A-71036, MARCH 27, 1936, 15 COMP. GEN. 861

A-71036: Mar 27, 1936

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CONTRACTS - DELIVERIES - INCREASED FREIGHT RATES PAYMENT TO A CONTRACTOR OF AN AMOUNT REPRESENTING INCREASE IN FREIGHT RATES IN ADDITION TO THE CONTRACT PRICE OF ARTICLES DELIVERED IS UNAUTHORIZED IN THE ABSENCE OF A CONTRACT PROVISION THEREFOR NOTWITHSTANDING APPROVAL OF SAID RATES BY THE INTERSTATE COMMERCE COMMISSION AND DELAY IN AWARD ON ACCOUNT OF THE NONAVAILABILITY OF APPROPRIATED FUNDS. NOTWITHSTANDING THAT WE WERE THE LOWEST BIDDERS. THE AWARD OR CONTRACT OR ORDER WOULD HAVE BEEN PASSED TO US ON OR ABOUT MARCH 23RD/35. SHIPMENT WOULD HAVE BEEN MADE PROMPTLY. AN EMERGENCY CHARGE WHICH WAS ALLOWED BY THE INTERSTATE COMMERCE COMMISSION. WAS ADDED TO THE COST OF THE MERCHANDISE. THERE CERTAINLY IS A LEGAL BASIS FOR THE GOVERNMENT TO REIMBURSE US.

A-71036, MARCH 27, 1936, 15 COMP. GEN. 861

CONTRACTS - DELIVERIES - INCREASED FREIGHT RATES PAYMENT TO A CONTRACTOR OF AN AMOUNT REPRESENTING INCREASE IN FREIGHT RATES IN ADDITION TO THE CONTRACT PRICE OF ARTICLES DELIVERED IS UNAUTHORIZED IN THE ABSENCE OF A CONTRACT PROVISION THEREFOR NOTWITHSTANDING APPROVAL OF SAID RATES BY THE INTERSTATE COMMERCE COMMISSION AND DELAY IN AWARD ON ACCOUNT OF THE NONAVAILABILITY OF APPROPRIATED FUNDS, THE DELAY NOT HAVING BEEN BEYOND THE PERIOD PERMITTED BY THE CONTRACTOR FOR ACCEPTANCE OF THE BID.

COMPTROLLER GENERAL MCCARL TO S. S. MACK, MARCH 27, 1936:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER DATED NOVEMBER 14, 1935, REQUESTING REVIEW OF SETTLEMENT DATED NOVEMBER 13, 1935, WHICH DISALLOWED YOUR CLAIM FOR $2.60 REPRESENTING AN AMOUNT ASSERTED TO BE DUE AS AN EMERGENCY CHARGE OF 3 CENTS PER HUNDRED POUNDS IN EXCESS OF THE CONTRACT PRICE PAID TO THE CARRIER IN CONNECTION WITH THE SHIPMENT OF 8,670 POUNDS OF JAM, FURNISHED THE QUARTERMASTER, FORT WILLIAMS, MAINE, UNDER BID DATED MARCH 18, 1935, AND ACCEPTANCE BY PURCHASE ORDER NO. 943, DATED APRIL 12, 1935, REFERRED TO AS CONTRACT NO. W-155 QM-ECF-305.

YOU STATE IN YOUR LETTER OF NOVEMBER 14, 1935, IN PART, AS FOLLOWS:

CIRCULAR PROPOSAL, INVITATION OR BID, ISSUED BY THE QUARTERMASTER DEPOT AT BOSTON, MASS., OPENED ON MARCH 19TH/35. HOWEVER, NO AWARD COULD BE MADE TO US, NOTWITHSTANDING THAT WE WERE THE LOWEST BIDDERS, UNTIL THE "AVAILABILITY OF APPROPRIATE FUNDS.'

IF THE QUARTERMASTER HAD APPROPRIATE FUNDS, THE AWARD OR CONTRACT OR ORDER WOULD HAVE BEEN PASSED TO US ON OR ABOUT MARCH 23RD/35, AND SHIPMENT WOULD HAVE BEEN MADE PROMPTLY. DUE TO THE DEPOT HAVING NO FUNDS, THEY HELD UP THE AWARD AND IN THE MEANTIME, AN EMERGENCY CHARGE WHICH WAS ALLOWED BY THE INTERSTATE COMMERCE COMMISSION, WAS ADDED TO THE COST OF THE MERCHANDISE, THEREBY SHOWING US A LOSS OF $2.60.

THERE CERTAINLY IS A LEGAL BASIS FOR THE GOVERNMENT TO REIMBURSE US, WHEN THE GOVERNMENT DID NOT PASS THE ORDER TO US FOR A PERIOD OF TWENTY DAYS, AND WE HOPE UPON CONSIDERATION, A CHECK WILL BE SENT TO US FOR THE AMOUNT DUE US, CAUSED THROUGH NO FAULT OF OURS, BUT THROUGH THE FAULT OF THE GOVERNMENT FOR NOT PROVIDING "APPROPRIATE FUNDS.'

IT APPEARS THAT YOU SUBMITTED YOUR BID IN RESPONSE TO AN INVITATION FOR BIDS ISSUED BY THE COMMANDING OFFICER, BOSTON QUARTERMASTER DEPOT, ARMY BASE, BOSTON, MASS., TO BE OPENED MARCH 19, 1935, FOR FURNISHING CERTAIN ITEMS OF SUBSISTENCE SUPPLIES TO VARIOUS ARMY POSTS IN THE NORTHEASTERN PART OF THE UNITED STATES. BECAUSE OF THE LIMITED STORAGE FACILITIES AND DISTRIBUTION REQUIREMENTS, BIDDERS WERE ADVISED THAT DELIVERIES WOULD BE REQUIRED F.O.B. THE POINTS SPECIFIED IN THE ADVERTISEMENT TO ARRIVE AT DESTINATIONS BETWEEN APRIL 1 AND APRIL 8, 1935, AND THAT ANY BID SPECIFYING DELIVERY AFTER APRIL 8, 1935, COULD NOT BE CONSIDERED AND WOULD BE REJECTED. UNDER DATE OF MARCH 13, 1935, THE CONTRACTING OFFICER ISSUED ADDENDUM NO. 1 INVITATION FOR BIDS NO. 155-35-99 ADDRESSED TO ALL BIDDERS, WHICH INFORMED THEM THAT SEALED PROPOSALS ASKED FOR ON THE INVITATION FOR BIDS SCHEDULED TO BE OPENED MARCH 19, 1935, WOULD BE OPENED AT THE HOUR AND ON THE DATE SPECIFIED BUT THAT AWARD WOULD BE CONTINGENT UPON THE AVAILABILITY OF APPROPRIATED FUNDS. BIDDERS WERE ALSO ADVISED TO STATE ON PAGE 1 OF THE BID FORM THE NUMBER OF DAYS THEIR PROPOSAL WOULD REMAIN OPEN FOR ACCEPTANCE UNDER THE NEW CONDITIONS AND THAT ALL OTHER TERMS AND CONDITIONS OF THE ADVERTISEMENT WOULD REMAIN UNCHANGED. A COPY OF THIS ADDENDUM "ACKNOWLEDGED AND SUBSCRIBED TO" BY YOUR COMPANY IS ATTACHED TO THE CONTRACT ON FILE IN THIS OFFICE. THE BID FORM SHOWS THAT YOU STATED IN THE SPACE PROVIDED THEREFOR THAT YOUR BID WOULD REMAIN OPEN FOR WRITTEN ACCEPTANCE FOR 15 DAYS WITH RESPECT TO THE FURNISHING OF BLACKBERRIES AND MAYONNAISE AND THAT IT WOULD REMAIN OPEN FOR "JAMS, 15 DAYS AND IF NECESSARY A FURTHER 15 DAYS.' YOUR BID AS TO CERTAIN ITEMS, INCLUDING ITEM 116 FOR 1,020 CANS OF ASSORTED JAM FOR DELIVERY TO FORT WILLIAMS, MAINE, WAS ACCEPTED BY PURCHASE ORDER NO. 943, SUPRA, AND THE RECORD SHOWS THAT THE SAID JAM WEIGHING 8,670 POUNDS WAS DELIVERED ON MAY 9, 1935.

YOU HAD NO ASSURANCE WHEN YOU SUBMITTED YOUR BID THAT THE FREIGHT CHARGES ON THE SUPPLIES WOULD BE INCREASED OR DECREASED DURING THE LIFE OF THE CONTRACT AND NO PROVISION WAS MADE THEREIN FOR ANY ADJUSTMENT OF PRICE EITHER UP OR DOWN IN THE EVENT OF ANY CHANGE IN FREIGHT RATES. YOU MUST BEAR THE BURDEN OF ANY INCREASE IN FREIGHT RATES JUST AS YOU WOULD HAVE THE BENEFIT OF ANY DECREASE IN SUCH RATES.

THE FACT THAT THE INTERSTATE COMMERCE COMMISSION MAY HAVE APPROVED THE INCREASE OF 3 CENTS PER HUNDRED POUNDS IN FREIGHT CHARGES DOES NOT MAKE THE UNITED STATES, AS A CONTRACTOR, RESPONSIBLE FOR THE PAYMENT OF SUCH INCREASED CHARGES ON A DELIVERY MADE TO THE GOVERNMENT.

WHILE, AS YOU STATE, THE GOVERNMENT DELAYED ISSUING THE PURCHASE ORDER TO YOU FOR A PERIOD OF 20 DAYS, YOUR BID AS AMENDED SPECIFIED THAT IT WOULD REMAIN OPEN FOR ACCEPTANCE FOR 15 DAYS AS TO THE ITEMS FOR FURNISHING JAMS AND IF NECESSARY A FURTHER 15 DAYS AFTER THE DATE (MARCH 19, 1935) SCHEDULED FOR OPENING OF BIDS. YOUR BID WAS ACCEPTED WITHIN 30 DAYS FROM SUCH DATE AND THE AGREEMENT AS THUS FORMULATED CONSTITUTED A CONTRACT BINDING ON YOU TO COMPLETE PERFORMANCE IN ACCORDANCE WITH ITS TERMS. SEE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88.

ACCORDINGLY, IT MUST BE HELD THAT THERE IS NO LEGAL BASIS FOR CHARGING THE APPROPRIATION INVOLVED IN THIS CASE WITH THE AMOUNT--- IN ADDITION TO THE CONTRACT PRICE--- WHICH YOU CLAIM ON ACCOUNT OF AN INCREASE IN FREIGHT RATES, AND IT NECESSARILY FOLLOWS THAT THE SETTLEMENT OF NOVEMBER 13, 1935, DISALLOWING YOUR CLAIM MUST BE, AND IS, SUSTAINED.