A-61431, JUNE 5, 1935, 14 COMP. GEN. 875

A-61431: Jun 5, 1935

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IS A SUDDEN OR UNEXPECTED HAPPENING. A CONTRACTOR IS CHARGED WITH KNOWLEDGE NOT ONLY OF STATUTORY REQUIREMENTS. THE GOVERNMENT IS NOT BOUND BY THE UNAUTHORIZED ACT OF SUCH AGENT. HAVE FILED A CLAIM IN THE AMOUNT OF $303.06 ALLEGED TO BE DUE ON ACCOUNT OF CERTAIN DEDUCTIONS MADE IN PAYMENT OF INVOICES. THE RECORD SHOWS THAT EARLY IN DECEMBER 1933 THE CLAIMANTS WERE REQUESTED TO SUBMIT A BID ON CANVAS GLOVES TO BE FURNISHED THE FEDERAL CIVIL WORKS ADMINISTRATION AND THE CITY OF CHICAGO. THE BID PRICE WAS 98 CENTS PER DOZEN PAIRS. WHICH WAS ACCEPTED. IT IS REPORTED THAT BIDS WERE SOLICITED BY TELEPHONE AT THAT TIME. IT IS REPORTED THAT THE CLAIMANT COMPANY ENTERED INTO AN AGREEMENT WITH THE MANUFACTURER OF THE GLOVES WHEREBY THE CLAIMANTS WERE ENTITLED TO PURCHASE FROM SAID MANUFACTURER THE ENTIRE OUTPUT OF ITS FACTORY AND WHEN.

A-61431, JUNE 5, 1935, 14 COMP. GEN. 875

CONTRACTS - ADVERTISING - EMERGENCY CONDITIONS AN EMERGENCY JUSTIFYING A FAILURE TO ADVERTISE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, IS A SUDDEN OR UNEXPECTED HAPPENING; AN UNFORESEEN OCCURRENCE OR CONDITION; A PERPLEXING CONTINGENCY OR COMPLICATION OF CIRCUMSTANCES; A SUDDEN OR UNEXPECTED OCCASION FOR ACTION; AN EXIGENCY. KNOWN, NORMAL, AND RECOGNIZED CONDITIONS PROPERLY TO BE ANTICIPATED, SUCH AS COLD WEATHER IN THE NORTHERN PART OF THE UNITED STATES DURING THE WINTER, DO NOT CONSTITUTE AN EMERGENCY AND MAY NOT BE CONVERTED INTO AN EMERGENCY CONDITION MERELY BY A DECISION TO ACT THEREON. A CONTRACTOR IS CHARGED WITH KNOWLEDGE NOT ONLY OF STATUTORY REQUIREMENTS, BUT WITH LIMITATIONS UPON THE AUTHORITY OF AN AGENT OF THE GOVERNMENT WITH WHOM HE DEALS, AND WHEN SUCH AGENT EXCEEDS HIS AUTHORITY BY UNDERTAKING TO CONTRACT IN VIOLATION OF STATUTORY REQUIREMENTS, THE GOVERNMENT IS NOT BOUND BY THE UNAUTHORIZED ACT OF SUCH AGENT.

DECISION BY COMPTROLLER GENERAL MCCARL, JUNE 5, 1935:

CRERAR, ADAMS AND CO. HAVE FILED A CLAIM IN THE AMOUNT OF $303.06 ALLEGED TO BE DUE ON ACCOUNT OF CERTAIN DEDUCTIONS MADE IN PAYMENT OF INVOICES, TO ADJUST THE PRICE OF COTTON GLOVES FURNISHED THE FEDERAL CIVIL WORKS ADMINISTRATION, COOK COUNTY, ILL., ON PROJECT NO. 240 AND OTHERS, ON EMERGENCY PURCHASE ORDERS.

THE RECORD SHOWS THAT EARLY IN DECEMBER 1933 THE CLAIMANTS WERE REQUESTED TO SUBMIT A BID ON CANVAS GLOVES TO BE FURNISHED THE FEDERAL CIVIL WORKS ADMINISTRATION AND THE CITY OF CHICAGO, LL., FOR USE OF MEN EMPLOYED ON CIVIL WORKS ADMINISTRATION PROJECTS, THE GLOVES TO BE PAID FOR BY THE CIVIL WORKS ADMINISTRATION AND THE CITY OF CHICAGO ON A 50 50 BASIS. THE BID PRICE WAS 98 CENTS PER DOZEN PAIRS, WHICH WAS ACCEPTED, AND AT THAT PRICE THE COMPANY FURNISHED 51,805 PAIRS OF GLOVES. IT IS REPORTED THAT BIDS WERE SOLICITED BY TELEPHONE AT THAT TIME, ALTHOUGH THE EXTENT OF SUCH SOLICITATION DOES NOT APPEAR. IT IS REPORTED THAT THE CLAIMANT COMPANY ENTERED INTO AN AGREEMENT WITH THE MANUFACTURER OF THE GLOVES WHEREBY THE CLAIMANTS WERE ENTITLED TO PURCHASE FROM SAID MANUFACTURER THE ENTIRE OUTPUT OF ITS FACTORY AND WHEN, ON OR ABOUT DECEMBER 19, 1933, THE CIVIL WORKS ADMINISTRATION UNDERTOOK THE PURCHASE OF ADDITIONAL GLOVES, THE CLAIMANTS INFORMED THE PURCHASING OFFICER THAT THE PRICE WAS ADVANCED TO $1.15 PER DOZEN PAIRS. IT IS STATED FURTHER THAT AT THAT TIME THE CLAIMANTS HAD CORNERED THE MARKET, OTHER DEALERS WERE NOT IN POSITION TO FURNISH GLOVES, AND THE MANUFACTURER REFUSED TO SUBMIT A BID. THE FEDERAL CIVIL WORKS ADMINISTRATION PURCHASED THE GLOVES AND ISSUED "EMERGENCY PURCHASE ORDERS" THEREFOR. ATTACHED TO THE EMERGENCY PURCHASE ORDER FORMS WERE FORMS FOR AN "EMERGENCY PURCHASE STATEMENT" TO BE USED FOR CERTIFICATION AS TO THE EMERGENCY JUSTIFYING INFORMAL SOLICITATION OF BIDS OR PURCHASES WITHOUT COMPETITION. THE EMERGENCY PURCHASE STATEMENTS ATTACHED TO VOUCHERS FORWARDED TO THIS OFFICE ARE TO THE EFFECT THAT THE GLOVES WERE NECESSARY TO KEEP MEN AT WORK. 42,785 PAIRS OF GLOVES WERE DELIVERED, ONE-HALF CHARGEABLE TO THE FEDERAL CIVIL WORKS ADMINISTRATION OF ILLINOIS ON THESE SO-CALLED EMERGENCY PURCHASES.

UPON PRESENTATION OF INVOICES COVERING 21,392 1/2 PAIRS OF GLOVES, THE MATTER WAS CONSIDERED BY THE BOARD OF PRICE REVIEW OF THE FEDERAL CIVIL WORKS ADMINISTRATION, ILLINOIS, WHICH APPROVED PAYMENT AT 98 CENTS PER DOZEN PAIRS. THE MATTER THEN WAS SUBMITTED TO THE BOARD OF CLAIMS OF THE FEDERAL CIVIL WORKS ADMINISTRATION OF ILLINOIS, WHICH, IN TURN, RECOMMENDED PAYMENT OF 98 CENTS PER DOZEN PAIRS. THE CLAIMANTS ACCEPTED PAYMENT AT THAT PRICE UNDER PROTEST AND THE PRESENT CLAIM WAS FILED FOR $303.06, AS THE DIFFERENCE BETWEEN THE PRICE AT 98 CENTS AND $1.15 PER DOZEN PAIRS. IT IS SHOWN BY THE RECORD THAT THE COST OF THESE GLOVES, FOR WHICH THE CLAIMANTS PROPOSED TO CHARGE THE GOVERNMENT $1.15, AND THE COST TO THE CLAIMANTS OF THE 51,805 PAIRS THERETOFORE FURNISHED WERE IDENTICAL. IT APPEARS, ALSO, THAT THE DELIVERY OF THE 42,785 PAIRS OF GLOVES ORDERED ON DECEMBER 19, 1933, WAS NOT COMPLETED UNTIL JANUARY 6, 1934, 18 DAYS LATER, AND THAT THE SO-CALLED EMERGENCY PURCHASE ORDERS WERE ISSUED FROM TIME TO TIME AS ADDITIONAL GLOVES WERE NEEDED OVER A PERIOD OF 18 DAYS.

THE FEDERAL CIVIL WORKS ADMINISTRATION WAS ESTABLISHED BY EXECUTIVE ORDER NO. 6420-B, NOVEMBER 9, 1933, UNDER AUTHORITY OF TITLE II OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 195, ET SEQ., FOR THE PURPOSE OF ADMINISTERING A PROGRAM OF PUBLIC WORKS AS OUTLINED IN SAID EXECUTIVE ORDER. NEITHER THE ACT UNDER AUTHORITY OF WHICH IT WAS CREATED, NOR THE EXECUTIVE ORDER, SUPRA, CONFERRED UPON THE OFFICERS OR EMPLOYEES OF THE CIVIL WORKS ADMINISTRATION AUTHORITY TO ENTER INTO CONTRACTS FOR SUPPLIES OR MATERIALS INVOLVING THE EXPENDITURE OF FEDERAL FUNDS IN ANY OTHER MANNER THAN IN CONFORMITY WITH THE REQUIREMENTS OF THE LAW CONTROLLING THE LETTING OF CONTRACTS OF THE UNITED STATES. FURTHERMORE, THE MANUAL OF FINANCIAL PROCEDURE, ACCOUNTING, AND REPORTING OF THE FEDERAL CIVIL WORKS ADMINISTRATION, SECTION VI, PARAGRAPH 15, PROVIDES:

ITEM 15. CONTRACT--- WHEN VOID.---A CONTRACT PURCHASE, OR LEASE MADE ON BEHALF OF THE CIVIL WORKS ADMINISTRATION BY AN UNAUTHORIZED PERSON, OR WHICH EXCEEDS THE AUTHORITY DELEGATED TO THE CONTRACTING OFFICER, OR WHICH CONFLICTS WITH EXISTING LAW, IS VOID AND WITHOUT LEGAL EFFECT AS AGAINST THE UNITED STATES. IT SHOULD BE BORNE IN MIND THAT THE CONTRACTING OFFICER IS ACTING AS AN AGENT OF THE UNITED STATES OF AMERICA.

IT THUS IS APPARENT THAT THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO ENTER INTO CONTRACTS EXCEPT IN ACCORDANCE WITH THE LAW, SECTION 3709, REVISED STATUTES, AND RELATED STATUTES.

SECTION 3709, REVISED STATUTES, REQUIRES THAT ALL PURCHASES AND CONTRACTS FOR SUPPLIES OR SERVICES SHALL BE MADE BY ADVERTISING A SUFFICIENT TIME PREVIOUSLY FOR PROPOSALS RESPECTING THE SAME, EXCEPT WHEN THE PUBLIC EXIGENCIES REQUIRE THE IMMEDIATE DELIVERY OF THE ARTICLES OR PERFORMANCE OF THE SERVICE, AND IN THE ABSENCE OF SUCH AN EMERGENCY AS CONTEMPLATED BY THE STATUTE, PURCHASE BY ANY OTHER MEANS THAN ADVERTISING FOR PROPOSALS A SUFFICIENT TIME PREVIOUSLY, IS UNAUTHORIZED.

WHILE EMERGENCY PURCHASE ORDER FORMS WERE ISSUED IN THE PRESENT INSTANCE AND STATEMENTS WERE TO THE EFFECT THAT THE MATERIAL (GLOVES) WAS NECESSARY TO KEEP MEN AT WORK ON VARIOUS PROJECTS, THE MERE STATEMENT OF THE PURCHASING OFFICER OR EMPLOYEE IS NOT SUFFICIENT TO ESTABLISH THE EXISTENCE OF AN EMERGENCY WITHIN CONTEMPLATION OF THE STATUTE, NOR MAY AN EMERGENCY BE ADMINISTRATIVELY CREATED AND USED AS A BASIS FOR MAKING AWARD OF A CONTRACT OR PURCHASE OF MATERIALS OR SUPPLIES WITHOUT ADVERTISING FOR COMPETITION AS REQUIRED BY LAW. 14 COMP. GEN. 366; 3 COMP. DEC. 470. EMERGENCY JUSTIFYING A FAILURE TO ADVERTISE IS A SUDDEN OR UNEXPECTED HAPPENING; AN UNFORESEEN OCCURRENCE OR CONDITION; SPECIFICALLY, A PERPLEXING CONTINGENCY OR COMPLICATION OF CIRCUMSTANCES; A SUDDEN OR UNEXPECTED OCCASION FOR ACTION; AN EXIGENCY. UNITED STATES V. SHERIDAN- KIRK CONTRACTING CO., 149 FED. 809. THIS OFFICE HAD OCCASION TO ADVISE THE FEDERAL CIVIL WORKS ADMINISTRATOR IN A-51602, DECEMBER 28, 1933, THAT SO-CALLED EMERGENCY PURCHASES--- PURCHASES MADE WITHOUT EMPLOYING THE SAFEGUARD OF COMPETITIVE BIDS AS REQUIRED BY SECTION 3709, REVISED STATUTES--- WERE JUSTIFIED ONLY WHERE A HAPPENING THAT COULD NOT REASONABLY HAVE BEEN ANTICIPATED REQUIRED, IN THE PUBLIC INTEREST, THE ACQUIRING OF THOSE THINGS ESSENTIAL TO MEET SUCH EMERGENCY. THEN ONLY MIGHT THIS STATUTORY SAFEGUARD BE DISREGARDED--- AND EVEN THEN ONLY IN THE ACQUIRING OF THOSE THINGS ESSENTIAL TO MEET THE EMERGENCY. AN EMERGENCY CONDITION WITHIN THE MEANING AND PURPOSE OF THE STATUTE MUST, IN GENERAL, BE THE RESULT OF AN UNEXPECTED HAPPENING AND, CONSEQUENTLY, A KNOWN CONDITION MAY NOT BE CONVERTED INTO AN EMERGENCY CONDITION MERELY BY A DECISION TO ACT THEREON.

IN THIS INSTANCE THE WORK ON WHICH THE MEN WERE ENGAGED WAS BEING DONE IN THE CITY OF CHICAGO AND COOK COUNTY, ILL., IN THE MONTH OF DECEMBER. WOULD APPEAR THAT COLD WEATHER WAS NORMALLY TO BE EXPECTED AND FORESEEN AND ADEQUATE PREPARATION TO MEET SUCH COLD WEATHER COULD AND SHOULD HAVE BEEN MADE IF NECESSARY. THE RECORD DISCLOSES THAT APPROXIMATELY 52,000 PAIRS OF GLOVES WERE PURCHASED PRIOR TO THE PERIOD HERE INVOLVED, LIKEWISE ON EMERGENCY PURCHASE ORDERS, AND IT IS EVIDENT THAT THE CONTINUING REQUIREMENT FOR GLOVES THROUGHOUT THE NORMAL COLD WEATHER PERIOD WAS KNOWN FOR SOME TIME PRIOR TO THE PURCHASE ORDERS HERE INVOLVED. SINCE THIS WAS TRUE, MANIFESTLY NO EMERGENCY EXISTED AS OUTLINED ABOVE, JUSTIFYING DISREGARD OF STATUTORY REQUIREMENTS OF ADVERTISING A SUFFICIENT TIME PREVIOUSLY FOR PROPOSALS AS REQUIRED BY SECTION 3709, REVISED STATUTES, AND THE PURCHASING OFFICER EXCEEDED HIS AUTHORITY IN MAKING THE PURCHASES HERE INVOLVED WITHOUT COMPLIANCE WITH THE PROVISIONS OF SAID STATUTE. THE CLAIMANTS WERE CHARGED WITH KNOWLEDGE NOT ONLY OF THE REQUIREMENTS OF THE STATUTE, BUT LIKEWISE WITH THE LIMITATIONS UPON THE AUTHORITY OF THE GOVERNMENT REPRESENTATIVE WHO UNDERTOOK TO PURCHASE FROM THEM IN DISREGARD OF LEGAL REQUIREMENTS. WHITESIDE ET AL. V. UNITED STATES, 93 U.S. 247; ALLIANCE CONSTRUCTION CO. V. UNITED STATES, CT.CLS. NO. 42443, JUNE 5, 1934; SCHNEIDER V. UNITED STATES, 19 CT.CLS. 547.

IT IS NOT NECESSARY AT THIS TIME TO CONSIDER WHAT EFFECT THE CORNERING OF THE SUPPLY OF GLOVES BY THE CLAIMANTS MIGHT OTHERWISE HAVE UPON THEIR RIGHTS AGAINST THE GOVERNMENT, BUT SEE IN THIS CONNECTION MCMULLEN V. HOFFMAN, 174 U.S. 648; REX V. DE BERENGER, 3 M. AND S. 67, 72, CITED IN SCOTT V. BROWN (1892) 2 Q.B.D. 724; AND MORGAN V. GORE, 62 A.L.R. 223. THE CLAIMANTS HAVE NO RIGHTS AGAINST THE GOVERNMENT AS CONTRACTORS AND ARE RELEGATED TO ANY RIGHTS THEY MAY HAVE TO PAYMENT ON A QUANTUM VALEBAT BASIS. THE RECORD SHOWS THAT THE CLAIMANTS HAD BEEN FURNISHING SIMILAR GLOVES AT A PRICE OF 98 CENTS PER DOZEN PAIRS AND THAT THERE WAS NO ADVANCE OF PRICE TO THE CLAIMANTS FOR THE GLOVES DELIVERED IN THIS INSTANCE OVER THE FORMER PRICE. THE PRICE OF 98 CENTS PER DOZEN PAIRS, THEREFORE, MAY BE ACCEPTED AS A REASONABLE PRICE FOR THE GLOVES DELIVERED. IT APPEARS THAT THE GLOVES HAVE ACTUALLY BEEN DELIVERED TO THE FEDERAL CIVIL WORKS ADMINISTRATION AND THAT THE CLAIMANTS HAVE BEEN PAID THE FULL AMOUNT OF THE PURCHASE PRICE. THE CLAIM FOR ADDITIONAL PAYMENT IN THE AMOUNT OF $303.06 MUST BE AND IS DISALLOWED.