Skip to main content

B-129420, NOV. 16, 1956

B-129420 Nov 16, 1956
Jump To:
Skip to Highlights

Highlights

WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT THEREON IS AUTHORIZED. WHICH WAS ENTERED INTO PURSUANT TO AN INVITATION FOR BIDS ISSUED BY THE BASE PROCUREMENT OFFICE. IT IS NOTED THAT THE RESOLUTIONS. A COPY OF WHICH WAS FURNISHED BY HARRY L. WERE PASSED BY THE STOCKHOLDERS AND BOARD OF DIRECTORS OF WASHINGTON LAUNDRY ON OCTOBER 15. THE RESOLUTIONS ARE NOT TO BE ACCEPTED AS PROOF THAT THE AGREEMENT ACTUALLY BECAME EFFECTIVE. IT IS STATED: "INFORMATION NOW INDICATES THAT THE TWO COMPANIES HAVE SEPARATED. THAT BLUE BANNER COMPANY WILL COMPLETE THE CONTRACT.'. THE WASHINGTON LAUNDRY HAS SUBMITTED INVOICES FOR LAUNDRY AND DRY CLEANING SERVICES ALLEGED TO HAVE BEEN PERFORMED BY IT FOR THE PERIODS NOVEMBER 1 TO DECEMBER 31.

View Decision

B-129420, NOV. 16, 1956

TO MAJOR E. F. OGOZALEK, FINANCE OFFICER, UNITED STATES AIR FORCE:

THERE HAS BEEN RECEIVED FROM HEADQUARTERS, AIR FORCE FINANCE CENTER, DENVER, COLORADO, YOUR LETTER OF JULY 3, 1956, TRANSMITTING A VOUCHER, WITH ATTACHED PAPERS, IN THE AMOUNT OF $1,913.03, STATED IN FAVOR OF BLUE BANNER LAUNDRY AND CLEANERS UNDER CONTRACT NO. AF 49/608/ 430, DATED JULY 26, 1955, WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT THEREON IS AUTHORIZED.

THE CONTRACT, WHICH WAS ENTERED INTO PURSUANT TO AN INVITATION FOR BIDS ISSUED BY THE BASE PROCUREMENT OFFICE, ANDREWS AIR FORCE BASE, WASHINGTON, D.C., REQUIRED THE "BLUE BANNER CO., INC.' TO FURNISH LAUNDRY AND/OR DRY CLEANING OF AIR FORCE CLOTHING DURING THE PERIOD AUGUST 1, 1955, TO JUNE 30, 1956. UNDER DATE OF OCTOBER 5, 1955, SAM BURKA (WHO SIGNED THE CONTRACT AS PRESIDENT OF BLUE BANNER, INC.) UNDER THE NAME OF BLUE BANNER LAUNDRY AND DRY CLEANERS ENTERED INTO AN AGREEMENT PURPORTING TO MERGE THAT BUSINESS WITH WASHINGTON LAUNDRY, INC., EFFECTIVE NOVEMBER 1, 1955, THE NAME OF THE NEW COMPANY TO BE WASHINGTON LAUNDRY, INC. THE AGREEMENT CONTAINED CERTAIN CONDITIONS AND REQUIREMENTS TO BE FULFILLED BY THE PARTIES. IN A LETTER DATED JULY 24, 1956, TO THE BASE PROCUREMENT OFFICE, MR. BURKA STATED THAT AS A RESULT OF THE FAILURE OF THE WASHINGTON LAUNDRY TO FULFILL ITS PART OF THE AGREEMENT THE MERGER AGREEMENT NEVER BECAME EFFECTIVE.

IT IS NOTED THAT THE RESOLUTIONS, A COPY OF WHICH WAS FURNISHED BY HARRY L. RYAN, JR., SECRETARY OF THE WASHINGTON LAUNDRY, INC., APPROVING AND ACCEPTING THE MERGER AGREEMENT, WERE PASSED BY THE STOCKHOLDERS AND BOARD OF DIRECTORS OF WASHINGTON LAUNDRY ON OCTOBER 15, 1955--- PRIOR TO THE PROPOSED EFFECTIVE DATE OF THE MERGER AGREEMENT--- AND THE SECOND RESOLUTION MERELY AUTHORIZED AND DIRECTED THAT NECESSARY STEPS BE TAKEN TO EFFECTUATE THE AGREEMENT. THEREFORE, THE RESOLUTIONS ARE NOT TO BE ACCEPTED AS PROOF THAT THE AGREEMENT ACTUALLY BECAME EFFECTIVE.

AFTER BECOMING AWARE OF THE PURPORTED MERGER, THE BASE PROCUREMENT OFFICE PREPARED A PROPOSED SUPPLEMENTAL AGREEMENT "AS OF MARCH 5, 1956" RECOGNIZING WASHINGTON LAUNDRY, INC., AS THE SUCCESSOR IN INTEREST UNDER CONTRACT NO. AF 49/608/-430, BUT THE CONTRACTOR REFUSED TO SIGN IT. IN A LETTER FROM ANDREWS AIR FORCE BASE DATED MAY 4, 1956, IT IS STATED:

"INFORMATION NOW INDICATES THAT THE TWO COMPANIES HAVE SEPARATED, AND THAT BLUE BANNER COMPANY WILL COMPLETE THE CONTRACT.'

THE WASHINGTON LAUNDRY HAS SUBMITTED INVOICES FOR LAUNDRY AND DRY CLEANING SERVICES ALLEGED TO HAVE BEEN PERFORMED BY IT FOR THE PERIODS NOVEMBER 1 TO DECEMBER 31, 1955, AND FROM FEBRUARY 1 TO FEBRUARY 29, 1956. INVOICES HAVE ALSO BEEN SUBMITTED FOR THE PERIOD NOVEMBER 1, 1955, THROUGH APRIL 30, 1956, IN THE NAME OF "BLUE BANNER LAUNDRY AND CLEANERS"- -- NOT THE NAME APPEARING IN THE CONTRACT.

IT IS REPORTED THAT BOTH THE BLUE BANNER LAUNDRY AND THE WASHINGTON LAUNDRY, INC., ARE INDEBTED TO THE UNITED STATES FOR WITHHOLDING TAXES AND SOCIAL SECURITY TAXES AND THAT NOTICES OF LEVY HAVE BEEN SERVED ON YOU AGAINST THE WASHINGTON LAUNDRY IN THE AMOUNT OF $6,406.62 AND AGAINST THE BLUE BANNER LAUNDRY IN THE AMOUNT OF $7,229.45.

IN VIEW OF THE FACTS OF THE MATTER AS ABOVE SET OUT AND INFORMAL ADVICE RECEIVED IN THIS OFFICE THAT LITIGATION MAY BE INSTITUTED BETWEEN THE TWO CLAIMANTS TO DETERMINE THE QUESTIONS OF BREACH OF CONTRACT AND ENTITLEMENT TO PAYMENT OF THE AMOUNT DUE FROM THE UNITED STATES, IT IS QUESTIONABLE WHETHER THE GOVERNMENT COULD RECEIVE A FULLY BINDING ACQUITTANCE FROM EITHER THE CLAIMANTS ALONE. ACCORDINGLY, PAYMENT IS NOT AUTHORIZED ON THE VOUCHER, WHICH WILL BE RETAINED HERE FOR HANDLING AS A CLAIM, TO BE ALLOWED ON RECEIPT OF PROOF OF AGREEMENT OF THE CLAIMANTS OR IN ACCORDANCE WITH A JUDICIAL DETERMINATION OF THE MATTER.

GAO Contacts

Office of Public Affairs