B-124166, JUN. 30, 1955

B-124166: Jun 30, 1955

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TO THE PENDLEY BODY COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 7. DA-20-113-ORD 13631 WAS ISSUED TO YOU AND YOU WERE ADVISED THAT IT CONSTITUTED CONTRACT ON THE TERMS SET FORTH THEREIN AND SIGNIFIED AN INTENTION OF THE ORDNANCE CORPS. IT WAS STIPULATED THAT THE DURATION OF THE LETTER ORDER WOULD BE NO LONGER THAN 60 DAYS FROM THE DATE OF YOUR ACCEPTANCE THEREOF AND. DA-20-113-ORD-13631 WAS EXECUTED WHICH SPECIFICALLY PROVIDES IN ARTICLE I OF PART 3 THAT THE LETTER ORDER OF SEPTEMBER 22. "IS HEREBY SUPERSEDED AND REPLACED BY THIS DEFINITIVE CONTRACT.'. YOU STATE THAT BY THE TIME THE DEFINITIVE CONTRACT WAS SIGNED AND DELIVERED ON JANUARY 6. WHILE YOU WERE FULLY AWARE THAT THE LETTER ORDER HAD EXPIRED BY ITS OWN TERMS ON NOVEMBER 22.

B-124166, JUN. 30, 1955

TO THE PENDLEY BODY COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 7, 1955, TRANSMITTING A RECLAIM VOUCHER IN THE AMOUNT OF $12,323.40, REPRESENTING THE DIFFERENCE BETWEEN THE SUM WHICH HAS BEEN PAID TO YOU FOR THE MANUFACTURE OF PARTS USED IN THE PERFORMANCE OF DEFINITIVE CONTRACT NO. DA-20-113-ORD-13631 AND THAT ALLEGED TO BE DUE FOR THE PARTS INVOICED AT NEGOTIATED MANUFACTURERS' UNIT PRICES.

UNDER DATE OF SEPTEMBER 22, 1952, LETTER ORDER NO. DA-20-113-ORD 13631 WAS ISSUED TO YOU AND YOU WERE ADVISED THAT IT CONSTITUTED CONTRACT ON THE TERMS SET FORTH THEREIN AND SIGNIFIED AN INTENTION OF THE ORDNANCE CORPS, DEPARTMENT OF THE ARMY, TO EXECUTE A FORMAL FIXED PRICE CONTRACT WITH YOU FOR FURNISHING THE NECESSARY LABOR, MATERIALS, TOOLS, MACHINERY AND EQUIPMENT TO REBUILD 2,500 1-TON TRAILERS (PLUS OR MINUS 10 PERCENT) AT A UNIT PRICE NOT TO EXCEED $48 EACH. IT WAS STIPULATED THAT THE DURATION OF THE LETTER ORDER WOULD BE NO LONGER THAN 60 DAYS FROM THE DATE OF YOUR ACCEPTANCE THEREOF AND, IN ANY EVENT, WOULD EXPIRE ON NOVEMBER 22, 1952, UNLESS EXTENDED BY MUTUAL AGREEMENT. THE LETTER ORDER PROVIDED FURTHER THAT SUBJECT TO THE APPROVAL OF THE CONTRACTING OFFICER, REPLACEMENT PARTS NOT AVAILABLE IN SUFFICIENT TIME TO MEET THE DELIVERY SPECIFIED COULD BE PROCURED, MANUFACTURED OR EXTRAORDINARILY RECLAIMED, REIMBURSEMENT FOR WHICH WOULD BE MADE ON THE BASES SET FORTH IN THE LETTER.

ON NOVEMBER 21, 1952, CONTRACT NO. DA-20-113-ORD-13631 WAS EXECUTED WHICH SPECIFICALLY PROVIDES IN ARTICLE I OF PART 3 THAT THE LETTER ORDER OF SEPTEMBER 22, 1952,"IS HEREBY SUPERSEDED AND REPLACED BY THIS DEFINITIVE CONTRACT.' REGARDING SUPPLIES ACQUIRED OR MANUFACTURED FOR THE GOVERNMENT'S ACCOUNT, ARTICLE II, PART 2, OF THE DEFINITIVE CONTRACT PROVIDES THAT THE GOVERNMENT SHALL REIMBURSE THE CONTRACTOR FOR THE ACTUAL COST OF PARTS, INCLUDING COMPONENTS, ACCESSORIES AND ATTACHMENTS, AS DEFINED THEREIN.

IN YOUR LETTER OF APRIL 27, 1954, TO THE COMMANDING OFFICER, ST. LOUIS ORDNANCE DISTRICT, YOU STATE THAT BY THE TIME THE DEFINITIVE CONTRACT WAS SIGNED AND DELIVERED ON JANUARY 6, 1953, APPROXIMATELY 80 PERCENT OF THE CONTRACT WORK HAD BEEN COMPLETED; THAT, WHILE YOU WERE FULLY AWARE THAT THE LETTER ORDER HAD EXPIRED BY ITS OWN TERMS ON NOVEMBER 22, 1952, YOU PROCEEDED WITH PRODUCTION UNTIL JANUARY 1, 1953, ON AN "INFORMAL ORAL EXTENSION OF THE LETTER ORDER" AND THAT PRICES FOR MANUFACTURED PARTS WERE NEGOTIATED WITH LIEUTENANT JACK CUNNINGHAM, THE CONTRACTING OFFICER'S REPRESENTATIVE, UNDER THE PROVISIONS OF THE BID INVITATION AND THE LETTER ORDER. YOU CONCLUDE, THEREFORE, THAT YOU ARE ENTITLED TO REIMBURSEMENT ON THE NEGOTIATED PRICE BASIS UNDER THE LETTER ORDER RATHER THAN ON THE ACTUAL COST BASIS AS PROVIDED IN ARTICLE II, PART 2, OF THE DEFINITIVE CONTRACT, REFERRED TO ABOVE.

IN THE CIRCUMSTANCES, SINCE THE LETTER REFERRED TO A DEFINITIVE CONTRACT TO BE NEGOTIATED WITHOUT DELAY AND DID NOT PURPORT TO CONTAIN ALL THE TERMS OF THE AGREEMENT, THERE IS FOR APPLICATION THE SETTLED RULE OF CONSTRUCTION THAT PREVIOUS AND CONTEMPORARY NEGOTIATIONS ARE PRESUMED TO BE MERGED IN THE FORMAL WRITTEN AGREEMENT WHICH EXPRESSES THE FINAL UNDERSTANDING OF THE PARTIES THERETO. BRAWLEY V. UNITED STATES, 96 U.S. 168; SOUTH BOSTON IRON CO. V. UNITED STATES, 118 U.S. 37; ROCKY BROOK MILLS COMPANY V. UNITED STATES, 70 C.CLS. 646, 659. ACCORDINGLY, IT MUST BE HELD THAT THE DEFINITIVE CONTRACT CONSTITUTES THE ONLY AGREEMENT WHICH IS APPLICABLE TO THE INSTANT QUESTION.

MOREOVER, THE RECORD SHOWS THAT LIEUTENANT CUNNINGHAM WAS DESIGNATED AS THE CONTRACTING OFFICER'S REPRESENTATIVE FOR CONTRACT NO. DA-20-113-ORD- 13631, BY LETTER OF NOVEMBER 17, 1952, COPY OF WHICH WAS FURNISHED YOU UNDER DATE OF DECEMBER 23, 1952. IN THAT LETTERLIEUTENANT CUNNINGHAM'S AUTHORITY WAS RESTRICTED IN THE FOLLOWING TERMS:

"YOU SHALL NOT UNDER ANY CIRCUMSTANCES EXECUTE, SIGN, OR BIND THE UNITED STATES OF AMERICA ON ANY SUPPLEMENTAL AGREEMENT, CHANGE ORDER, OR MODIFICATION TO THE ABOVE CITED CONTRACTS.'

THUS, SINCE THE LETTER ORDER HAD EXPIRED BY ITS OWN TERMS ON NOVEMBER 22, 1952, AND LIEUTENANT CUNNINGHAM WAS OPERATING UNDER THE DEFINITIVE CONTRACT, ANY INFORMAL AGREEMENT WHICH YOU MAY HAVE HAD WITH HIM TO EXTEND THE PERIOD OF THE LETTER ORDER AND NEGOTIATE THE PRICE FOR MANUFACTURED PARTS IN THE MANNER SET FORTH IN THE LETTER CANNOT SERVE TO OBLIGATE THE GOVERNMENT. IT IS WELL SETTLED THAT THE GOVERNMENT CANNOT BE LEGALLY OBLIGATED BY THE UNAUTHORIZED ACTS OF ITS AGENTS.

ACCORDINGLY, IT IS CONCLUDED THAT THE ACTION OF THE CONTRACTING AGENCY IN REIMBURSING YOU FOR THE COST OF MANUFACTURED PARTS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE DEFINITIVE CONTRACT DATED NOVEMBER 21, 1952, WAS CORRECT AND PROPER, AND YOUR CLAIM FOR AN ADDITIONAL AMOUNT MUST BE AND IS DISALLOWED.