B-132792, AUG. 19, 1957

B-132792: Aug 19, 1957

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED JULY 31. IT IS UNDERSTOOD THAT ALL CONTRACTS WHICH HAD BEEN ENTERED INTO WITH THIS FIRM FOR THE PAST FIVE YEARS HAD BEEN SIGNED EXCLUSIVELY BY "A. IT IS FURTHER UNDERSTOOD THAT NAPOLEON MAGOPIAN. IS A BROTHER OF THE FIRM'S PRESIDENT THE BUSINESS. IT IS FURTHER UNDERSTOOD THAT NAPOLEON HAGEPIAN. HE IS ALSO AN EXPERT DIE MAKER BY TRADE AND. THE BIDS WHICH RESULTED IN THE INSTANT CONTRACTS WERE EXECUTED BY SUCH PARTY WITHOUT PROPER AUTHORITY. WAS ON AN EXTENDED LEAVE OF ABSENCE. THE CONTRACTING OFFICER CONTACTED THE FIRM'S MANAGER WITH VIEW TO DETERMINING WHETHER THE ATTEMPTED DISAVOWAL OF HIS BROTHER'S ACTS WAS ACTIVATED BY AN ANTICIPATED LOSS ON THE CONTRACTS.

B-132792, AUG. 19, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED JULY 31, 1957, B11.2L4-1 L4/MP7, WITH ENCLOSURES, FROM CAPTAIN D. C. MAC KENZIE, ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING AN ADVANCE DECISION AS TO THE PROPRIETY OF CANCELING CONTRACTS NOS. N171-13313A, N171-13325-A, N171- 13335A, N171-133357A AND N171-13363A, AWARDED ON MAY 17, MAY 3, MAY 3, MAY 10 AND MAY 14, 1957, RESPECTIVELY, BY THE U.S. NAVAL GUN FACTORY IN FAVOR OF THE HOPPE TOOL WORKS, INC., SPRINGFIELD, MASSACHUSETTS.

ALL OF THE CONTRACTS CITED RESULTED FROM INVITATIONS ISSUED DURING APRIL 1957, AND FROM PROPOSALS PURPORTEDLY SUBMITTED ON BEHALF OF THE HOPPE TOOL WORKS, INC., BY ONE "NAPOLEON OPIAN," WHO SIGNED THEM IN THE CAPACITY OF "FOREMAN" OF THE SAID COMPANY. FROM THE AVAILABLE RECORDS, IT IS UNDERSTOOD THAT ALL CONTRACTS WHICH HAD BEEN ENTERED INTO WITH THIS FIRM FOR THE PAST FIVE YEARS HAD BEEN SIGNED EXCLUSIVELY BY "A. J. MAGOPIAN," ITS PRESIDENT, AND APPARENTLY THE SOLE MANAGER OF THE BUSINESS. IT IS FURTHER UNDERSTOOD THAT NAPOLEON MAGOPIAN, WHO SUBMITTED THESE ACCEPTED PROPOSALS, IS A BROTHER OF THE FIRM'S PRESIDENT THE BUSINESS. IT IS FURTHER UNDERSTOOD THAT NAPOLEON HAGEPIAN, WHO AND MANAGER; HE IS ALSO AN EXPERT DIE MAKER BY TRADE AND, IN HIS BROTHER'S ABSENCE, SOMETIMES RUNS THE SHOP, BUT TAKES NO PART IN THE COMPANY'S MANAGEMENT. HE HAS BEEN PERMITTED, HOWEVER, TO SUBMIT QUOTATIONS ON SMALL PURCHASES MADE ON BEHALF OF THE COMPANY, BUT NEVER HAS SIGNED A BILATERAL AGREEMENT MADE BY IT. APPARENTLY, THE BIDS WHICH RESULTED IN THE INSTANT CONTRACTS WERE EXECUTED BY SUCH PARTY WITHOUT PROPER AUTHORITY, AND WHILE HIS BROTHER, A. J., WAS ON AN EXTENDED LEAVE OF ABSENCE.

IMMEDIATELY UPON THE LATTER'S RETURN, HE NOTIFIED THE CONTRACTING AUTHORITIES OF THE UNAUTHORIZED SUBMISSION OF THESE BIDS, AND REQUESTED CANCELLATION OF THE CONTRACTS FORTHWITH. UPON RECEIPT OF THE ABOVE NOTIFICATION, THE CONTRACTING OFFICER CONTACTED THE FIRM'S MANAGER WITH VIEW TO DETERMINING WHETHER THE ATTEMPTED DISAVOWAL OF HIS BROTHER'S ACTS WAS ACTIVATED BY AN ANTICIPATED LOSS ON THE CONTRACTS, OR WHETHER IT ACTUALLY RESULTED FROM THE EMPLOYEE'S UNAUTHORIZED CONDUCT. THE CONTRACTING OFFICER FOUND THAT NOT ONLY WERE THE QUOTED BID PRICES ON THE ADVERTISED SERVICES SHARPLY OUT OF LINE WITH THE AMOUNTS OF THE OTHER BIDS RECEIVED, BUT ALSO, AT THE TIME OF THE SUBMISSION OF THE QUESTIONABLE IMPOSSIBLE TO SCHEDULE THESE CONTRACTS FOR PERFORMANCE IN THE NEAR OR IN WHICH THE EMPLOYEE SUBMITTED THE BIDS, THE CONTRACTING OFFICER HAS EXPRESSED "GRAVE DOUBT" AS TO THE VALIDITY OF THESE CONTRACTS.

IT LONG HAS BEEN RECOGNIZED THAT TO FORM A CONTRACT IT IS NECESSARY FORESEEABLE FUTURE. FURTHERMORE, IN VIEW OF THE CAPACITY OF "FOREMAN" BIDS, THERE WAS NO OPEN CAPACITY IN THE PLANT AND, THEREFORE, IT WOULD BE THAT THERE BE A PARTY CAPABLE OF CONTRACTING, AND A PARTY CAPABLE OF 308; FARRINGTON V. TENNESSEE, 95 ID. 679. IT IS EQUALLY WELL SETTLED BEING CONTRACTED WITH. SEE LITTLE ROCK V. MERCHANTS' NAT. BANK, 98 U.S. THAT A CONTRACT VOID FOR WANT OF CAPACITY OF ONE OR BOTH OF THE CONTRACTING PARTIES TO ENTER INTO IT IS NO CONTRACT AT ALL. THAT IS TO SAY, IT IS AS IF NO ATTEMPT AT AN AGREEMENT HAD EVER BEEN MADE. PORTLAND V. BITUMINOUS PAVING AND IMPROV. CO., 52 F. 28; HASBROUCK V. MILWAUKEE, 80 AN.DEC. 719.

WHILE IT IS NOT MEANT TO SAY HERE THAT UNDER NO CIRCUMSTANCES COULD A FOREMAN OF A SHOP OR BUSINESS FIRM BE REGARDED AS A PARTY CAPABLE OF SUBMITTING A PROPER BID, OR ENTERING INTO A VALID CONTRACT ON ITS BEHALF, STILL CONSIDERING THE FACT THAT ALL PRIOR PROPOSALS WHICH RESULTED IN CONTRACTS WITH THIS FIRM DURING THE PAST FIVE YEARS HAD BEEN SIGNED "A. J. MAGOPIAN" AS PRESIDENT OF THE FIRM OF HOPPE TOOL WORKS, INC., IT WOULD SEEM THAT IT WAS INCUMBENT UPON THE CONTRACTING OFFICIALS TO HAVE MADE INQUIRY AS TO THE FOREMAN'S AUTHORITY TO SUBMIT THESE PROPOSALS PRIOR TO ACCEPTING THEM. SEE 15 COMP. GEN. 566.

IN THE CIRCUMSTANCES, YOU ARE ADVISED THAT THE PURPORTED CONTRACTS ABOVE REFERRED TO MAY BE CANCELED, AS RECOMMENDED BY THE CONTRACTING OFFICER.