B-175895, FEB 21, 1973, 52 COMP GEN 530

B-175895, FEB 21, 1973, 52 COMP GEN 530

CONTRACTS - FEDERAL SUPPLY SCHEDULE - PURCHASES ELSEWHERE A FIRM WHO HAD A YEARLY SUPPLY CONTRACT WITH THE GENERAL SERVICES ADMINISTRATION (GSA) FOR CARPET SERVICING IN GOVERNMENT BUILDINGS WITHIN A DESIGNATED AREA AT A SPECIFIED PRICE BUT ACCEPTED AN ORAL ORDER FROM AN AGENCY IN ANOTHER CONTRACTOR'S AREA MAY NOT BE PAID THE HIGHER PRICE CLAIMED ON THE BASIS OF ENTITLEMENT TO BE REIMBURSED AS FOR AN "OPEN MARKET" JOB AT COMMERCIAL PRICES. THE FIRM COGNIZANT OF THE LIMITATIONS IMPOSED BY THE GSA CONTRACTS IS CHARGED WITH NOTICE OF THE LACK OF EMPLOYEE AUTHORITY TO OBLIGATE THE GOVERNMENT AND SHOULD HAVE ADVISED THE AGENCY OF ITS ERROR. SINCE THE SERVICE WAS NOT WITHIN THE URGENCY EXCEPTION OF THE CONTRACT, THE ERROR IN PROCURING THE SERVICES ON THE OPEN MARKET RATHER THAN FROM THE SCHEDULE CONTRACT DOES NOT LEGALLY OBLIGATE THE GOVERNMENT BEYOND THE EXTENT OF THE PRICE STIPULATED.

TO THE DIRECTOR, OFFICE OF ADMINISTRATION, THE RENEGOTIATION BOARD, FEBRUARY 21, 1973:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 12, 1972, WITH ATTACHMENTS, TRANSMITTING THE CLAIM OF AFGHAN CARPET CLEANERS (AFGHAN) FOR SERVICES FURNISHED TO YOUR AGENCY IN JANUARY AND FEBRUARY 1972, AND REQUESTING OUR DECISION AS TO THE AMOUNT THE BOARD MAY PAY IN SATISFACTION THEREOF.

THE RECORD REVEALS THAT AFGHAN WAS THE RECIPIENT OF THE GENERAL SERVICES ADMINISTRATION'S (GSA) CONTRACT GS-03-DP-(P)-10023 FOR THE CLEANING, REPAIRING AND INSTALLATION OF RUGS AND CARPETS IN GOVERNMENT BUILDINGS FOR THE PERIOD OF JUNE 1, 1971, THROUGH MAY 31, 1972. AFGHAN'S CONTRACT ENCOMPASSED "AREA 2" WHICH WAS DESCRIBED AS SOUTHWEST AND SOUTHEAST WASHINGTON, D.C. THE CONTRACT FOR NORTHWEST AND NORTHEAST WASHINGTON, D.C. WAS HELD BY METRO MAINTENANCE, INC. (METRO) OF FALLS CHURCH, VIRGINIA.

THE MASTER SCHEDULE FOR ALL SUCH CONTRACTS IN REGION 3, IDENTIFIED AS THE WASHINGTON, D.C., MARYLAND AND VIRGINIA AREAS, STIPULATED THAT THE TERM CONTRACTS AND COVERING PRICE SCHEDULES WERE MANDATORY ON AGENCIES WITHIN THE RESPECTIVE GEOGRAPHICAL AREAS, AND THAT THE CONTRACTOR HOLDING THE CONTRACT FOR A SPECIFIED AREA WOULD BE REQUIRED TO FULFILL ALL REQUIREMENTS OF THE AGENCIES WITHIN THE AREA ENCOMPASSED BY HIS CONTRACT SUBJECT TO CERTAIN ENUMERATED EXCEPTIONS. THE GOVERNMENT AGENCY WAS REQUIRED TO USE THE CONTRACTOR HOLDING THE CONTRACT FOR THE AGENCY'S AREA, UNLESS THE SERVICES WERE REQUIRED AT A LOCATION OUTSIDE A DESIGNATED SERVICE AREA.

ACCORDING TO THE RECORD, YOUR AGENCY, LOCATED IN THE NORTHWEST SECTION OF WASHINGTON, D.C., WAS IN THE PROCESS OF MOVING FROM ITS PREMISES AT 1910 K STREET, N.W. TO ITS NEW LOCATION AT 2000 M STREET, N.W. DURING THE MONTH OF JANUARY 1972.

YOU HAVE STATED THAT THE AGENCY ORALLY ORDERED AFGHAN, WHICH DID NOT HOLD THE CONTRACT FOR THAT AREA, TO PICK UP SOME 13,162 SQUARE FEET OF CARPET FROM 1910 K STREET, N.W., CLEAN IT, AND DELIVER IT TO YOUR NEW OFFICES. YOU FURTHER ADVISE THAT DURING THE COURSE OF 2 DAYS IN THE WEEK OF JANUARY 10, 1972, AFGHAN'S CREW REMOVED THE CARPETING FROM THE OLD LOCATION WITH THE ASSISTANCE OF TWO GSA LABORERS. THE RECORD RELATES THAT WHEN THE AFGHAN FOREMAN WAS REQUESTED TO FURNISH A RECEIPT FOR THE CARPETS AS REQUIRED BY AFGHAN'S CONTRACT, HE MERELY TENDERED HIS BUSINESS CARD AND STATED THAT AFGHAN WOULD MAIL THE RECEIPT TO THE BOARD.

DURING THE COURSE OF THE FOLLOWING SEVERAL WEEKS, YOUR AGENCY CONTACTED AFGHAN REGARDING THE DETERMINATION OF A PRICE, BUT WAS PURPORTEDLY ADVISED BY AFGHAN THAT A PRICE HAD NOT YET BEEN COMPUTED. FOR THIS REASON, YOU STATE THAT THE BOARD WAS UNABLE TO ISSUE A PURCHASE ORDER.

THE CARPETS, AFTER BEING CLEANED, WERE DELIVERED TO YOUR NEW OFFICES ON OR ABOUT FEBRUARY 15, 1972, AT WHICH TIME AFGHAN SUBMITTED AN INVOICE IN THE SUM OF $2,579.76, WHICH WAS COMPUTED BY MULTIPLYING THE 13,162 SQUARE FEET OF CARPET BY 20 CENTS PER SQUARE FOOT LESS A DISCOUNT OF 2 PERCENT FOR PAYMENT WITHIN 10 DAYS.

A LETTER FROM AFGHAN, DATED MARCH 2, 1972, AMENDED ITS INVOICE BY OFFERING AN ADDITIONAL 3 PERCENT DISCOUNT IF THE INVOICE WERE PAID BY MARCH 16, 1972. IT WAS EXPLAINED THAT THE 20 CENTS PER SQUARE FOOT FIGURE WAS THE PRICE OFFERED TO ALL OF AFGHAN'S COMMERCIAL CUSTOMERS AND THAT IT COULD NOT OFFER THE BOARD MORE FAVORABLE TREATMENT THAN ITS OTHER COMMERCIAL CUSTOMERS.

BY LETTER OF MARCH 27, 1972, YOU ADVISED AFGHAN THAT THE SERVICES COVERED BY THE INVOICE WERE ORDERED ON THE BASIS OF AFGHAN'S GSA CONTRACT, AND THAT THE BOARD ERRED IN SELECTING AFGHAN FROM THE SCHEDULE AS THE AUTHORIZED CONTRACTOR FOR THE NORTHWEST AREA, SINCE A REVIEW OF THE SCHEDULE SHOWED METRO AS HOLDING THAT CONTRACT. YOU MAINTAINED THAT THE BOARD WAS NOT AUTHORIZED TO PAY MORE THAN AFGHAN'S CONTRACT PRICE OF 8 CENTS PER SQUARE FOOT, LESS DISCOUNTS AS SET OUT IN THE GSA SCHEDULE. THEREFORE, YOU ADVISED AFGHAN THAT YOU HAD PREPARED A PURCHASE ORDER AT 8 CENTS PER SQUARE FOOT, LESS A 45 PERCENT PROMPT PAYMENT DISCOUNT AND AN ADDITIONAL TRADE DISCOUNT OF 40 PERCENT, FOR A TOTAL INVOICE PRICE OF $347.48. AFGHAN WAS ADVISED THAT IF IT WOULD SUBMIT A PROPER INVOICE IN THAT AMOUNT, THE INVOICE WOULD RECEIVE PROMPT ATTENTION.

THE RECORD INCLUDES A COPY OF AN UNDATED LETTER FROM AFGHAN STATING THAT IT WAS CHARGING THE BOARD WITH KNOWLEDGE OF THE FACT THAT METRO, RATHER THAN AFGHAN, HELD THE CONTRACT FOR NORTHWEST WASHINGTON. THE LETTER FURTHER INDICATES THAT AFGHAN KNEW GOVERNMENT AGENCIES WERE OBLIGATED TO ORDER THEIR REQUIREMENTS FROM THE FIRM HOLDING THE CONTRACT FOR THE AREA IN WHICH THE AGENCY WAS LOCATED. HOWEVER, AFGHAN MAINTAINED THAT IT COULD NOT AFFORD TO ABSORB LOSSES ON THE REMOVAL AND CLEANING OF CARPETS IN SECTIONS OF THE CITY FOR WHICH IT DID NOT HOLD A GSA CONTRACT, AND CLAIMED THAT ANY REMUNERATION BELOW THE COMMERCIAL PRICE WOULD RESULT IN A LOSS. ACCORDINGLY, THE LETTER REQUESTED PAYMENT OF $2,632.40, CONTENDING THAT THE DISCOUNT WHICH AFGHAN HAD INITIALLY OFFERED HAD BEEN LOST DUE TO THE EXPIRATION OF THE DISCOUNT PERIOD.

AFGHAN, BY WAY OF ITS COUNSEL, HAS SUBMITTED TO THIS OFFICE A SUMMARY OF THE EXPENSES ALLEGEDLY INCURRED IN PERFORMING THE REFERENCED WORK, INCLUDING THE RENTAL OF A TRUCK TO TRANSPORT THE CARPETS TO A SUBCONTRACTOR IN ROCKVILLE, MARYLAND, AND $721.75 ALLEGEDLY PAID TO THE SUBCONTRACTOR FOR CLEANING SERVICES. AFGHAN'S COUNSEL MAINTAINS THAT BECAUSE AFGHAN HAD PERFORMED "OPEN MARKET" JOBS FOR CERTAIN OTHER AGENCIES, AFGHAN WAS ENTITLED TO BELIEVE THE RENEGOTIATION BOARD ORDER WAS ALSO FOR SUCH AN "OPEN MARKET" JOB.

IN VIEW OF THE FOREGOING, YOU HAVE SUBMITTED AFGHAN'S INVOICE FOR $2,579.76 TO THIS OFFICE AND HAVE REQUESTED AN ADVANCE DECISION ON THE AMOUNT THE BOARD MAY PROPERLY PAY FOR THE SERVICES RECEIVED FROM AFGHAN.

WITH REGARD TO SUPPLY SCHEDULE CONTRACTS, IT HAS BEEN THE POSITION OF OUR OFFICE THAT THE PROCUREMENT OF SUCH SUPPLIES OR SERVICES ON THE OPEN MARKET, RATHER THAN FROM THE SCHEDULED CONTRACTOR, WHERE SUCH PROCUREMENT IS DUE TO AN ERROR ON THE PART OF GOVERNMENT PERSONNEL RATHER THAN A PUBLIC EXIGENCY, DOES NOT LEGALLY OBLIGATE THE GOVERNMENT BEYOND THE EXTENT OF THE PRICE STIPULATED IN THE APPLICABLE SUPPLY CONTRACT. MOREOVER, AND MOST SIGNIFICANTLY, ONE ENTERING INTO A CONTRACT WITH AN OFFICER OR EMPLOYEE OF THE GOVERNMENT IS CHARGED WITH NOTICE OF THE LIMITATIONS PLACED UPON THE AUTHORITY OF THE OFFICER OR EMPLOYEE TO OBLIGATE THE UNITED STATES. 26 COMP. GEN. 866, 867 868(1947); 30 ID. 23(1950).

OUR PERUSAL OF THE RECORD REVEALS THAT AFGHAN WAS CLEARLY COGNIZANT OF THE LIMITATIONS IMPOSED BY THE GSA CONTRACTS UPON THE GOVERNMENT AGENCIES ORDERING THE SERVICES SET OUT THEREIN. IT FOLLOWS THAT AFGHAN IS CHARGEABLE WITH KNOWLEDGE THAT THE RENEGOTIATION BOARD WAS OBLIGATED TO ORDER THESE SERVICES FROM METRO. IT WOULD THEREFORE APPEAR THAT HAD AFGHAN ADVISED THE RENEGOTIATION BOARD OF ITS ERROR AT THE TIME THE SERVICES WERE ORDERED, AFGHAN COULD EASILY HAVE AVERTED ANY LOSS IT MAY HAVE SUSTAINED ON THE JOB. INSTEAD, AFGHAN REMAINED SILENT AND NOW SEEKS TO RECOVER REMUNERATION IN EXCESS OF THE PRICE THE RENEGOTIATION BOARD WAS REQUIRED TO PAY UNDER METRO'S GSA CONTRACT.

AFGHAN CONTENDS IT WAS JUSTIFIED IN BELIEVING THAT THE BOARD WAS PLACING AN "OPEN MARKET" ORDER AT COMMERCIAL PRICES, SINCE AFGHAN HAD PREVIOUSLY RECEIVED SUCH ORDERS FROM THE SMITHSONIAN INSTITUTION AND FROM ANDREWS AIR FORCE BASE, NEITHER OF WHICH WAS LOCATED WITHIN THE AREA COVERED BY AFGHAN'S CONTRACT. WE MUST, HOWEVER, REJECT THIS CONTENTION SINCE IT DOES NOT APPEAR THAT USE OF THE SCHEDULE CONTRACTS WAS MANDATORY UPON EITHER THE AIR FORCE OR THE SMITHSONIAN INSTITUTION.

ADDITIONALLY, WE CANNOT CONSIDER THIS CASE TO FALL WITHIN THE URGENCY EXCEPTION TO THE GSA CONTRACT, AS URGED BY AFGHAN'S COUNSEL, BECAUSE AFGHAN DID NOT PICK UP THE CARPETS IN LESS THAN 24 HOURS, WHEREAS THE MASTER SCHEDULE (P. 5) CLEARLY REQUIRES THAT WHERE THE CARPETS ARE TO BE REMOVED FOR SERVICING AT THE CONTRACTOR'S PLANT, THEY SHALL BE PICKED UP WITHIN 24 HOURS AFTER NOTIFICATION. HAD THE RENEGOTIATION BOARD NOT COMMITTED AN ERROR IN SELECTING AFGHAN BUT HAD PROPERLY CONTACTED METRO FOR THIS JOB, METRO THEREFORE WOULD HAVE BEEN OBLIGATED BY ITS CONTRACT TO PERFORM THESE SAME SERVICES ON THE BASIS OF 8 CENTS PER SQUARE FOOT, NOTWITHSTANDING THAT THE WORK WAS TO BE PERFORMED AT THE CONTRACTOR'S PLANT (MASTER SCHEDULE, P. 8). MOREOVER, IN COMPUTING THE INVOICE PRICE, THE RENEGOTIATION BOARD WOULD HAVE BEEN AUTHORIZED TO APPLY A 2 PERCENT, 20 DAYS PROMPT PAYMENT DISCOUNT AND A DISCOUNT OF 66 1/2 PERCENT FOR THE AREA OF NORTHWEST WASHINGTON (MASTER SCHEDULE, P. 12).

IN VIEW THEREOF, AND OF THE CITED DECISIONS PROHIBITING REMUNERATION IN EXCESS OF THE PRICE AT WHICH THE RENEGOTIATION BOARD WOULD HAVE BEEN ABLE TO OBTAIN THE SAME SERVICES FROM METRO, IT IS OUR OPINION THAT YOU MAY PAY AFGHAN ONLY ON THE BASIS OF 8 CENTS PER SQUARE FOOT, MINUS THE DISCOUNTS (IF EARNED) APPLICABLE TO METRO'S GSA CONTRACT.