUT OF THE CANCELLATION OF CONTRACT NO. AF 109/603/-35205, AWARDED JANUARY 26, 1960, BUY THE WARNER ROBBINS AIR MATERIEL AREA, UNITED STATES IAR FORCE, FOR THE PROCUREMENT OF 78 RADIAL OVERARM SAWS.
BIDS FOR THE PROCUREMENT WERE SOLICITED UNDER INVITATION NO. 109-603 60- 635, ISSUED SEPTEMBER 8, 1959. WHEN BIDS WERE OPENED AS SCHEDULED ON OCTOBER 9, 1959, IT WAS FOUND THAT THE WALLACE BID WAS ACCOMPANIED BY A CONTINUATION SHEET, FORMING A PART THEREOF, WHICH SHOWED HOW THE BIDDER PROPOSED TO MEET CERTAIN OF THE REQUIREMENTS IMPOSED BY THE SPECIFICATIONS. AFTER OPENING, THE BIDDERS WERE ADVISED THAT THE PROCUREMENT HAD BEEN CANCELED. LATER, HOWEVER, THE PROCUREMENT OFFICE ASKED THE BIDDERS IF THEY WOULD BE WILLING TO REINSTATE THEIR BIDS. LETTER OF DECEMBER 8, 1959, THE WALLACE COMPANY SO AGREED. IT APPEARS THAT THE INFORMATION IN THE CONTINUATION SHEET OF THE WALLACE BID CAUSED SOME QUESTION AS TO ITS RESPONSIVENESS. ON DECEMBER 10, 1959, THE WALLACE FIRM SENT A TELEGRAM TO THE CONTRACTING OFFICER STATING THAT THE FIRM PROPOSED TO FURNISH AN ITEM IN ACCORDANCE WITH THE SPECIFICATIONS CONTAINED IN THE INVITATION. AWARD WAS MADE TO WALLACE ON JANUARY 26, 1960, ON THE BASIS OF THE SPECIFICATIONS AS ISSUED.
THAT AWARD WAS PROTESTED AND, UPON DUE CONSIDERATION, WE FOUND THAT THE BID ORIGINALLY SUBMITTED BY WALLACE WAS NOT RESPONSIVE TO THE SPECIFICATIONS IN AT LEAST TWO ASPECTS--- THE MEANS OF PREVENTING MOVEMENT OF THE CUTTING HEAD RELATIVE TO THE UPRIGHT COLUMN AND THE POWER BRAKE. THIS DETERMINATION APPEARS TO HAVE BEEN BORNE OUT BY THE FAILURE OF THE PROTOTYPE SUBMITTED IN ACCORDANCE WITH THE TERMS OF THE CONTRACT TO MEET THE SPECIFICATIONS FOR THESE AND OTHER REASONS. ACCORDINGLY, WE CONCLUDED IN OUR DECISION OF JUNE 13, 1960, (39 COMP. GEN. 832), THAT THE WALLACE BID WAS NOT RESPONSIVE TO THE INVITATION, THAT THE AWARD WAS ERRONEOUS AND SHOULD BE DISAVOWED BY THE UNITED STATES, AND THAT THE CONTRACTOR SHOULD BE ADVISED THAT NO FURTHER DELIVERIES WOULD BE ACCEPTED.
THE CONTRACT WAS CANCELED ON OR ABOUT JUNE 23, 1960. AT THAT TIME 18 OF THE SAWS HAD BEEN DELIVERED, ACCEPTED AND, AS WE UNDERSTAND, PAID FOR AT THE CONTRACT PRICE. THE CLAIM SUBMITTED REPRESENTS ACTUAL COSTS INCURRED IN OBTAINING SUPPLIES AND OTHERWISE PREPARING FOR THE MANUFACTURE OF THE 60 SAWS UNDELIVERED AT THE TIME OF CANCELLATION. WE UNDERSTAND, AS INDICATED IN THE ENCLOSURES TO YOUR LETTER, THAT THE CLAIM IS SUBJECT TO REDUCTION BY ANY AMOUNT REALIZED FROM OTHER DISPOSITIONS OF THE MATERIALS.
THE PROCUREMENT WAS UNDERTAKEN PURSUANT TO 10 U.S.C. 2304 (A), WHICH PROVIDES THAT WITH CERTAIN EXCEPTIONS, NOT HERE MATERIAL, PURCHASES OF AND CONTRACTS FOR PROPERTY OR SERVICES OF THE KIND UNDER CONSIDERATION SHALL BE MADE BY FORMAL ADVERTISING. IT IS FURTHER PROVIDED AT 10 U.S.C. 2305 (C) THAT---
* * * AWARDS SHALL BE MADE WITH REASONABLE PROMPTNESS BY GIVING WRITTEN NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. * * * (ITALICS SUPPLIED.)
WHERE, AS IN THIS CASE, A CONTRACT IS REQUIRED BY STATUTE TO BE AWARDED PURSUANT TO FORMAL ADVERTISING, A BID WHICH VARIES MATERIALLY FROM THE SPECIFICATIONS MUST BE REJECTED. 63 C.J.S. MUNICIPAL CORPORATIONS SEC. 1000; 43 AM. JUR. PUBLIC WORKS AND CONTRACTS SEC. 40; WILLIAM A. CAREY AND CO. V. BOROUGH OF FAIR LAWN (1N.J. 1955), 117 A.2D 140; 38 OP. ATTY. GEN. 555; TUFANO V. BOROUGH OF CLIFF SIDE PARK (1N.J. 1933), 165 A. 628; INTERNATIONAL MOTOR CO. V. MAYOR, ETC., OF PLAINFIELD (1N.J. 1921), 115 A. 391; AND SUTTON V. CITY OF ST. PAUL (1MINN. 1951), 48 N.W.2D 436. IN THE CITED OPINION OF THE ATTORNEY GENERAL IT WAS STATED:
IT IS ALSO WELL ESTABLISHED THAT IF IN RESPONSE TO AN INVITATION FOR BIDS ON A GOVERNMENT CONTRACT ONE IS SUBMITTED WHICH OFFERS TO FURNISH A PRODUCT MATERIALLY DIFFERENT FROM THAT DESCRIBED OR SPECIFIED IN THE INVITATION, IT NOT ONLY MAY, BUT MUST, BE REJECTED. * * *. ANY OTHER RULE WOULD DEFEAT THE PURPOSES OF THE STATUTE. * * *
A BID WHICH VARIES MATERIALLY FROM THE TERMS OF THE INVITATION MAY NOT BE MODIFIED AFTER OPENING TO CONFORM TO THE SPECIFICATIONS. 63 C.J.S. MUNICIPAL CORPORATIONS SEC. 1003; 10 MCQUILLIN ON MUNICIPAL CORPORATIONS 3D ED. SEC. 29.65.
A CONTRACT REQUIRED TO BE LET PURSUANT TO COMPETITIVE BID PROCEDURES, WHICH IS AWARDED ON A BID CONTAINING MATERIAL VARIANCES FROM THE INVITATION, IS VOID AB INITIO. HUDSON CITY CONTRACT CO. V. JERSEY CITY INCINERATOR AUTHORITY (1N.J. 1955), 111 A.2D 385. SUCH CONTRACT IS INVALID AND CONFERS NO RIGHTS ON THE PURPORTED CONTRACTOR. TUPFER V. BOARD OF CHOSEN FREEHOLDERS ( N.J. 1917), 110 A. 927; HORNUNG V. TOWN OF WEST NEW YORK (1N.J. 1911), 81 A. 1116; CASE V. INHABITANTS OF TRENTON ( N.J. 1909), 74 A. 672; KONIG V. MAYOR, ETC., OF BALTIMORE ( MD. 1915), 95 A. 478; DIAMOND V. MANKATO ( MINN. 1903), 93 N.W. 911; LE TOURNEAU V. HUGO ( MINN. 1903), 97 N.W. 115; COLLER V. CITY OF ST. PAUL (1MINN. 1947), 26 N.W.2D 835; UNITED STATES V. ELLICOTT (1911), 223 U.S. 524; 20 OP. ATTY. GEN. 496; NEW YORK MAIL AND NEWSPAPER TRANS. CO. V. UNITED STATES (1957), 139 CT.1CL. 751.
IN THE CASE OF UNITED STATES V. ELLICOTT, SUPRA, AN INVITATION HAD BEEN ISSUED INCORPORATING CERTAIN SPECIFICATIONS. THE LOW BID AS SUBMITTED CONTAINED EXCEPTIONS TO THOSE SPECIFICATIONS. AFTER CORRESPONDING BETWEEN THE CONTRACTING OFFICER AND THE BIDDER AS TO THE INTENT OF THE EXCEPTIONS, A CONTRACT WAS ENTERED INTO INCORPORATING THE EXCEPTIONS. AFTER AWARD, THE CONTRACTOR SUBMITTED DETAILED DRAWINGS WHICH, IT WAS DETERMINED, DEPICTED A PRODUCT MATERIALLY DEFICIENT FFROM THE VIEWPOINT OF THE GOVERNMENT'S NEEDS. AFTER CANCELLATION, THE CONTRACTOR SUED FOR BREACH OF CONTRACT. THE SUPREME COURT HELD THAT IF THE ORIGINAL SPECIFICATIONS WERE TO BE FOLLOWED THERE WAS NO CONTRACT, SINCE THE BIDDER HAD NOT OFFERED SUCH PERFORMANCE, AND IF THE MODIFICATIONS OFFERED BY THE BIDDER WERE TO BE REGARDED AS HAVING BEEN ADOPTED THERE WAS NO CONTRACT "* * * SINCE IT WOULD THEN COME TO PASS THAT THE CONTRACT WAS SO ERRONEOUS TO AND DESTRUCTIVE OF THE ADVERTISED PROPOSALS AS TO NULLIFY THEM, AND THEREFORE CAUSE IT TO RESULT THAT THE CONTRACT WAS ONE MADE WITHOUT THE COMPETITIVE BIDDING WICH WAS NECESSARY TO GIVE IT VALIDITY.'
IN THE CASE OF KONIG V. MAYOR, ETC., OF BALTIMORE, SUPRA, THERE WAS CONSIDERED THE VALIDITY OF A CONTRACT AWARDED UNDER THE TERMS OF A STATUTE REQUIRING AWARD TO THE LOWEST RESPONSIBLE BIDDER. THE INVITATION SOLICITED BIDS ON ALTERNATIVE ITEMS WITH THE CONTRACTING OFFICER RESERVING THE RIGHT TO ACCEPT EITHER. THE LOW BIDDER SUBMITTED A BID ON THE FIRST ALTERNATE WITH THE PROVISION THAT IF THIS ALTERNATE COULD NOT BE EMPLOYED WITHOUT OBTAINING A LICENSE FROM THE PATENT HOLDER HE COULD THEN PERFORM IN ACCORDANCE WITH A SECOND ALTERNATE. THE BIDDER WAS AWARDED A CONTRACT WHICH PROVIDED THAT THE CITY RETAINED THE OPTION AT THE APPROPRIATE TIME TO DIRECT THE USE OF EITHER ALTERNATIVE. THE COURT HELD THAT THE CONTRACT WAS "UTTERLY VOID" SINCE THE BID SUBMITTED WAS NOT IN CONFORMITY WITH THE SPECIFICATIONS.
IN THE CASE OF COLLER V. CITY OF ST. PAUL, SUPRA, THE STATUTE REQUIRED AWARD TO THE LOWEST RESPONSIBLE BIDDER. AN INVITATION HAD BEEN ISSUED FOR THE PROCUREMENT AND INSTALLATION OF STREET PARKING METERS. THE LOW BIDDER OFFERED AN ALTERNATIVE METHOD OF INSTALLING CERTAIN OF THE METERS AND TOOK EXCEPTION TO THE SPECIFICATION REQUIRED THAT THE CONTRACTOR PAY THE SALARY OF THE CITY'S SERVICE MAN FOR SIX MONTHS. AFTER OPENING, THE LOW BIDDER WITHDREW THE EXCEPTIONS AND OFFERED TO PERFORM EXACTLY IN ACCORDANCE WITH THE INVITATION; AND ON THAT BASIS HE WAS AWARDED THE CONTRACT. THE COURT HELD THAT WHERE, AS HERE, THERE IS A MATERIAL VARIANCE BETWEEN THE BID AND THE INVITATION, THE BID MUST BE REJECTED. THE COURT FURTHER FOUND THAT THE VARIANCE IN THIS CASE WAS MATERIAL IN THAT IT WOULD HAVE GIVEN THE BIDDER A SUBSTANTIAL ADVANTAGE OVER THE OTHER BIDDERS SINCE THE ALTERNATE METHOD OFFERED WOULD SAVE APPROXIMATELY $2,100 OUT OF A TOTAL PRICE OF $69,000. THE COURT SPECIFICALLY HELD ALSO THAT NO BID COULD BE MODIFIED AFTER OPENING, EVEN THOUGH NO FRAUD OR WRONGDOING HAS BEEN SHOWN, AND THAT THE AWARD TO THE LOW BIDDER UNDER THE CIRCUMSTANCES WAS ,VOID.' AS TO THE APPLICABILITY OF THE RULE REGARDLESS OF THE GOOD FAITH OF THE PARTIES SEE ALSO DIAMOND V. CITY OF MANKATO, SUPRA, AND KONIG V. MAYOR, ETC; OF BALTIMORE, SUPRA. AS TO THE MATERIALITY OF THE VARIANCE OF THE SPECIFICATIONS, SEE ALSO 63 C.J.S. MUNICIPAL CORPORATIONS, SEC. 1000.
IN THIS INSTANCE, WE BELIEVE THAT THE EXCEPTIONS TO THE SPECIFICATIONS INCLUDED IN THE WALLACE BID MUST BE REGARDED AS MATERIAL VARIANCES SINCE THEY WOULD HAVE RESULTED, IF EMPLOYED, IN A REDUCTION IN PRODUCTION COST, THUS GIVING THE LOW BIDDER A DECIDED COMPETITIVE ADVANTAGE OVER BIDDERS RESPONDING TO THE SPECIFICATIONS. IN ACCORDANCE WITH THE FOREGOING AUTHORITIES WE MUST CONCLUDE, AS WE HELD IN OUR DECISION OF JUNE 13, 1960, 39 COMP. GEN. 832, THAT NO VALID CONTRACT EVER EXISTED.
THE ISSUE NOW PRESENTED IS THE MEASURE OF THE WALLACE FIRM'S ENTITLEMENT FOR WORK PERFORMED ON THE 60 UNITS UNCOMPLETED AND UNDELIVERED AT THE TIME OF CANCELLATION. AS TO THE OTHER 18 UNITS, WHICH WERE ACCEPTED BY THE GOVERNMENT, THE RULE FOLLOWED BY OUR OFFICE AND THE FEDERAL COURTS IS THAT PAYMENT IS AUTHORIZED ON A QUANTUM MERUIT OR QUANTUM VALEBAT BASIS FOR BENEFITS RECEIVED PRIOR TO THE DETERMINATION OF CONTRACT INVALIDITY. CLARK V. UNITED STATES (1877), 95 U.S. 539; SOUTH BOSTON IRON CO. V. UNITED STATES (1886), 118 U.S. 37; SALOMON V. UNITED STATES (1873), 86 U.S. 17; 154 ALR 356; 110 ALR 154; 84 ALR 937; 38 COMP. GEN. 368; 37 COMP. GEN. 330; 17 COMP. GEN. 312.
IT SHOULD BE NOTED, HOWEVER, THAT THERE EXISTS STRONG PRECEDENT FOR HOLDING THAT A CONTRACT WITHIN THE AUTHORITY OF THE PUBLIC BODY, WHICH IS INVALID BECAUSE ENTERED INTO WITHOUT FOLLOWING THE REQUIRED PROCEDURES, GIVES RISE TO NO ENTITLEMENT TO PAYMENT OTHER THAN THAT ALREADY RECEIVED PRIOR TO THE DETERMINATION OF INVALIDITY, NOTWITHSTANDING THE GOOD FAITH OF THE PARTIES. 43 AM. JUR. PUBLIC WORKS AND CONTRACTS, SEC. 88; ROEMHELD V. CITY OF CHICAGO (1ILL. 1907), 83 N.E. 291; SHULSE V. CITY OF MAYVILLE (1WISC. 1937), 271 N.W. 643; FEDERAL PAVING CORP. V. CITY OF WAUWATOSA (1WISC. 1939), 286 N.W. 546; TOBIN V. TOWN COUNCIL (1WYO. 1933), 17 P.2D 666; JOHNSON COUNTY SAVINGS BANK V. CITY OF CRESTON ( IOWA 1930), 231 N.W. 705; 10 MCQUILLIN ON MUNICIPAL CORPORATIONS, 3D ED., SECS. 29.02, 29.26, 29.41; LAYNE-WESTERN CO. V. BUCHANAN COUNTY, MO. (8TH CIR. 1936), 85 F.2D 343; SEE, ALSO, MILLER V. MCQUILLIN ( CALIF. 1942), 124 P.2D 34. IN 10 MCKINNON ON MUNICIPAL CORPORATIONS, SEC. 29.02, IT IS STATED:
THE DOCTRINE WHICH SEEMS TO HARMONIZE WITH OUR GOVERNMENTAL AND LEGAL SYSTEM, WHICH APPEARS TO BE SUPPORTED BY REASON AND WHICH, THEREFORE, SHOULD PREVAIL MAY BE THUS STATED BRIEFLY: IF THE CHARTER OR THE STATUTE APPLICABLE REQUIRES CERTAIN STEPS TO BE TAKEN BEFORE MAKING A CONTRACT, AND IT IS MANDATORY IN TERMS, A CONTRACT NOT MADE IN CONFORMITY THEREWITH IS INVALID * * * AND USUALLY THERE IS NO IMPLIED LIABILITY FOR THE REASONABLE VALUE OF THE PROPERTY OR SERVICES OF WHICH THE MUNICIPALITY HAS HAD THE BENEFIT.
WHERE THE RIGHT TO PAYMENT ON A QUANTUM VALEBAT OR QUANTUM MERUIT BASIS IS RECOGNIZED, IT IS PREDICATED ON THE THEORY THAT IT WOULD BE UNFAIR FOR ONE PARTY TO HAVE THE BENEFIT OF THE LABOR OF ANOTHER WITHOUT RECOMPENSE, AND RECOVERY IS LIMITED "TO SUCH SUMS AS WILL REASONABLY COMPENSATE THE PART WHOSE SERVICES OR PROPERTY HAVE BEEN DEVOTED TO THE ADVANTAGE OF THE OTHER.' GEE V. CITY OF SUTTON (1NEBR. 1948), 31 N.W.2D 747. SEE ALSO HUDSON CITY CONTRACT CO. V. JERSEY CITY INCINERATOR AUTHORITY, SUPRA, IN WHICH THE MEASURE OF RECOVERY WAS HELD TO BE THE VALUE OF THE SERVICES ACTUALLY RENDERED NOT TO EXCEED COSTS, WITHOUT PROFIT ON THE BASIS THAT THE COMMUNITY WOULD OTHERWISE BE UNJUSTLY ENRICHED. SEE ALSO GAMEWELL CO. V. CITY OF PHOENIX (1955), 216 F.2D 928, WHERE IT WAS HELD THAT THE CITY SHOULD NOT BE ALLOWED TO RETAIN THE BENEFITS RECEIVED UNDER THE INVALID CONTRACT WITHOUT PAYING A REASONABLE VALUE FOR THEM. AND IN SALOMON V. UNITED STATES, SUPRA, IT WAS HELD THAT THE GOVERNMENT IS LIABLE ON QUANTUM VALEBAT FOR GOODS RECEIVED AND ACCEPTED UNDER AN INVALID CONTRACT.
IT WILL BE NOTED THAT PAYMENT ON QUANTUM MERUIT OR QUANTUM VALEBAT IS AUTHORIZED ON THE BASIS OF THE VALUE RECEIVED BY THE GOVERNMENT AGENCY. THE WEIGHT OF JUDICIAL AUTHORITY PROVIDES NO PRECEDENT FOR PAYMENT OF COSTS INCURRED BY THE CONTRACTOR WHICH DID NOT RESULT IN A BENEFIT TO OR IN THE RECEIPT OF VALUABLE GOODS OR SERVICES BY THE GOVERNMENTAL UNIT INVOLVED. IN NEW YORK MAIL AND NEWSPAPER TRANS. CO. V. UNITED STATES (1957), 139 CT.1CL. 751, THE MAJORITY OPINION STATED THAT, RATHER THAN PROVIDING FOR PAYMENT ON A STRICTLY QUANTUM MERUIT BASIS, THE PARTIES SHOULD BE PLACED SUBSTANTIALLY IN THE POSITION THEY WOULD HAVE BEEN IN HAD THERE BEEN NO ATTEMPTED CONTRACT. WHILE THE MATTER IS NOT ENTIRELY CLEAR, IT MAY BE THAT THE JUDGMENT AWARDED EXCEEDED THE AMOUNT WHICH WOULD HAVE BEEN PAID UNDER QUANTUM MERUIT. HOWEVER, EVEN ACCEPTING THE RULE IN THAT CASE (OVERLOOKING THE PRECEDENTS TO THE CONTRARY AND THE DICTUM IN THE STRONG DISSENT UNDER WHICH NO PAYMENT WOULD HAVE BEEN AWARDED THE CONTRACTOR HAD THERE BEEN NO VALID CONTRACT) IT DOES NOT APPEAR THAT THE PREAWARD POSITION OF THE PARTIES COULD ANY MORE BE RESTORED IF THE UNITED STATES WERE TO PAY THE CLAIM THAN IF THE PARTIES WERE LEFT IN STATUS QUO.
IN ANY CASE, WE THINK THE MATTER HAS BEEN SPECIFICALLY DECIDED BY THE SUPREME COURT IN THE RECENT CASE OF UNITED STATES V. MISSISSIPPI VALLEY GENERATING CO., U.S. SUP. CT., JANUARY 9, 1961, WHERE IT WAS STATED (FOOTNOTE NO. 22):
THE RESPONDENT ALSO CONTENDS THAT EVEN IF THE CONTRACT IS NOT ENFORCEABLE, A RECOVERY QUANTUM VALEBAT SHOULD BE DECREED. HOWEVER, SUCH A REMEDY IS APPROPRIATE ONLY WHERE ONE PARTY TO A TRANSACTION HAS RECEIVED AND RETAINED TANGIBLE BENEFITS FROM THE OTHER PARTY. SEE CROCKER V. UNITED STATES, 240 U.S. 74, 81-82. SINCE THE GOVERNMENT HAS RECEIVED NOTHING FROM THE RESPONDENT, NO RECOVERY QUANTUM VALEBAT IS IN ORDER.
IN ACCORDANCE WITH THE FOREGOING WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE MAY GIVE FAVORABLE CONSIDERATION TO YOUR CLAIM. MAY APPEAR UNDULY HARSH TO REQUIRE THE CONTRACTOR WHO ACTED IN GOOD FAITH TO ABSORB THE COSTS APPLICABLE TO THOSE ITEMS UNDELIVERED AT THE TIME OF CANCELLATION. IN THIS CONNECTION, IT MAY BE NOTED THAT WALLACE'S CLAIM OF $49,956.82 ON ACCOUNT OF THE 60 SAWS CANCELED AMOUNTS TO ABOUT $832.60 PER SAW. THIS IS $6,287.62 MORE THAN WALLACE WOULD HAVE RECEIVED FOR THESE 60 SAWS IF THE CONTRACT HAD NOT BEEN CANCELED, SINCE THE CONTRACT PRICE THEREFOR WAS ONLY $728.12 PER SAW. IN ANY EVENT, HOWEVER, THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY AND THE MANNER OF EXERCISE THEREOF IS PRESCRIBED AND LIMITED BY STATUTE, REGULATION AND ADMINISTRATIVE AND JUDICIAL DETERMINATION. TO MAKE THE GOVERNMENT LIABLE FOR OTHER THAN BENEFITS RECEIVED WOULD, IN EFFECT, PERMIT AGENTS OF THE GOVERNMENT TO OBLIGATE THE UNITED STATES IN DIRECT CONTRAVENTION OF THOSE LIMITATIONS AND PRESCRIPTIONS. IN EFFECT, THE BASIC PURPOSES OF THE STATUTES, REGULATIONS AND DETERMINATIONS WOULD BE NULLIFIED. SUCH RESULT IS OPPOSED TO THE PUBLIC INTEREST.
ACCORDINGLY, WE WOULD HAVE NO AUTHORITY TO ALLOW ANY PART OF YOUR CLAIM IRRESPECTIVE OF THE OUTCOME OF YOUR REPORTED EFFORTS TO SALVAGE THE MATERIALS AND SUPPLIES WHICH WERE ON HAND FOR PERFORMANCE OF THE CONTRACT AT THE TIME OF ITS CANCELLATION.