B-136232, JUL. 25, 1958

B-136232, JUL. 25, 1958

TO POWER GENERATORS, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF MAY 12, 1958, REQUESTING RECONSIDERATION OF YOUR CLAIM FOR $1,023.11, ALLEGED TO BE DUE AS UNREIMBURSED OVERHEAD COSTS INCURRED IN PERFORMANCE OF LETTER ORDERS NOS. 116, 117, 119, AND 122, ISSUED UNDER CONTRACT NO. N156S 27437. IT IS CONTENDED THAT THE RELEASES EXECUTED IN CONNECTION WITH THE SUBJECT ORDERS SHOULD BE VIEWED AS HAVING NO LEGAL FORCE OR EFFECT BECAUSE SUCH DOCUMENTS DO NOT CONTAIN THE SIGNATURE OF TWO RESPONSIBLE OFFICERS OF YOUR COMPANY. IT IS FURTHER CONTENDED THAT THOSE RELEASES ARE A NULLITY BECAUSE THE RESULTS OF THE GOVERNMENT'S AUDIT HAD NOT BEEN MADE KNOWN TO YOU AT THE TIME THE RELEASES WERE ISSUED, AND THAT TO REQUIRE SUCH RELEASES WITHOUT DISCLOSURE BY THE UNITED STATES OF THE AUDIT INFORMATION CONSTITUTED DURESS. ALSO, IT IS URGED BY YOU THAT THE RELEASES ISSUED UNDER EACH SEPARATE LETTER ORDER ARE NOT BINDING WHILE THE BASIC CONTRACT REMAINS IN FORCE, SINCE FINAL SETTLEMENT UNDER THE CONTRACT CANNOT BE MADE IF THERE REMAIN UNPAID ANY REIMBURSABLE COSTS UNDER THE SUBJECT LETTER ORDERS.

WITH RESPECT TO YOUR FIRST CONTENTION THAT A VALID RELEASE REQUIRES THE SIGNATURE OF TWO RESPONSIBLE OFFICERS OF YOUR CONCERN, ATTENTION IS INVITED TO ARTICLE 15 OF THE CONTRACT WHICH REQUIRES ONLY THAT THE CONTRACTOR SHALL EXECUTE A RELEASE IN RESPECT TO THE LETTER ORDERS. COMPARE THE PROVISIONS OF ARTICLE 13 (A) REQUIRING CERTIFICATION BY TWO OFFICERS ON COST STATEMENTS.

IN REGARD TO YOUR CONTENTION THAT THE RELEASES EXECUTED WITHOUT THE BENEFIT OF THE GOVERNMENT AUDIT RESULTS ARE A NULLITY, AND TO REQUIRE THEIR ISSUANCE UNDER THOSE CIRCUMSTANCES WAS TANTAMOUNT TO DURESS, THE CONTRACT (ARTICLE 13) REQUIRED THE PREPARATION OF COST STATEMENTS BY THE CONTRACTOR. IT ALSO REQUIRED THAT FINAL INVOICE UNDER EACH LETTER ORDER BE SUPPORTED BY A STATEMENT OF COST AND ACCOMPANIED BY A RELEASE. WHILE THAT PROVISION RESERVED TO THE GOVERNMENT COST INSPECTOR THE RIGHT TO AUDIT ALL INVOICES AND STATEMENTS OF COST PRIOR TO FINAL PAYMENT, THE FINALITY OF SUCH PAYMENT AND RELEASE WAS NOT CONTINGENT UPON, OR SUBJECT TO, THE FURNISHING OF A FINAL COST AUDIT BY THE GOVERNMENT. MOREOVER, IN THAT CONNECTION THERE IS NOTHING IN THE RECORD TENDING TO ESTABLISH THAT THE FINAL PAYMENT REQUESTS AND RELEASES UNDER THE LETTER ORDERS WERE EXECUTED AND SUBMITTED BY OFFICIALS OF YOUR CORPORATION AS A RESULT OF DURESS OR COERCION.

CONCERNING YOUR CONTENTION THAT A RELEASE UNDER THE MASTER CONTRACT CANNOT BE GIVEN UNTIL REIMBURSEMENT OF ALL ALLOWABLE COSTS HAVE BEEN ACCOMPLISHED UNDER THE SEPARATE LETTER ORDERS, ARTICLE 1 OF THE CONTRACT STIPULATES THAT ALL OF THE WORK CONTEMPLATED BY THE PARTIES TO BE PERFORMED THEREUNDER SHALL BE SPECIFIED IN THE LETTER ORDERS. AS STATED HEREINBEFORE, ARTICLE 15 OF THE AGREEMENT STIPULATES THAT A RELEASE FOR EACH OF THE SEVERAL LETTER ORDERS SHALL BE EXECUTED. HENCE, IT IS CLEAR THAT THE PARTIES UNDERSTOOD AND EXPECTED THAT THE GOVERNMENT WOULD BE RELEASED PROGRESSIVELY FROM FUTURE LIABILITY UPON COMPLETION OF EACH SEGMENT OF THE WORK COVERED BY THE SEVERAL LETTER ORDERS, RATHER THAN UPON A FINAL OVERALL ACCOUNTING OF THE WORK WHEN THE LAST LETTER ORDER IS COMPLETED.

THE COURTS HAVE HELD REPEATEDLY THAT WHEN, AS HERE, RELEASES HAVE BEEN EXECUTED UNDER SIMILAR CIRCUMSTANCES, SUCH DOCUMENTS INDICATE A PURPOSE TO MAKE AN ENDING OF EVERY MATTER ARISING UNDER OR BY VIRTUE OF THE CONTRACT. UNITED STATES V. WM. CRAMP AND SONS, CO., 206 U.S. 118. RELEASE PRECLUDES THE PRESENTATION OF ANY CLAIM ARISING OUT OF THE TRANSACTION INVOLVED (FEDERAL MOTOR TRUCK CO. V. UNITED STATES, 71 C.CLS. 611), EVEN THOUGH CERTAIN PARTICULAR CLAIMS EMBRACED WITHIN THE TERMS OF THE RELEASE WERE UNKNOWN AT THE TIME OF ITS EXECUTION. RADOVSKY V. WEXLER, ET AL., 173 N.E. 409.

IN VIEW OF THE FACTS OF RECORD AND APPLICABLE LAW THIS OFFICE IS WITHOUT AUTHORITY TO CERTIFY FOR PAYMENT FROM APPROPRIATED FUNDS ANY PART OF THE AMOUNT CLAIMED AND THEREFORE THE SETTLEMENT OF SEPTEMBER 26, 1956, MUST BE SUSTAINED.