B-131421, JUL. 22, 1957

B-131421: Jul 22, 1957

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TO HORNSBY AND MCKINLEY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 11. COVERING LOSSES ALLEGED TO HAVE BEEN INCURRED AS GUARANTOR UNDER CONTRACT NO. WHICH WAS DISALLOWED BY OUR SETTLEMENT OF MARCH 19. THAT ACTION WAS SUSTAINED ON APPEAL BY DECISION DATED APRIL 30. THE ACTION TAKEN IN REJECTING YOUR CLAIM WAS PRIMARILY BASED UPON THE FACT THAT YOU WERE NOT A PARTY TO THE CONTRACT. ALTHOUGH IT WAS POINTED OUT IN OUR SUSTAINING DISALLOWANCE THAT UNDER THE COLLATERAL AGREEMENT WHEREBY YOU GUARANTEED PERFORMANCE YOU COULD HAVE BEEN HELD LIABLE FOR ANY LOSSES INCURRED BY THE GOVERNMENT IN THE CASE OF A DEFAULT ON THE PART OF YOUR PRINCIPAL. THE SITUATION CREATED BY YOUR FINANCIAL ARRANGEMENT WITH THE CONTRACTOR WAS NOT UNLIKE THAT OF AN ORDINARY SURETY ON PAYMENT AND PERFORMANCE BONDS REQUIRED UNDER CERTAIN GOVERNMENT CONTRACT FORMS.

B-131421, JUL. 22, 1957

TO HORNSBY AND MCKINLEY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 11, 1957, RELATIVE TO YOUR CLAIM FOR $12,723.08, COVERING LOSSES ALLEGED TO HAVE BEEN INCURRED AS GUARANTOR UNDER CONTRACT NO. AF40/604/4515, ENTERED INTO BETWEEN THE DEPARTMENT OF THE AIR FORCE AND MIRACLE MEALS, INCORPORATED, WHICH WAS DISALLOWED BY OUR SETTLEMENT OF MARCH 19, 1957, AND THAT ACTION WAS SUSTAINED ON APPEAL BY DECISION DATED APRIL 30, 1957, B-131421.

THE ACTION TAKEN IN REJECTING YOUR CLAIM WAS PRIMARILY BASED UPON THE FACT THAT YOU WERE NOT A PARTY TO THE CONTRACT, ALTHOUGH IT WAS POINTED OUT IN OUR SUSTAINING DISALLOWANCE THAT UNDER THE COLLATERAL AGREEMENT WHEREBY YOU GUARANTEED PERFORMANCE YOU COULD HAVE BEEN HELD LIABLE FOR ANY LOSSES INCURRED BY THE GOVERNMENT IN THE CASE OF A DEFAULT ON THE PART OF YOUR PRINCIPAL. THE SITUATION CREATED BY YOUR FINANCIAL ARRANGEMENT WITH THE CONTRACTOR WAS NOT UNLIKE THAT OF AN ORDINARY SURETY ON PAYMENT AND PERFORMANCE BONDS REQUIRED UNDER CERTAIN GOVERNMENT CONTRACT FORMS. HOWEVER, THE FACT THAT YOU EXECUTED SUCH AGREEMENT, THEREBY RENDERING YOUR PRINCIPAL QUALIFIED FOR AWARD OF THE CONTRACT, AND THAT YOU ADVANCED THE NECESSARY FUNDS TO FINANCE PRODUCTION, INCLUDING AN AMOUNT IN EXCESS OF THE CONTRACT CONSIDERATION FOR WHICH REIMBURSEMENT IS CLAIMED, MIRACLE MEALS, INCORPORATED, REMAINED THE ONLY CONTRACTING PARTY UNDER THE BASIC UNDERTAKING. IN THE EVENT OF DEFAULT ANY RIGHT OF ACTION THE GOVERNMENT MIGHT HAVE HAD AGAINST YOU WOULD BE UNDER THE GUARANTEE YOU EXECUTED RATHER THAN UNDER THE PRIMARY CONTRACT. THE RECORD SHOWS THAT THE CONTRACT WAS PERFORMED BY MIRACLE MEALS, INCORPORATED, FOR WHICH PAYMENT IN FULL HAS BEEN MADE, AND THAT YOUR FUNCTION IN THE TRANSACTION WAS TO FURNISH FINANCIAL ASSISTANCE DURING PERFORMANCE OF THE CONTRACT FOR WHICH YOU WERE TO BE PAID A PREMIUM BASED UPON THE NUMBER OF MEALS SUPPLIED. THAT AGREEMENT DID NOT MAKE YOU THE CONTRACTOR IN PLACE OF MIRACLE MEALS, INCORPORATED.

WITH RESPECT TO YOUR CONTENTION THAT THE LOSSES WHICH YOU HAVE INCURRED WERE DUE TO THE ABUSES SUFFERED AT THE HANDS OF INSPECTORS REPRESENTING THE UNITED STATES VETERINARIAN CORPS, YOU ARE ADVISED THAT SUCH MATTERS PRIMARILY ARE FOR CONSIDERATION BY THE HEAD OF THE AGENCY OR ESTABLISHMENT CONCERNED RATHER THAN THE GENERAL ACCOUNTING OFFICE.

IN REGARD TO YOUR CONTENTION THAT A HEARING SHOULD HAVE BEEN HELD BEFORE RENDERING OUR DECISION, AND THAT YOU SHALL EXPECT US IMMEDIATELY TO ARRANGE FOR SUCH HEARING, YOU ARE ADVISED THAT DECISIONS OF THE GENERAL ACCOUNTING OFFICE UNDER ITS STATUTORY AUTHORITY MAY BE RENDERED ONLY ON THE WRITTEN RECORD, AND THEREFORE ORAL PRESENTATION OR ARGUMENT WOULD BE USELESS UNLESS THE SUBSTANCE THEREOF BE REDUCED TO WRITING. ALSO, IT APPEARS THAT ALL THE MATERIAL FACTS NECESSARY FOR A COMPLETE CONSIDERATION OF THE CASE ARE CONTAINED IN THE RECORDS AND REPORTS COMPILED BY THE DEPARTMENT OF THE AIR FORCE, AND THEREFORE NO USEFUL PURPOSE WOULD BE SERVED BY CONDUCTING A HEARING SUCH AS YOU SUGGEST.

SINCE NO NEW OR MATERIAL EVIDENCE OR CONTENTIONS NOT HERETOFORE CONSIDERED HAVE BEEN SUBMITTED, THE ACTION TAKEN IN DISALLOWING YOUR CLAIM WILL NOT BE DISTURBED.