B-137707, DEC 11, 1958

B-137707, DEC 11, 1958

PRECIS-UNAVAILABLE

HONORABLE FRANKLIN FLEETE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 14, 1958, REQUESTING A DECISION AS TO WHETHER PAYMENT IS AUTHORIZED ON A QUANTUM MERUIT BASIS, FOR GASOLINE OR OTHER PETROLEUM PRODUCTS OR SERVICES FURNISHED ON CREDIT CARDS PRESENTED BY GSA DRIVERS AND DRIVERS OF OTHER AGENCIES OF GOVERNMENT VEHICLES, EVEN THOUGH NO CONTRACTS PRESENTLY ARE IN EFFECT WITH THE PARTICULAR COMPANIES FOR THE PERIOD INVOLVED.

IT IS STATED IN YOUR LETTER THAT BY EXECUTIVE ORDER 10761, DATED MARCH 27, 1958, CERTAIN STANDARDS WERE SET UP WITH RESPECT TO THE PROCUREMENT OF PETROLEUM PRODUCTS, BASED UPON APPLICATION OF THE BUY AMERICAN ACT, 41 U.S.C. 10A; THAT ONE OF THE REQUIREMENTS IMPOSED UPON THE GOVERNMENT PURCHASING AGENCIES REQUIRES THAT DIFFERENTIALS BE PRESCRIBED WHERE DOMESTIC OR COMPLYING OIL IS OFFERED IN COMPETITION WITH A NON-COMPLYING PRODUCT; THAT AS A CONSEQUENCE OF THE NECESSITY EITHER OF FURNISHING DOMESTIC PETROLEUM OILS OR OF CERTIFYING FUTURE COMPLIANCE WITH THE PROGRAM TO BE IN LINE FOR AWARD, A NUMBER OF THE LARGE OIL COMPAINES HAVE DECLINED TO CONTRACT WITH GSA FOR REQUIREMENTS HERETOFORE FURNISHED FOR SERVICE STATION DELIVERIES. IT IS STATED FURTHER THAT THE COMPANIES WITH WHICH THE ADMINISTRATION IS CHIEFLY CONCERNED ARE THE SUN OIL COMPANY, SHELL OIL COMPANY, AND SINCLAIR REFINING COMPANY; THAT CONTRACTS GS-075- 5996, GS-075-4022 AND GS-075 4026, RESPECTIVELY, HAVE BEEN IN EFFECT BETWEEN GSA AND THESE COMPANIES FOR SERVICE STATION DELIVERIES FOR SEVERAL YEARS PRIOR TO JUNE 30, 1958, AND THAT ALL THREE CONTRACTORS HAVE, WITH GSA CONCURRENCE, ESTABLISHED PROCEDURES WHEREBY GOVERNMENT VEHICLES COULD OBTAIN GASOLINE AND OIL ON THE BASIS OF THE USE OF CREDIT CARDS OR SIMILAR CREDENTIALS.

THERE IS ATTACHED TO YOUR LETTER A COMMUNICATION DATED SEPTEMBER 5, 1958, FROM THE SUN OIL COMPANY ENCLOSING PHOTOSTATIC COPIES OF 18 DEALER WRITE- UP TICKETS RECEIVED BY THAT COMPANY REPRESENTING SALES MADE BY DEALERS TO HOLDERS OF U. S. NATIONAL CREDIT CARDS. IN THIS CONNECTION YOU STATE THAT SOME GSA DRIVERS HAD SUN CREDIT CARDS AND NEED THEM TO BUY SUN GASOLINE OR OTHER PRODUCTS OR SERVICES BUT THAT SINCE NO CONTRACT PRESENTLY EXISTS PAYMENT FOR SUCH PRODUCTS OR SERVICES CLEARLY IS NOT AUTHORIZED. ALSO, THERE WAS FORWARDED WITH YOUR LETTER COPY OF A COMMUNICATION OF SEPTEMBER 11, 1958, FROM THE SINCLAIR REFINING COMPANY STATING THAT IT NOW IS WILLING TO CONTRACT FOR SERVICE STATION DELIVERY AND REQUESTING THAT THE CONTRACT BE MADE RETROACTIVE TO COVER THE PERIOD BEGINNING JULY 1, 1958, AND ENDING JUNE 30, 1959. IT IS STATED, HOWEVER, THAT WHILE THE ADMINISTRATION HAS DECLINED TO AGREE TO THIS REQUEST THE COMPANY WAS NOT INFORMED OF THE REASON THEREFOR WHICH YOU STATE TO BE THAT IT IS FELT THE CREDIT CARDS PROBABLY HAVE BEEN USED BY GOVERNMENT DRIVERS AND HONORED BY THIS COMPANY WITHOUT PROPER AUTHORIZATION.

AS TO THE SHELL COMPANY IT IS STATED, IN EFFECT, THAT THIS COMPANY HAS NOT BEEN IN TOUCH WITH GSA AS TO ANY RETROACTIVITY FEATURE INCIDENT TO THE NEGOTIATIONS FOR EXTENSION OF THE CONTRACT STILL UNDER NEGOTIATION, BUT THAT IT SEEMS MOST PROBABLE SINCE CREDIT CARDS HAVE BEEN ISSUED TO GSA DRIVERS AS WELL AS TO DRIVERS OF OTHER AGENCIES, THAT "WRITE UP" TICKETS FROM THIS COMPANY ALSO WILL ULTIMATELY BE THE SUBJECT OF CONTROVERSY.

IN CONCLUSION YOU STATE THAT THE ADMINISTRATION NOW HAS ISSUED INSTRUCTIONS THAT PETROLEUM PRODUCTS OF THE THREE COMPANIES INVOLVED SHOULD NOT BE USED AND THAT WHILE THE COMPANIES HAVE BEEN INFORMED THAT THEIR CREDIT CARDS SHOULD BE WITHDRAWN, IT IS FELT THAT IN THE CASES OF SINCLAIR REFINING COMPANY AND SHELL OIL COMPANY COMPLETE CONTRACTS WILL BE CONSUMMATED IN THE NEAR FUTURE SO THAT THE USE OF THEIR CREDIT CARDS AGAIN WILL BE VALIDATED. IT IS STATED, IN EFFECT, THAT THE "WRITE UP TICKETS" FORWARDED WITH YOUR LETTER PROBABLY ARE TYPICAL OF OTHER SIMILAR CLAIMS FOR COMPARATIVELY SMALL AMOUNTS TO FOLLOW; THAT IT IS APPARENT THAT GOVERNMENT VEHICLES HAVE USED THE PRODUCTS OF THE INVOLVED FIRMS, INVARIABLY ON GOVERNMENT BUSINESS SO FAR AS IS KNOWN AND THAT SINCE THE PRICE IN EACH INSTANCE IS IN ACCORD WITH PREVAILING MARKET PRICES, THE GOVERNMENT HAS DERIVED, SO FAR AS ACTUAL EXPENDITURE IS CONCERNED, THE SAME BENEFITS AS IT WOULD HAVE DERIVED HAD A CONTRACT BEEN IN EFFECT.

FROM THE FOREGOING IT IS INDICATED THAT NEITHER THE EMPLOYEES USING THE CREDIT CARDS NOR THE SERVICE STATIONS HONORING THEM WERE AWARE THAT CONTRACTS WERE NOT IN EFFECT WITH THE INVOLVED COMPANIES. IT IS CLEAR THAT IN THE ABSENCE OF PROPER AUTHORIZATION THE CREDIT CARDS SHOULD NOT HAVE BEEN USED. SINCE IT IS INDICATED, HOWEVER, THAT THE GOVERNMENT VEHICLES USING THE PRODUCTS WERE ON GOVERNMENT BUSINESS AND THAT THE GOVERNMENT HAS DERIVED THE SAME BENEFIT AS IT WOULD HAVE DERIVED HAD THE SEVERAL COMPANIES BEEN INCLUDED IN YOUR SUPPLY SCHEDULE, AT PRICES IN EACH INSTANCE IN ACCORD WITH PREVAILING MARKET PRICES, THE SELLERS ARE ENTITLED TO BE PAID ON A QUANTUM MERUIT BASIS. SEE 18 COMP. GEN. 568.

ACCORDINGLY, SINCE YOU STATE THAT INSTRUCTIONS NOW HAVE BEEN ISSUED THAT PETROLEUM PRODUCTS OF THE THREE INVOLVED COMPANIES SHOULD NOT BE USED, AND THAT YOU HAVE NOTIFIED THE COMPANIES THAT THEIR CREDIT CARDS SHOULD BE WITHDRAWN, WE WILL NOT BE REQUIRED TO OBJECT TO PAYMENT OF THE INVOLVED CLAIMS ON A QUANTUM MERUIT BASIS WITH THE UNDERSTANDING, OF COURSE, THAT YOUR EXAMINATION DISCLOSES IN EACH CASE THAT THE PRICE IS NOT IN EXCESS OF THE PRICES OF OTHER OIL COMPANIES WHICH ARE LISTED IN THE SCHEDULES.