B-128131, JUN. 19, 1956

B-128131: Jun 19, 1956

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TO THE POSTMASTER GENERAL: REFERENCE IS MADE TO A LETTER DATED JUNE 5. A CONTRACT WAS AWARDED TO THE UNIFLEX MANUFACTURING COMPANY FOR THE SUM OF $47. WAS DECLARED TO BE IN DEFAULT. THAT THE LATTER HAD HAD NO EXPERIENCE IN PREPARING BIDS FOR GOVERNMENT CONTRACTS AND THAT IN THIS CASE THE BID WAS MUCH TOO LOW. IT IS STATED FURTHER THAT THE SON RELIED UPON ESTIMATES OF SUPPLIERS WITHOUT OBTAINING COMMITMENTS. THAT WHEN AN ATTEMPT WAS MADE TO PURCHASE THE SUPPLIES AND MATERIALS REQUIRED IT WAS FOUND THAT DELIVERY COULD NOT BE EXPECTED FOR MORE THAN SIX MONTHS. THAT DURING THE PERIOD OF DELAY THERE WERE SUBSTANTIAL INCREASES IN THE COST OF THE LABOR AND MATERIALS REQUIRED. THE ATTORNEY IS OF THE VIEW THAT THE CONTRACTOR SHOULD BE RELEASED FROM THE OBLIGATIONS OF ITS CONTRACT FOR THE REASON THAT.

B-128131, JUN. 19, 1956

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO A LETTER DATED JUNE 5, 1956, WITH ENCLOSURES, FROM THE DEPUTY POSTMASTER GENERAL, REQUESTING A DECISION AS TO WHETHER UNDER THE CIRCUMSTANCES HEREINAFTER SET FORTH, THE UNIFLEX MANUFACTURING COMPANY OF ELIZABETH, NEW JERSEY, MAY BE RELEASED FROM THE OBLIGATIONS OF CONTRACT NO. 5-A-2394, DATED JUNE 30, 1955, PROVIDING FOR THE DELIVERY OF 500 CARRIER CARTS.

IT APPEARS FROM THE RECORD THAT UNDER DATE OF MAY 6, 1955, YOUR DEPARTMENT ISSUED INVITATION NO. 1669 FOR FURNISHING 300--- SUBSEQUENTLY INCREASED TO 500--- CARRIER CARTS, CONTAINER-TYPE, THE BIDS TO BE OPENED ON MAY 27, 1955--- SUBSEQUENTLY POSTPONED TO JUNE 10, 1955. UNDER DATE OF JUNE 30, 1955, A CONTRACT WAS AWARDED TO THE UNIFLEX MANUFACTURING COMPANY FOR THE SUM OF $47,475, COMPLETE DELIVERY THEREUNDER TO BE MADE WITHIN NINETY DAYS. THE CONTRACTOR FAILED TO MAKE DELIVERY AS REQUIRED AND UNDER DATE OF FEBRUARY 16, 1956, WAS DECLARED TO BE IN DEFAULT.

AS A BASIS FOR HIS REQUEST THAT THE CONTRACTOR BE RELEASED FROM ITS CONTRACTUAL OBLIGATIONS, THE COMPANY'S ATTORNEY STATED IN HIS LETTER OF MARCH 13, 1956, AMONG OTHER THINGS, THAT DUE TO THE ILLNESS OF THE PRESIDENT OF THE COMPANY THE ACTIVE MANAGEMENT OF THE COMPANY HAD BEEN TAKEN OVER BY HIS SON; THAT THE LATTER HAD HAD NO EXPERIENCE IN PREPARING BIDS FOR GOVERNMENT CONTRACTS AND THAT IN THIS CASE THE BID WAS MUCH TOO LOW. IT IS STATED FURTHER THAT THE SON RELIED UPON ESTIMATES OF SUPPLIERS WITHOUT OBTAINING COMMITMENTS, AND THAT WHEN AN ATTEMPT WAS MADE TO PURCHASE THE SUPPLIES AND MATERIALS REQUIRED IT WAS FOUND THAT DELIVERY COULD NOT BE EXPECTED FOR MORE THAN SIX MONTHS; ALSO, THAT DURING THE PERIOD OF DELAY THERE WERE SUBSTANTIAL INCREASES IN THE COST OF THE LABOR AND MATERIALS REQUIRED. THE ATTORNEY IS OF THE VIEW THAT THE CONTRACTOR SHOULD BE RELEASED FROM THE OBLIGATIONS OF ITS CONTRACT FOR THE REASON THAT, DUE TO ITS FINANCIAL SITUATION, IT COULD NOT RESPOND TO A JUDGMENT AGAINST IT AND THAT THE ENFORCEMENT OF THE CONTRACT WOULD ENTAIL GREAT HARDSHIP.

IT SEEMS APPARENT THAT THE DIFFICULTIES IN WHICH THE CONTRACTOR FOUND ITSELF SUBSEQUENT TO THE AWARD OF THE CONTRACT WERE DUE TO ITS FAILURE TO OBTAIN COMMITMENTS AS TO PRICES AND DELIVERY DATES PRIOR TO MAKING ITS BID. THIS FAILURE TO ACT WAS IN NO WAY CONTRIBUTED TO BY THE GOVERNMENT AND, IN THE VIEW OF THIS OFFICE, THERE IS NO LEGAL BASIS FOR GRANTING THE REQUESTED RELIEF.

IT IS A WELL-ESTABLISHED PRINCIPLE OF LAW THAT VALID CONTRACTS ARE TO BE ENFORCED AND PERFORMED AS WRITTEN AND THE FACT THAT INTERVENING OR UNFORESEEN CAUSES RENDER PERFORMANCES MORE BURDENSOME OR LESS PROFITABLE, OR EVEN OCCASION A LOSS, IS NOT SUFFICIENT TO EXCUSE PERFORMANCE OR OTHERWISE ENTITLE A CONTRACTOR TO ADDITIONAL COMPENSATION UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE CONTRACT. COLUMBUS RAILWAY, POWER AND LIGHT COMPANY V. COLUMBUS, 249 U.S. 349; SUN PUBLISHING COMPANY V. MOORE, 183 U.S. 642; PENN BRIDGE COMPANY V. UNITED STATES, 59 C.CLS. 892; PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 C.CLS. 327, AND SATTERLEE, ADMINISTRATRIX V. UNITED STATES, 30 C.CLS. 31.

THERE APPEARS TO BE ALSO FOR CONSIDERATION THE FACT THAT UPON THE AWARD OF THE CONTRACT IN THIS CASE THE UNITED STATES CAME INTO POSSESSION OF CERTAIN VESTED RIGHTS, THAT IS TO SAY, TO HAVE THE CONTRACT COMPLETED IN ACCORDANCE WITH ITS TERMS AND TO RECOVER ANY EXCESS COSTS IN THE EVENT OF A DEFAULT. IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO GIVE AWAY OR SURRENDER A RIGHT VESTED IN OR ACQUIRED BY THE GOVERNMENT UNDER A CONTRACT. SIMPSON V. UNITED STATES, 172 U.S. 372; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED 32 F.2D 141, AND CERTIORARI DENIED, 280 U.S. 574. IN THE CASE OF PACIFIC HARDWARE COMPANY V. UNITED STATES, SUPRA, THE COURT SAID (PAGE 335):

"IT IS UNQUESTIONABLY TRUE THAT AN OFFICIAL OF THE GOVERNMENT IS NOT AUTHORIZED TO GIVE AWAY OR REMIT A CLAIM DUE THE GOVERNMENT. THIS RULE IS GROUNDED IN A SOUND PUBLIC POLICY AND IS NOT TO BE WEAKENED.'

THE RULE IS APPLICABLE TO THE ACCOUNTING AS WELL AS THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT AND CONSIDERATIONS OF SYMPATHY FOR THE POSSIBLE MISFORTUNE OF A CONTRACTOR DO NOT AUTHORIZE THE WAIVING OF THE RULE. THE ALLEGED INABILITY OF THE CONTRACTOR TO SATISFY ANY JUDGMENT FOR THE EXCESS COSTS OR OTHER DAMAGES SUSTAINED BY THE GOVERNMENT WOULD BE A MATTER FOR CONSIDERATION BY THE ATTORNEY GENERAL AFTER REFERENCE OF THE CLAIM TO HIS DEPARTMENT.

UNDER THE FACTS REPORTED, THERE APPEARS TO BE NO LEGAL BASIS FOR RELEASING THE UNIFLEX MANUFACTURING COMPANY FROM THE OBLIGATIONS IMPOSED BY ITS CONTRACT.