The opinion of the court was delivered by: Robson, District Judge.
This is a diversity action for an alleged breach of an oral
contract. This court concludes, after a trial on the merits,
that judgment should be rendered for the defendant.
On February 3, 1966, the Atomic Energy Commission (A.E.C.)
invited several general contractors, including the defendant
to bid on a project at the Argonne National Laboratories in
Argonne, Illinois.*fn1 The bids were to be opened at 2:00 p.
m. on March 3, 1966. The defendant, in turn, sent out
invitations to several electrical subcontractors, including
the plaintiff, to bid on the electrical work, which
constituted approximately one-third of the entire project. The
bid was divided into a base bid, which was of primary
importance, and nine alternates.*fn2 Daniel J. Casey, of the
A.E.C., testified that this form of bid was chosen to allow
them to come within their budget. The A.E.C. did not meet its
budget when the project was first bid in September, 1965, and
because of this lack of funds, the project was not then begun.
At the time of this earlier bid, the defendant was the low
bidder and, had the project gone through, would have most
likely been awarded the contract.
On March 2, 1966, the day before the bids were due, the
plaintiff called the defendant, and made it very clear that it
wanted to work on the job with the defendant. At that time,
plaintiff's Contract Manager and Vice President, Stanley
Wielgos, requested some assurance that the defendant would
work with them, if the plaintiff helped by being the most
competitive electrical subcontractor. The defendant, through
Paul Hunsberger, then Chief Estimator of the Chicago office
and Assistant Division Manager for defendant, gave no
assurances. He told Wielgos to call around 12:30 the next day,
March 3. Wielgos gave Hunsberger a base bid of $450,000 to
$500,000 during this conversation. No figures were given for
any of the alternates.
At about 1:00 o'clock, Wielgos called again and asked if his
bid was holding up. Hunsberger said it was. Wielgos then
repeated what he had said earlier about plaintiff still having
the job. Hunsberger replied that "as it stands now, you do."
Wielgos called again at 1:30, and a few minutes later, close
to 1:40, and wanted to know what the situation was, because if
their bid was not the lowest, they wanted to publish their
price to the other contractors bidding on the job. Apparently,
Hunsberger responded in a similar manner, and indicated that
plaintiff's bid was still the lowest, and that if it remained
that way, the plaintiff had the job. All these conversations
were very short. Wielgos did not call again before 2:00 p. m.
Earlier, the defendant had sent one of its job
superintendents, Richard Larsen, to Argonne with the official
bid form, so that he would be able to insert any late changes
onto the form. Plaintiff's Exhibit (PX) 6-O. At around 1:30,
after getting lost, Larsen called his office from an open pay
telephone. He talked to Hunsberger, or to William Sinclair,
Vice President and Chicago Division Manager for the defendant.
At the time of this first call, Larsen was given the nine
alternates*fn5 to write down on the bid form. Larsen went to
a more private telephone in an enclosed office and reached
Sinclair again at around 1:40 or 1:45 p. m. Larsen was held on
the line, and at about 1:50 p. m., Sinclair gave him the base
bid of $1,019,000. Larsen remembered the times clearly because
this had been "the only bid [he] ever took in [his] life."
At around 1:40 p. m., Hunsberger had given Sinclair the cost
figures ($225,000) of another electrical subcontractor, St.
Arnaud Electrical Company. Sinclair then called Joe Abrams,
Electrical Engineer for St. Arnaud, and asked if they would
take the job for $255,000. Abrams called back at around 1:45
or 1:50 p. m. and said "O.K." (See notation in Sinclair's
handwriting on PX 6-M) Sinclair then made the necessary
changes on the late change sheet (PX 6-D-1), and incorporated
this altered electrical base bid into the general base bid.
The resultant figure of $1,019,000 was given to Larsen at
around 1:50 p. m. Larsen wrote it down and submitted the bid
form to the A.E.C. about two or three minutes later.*fn6
At the pre-award meeting on March 8, 1966, after the
defendant was tentatively chosen as the lowest bidder, the
A.E.C. had only to decide that the defendant was financially
responsible before they would award them the contract. The
A.E.C. told Sinclair that Alternates 4, 6 and 7 were chosen,
with options on Alternates 1 and 9. (Alternate 9 was
ultimately chosen by the time the contract was signed.) During
this meeting, Sinclair told Casey (of the A.E.C.) that St.
Arnaud would be used as the electrical subcontractor.*fn7 The
A.E.C. was satisfied with the defendant's qualifications, and,
on March 11, 1966, signed the contract with them.
At around 5:00 or 5:30 p. m. on the day the bids were
submitted (March 3), Wielgos called Hunsberger to find out
whether plaintiff's figures had been used in defendant's bid.
Although the record is not clear on this point, Hunsberger
apparently knew at this time that St. Arnaud would be used.
However, Hunsberger said to Wielgos that he did not have the
file in front of him and that he would have to check the file
before he could tell. This conversation was very short, since
Hunsberger made it clear that he was tired from the hectic bid
Wielgos called again the next morning, March 4, to get an
answer to his question. Hunsberger told Wielgos that he was
not going to divulge any information until he found out
whether the defendant got the contract. Hunsberger definitely
knew at this time that St. Arnaud was to be the electrical
subcontractor, if the defendant was awarded the prime
contract. He explained his reluctance to tell Wielgos anything
by referring, in his testimony, to what had happened when this
job has been bid the first time in September, 1965. Then,
Hunsberger had told Divane Electric Company that they "had the
job" five minutes prior to the time the bids were to be opened
by the A.E.C. Hunsberger had received many angry calls from
other electrical contractors after word got out that he had
told Divane. He decided that the best course was to say
nothing until the A.E.C. made a public announcement.
"If you want to, that's your privilege,*fn9 but
I can't tell you anything, Stan. This isn't my
desire, either. I mean — don't misunderstand. I'm
not saying that Bill [Sinclair] told me not to say
anything. What I am saying is that conditions in
this case have gotten such that I can't say
The plaintiff contends that the defendant through Paul
Hunsberger entered into a binding contract to employ the
plaintiff as its electrical subcontractor, in consideration
for the plaintiff giving the defendant "protection" by
submitting higher bids to the other general contractors. The
defendant contends that (1) there was no contract; and (2) if
there was a contract, the ...