Atacs Corp. v. Trans World Communications, Inc.

Facts

The Greek government opened bidding to manufacture 61 communication shelters for the Hellenic Army General Staff. Ps considered bidding on the contract as the prime contractor, but they lacked the requisite assets to meet the financial obligations enumerated in the Greek RFP. D did not command significant technical experience in this particular field and generally lacked foreign government contracting knowledge to bid and perform the contract on its own. A strategic alliance was born where D wrote P stating that 'this letter will serve as confirmation that Trans World Communications intends to team with ATACS Corporation on the Greek Shelter program.' D professed that the 'details needed to be worked out,' and that 'this [letter] is only a preliminary look at our various responsibilities,' D sought a commitment from P before any quotations were issued. The parties agreed that D would bid for the Greek RFP as the prime contractor and P would be the major subcontractor. D communicated to P a basic outline for the new arrangement whereby D agreed to assume the role of prime contractor, assume complete responsibility for the financial requirements of the Greek RFP, and give P a subcontract for the shelter and generator systems. Ps were expected to 'assist in the final proposal preparation,' submit a price quotation on their portion of the program and introduce D to their Greek agent who would facilitate the bid. They agreed to circulate a draft contract and initiate the process of formalizing this agreement. For three months, the parties circulated draft subcontracts, none of which were executed. In the exchange of drafts, however, the parties had substantially agreed to the basic understanding of the transaction. In accordance with their understanding, Ps introduced D to their Greek agent who ultimately proved to be influential in getting D the final contract. Ps eventually submitted their final price proposal to D, which totaled approximately $3.8 million. D submitted its own proposal to the Greek government. As the prime contractor bidding for the Greek RFP, D represented that Ps would be 'the primary subcontractor in our proposal,' as well as a member of the 'team' working on the project. D included in its bid Ps' final prices plus a 30% profit margin. D learned that its proposal for the project remained competitive. D then contacted Craig Systems, a manufacturer of bare shelters, shelter integrator, and competitor to Ps. D sent to Craig all of the information, design notes, general correspondence, and Ps' technical proposal regarding the Greek RFP. D then asked Craig to submit a bid for the shelter work. Ps' Greek agent forwarded D the results of the Greek government's review of the various bids, which indicated that D's bid was the lowest among the competitors. D negotiated with Greek authorities to determine the final technical specifications and price concessions. Eventually, D sent all its potential subcontractors, including Ps, a form letter which asked everyone to requote their offers. The letter also stated that D will chose the supplier, based on the price of goods, quality, service and technical/manufacturing capabilities. P also learned that D was bidding other contractors. Ps replied that 'there was an agreement between Trans World and ATACS that ATACS would be the sole source shelter integrator and supplier, and . . . AIRTACS [would be the] sole source provider of air conditioners . . . .' D did not respond to Ps' letters. D rebid a new spec which Ps did not bid and ultimately executed subcontracts with Craig for the shelter integration work and Airflow for the air conditioner portion of the project. The total price difference between the Craig/Airflow contracts and Ps' proposals totaled $1,887,104. Ps sued D alleging breach of contract, detrimental reliance, misrepresentation, wrongful interference with prospective contractual relations, and unjust enrichment. The district court found that the 'teaming arrangement' constituted an enforceable contract with sufficiently definite terms for enforcement, notwithstanding the absence of a final executed document evincing the parties' agreement. The district court relied on the outward manifestation of the parties' intent to conclude that the terms of the legally binding agreement entailed a promise by D to work exclusively with Ps in its bid for the Greek RFP, and to further negotiate in good faith the final subcontract prices if the Greek government awarded defendant the prime contract. In return, Ps promised D to assist in the preparation of its bid, to work exclusively with D, and to introduce D to its Greek contacts. It found that D's conduct after the Greek government awarded it the project did not constitute good faith negotiations. The district court found that expectation damages, measured in lost profits would lead to mere speculation because the parties never agreed on a price. It was unable to compute lost opportunity damages. As for restitution, Ps argued that the value of its services rendered to D roughly approximate the $1,288,349 D had paid in consulting fees to Ps' Greek agent. The district court felt that it had no reasonable basis in calculating the value of Ps' service and assistance rendered to D, it rejected a restitutionary theory as a basis for damages and entered into judgment nominal damages of only $1. Ps appealed. D cross-appealed; the teaming agreement was an enforceable contract. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.