B-163431, FEB. 21, 1968

B-163431, FEB. 21, 1968

CONTRACTS - $2,500 LIMITATION DECISION TO CHIEF ACCOUNTING AND FINANCE OFFICER, DEFENSE SUPPLY AGENCY CONCERNING CLAIM OF STANDARD LOCKNUT AND LOCKWASHER, INC., FOR AMOUNT DEDUCTED FOR EXCESS QUANTITY OF DELIVERIES. WHEN UNDER A PURCHASE ORDER LIMITED TO $2,500, A CONTRACTOR FURNISHED AN EXCESS QUANTITY THAT WAS WITHIN THE AUTHORIZED VARIATION OF THE ORDER BUT THE PURCHASING AGENCY WAS REQUIRED TO DEDUCT THE AMOUNT OF THE EXCESS UNITS TO KEEP THE TOTAL COST WITHIN $2,500 LIMITATION, THE CONTRACTOR MAY BE PAID ON A QUANTUM VALEBAT OR QUANTUM MERUIT BASIS. THE NEGOTIATION OF THE PURCHASE ORDER UNDER 10 U.S.C. 2304 (A) (3) WAS IMPROPER SINCE AT THE TIME OF THE AWARD THE CONTRACTING OFFICER COULD HAVE CALCULATED THE MAXIMUM SHIPMENT AT THE PRICE QUOTED AND DETERMINED THAT THE PURCHASE WOULD EXCEED THE LIMITATION.

TO MR. CLAYTOR:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF JANUARY 25, 1968, TRANSMITTING THE CLAIM OF STANDARD LOCKNUT AND LOCKWASHER, INC., FOR $123.00 UNDER PURCHASE ORDER DSA-500-67-M-W714 AND REQUESTING AN ADVANCE DECISION AS TO WHETHER IT MAY PROPERLY BE PAID.

THE PURCHASE ORDER REQUIRED THE DELIVERY F.O.B. VARIOUS DESTINATIONS, OF 2,000 EACH (SUBJECT TO A QUANTITY VARIATION OF PLUS 5 PERCENT AND MINUS 2 PERCENT) OF NUT, PLAIN, ROUND, FSN KZ 3110-185 6460, AT A UNIT PRICE OF $1.23 EACH AND AN EXTENDED AMOUNT OF $2,460. THE COMPANY SHIPPED 2,100 UNITS, WHICH WAS NOT IN EXCESS OF THE AUTHORIZED VARIATION, AND SUBMITTED ITS INVOICE FOR $2,583, FOR THAT NUMBER AT THE UNIT PRICE SPECIFIED IN THE ORDER. AGAINST THIS INVOICE THE PRICE OF THE ADDITIONAL 100 UNITS SHIPPED WAS DEDUCTED SO THAT THE AMOUNT PAID UNDER THE ORDER WOULD NOT EXCEED $2,500. THE COMPANY OBJECTED TO THE DEDUCTION AND SUBMITTED ANOTHER INVOICE REQUESTING PAYMENT OF THE $123.00 WITHHELD.

THE NEGOTIATION OF THIS PURCHASE UNDER 10 U.S.C. 2304 (A) (3) WAS CLEARLY IMPROPER SINCE AT THE TIME OF AWARD THE CONTRACTING OFFICER COULD HAVE CALCULATED THAT THE MAXIMUM SHIPMENT OF THE DESIRED ITEMS AT THE PRICE QUOTED BY THE COMPANY WOULD HAVE INVOLVED A PURCHASE IN EXCESS OF $2,500. SEE B-150058, OCTOBER 29, 1962. ADDITIONALLY, THE INCLUSION OF THE 5 PERCENT QUANTITY VARIATION IN THE SUBJECT PURCHASE ORDER VIOLATED ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-608.2 (D) (II), QUOTED, IN PART, AS FOLLOWS:

"/II) THE QUANTITY OF SUPPLIES OR SERVICES SHALL BE SPECIFIED. FOR BULK QUANTITY ITEMS AND THOSE SUBJECT TO SHRINKAGE, EVAPORATION, MISCOUNT, WEIGHT OR FOOTAGE VARIANCE, ETC., A MAXIMUM ALLOWABLE VARIATION (NORMALLY NOT IN EXCESS OF 10 PERCENT) SHALL BE SPECIFIED IN THE ORDER SO THAT SHIPMENTS IN EXCESS OF THE ORDER QUANTITY MAY BE ACCEPTED IF THE REASON FOR SUCH EXCESS COMES WITHIN THE VARIATION IN QUANTITY CLAUSE OF THE ORDER AND THE AGGREGATE AMOUNT OF THE ORDER DOES NOT EXCEED AUTHORIZED LIMITATIONS.'

WHILE THE GOVERNMENT IS NOT BOUND BY A CONTRACT ENTERED INTO WITHOUT AUTHORITY, WHERE GOODS OR SERVICES ARE FURNISHED AT THE REQUEST OF AN OFFICER OF THE GOVERNMENT THERE IS RECOGNIZED AN OBLIGATION TO PAY THE FAIR VALUE OF THE GOODS AND SERVICES ACTUALLY FURNISHED ON A QUANTUM VALEBAT OR QUANTUM MERUIT BASIS. 46 COMP. GEN. 348; 38 COMP. GEN. 38; 33 COMP. GEN. 533. THE CONTRACTING OFFICER STATES THAT THE AMOUNT CLAIMED REPRESENTS THE REASONABLE VALUE OF THAT PORTION OF THE SHIPMENT DELIVERED BY THE COMPANY AND FOR WHICH IT HAS NOT RECEIVED PAYMENT. ACCORDINGLY, YOU ARE ADVISED THAT PAYMENT MAY BE MADE IN THE AMOUNT RECOMMENDED.