A-98113, DECEMBER 17, 1938, 18 COMP. GEN. 554

A-98113: Dec 17, 1938

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CONTRACTS - CONTRACTING OFFICER'S AUTHORITY - PURCHASES BEYOND ADMINISTRATIVE NEEDS - GOVERNMENT LIABILITY PURCHASE BY A CONTRACTING OFFICER OF A MOTOR VEHICLE OTHER THAN THAT OFFERED BY THE LOW BIDDER MEETING THE SPECIFICATIONS BECAUSE OF HIS PERSONAL BELIEF THAT THE HIGHER PRICED CAR WAS THE BETTER VALUE AND PERSONAL PREFERENCE AND SATISFACTION IN ITS USE BY HIM ON OFFICIAL BUSINESS. IS NOT ONLY UNAUTHORIZED IN THAT GOVERNMENT AGENTS HAVE NO DISCRETION BUT MUST ACCEPT THE LOWEST RESPONSIBLE BID OR REJECT ALL AND READVERTISE AND THAT THE PURCHASE PRICE IN THIS CASE IS IN EXCESS OF THE STATUTORY PURCHASE PRICE LIMITATION FOR MOTOR-PROPELLED PASSENGER CARRYING VEHICLES. IS HIGHLY IRREGULAR AND OBJECTIONABLE BECAUSE OF THE PERNICIOUS CONSEQUENCES OF SUCH PRACTICE IF PERMITTED.

A-98113, DECEMBER 17, 1938, 18 COMP. GEN. 554

CONTRACTS - CONTRACTING OFFICER'S AUTHORITY - PURCHASES BEYOND ADMINISTRATIVE NEEDS - GOVERNMENT LIABILITY PURCHASE BY A CONTRACTING OFFICER OF A MOTOR VEHICLE OTHER THAN THAT OFFERED BY THE LOW BIDDER MEETING THE SPECIFICATIONS BECAUSE OF HIS PERSONAL BELIEF THAT THE HIGHER PRICED CAR WAS THE BETTER VALUE AND PERSONAL PREFERENCE AND SATISFACTION IN ITS USE BY HIM ON OFFICIAL BUSINESS, AFTER HAVING BEEN ADMINISTRATIVELY ADVISED TO PURCHASE A MOTOR VEHICLE MEETING THE SPECIFICATIONS UNDER A PRIOR DEFAULTED CONTRACT, IS NOT ONLY UNAUTHORIZED IN THAT GOVERNMENT AGENTS HAVE NO DISCRETION BUT MUST ACCEPT THE LOWEST RESPONSIBLE BID OR REJECT ALL AND READVERTISE AND THAT THE PURCHASE PRICE IN THIS CASE IS IN EXCESS OF THE STATUTORY PURCHASE PRICE LIMITATION FOR MOTOR-PROPELLED PASSENGER CARRYING VEHICLES, BUT IS HIGHLY IRREGULAR AND OBJECTIONABLE BECAUSE OF THE PERNICIOUS CONSEQUENCES OF SUCH PRACTICE IF PERMITTED, AND THE DEFAULTING CONTRACTOR MAY NOT BE CHARGED WITH THE EXCESS COST OF THE VEHICLE SO PURCHASED, NOR MAY PAYMENT FROM APPROPRIATED MONEYS BE MADE TO THE SUCCESSFUL BIDDER UNDER THE SECOND CONTRACT IN EXCESS OF THE LOW BID, THE CONTRACTING OFFICER PROPERLY BEING CHARGEABLE WITH ANY BALANCE DUE IN EXCESS OF THE LOW BID.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, DECEMBER 17, 1938:

THERE HAS BEEN SUBMITTED TO THIS OFFICE FOR PREAUDIT BUREAU VOUCHER NO. 433782 IN FAVOR OF THE SUNSET GARAGE, ALMIRA, WASHINGTON, IN THE AMOUNT OF $631.15, COVERING THE PURCHASE OF ONE MASTER DE LUXE CHEVROLET SEDAN FOR THE BUREAU OF INDIAN AFFAIRS.

IT APPEARS FROM THE RECORD THAT UNDER THE PROVISIONS OF CONTRACT I 1-IND- 15333, APRIL 16, 1938, THE JOHN C. POWELL MOTOR CO., DEVILS LAKE, N.DAK., WAS OBLIGATED TO FURNISH ONE FORD TWO-DOOR SEDAN, F.O.B. WILBUR, WASH., FOR A PRICE OF $745, LESS TRADE-IN ALLOWANCE OF $175 FOR ONE PLYMOUTH COACH, OR A NET CASH PRICE OF $570. THE POWELL CO. DEFAULTED ITS CONTRACT AND THE PURCHASING OFFICER OF YOUR DEPARTMENT, BY TELEGRAM OF JUNE 27, 1938, INSTRUCTED MR. HARVEY K. MEYER, SUPERINTENDENT OF THE COLVILLE INDIAN AGENCY, NESPELEM, WASH., TO PURCHASE IN THE OPEN MARKET FOR IMMEDIATE DELIVERY A VEHICLE MEETING THE SPECIFICATIONS UNDER THE POWELL CONTRACT, OFFERING THE SAME VEHICLE FOR TRADE-IN, AND REPORT IN ORDER THAT STEPS MIGHT BE TAKEN TO COLLECT THE EXCESS COST, IF ANY, FROM THE JOHN C. POWELL MOTOR CO.

UNDER DATE OF JULY 6, 1938, MR. MEYER REPORTED THAT THREE ORAL BIDS HAD BEEN RECEIVED, ONE FROM A FORD DEALER AT A COST PRICE OF $564, $818.62 LESS $254.62 FOR THE USED VEHICLE, ONE FROM A CHEVROLET DEALER AT A NET COST OF $766.70, AND THE THIRD FROM A CHEVROLET DEALER AT A NET CASH PRICE OF $635, $890.65 LESS TRADE-IN ALLOWANCE OF $255.65 FOR THE USED PLYMOUTH. MR. MEYER'S REPORT CONTINUED:

THE LAST MENTIONED BID WAS ACCEPTED FOR A NET AMOUNT OF $635.00 TO BE PAID. I SELECTED THIS CAR ON ACCOUNT OF THE BETTER VALUE TO BE ACQUIRED, AND BECAUSE OF ITS FRONT SUSPENSION CONSTRUCTION THE GREATER SAFETY WOULD BE SECURED FOR DRIVING ON THE RESERVATION ROADS, MANY MILES YET ROUGH AND HAZARDOUS ENOUGH.

AS A LOWER COST PRICE COULD HAVE BEEN ACCEPTED ON A CAR TO MEET THE SPECIFICATIONS ON WHICH THE DEVILS LAKE CONTRACTOR DEFAULTED ON HIS CONTRACT THAN THAT FOR THE CHEVROLET MASTER CAR DELIVERED THIS DAY, IT IS NOT REPRESENTED THAT THE DEFAULTING CONTRACTOR SHOULD BE REQUIRED TO PAY THE DIFFERENCE BETWEEN HIS NET PRICE OF $570.00 AND THE $635.00. BECAUSE OF THE PERSONAL SATISFACTION IT WILL BE TO ME TO ATTEND TO THE OFFICIAL BUSINESS OF THIS AGENCY IN THIS BETTER CAR I SHALL NOT OBJECT TO PAYING FROM PERSONAL FUNDS ANY PART OF THIS EXCESS COST AS MAY BE DIRECTED.

I WOULD LIKE TO BE INSTRUCTED, THEREFORE, IN WHAT AMOUNT SETTLEMENT SHALL BE MADE FOR THE CAR ACCEPTED FROM OFFICIAL FUNDS AND WHAT ADDITIONAL SUM IT WILL BE ACCEPTABLE TO HAVE ME PAY FROM PERSONAL FUNDS.

UNDER DATE OF AUGUST 10, 1938, MR. MEYER MADE A NOTARIZED STATEMENT IN FURTHER REFERENCE TO THE MATTER IN PERTINENT PART AS FOLLOWS:

ORAL BIDS WERE SECURED; THE LOW BID FROM A FORD DEALER MEETING THE ABOVE- NAMED SPECIFICATION AMOUNTED TO $564.00. I ACCEPTED THE BID OF THE SUNSET GARAGE OF ALMIRA, WASHINGTON, COVERING ONE MASTER DE LUXE CHEVROLET, 2- DOOR SEDAN, BUILT-IN TRUNK AND SPARE WHEEL AND TIRE, EQUIPPED WITH 6-PLY TIRES AT THE TOTAL COST OF $631.15.

I SELECTED THE CHEVROLET ON ACCOUNT OF THE BETTER VALUE TO BE ACQUIRED, AND BECAUSE OF ITS FRONT SUSPENSION CONSTRUCTION THE GREATER SAFETY WOULD BE SECURED FOR DRIVING ON THE RESERVATION ROADS, MANY MILES YET ROUGH AND HAZARDOUS. A FURTHER REASON FOR MAKING THIS SELECTION WAS FOR THE PERSONAL SATISFACTION IT WILL BE TO ME TO ATTEND TO THE OFFICIAL BUSINESS OF THIS AGENCY IN THIS BETTER CAR.

SINCE THE LOW BID WAS NOT ACCEPTED AND I DO NOT EXPECT THE GOVERNMENT TO PAY THE EXCESS COST, I, HARVEY K. MEYER, SUPERINTENDENT OF THE COLVILLE INDIAN AGENCY, DO HEREBY AGREE TO PAY FROM PERSONAL FUNDS THE SUM OF SIXTY -SEVEN DOLLARS AND FIFTEEN CENTS ($67.15), THE DIFFERENCE BETWEEN THE LOW BID AND THE BID ACCEPTED.

I WAIVE ALL INTEREST AND RIGHTS IN THIS VEHICLE AND IT WILL NOT BE USED FOR OTHER THAN OFFICIAL BUSINESS.

THAT THE TRANSACTION WAS HIGHLY IRREGULAR AND WHOLLY UNAUTHORIZED IS OBVIOUS WITHOUT ARGUMENT. MR. MEYER, AS A GOVERNMENT EMPLOYEE, HAD NO AUTHORITY TO ACCEPT OTHER THAN THE LOW BID FOR AN AUTOMOBILE MEETING THE SPECIFICATIONS--- PRESUMABLY IDENTICAL IN MODEL AS THE ONE WHICH WAS TO HAVE BEEN FURNISHED UNDER THE POWELL CONTRACT--- EITHER BECAUSE HE CONSIDERED THE HIGH PRICED VEHICLE THE BETTER VALUE, OR BECAUSE OF THE PERSONAL SATISFACTION HE MIGHT EXPERIENCE IN THE USE OF THE SO CALLED "BETTER GRADE" OR BECAUSE OF HIS PERSONAL PREFERENCE, OR FOR ANY OTHER PERSONAL REASON. THE COURTS HAVE LAID DOWN THE RULE THAT AGENTS OF THE GOVERNMENT IN MAKING PURCHASES ON BEHALF OF THE UNITED STATES MUST ACCEPT THE LOWEST RESPONSIBLE BID OR REJECT ALL AND READVERTISE, AND THAT THEY HAVE NO DISCRETION IN THE PREMISES. SCOTT V. UNITED STATES, 44 CT.CLS. 524. OF COURSE, THE RULE IS PREDICATED UPON THE ASSUMPTION THAT THE ARTICLES OFFERED UNDER THE LOW BID MEET THE ESSENTIAL REQUIREMENTS OF THE SPECIFICATIONS AND THE NEEDS OF THE GOVERNMENT, BUT THE INSTANT CASE APPEARS CLEARLY WITHIN THE RULE. MOREOVER, SINCE YOUR DEPARTMENT ALREADY HAD DETERMINED THAT THE FORD AUTOMOBILE MET THE SPECIFICATIONS UNDER WHICH THE SUPERINTENDENT WAS INSTRUCTED TO MAKE THE OPEN MARKET PURCHASE, AS WITNESS THE AWARD OF THE CONTRACT TO THE POWELL MOTOR CO. IN THE FIRST INSTANCE, IT IS NOT APPARENT UPON WHAT AUTHORITY OR THEORY MR. MEYER UNDERTOOK TO INTERPOSE HIS JUDGMENT OR PREFERENCE FOR THAT OF THE DEPARTMENT. SUCH A PRACTICE, IF PERMITTED, MIGHT READILY LEAD TO SUCH PERNICIOUS CONSEQUENCES THAT EVEN AN ISOLATED INSTANCE SHOULD NOT BE COUNTENANCED.

THE PRESENT CASE IS OPEN TO THE FURTHER OBJECTION THAT IT APPARENTLY WAS IN VIOLATION OF THE PRICE LIMITING STATUTES. THE DELIVERED COST OF THE CHEVROLET AUTOMOBILE PURCHASED INCLUSIVE OF THE TRADE-IN ALLOWANCE ON THE USED VEHICLE WAS $886.80, OR $136.80 IN EXCESS OF THE $750 STATUTORY PRICE LIMIT. SEE 17 COMP. GEN. 580, IN WHICH IT WAS STATED THAT IN CASE OF A DESTINATION BID IN EXCESS OF $750 THERE WOULD BE PROPER FOR CONSIDERATION THE ACTUAL COST OF TRANSPORTATION FROM POINT OF ORIGIN TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT, AND 17 COMP. GEN. 854, 857, EMPHASIZING THE FACT THAT IN DETERMINING WHETHER A DESTINATION OR INTERMEDIATE DELIVERY BID, INCLUSIVE OF TRADE-IN ALLOWANCE IS WITHIN THE $750 PRICE LIMIT, IT IS PERMISSIBLE TO CONSIDER ONLY THE LOWEST TRANSPORTATION COST AVAILABLE TO THE GOVERNMENT. THE POWELL BID QUOTING DESTINATION PRICE STATED THAT $75 WAS INCLUDED FOR TRANSPORTATION FROM DETROIT, MICH. IT DOES NOT APPEAR LIKELY THAT THERE WOULD BE ANY SUBSTANTIAL DIFFERENCE BETWEEN THE COST OF TRANSPORTATION FOR THE FORD AND THAT OF THE CHEVROLET FROM FACTORY TO DELIVERY POINT. CONSIDERING THE TRANSPORTATION COST OF THE TWO VEHICLES AT APPROXIMATELY THE SAME FIGURE, OR $75, IT IS PLAIN THAT THE BID ON THE CHEVROLET VEHICLE PURCHASED, INCLUSIVE OF TRADE-IN ALLOWANCE WAS APPROXIMATELY $800 AND THEREFORE NOT LEGALLY FOR CONSIDERATION. THE FACT THAT THE PURCHASE POSSIBLY WAS BEING MADE FOR THE ULTIMATE ACCOUNT OF THE DEFAULTING CONTRACTOR DOES NOT AFFECT THE QUESTION. A DEFAULTING CONTRACTOR ON THE SALE OF PASSENGER CARRYING VEHICLES TO THE GOVERNMENT WOULD BE ENTITLED TO THE PROTECTION OF THE PRICE LIMITING STATUTES. THAT IS TO SAY, THE GOVERNMENT AGENCIES BEING FORBIDDEN BY STATUTE TO PURCHASE PASSENGER CARRYING AUTOMOBILES AT A PRICE IN EXCESS OF $750 HAVE NO AUTHORITY TO BURDEN A DEFAULTING CONTRACTOR WITH A PRICE IN EXCESS OF THAT AMOUNT. HENCE, IF THE BID ACCEPTED IN THIS INSTANCE HAD BEEN THE LOW BID, MR. MEYER'S ACTION STILL WOULD HAVE BEEN UNAUTHORIZED IF, IN FACT, THE BID PRICE INCLUSIVE OF TRADE-IN ALLOWANCE, AND EXCLUSIVE OF THE MOST ADVANTAGEOUS TRANSPORTATION COST AVAILABLE TO THE GOVERNMENT WAS IN EXCESS OF $750.

OF COURSE, THERE IS NO BASIS FOR ANY CHARGE AGAINST THE JOHN C. POWELL MOTOR CO. IN THIS PARTICULAR TRANSACTION, SINCE PROPER ACCEPTANCE OF THE LOW BID WOULD HAVE RESULTED IN A SAVING RATHER THAN EXCESS COST TO THE GOVERNMENT. IT IS EQUALLY TRUE THAT THE WHOLLY UNAUTHORIZED ACTION OF MR. MEYER IN ACCEPTING THE HIGHER BID COULD NOT OPERATE TO CHARGE APPROPRIATED MONEYS OF THE UNITED STATES IN ANY GREATER AMOUNT THAN THAT OF THE ACCEPTABLE BID, TO WIT, $564, AND MR. MEYER PROPERLY IS CHARGEABLE WITH ANY BALANCE DUE THE SUNSET GARAGE ON ACCOUNT OF SUCH PURCHASE. IN VIEW OF HIS PROPOSAL TO PAY THE EXCESS COST OF THE CHEVROLET AUTOMOBILE BEYOND THE AMOUNT OF THE LOW BID, THE VOUCHER FORWARDED TO THIS OFFICE WILL BE CERTIFIED FOR PAYMENT TO THE SUNSET GARAGE IN THE AMOUNT OF $564, AND MR. MEYER SHOULD BE REQUIRED TO PAY SUCH BALANCE AS IS DUE AND TO FURNISH SATISFACTORY EVIDENCE OF THE PAYMENT BY HIM OF SUCH BALANCE, FOR FILING IN THIS OFFICE, WITH THE DISTINCT UNDERSTANDING, OF COURSE, THAT SUCH PAYMENT DOES NOT AND COULD NOT, IN ANY EVENT, INVEST HIM WITH ANY INTEREST OR RIGHT IN THE VEHICLE OR AUTHORIZE ITS USE FOR OTHER THAN OFFICIAL BUSINESS. IN THIS CONNECTION, ATTENTION IS INVITED TO THE FACT THAT IN HIS REPORT OF JULY 6, 1938, MR. MEYER STATED THAT THE BID OF THE SUNSET GARAGE WAS $890.65, WHILE IN HIS SWORN STATEMENT OF AUGUST 10, 1938, HE STATED THAT THE CHEVROLET WAS OBTAINED AT AN EXCESS COST OF $67.15, AND THE VOUCHER FORWARDED HERE STATES THE PRICE OF THE CHEVROLET AS $886.80, MAKING AN APPARENT DISCREPANCY OF $3.85. EXPLANATION OF THIS APPARENT DISCREPANCY SHOULD BE FURNISHED, AND THE MATTER IS ALSO BROUGHT TO YOUR ATTENTION FOR THE TAKING OF SUCH ADMINISTRATIVE MEASURES AS MAY BE FOUND TO AVOID ANY FUTURE RECURRENCE IN YOUR DEPARTMENT OF A TRANSACTION SUCH AS INVOLVED IN THE PRESENT CASE.

THIS OFFICE IS ALSO IN RECEIPT OF A LETTER DATED OCTOBER 31, 1938, FROM THE ACTING PURCHASING OFFICER TO YOUR DEPARTMENT AS FOLLOWS:

THE ENCLOSED CERTIFIED CHECK OF THE JOHN C. POWELL MOTOR COMPANY FOR $365.00 IN FAVOR OF AND UNENDORSED BY THE PURCHASING OFFICER ACCOMPANIED THE MAKER'S BID IN RESPONSE TO INVITATION NO. 3447 AND CONSTITUTES ITS GUARANTEE TO EXECUTE A CONTRACT AND PERFORMANCE BOND THEREUNDER. THE CHECK IS SENT TO YOUR OFFICE FOR YOUR FINAL DETERMINATION AS TO THE AMOUNT TO BE DEDUCTED THEREFROM DUE TO THE MAKER'S DEFAULT UNDER CONTRACTS I-1- IND-15333 AND I-1-IND-15383. THE PERTINENT FACTS ARE AS FOLLOWS:

1. UNDER THE TERMS OF CONTRACT I-1-IND-15333, DATED APRIL 16, 1938, THE JOHN C. POWELL MOTOR COMPANY OF DEVILS LAKE, NORTH DAKOTA, WAS OBLIGATED AS FOLLOWS:

CHART ITEM 2: TO FURNISH ONE FOUR-DOOR SEDAN F.O.B. GALLUP,

N.MEX. ----------------------------------------------------- $764.00

LESS TRADE-IN:

CHEVROLET SEDAN ----------------------------- $190.00

PLYMOUTH COUPE ------------------------------ 85.00

---------275.00

NET PRICE F.O.B. GALLUP, N.MEX --------------------------- 489.00

----------- ITEM 6: CASH OFFER ONLY FOR ONE CHEVROLET COACH ----------- 110.00

----------- ITEM 11: TO FURNISH ONE FOUR-DOOR SEDAN, F.O.B. WILBUR,

WASH ------------------------------------------------------- 745.00

LESS TRADE-IN ON PLYMOUTH COACH -------------------------- 175.00

NET PRICE F.O.B. WILBUR, WASH ---------------------------- 570.00

2. UNDER THE TERMS OF CONTRACT I-1-IND-15383, DATED APR. 21, 1938, THE JOHN C. POWELL MOTOR CO. WAS BOUND AS FOLLOWS:

CHART ITEM 2: TO FURNISH ONE 1/4-TON PICKUP TRUCK F.O.B. DETROIT - $624.00

LESS TRADE-IN ON 1935 CHEVROLET COACH --------------------- 150.00

NET PRICE F.O.B. DETROIT, MICH ---------------------------- 474.00

---------- ITEM 3: CASH OFFER FOR ONE CHEVROLET COUPE AT PINE RIDGE,

S.DAK ------------------------------------------------------- 59.00

3. ON JUNE 15, 1938, THE CONTRACTOR SENT THE FOLLOWING TELEGRAM TO THE PURCHASING OFFICE:DUE TO INABILITY TO PRESENT SETUP IT IS VERY INCONVENIENT TO DELIVER THREE NEW UNITS UNDER BID C-1676 TO OTHER ENDS OF UNITED STATES INCLUDING GALLUP, N.MEX., WILBUR, WASH., AND DETROIT FOR CHEYENNE AGENCY. KINDLY GIVE CONTRACT ELSEWHERE AS WE HAVE NOT ACCEPTED. THANK YOU.

4. BY AIR MAIL LETTER OF JUNE 20, 1938, THE PURCHASING OFFICER NOTIFIED THE CONTRACTOR THAT IT WAS IN DEFAULT ON CONTRACT I-1-IND 15383, AND ON CONTRACT I-1-IND-15333, AND ADVISED THAT, WITH THE EXCEPTION OF ITEM 6OF CONTRACT I-1-IND-15333, WHICH HAD BEEN SATISFACTORILY EXECUTED, TO STOP PERFORMANCE ON THE CONTRACTS. 5. IN RESPONSE TO PURCHASING OFFICE INSTRUCTIONS, THE SUPERINTENDENTS OF THE AGENCIES INVOLVED ENTERED INTO THE FOLLOWING TRANSACTIONS AGAINST THE DEFAULTING CONTRACTOR'S ACCOUNT:

CHART

(A) BY E. R. FRYER, SUPERINTENDENT OF THE NAVAJO AGENCY,

WINDOW ROCK, ARIZ., AS PROVIDED IN ITEM 2 OF CONTRACT

I-1-IND-15333.: PURCHASE OF ONE FOUR-DOOR SEDAN FROM WHITING

BROS.,

HOLBROOK, ARIZ., AFTER TRADE-IN ALLOWANCE ON ONE

PLYMOUTH COUPE AND ONE CHEVROLET SEDAN, F.O.B. GALLUP,

N.MEX ------------------------------------------------ $665.00

NET PRICE AFTER TRADE-IN UNDER ITEM 2, CONTRACT

I-1-IND-15333, F.O.B. GALLUP, N.MEX ----------------- 489.00

EXCESS COST TO THE GOVERNMENT ------------------ 176.00

(B) BY HARVEY E. MEYER, SUPERINTENDENT OF COLVEILLE AGENCY,

NESPELEM, WASH.: PURCHASE OF ONE CHEVROLET SEDAN, LESS

TRADE-IN ALLOWANCE

FOR ONE PLYMOUTH SEDAN ------------------------------- $635.00

PERSONAL LIABILITY OF SUPERINTENDENT MEYER FOR FAILURE

TO ACCEPT LOWEST BID OF $564.00 ---------------------- 71.00

NET COST TO THE GOVERNMENT --------------------- 564.00

NET PRICE UNDER ITEM 11, CONTRACT I-1-IND-15333,

F.O.B. WILBUR, WASH --------------------------------- 570.00

NET SAVING TO THE GOVERNMENT ------------------- 6.00

(C) BY MR. W. F. DICKENS, SUPT., CHEYENNE RIVER AGENCY:

PURCHASE OF ONE 1/4-TON COUPE PICKUP TRUCK AFTER

TRADE-IN OF ONE CHEVROLET COACH, F.O.B. CHEYENNE

AGENCY, S.DAK -------------------------------------- 650.00

NET PRICE AFTER TRADE-IN UNDER ITEM 2, CONTRACT

I-1-IND-15383, F.O.B. DETROIT -------------- $474.00

ESTIMATED GOVERNMENT FREIGHT COST FROM DETROIT

TO LAPLANT, S.DAK -------------------------- 58.52

-------- 532.52

EXCESS COST TO THE GOVERNMENT ---------------- 117.48

(D) BY MR. W. O. ROBERTS, SUPERINTENDENT PINE RIDGE AGENCY:

CASH SALE OF ONE CHEVROLET COUPE TO THE C. AND C. MOTOR

COMPANY, RUSHVILLE, NEBR ----------------------------- 35.00

CASH OFFER UNDER ITEM 6, CONTRACT I-1-IND-15383 ------- 59.00

LOSS TO THE GOVERNMENT ------------------------ 24.00

IN SUMMARY, THE EXCESS COST TO THE GOVERNMENT AS THE RESULT OF THE ABOVE TRANSACTIONS WAS AS FOLLOWS:

CHART

CONTRACT I-1-IND-15333, ITEM 2 --------------------------- $176.00

CONTRACT I-1-IND-15383:

ITEM 2 ----------------------------------------------- 117.48

ITEM 6 ----------------------------------------------- 24.00

TOTAL LOSS TO THE GOVERNMENT ----------------- 317.48

THE CONTRACTING OFFICER CONCLUDES FROM THE RECORD THAT, UNDER THE TERMS OF THE ABOVE CITED CONTRACTS THE GOVERNMENT AND THE CONTRACTOR WERE MUTUALLY BOUND. THAT THE CONTRACTOR'S EXCUSE FOR THE NON PERFORMANCE WAS INSUFFICIENT, AND IN VIEW OF THE FACT THAT IT WAS MADE MORE THAN TWO MONTHS AFTER THE MAKING OF THE AWARDS, CANNOT BE CONSIDERED AS A VALID REASON FOR FREEING THE CONTRACTOR FROM ITS OBLIGATIONS UNDER THE CONTRACTS. THAT THE FAILURE, THEREFORE, ON THE PART OF THE CONTRACTOR TO PERFORM PLACED IT IN DEFAULT AND AUTHORIZED THE GOVERNMENT TO PURCHASE AGAINST ITS ACCOUNT. THAT, AS ITEMIZED ABOVE THE TOTAL EXCESS COST RESULTING TO THE GOVERNMENT FROM THE TRANSACTIONS AGAINST THE ACCOUNT OF THE CONTRACTOR AMOUNTED TO $317.48, WHICH SUM SHOULD BE DEDUCTED FROM THE CONTRACTOR'S CERTIFIED CHECK, AND THE BALANCE REMITTED TO THE CONTRACTOR.

THE CONCLUSIONS OF THE CONTRACTING OFFICER AS STATED IN THE FINAL PARAGRAPH, SUPRA, MANIFESTLY ARE CORRECT AND, SO FAR AS APPEARS, THE AMOUNT DETERMINED AS DUE FROM THE JOHN C. POWELL MOTOR O., TO WIT, $317.48 ALSO IS CORRECT, THUS LEAVING A BALANCE OF $47.52 DUE THE DEFAULTING CONTRACTOR.

THE CERTIFIED CHECK OF THE JOHN C. POWELL MOTOR CO. IN THE AMOUNT OF $365 IS RETURNED HEREWITH FOR HANDLING BY YOUR DEPARTMENT ACCORDINGLY.