B-171255, JAN 5, 1972

B-171255, JAN 5, 1972

CONTRACTS - UNPAID SUBCONTRACTOR - PRIVITY OF CONTRACT CONCERNING REQUEST FOR CLARIFICATION ON PREVIOUS DISALLOWANCE OF A CLAIM BY DONRAY PRODUCTS CO., AS AN UNPAID SUBCONTRACTOR UNDER AN AIR FORCE PRIME CONTRACT WITH RA-DOR INDUSTRIES, INC. PRIVITY OF CONTRACT WILL ONLY BE RECOGNIZED WHERE THE CONDUCT OF THE GOVERNMENT AND OF THE SUBCONTRACTOR EVIDENCES A DIRECT CONTRACTUAL ARRANGEMENT. SINCE THE CIRCUMSTANCES SHOW THE CLAIM TO BE OF DOUBTFUL VALIDITY, IT IS THE DUTY OF THE COMP. GEN. TO DENY THE CLAIM AND TO LEAVE THE CLAIMANT TO HIS REMEDY IN THE COURTS.

TO DONRAY PRODUCTS CO.:

YOUR LETTER OF DECEMBER 1, 1971, REQUESTS CLARIFICATION OF THE GROUNDS WHICH REQUIRED DISALLOWANCE OF YOUR CLAIM AS AN UNPAID SUBCONTRACTOR UNDER AIR FORCE PRIME CONTRACT NO. F33657-67-C-0039 WITH RA-DOR INDUSTRIES, INC.

AS WE HAVE INDICATED TO YOU IN OUR PRIOR DECISIONS, IN ORDER TO RECOVER ON A CONTRACT CLAIM AGAINST THE UNITED STATES, THERE MUST BE A DIRECT CONTRACTUAL RELATIONSHIP, EXPRESS OR IMPLIED, BETWEEN THE CLAIMANT AND THE UNITED STATES. GENERALLY, THIS DIRECT RELATIONSHIP OR "PRIVITY OF CONTRACT" DOES NOT EXIST WHERE A CLAIM AGAINST THE GOVERNMENT IS ASSERTED BY A SUBCONTRACTOR. EXCEPTIONS, HOWEVER, HAVE BEEN RECOGNIZED WHERE THE CONDUCT OF THE GOVERNMENT AND THE SUBCONTRACTOR EVIDENCES A DIRECT CONTRACTUAL ARRANGEMENT. FOR EXAMPLE, IN B-171868, AUGUST 20, 1971 (COPY ENCLOSED FOR YOUR INFORMATION), WE SUSTAINED THE CLAIM OF A SUBCONTRACTOR WHERE IT WAS ESTABLISHED THAT SUPPLIES WERE FURNISHED BY IT TO THE PRIME CONTRACTOR AFTER ASSURANCES BY THE CONTRACTING OFFICER THAT HE WOULD TAKE STEPS TO SEE THAT PAYMENT WOULD BE MADE UPON RECEIPT OF THE SUPPLIES. WAS ALSO SHOWN THAT THE GOVERNMENT HAD ASSUMED FINANCING OF THE CONTRACT AND ESTABLISHED A SPECIAL ACCOUNT.

UNFORTUNATELY, THE CIRCUMSTANCES OF RECORD SURROUNDING YOUR CLAIM NEGATED THE EXISTENCE OF PRIVITY, FOR, AS STATED IN OUR DECISION B 171255, SEPTEMBER 3, 1971, TO YOU:

" *** WHILE THE GOVERNMENT MAY HAVE BEEN INSTRUMENTAL IN INDUCING YOU TO PERFORM, THERE IS NO EVIDENCE THAT IT ASSUMED ANY OBLIGATION TO PAY YOU FOR THE MATERIAL. THAT OBLIGATION REMAINED SOLELY WITH THE PRIME CONTRACTOR. IN THAT REGARD, THE GOVERNMENT REPRESENTATIVE WITH WHOM YOU CONVERSED CONCERNING THE DELIVERIES TO THE PRIME CONTRACTOR HAS DENIED THAT HE OR ANYONE ELSE PROMISED THAT THE GOVERNMENT WOULD PAY YOU FOR SHIPMENTS MADE TO THE PRIME CONTRACTOR. EVEN YOUR LETTER OF MAY 14, 1968, WHICH WAS WRITTEN TO THE GOVERNMENT REPRESENTATIVE AFTER YOU MADE DELIVERIES TO THE PRIME CONTRACTOR, CONTAINS NO STATEMENT THAT THE GOVERNMENT HAD GUARANTEED PAYMENT TO YOU FOR THE SHIPMENTS; ONLY THAT, WHEN YOU WERE REQUESTED BY THE GOVERNMENT TO MAKE FURTHER SHIPMENTS TO THE PRIME CONTRACTOR, 'THE MILITARY THEN SAID THEY WOULD LOOK INTO THE FINANCIAL ASPECTS OF THIS PROBLEM.'"

UNDER THE CIRCUMSTANCES, WE HAD NO ALTERNATIVE BUT TO DENY YOUR CLAIM. IN THIS CONNECTION, THE COURTS HAVE RECOGNIZED THAT WHERE A CLAIM AGAINST THE UNITED STATES IS OF DOUBTFUL VALIDITY, IT IS THE DUTY OF OUR OFFICE TO DENY THE CLAIM AND LEAVE THE CLAIMANT TO HIS REMEDY IN THE COURTS. SEE LONGWILL V UNITED STATES, 17 CT. CL. 288, 291 (1881); CHARLES V UNITED STATES, 19 CT. CL. 316, 319 (1884); SAUER V UNITED STATES, 354 F. 2D 302 (CT. CL. 1965); STEEL FORGE IMPROVEMENT & FORGE COMPANY V UNITED STATES, 355 F. 2D 627 (CT. CL. 1966).

WE TRUST THE FOREGOING SERVES THE PURPOSE OF YOUR INQUIRY.