A-6350, A-7704, APRIL 23, 1925, 4 COMP. GEN. 885

A-6350,A-7704: Apr 23, 1925

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IS NOT APPLICABLE TO BIDS OR PROPOSALS WHICH ARE INTENDED AS PRELIMINARY TO CONTRACTS THEREAFTER TO BE FORMALLY EXECUTED. NEITHER WILL SUSPENSIONS OR DISALLOWANCES BE MADE BECAUSE OF THE LACK OF SUCH EVIDENCE IN COMPLETED CONTRACTS FOR WHICH PAYMENTS HAVE BEEN PROPERLY MADE AND THE GOVERNMENT HAS RECEIVED FULL VALUE. HEREAFTER THE AFFIRMATIVE EVIDENCE OF AUTHORITY ABOVE INDICATED WILL NOT BE REQUIRED IN CONTRACTS AMOUNTING TO LESS THAN $1. 000 IF THE CONTRACTING OFFICER ON THE PART OF THE UNITED STATES WILL CERTIFY THAT THE SIGNING OFFICERS ARE THE SAME OFFICERS WHO ARE AUTHORIZED AND DO SIGN SIMILAR CONTRACTS ON BEHALF OF THE CORPORATION WITH THE PUBLIC GENERALLY. 3 COMP. 1925: THERE IS FOR CONSIDERATION THE MATTER OF THE EXTENT WHICH THIS OFFICE REASONABLY.

A-6350, A-7704, APRIL 23, 1925, 4 COMP. GEN. 885

CONTRACTS - AUTHORITY TO SIGN THE REQUIREMENT THAT THE AUTHORITY OF AN AGENT TO BIND THE CORPORATION FOR WHICH HE PURPORTS TO ACT IN SIGNING A CONTRACT MUST BE AFFIRMATIVELY ESTABLISHED IN EACH INSTANCE BY FILING WITH THE CONTRACT EXTRACTS FROM THE ARTICLES OF INCORPORATION, BY-LAWS, OR MINUTES OF THE BOARD OF DIRECTORS, DULY CERTIFIED UNDER SEAL OF THE CORPORATION, IS NOT APPLICABLE TO BIDS OR PROPOSALS WHICH ARE INTENDED AS PRELIMINARY TO CONTRACTS THEREAFTER TO BE FORMALLY EXECUTED; NEITHER WILL SUSPENSIONS OR DISALLOWANCES BE MADE BECAUSE OF THE LACK OF SUCH EVIDENCE IN COMPLETED CONTRACTS FOR WHICH PAYMENTS HAVE BEEN PROPERLY MADE AND THE GOVERNMENT HAS RECEIVED FULL VALUE. HEREAFTER THE AFFIRMATIVE EVIDENCE OF AUTHORITY ABOVE INDICATED WILL NOT BE REQUIRED IN CONTRACTS AMOUNTING TO LESS THAN $1,000 IF THE CONTRACTING OFFICER ON THE PART OF THE UNITED STATES WILL CERTIFY THAT THE SIGNING OFFICERS ARE THE SAME OFFICERS WHO ARE AUTHORIZED AND DO SIGN SIMILAR CONTRACTS ON BEHALF OF THE CORPORATION WITH THE PUBLIC GENERALLY. 3 COMP. GEN. 467; 4 ID. 38, MODIFIED.

DECISION BY COMPTROLLER GENERAL MCCARL, APRIL 23, 1925:

THERE IS FOR CONSIDERATION THE MATTER OF THE EXTENT WHICH THIS OFFICE REASONABLY, AND CONSISTENT WITH GOOD ACCOUNTING AND WITHOUT JEOPARDY TO THE INTERESTS OF THE UNITED STATES, MAY ACCEPT THE CERTIFICATES OF GOVERNMENT CONTRACTING OFFICERS AS TO THE AUTHORITY OF AGENTS TO BIND CORPORATIONS FOR WHICH THEY PURPORT TO ACT WHEN SUCH AGENTS UNDERTAKE TO SIGN CONTRACTS OR AGREEMENTS ENTERED INTO BETWEEN SUCH CORPORATIONS AND SUCH GOVERNMENT CONTRACTING OFFICERS, ACTING FOR AND ON BEHALF OF THE UNITED STATES. THE REQUIREMENTS DO NOT AFFECT BIDS AND PROPOSALS AS SUCH, BUT HAVE REFERENCE ONLY TO AN ACCEPTED BID OR PROPOSAL AS A BASIS OF A FORMAL OR INFORMAL CONTRACT.

THE GENERAL REQUIREMENT HAS BEEN THAT THE AUTHORITY OF AN AGENT TO BIND THE CORPORATION FOR WHICH HE PURPORTS TO ACT MUST BE AFFIRMATIVELY ESTABLISHED IN EACH INSTANCE, THE USUAL METHOD OF ESTABLISHING SUCH AUTHORITY BEING BY FILING WITH THE CONTRACT EXTRACTS FROM THE ARTICLES OF INCORPORATION, BY-LAWS, OR THE MINUTES OF THE BOARD OF DIRECTORS, DULY CERTIFIED BY THE CUSTODIAN OF SUCH RECORDS UNDER THE CORPORATE SEAL. FOR THE REASONS GIVEN IN DECISIONS OF JANUARY 21, 1924, 3 COMP. GEN. 436; FEBRUARY 4, 1924, 3 COMP. GEN. 467; AND JULY 10, 1924, 4 COMP. GEN. 38, IT WAS PROVIDED THAT AN AFFIRMATIVE SHOWING IN EACH INSTANCE OF THE AUTHORITY OF THE AGENT TO BIND THE CORPORATION WOULD NOT BE INSISTED UPON IN THOSE CASES IN WHICH THE GOVERNMENT CONTRACTING OFFICER CERTIFIED, WITH RESPECT TO CONTRACTS OF $500 OR LESS ENTERED INTO WITH SUCH AGENTS, THAT HE HAD SATISFIED HIMSELF THAT SAID AGENT HAD THE NECESSARY AUTHORITY TO BIND THE CORPORATION, BEING THE SAME AGENT WHO SIGNS CONTRACTS ENTERED INTO WITH THE PUBLIC GENERALLY.

IT APPEARS THAT THERE HAS BEEN SOME MISUNDERSTANDING IN THE APPLICATION OF THE DECISIONS REFERRED TO, SUPRA, AND OTHERS OF THE SAME PURPORT, IN THAT THE REQUIREMENT HAS BEEN SOUGHT TO BE EXACTED WITH RESPECT TO BIDS OR PROPOSALS WHICH ARE INTENDED AS PRELIMINARY TO CONTRACTS THEREAFTER TO BE EXECUTED BY ACCEPTING A BID OR PROPOSAL OR BY A MORE FORMAL INSTRUMENT.

THE MATTER OF THE PROPER EXECUTION OF CONTRACTS ENTERED INTO WITH CORPORATIONS BY GOVERNMENT OFFICERS IS ONE OF SOME IMPORTANCE, THOUGH IN THOSE CASES WHERE EVERYTHING PROVIDED TO BE DONE UNDER A CONTRACT HAS BEEN DONE, INCLUDING THE MAKING OF PAYMENT, THE QUESTION AS TO WHETHER THE AUTHORITY OF THE AGENT TO SIGN FOR THE CORPORATION AFFIRMATIVELY APPEARS IS NOT SUCH AS TO WARRANT OTHER THAN BRINGING THE MATTER TO THE ATTENTION OF THE PROPER ADMINISTRATIVE OFFICIALS FOR INSTRUCTING AND ADVISING SUBORDINATE OFFICERS OR EMPLOYEES. SUSPENSIONS OF CREDIT, THEREFORE, SHOULD NOT BE MADE IN THE SETTLEMENTS OF DISBURSING ACCOUNTS INVOLVING PAYMENTS UNDER SUCH CONTRACTS IF THE CONTRACTS APPEAR OTHERWISE PROPER AND THE PAYMENTS PROPERLY MADE TO THE CORPORATIONS IN WHOSE BEHALF THE CONTRACTS ARE EXECUTED FOR WHICH PAYMENTS THE GOVERNMENT HAS RECEIVED FULL VALUE.

IT IS THE POLICY OF THIS OFFICE NOT TO EXACT OF THE DEPARTMENTS OR ESTABLISHMENTS OF THE GOVERNMENT, OR THOSE WHO HAVE DEALINGS WITH SAID DEPARTMENTS OR ESTABLISHMENTS, ANY REQUIREMENT WHICH IS NOT NECESSARY TO PROTECT OR SAFEGUARD THE INTERESTS OF THE UNITED STATES. THEREFORE, THE MATTER AS TO THE EXTENT TO WHICH THIS OFFICE MAY SAFELY GO IN RELAXING THE REQUIREMENT AS TO AN AFFIRMATIVE FORMAL SHOWING OF THE AUTHORITY OF AGENTS TO BIND THE CORPORATIONS WHICH THEY PURPORT TO REPRESENT, HAS BEEN THE SUBJECT OF OBSERVATION AND INVESTIGATION. IT IS BELIEVED THAT THE PRESENT REQUIREMENT AS TO AN AFFIRMATIVE FORMAL SHOWING WITH RESPECT TO ALL CONTRACTS IN EXCESS OF $500 MAY BE SOMEWHAT RELAXED. HEREAFTER THE REQUIREMENT OF SUCH AFFIRMATIVE FORMAL SHOWING WILL NOT BE EXACTED AS TO CONTRACTS OF $1,000 OR LESS. HOWEVER, THE REQUIREMENT OF THE DECISIONS CITED, SUPRA, AS TO A CERTIFICATE BY THE GOVERNMENT CONTRACTING OFFICER COVERING CONTRACTS OF $500 OR LESS, HEREAFTER WILL BE HELD TO APPLY TO CONTRACTS OF $1,000 OR LESS.