A-61572, APRIL 30, 1935, 14 COMP. GEN. 803

A-61572: Apr 30, 1935

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THERE WERE REFERRED TO THIS OFFICE CERTAIN PAPERS RELATIVE TO A SUGGESTION OF THE FLEMING-YOUNG COAL CO. TO $3.97 PER NET TON WITH A 15-CENT PER TON PENALTY IF NOT PAID WITHIN 10 DAYS AFTER THE INVOICES ARE RENDERED. IT IS STATED THAT THE FLEMING-YOUNG COAL CO. SUCH INVOICES WERE PAID BY THE POSTMASTER WITH THE RESULT THAT CREDIT HAS BEEN DISALLOWED IN HIS ACCOUNTS FOR ALL AMOUNTS IN EXCESS OF THE STIPULATED PRICE OF $2.33 PER NET TON IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. AMONG THE PAPERS SUBMITTED IS A LETTER OF APRIL 5. AS FOLLOWS: THIS IS IN ANSWER TO YOUR COMMUNICATION OF APRIL 4TH IN WHICH YOU ENCLOSE A COPY OF LETTER FROM W. " WHICH STATEMENT WAS CONTAINED IN A LETTER DATED FEBRUARY 15.

A-61572, APRIL 30, 1935, 14 COMP. GEN. 803

CONTRACTS - PURCHASE OF COAL - CODE OF FAIR COMPETITION A PROVISION IN A CONTRACT FOR FURNISHING COAL TO THE UNITED STATES REQUIRING COMPLIANCE WITH A CODE OF FAIR COMPETITION DOES NOT AUTHORIZE PAYMENT OF AN AMOUNT IN EXCESS OF THE CONTRACT PRICE.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, APRIL 30, 1935:

BY LETTERS OF APRIL 9 AND 12, 1935, FROM THE FOURTH ASSISTANT POSTMASTER GENERAL, THERE WERE REFERRED TO THIS OFFICE CERTAIN PAPERS RELATIVE TO A SUGGESTION OF THE FLEMING-YOUNG COAL CO. THAT UNDER CONTRACT DATED SEPTEMBER 13, 1934, FOR DELIVERY OF 1,200 TONS OF COAL FOR THE POST-OFFICE BUILDING AT ST. LOUIS, MO., THE AGREED PRICE SHOULD BE INCREASED FROM $2.33 PER NET TON, AS STATED IN THE CONTRACT, TO $3.97 PER NET TON WITH A 15-CENT PER TON PENALTY IF NOT PAID WITHIN 10 DAYS AFTER THE INVOICES ARE RENDERED, SUCH SUGGESTION BEING BASED ON A SCHEDULE OF CODE PRICES FILED UNDER OR ADOPTED BY THE CODE OF FAIR COMPETITION FOR THE INDUSTRY CONCERNED.

IT IS STATED THAT THE FLEMING-YOUNG COAL CO. HAS SUBMITTED ITS INVOICES SINCE THE EFFECTIVE DATE OF THE INCREASE UNDER THE CODE OF FAIR COMPETITION AT $4.12 PER TON WITH A NOTATION THAT 15 CENTS PER TON COULD BE DEDUCTED IF PAID WITHIN 10 DAYS, AND SUCH INVOICES WERE PAID BY THE POSTMASTER WITH THE RESULT THAT CREDIT HAS BEEN DISALLOWED IN HIS ACCOUNTS FOR ALL AMOUNTS IN EXCESS OF THE STIPULATED PRICE OF $2.33 PER NET TON IN ACCORDANCE WITH THE TERMS OF THE CONTRACT.

AMONG THE PAPERS SUBMITTED IS A LETTER OF APRIL 5, 1935, FROM THE LEGAL ADVISER OF THE DIVISIONAL CODE AUTHORITY NO. 32, RETAIL SOLID FUEL INDUSTRY, TO THE FLEMING-YOUNG COAL CO., AS FOLLOWS:

THIS IS IN ANSWER TO YOUR COMMUNICATION OF APRIL 4TH IN WHICH YOU ENCLOSE A COPY OF LETTER FROM W. RUFUS JACKSON, POSTMASTER, CONTAINING AMONG OTHER THINGS A REPETITION OF THE STATEMENT "A CAREFUL EXAMINATION OF THE CONTRACT FAILS TO DISCLOSE ANY PROVISION WHEREIN THE UNIT PRICE MAY BE INCREASED OR DECREASED," WHICH STATEMENT WAS CONTAINED IN A LETTER DATED FEBRUARY 15, 1935, FROM THE GENERAL ACCOUNTING OFFICE, WASHINGTON, D.C., AND DIRECTED TO THE LOCAL POSTMASTER AND WAS OFFERED AS THE BASIS FOR THE CONCLUSION THAT THE GOVERNMENT WAS NOT OBLIGED TO PAY YOU THE MINIMUM CODE PRICES WHICH HAVE BEEN DULY ESTABLISHED AND MADE EFFECTIVE IN DIVISION 32, RETAIL SOLID FUEL INDUSTRY. THE ABOVE QUESTION WAS ANSWERED FULLY IN MY LETTER TO YOU DATED MARCH 15, 1935. YOU WILL NOTE THAT THE RECENT COMMUNICATION FROM THE POSTMASTER DOES NOT CONTROVERT THE CONCLUSIONS EXPRESSED IN THAT LETTER.

INASMUCH AS YOUR CONTRACT WITH THE GOVERNMENT EXPRESSLY PROVIDES: "THE CONTRACTOR SHALL COMPLY WITH ALL PROVISIONS OF THE APPLICABLE APPROVED CODE OF FAIR COMPETITION FOR THE TRADE OR INDUSTRY OR SUBDIVISION THEREOF CONCERNED, ETC., " THE GOVERNMENT SHOULD NOT BE HEARD TO COMPLAIN THAT BY SO DOING YOU ARE OBLIGED TO CHARGE THEM A PRICE FOR COAL WHICH IS GREATER THAN THE PRICE ORIGINALLY QUOTED AND MADE SUBJECT TO SUCH CODE REGULATION.

SECTION 5 OF ARTICLE V OF THE CODE TO WHICH YOU ARE SUBJECT BECAME INCORPORATED IN YOUR AGREEMENT WITH THE GOVERNMENT BY THE ABOVE-QUOTED CONDITION OF THE CONTRACT BECAUSE (1) THE GOVERNMENT INSISTED THAT YOU WOULD AGREE TO COMPLY WITH ALL CODE PROVISIONS AS A CONDITION OF ITS ACCEPTANCE OF YOUR QUALIFICATIONS AS A BIDDER (2) IN ORDER TO OBTAIN THE AWARD THE GOVERNMENT REQUIRED THAT YOU SIGN A COMPLIANCE CERTIFICATE (3) THE CODE CONTAINING THE ABOVE REFERRED TO PROVISIONS WAS MADE EFFECTIVE ON FEBRUARY 26, 1934 BY EXECUTIVE ORDER 280, THE EFFECT OF WHICH WAS TO BIND YOU, AS A MEMBER OF THE RETAIL SOLID FUEL INDUSTRY, TO ITS SEVERAL PROVISIONS, AND LIKEWISE TO BIND THE GOVERNMENT IN THE MAKING OF ITS AGREEMENTS WHICH WERE ENTERED INTO SUBSEQUENT TO THE EFFECTIVE DATE OF THE CODE, WHICH IN THIS CASE WAS ON SEPTEMBER 13, 1934.

THIS AUTHORITY HAS INSISTED ON FULL AND COMPLETE COMPLIANCE FROM OTHER RESPONDENTS IN LIKE CASES, AND MUST REITERATE OUR INSISTENCE ON YOUR CONTINUED COMPLIANCE IN THE OBSERVANCE OF THE MINIMUM COST PRICES WHICH HAVE BEEN HERETOFORE DULY ESTABLISHED BY GOVERNMENT SUPERVISION AND SANCTION AND NOW EFFECTIVE IN DIVISION 32.

A CONTRACT WITH THE UNITED STATES REQUIRES A CONTRACTOR TO PERFORM IN ACCORDANCE WITH ITS TERMS OR TO PAY THE UNITED STATES ANY DAMAGES RESULTING FROM DEFAULT IN PERFORMANCE. UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88; PURCELL ENVELOPE CO. V. UNITED STATES, 249 U.S. 318; SIMPSON V. UNITED STATES, 172 U.S. 372; AND BRAWLEY V. UNITED STATES, 96 U.S. 168. THE CONTRACT IN THIS CASE DOES NOT AUTHORIZE PAYMENT OF ANY AMOUNT IN EXCESS OF THE CONTRACT PRICE.

WHILE IT IS TRUE, AS SUGGESTED IN THE ABOVE QUOTED LETTER OF APRIL 5, 1935, THAT THE CONTRACT REQUIRED THE CONTRACTOR TO COMPLY WITH ALL PROVISIONS OF THE APPLICABLE APPROVED CODE OF FAIR COMPETITION--- IN ACCORDANCE WITH EXECUTIVE ORDER NO. 6646 OF MARCH 14, 1934--- SUCH REQUIREMENT OF COMPLIANCE WITH THE CODE DOES NOT INCLUDE AUTHORITY TO INCREASE THE PRICES STIPULATED IN THE CONTRACT TO BE PAID BY THE UNITED STATES IN EVENT THERE HAD BEEN OR SHOULD BE FILED, APPROVED, OR BE PLACED IN GENERAL EFFECT, NOTWITHSTANDING SECTION 3 OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 195, A UNIFORM SCHEDULE OF PRICES. THE APPLICABLE APPROVED CODE OF FAIR COMPETITION PERTAINS TO OTHER MATTERS IN ADDITION TO PRICES AND IT IS AS TO THESE OTHER MATTERS THAT THE CONTRACTOR MUST COMPLY IN THE PERFORMANCE OF HIS CONTRACT WITH THE UNITED STATES, AND NOWHERE UNDER THE APPLICABLE CODE IS THERE ANY OBLIGATION ON EITHER THE CONTRACTOR OR THE UNITED STATES TO CHARGE OR PAY ANY AMOUNT FOR COAL DELIVERED UNDER THE CONTRACT IN QUESTION IN EXCESS OF THE PRICES STIPULATED THEREIN.