Coastal States Petrochemical Co. v. United States

559 F.2d 1, 23 Cont. Cas. Fed. 81,512, 214 Ct. Cl. 520, 1977 U.S. Ct. Cl. LEXIS 71
CourtUnited States Court of Claims
DecidedJuly 8, 1977
DocketNo. 190-72
StatusPublished
Cited by3 cases

This text of 559 F.2d 1 (Coastal States Petrochemical Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coastal States Petrochemical Co. v. United States, 559 F.2d 1, 23 Cont. Cas. Fed. 81,512, 214 Ct. Cl. 520, 1977 U.S. Ct. Cl. LEXIS 71 (cc 1977).

Opinions

Kashiwa, Judge,

delivered the opinion of the court:

The primary issue in this case is one of contract interpretation. The point in controversy is whether the United States was contractually obligated to purchase from the plaintiff, Coastal States Petrochemical Company ("Coastal States”), the requirements for JP-4 fuel1 that existed during the contract term. Plaintiff contends that the contract between the parties was basically a requirements type contract and that the United States was contractually bound to purchase certain of its fuel requirements during the contract period from Coastal States. The United States, on the other hand, denies any such obligation. Its position is that the contract in question was an indefinite quantity type contract and that, in keeping with that type of purchase agreement, the only obligation it owed to plaintiff was to satisfy a minimum purchase requirement.

The case comes before the court on defendant’s exceptions to the recommended decision of Trial Judge Harry E. [524]*524Wood, which he has submitted in accordance with Rule 134(h) on May 25, 1976. Although we borrow from much of the trial judge’s recommended opinion, we come to different results.

After having carefully considered the trial judge’s recommended decision and findings of fact, the defendant’s exceptions thereto, and the parties’ briefs, after oral argument, we agree with the defendant that the contract in issue is an indefinite quantity type contract and that the Government in good faith has met all obligations which it had to plaintiff under the contract. Accordingly, the trial judge’s findings of fact,2 recommended decision, and conclusion of law are modified to accord with the facts and law set forth below.

I

Conventional Government Procurement Patterns: The Defense Fuels Supply Center ("DFSC”), Defense Supply Agency, Department of Defense ("DOD”), has the mission of procuring, among other things, JP-4 jet fuel for the military services and federal civil agencies on a worldwide basis.3 To fulfill that mission, DFSC procures JP-4 jet fuel every 6 months in such enormous quantities that no single supplier is capable of satisfying its demands. A DFSC invitation for bids for such fuel is usually sent to more than 150 suppliers, and multiple awards of some 60 to 80 contracts are invariably necessary to secure the requisite volume of such fuel at the lowest prices obtainable.

To some time in 1967, the Domestic Fuels Division, DFSC, solicited domestic suppliers of JP-4 jet fuel for use in the United States, including Alaska and Hawaii. In so doing, the Domestic Fuels Division utilized the DOD import [525]*525quota4 in procuring the fuel from refineries in the Caribbean Sea.

During that same period, DFSC’s Overseas Division procured the anticipated needs of United States forces in Europe and in the Western Pacific by contracts, negotiated with foreign refiners located outside the United States, its territories, and possessions, for delivery of JP-4 jet fuel to Europe and to the Western Pacific.

As military operations in the Western Pacific and in Southeast Asia steadily increased, however, defendant found not only that supplies of JP-4 jet fuel normally imported for domestic use were required for shipment to Europe and Southeast Asia but also that it was necessary to procure additional quantities of such fuel from United States domestic sources, at higher prices, for shipment to Southeast Asia and Europe. Thus, by late 1967, a departure from the traditional patterns of procurement of JP-4 jet fuel described above occurred, in that quantities of JP-4 jet fuel needed for use in Europe and in the Western Pacific were included in domestic solicitations, with such "overseas”. quantities designated for statistical purposes as "restricted to U. S. refined product,” in order to return to this country as many procurement dollars as possible.

The Solicitation: On February 5, 1969, DFSC issued bid solicitation DSA 600-69-B-0161 (also "IFB”), involving a 6-month purchase program of a portion of defendant’s projected JP-4 jet fuel needs for the period July 1 to December 31, 1969.5 The solicitation was one of a continuing series of semi-annual, formally advertised invitations for bids issued by the Domestic Fuels Division, DFSC, to supply the anticipated needs of the Army, Navy, and Air Force, and some federal civil agencies, for JP-4 jet fuel for use principally within the United States; consistent with the departure from tradition described above, however, it also included a substantial quantity of such fuel intended [526]*526for ultimate receipt and use by United States armed forces overseas.

The IFB, issued to 168 firms,6 involved total estimated JP-4 jet fuel needs of 2,691,091,530 gallons, to be delivered to more than 300 specified military destinations ("using activities”) throughout the United States, in Europe, and in the Pacific. The IFB estimate of quantities of JP-4 jet fuel needed for "offshore” use (that is, for use by all of the specified using activities located other than in one of the 50 States or the District of Columbia) was 371,960,000 gallons.

The IFB contained a 41-page schedule of anticipated fuel needs for the period July 1 to December 31, 1969, listing the more than 300 separate military and civilian using activities both within and outside the United States and setting forth an estimate, in gallons, of each such activity’s JP-4 jet fuel needs for that 6-month period.

The schedule also grouped the using activities into four geographic areas (East Coast, Gulf Coast, Inland, and West Coast). Bidders were invited to bid on all or any portion of the anticipated fuel needs included in the IFB and were advised of defendant’s preference for bids on an origin basis but were also advised that, with the exception of one item, bids could be submitted on either an origin or a destination basis.7

The exception referred to was Item 365, designated "West Coast Offshore.” As to Item 365, the ultimate destinations of the 189 million gallons of JP-4 jet fuel involved were impossible to predict; so the solicitation indicated that only offers on an origin basis would be considered. With respect to this bid item, the IFB provided that:

Item 365 is a one time procurement in support of Southeast Asia and in implementation of the Balance of Payments Program. The requirements represented by the above are needed at various Pacific bases. The [527]*527requirements at individual bases are not certain. Accordingly offers are desired on an origin basis only and destination offers for this item will not be considered. For evaluation purposes only, the destination will be considered to be Guam. * * * [Emphasis in original.]

The IFB also contained a "Balance of Payments Restrictions” clause providing that only products refined in the United States were to be considered for those offshore items. However, the balance of payments clause in the domestic IFB did not preclude suppliers which were covered by both an offshore IFB and the domestic IFB from furnishing foreign-refined JP-4 fuel to the offshore using activities; it merely precluded suppliers bidding under the domestic IFB from furnishing foreign-refined JP-4 fuel for the offshore quantitites listed therein.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Schweiger Construction Co. v. United States
49 Fed. Cl. 188 (Federal Claims, 2001)
Rice Lake Contracting, Inc. v. United States
40 Cont. Cas. Fed. 76,773 (Federal Claims, 1995)
Nimrod, Inc.
650 F.2d 286 (Court of Claims, 1980)

Cite This Page — Counsel Stack

Bluebook (online)
559 F.2d 1, 23 Cont. Cas. Fed. 81,512, 214 Ct. Cl. 520, 1977 U.S. Ct. Cl. LEXIS 71, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coastal-states-petrochemical-co-v-united-states-cc-1977.