A-50372, AUGUST 11, 1933, 13 COMP. GEN. 46

A-50372: Aug 11, 1933

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CONTRACTS - INCREASED COST OF PERFORMANCE - NATIONAL INDUSTRIAL RECOVERY ACT THE UNITED STATES AS A CONTRACTOR IS NOT RESPONSIBLE FOR ITS ACTS IN ITS SOVEREIGN CAPACITY AND UNDER EXISTING LAW APPROPRIATIONS ARE NOT AVAILABLE FOR MAKING PAYMENTS TO CONTRACTORS IN EXCESS OF THE COMPENSATION STIPULATED IN SUCH CONTRACTS. WHETHER SUCH INCREASE IN THE COST OF PERFORMANCE IS DUE TO SUBSEQUENTLY ENACTED STATUTES. AS FOLLOWS: REFERENCE IS MADE TO DEPARTMENT OF JUSTICE CONTRACT NO. ENCLOSED ARE PHOTOSTAT COPIES OF LETTERS OF JULY 27 AND JULY 28. ADVISING THAT AS OF JULY 31ST THEIR CONTRACT PRICE OF 2 5/8 CENTS PER YARD WILL BE WITHDRAWN AND THAT OWING TO ADDITIONAL COSTS UNDER THE NATIONAL RECOVERY ACT UNDER WHICH THEY STARTED TO OPERATE JULY 31ST.

A-50372, AUGUST 11, 1933, 13 COMP. GEN. 46

CONTRACTS - INCREASED COST OF PERFORMANCE - NATIONAL INDUSTRIAL RECOVERY ACT THE UNITED STATES AS A CONTRACTOR IS NOT RESPONSIBLE FOR ITS ACTS IN ITS SOVEREIGN CAPACITY AND UNDER EXISTING LAW APPROPRIATIONS ARE NOT AVAILABLE FOR MAKING PAYMENTS TO CONTRACTORS IN EXCESS OF THE COMPENSATION STIPULATED IN SUCH CONTRACTS, WHETHER SUCH INCREASE IN THE COST OF PERFORMANCE IS DUE TO SUBSEQUENTLY ENACTED STATUTES, OR OTHERWISE.

COMPTROLLER GENERAL MCCARL TO THE ATTORNEY GENERAL, AUGUST 11, 1933:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 3, 1933, AS FOLLOWS:

REFERENCE IS MADE TO DEPARTMENT OF JUSTICE CONTRACT NO. J-2C-820 BETWEEN THE U.S. PENITENTIARY, ATLANTA, GEORGIA, AND THE DELTA FINISHING COMPANY, FRANKFORD, PHILADELPHIA, PA., FOR BLEACHING AND SHRINKING BY THE SANFORIZING PROCESS 500,000 YARDS OF DUCK, TRANSMITTED TO THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE ON FEBRUARY 9, 1933.

ENCLOSED ARE PHOTOSTAT COPIES OF LETTERS OF JULY 27 AND JULY 28, 1933, RECEIVED FROM THE DELTA FINISHING COMPANY, ADVISING THAT AS OF JULY 31ST THEIR CONTRACT PRICE OF 2 5/8 CENTS PER YARD WILL BE WITHDRAWN AND THAT OWING TO ADDITIONAL COSTS UNDER THE NATIONAL RECOVERY ACT UNDER WHICH THEY STARTED TO OPERATE JULY 31ST, THEY WILL CHARGE US FOR THE BALANCE OF THE CONTRACT AN INCREASE OF APPROXIMATELY 35 PERCENT.

THIS INCREASE WILL PROPORTIONATELY RAISE OUR QUOTATION TO THE WAR DEPARTMENT FOR WHOM WE ARE MANUFACTURING THIS YARDAGE. I AM ADVISED BY THE CONTRACTING OFFICER OF THE PHILADELPHIA QUARTERMASTER DEPOT THAT THEY HAVE NO AUTHORITY TO ACCEPT AN INCREASE IN OUR QUOTATION TO THEM ON THIS MATERIAL AND THAT THEY HAVE NO AVAILABLE MONEY FROM WHICH TO PAY THIS INCREASE.

THIS MATTER IS SUBMITTED FOR A RULING FROM YOU AS TO OUR PROCEDURE WITH THE DELTA FINISHING COMPANY AND THE PHILADELPHIA QUARTERMASTER DEPOT. EARLY REPLY WILL BE GREATLY APPRECIATED.

THE DELTA FINISHING COMPANY STATED IN ITS LETTER OF JULY 28, 1933, THAT UP TO THAT TIME IT HAD BLEACHED AND SHRUNK 238,000 YARDS OF DUCK AS PROVIDED IN ITS CONTRACT OF JANUARY 20, 1933, AND STATED THAT COMMENCING MONDAY, JULY 31, 1933, IT HAD BECOME IMPERATIVE TO OPERATE ITS PLANT UNDER THE NATIONAL RECOVERY ACT APPROVED JUNE 16, 1933 (48 STAT. 195), "NECESSITATING AN INCREASED COST TO US ON THE, APPROXIMATELY, 262,000 YARDS ADDITIONAL COMPLETING THE CONTRACT.' AS STATED BY YOU, THE COMPANY ESTIMATED IN SAID LETTER THAT ITS COSTS WOULD BE INCREASED APPROXIMATELY 35 PERCENT AND REQUESTED THAT ITS CONTRACT PRICE BE REVISED TO TAKE CARE OF THE DIFFERENCE BETWEEN THE OLD AND THE NEW COST OF PERFORMANCE.

THERE IS NO EXISTING LEGAL AUTHORITY FOR ANY MODIFICATION OF THE TERMS OF THE CONTRACT OF JANUARY 20, 1933, INCREASING THE PRICE TO BE PAID BY THE UNITED STATES TO THE DELTA FINISHING COMPANY BECAUSE OF THE OPERATION OF THE NATIONAL RECOVERY ACT OF JUNE 16, 1933. (SEE 8 COMP. GEN. 25 AND THE CASES THERE CITED: HOROWITZ V. UNITED STATES, 267 U.S. 458; MAXWELL V. UNITED STATES, 3 FED./2D) 906.)

THE CONTRACT OF JANUARY 20, 1933, BETWEEN THE UNITED STATES AND THE DELTA FINISHING COMPANY CONSTITUTES AN OBLIGATION BINDING ON THE COMPANY, AND IT MAY NOT WITHDRAW THEREFROM WITHOUT RESULTING LIABILITY TO THE UNITED STATES FOR EXCESS COST, IF ANY, WHICH MAY BE OCCASIONED THE GOVERNMENT BY SUCH DEFAULT. YOU ARE ADVISED THAT THERE IS NO LEGAL AUTHORITY NOW EXISTING TO USE APPROPRIATED PUBLIC MONEY TO PAY ANOTHER PRICE THAN THE PRICE FIXED BY THE CONTRACT OF JANUARY 20, 1933.