B-179309, OCT 2, 1973

B-179309, OCT 2, 1973

ADVICE AS TO WHAT RECOURSE IS AVAILABLE TO AVOID SUBSTANTIAL LOSSES RESULTING FROM PHASE 4 PRICE CONTROLS ON THE MEAT INDUSTRY. IT IS WELL SETTLED THAT THE GOVERNMENT IS NOT LIABLE AS A CONTRACTOR FOR THE CONSEQUENCES OF ITS ACTS AS A SOVEREIGN. THERE WOULD APPEAR TO BE NO LEGAL AUTHORITY FOR TERMINATING THE CONTRACTS HELD BY INQUIRER OR GRANTING THE COMPANY AN INCREASE IN ANY CONTRACT PRICE BECAUSE OF THE EXTRA COST OF CONTRACT PERFORMANCE DUE TO THE IMPOSITION OF PHASE 4.

TO SHANE PACKING CO.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 27, 1973, AND SUBSEQUENT CORRESPONDENCE, REQUESTING ADVICE AS TO WHAT RECOURSE IS AVAILABLE TO AVOID SUBSTANTIAL LOSSES RESULTING FROM PHASE 4 PRICE CONTROLS ON THE MEAT INDUSTRY.

YOU STATE THAT YOUR COMPANY HAD BEEN AWARDED SEVERAL VA HOSPITAL CONTRACTS FOR MEAT AND OTHER ITEMS FOR DELIVERY DURING THE MONTH OF AUGUST. THESE CONTRACTS WERE BID UNDER THE THEN EXISTING PHASE 3 PRICE CONTROLS. HOWEVER, YOU STATE THAT ON JULY 19, 1973, MANY OF THE PHASE 3 CONTROLS WERE REMOVED, WHICH IN TURN LED TO AN INCREASE IN PRICES WHICH YOU ALLEGE THREATENS YOUR CONTINUED EXISTENCE. YOU STATE THAT THE PRICE INCREASES BROUGHT ABOUT BY THE INAUGURATION OF THE PHASE 4 LIFTING OF CEILINGS RUN ANYWHERE FROM 10 TO 40 PERCENT. IT IS BASED UPON THIS SET OF CIRCUMSTANCES THAT YOU REQUEST ADVICE AS TO RELIEF THAT MAY BE AVAILABLE TO AVOID SUCH UNFORESEEN LOSSES.

THE TERMINATION OF PHASE 3 CONTROLS AND INSTITUTION OF PHASE 4 IS ATTRIBUTABLE TO THE GOVERNMENT ACTING IN ITS SOVEREIGN CAPACITY. SEE B 175674, MAY 30, 1972. AS WAS STATED IN 53 COMP. GEN. , B-179255, SEPTEMBER 4, 1973:

"*** IT IS WELL SETTLED THAT THE GOVERNMENT IS NOT LIABLE AS A CONTRACTOR FOR THE CONSEQUENCES OF ITS ACTS AS A SOVEREIGN. SEE HOROWITZ V. UNITED STATES, 267 U.S. 458 (1925); THE SUNSWICK CORP. V. UNITED STATES, 75 F. SUPP. 221, 109 CT. CL. 772 (1948). ALSO, WHERE A GOVERNMENT CONTRACT CONTAINS AN EXPRESS STIPULATION AS TO THE AMOUNT OF COMPENSATION TO BE PAID, AND NO PROVISION IS MADE FOR ANY INCREASE IN THE EVENT PERFORMANCE BECOMES MORE EXPENSIVE OR DIFFICULT, THE FACT THAT THE COST OF PERFORMANCE IS INCREASED BY FACTORS WHICH DO NOT CONSTITUTE UNDUE INTERFERENCE BY THE GOVERNMENT AS A CONTRACTOR DOES NOT ENTITLE THE CONTRACTOR TO ADDITIONAL COMPENSATION. SEE B-175674, SUPRA, AND CASES CITED THEREIN. AS WAS STATED IN PENN BRIDGE CO. V. UNITED STATES, 59 CT. CL. 892, 896, (1924)

"'*** CONTRACTUAL RIGHTS ONCE FIXED IN A PROPER CONTRACT EXECUTED BY AUTHORITY ARE INVIOLATE. THEY MAY BE FORFEITED BY ONE PARTY OR THE OTHER, CONSTRUCTION IS PERMISSIBLE IF THE TERMS ARE AMBIGUOUS, BUT IN THE ABSENCE OF AMBIGUITY OR FORFEITURE OF RIGHTS BY CONDUCT, SUCH A CONTRACT CANNOT BUT BE ENFORCED AS WRITTEN.'"

IN VIEW OF THE FOREGOING, THERE WOULD APPEAR TO BE NO LEGAL AUTHORITY FOR TERMINATING THE CONTRACTS OR GRANTING YOUR COMPANY AN INCREASE IN ANY CONTRACT PRICE BECAUSE OF THE EXTRA COST OF CONTRACT PERFORMANCE DUE TO THE IMPOSITION OF PHASE 4.

AS YOUR LETTER OF JULY 27, 1973, REQUESTS ADVICE AS TO ANY POSSIBLE AVENUE OF RELIEF, WE HAVE ALSO CONSIDERED WHETHER YOUR CLAIM SHOULD BE REFERRED TO THE CONGRESS PURSUANT TO THE MERITORIOUS CLAIMS ACT OF 1923 (31 U.S.C. 236).

THE MERITORIOUS CLAIMS ACT PROVIDES THAT WHEN A CLAIM IS FILED IN THIS OFFICE THAT MAY NOT BE LAWFULLY ADJUSTED BY USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM, IN OUR JUDGMENT, CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF CONGRESS, IT SHALL BE SUBMITTED TO THE CONGRESS WITH OUR RECOMMENDATIONS. THE REMEDY IS AN EXTRAORDINARY ONE AND ITS USE IS LIMITED TO EXTRAORDINARY CIRCUMSTANCES.

THE CASES WE HAVE REPORTED FOR THE CONSIDERATION OF THE CONGRESS GENERALLY HAVE INVOLVED EQUITABLE CIRCUMSTANCES OF AN UNUSUAL NATURE AND WHICH ARE UNLIKELY TO CONSTITUTE A RECURRING PROBLEM, SINCE TO REPORT TO THE CONGRESS A PARTICULAR CASE WHEN SIMILAR EQUITIES EXIST OR ARE LIKELY TO ARISE WITH RESPECT TO OTHER CLAIMANTS WOULD CONSTITUTE PREFERENTIAL TREATMENT OVER OTHERS IN SIMILAR CIRCUMSTANCES. SEE B 175278, APRIL 12, 1972.

UNDOUBTEDLY OTHER CONTRACTORS WHO DEAL WITH GOVERNMENT HAVE FOUND THEMSELVES IN YOUR SITUATION. ALSO, IMPOSITION OF PRICE CONTROLS HAS OCCURRED IN THE PAST AND MAY OCCUR AGAIN IN THE FUTURE. THEREFORE, WE FIND YOUR CLAIM TO BE NEITHER UNUSUAL IN NATURE NOR A NONRECURRING SITUATION.

FOR THE REASONS STATED ABOVE, WE FIND NO ELEMENT OF UNUSUAL LEGAL LIABILITY OR EQUITY WHICH WOULD JUSTIFY US IN REPORTING IT TO THE CONGRESS FOR ITS CONSIDERATION UNDER THE MERITORIOUS CLAIMS ACT.