A-19376, AUGUST 12, 1927, 7 COMP. GEN. 105

A-19376: Aug 12, 1927

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - INSURANCE AGAINST DAMAGES THERE IS NO AUTHORITY FOR THE INCLUSION IN A NATIONAL GUARD CONTRACT OF A STIPULATION TO THE EFFECT THAT THE GOVERNMENT WOULD INSURE BUILDINGS FOR ENCAMPMENT PURPOSES WHILE IN PROCESS OF CONSTRUCTION. THERE IS NO LEGAL LIABILITY ON NATIONAL GUARD FUNDS FOR PAYMENT TO THE CONTRACTOR OF THE COST OF CERTAIN RESTORATION MADE NECESSARY BY SEVERE WINDS AND STORMS. YOU ARE AUTHORIZED TO PAY $171.70 ON AN APPROVED VOUCHER STATED IN FAVOR OF THE O. IS PREDICATED ON THE FOLLOWING STIPULATION SAID TO BE CONTAINED IN THE SPECIFICATIONS FOR THE WORK: INSURANCE: THE CONTRACTOR SHALL CARRY LIABILITY INSURANCE AS REQUIRED BY LAW. NOR ARE THEY REFERRED TO AS HAVING BEEN INCORPORATED THEREIN.

A-19376, AUGUST 12, 1927, 7 COMP. GEN. 105

CONTRACTS - INSURANCE AGAINST DAMAGES THERE IS NO AUTHORITY FOR THE INCLUSION IN A NATIONAL GUARD CONTRACT OF A STIPULATION TO THE EFFECT THAT THE GOVERNMENT WOULD INSURE BUILDINGS FOR ENCAMPMENT PURPOSES WHILE IN PROCESS OF CONSTRUCTION, AND THERE IS NO LEGAL LIABILITY ON NATIONAL GUARD FUNDS FOR PAYMENT TO THE CONTRACTOR OF THE COST OF CERTAIN RESTORATION MADE NECESSARY BY SEVERE WINDS AND STORMS.

ACTING COMPTROLLER GENERAL GINN TO MAJ. ROY E. DECKER, UNITED STATES PROPERTY AND DISBURSING OFFICER, MAINE NATIONAL GUARD, AUGUST 12, 1927:

THERE HAS BEEN RECEIVED BY INDORSEMENT DATED JULY 27, 1927, YOUR REQUEST OF JUNE 16, 1927, FOR DECISION WHETHER UNDER CONTRACT DATED SEPTEMBER 1, 1925, YOU ARE AUTHORIZED TO PAY $171.70 ON AN APPROVED VOUCHER STATED IN FAVOR OF THE O. B. FROST CO. AS COST OF REPAIRS MADE NECESSARY BY A STORM OF WIND AND RAIN TO SEVERAL BUILDINGS UNDER PROCESS OF CONSTRUCTION AT CAMP KEYES, AUGUSTA, ME., A NATIONAL GUARD ENCAMPMENT.

THE CLAIM FOR PAYMENT OF THE COST OF REPAIRS MADE NECESSARY BY THE UNUSUALLY SEVERE WEATHER TO THE BUILDINGS THEN UNDER CONSTRUCTION BY THE O. B. FROST CO. IS PREDICATED ON THE FOLLOWING STIPULATION SAID TO BE CONTAINED IN THE SPECIFICATIONS FOR THE WORK:

INSURANCE: THE CONTRACTOR SHALL CARRY LIABILITY INSURANCE AS REQUIRED BY LAW, OR IN SUCH AMOUNTS AS ARCHITECTS REQUIRE, AND SHALL HOLD THE OWNER HARMLESS FROM ANY INJURIES TO PERSONS OR PROPERTIES DURING THE PROGRESS OF THE WORK. THE OWNER SHALL, DURING THE PROGRESS OF THE WORK, MAINTAIN INSURANCE ON SAID WORK, IN HIS OWN NAME AND IN THE NAME OF THE CONTRACTOR, AGAINST LOSS OR DAMAGE BY FIRE, LIGHTNING, EARTHQUAKE, CYCLONE, OR OTHER CASUALTY. THE POLICIES TO COVER ALL WORK INCORPORATED IN THE BUILDING AND ALL MATERIALS FOR THE SAME IN OR ABOUT THE PREMISES AND SHALL BE MADE PAYABLE TO THE PARTIES HERETO, AS THEIR INTEREST MAY APPEAR.

THE CONTRACT OF SEPTEMBER 1, 1925, AS TRANSMITTED TO THIS OFFICE, DOES NOT CONTAIN A COPY OF THE SPECIFICATIONS, NOR ARE THEY REFERRED TO AS HAVING BEEN INCORPORATED THEREIN. HOWEVER, IT MAY BE ASSUMED FOR PRESENT PURPOSES THAT THE SPECIFICATIONS WERE INADVERTENTLY OMITTED FROM THE CONTRACT AND THAT THEY CONTAIN THE ABOVE-QUOTED STIPULATION. IN OTHER WORDS, IT WILL BE ASSUMED, FOR THE PURPOSE OF THIS DECISION, THAT IT WAS THE INTENTION OF THE PARTIES TO MAKE THE FOREGOING STIPULATION A PART OF THE CONTRACT.

SECTION 3732, REVISED STATUTES, PROVIDES, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, THAT "NO CONTRACT OR PURCHASE ON BEHALF OF THE UNITED STATES SHALL BE MADE UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT," AND SECTION 3733, REVISED STATUTES, PROVIDES THAT "NO CONTRACT SHALL BE ENTERED INTO FOR THE ERECTION, REPAIR, OR FURNISHING OF ANY PUBLIC BUILDING, OR FOR ANY PUBLIC IMPROVEMENT, WHICH SHALL BIND THE GOVERNMENT TO PAY A LARGER SUM OF MONEY THAN THE AMOUNT IN THE TREASURY APPROPRIATED FOR THAT SPECIFIC PURPOSE.' BOTH CONTRACTING OFFICERS AND CONTRACTORS ARE CHARGEABLE WITH NOTICE OF THESE PROVISIONS OF PUBLIC LAW, AND THERE IS NEITHER ANY SPECIFIC STATUTE AUTHORIZING A STIPULATION IN NATIONAL GUARD CONTRACTS FOR PAYMENT OF INSURANCE ON BUILDINGS IN PROCESS OF ERECTION NOR ANY SUM APPROPRIATED THEREFOR IN THE ACT OF FEBRUARY 12, 1925, 43 STAT. 920, UNDER THE TITLE "ARMING, EQUIPPING, AND TRAINING THE NATIONAL GUARD," THE APPROPRIATION PROPOSED TO BE CHARGED THEREWITH. IT HAS LONG BEEN THE POLICY OF THE UNITED STATES NOT TO INSURE ITS PROPERTY. SEE 14 COMP. DEC. 836; 23 ID. 297.

THE CONTRACTING OFFICER WAS EVIDENTLY COGNIZANT OF THE FOREGOING WELL- SETTLED PRINCIPLES OF LAW, FOR HE DID NOT SECURE ANY INSURANCE ON THE BUILDINGS, AND THE ONLY THEORY ON WHICH PAYMENT OF THE COST OF RESTORATION COULD BE NOW MADE TO THE CONTRACTOR WOULD BE ONE OF BREACH OF THE CONTRACT STIPULATION FOR FAILURE TO EFFECT SUCH INSURANCE. HOWEVER, THERE COULD BE NO LIABILITY FOR THE BREACH OF SUCH A STIPULATION UNLESS THE STIPULATION IMPOSED A LEGAL LIABILITY ON THE NATIONAL GUARD FUNDS THEN CURRENT. HEREINABOVE SHOWN, SUCH A STIPULATION WAS IN EXCESS OF THE AUTHORITY OF THE CONTRACTING OFFICER AND THEREFORE VOID. SEE FLOYD'S ACCEPTANCES, 7 WALL. 666. ..END :