Week Three – Contract Formation Principles
I. Manifestation of Mutual Assent
As with private contracts, both the Government and the contractor must
demonstrate a present intent to be bound. Any suggestion that a future contract is
contemplated will not support the enforceability of a contract. One caveat to this rule is
the Government’s ability to issue a letter contract that is subject to future definitization.1
Letter contracts allow the government to meet emergency government needs that arise
and must be satisfied before a normal solicitation process can be completed.
The Government does not go into the contracting market and supply offers for
performance. Rather, the Government issues solicitations that invite bids or request
offers from contractors. The replying contractors are called “offerors” and the
Government is usually considered the “offerree.” The Government as offerree is in the
best position to control the formation of the contract. Solicitations are generally
publicized to all responsible contractors through a procurement notice publication titled
Federal Business Opportunities.2
48 C.F.R. § 16.603-1 Description.
A letter contract is a written preliminary contractual instrument that authorizes the
contractor to begin immediately manufacturing supplies or performing services.
PART: SPECIAL NOTICES
OFFADD: Department of Commerce, Office of Acquisition Management, 14th and
Constitution, NW, Room 6412, Washington, DC 20230 SUBJECT: FEDERAL
BUSINESS OPPORTUNITIES TO REPLACE THE COMMERCE BUSINESS DAILY
This is a special notice for information. Recently, Federal Business
Opportunities (www.fedbizopps.gov) was designated in the Federal Acquisition
Regulation (FAR) as the single point of universal electronic public access on the Internet
to government-wide Federal procurement opportunities that exceed $25,000 (see 66 Fed.
Reg. 27407, May 16, 2001). The FAR requires agencies, as of October 1, 2001, to use
FedBizOpps to provide access to public notices of procurement actions over $25,000 that
are currently required to be published in the Commerce Business Daily (CBD) along with
associated solicitations and amendments. Designation of this one-stop online gateway
represents an important step in the ongoing transformation to a more efficient, accessible,
citizen-centric e-government. Agencies will be in a transition period through December
31, 2001. During this time, the FAR requires agencies to ensure that notice is provided
both to FedBizOpps and the CBD. However, the FAR provides that, as of January 1,
2002, agencies will no longer be required to provide duplicate notice in the CBD and
instead may rely exclusively on the mandatory notice in FedBizOpps to provide the
required access. This transition will enable agencies to realize the efficiencies in
The Government can be bound by its solicitation based upon the doctrine of good
faith and fair dealings. Although not offers by the Government, solicitations place a duty
to consider fairly and honestly bids and proposals submitted by prospective contractors,
and a duty to give fair and impartial consideration to responses received based upon
notices in fedbizopps.
Solicitations for offers come in three basic forms: invitation for bids (sealed bid
procurement), request for proposals (negotiated procurement), and request for quotations
(negotiated procurement). In sealed bid procurements, the Government receives a
contractor’s bid in response to its issuance of an Invitation for Bids (IFB). The
contractor’s bid is the offer, and the Government award is acceptance.3 The process of
negotiated procurements is sufficiently more complex in that there are opportunities for
discussion and modification of proposals. Thus, the Government even has the potential
to make an offer under this type of procurement. The Government will rely upon
requests for quotations in small purchase situations where it is inefficient to receive bids
or offers from contractors. The variety of procedures that can follow a request for
electronic processes that help to justify their investments in e-government. Accordingly,
4, 2002, the Department of Commerce will cease publication of the CBD through the
U.S. Government Printing Office (GPO). Refer to FAR § 2.101, Definitions, which
Government-wide point of entry (GPE) means the single point where
Government business opportunities greater than $25,000, including synopses of
proposed contract actions, solicitations, and associated information, can be
accessed electronically by the public. The GPE is located at
Agencies should recognize FedBizOpps as the official source for all
procurement information and notices to be published under 41 U.S.C. 416(a)(2)(B) and
the Small Business Act (15 U.S.C. 637(e) and (k)). Other notices that would be
published, such as notices of subcontracting opportunities (15 U.S.C. 637(k)) will also be
made available to FedBizOpps. Agencies and business concerns should modify their
solicitation practices to use the electronic notice services of FedBizOpps. Notices
received on the CBD system by midnight, January 1, and manuscripts received by 3:00
p.m. on January 2, will be included in the final GPO print version of the CBD to be
issued on January 4, 2002.
48 C.F.R. Subpart 14.408-2(c)(5) states –
(5) All provisions of the invitation for bids, including any acceptable additions or
changes made by a bidder in the bid, shall be clearly and accurately set forth
(either expressly or by reference) in the award document. The award is an
acceptance of the bid, and the bid and the award constitute the contract.
quotations, include negotiations, quotes by the contractor, or the forwarding of a contract
by the Government to the contractor. If the Government sends a contract, in the form of
a purchase order, the Government becomes the offeror.
B. Revocation of Offer
Government contract law recognizes revocation of offers. Revocation may occur
because of withdrawal of an offer or modification of an offer. A contractor or the
Government may revoke an offer. The type of procurement (sealed bid or negotiated
procurement) governs the rules of revocation. In sealed bid procurements, the contractor
may revoke an offer before the date and time established for bid opening. Bids cannot be
modified or revoked after bid opening because to do so would disadvantage other bidders
in the field. In negotiated procurements, there are times when all bidders will be allowed
to either modify or revoke their offers. These rules typically do not disadvantage other
C. Acceptance of Offer
The time, manner, form, and any other conditions associated with the method of
acceptance are generally within the control of the offeror. But this can be viewed as
fiction because the Government’s solicitation will be very specific about its requirements,
and, depending on the type of procurement, the contractor who deviates from the
solicitation may not be chosen as the most advantageous offeror.
Acceptance generally results from the signing of a standard form contract. The
acceptance manifests the Government’s assent to the terms specified by the contractor-
offeror. The mailbox rule is the general rule relied upon in the Government contracting
community with respect to the initial contract. The Government and the contractor are
bound when the contract document is placed in the United States postal system, not
D. Manifestation of Agreement
Government contract law recognizes the “mirror image” rule. This rule says that the
acceptance must conform to the offer to demonstrate the mutual assent and agreement.
The acceptance cannot vary materially from the terms of the offer. The parties must also
have a present intent to be bound. Thus, the requirements to form a government contract
are (1) mutual intent to contract; (2) offer and acceptance; and (3) conduct by an officer
having the actual authority to bind the government in contract.
In addition, the terms of the contract must be definite. All terms need not be
spelled out, but there should be enough information about the terms of the contract in
order to allow for determinations about the existence of a breach of contract. Federal
Acquisition Regulation Subpart 2.101 states that a contract “includes all types of
commitments that obligate the Government to an expenditure of appropriated funds and
that, except as otherwise authorized, are in writing.” This is a general requirement that
the contract entered into by and with the Government be in writing; however, oral
contracts will be enforced against the Government if these types of agreements are
supported by documentary evidence. The Court of Claims has held that failure to reduce
a contract to writing should not preclude recovery when a party presents additional facts
from which a court can infer a meeting of the minds. See Narva Harris Constr. Corp. v.
United States, 574 F.2d 508 (Ct. Cl. 1978)
Matter of: SWR, Inc.
Comptroller General of the United States
1997 U.S. Comp. Gen. LEXIS 422
December 17, 1997
Agency properly rejected unsigned proposal containing only a "typed signature" where
no other documentation submitted with the proposal had an original signature and the
offeror had not, on or prior to the closing date for receipt of proposals, submitted a
corporate resolution authorizing typewritten signatures.
OPINIONBY: Comptroller General
SWR, Inc. protests the rejection of its proposal under request for proposals (RFP) No.
DTCG23-98-R-TPM01B, issued by the Department of Transportation, U.S. Coast Guard
for maintenance, repair and rebuilding of mail processing equipment. The agency
rejected SWR's proposal because it was not signed. SWR contends that this omission
should have been waived as a minor informality.
We deny the protest.
The agency received two proposals, including SWR's, by the closing date. Although
SWR proposed the apparent low price, its proposal was unsigned and contained only the
typewritten name of SWR's Vice President, below which was typewritten, "Vice
President, SWR, Inc." No documents submitted by SWR with its proposal contained an
original signature. After initially considering the possibility of waiving the lack of
signature as a minor informality, the agency eventually determined to reject SWR's
proposal as unacceptable and made award to Pitney Bowes, the other offeror.
SWR maintains that its proposal contains a typewritten signature and contends that its
firm formally adopted, before the closing date, a resolution permitting the execution of
documents by typewritten signature. SWR also points out that its proposed price was
significantly below the awardee's. The agency points out that the solicitation provided
that the agency intended to make award without discussions, which it did, and that SWR
failed to submit to the agency, prior to the closing date, any resolution that SWR had
adopted regarding the authorization of typewritten signatures.
An offer which is not signed, and lacks some other material indication of the offeror's
intention to be bound, generally must be rejected since the government's acceptance of
the offer would not result in a binding contract without resort to confirming the offeror's
intention to be bound. Valencia Technical Servs., Inc., B-223288, July 7, 1986, 86-2 CPD
P 40 at 1. Where, as here, the solicitation contemplates award on the basis of initial
proposals, after the established date for submitting proposals, it would be unfair to other
offerors to ask a vendor that had submitted an unsigned proposal whether it intends to be
bound by its offer. Id. Although after rejection of its proposal, SWR submitted a copy of
an undated corporate resolution authorizing typewritten signatures, "[e]ffected as of 8
January 1997," to be effective, such documentation must be provided on or before the
closing date. n1 Stafford Grading and Paving Co., Inc., B-245907, Jan. 14, 1992, 92-1
CPD P 66 at 2. Accordingly, the agency's rejection of SWR's proposal was appropriate.
n1 Federal Acquisition Regulation (FAR) " 15.607 (June 1997) instructs
contracting officers to examine all proposals for minor informalities, and then
refers to FAR §§ 14.405 and 14.407. FAR § 14.405(c)(2), entitled "Minor
informalities or irregularities in bids," states that the lack of a signature on a bid
may be waived as a minor informality if:
the firm submitting a bid has formally adopted or authorized, before the
date set for opening of bids, the execution of documents by typewritten,
printed, or stamped signature and submits evidence of such authorization
and the bid carries such a signature.
While SWR points out that there are monetary savings associated with accepting its
proposal, the maintenance of confidence in the integrity of the government procurement
system outweighs the possible monetary advantage to be gained by considering the
unsigned proposal. Valencia Technical Servs., Inc., supra, at 1-2. n2
n2 While the protester questions the reasonableness of the awardee's proposed
price, it is below the independent government cost estimate.
The protest is denied.
II. Binding the Parties
Consideration is the price bargained and paid for a promise. In private contracts,
there is a good deal of discussion about adequacy of consideration versus the sufficiency
of consideration. Government contract law does not wrestle with these distinctions
because the law assumes that the bargaining power of each contractor and the rules of
competition will define the adequacy of consideration.
Generally, while consideration is required to support an enforceable contract,
there is an exception related to Government contract law. This exception is the National
Defense exception. It states that an executive agency may make or amend contracts
without consideration in facilitating the National Defense. Forms of consideration
include the exchange of promises, usually performance in exchange for pay, and
forbearance, refraining from performing in exchange for a benefit.
United States Claims Court.
ALMAR INDUSTRIES, INC.
The UNITED STATES.
Jan. 31, 1989.
16 Cl. Ct. 243
Government contractor sued the Government for breach of an express contract and
breach of the implied duty of good faith and fair dealing. Government moved for
dismissal. The Claims Court, Margolis, J., held that: (1) the parties' basic agreement
could not be transformed into an enforceable contract, and (2) the contractor could not
invoke jurisdiction based on an implied-in- fact contract with the Government.
M. Susan Burnett, Asst. Director, and Joseph A. Kijewski, Washington, D.C., with
whom was Asst. Atty. Gen., John R. Bolton, for defendant; Judith R. Robbins, Associate
Counsel, Defense Industrial Supply Center, of counsel.
This contract action against the United States acting through the Defense Logistics
Agency (DLA), Defense Industrial Supply Center (DISC), is before the court on
defendant's motion to dismiss for lack of subject matter jurisdiction, and in the
alternative, for summary judgment. The court has carefully examined the entire record
and finds that the court does not have jurisdiction to consider the merits of plaintiff's
claim. Accordingly, defendant's motion for summary judgment is granted.
Plaintiff, Almar Industries, Inc., is in the business of acquiring parts and components
from manufacturers of air, ground and naval weapons systems and resupplying the
military with these parts and components as spares. Plaintiff is party to a basic
agreement with DISC. Under this basic agreement, plaintiff receives request for quote
solicitations from DISC through its SAMMS Automated Small Purchase System, Phase
II (SASPS-II). In response to these solicitations, plaintiff is allowed to submit quotations
and be awarded purchase orders when it provides the lowest conforming quote.
The SASPS-II program was developed by DISC to ensure that a minimum number of
suppliers, predetermined to be qualified bidders, receives each solicitation issued by
DISC for spare parts and components. Suppliers in the system receive notice of
solicitations directly through the mail from DISC. Inclusion in SASPS-II is not a
prerequisite to bidding on DISC solicitations. Non-SASPS-II suppliers may still bid upon
these solicitations as general bidders, and their bids are given the same consideration by
DISC as those received from SASPS-II suppliers.
On November 30, 1982, plaintiff entered into basic agreement number DLA500-83- H-
R334 with DISC. The basic agreement entered plaintiff into the SASPS-II program and
sets forth clauses that are applicable to future contracts that are formed when DISC
awards a purchase order to the plaintiff. The basic agreement also provides that "the
agreement may be terminated in its entirety by either party upon thirty (30) days written
notice to the other party...."
Section 9 of the basic agreement, entitled "Certification of Manufacturer's Part
Numbered Item," provides:
A. The Contractor, in responding to a SASPS-II solicitation for a manufacturer's part
numbered item, and indicating that the item quoted is the "EXACT PRODUCT
(Manufacturer Cited in PID [Purchase Item Description] )" as distinguished from
"EXACT PRODUCT (Other, approved by manufacturer cited in PID)", and
"ALTERNATE PRODUCT", shall be deemed to certify that the item quoted, and that
the item to be supplied if awarded the purchase order, will be manufactured or supplied
by a manufacturer cited in PID. Contractor's failure to furnish, on the Vendor
Quotation Card (DLA Form 1233R), the information required by Block 8 thereon, will
preclude consideration of any quotation.
B. Any violation of this certification shall be a breach of this agreement (and of the
purchase order, if issued, to which it pertains ). (emphasis added).
A SASPS-II purchase order, number DLA500-84-P-F442, was awarded to the plaintiff
by the defendant on April 27, 1984 under the terms of the basic agreement requiring that
the plaintiff furnish 2,300 washers, part number (P/N) 701536. The defendant quoted
the solicitation based on supplying an "EXACT PRODUCT," manufactured by the
manufacturers cited in the PID (United Technologies Corp., Hamilton Standard
Division). Seven months after the award, the government requested substantiation that
the material offered was in fact provided by United Technologies. By letter dated
November 6, 1984, the plaintiff in response to the government's request for
substantiation, asked permission to substitute an alternate item manufactured by Spartan
Tool & Manufacturing, Inc.
As a result of plaintiff's substitution of United Technologies with Spartan for the
DLA500-84-P-F422 solicitation, on July 29, 1985, DISC sent plaintiff thirty days written
notice of its intent to terminate the basic agreement. The contracting officer
recommended that DISC withdraw the purchase order from the plaintiff, suspend plaintiff
from the SASPS-II automated solicitation and procurement system, place plaintiff's name
on the DISC Contractor Review List, and withhold payments on other contracts between
plaintiff and defendant. DISC determined that plaintiff frequently violated the
provisions of section 9 of the basic agreement. Plaintiff was repeatedly cautioned about
its improper bidding practices in correspondence between plaintiff and Commander John
J. Paulson of DISC in 1983 and 1984 and was advised that any quote for an item to be
furnished by other than the manufacturer cited in the PID on the request for quote must
have documented approval.
The basic agreement was terminated by DISC about August 29, 1985. The termination
resulted in plaintiff's removal from the SASPS-II program. Although removed from
SASPS-II, plaintiff was not barred from bidding on DISC solicitations as a general bidder
and was so informed in its notice of termination. As a result of discussions between
plaintiff and DISC on August 13, October 4, and November 14 of 1985, plaintiff was
restored to SASPS-II in early 1986. The reinstatement was based on plaintiff's
assurances of future compliance with all the terms of the basic agreement for
participation in SASPS-II.
Following this reinstatement, plaintiff filed a claim for $643,281 with the contracting
officer on October 31, 1986. The contracting officer found that DISC's actions in
terminating the basic agreement and removing plaintiff's name from the its automated
procurement system were proper. The contracting officer determined that if the plaintiff
suffered any loss of business as a result of these actions it was entirely attributable to
plaintiff's failure to comply with DISC's documentation requirements and failure to
candidly reveal its manufacturing sources. Accordingly, the contracting officer denied
plaintiff's claim on December 11, 1986.
Plaintiff's complaint alleges that the contracting officer's termination of the basic
agreement and the suspension and removal of plaintiff from SASPS- II was a breach of
an express contract and a breach of the implied duty of good faith and fair dealing.
Plaintiff further alleges that as a result of its suspension from SASPS-II between August
1, 1985 and April 17, 1986 plaintiff experienced a drastic reduction of business and was
severely damaged. Plaintiff seeks $643,281 plus interest, costs and attorney's fees.
Defendant asserts that this court lacks jurisdiction to entertain plaintiff's claim because
the basic agreement on which it is based is not a contract with the United States over
which the Claims Court may exercise jurisdiction under the Tucker Act, 28 U.S.C. §
1491(a). In the alternative, defendant asserts that even if the basic agreement constitutes
a contract, its express terms provide for its termination by either party without cause.
Defendant also argues that even if DISC's conduct could be construed as a breach of
contract, plaintiff cannot recover because it was not damaged by the alleged breach.
This court has jurisdiction under the Tucker Act, 28 U.S.C. § 1491, to render judgments
on claims for money arising out of a contract with the United States, or out of a statute or
regulation requiring, or fairly interpreted to require, the payment of money. United States
v. Testan, 424 U.S. 392, 397- 98, 96 S. Ct. 948, 952-53, 47 L. Ed. 2d 114 (1976);
Eastport Steamship Corp. v. United States, 178 Ct. Cl. 599, 605, 372 F.2d 1002, 1007
(1967). The court has jurisdiction over implied-in-fact contracts with the United States,
as well as express contracts.
1. Express Contract Jurisdiction
Defendant asserts that this court does not have jurisdiction over plaintiff's claim because
the basic agreement entered into by the parties is not a contract providing the court with
jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a). In support of this assertion,
defendant relies on Federal Acquisition Regulation (FAR) § 16.702(a), which defines a
basic agreement as:
[A] written instrument of understanding, negotiated between an agency or contracting
activity and a contractor, that (1) contains contract clauses applying to future contracts
between the parties during its term and (2) contemplates separate future contracts that
will incorporate by reference or attachment the required and applicable clauses agreed
upon in the basic agreement. A basic agreement is not a contract. 48 C.F.R. §
16.702(a) (1987) (emphasis added).
The parties have not provided the court with any applicable case law interpreting the
jurisdictional implications of FAR § 16.702, and it appears that scant precedent exists on
this question. Likewise, the predecessor provision to § 16.702 in the Armed Service
Procurement Regulations (ASPR) § 3-410.1, 32 C.F.R. § 3-410.1 (1983), apparently has
not been specifically interpreted for jurisdictional purposes in this court.
The regulations dictate that basic agreements do not give rise to contractual obligations
with the government. The provisions of the basic agreement in this case, number
DLA500-83-H-R334, appear to comport with the FAR mandate that a basic agreement is
no more than "a written instrument of understanding ... contain[ing] contract clauses
applying to future contracts." FAR § 16.702(a). Under certain circumstances, however,
a basic agreement or other such instrument may be transformed into a contract where the
definitive elements of a contract are found to be present--mutuality of assent and
consideration. Torncello v. United States, 231 Ct. Cl. 20, 41, 681 F.2d 756, 768 (1982);
Societe Cotonniere Du Tonkin v. United States, 145 Ct. Cl. 426, 439, 171 F. Supp. 951,
958 (1959), cert. denied, 361 U.S. 965, 80 S. Ct. 594, 4 L. Ed. 2d 545 (1960).
In General Dynamics Corp., Electric Boat Division, 83-2 BCA. ¶ 16,907, 84,116 (1983),
the Armed Services Board of Contract Appeals rejected a contractor's argument that the
terms of a basic agreement were not enforceable because it lacked valid consideration.
The contractor asserted that the Navy had given up nothing in exchange for the
agreement and that the government's position that the basic agreement formed part of the
consideration for a detail design contract on the Trident submarine and for the award of
future contracts was "devoid of any substance." Id. at 84,135.
The Board ruled, however, that the contractor's assertion that the basic agreement lacked
consideration had "no merit" because the concurrent execution of a detail design contract,
which presumably conferred substantial benefits upon the contractor, constituted
adequate consideration to permit the Board to enforce the basic agreement. Id. at 84,136.
The Board went on to rule that ASPR § 3-410.1, the predecessor regulation to FAR §
16.702, which describes a basic agreement as "not a contract, ...simply [did] not apply"
under the circumstances of that case. Id. at 84,137.
In Great Falls Terminal Warehouse Co., 68-2 B.C.A. ¶ 7138, 33,076 (1968), the Board
recognized that a basic agreement, standing alone, cannot form a binding contract
conferring jurisdiction on the Board to grant relief to a contractor. The contractor
entered into a basic agreement with the Air Force entitling it to receive service order
solicitations for the storage of household goods, in much the same way that the basic
agreement in this case entitled plaintiff to receive SASPS-II purchase order solicitations.
The basic agreement in Great Falls Terminal provided that "this Agreement shall not
constitute a contractual obligation of the Government or obligate Government funds in
any way." Id. at 33,077. The Board also noted that ASPR § 3- 410.1, applied to the
basic agreement in that case.
The Board determined that the dispositive issue before it was whether it had jurisdiction
pursuant to an enforceable contract. The Board stated that "[i]n the absence of a valid
contract with an operative Disputes clause the Board will take no jurisdiction." Id. at
33,079. Noting that the basic agreement on its face disclaimed any contractual effect
and that ASPR § 3-410.1 applied, the Board ruled that "the Basic Agreement by itself is
not a contract giving rise to contractual rights and obligations." Id. The Board reasoned
that additional circumstances evidencing an intent to contract were required to make the
provisions of the basic agreement enforceable and stated "only the issuance and
acceptance of a service order that gives rise to a contractual obligation and a contract, ...
would permit this Board to take jurisdiction." Accordingly, the government's motion to
dismiss was granted.
Also, in Western Pioneer, Inc. v. United States, 8 Cl. Ct. 291 (1985), the defendant
argued that a memorandum of understanding executed between the parties was in fact a
basic ordering agreement, which, like a basic agreement, is defined under FAR 16.703(a)
as "a written instrument of understanding ... [and] is not a contract." Id. at 297. The
court ruled, however, that the instrument had "sufficient contractual overtones to qualify
as a 'contract' within the ambit of 28 U.S.C. §1491(a)(3)." Id. The court based this
conclusion on the fact that the document in question specifically presented and scheduled
yearly transportation requirements for petroleum products and that any change in those
terms would have to be agreed upon by both the contracting officer and the carriers.
Without so stating, the court recognized a mutual exchange of promises that gave rise to
an enforceable contract.
These precedents clearly indicate that facts and circumstances independent of a basic
agreement itself, may form an enforceable contract or transform the basic agreement into
a binding obligation. The court finds, however, that such circumstances are wanting in
this case. The plaintiff contends that the basic agreement at issue here is supported by
consideration because both parties received benefits from the agreement. Plaintiff
asserts that the government received a substantial benefit in having rapid access to a pool
of pre-qualified bidders and that SASPS-II companies benefited by obtaining request for
quotes directly in the mail, which because of the rapid turnaround time for SASPS-II
bids, all but eliminates outside competition. In this regard, plaintiff maintains that
suspension from the SASPS-II was in essence a de facto debarment. The defendant
denies that plaintiff was precluded from bidding on SASPS-II solicitations, both as a
matter of law and as a practical matter.
Plaintiff's bald assertions concerning the competitive advantages realized by SASPS-II
suppliers are not borne out by the record before this court. Plaintiff has failed to submit
any evidence substantiating its contention that outside bidders are virtually excluded from
the solicitation process by the rapid turnaround available to SASPS-II bidders. The
defendant, however, submitted the affidavit of Richard J. Hoffman, the Deputy Director
of DISC's Directorate of Contracting and Production. Hoffman authored the basic
agreement which is the focal point of this case. He stated that plaintiff's assertion that it
was virtually excluded from DISC solicitations as a result of its suspension from the
SASPS-II program was "fallacious" and "incorrect." Hoffman stated that "the
preponderant number of quotations received at DISC are from unsolicited sources, which
the plaintiff terms 'non-SASPS II sources.' " The court accepts Hoffman's statement
concerning the ability of non-SASPS-II suppliers to bid on DISC contracts on its face as
plaintiff has failed to offer any support, other than unsubstantiated allegations, for the
proposition that suspension from SASPS-II was a de facto debarment.
Plaintiff has failed to establish that it received sufficient benefit from participating in the
SASPS-II program to provide consideration to transform the basic agreement into an
enforceable contract. Moreover, there is no evidence of any mutuality of intent or
"meeting of the minds" between the parties tending to show that a contract exists in the
manner urged by the plaintiff. The regulations on this point are clear--a basic agreement
is not an enforceable contract. Accordingly, absent any facts or circumstances
demonstrating otherwise, this court does not have jurisdiction to render judgment on an
express contract, as none exists between the parties.
2. Implied-in-Fact Contract Jurisdiction
In addition to invoking the jurisdiction of this court based on an alleged contract formed
by the basic agreement, the plaintiff also alleges that the defendant violated its duty of
good faith and fair dealing in conducting its procurement activities. Cases involving the
breach of the government's implied duty to act in good faith and fairly deal with
prospective contractors are within the contractual jurisdiction of this court under the
Tucker Act. In Tidewater Management Services, Inc. v United States, 216 Ct. Cl. 69, 72,
573 F.2d 65, 67 (1978), the Court of Claims stated that "this court has long recognized its
jurisdiction ... based on implied contract which obligates the Government to deal lawfully
and in good faith with those who respond to its requests for bids and proposals."
The Claims Court's jurisdiction to provide relief for violations of the government's
implied duty of good faith and fair dealing arises from the court's authority under section
1491(a)(3) over "contract claim[s] brought before the contract is awarded." As then
Chief Judge Kozinski noted in Ingersoll-Rand Co. v. United States, 2 Cl. Ct. 373, 375
(1983), this section refers to two entirely different contracts. The first contract referred
to in § 1491(a)(3) is the implied-in-fact contract between bidders and the government for
the fair and honest consideration of the proposal on the underlying contract. The second
contract mentioned is the contract that is the subject of the proposed award--the contract
for goods and services. At the pre-award stage, this second contract is not yet in
existence and cannot, therefore, provide a basis for the exercise of jurisdiction. See
United States v. John C. Grimberg Co., Inc., 702 F.2d 1362, 1367, n.8 (Fed.Cir.1983) (en
It is the implied-in-fact contract that provides the jurisdictional basis for the authority to
grant relief for violations of the duty of good faith and fair dealing. This contract arises
from the bid solicitation process and ensures that a bid submitted in conformity with the
requirements of the solicitation will be fully and fairly considered. Keco Industries, Inc.
v. United States, 192 Ct. Cl. 773, 778, 428 F.2d 1233, 1237 (1970). In order to give rise
to this implied-in-fact contract, there must be a solicitation, and an underlying contract
for goods and services. Jurisdiction to consider allegations of bad faith and unfair
dealing does not, therefore, attach outside the context of a solicitation to which a
conforming bid was submitted.
Under the facts of this case, the plaintiff cannot invoke the jurisdiction of this court
based on allegations that the government violated its duty of good faith and fair dealing.
The plaintiff has not shown that it submitted a conforming bid, or quote in this case, to
the government in response to a solicitation, or request for quotes, that was not fully and
fairly considered. This case does not arise within the context of a wrongful denial of a
purchase order for which the plaintiff actually submitted a bid and, as previously
discussed, plaintiff was not precluded from submitting bids to DISC, as a matter of law or
as a practical matter. Plaintiff has not shown that DISC refused to consider its bids, and
on the record before the court, it does not appear as though plaintiff actually submitted
any during the period of the suspension although it was aware that it could, as indicated
in the notice of suspension issued by the contracting officer on July 29, 1985.
Accordingly, plaintiff cannot invoke the jurisdiction of this court based on an implied-in-
fact contract with the government.
Plaintiff has failed to show that the facts and circumstances surrounding the existence of
the basic agreement between the parties constituted an express contract. Nor has
plaintiff established that the government violated the duty of good faith and fair dealing
under an implied-in-fact contract. Plaintiff has not shown that a statute or regulation
mandates the payment of money by the government under the circumstances of this case.
This court does not, therefore, have jurisdiction under the Tucker Act to consider the
merits of plaintiff's claim. [FN*] The defendant's motion for summary judgment is
granted, and the Clerk will dismiss the complaint. Each party will bear its own costs.
FN* The court notes, however, that the basic agreement at issue here explicitly
provides that it may be terminated at will by either party upon thirty days written
notice. It appears unlikely, therefore, that the plaintiff could prevail on the merits
even if the court exercised jurisdiction over the claim.
IMPORTANT: Additional Assignment for Monday:
Look up samples of solicitation postings and awards at
Copy one for class and come in with a description of the work required by the agency.