B-142027, APRIL 26, 1960, 39 COMP. GEN. 726

B-142027: Apr 26, 1960

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RECOVERY OF THE ERRONEOUS PAYMENT ON ACCOUNT OF THE DEVIATION IS REQUIRED. EVEN THOUGH THE DEVIATION WAS NOT MADE IN THE TECHNICAL FORM REQUIRED BY THE CONTRACT. 1960: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 29. THE CONTRACT WAS AWARDED TO SALEM ON MARCH 11. PROVIDING SAME IS ACCOMPLISHED AT NO ADDITIONAL COST TO THE GOVERNMENT.'. THE CONTRACT WAS COMPLETED ON DECEMBER 24. THIS DEVIATION WAS TECHNICALLY EVALUATED AND BY LETTER OF MARCH 8. SALEM WAS ADVISED BY THE SUCCESSOR CONTRACTING OFFICER THAT SAVINGS RESULTING FROM THE DEVIATION AMOUNTED TO $4. 875.60 AND DEMAND WAS MADE FOR PAYMENT. THIS DEMAND WAS FOLLOWED BY A FINDINGS OF FACT AND DECISION OF THE SUCCESSOR CONTRACTING OFFICER DATED APRIL 4.

B-142027, APRIL 26, 1960, 39 COMP. GEN. 726

CONTRACTS - PRICE ADJUSTMENT - CHANGES RESULTING IN SAVINGS TO GOVERNMENT - RECOVERY - TIME A DEVIATION FROM CONTRACT SPECIFICATIONS APPROVED BY A CONTRACTING OFFICER, WHICH DECREASED THE COST OF PERFORMANCE WITHOUT AN EQUITABLE PRICE ADJUSTMENT AS REQUIRED UNDER THE "CHANGES" CLAUSE OF THE CONTRACT PRIOR TO FINAL PAYMENT, MUST BE REGARDED AS A CHANGE NOT SUPPORTED BY CONSIDERATION AND REPRESENTED THE SURRENDER OF THE VESTED RIGHT OF THE GOVERNMENT TO SECURE A PRICE ADJUSTMENT; THEREFORE, RECOVERY OF THE ERRONEOUS PAYMENT ON ACCOUNT OF THE DEVIATION IS REQUIRED, IRRESPECTIVE OF THE TIME AND EVEN THOUGH THE REOPENING OF THE CONTRACT UNDER THE DISPUTES CLAUSE TO DETERMINE THE AMOUNT OF SAVINGS DUE THE GOVERNMENT MAY NOT BE CONSIDERED PROPER. UNDER A CONTRACT "CHANGES" CLAUSE WHICH REQUIRES AN EQUITABLE ADJUSTMENT IF ANY CHANGES CAUSE AN INCREASE OR DECREASE IN THE COST OF PERFORMANCE, THE APPROVAL BY THE CONTRACTING OFFICER OF A DEVIATION FROM THE CONTRACT SPECIFICATION WHICH DECREASED THE COST OF PERFORMANCE WITHOUT AN EQUITABLE PRICE ADJUSTMENT PRIOR TO FINAL PAYMENT MUST BE REGARDED AS A CHANGE, EVEN THOUGH THE DEVIATION WAS NOT MADE IN THE TECHNICAL FORM REQUIRED BY THE CONTRACT, AND BY VIRTUE OF THE ,CHANGES" CLAUSE, THE CONTRACTING OFFICER EXPRESSLY RAISED AND RESERVED FOR FUTURE DETERMINATION THE AMOUNT SAVED TO THE GOVERNMENT.

TO EUGENE EBERT, APRIL 26, 1960:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 29, 1960, REQUESTING, ON BEHALF OF THE SALEM PRODUCTS CORPORATION, REFUND OF THE AMOUNT OF $1,929.16 ($1,919.16) PAID TO THE GOVERNMENT UNDER PROTEST IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. DA-30-352-53-TAP-857 BY THE CORPORATION.

THE CONTRACT WAS AWARDED TO SALEM ON MARCH 11, 1953, AND, AS AMENDED, PROVIDED FOR THE FABRICATION AND DELIVERY OF A CERTAIN QUANTITY OF PARKA LINERS FOR A TOTAL CONTRACT PRICE OF $218,638. THE CONTRACT INCORPORATED BY REFERENCE AS A PART THEREOF THE STANDARD GENERAL PROVISIONS APPLICABLE GENERALLY TO GOVERNMENT CONTRACTS, INCLUDING BUT NOT LIMITED TO," CHANGES" AND " DISPUTES.'

IT APPEARS THAT BY LETTER DATED MAY 20, 1953, SALEM REQUESTED A DEVIATION FROM SPECIFICATIONS RESPECTING OPERATIONS 9 AND 17B. ON MAY 26, 1953, THE CONTRACTING OFFICER APPROVED THE DEVIATION ,PROVIDING SAME IS ACCOMPLISHED AT NO ADDITIONAL COST TO THE GOVERNMENT.' THE CONTRACT WAS COMPLETED ON DECEMBER 24, 1953, AND FINAL PAYMENT MADE FOR THE PARKA LINERS FABRICATED AND DELIVERED. THEREAFTER, ON FEBRUARY 15, 1957, THE SUCCESSOR CONTRACTING OFFICER ADVISED THE CONTRACTOR ANY ADJUSTMENT IN THE CONTRACT PRICE. THIS DEVIATION WAS TECHNICALLY EVALUATED AND BY LETTER OF MARCH 8, 1957, SALEM WAS ADVISED BY THE SUCCESSOR CONTRACTING OFFICER THAT SAVINGS RESULTING FROM THE DEVIATION AMOUNTED TO $4,875.60 AND DEMAND WAS MADE FOR PAYMENT. THIS DEMAND WAS FOLLOWED BY A FINDINGS OF FACT AND DECISION OF THE SUCCESSOR CONTRACTING OFFICER DATED APRIL 4, 1957, WHEREBY HE DETERMINED, PURSUANT TO THE " CHANGES" AND " DISPUTES" CLAUSES OF THE CONTRACT, THAT THE CONTRACT PRICE SHOULD BE REDUCED BY $4,875.60 AS AN EQUITABLE ADJUSTMENT UNDER THE " CHANGES" CLAUSE. SALEM ALSO WAS APPRISED BY THAT DOCUMENT OF ITS RIGHT TO APPEAL THE DECISION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS. ON SEPTEMBER 29, 1958, THE BOARD DETERMINED THAT SAVINGS TO SALEM RESULTED FROM THE DEVIATION GRANTED WITH RESPECT TO OPERATIONS 9 AND 17B AND THAT THE GOVERNMENT WAS ENTITLED TO $1,919.16 AS AN EQUITABLE ADJUSTMENT UNDER THE " CHANGES" CLAUSE OF THE CONTRACT. MOTION FOR RECONSIDERATION WAS DENIED BY THE BOARD ON SEPTEMBER 16, 1959. IN RESPONSE TO FURTHER DEMAND BY THE GOVERNMENT, SALEM, THROUGH ITS ATTORNEYS, PAID THE SUM DEMANDED UNDER PROTEST BY LETTER OF NOVEMBER 25, 1959.

THE PRESENT REQUEST CONSTITUTES A CLAIM AGAINST THE GOVERNMENT FOR MONEYS HERETOFORE PAID OVER UNDER PROTEST AND IS BASED UPON THE PROPOSITION THAT UTILIZATION OF THE " DISPUTES" CLAUSE AND ITS PROCEDURES AS CONTAINED IN THE CONTRACT TO RECOVER THE SAVINGS RESULTING FROM THE DEVIATION WAS ENTIRELY UNWARRANTED SINCE THERE EXISTED NEITHER A DISPUTE NOR A CHANGE AS THOSE TERMS ARE USED IN THE " DISPUTES" AND " CHANGES" CLAUSES OF THE CONTRACT.

EVEN IF IT BE CONCEDED THAT REOPENING THE CONTRACT TO DETERMINE WHETHER SAVINGS ACCRUED TO SALEM ON ACCOUNT OF THE DEVIATION MAY NOT HAVE BEEN PROPER UNDER THE " DISPUTES" CLAUSE, NONETHELESS, THERE REMAINS FOR CONSIDERATION THE QUESTION WHETHER THE CONTRACTING OFFICER HAD AUTHORITY TO CHANGE THE CONTRACT IN THAT REGARD WITHOUT ADEQUATE CONSIDERATION MOVING TO THE GOVERNMENT. THE " CHANGES" CLAUSE OF THE CONTRACT PROVIDED, IN PERTINENT PART, THAT:

* * * IF ANY SUCH CHANGE CAUSES AN INCREASE OR DECREASE IN THE COST * * * PERFORMANCE OF THIS CONTRACT, AN EQUITABLE ADJUSTMENT SHALL BE MADE IN THE CONTRACT PRICE * * * AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY. ( ITALICS SUPPLIED.)

THE RECORD BEFORE US ESTABLISHES THAT THE DEVIATION GRANTED UNDER THE " CHANGES" CLAUSE RESULTED IN A DECREASE IN THE COST OF PERFORMING THE CONTRACT. HOWEVER, A PROPER ADJUSTMENT IN THE CONTRACT PRICE WAS NOT MADE BY THE CONTRACTING OFFICER AS REQUIRED BY THE CONTRACT. TO THAT EXTENT THE DEVIATION AS GRANTED WAS NOT SUPPORTED BY CONSIDERATION TO THE GOVERNMENT TO SECURE A PRICE ADJUSTMENT UNDER THE CONTRACT " CHANGES" CLAUSE. IN THAT CONNECTION, IT IS TO BE NOTED THAT SUCH CLAUSE PRESCRIBES NO TIME LIMITATION FOR THE GOVERNMENT TO ASSERT CLAIMS THEREUNDER. IT IS AXIOMATIC THAT NO OFFICER OF THE GOVERNMENT IS AUTHORIZED TO GIVE AWAY SUCH A VESTED RIGHT. PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.1CLS. 327; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.1CLS. 584, 607; AND UNITED STATES V. AMERICAN SALES COMPANY, 27 F.2D 389, CERTIORARI DENIED, 280 U.S. 574. ALSO, THE GOVERNMENT, INDEPENDENTLY OF STATUTE, HAS THE RIGHT TO RECOVER FUNDS WHICH ITS AGENTS HAVE WRONGFULLY, ERRONEOUSLY, OR ILLEGALLY PAID. THIS RIGHT EXISTS WHETHER SUCH PAYMENTS WERE MADE UNDER MISTAKE OF LAW OR FACT; WHETHER BECAUSE IN EXCESS OF AUTHORITY OR BASED UPON AN ERRONEOUS INTERPRETATION OF A CONTRACT LATER FOUND TO BE INCORRECT, OR BECAUSE OF THE RELIANCE UPON FACTS FOUND SUBSEQUENTLY NOT TO EXIST. SEE CHORPENNING V. UNITED STATES, 94 U.S. 397, 399; STEELE V. UNITED STATES, 113 U.S. 128, 134; UNITED STATES V. WURTS, 303 U.S. 414; UNITED STATES V. SUTTON, 11F.2D 24, 26; AND THE ANNOTATION COLLECTED IN 63 A.L.R. 1346. MOREOVER, LACHES ON THE PART OF GOVERNMENT AGENTS DOES NOT STOP THE GOVERNMENT FROM SECURING RECOVERY OF THE RESULTING OVERPAYMENTS. SEE SUTTON V. UNITED STATES, 256 U.S. 575; HEIDT V. UNITED STATES, 56 F.2D 559; ALSO UNITED STATES V. HOLLEY, 199 F.2D 575, 578; UNITED STATES V. SUMMERLIN, 310 U.S. 414; AND THE CASES COLLECTED IN 54 AM. JUR., UNITED STATES, PAGES 630, 631.

WE DO NOT AGREE THAT THE CONTRACTING OFFICER'S LETTER OF MAY 26, 1953, PERMITTING THE DEVIATION WAS NOT, IN EFFECT, A CONTRACT CHANGE ORDER. THERE IS NO DOUBT THAT SALEM'S OBLIGATIONS UNDER THE CONTRACT SPECIFICATIONS WERE CHANGED. IT WOULD BE, IN OUR OPINION, MERE SEMANTICS TO HOLD THAT AN ORDER PERMITTING A DEVIATION WAS NOT A CHANGE ORDER BECAUSE OF TECHNICAL OBJECTIONS TO ITS FORM WHEN, IN FACT, SUCH LETTER DID EFFECT A CHANGE IN THE SPECIFICATION REQUIREMENTS AS ENVISAGED BY THE " CHANGES" CLAUSE. WE BELIEVE THAT THE CONTRACTING OFFICER BY VIRTUE OF SUCH CLAUSE EXPRESSLY RAISED AND RESERVED FOR FUTURE DETERMINATION THE QUESTION OF SAVINGS TO THE GOVERNMENT. THE HOLDING IN 25 COMP. GEN. 332 THAT A CHANGE ORDER MAY NOT BE ISSUED AFTER CONTRACT PERFORMANCE TO REIMBURSE A CONTRACTOR FOR ADDITIONAL WORK HAS NO APPLICATION HERE, SINCE THE APRIL 4, 1957, FINDINGS OF FACT AND DECISION, WAS ISSUED, IN CONSONANCE WITH THE LEGAL PRINCIPLES STATED ABOVE, TO ACCOMPLISH THE RECOVERY OF FUNDS ERRONEOUSLY PAID.

ACCORDINGLY, YOU ARE ADVISED THAT NO LEGAL BASIS EXISTS FOR REFUND OF THE AMOUNT IN QUESTION. NEITHER DO WE FEEL THAT THE PRESENT RECORD CONTAINS SUCH ELEMENTS OF EQUITY AS WOULD AUTHORIZE OUR OFFICE TO REPORT THE MATTER TO THE CONGRESS AS A MERITORIOUS CLAIM UNDER 31 U.S.C. 236.