Goldwasser v. United States

• Decision Date: 13 December 1963
• Docket Number: No. 477-61.,477-61.
• Citation: 325 F.2d 722
• Parties: Neil A GOLDWASSER, Doing Business as Century Offset Company v. The UNITED STATES.
• Court: U.S. Claims Court

325 F.2d 722 (1963)

Neil A GOLDWASSER, Doing Business as Century Offset Company v. The UNITED STATES.

No. 477-61.

United States Court of Claims.

December 13, 1963.

Jack Rephan, Washington, D. C., for plaintiff. Solomon Dimond, Washington, D. C., was on the brief.

Jay J. Levit, Richmond, Va., with whom was Asst. Atty. Gen. John W. Douglas, for defendant.

Before JONES, Chief Judge, and WHITAKER, LARAMORE, DURFEE and DAVIS, Judges.

WHITAKER, Judge.

This is an action for breach of contract. Both parties have moved for summary judgment.

On July 18, 1960, plaintiff was awarded a Department of the Navy contract to print and deliver a weekly newspaper called the Shipworker at New York Naval Shipyard. The contract was to run from August 1, 1960 to June 30, 1961. The estimated total contract price was $40,000. After plaintiff had printed the editions of the Shipworker from August 5, 1960 to October 21, 1960, he was orally advised that no further issues would be ordered from him. Plaintiff was thereafter given no more printing under the contract, and the remaining numbers of the Shipworker were printed by another printer.

Plaintiff claims that this was a requirements contract and that each failure on defendant's part to order its weekly requirements for the printing of the newspaper from him was a breach of contract. Defendant denies that this was a requirements contract; it says that after it had paid for delivery of the first edition of the newspaper at a price exceeding $100.00, it was free to give its printing business to whomever it chose. In support of its position, defendant points to the "Indefinite Quantities" clause of the Invitation for Bids:

"INDEFINITE QUANTITIES

"The total quantities specified herein are estimates only. The amounts which the Contractor may be required to furnish and the Government to accept hereunder shall be the amounts which shall from time to time be ordered hereunder by the Government during the ordering period of this contract. In any event, however, the Government shall order supplies (or services) hereunder having an aggregate value at the unit prices specified herein of not less than $100.00; and the Government shall be entitled to order and the Contractor shall be required to furnish supplies (or services) hereunder amounting to not more than the total estimated quantities set forth herein."

Plaintiff replies that the following excerpts from the Invitation and the Specifications show that a requirements contract was intended:

"SERVICES (Labor and Material) including paper stock as specified below and print weekly issues of the New York Naval Shipyard publication Shipworker as follows:

1. PRICE SCHEDULE A (Print in black ink)

To set type, proofread, make up, submit galley proofs and page proofs, and print in one color ink, fold, insert, and deliver: 50 Issues (about 750,000 copies)

* * * * * *

"Minimum numbers of copies to be printed under this contract shall be 10,000 per issue, with the New York Naval Shipyard reserving the right to add increments of 1,000 up to a total of 30,000 copies per issue. The present requirement will be 15,000 copies per issue. Printing is to be in black ink unless otherwise directed. During the 12 month term to this contract, sic it is expected that one to two issues will be printed in two colors. A six or eight page issue may be requested on occasion."

The two above-quoted clauses are directly contradictory; one or the other must fall. We think the indefinite-quantities clause must fall.

In the first place, it is a verbatim copy of a form used in many Government contracts. On the other hand, the clause on which plaintiff relies relates to this specific contract and to it only. The specific provision must prevail over the general.

The Government's draftsman picked up the wrong form. It is entirely inappropriate to what the parties sought to accomplish. The specific provision called for the printing of a minimum of 10,000 copies per issue for 50 issues. The contract was to last for 12 months, and the estimated contract price was $40,000. In contrast, the indefinite-quantities clause only bound the Government to take "supplies (or services)"¹ up to $100.00.

According to the Government's contention, when it paid for $100 worth of printing, its obligation was discharged. But, on the other hand, it acknowledges that the contractor was bound to keep his facilities available to print 10,000 copies a week of the newspaper whenever the Government might elect to order them. This would have prevented him from accepting any other business requiring the need of these facilities. It would have been a one-sided bargain, bordering upon a lack of mutuality under the facts of this case. The contract should not be given this construction if it can be avoided.

Defendant's purpose was to employ a printer to print its weekly newspaper over a 50-week period in quantity sufficient to provide each employee of the Shipyard with a copy. That is why the contract provided for a fixed minimum quantity for each issue, but gave the contracting officer authority to order increments in units of 1,000 copies. The long term of the contract and the large contract price are also the reasons why the defendant required plaintiff to obtain a Certificate of Competency from the Small Business Administration before it would make the award to him. If it were able to shut plaintiff off after purchasing $100 worth of printing, defendant would not have gone to the trouble of assuring itself of his competency to perform the contract over its entire term. All signs indicate that both parties envisaged a relatively long-term relationship between them; nothing in the facts supports the idea that they intended that relationship to subsist only occasionally and at defendant's election.

In Tennessee Soap Co. v. United States, 126 F.Supp. 439, 130 Ct.Cl. 154 (1954), cited by defendant in support of its interpretation, there were no contradictory provisions in the contract, and the commercial setting was such that an indefinite-quantities contract made sense. In that case, it was clear at the time the contract was made that the Navy's need for soap was uncertain; though it obviously would need some soap over the course of the contract, the Navy had no idea just how much it would need or when it would want delivery to be made. In such a situation, the indefinite-quantities clause fits the situation; it enables the Government to procure needed supplies but does not commit it to buy too much or at the wrong time. In the case at bar, however, the minimum quantity of the Shipworker that would be needed and the times of its delivery were known to defendant in advance. Since the contractor was obligated to furnish this minimum number, the Navy, on the other hand, must be held to have been obligated to accept this minimum number.

Since this is a contract which required the Government to purchase its needs from plaintiff, it had no right to purchase them from another printer as long as the contract subsisted.

This is the view which the Armed Services Board of Contract Appeals took when plaintiff appealed the case to it. But the Board concluded that, although the refusal of the defendant to order from the plaintiff was unjustified, the effect of defendant's refusal was to terminate the contract for its own convenience under the Termination-for-Convenience-of-the-Government clause. Defendant urges us to accept this view and to remit plaintiff to his remedy under the termination procedure.

We are, however, unable to agree with the suggestion that there was in fact a termination for the convenience of the Government. At no time during the contract period did the contracting officer formally advise the contractor that the Government was terminating the contract for its convenience. The letter of the Commanding Officer of the Yard of October 4, 1960 (defendant's exhibit 2) said, "we are compelled to take steps to cancel our current contract with you for the printing of the Shipworker," but these steps were never taken.

The Armed Services Procurement Regulations (32 C.F.R. § 8.701) prescribe a mandatory termination-for-convenience clause which states that the contracting officer must, when terminating the contract for the Government's convenience, provide the contractor with a formal Notice of Termination and the manner in which the contractor can submit its termination claim, and sections 8.800-8.801 provide for form letters to be used to give Notice of Termination. None of this was done.

In the light of our recent decision in G. L. Christian & Associates v. United States, Ct.Cl., 312 F.2d 418 (1963), the Armed Services Procurement Regulations have the force of law. These regulations were not complied with.

Indeed, the contracting officer never had any intention of cancelling the contract for the convenience of the Government, thereby subjecting the Government to liability; but rather because it asserted plaintiff's workmanship was faulty and not up to the standard required by the contract. On October 4, 1960, Rear Admiral S. N. Pyne, Commander of the New York Naval Shipyard, wrote to plaintiff complaining that the numbers of the newspaper that had theretofore been printed "have been reproduced in an unacceptable quality and appearance." The letter added that the poor quality of plaintiff's work had drawn complaints from the readers, and that in spite of plaintiff's promises to improve the quality of the printing, "Thus far whatever measures you have taken to eliminate these faults have been unsuccessful." The letter concluded:

"For these reasons, and after nearly two months of continued substandard quality and complaints from our readers you did not correct the faults indicated to you. We can therefore no longer jeopardize the standing and readership of the Shipworker. Consequently we are compelled to take steps to cancel our current contract with you for the printing of the Shipworker."

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